(Justin Vaughn, Editor, Options Trading Report)
March Opened With the Bulls Marching On…All sectors contributed to an active upward market. Friday finished with all indexes setting record highs after four months of running hot. It was the “16th weekly gain in 18 weeks for the S&P 500.” Even the Russell 2000 index, (The smaller value stock index) followed suit catching ‘fire’ along with the big guys. “Things don’t go up forever. You need some sort of natural pull back,” said Leslie Thompson, chief investment officer of Spectrum Wealth Management. Oil was active, and stronger Friday hitting near $80 a barrel. Gasoline prices began to trickle higher as travel peaks near. Gold began to show movement signs, cresting over $2,000 at $2,117.70, and edging higher as profit takers of surging high techs look for safe-havens..
Monday’s session opened and quickly turned flat as a couple of Magnificent 7 stocks with troubling concerns (Apple and Tesla). With the upcoming testimony from Jerome Powell in his Congressional appearance on Wednesday, the market was clouded. Mr. Powell will speak on the stagflation and the soft-landing situations, possible rate hikes and other economy related concerns. As always U.S. markets are deeply affected prior to Mr. Powell’s speaking before Congress. Even the AI (Artificial Intelligence) sector stumbled a bit in a lethargic market. Bitcoin continued its upward trajectory, gaining 7% on Monday, hitting near $67,000 and closer to its previous record. The many hundreds of penny-cryptocurrencies are tagging along, showing unheard gains in ‘uncharted waters.’ Investor enthusiasm is at an all-time high with many ETFs now available, making the investment avenue very fluid.
Bitcoin broke all records on Tuesday, hitting $68,991, besting the old record of $68,789 on November 10, 2021. A real frenzy has sparked Bitcoin Exchange traded funds exciting the market with a ‘new’ dimension of investing for the speculative investor. Over $8 billion has flowed to Bitcoin in just two months, with Fidelity and Blackrock garnering a majority share. As demand for bitcoin investment remains high, (and it is) supply becomes an issue as the daily bitcoin production is 900. According to money managers daily purchasing is heavy, 3,300 to 4,300 coins per day, and reaching a potential shortage of supply. According to developer Satoshi Nakamoto a “halving will take place every four years,” the first of which will occur in approximately 45 days.
Stocks picked up on Thursday’s opening, as the Dow Jones Industrial Average jumped 200 points, after a lackluster Wednesday. The S&P 500 is near an all-time high, as techs found their winning ways again. The fall-out of Mr. Powell’s Congressional testimony was uneventful, with very little new revelation on economic policy and possible rate hikes. He reiterated previous remarks on policy. He said inflation was cooling and is reacting to previous rate hikes as expected.
Once the darling of the commodities market in 2021 and 2022, Lithium is in a turnaround, with prices falling fast, down near 90% from the ‘golden days.’ With Electric Vehicles sales sluggish, and falling from favor, demand for raw materials has dried up. Mining production is severely affected in Australia and the Golden Triangle (Chile, Bolivia and Argentina), while smelting processing in China is near dormant. With demand for Hybrids at all-time highs, Electric Vehicles inventory is mounting. Lithium, a once high-demand commodity is now struggling, waiting for EVs to ‘take hold’…again.
RUMBLINGS ON THE STREET
Suni Hartford, President, UBS Asset Management, Barron’s – “I’m more bullish than most people for 2024. The fundamentals underpinning most markets, particularly in the U.S., are strong. Yes, valuations are high, but that’s because a handful of stocks are driving the index performance.”
Quincy Krosby, chief global strategist at LPL Financial, Barron’s – “It’s encouraging that the market looks satisfied by strong earnings, and has something to celebrate other than potential rate cuts,” said Mr. Krosby. “The market still believes the rate cuts are coming. As long as that’s a question of ‘when’ and not ‘if,’ AI euphoria can keep lifting markets.”
Evan Brown, head of multi asset strategist UBS Wealth Management, Barron’s – “Risk appetite and valuations rise when an improving solid economic outlook enhances investors’ confidence that corporations will be able to deliver consistent profit growth. That is the environment we find ourselves in today.”
Dr. David Week, neurologist at University of Pennsylvania, speaking of factors to help ward off mental decline, WSJ – “The healthier you are in the whole body, the better your brain responds to the aging process.”
George Mason, an economist at Nomura in London, Barron’s – “people are concerned about the highest tax burden in 70 years, higher energy prices and mortgage rates going up. We are starting to see positive real wages, but that may be coming too late.”