Weekly Memorandum 1/25/2021
Stocks are flat overall to start the week, with the exception of the Nasdaq, which is trading at new all-time highs again. Last week saw new all-time closing highs in all indices, but not the Dow. If we don't see a new high in the Dow this week, it could turn into a sell signal. Our work still suggests that we are closer to the end of this share rally than the beginning, at least in the short-term. It's unlikely that any imminent high would be *the* high in this bull market, but this is something we will explore further in this weekend's publication of the Mercator Letter.
Interest rates fell a bit last week, which could be a sign that risks could be rising. The dollar was up early in the week, but by Friday had erased most of its gains and closed out near the week's lows, which is hardly bullish price action. This will likely be the key going forward for many markets-- whether or not the dollar's weakness persists. The share rally has been in the face of a falling dollar, which tells us it's the function of currency depreciation versus rising demand for stocks.
Last week also saw Crude Oil pull back slightly, but there was some damage sustained in various grain markets, which pulled back with a vengeance. This is no surprise after their recent impressive bull run, and the key now will be where they stabilize. The higher the low, the more bullish it will be. Our sights are now set on various livestock markets at the moment to see if they can play catch-up to their fellow commodity peers.
In the crypto-world, we are noting some divergences right now, which could be a sign that a short-term high is imminent. Bitcoin pulled back last week, while Ethereum made new highs. Litecoin was down too. We have a Mercator Crypto report coming out at the end of the month, so be sure to check out our free November edition posted on the site. In Bitcoin, we sent a buy signal to subscribers back around the 10,000 mark.