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Time to see some good chart!
U.S. Equity Indices: Large Cap on fire, Small Cap sleeping
The S&P 500 tested again the 50-Days SMA and it bounced back one more time.
Instead the Russell 2000, the index of the small cap, is facing a difficult time: after a strong start of the year it is now locked in a flat rectangle. When value stocks will start to run again the Russell will have good time.
JP Morgan Clients survey
Recently JPM asked to their clients to share their views on markets. Here some of the most notable answers:
Clients are currently bullish on equities and skepticals on the recent Treasury rally (maybe they are heavily short on Treasury…).
Seasonality: the best is gone?
We are entering in a usually bad period for stocks: on average the second half of July and the entire August is a downturn period for equities.
Moreover when the S&P 500 gains more than 10% in the first six months of the year, the historical return for August is negative. This year we have not seen any correction: don’t be surprised if next month will be tough.
Hedging? Diversification? Some useful data
If you are thinking to hedge your portfolio you should know that now it is very expensive to do that. On the above chart you can see that a 50-Strike Vix Call option now costs much more than the same option (with the same expiration period) in the past, at the same VIX future level.
Looking for some diversification? Maybe you should have some tech and some financials in your portfolio. In 2021 the 2 sectors are moving in different directions in more than 50% of trading days.
Stocks with an interesting setup
Take Two Interactive: the trendline has been tested several times in the last 9 months, and now the stock is testing it again. Meanwhile the stock has formed a clear Head & Shoulder, that it is typically an inversion pattern, but not always. The breakout to the downside would be very bearish, but as long as the stock stands above the trendline, the upward trend remain intact.
Volkswagen (preferred share): the German carmaker is in a flat channel since March, and now it is in the low bound, that could be a good entry point if you want to go long on the stock. The company is going all-in in the EV segment (as every car maker) and its recent sales data tell us that it is increasing its shares in the market thanks to the new models ID.3 and ID.4. The production of all the automakers has been low in the first half because of chip shortage, but in Q3 things should go better (as stated by VW).
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