Tech Sell-Off Continues Amid Policy Uncertainty And Growth Concerns

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

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After a solid green close on Wednesday, the markets reversed course early on Thursday as traders sought more clarity on the latest tariff measures and their economic impact.

Despite Commerce Secretary Lutnick’ s announcement of likely one-month exemptions for “more than just carmakers,” markets remained mired in uncertainty throughout the morning and turned downward in the afternoon.

The markets faced a trifecta of trouble, as ZH described it:

1. Tariffs and broader policy uncertainty

2. The sustainability of the AI trade following DeepSeek

3. Upward pressure on sovereign rates, such as those in Germany

Traders’ aversion to uncertainty led to a downward trend, with mega-cap tech stocks selling off again and the Mag7 basket continuing to decline. Growth concerns, highlighted in various surveys, suggest that the threat of stagflation remains ever-present.

Adding to traders’ concerns, both the Nasdaq and S&P 500 broke their 200-day moving averages (DMAs) on an intra-day basis, which can signal a trend change from bullish to bearish, though prices bounced off that level.

Bond yields were mixed, with rate-cut expectations holding at three for this year. The dollar tumbled again, while gold traded steadily in a tight range above the $2,900 level. Bitcoin lost its $90k support ahead of tomorrow’s White House crypto summit.

Friday’s highlights will include the eagerly anticipated non-farm payrolls report, which has been dubbed the “most important data point ever.” Depending on the outcome, we might see some fireworks in the markets.

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Gold And Bitcoin Rebound As Markets React To Tariff Exemption

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

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The major indexes attempted an early relief rally, but conflicting economic data and uncertainty over Trump’s tariffs and their duration kept them fluctuating around their respective unchanged lines.

ADV’s private payroll report showed less job growth than anticipated, while service sector data slightly exceeded expectations. This reinforced the view that the economy is cooling.

After a lackluster opening, the markets received a boost from a midday announcement by the Trump team, granting a one-month tariff exemption to automakers in Canada and Mexico. This reignited bullish sentiment, pushing the indexes to a solidly green close.

The most shorted stocks were squeezed for the second consecutive day, with mega-cap tech continuing yesterday’s uptrend despite a few dips. The S&P 500 and Nasdaq firmly bounced off their respective 200-day moving averages.

Bond yields faced volatility, with the 10-year yield slightly rising. The dollar and crude oil both declined, while gold surged to close above $2,920.

Bitcoin built on yesterday’s rebound to reach the $90k level again. According to ZH, if the trend of global liquidity holds true, Bitcoin may have one more dip to the $80k area before recovering and charging into record territory.

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Stocks Plunge As Trade Tensions Rise, Bitcoin And Gold Rally—Sell Signal On Deck?

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

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Equities continued their downward slide today as Trump’s tariffs on China, Mexico, and Canada went into effect. The affected countries announced retaliatory measures, sparking fears among traders of an all-out trade war and its potential negative economic impacts.

Monday’s market drop pushed the widely followed S&P 500 into the red for the year, with losses deepening today as hopes for a last-minute deal to avoid these confrontations faded.

Given the current economic conditions, as indicated by the deteriorating macro index, equities are likely to face a rough ride unless the tariff situation proves to be more of a negotiation tactic than an enduring trade war.

A mid-day rebound saw the S&P 500 and Nasdaq bounce off their respective 200-day moving averages and into positive territory. However, this attempt failed, and the major indexes reversed course, closing in the red but off their morning lows, with the Dow leading the decline.

Bond yields were mixed, but expectations for rate cuts in 2025 soared to three. Big Tech experienced its own rollercoaster ride, with significant fluctuations throughout the day. The Mag7 basket saw a $2.5 trillion swing in market cap from highs to lows.

Bitcoin and gold provided some relief, with Bitcoin bouncing back strongly and gold trending higher with only minor dips.

The dollar ended lower, and with a potential government shutdown looming, the risk of a U.S. sovereign default is once again rising, as highlighted by ZH.

To say we are living in interesting times seems to be an understatement.

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Equities Stumble As Economic Data Raises Stagflation Fears

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

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Equities started the first trading day of March with aimless meandering, leading to a rocky start.

