This unusual combination signals either booms, bubbles or inflections, says Bank of America

MW This unusual combination signals either booms, bubbles or inflections, says Bank of America

By Steve Goldstein

Only five times in 60 years have tech stocks, commodities and the U.S. dollar all advanced

There's an unusual combination in markets this year that has happened just five times in the last 60 years.

Tech stocks COMP, commodities and the U.S. dollar DXY all have gained simultaneously, find strategists at Bank of America led by Michael Hartnett. Annualized, that would lead to tech gains of 21%, commodities gains of 47% and dollar gains of 16%.

What do they have in common? Two of those years, 1983 and 2021, were stimulus-induced booms. Both 1969 and 2016 were inflection points - 1969 as the start of stagflation, 2016 as the start of de-globalization. The other year, 1999, was the dot-com bubble.

Put in even blunter terms, that combination signals "booms, bubbles or inflections," the strategists say.

Right now, they say, the market debate is what the current five-day losing streak for the S&P 500 SPX means.

Bulls can argue it's a healthy correction, while bears can point to U.S. growth stocks struggling to make new highs and the high-yield bond ETF JNK falling to its 200-day moving average, say the strategists. If the bears are right, the market may flip to a current situation where "good news is bad" to one where "bad news is bad," says Hartnett and team.

-Steve Goldstein

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April 19, 2024 06:45 ET (10:45 GMT)

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