June 21, 2021
Good morning,
One tries not to look back much but that said, last week was brutal. Stocks fell for the fourth straight day on Friday and the S&P 500 posted its worst week since February (-1.91%). Friday was the worst of it (-1.31%) and there’s no telling how much of the day’s decline was technical and related to the quarterly expiration. However, expiration day notwithstanding, it was no wonder that the post-Fed shakeup in short rates and the yield curve, which was no less than brutal, would radiate across equities, the dollar and gold among others.
The question now, of course, is “what now?”. From their overnight lows, Futures are up >40pts or almost a percent. It appears that market participants have digested last week’s Fed announcement and are ready to look ahead and take on some risk across their portfolios.
As you have heard here endlessly, the behavior of the Tape is an excellent leading indicator and tends to peak well before the market. Even though the tape indicator in the chart below has probably peaked and rolled over, it still leans bullish. The trend is still our friend.
Be well,
Mike