Wall Street Webcasting has prepared and provided for you an exclusive broadcast of Wells Fargo Securities own, Rich Gordon. Gordon is highly recognized for his weekly narrates regarding the fixed income strategy at Wells Fargo Securities (
. This week, Gordon discusses the analysts markets versus traders markets.
The prices of financial assets are driven by the degree of company any economic data in an analysts market. In a traders market, the data is put on the back burner to technical signals in the charts of the financial assets themselves. Algorithms become the leading effort in amending price levels. Volatility tends to increase as a result. We are essentially witnesses of this, as we are currently in a traders market.
The Wells Fargo Securities analysts believe that the stock markets have been driving the bond markets with a negative price correlation. They believe that this will remain the case until the release of the next Payrolls Report in 3 weeks and investors are more directed to economic fundamentals.
There are a few things that the Wells Fargo analysts are keeping an eye on. For example, the Biotech sector, a smaller sub-set of the extensive market, has been the most over extended throughout the first quarter of this year. The growing price gains throughout the second half of 2013, along with the first few months of 2014, was contrary to the Fed’s decision to begin cutting back on loose liquidity conditions by tapering. They’re looking to see whether or not the Biotech sector closes below the 200 day moving average consistently for a considerable amount of time.
The chart of the S&P looks to be somewhat better than the higher beta domestic stock sectors, but not by much. An important question to deliberate is whether the S&P follows the higher beta sectors lower. The 50 day moving average has been disrupted, and the upward trend line is only 2% below the current level. Wells Fargo’s analysts believe that the 200 day moving average will be put to the test throughout the weeks to come.