D&D Note (1.30.2018) ~ Pension Fund Rebalancing Sends Stocks Falling ~

D&D Note (1.30.2018) ~ Pension Fund Rebalancing Sends Stocks Falling ~

Stocks selloff today but close off their lows which is a positive sign. Trading volume was low signaling it was not panic selling. This was the first 1%+ correction in the markets this year which is healthy for the overall market.

Three main stories dominated the day; Pension rebalancing, Health care selloff, and rising bond yields.

Pension funds always rebalance their funds at the end of the month and quarter. This month stocks went up so much that the percentage of stocks and bonds in the funds needs to be readjusted. Instead of buying more bonds these funds have sold stocks to take profits.

Health care sells off today on news that JPM Morgan, Amazon, and Berkshire Hathaway have a deal to create a new health insurance company for their domestic employees. This has sent United Health and the sector down with UNH falling -4.35% while AMZN rose 1.42% on the day.

The 10YR yield continues to rise hitting 2.725% which is putting further downward pressure on equities.

Long term S&P 500 resistance is another 6% lower, so even if we test those levels this correction if continues would be healthy and inline with a bull market correction. While we are still in the middle of earnings season its hard to see the market try and test those levels.

The VIX rose but closes below 15 which also shows there is still not panic in the market.

Crypto sells off with the four coinbase.com coins seeing 7 to 10% declines on the day.

The State of the Union Address is tonight and investors will be keeping a close eye on wether the POTUS stays on the teleprompter or goes off script. What about defense and infrastructure investment will be said. Will this be another Davo’s speech which the markets liked?

We also have the FED meeting coming up which certainly another part of todays market action. Dovish or Hawkish?

Today D&D increased positions in financials (C, BAC) and pot stocks (EMHTF, APHQF, TWMJF).

D&D movers:

– AMZN up 1.42%

– FB up 0.61%

– WNS up 0.56%

– EMHTF down -9.51%

– TWMJF down -7.84%

– IMLFF down -6.86%

Indexes

– DOW down -1.23%

– NASDAQ down -0.86%

– S&P down -1.09%

Sector Movers:

– Utilities up 0.17%

– Health down -2.13%

– Energy down -2.02%

– Financials down -1.22%

Notes

– US 2-YR 2.124% (UNCH)

– US 10-YR 2.725% (up 0.026)

– US 30-YR 2.976% (up 0.0033)

Volatility

– VIX 14.50 (up 4.77%)

Crypto (1:00 PST)

– BTC $10,012.01

– ETH $1,055.01

– BCH $1,478.54

– LTC $165.00

Metals

– Gold $1,340.40 (down -0.35%)

– Silver $17.09 (down -0.22%)

– Copper $3.1915 (down -0.08%)

Energy

– Oil $65.36 (down -1.83%)

– Brent $68.81 (down -0.93%)

– Nat Gas $3.168 (up 0.03%)