by Robert Holman | The Defensive Advisor | February 2, 2021
MARKET BULLISH … Rating of 7.0 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish). I’ve gone back to 7.0 because my concern over broker-dealer financial problems has diminished. It’s likely that the whole short-selling issue is beginning to resolve itself.
What a difference a day makes. The market is up 600 points as of this writing. In the last two days, the market has recovered most of the territory lost in the selloff, making that decline a painless one – if the decline is over. I believe that is more likely (that it is over) than unlikely.
My dominant investor concern is rising interest rates. The 10-Yr. T-Note rose in price showing genuine concern (fear) last week. But, it is reversing itself today.
Growth stocks and Value stocks are now both performing in-line with the S&P 500; value stocks were hit hard in the recent sell-off. I am not too concerned about the pace of vaccine injections being slower than forecast; I think that will be resolved shortly. The recovery stocks (the ones that should benefit from economic growth) like Energy, Financials and Consumer Discretionary are moving well today, after being hit hard in the sell-off, indicating to me a return to prior thinking by market participants.
Fourth quarter earnings reports have been a bit better than expected. Economic reports show a general slowing which was expected. Most investors are looking forward into the summer. The greater the percentage of the population that’s been vaccinated by then, the sooner economic growth will bounce back, and the sooner stock prices will respond with higher valuations.
FOR NEW CLIENTS – HWM manages risk by taking defensive positions in times of difficulty. If you would like to learn more about becoming a client of HWM, please allow me the opportunity to explain my services to you. Call me at 972-702-6032 or reply to this email. For those of you who are already clients, thank you for your trust.
For more information or prior letters, go to http://www.defensiveadvisor.com/blog
Opinions voiced in this post are for general information only and are not intended to provide specific advice or recommendations for any individual, without complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.