FINSUM + Magnifi: Pay Attention to This Big Bear Market Warning Sign

April 8, 2021

The stock market has been on one of the most historic recoveries in market history, but hedge funds are holding off on their buying. New data shows that hedge funds have some of the lowest levels of their positions in cyclical markets (energy, finance, tech) in the last decade, but instead are heavy on resilient industries such as healthcare and consumer staples. Hedge funds might be suspicious of how normal the economy will look as vaccines roll out, or that the benefits of the stimulus packages will be short-lived.

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FINSUM + Magnifi: The Nasdaq Correction May Be Signaling a Bear Market

(February 2021)

The market had eagerly awaited Fed Testimony before Congress on Tuesday as investors wanted clarity on rising inflation concerns, but it appears investors didn’t take the ‘sit and wait’ approach. A bearish surge in overnight trading and on open primarily in tech stocks weighed the market down. Inflation concerns are driving this slump as many tech companies are dependent on cash flows. Tech concentrated index NASDAQ already had a hard Monday down 2.5% but fell off another 1.8% on Tuesday. What would normally be a bullish sign for markets appears very bearish as Powell tells congress inflation is soft and the Fed remains on track to hit its target. Treasury yields have been on the rise as the markets are in lockstep with the Fed, hitting an annual high of 1.39%. Powell says that it will move patiently and slowly telegraphing its moves amid inflation pressures.
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FINSUM + Magnifi: This Volatility is the Second Leg of a Bear Market say Analysts

(September 2020)

The volatility and losses over the last four weeks have been more severe than most imagined they would be. What started as the market “taking a breather” has morphed into very significant losses and a market teetering on the brink of returning to a bear market. Now a chorus of Wall Street analysts are saying something similar: this may indeed be the next phase of a bear market. Aside from the short-term warning sign of large investors taking profits, the long-term driver of the next phase of a bear market might be the rise of deflation. With so many workers losing their jobs, and automation taking over in many areas, deflation seems quite likely. If that happens, an extended bear market reaching into 2021 may take hold.
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