The NASDAQ 100 has declined for five consecutive weeks. The longest such decline since 2022. During this period, there have been some bounces, however each bounce has been met with a successive low, punishing one of the most time-honored investment strategies of buying on the dip.
JP Morgan writes retail/individual investors pace of buying during the week ending March 19 was “significantly higher” that the groups 12-month average.
A Bank America report indicated that both its institutional and private client group bought stocks at a “rapid pace” in the week through Wednesday.
Will this prove to fortuitous?
There is near universal belief that the tech giants are some of the highest quality companies in the world, the question is rising whether these advantages are already priced into shares in terms of valuations and ownership levels.
Equity performance outside of the largest tech companies, companies that dominate the popular indices, has been described by Bloomberg as “robust.”
Is this a start of a trend or is this outperformance only noise?
Valuations and ownership do matter and ultimately there is always a reversion back to the mean, thus suggesting that recent equity activity may be the commencement of a trend. History, however, will be the final arbiter.
Longer dated Treasuries sold off on Friday, causing a steepening of the curve. An obvious catalyst was lacking. However, could the selloff be the result of higher current and future inflationary expectations coupled by the greater acceptance of a “higher neutral rate” compounded by the massive demand of monies by the Federal government?
What will happen this week?
The economic calendar is comprised of several housing statistics, a sentiment indicator, inventory data, the monthly PCE and final revision of 4Q GDP.
Last night the foreign markets were up. London was up 0.21%, Paris up 0.26% and Frankfurt up 0.48%. China was up 0.15%, Japan down 0.18% and Hang Seng up 0.91%.
Dow and NASDAQ futures are up 0.75% and 1.15%, respectively, as there is yet another change in the timing of any potential tariffs. The 10-year is off 13/32 to yield 4.30%.
