Key Economic Data & Market Analysis For 2/23/2021
Summary
- Economic Data on Retail Sales and Single family homes comes in strong once again.
- Market sells off into the open and rallies throughout the day to close slightly down.
- Fed tells congress they plan on keeping interest rates low until inflation is above 2 percent and unemployment is lower.
The Snowman Report for 2/23/2021
================================================
Today's Moves
Bought: Palantir (PLTR), Fastly (FSLY), AirBNB (ABNB), Zoom Video (ZM)
Trimmed Positions: None
Palantir (PLTR): Strong support at $25, held above these levels even during the worst part of the day, high upside and strong retail support for this company
Fastly (FSLY): Support at $82 and $68, very little downside risk at this point and potential to move back towards $100+
AirBNB (ABNB): Support at $180, Upside is $220+
Zoom Video (ZM): Support at $375, high volatility and could move back towards $430 resistance levels in the short term
BlackRock (BLK): Diversified Finanical, one of the few that is trading 10% below its 52-week high, quality-value stock and should do well in a rising rate/expanding economy
| QUOTE | SUP. | RES. | PRICE | F . P/S |
| PLTR | $25.00 | $38.00 | $26.75 | 19.21 |
| FSLY | $82.00 | $116.00 | $77.91 | 21.50 |
| ABNB | $180.00 | $220.00 | $187.59 | 19.86 |
| ZM | $375.00 | $580.00 | $388.16 | 2.74 |
| BLK | $700.00 | $780.00 | $703.16 | 5.59 |
================================================
Economic Data
Redbook (February 2021): Although retail sales were up year over year we are seeing decreased spending in chain and department stores since the beginning of the year. The cold weather and winter storms probably had an outsized negative effect on numbers for this reporting week. As of now sales appear to have leveled off and we'll probably see steady but not robust sales growth over the coming months.
4.0% → 2.9% Year/Year
----------------------------------------------------------------------------------------
Case-Shiller Home Price Index (December 2020): Single family homes in major metropolitan areas continue to show strong price growth on a year over year basis. The increased equity will positively affect consumer spending and debt financing over the coming year. These numbers also bode well for home oriented retailers such as Restoration Hardware (RH), Home Depot (HD), and Lowes (L).
1.1% → .8% Month/Month
9.1% → 10.1% Year/Year
----------------------------------------------------------------------------------------
Consumer Confidence (February 2021): Consumer Confidence continues to come in lower than pandemic highs with consumers split over the current stock market outlook and rising prices in homes, cars and other large ticket items.
88.9 → 91.3 Month/Month
----------------------------------------------------------------------------------------
FHFA House Price Index: Single family homes purchased through Fannie Mae and Freddie Mac confirm earlier data from Case-Shiller showing strong price growth and extremely high demand.
1.0% → 1.1% Month/Month
11.1% → 11.4% Year/Year
----------------------------------------------------------------------------------------
TLDR; Housing demand continues to be very strong while retail sales trend north albeit at lower rates. Consumers are worried over rising prices on big ticket items.
All indicators courtesy of Fidelity.com, summary and analysis is my own work
================================================
Upgrades and Downgrades of Note:
Nothing worth mentioning - anyone who downgrades a stock on a day like this is asking for a beating. You can't sell into the red.
================================================
Summary of the Day
I woke up today and walked to my computer right before 9:30 AM thinking that it might be a down day but I was not prepared for the beating that the Nasdaq was taking. And it was ugly for a very short period of time but then it was not. Market participants came in and bought all day long as the market rallied higher and higher to the point that the Nasdaq traded in a 500 point range and closed only .5% off breakeven. What a great buying opportunity in the morning, right?
Now as I look at the heat map today - I always focus on Tech and Consumer Discretionary because they make up the largest part of the market - they are both looking ugly. Especially technology so I'm going to go out on a limb and guess that this sell off is the beginning of a larger correction the market may be facing. The market breadth numbers over the past few weeks have not been strong and the Nasdaq has more companies trading below their 10 day moving average than above - a clear bearish sign. The 10 year yield did move back down today but that was mainly consolidation, no one expects the 10 year to move south of 1.00 anytime soon.
This market move is in stark contrast to the economic data that has been hitting the presses of late. Housing data is extremely strong, purchasing and manufacturing indexes have come in above expectations and at record levels. Activity Indexes have shown movement and transaction increasing at a pace that implies a strong economy - let alone a strong economic recovery. That is why this market sell off is not the beginning of a bear market but another correction that is giving shrewd investors the chance to buy the dip. The economic data - the hard facts - will eventually win out and this market will move higher after stocks have adjusted valuations. We have already seen this in the mega cap tech names such as Facebook, Apple and Amazon and the mid/small cap will get their re rating too. Those re ratings are the buying opportunity we all have been waiting for - because no one wants to buy Square at its 52-week high.
TLDR; Market sold off, people bought all day. Buy the dip - so says twitter, so say we all.
Special thanks to Finviz, IndexIndicators, WallStreetJournal and CNBC for data.
Daily Heat Map, Full Stock Market
----------------------------------------------------------------------------------------
Nasdaq 100 vs. Nasdaq Stocks above 10 day moving average
Nasdaq 100 vs % of Nasdaq 100 Stocks Above 10-Day Moving Average | Stock Market Indicators
----------------------------------------------------------------------------------------
U.S. 10 Year Treasury Rate
Check out US TREASURY-CURRENT 10 YEAR's stock price (US10Y) in real time
----------------------------------------------------------------------------------------
Special thanks to Finviz, IndexIndicators, WallStreetJournal and CNBC for data.
================================================
I am not a financial Advisor. Decisions to alter investment decisions or initiate a position should be preempted with due diligence and careful planning. All data collected, summarized and analyzed has been on my own and I have not been compensated for any work done. Past performance is not an indicator of future returns nor should it be.
Analyst's Disclosure: I am/we are long abnb, blk, pltr, fsly, ZM.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.