Bond Market VAR Shock Over Or Just Beginning: Weekly Nifty 9

Welcome to another trading week!! In appreciation of all of our daily readers of content, we offer the following excerpts from our Weekly Research Report. Our weekly report is extremely detailed and has proven to help guide investors and traders during all types of market conditions with thoughtful insights and analysis, graphs, studies, and historical data/analogues. 

Research Report Insight #1

The benchmark index fell ~1% for the month, breaking from the typical seasonal pattern. February is usually a down month for the market and yet, the benchmark index rose ~2.6% for the month, also breaking a seasonal pattern dating back to the turn-of-the-century.

  • In the chart above, if just go back to 2001, we can see that the majority of the time the month of February is a down month.

Research Report Insight #2

Of course, what is on the minds of many investors right now, however, is how the downturn at the end of February seems to align with 2020. Kind of wish we could forget 2020, but its hard to forget such a moment in U.S. market history, right? Nonetheless, there are grave differences we can identify in the broad market between February 2020 and February 2021. This year’s stock market looks a lot different than last year. The chart below shows the performance of S&P 500 sectors on a YTD basis as of the close on February 18th last year versus this year. (Feb 19th was peak in 2020)

Technology (XLK) and yield-sensitive sectors like Utilities (XLU) and Real Estate (XLRE) led the rally in 2020. On the downside, Energy (XLE) and Materials (XLB) were the only two sectors down on the year. This year, Energy is leading the way higher with a gain of just under 20%, while Financials (XLF) and Communications Services (XLC) are both up over 8 percent. We have seen a complete reversal from 2020 leadership. Just like scary headlines promoted in the financial media, sometimes you have to look underneath the surface to find the truth of what’s going on in the markets. Now let’s take a look at March since we rid ourselves of March 2020 mimic-market fears.

Research Report Insight #3

Now as you can see below, if the S&P 500 could just go sideways for the next 2 or 3 days, the current trend and the Roadmap will be back in sync.

This is pretty awesome if it comes to fruition, as it would lend credibility to the fundamental argument that the magnitude of fiscal policy in 2020-2021 far exceeded that in 2009-2010, thus the equity market should prove more resilient in 2020-2021. I could also point out that the earnings recession from the previous period was far great than the present period, but we’ll leave that for a fundamental conversation. The key to the above analogue is no different than it was last year: 2021 may travel the same path, but on a different time plane, from time-to-time. 

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