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Trick or trend: Bond yields have their own upward momentum now

Trick or trend: Bond yields have their own upward momentum now

Some financial trends make the transition from directional moves driven by events–the war in Ukraine or a speech by Federal Reserve chair Jerome Powell that opens there door to a 50-basis-point (instead of the “business as usual” 25 basis point move) increase in interest rates–to trends with their own momentum. These momentum trends then run until events arise to stop or reverse the trend Higher bond yields may have entered into that “momentum” phase last week. The yield on the 10-year Treasury ended Friday, March 25, at 2.47%, up 10 basis points on the day.

Trick or Trend: Does the surge in buybacks balance the drop in margin debt?

Trick or Trend: Does the surge in buybacks balance the drop in margin debt?

Margin debt has dropped again in January, according to FINRA (Financial Industry Regulatory Authority). The month to month drop for January is a big 8.8%. Margin debt is a useful indicator of market direction and top and bottoms. It tends to peak near a market top and signal a coming retreat in the market as lower levels of margin debt means some buyers are moving out of the market. On the other hand, corporations are buying back their own shares at a record pace.

Is this the Russian false-flag (or two) in Ukraine?

Is this the Russian false-flag (or two) in Ukraine?

Russian state media are reporting a bomb explosion outside the separatist-controlled administration building in the rebel-held city of Donetsk in eastern Ukraine. Video filmed by Russian reporters at the scene showed a fire burning. The car belonged to the head of the DNR’s police force, Denis Sinenkov, reports said. The explosion follows multiple warnings by the United States and others of a “false flag” incident, that could be used by Russia as a pretext to justify a military attack on Ukraine.

So what was Monday? A bottom for stocks, just one of those oversold bouncy things, or something else?

So what was Monday? A bottom for stocks, just one of those oversold bouncy things, or something else?

Yesterday stocks reversed direction big time. After days of pounding lower the Standard & Poor’s 500 gained 1.89% and the Dow Jones Industrial Average added 1.17% The NASDAQ Composite climbed 3.41% and the NASDAQ 100 tacked on 3.29%. Even the small cap Russell 2000 gained 3.05%. On those numbers I ‘d say the days action looks like a big oversold bounce off of a truly terrible January. But dig a little deeper and it looks like something else–or maybe additional somethings–was going on.

Is the trend turning in favor of big tech growth stocks?

Is the trend turning in favor of big tech growth stocks?

It’a always dangerous to construct a trend from Friday’s trading. Especially when the earlier part of the week has been so strong in one direction or another. (In this case, down, down, down.) Ahead of the weekend, stocks often reverse the trend from earlier in the week as sellers (in this case) decide that they don’t want to be quite so bearish until the market opens on Monday. So it’s not surprising that stocks gained today on nothing especially qualifying as news. But with all those caveats, I still found today’s action “interesting” and “perhaps” indicative of a future trend. Not only were stocks as a whole strongly higher–the Standard & Poor’s 500 rose 2.44% on the day–but technology stocks led the move to the upside.

2 Threats to Emerging Markets: Is This a Developing Short?

2 Threats to Emerging Markets: Is This a Developing Short?

Emerging markets and developing economies are looking at two very big and relatively near-term threats. First, and we know this one is coming, interest rate increases by the Federal Reserve could trigger a new debt crisis. Developing country debt repayments to creditors are already running at their highest level in two decades–even before higher U.S. interest rate and a strong dollar increase the burden on emerging markets and currencies.

Saturday Night Quarterback says, For the week ahead expect…

Selling my VIX Call Hedge–and a reminder of why we hedge and when we buy

The CBOE S&P 500 Volatility Index (VIX) is up another 8.87% today to 27.83 on another drop in stocks and continued worry about the effect of looming Federal Reserve interest rate increases. Today I’m going to sell the February 16 VIX Call Options with a strike of 20 (VIX220216C00020000) that I bought on December 31, 2021 in my Volatility Portfolio. I bought those Call Options for $380 a contract and I’m selling today, January 21 with those options trading at $710 a contract as of 2:45 New York time. That’s a gain of 86.8% on this position in roughly four weeks.

My Special Report: When will the selling stop? When to buy? What to buy? Complete with the first 7 of 10 Picks

My Special Report: When will the selling stop? When to buy? What to buy? Complete with the first 7 of 10 Picks

If you worry about what worries me right now, I know what you want to know. When will the selling stop? When will it be a good time to buy “bargains”? And What stocks should you buy when you begin to buy? Those are the three questions that I’ll answer in this Special Report. Along with listing my first three buys on this selling.