High yield bonds bounced 2.07% against Treasuries
|Highlights:
Market Recap: The Dow rallied 512 points or 2% yesterday on the back of Federal Reserve Chairman Jerome Powell's comments that the Fed would support the economy. The S&P 500 closed back above 2800. The Russell 3000 index gained 2.22% and closed back above its 200 day moving average. The US 10 year yield rose 5 basis points to close at 2.12%.
Economic Data: US Factory Orders are at a current level of 499.27B, down from 503.30B last month. This represents a monthly annualized growth rate of -9.59%, compared to a long-term average annualized growth rate of 3.30%.
Market Internals: The percentage of stocks in the S&P 500 above their 50 day moving average bounced significantly yesterday, getting rid of oversold conditions. The point and figure chart reversed back into a column of X’s and is suggestive of continued upward movement in this index. The percentage of stocks in the S&P 500 above their 200 day moving average also moved back into a column of X’s. This particular measure of internal strength and weakness never got oversold in the recent declines. The bullish percent index of the S&P 500 remains in a column of O’s and is not oversold, even after yesterday’s bounce.
Lumber: Lumber bounced 4.77% against gold. Momentum is positively diverging and could suggest a retest of the old lows (to the upside) which could now act as new resistance.
Semiconductors: Semiconductors rose 1.89% against the S&P 500 yesterday and 4.10% on an absolute basis. If semiconductors continue to lead to the upside, the oversold rally that started yesterday could have more room to run.
Value: The value factor (VLUE) gained 2.92% and was the strongest performing factor yesterday. The value factor ETF remains in a negative trend and value remains one of the weakest relative factors over the last year.
High Yield: High yield bonds bounced 2.07% against Treasuries, rallying off support. Spreads have widened over the past several weeks up until yesterday. For this rally to take markets back to all-time highs, we will need to see leadership in high yield bonds and a tightening of spreads.
Futures Summary:
News from Bloomberg:
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