Short Term

Hold off on those VIX hedges for a bit–a robust start to earnings season from the big banks this week could send the “fear index” even lower

Hold off on those VIX hedges for a bit–a robust start to earnings season from the big banks this week could send the “fear index” even lower

Over the weekend I posted that I’d be looking at a possible buy of Call Options on the CBOE S&P 500 Volatility Index (VIX) today–depending on how the VIX behaved in the Monday action. Today the VIX regained some of the ground that it gave up last week, closing ahead 1.92% to 1701 after closing at 16.69 on Friday. And I’m going to hold off on buying VIX Call Options until I see the trend in first quarter earnings reports.

Bond traders speculate that the bond “lull” won’t last long–and that yields will spike again

Bond traders speculate that the bond “lull” won’t last long–and that yields will spike again

A significant number of bond traders are betting that the calm in bond markets won’t last. Short interest in the $14 billion iShares 20+ Year Treasury Bond ETF (TLT) has climbed to about one-fifth of shares outstanding, the highest since early 2017, according to IHS Markit. Bearish bets, Bloomberg reports, have risen from just 7% at the start of 2021.

This week’s big Treasury auctions start off smoothly–so what does it mean if yields are down and so are stocks?

This weeks long list of Treasury auctions started off today with a very good sale of $60 billion in two-year notes today. Today’s sale came with a yield of 0.152%–yep that’s where interest rates are right now–on the two year note. That matched the bid in the when-traded market. Total bids amounted to 2.54 times the amount of debt offered. It’s a good sign when bids exceed the amount on sale. In February the bid-to-cover ration was 2.44 times. The yield on the benchmark 10-year Treasury fell 7 basis points today to 1.62%.

Bond traders speculate that the bond “lull” won’t last long–and that yields will spike again

Where are long Treasuries headed? In the short term, I’d expect a bounce, but I think the trend is still down for 2021

It worries me when any asset moves too quickly–either up or down. Long-term rallies pauses for a breather from time to time. So do big moves to the down. Like that we’re seeing at the long end of the Treasury bond market right now. The yield on the 10-year Treasury closed at 1.71% today, up another 7 basis points on the day. And now up 42 basis points in one month.

Is your portfolio ready for earnings season?

Another day, another record for the S&P 500 and Dow

The Standard & Poor’s 500 closed up 0.65% today and the Dow Jones Industrial Average gained 0.53% to set new record highs. Technology stocks rebounded from recent weakness with the NASDAQ finishing ahead by 1.05%. But the big impetus for the continued gains in the big indexes came from a sense that the economy is returning to normal.

Two market milestones today–and they’re both ugly

Two market milestones today–and they’re both ugly

The NASDAQ Composite closed the day down 2.11% on March 4. That was a third straight day of losses including the 2.7% drop on Wednesday. At its low for the day–12,555.1 at 1:59 p.m.–the index briefly dipped into correction territory with a 10.92% loss from the February 12 high of 14,095.47. A slight improvement at the end of the day to 12,723.47 left the index down 9.93% from the February high, right at the brink of correction territory. The drop to the close at 12723.47 erased all of the indexes gains for 2021 to date.

My nibbles in today’s “Everything is down” market

My nibbles in today’s “Everything is down” market

Last time, way back on February 23, when I posted on an everything is down market, I said that I didn’t think we were yet at buy on the dip time, but that I was doing a little selective nibbling at stocks such as Applied Materials (AMAT) that had extraordinarily strong 2012 growth stories. Well, I’ve been doing a little nibbling today–again I’m not buying everything on the drop since I can’t tell where the bottom might be.

Bond rally holds; stocks close on strong note

Bond rally holds; stocks close on strong note

Treasury yields ended the day slightly lower (which means prices were slightly higher) than earlier in the day. The 5-year Treasury note, for example, ended with a yield of 0.69% after trading with a yield of 0.72% earlier in the day. (The low yield for the day was 0.68%.) The yield on the 2-year Treasury finished at 0.12% and the yield on the 10-year closed at 1.42%, up 2 basis points. At 2 p.m. New York time the yield had been 1.45%. With bonds saying “No worries,” many stock indexes edged up by the end of the day.

Buy, sell, repeat–I’m not buying on the dip yet–but I am making a few quick trades to take advantage of the volatility; my trade today in AMAT is an example

Buy, sell, repeat–I’m not buying on the dip yet–but I am making a few quick trades to take advantage of the volatility; my trade today in AMAT is an example

I’m very reluctant to go bottom fishing here–since I can’t tell where the bottom might be and the one-day losses are significant here. Tesla (TSLA), for example, was down 8.06% TODAY. That’s $59.80 dollars a share. Teladoc (TDOC) dropped 13.74% or $34.98 a share. Guessing wrong on a bottom could be very expensive here. But I am willing to try a few trades. Nothing fancy. Very short-term. But using stocks with very strong longer-term stories that make me feel good about the longer-term prospects for the stocks. And to believe that there are significant numbers of potential bargain hunters hiding in the bushes. So, for example, I’ve been trading in and out of the Call Options on Applied Materials (AMAT).