Monday, December 21, 2020

Morning Note: The Bull/Bear Boat

With, as we've been reporting, standing room only on the bull side of the boat, and only crickets over on the bear side, it would make sense that a good news ("stimulus" coming [big in the U.S. and Japan])/bad news (more contagious COVID strain hitting Europe, plus Brexit trade talks still in turmoil) morning setup would see the market yielding to the downside.

Plus, as I illustrated in last week's video, the market's been looking technically heavy to me of late to boot.

Asian stocks tilted lower overnight, with 11 of the 16 markets we track closing in the red.

Europe's getting creamed this morning; all 19 of the markets we track trading notably (most ~3%) lower as I type.

U.S. major averages, while not nearly as rough as Europe's, are having a rough go of it to start the session: Dow down 304 points (1.02%), SP500 down 1.65%, Nasdaq down 1.62%, Russell 2000 down 1.60%.

Oil futures are down 3.72%, gold's up 0.06%, silver's up 1.79%, copper futures are down 1.93% and the ag complex is down 0.19%.

The 10-year treasury is up (yield down) and the dollar is catching a strong bid, up 0.41%.

Recall also in last week's video that, while I'm generally bearish on the dollar longer-term, the technicals have been pointing to a bottom, and I thus warned of a bounce that would "play havoc with stocks." We'll see if today isn't the beginning of something. Although a Brexit trade deal would I suspect quell the dollar's upside, at least momentarily.

Only two of our core positions (silver and gold) are seeing green this morning, while Eurozone equities, energy, Asia-Pac equities, healthcare, utilities and consumer staples are leading the pack lower. Our core portfolio (down 1.47%) is (save for the Dow) providing a bit (tiny bit) of relief relative to the broad equity market.

I also discussed the day to day non-correlated aspect of our current asset mix in last Tuesday's video. If you happened to have missed it, you might want to take a look.

Here's something written 135 years ago that will be forever timeless:

"In a crowd every sentiment and act is contagious, and contagious to such a degree that an individual readily sacrifices his personal interest to the collective interest."

-- Gustave Le Bon, The Crowd: A Study of the Popular Mind

Which is why we're always interested in sentiment and the distribution of investors across the bull/bear boat.

Have a nice day!

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