Stocks Falling Slightly On February 20, But What’s With The Fear Trade?

Stocks are off to a pretty dull start with S&P 500 futures down slightly, and most major markets around the world pretty around the flatline. China was the one market up sharply rising by around 1.84%, as the country continues to stimulate.

Dollar

The dollar is soaring and continues to push higher; the move in the dollar index is pretty amazing. Breaking above resistance around 100, and probably on its way $101.50. My earlier prediction to start 2020, for a weaker dollar is not playing out. 

dollar, dxy

Gold (GLD)

Surprisingly Gold prices continue to rise as well and appear to be on their way to $1,699. Something you don’t usually see is the dollar and gold both rising at the same time, which would suggest that it is perhaps something else at play. It will require me to do something more thinking. But my natural reaction is there still a fear trade taking place, which is ultimately the opposite of what the equity market is suggesting.

gold

10-Year

With yields sitting at 1.54%, and on critical support, this does confirm the fear trade narrative.

yields

VIX

Also interestingly, the VIX is still hovering around 14.5, which seems “high” despite the S&P 500 trading at an all-time high. Typically we have seen the Vix fall to around 12, with markets at highs, again suggesting some fear in the market persists.

vix

So let’s continue to stay on top of this, and it could nearly be because of the coronavirus, or something more profound. I don’t know yet.

S&P 500 (SPY)

Futures on the S&P 500 are falling today, but holding support at 3,379. Remember, trends in the market are higher and remains unchanged. Futures are only falling 20 basis points. Nothing has changed at this point. A drop below 3,379 means the next support level comes at 3,357

S&P 500 spx

AMD (AMD)

Wells Fargo downgraded AMD to Equal Weight from Overweight but increased its price target to $64 from $55. Again, no change here from me, with the potential for shares to drop to around $52.90.

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Disclosure: Michael Kramer And The Clients Own AAPL. Michael Kramer Own SPY Calls.

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moment's ...

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