The fascination with the yield curve continues as the 2-year treasury yield rose above the 10-year once again. This comes after inflows show were the 8th highest recorded this past week. More investors yanked cash from equity funds. Fears over the economy have taken the market by storm and will likely continue. Volume was higher across each exchange and the NASDAQ notched a day of distribution. Certainly, not ideal but not a deal breaker just yet. Any further buildup of distribution would spell doom for this shaky uptrend. Hard to guess what Friday will do. However, we know what is in our control and will execute accordingly.
Leading the market decline was the Materials sector followed by Health, then Energy. Not too much to glean from sector movements Thursday. Financials were able to gain ground despite the swirl around the yield curve. The commentary around what will happen to the sector as the yield curve inverts has become the favorite past time of many yield curve twitter gurus. Our focus will remain on what matters the most to our portfolio and that is price. It is above everything else and nothing will replace it. It has been more than a decade since the last recession, and it is bound to happen at some point. Let the twitter gurus battle over when it will begin while we move forward.
While AAII Sentiment remains at historic bearish levels the NAAIM Exposure index did jump to 70 on a week over week basis. Active managers were quick to get back into the market. What is a bit fascinating is bearish bets increased too last week. A wide standard deviation indicates exposures are not concentrated around the mean of the curve. Essentially, even though mean of exposures is 70 respondents are all over the place. Not much consensus among active money manager. Is this bearish or bullish? Just information for us as we follow the market’s price action.
We hope you had a nice week of trading gains. There are always opportunities out there if you know where to look. Our chat room will point those out. Heading into the final weekend of summer we encourage you to get out there and enjoy it. Fall is just around the corner. Good luck to your trading on Friday and have a great weekend ahead!
