Home 2021 Commentary: Paul Ebeling on Wall Street

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The Bull trend is still North on the rotation, consolidation and testing” — Paul Ebeling

My work has the benchmark US stock market indexes Neutral with a Bullish bias in here.

  • Russell 2000 +11.0% YTD
  • DJIA +2.9% YTD
  • S&P 500 +2.3% YTD
  • NAS Comp +0.3% YTD

What happened last week

Again, all major US stock market indexes consolidated and tested, as the DJIA catches up. Overall the news was really good.

It was notable that Fed Chairman Powell did not mention the recent bond market and other financial market volatility. But Treasury Secretary Schoolmarm Yellen did saying the rising interest rate are expected to rise in a growing economy, and in this case not a signal for rising inflation.

History show us that rising rates are Bullish for stocks.

The technicals

S&P 500 broke below the 50-Day MA and reversed off of the lows. This was its 1st close below the 50-Day MA since early November, but it then broke through the 50-Day MA on strong volume.

NAS Comp dropped to the early December highs and recovered. The head-and-shoulders pattern did not dissipate. But the neck has been broken, so we watch for when the NAS tests the break.

What to expect this week

This wk, investors will be focused new inflation data, which will offer a look at whether prices have already begun to move up ahead of this coming major economic reopening. We do know that prices are and have been moving up in the food and fuel sectors, but, hang on, they are not included in the 1000’s of items the Fed uses to monitor US inflation.

Nomura’s chief economist Lewis Alexander wrote in a note Friday: “If our forecast is correct, February would mark the beginning of a reversal of COVID-induced relative price changes. That would imply goods prices might decline but service prices might increase in coming months, as consumer demand shifts back to services requiring personal contact.

Economic Calendar

  • Monday: Wholesale inventories, month-over-month, January final (1.3% expected, 1.3% in December)
  • Tuesday: NFIB Small Business Optimism, February (96.3 expected, 95.0 in January)
  • Wednesday: MBA Mortgage Applications, week ended March 5 (0.5% during prior week); Consumer Price Index, month-over-month, February (0.4% expected, 0.3% in January); Consumer Price Index excluding food and energy, month-over-month, February (0.2% expected, 0.0% in January); Consumer Price Index year-over-year, February (1.7% expected, 1.4% in January); Consumer Price Index excluding food and energy, year-over-year (1.4% expected, 1.4% in January); Monthly Budget Statement, February (-$162.8 billion in January)
  • Thursday: Initial jobless claims, week ended March 6 (725,000 expected, 745,000 during prior week); Continuing claims, week ended February 27 (4.180 million expected, 4.295 million during prior week); JOLTS job openings, January (6.600 million expected, 6.646 million in December); Household change in net worth, 4Q ($3.817 trillion in 3Q)
  • Friday: Producer price index, month-over-month, February (0.4% expected, 1.3% in January); Producer price index excluding food and energy, month-over-month, February (0.2% expected, 1.2% in January); Producer price index year-over-year, February (2.7% expected, 1.7% in January); Producer price index excluding food and energy, year-over-year (2.6% expected, 2.0% in January); University of Michigan Consumer Sentiment, March preliminary (78.0 expected, 76.8 in February)

An aside: I expect the NY-T’s to break a story that behind closed doors Dr. Doom Fauci said early on the COVID-19 “was no big deal.”

Some money is flowing out but other money is flowing in, in record amounts and the world markets are overall Bullish on this ongoing economic recovery. So, if this wk news is as good as last wks we should continue this Bullish trend.

However, pay attention, the market can reverse on a dime, and remember it is your money so your responsibility.

Have a healthy week, Keep the Faith!

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