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Market Analysis For Week of January 4, 2021 [Premium Articles]

The analysis is for week of January 4, 2021, and includes major market indexes, ETFs and spot currencies. Access to full article requires Premium Articles subscription.

Report contents

  1. Weekly summary and 2020 recap.
  2. Technical analysis of major indexes.
  3. Low volatility versus high beta S&P 500.
  4. Analysis of major indexes.
  5. Analysis of major ETFs.
  6. Analysis of sector, asset, country and commodity ETFs.
  7. Analysis of spot currency pairs.
  8. Chart of the week
  9. Conclusion.

1. Weekly summary

  • Stocks gained on the last week of the year.
  • High beta large caps rebound continued.
  • Bond yields were flat.
  • Gold and crude oil were higher.
  • The U.S. dollar fell on the week.

Recap (December 28, 2020 – December 31, 2020)

Index Week YTD
S&P 500 +1.4% +16.3%
DJIA +1.3% +7.2%
NASDAQ +0.7% +43.6%
Russell 2000 -1.5% +18.4%
10-Year Note -1 bps -1.00%
Gold (London fix) +1.0% +24.2%
Dollar Index -0.4% -6.0%
WTI Crude Oil spot +0.3% -20.9%

2020 performance of SPY, TLT and GLD ETFs

SPY and TLT realized nearly the same total return in 2020, 18.3% and 18.2%, respectively, although GLD outperformed both with 24.8% return. Stock/bond portfolios were not impacted by allocation: a 60/40 portfolio in SPY/TLT had the same total return in 2020 as a 90/10 portfolio. As the chart below shows, in the last 19 years, there were only 5 years when returns of SPY and TLT diverged in sign but never in that period the return difference was so close to 0 when the returns of both ETFs were positive.

Below is a list of S&P 500 stocks with 100% or higher return in 2020.

TSLA joined S&P 500 late in the year but the stock had already surged to end the year up 743.4%. In NASDAQ-100, two stocks in addition to TSLA gained more than 400%: PTON and MRNA.

In 2020, the stock market offered many opportunities for large returns but risks were also higher due to a crash earlier in the year. It is unlikely that 2021 will offer similar opportunities to traders and investors; a consolidation is the most likely scenario if central banks do not continue to pump markets with quantitative easing.

2. Analysis of major indexes

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Specific disclaimer: This report includes charts that may reference price target levels determined by technical and/or quantitative analysis. No updates to charts will be provided if market condition changes occur that affect the levels on the charts and/or any analysis based on them. All charts in this report are for informational purposes only. See the disclaimer for more information.

Disclaimer:  No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.

Charting and backtesting program: Amibroker

Data provider: Norgate Data

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