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Weekly Economic and Stock Market Commentary – February 21, 2021


As for the stock market specifically: 

February 21, 2021 – The bears had the win last week in the markets here and overseas. The single index that went against that was the Dow Jones Industrial Average, which had a gain of a tick.

The table above is a reasonably accurate representation of what I see in my charts. Namely, international markets are showing signs of life. It has been quite some time since I noticed that international market returns bettered two of the three domestic indices I track.

The relative strength relationship between US stocks and major international indices remains in favor of the U.S.  That said, in the emerging markets segment, we do have near-term strength favoring emerging markets.

The bullish percent risk indicators fell decent amounts for the week, and while the indicator has advanced into the Red Zone, it remains in X’s.  With this weight of the evidence is such that WEALTH ACCUMULATION strategies remain in effect.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of February 19, 2021 (Courtesy Dorsey, Wright, and Associates).

On a general note: 

The Department of Commerce announced that January retail sales rose 5.3%. It was the largest gain in seven months, and came after three consecutive declines. Spending increases generally were even across the measured sectors, and attribution went to the stimulus checks that went out in late December. I do not have an anticipated number for this report.

The Federal Reserve gave us some news on industrial production. January saw the fourth consecutive rise in output at the nation’s factories. Overall, there was a gain of 0.9%. While the report did not list an expectations number, it state that industrial production is very near the pre-virus record level of January 2020.

The National Association of Realtors announce January existing home sales rose 0.6% from December to a seasonally adjusted annualized rate of 6.69 million units. This number was 23.7% higher than January 2020. The median sales price was $303,900, an increase of 14.7% form January 2020.  The Federal Reserve is doing a great job of increasing asset levels in both the stock market and in residential real estate.

Want more information? Email me at philip.rongo@ibexwealth.com.