Tech Wrecks And Russell Roars As Dollar Dead-Cat-Bounce Dies

January 12, 2021

After an unexpected plunge in Small Business Optimism, buyers of Small Cap stocks were in a world of their own today as the rest of the majors traded together…

“Mad, Mad World” indeed…

Nasdaq clung to unchanged year-to-date (while Small Caps are up 7.5% YTD!)…

As “Most Shorted” surge for the 7th day in the last 8…

Source: Bloomberg

Energy stocks soared again today, now up 15% YTD as Utes, Tech, & Staples remain red…

Source: Bloomberg

And option investors have never been so levered long in energy stocks…

Source: Bloomberg

FANG Stocks were clubbed like a baby seal to two-month lows…

Source: Bloomberg

Small Caps are back at their strongest to Big-Tech since early March, testing up to critical resistance at the longer-term downtrend…

Source: Bloomberg

Growth/Value (Russell 1000) is back at a critical support area once again…

Source: Bloomberg

As Bear Traps Report notes, this neckline has held as each of the growth to value tremors have picked up with the intensity, a break will trigger colossal selling. If we break this level, growth equities are in big trouble, Tesla is of course a huge weight in the Growth ETF.

Cyclicals continue to surge relative to defensives implying a massive spike in yields to come (or that expectations for growth are head of themselves)…

Source: Bloomberg

US yields spiked after Atlanta Fed’s Bostic suggested “Universal Basic Income is worth discussing”… i.e. money printer go bbrrrr direct in the pockets of Americans… but a strong 10Y auction (and 30Y topping 1.90%) seems to spark a major reversal as yields ended the day lower – the first down-yield day of 2021…

Source: Bloomberg

Crucially, the 10Y yield broke below its recent uptrend channel…

Source: Bloomberg

The 2s10s Real Curve has surged up to its steepest since the post-Trump-election reflation spike…

Source: Bloomberg

Elsewhere in bond land, BTP Bloodbath’d with 10Y yield spiking 9bps…

Source: Bloomberg

And Real yields reversed notably today in the 10Y as nominal rates tumbled…

Source: Bloomberg

The Dollar’s short-lived dead-cat-bounce is over… as the greenback suffered its biggest daily drop in six weeks…

Source: Bloomberg

Bitcoin dramatically rebounded today…

Source: Bloomberg

As a reminder, CoinTelegraph notes that these kind of corrections are anything but unusual for Bitcoin: “bitcoin had 6 pullbacks bigger than our recent -28% in the record setting 1000%+ growth year of 2017.”