• Comments for May 3, 2021

    Markets pulled back on Friday, but the 20DMF remained in positive territory even though the Cumulative Tick continued to display weakness.





    The Futures pulled back but this move does not seem to attract large sellers.





    The 10Y rates remained relatively high, which started to attract investors into buying the 10Y Treasuries.





    Even though the US/German rates differential did not bounce, the US$/Euro broke out from oversold levels. As a matter of fact, the rates differential does not support such a currencies reversal.







    Below is the Yearly Active Boundaries Figure of the S&P500. This basically shows the return experienced by each share traded in the past one year - it is a price/volume based ROI calculation.

    We can see that we are at the highest annual return level that S&P500 investors have experienced since 1985. Almost 40 Years. After such high gain periods, we most often experience sideways markets. This means that the markets have to churn for some time so that new investors with higher expectations replace old investors that have gained much and want to book their profits.



    Conclusions:

    Markets are at expensive levels in terms of past annual returns, but are well priced in terms of interest rates.

    For now, there is no clear narrative that could help equities moving higher, while there are many ways for sell-offs to occur. I guess that it all depends on each individual's wall of worries.