Date: February 19, 2021

Another Opp For The Bulls

Stocks have pulled back so mildly over the past few days with the Russell 2000, S&P 400 and NASDAQ 100 leading the way. Yet, there is a short-term buying opportunity in the stock market as today is an expiration day. Those indices that fell that hardest are supposed to bounce the most and likely to new highs. The key will be if one or more do not. That would be an opportunity to further prune and move away from the laggard.

Bond yields continue to be spotlighted as the 10-year note is trading in my targeted range which I first forecast in my 2021 Fearless Forecast. As I continue to say, bond yields could see some more upside, but they should trend lower during the second half of 2021. That’s the exact opposite of what I have said about gold.

Leadership in the market has been sneaky. Most people have no idea that energy is the strongest sector. Also to repeat something I have said many times, I will and have bet that energy will handily beat socially responsible investing over the coming 5 and 10 years. And I am talking about the “unspeakable” kind of energy. Dirty, rotten oil and gas. It’s not my feeling; it’s the math and historical comparisons.

Point of interest from the last few days. A few stocks I haven’t even contemplated buying in a long while suddenly hit my buy screens. Apple, Netflix, Google, Nvidia and Tesla. Some may just be short-term trades. I don’t know. But I have to say; it was weird hitting the buy button on Apple when all I have done is prune positions since mid-August.

Next week, I will dive into index and sector leadership.


Paul Schatz, President, Heritage Capital