Morning Comment: A willingness to let inflation


It was an ugly day in the stock market yesterday as the 2.4% drop in the S&P 500 and the 3.5% dive in the Nasdaq came on a decent sized increase in volume and very poor breadth. In fact, the breadth on the S&P 500 was almost 10 to 1 negative...and it was 6.6 to 1 negative on the Nasdaq Composite Index. However, it was even worse on the NDX Nasdaq 100 Index...where the breadth was a whopping 50 to 1 negative! So as you can see, it was a broad decline. However, we’ve seen a several days like this in the last two months...only to see the stock market bounce-back strongly (rather quickly). Therefore, we’re going to have to see more downside follow-through to confirm that the correction we’ve been calling for recently has indeed begun.

Most of the blame for the decline went to the rise in long-term interest rates. Yesterday’s move was particularly strong...as it took the yield on the U.S. 10yr Treasury note above 1.6% in the middle of the day before settling in at 1.52% at the close. This move in the bond market...and the reaction it has created in the stock market...is not a surprise to us at all. Yes, most people thought that Chairman Powell’s comments in front of Congress was very dovish...and thus it should be very bullish for the stock market. However, we thought that the most important takeaway was that the Mr. Powell reiterated that the Fed will let inflation run hot for a while. THAT means that the Fed will not act if long-term interest rates rise more than the consensus has been thinking they will (for much of the rest of this year).

These higher long-term interest rates have an impact on what investors are willing to ...

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Morning Comment: Travel & leisure stocks getting overbought near-term.


As we highlighted yesterday morning, large intraday-reversals (like the kind we got on Tuesday) almost always see some sort of upside follow-through over the very-short-term. That is exactly what we got yesterday...as some more dovish comments from Chairman Powell helped ...

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Morning Comment: Powell Testimony.....TSLA & Bitcoin at key technical junctures.


We had a widely divergent market yesterday...as some groups rallied strongly as others got hit hard. In other words, the rotation that we’ve seen in the stock market in recent months was on steroids yesterday. Therefore, even though the S&P ...

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THE WEEKLY TOP 10


I hope you have been enjoying the “Morning Comment” and “The Weekly Top 10”.....We will be ending our extended free trial of the newsletter on March 1st, so if you want to continue to get these unique insights during these ...

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Morning Comment: They're running out of stocks to short.


Uneventful days have been few and far between over the last several months in the stock market (and for the last year for that matter), but we’ve had several of them recently. Yesterday was another one of those days...as the ...

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Morning Comment: Commodities getting ripe for a "breather."


It was definitely a good day for the stock market...as the S&P, Nasdaq and Russell 2000 all closed at record all-time highs. We must say that the “internals” of the market weren’t all that great. The breadth for the S&P ...

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Morning Comment: Amazon (AMZN) is at a key technical juncture


Our call that the short-term rally in silver would not last very long at all...and our call that the heavily “squeezed” stocks that had rallied so strongly recently...were very vulnerable to a big decline...worked-out quite well yesterday. Silver basically gave-back ...

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Morning Comment: Is the "short silver" story part of a "pump & dump" scheme?


We must admit, we just don’t see the big short position in the silver market. Maybe it’s out there...and we just can’t see it. However, when we look at the Commitment of Traders (COT) data, it shows that the net ...

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THE WEEKLY TOP 10


Just a reminder, we are only putting out one “version” each weekend now. The first paragraph will be in bold letters and will serve as the old “Short Version” of the piece (usually a condensed review of the “Long Version.”) ...

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Morning Comment: Wall Street still doesn't "get it" when it comes to the GameStop phenomenon



As we moved through the day yesterday, we couldn’t help asking ourselves whether Melvin Capital...the hedge fund that received a $3bn bailout this week...will end up being like the Bear Sterns hedge funds of 2007? Long before Bear Sterns (the ...

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Morning Comment: Be prepared IN ADVANCE...the signs are all over the place!


There are a lot of things going on today, so we have many candidates for a catalyst for a big move in the stock market over the rest of this week. The futures are trading significantly lower in pre-market trading, ...

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Morning Comment: The REAL Reason Why GameStop's Action Should be a Concern



Everybody has been talking about GameStop (GME) in recent days...which makes total sense given that the stock had rallied over 3,000% from its August level...and it has done this even though its prospects are worse than anything Judge Smells would ...

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