TREADING WATER (OR THIN ICE?) – There is no reason to hit any alarm bells and the main components of the bull market remain in place. Stimulus is coming, the Fed is at the ready (today’s soft jobless claims figure highlighting his comments about the labor market being a long way from full recovery) and Covid news is trending in the right direction. Yet equities seem stuck in neutral after snapping a 6-day winning streak. Energy has been on a tear of late but its serving as the biggest drag today, the IEA cutting global consumption forecasts providing an easy enough reason to take some money off the table. As such, value/cyclicals underperforming today. Not the case for the growth space although its largely being led by one group in particular. When in doubt, the semis are stout, and they’re ripping again today as they have been for much of February. Talk of chip shortages barely caused a ripple but it was enough for the Biden administration to say they’re taking aggressive measures to address it. (What, no tweet Joe?). Recent all-time highs in many well-known indices keep sentiment upbeat, but as discussed yesterday, the integrity of the Russell 2k has been somewhat compromised thanks to the “meme” stocks. Which is why breadth may be a better indicator. In which case, the highest ever recorded % of stocks above long term averages would imply markets remain in good stead.
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