Soft economic data from the construction and manufacturing sectors released today raised concerns about the state of the economy, causing major indexes to head sharply south and nearly wipe out Friday’s gains.

This reinforces the point that we have reached a stagflation scenario—low or no growth with rising inflation.

This week is crucial, with various data releases culminating in the February jobs report on Friday. Today, the Atlanta Fed slashed its GDPNOW forecast for Q1 to the worst level since the COVID lockdowns, confirming the current economic weakness.

Trump’s plans to impose import duties on Canada and Mexico are looming large this week, rattling traders and creating market volatility, as worries about more inflation remain in the foreground.

Over the weekend, Trump’s announcement of a strategic crypto reserve for the U.S., which will include a variety of coins, helped cryptocurrencies. Bitcoin jumped 10% to nearly $95k after dropping below $80k last Friday. However, today’s pullback towards the $85k area negated much of the positive effect.

With the Nasdaq leading today’s decline, it’s no surprise that the Mag7 basket took a hit, losing a stunning $570 billion and breaking below its 200 DMA, which could invite more selling. Nvidia tanked, reaching its February lows, with all AI stocks now in the red year-to-date.

Even plunging bond yields couldn’t stem the downward tide, as the dollar ended lower despite a late session rebound, leaving gold as the only winner for the day, with the precious metal back over the $2,900 level.

With Nvidia appearing to be in retreat mode, this old analog, thanks to ZH, was updated, bringing back the question: Can history repeat itself?

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ETFs On The Cutline – Updated Through 02/28/2025

Ulli ETFs on the Cutline Contact

Do you want to know which ETFs are hot and which ones are not? Then you need my High-Volume ETF Cutline report. It tells you how close or far each of the 311 ETFs I follow is from its long-term trend line (39-week SMA). These are the ETFs that trade more than $5 million a day, so they are not some obscure funds that nobody cares about.

The report is split into two parts: The winners that are above their trend line (%M/A), and the losers that are below it. The yellow line is the line of shame that separates them. You can see how many ETFs are in each group and how they have changed since the last report (201 vs. 215 current).

Take a peek:

The HV ETF Master Cutline Report

If you are confused by some of the terms we use, don’t panic. I have a helpful Glossary of Terms for you.

If you want to learn more about the Cutline method and how it can make you rich (or at least less poor), read my original post here.

ETF Tracker Newsletter For February 28, 2025

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

VOLATILE FEBRUARY ENDS WITH EQUITIES RECOVERING STRONGLY

[Chart courtesy of MarketWatch.com]

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The major indexes advanced this morning as the much-anticipated PCE index, the Fed’s preferred inflation gauge, met expectations.

The data showed that inflation eased slightly in January, increasing by 0.3% for the month and 2.5% on an annual basis. The core PCE, which excludes food and energy prices, also rose by 0.3% for the month and 2.6% annually.

While this may keep the Fed in pause mode for now, inflation will need to soften considerably, or employment data will have to weaken before the Fed considers cutting rates again.

February, historically the weakest and most volatile period for stocks, has lived up to its reputation this year. Greater clarity on tariffs, inflation, and consumer health may help the markets recover.

Mid-session, the major indexes took a sharp dive into the red following news of a “testy” exchange between Trump and Zelensky during their meeting in Washington. However, traders were relieved as equities quickly recovered and closed solidly in the green, marking the end of a tumultuous February.

For the month, the Economic Surprise index declined, with most data points disappointing. The stagflation scenario—no growth and rising inflation—remains a concern.

Despite rising rate-cut expectations, the major indexes fell in February, led by Small Caps, with the S&P 500 losing 1.4% but barely remaining in the green year-to-date.

The Mag7 basket saw a dramatic $2.2 trillion drop in market cap from December highs, marking its second-largest monthly decline ever, as noted by ZH.

Bond yields, which rose in the first half of the month, reversed, and collapsed in the latter half. The dollar closed lower after an early spike, and Bitcoin’s downturn accelerated with increased ETF outflows, though it bounced strongly off its 200-day moving average today.

Gold emerged as the winner, maintaining gains despite selling pressure in the last week.

The seasonal composite indicates we are in a period of uncertainty, with trend direction potentially changing after March 13—if historical patterns hold true.

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