During the opening 20 minutes of Tuesday's session, it looked a lot like another bloodbath for Technology, the Nasdaq, and the Nasdaq 100 (QQQ) -- and a not-so-great day for most of the other major indices. But with many of those indices hitting key support right after the opening (amazing how they do that), the losses evaporated just like the snow will in the mid-Atlantic.

In early January, we wrote the following. "Don't look now, but interest rates at the long end of the curve are moving higher. With the whole curve historically low, does it really matter? Could it actually be bullish for certain sections of the stock market? Certainly not high-yield plays, but for those stocks that benefit from a faster growing economy? Remember those days? There are lots of questions but no definitive answers -- so watch price action to give us a clue.

Last week, we noted that insider-sentiment data from Vickers Stock Research turned benign after two weeks of intensely bearish readings. During those two dark weeks, the big financial-press headlines (though certainly not the only headlines) focused on the GameStop short squeeze and fears of a broader market meltdown. Trading action saw the Dow Jones Industrial Average fall to a weekly close of 29,982 from 31,097 only a few weeks earlier.

A few weeks ago, we talked about the potential for a major U.S. Dollar Index (USD) bottom based on a number of technical factors. The greenback was close to major long-term chart support, the COT data (absolute and adjusted for open interest) was very favorable for the dollar, and the COT data for the euro (58% of the USD) was very unfavorable. Sentiment toward the dollar was also very poor while sentiment toward the euro was very bullish. Since then, the USD has bounced 2.3% -- so we have a start.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

NYSE margin debt has soared since the end of March along with the recovery in stocks. There has been a very consistent long-term pattern in margin debt and its strong ability to predict major market tops. Are we there yet?

Fourth-Quarter 2020 Summary & Market Outlook for 2021

Stocks rose strongly on Wednesday morning ahead of the inauguration of Joseph R. Biden as the nation's 46th president. President Biden enters the White House facing the twin crises of the pandemic and a battered economy, and is expected to move quickly on new stimulus measures and other initiatives. He will also sign a wide range of executive orders reversing Trump administration policies on his first day in office. The Dow rose 0.6%, the S&P 1.1%, and the Nasdaq 1.7%. Crude oil traded near $53.50 per barrel, while gold rose $16 to $1856 per ounce.

We saw some strange trading days in late 2020, and the majority of them had to do with the massive rotation that was happening at the time. But maybe we should start calling days like Thursday, January 14 more the norm than wacky. As we said recently, 2021 is starting out as the polar opposite of 2020 -- at least as far as the markets are concerned.

Stocks rose on Tuesday morning as investors weighed earnings reports from Bank of America, Goldman Sachs, and Halliburton, and congressional testimony from Treasury Secretary nominee Janet Yellen. The former Fed president said that she would focus on boosting employment and wages, which have been battered by the pandemic, and that economic recovery also depended on the rapid and broad distribution of coronavirus vaccines. The Dow rose 0.3%, the S&P 0.5%, and the Nasdaq 0.7%. Crude oil traded near $53 per barrel, while gold rose $11 to $1840 per ounce.

The stock market moved lower last week, as a Thursday afternoon selloff sent stocks into the red. Large-cap tech stocks were worse off than blue chips as investors digested Biden's stimulus plans and cabinet picks. During Friday's session, the Dow Jones Industrial Average fell 177 points, or 0.57%. The S&P 500 was down 0.72%, and the Nasdaq Composite was down 0.87%. For the week, the DJIA decreased 284 points, or 0.91%, the S&P 500 decreased 1.48%, and the Nasdaq Composite fell 1.54%.

Stocks fell on Friday morning as investors weighed the details of President-elect Biden's $1.9 trillion stimulus plan, along with disappointing retail sales data and the first 4Q earnings reports from the major banks. The Biden plan announced on Thursday calls for $1400 checks to Americans below certain income levels, an extension of supplemental unemployment insurance through the end of September, aid to state and local governments, and funding for a national vaccination program. Mr. Biden also proposed an increase in the federal minimum wage to $15 per hour from the current $7.25. JPMorgan, Citigroup, and Wells Fargo all posted stronger-than-expected earnings, helped by reserve releases, though their shares fell in morning trading. The Commerce Department reported that U.S. retail sales fell 0.7% in December after a 1.4% drop in November. The consensus forecast had called for flat sales last month. The Dow fell 0.5%, the S&P 0.6%, and the Nasdaq 0.5%. Crude oil traded near $52 per barrel, while gold dropped $29 to $1823 per ounce.

The big banks are typically the first to report earnings, and those announcements are about to begin. The second- and third-quarter earnings seasons were historically bad, while coming in slightly better than abysmal expectations. We note that 3Q EPS represented sequential improvement compared to 2Q, which was the trough of the earnings recession. By our calculations, S&P 500 earnings declined 16% in 3Q after plummeting 36% in 2Q. Our model assumes further improvement for 4Q20, with a decline of 3%. Taking all this into account, our 2020 estimate for S&P 500 earnings from continuing operations is $135. We expect further improvement (and outright growth) in 2021 and our forecast for 2021 EPS from continuing operations is $168. Our estimates imply a high-teen percentage decline for 2020, followed by 25% EPS growth for 2021. Finally, our preliminary EPS forecast for 2022 is $191. Our 2022 estimate assumes 15% EPS growth.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

This pick list highlights constituents of the Morningstar US Large Cap Index that we believe offer investors the best risk-adjusted return prospects. Stocks of large-cap companies where neither growth nor value characteristics predominate. Stocks in the top 70% of the capitalization of the U.S. equity market are defined as large cap.

We recently upgraded our rating on the Financial Services sector to Over-Weight. With market optimism rising on positive vaccine developments and the presidential transition, interest rates have started to move higher at the long end of the yield curve. We expect banks to benefit from wider net interest margins and lower loan-loss provisions as the economy normalizes, and insurance companies to generate higher income in their investment portfolios. The sector accounts for 10.4% of the S&P 500, down from 16.3% following the exclusion of REIT stocks. Over the past five years, the weighting has ranged from 9% to 17%. We think the sector should account for 11%-12% of diversified portfolios. The Financial sector is underperforming the market thus far in 2020, with a loss of 9.6%. It slightly outperformed in 2019, with a gain of 29.2%, and underperformed in 2018, with a loss of 14.7%. Here is how we use our analysts' Financial Services sector ideas in our Focus List and Model portfolios. All of the following stocks are rated BUY at Argus.

Last week, we talked about precious metals having been dead money since peaking in a parabolic move in early August. Steep moves to the upside typically see fairly large countertrend moves to the downside and also take time to bottom. Over the past couple of weeks, there has been a little spark under the metals, especially silver -- so it's possible we are finally at the beginning of another upside run.

Growth stocks may be outperforming value, again, in 2020. But in an environment of historically low interest rates (and with the coronavirus and economic shutdown seemingly poised to keep them low for a long time), many investors are still searching for high levels of income, which can often be found in value stocks. Progress on COVID-19 vaccines has given a lift to some of the cyclical companies (energy companies and regional banks) that have lagged in recent quarters, and value stocks have kept up the pace with growth stocks in the past quarter. The current yield on the iShares Russell 1000 Value Index ETF is 2.5%, compared to the 1.0% current yield on the iShares Russell 1000 Growth Index ETF. This is not unimportant, as the current yield on the 10-year Treasury bond is 0.95%.