Interest rates at the long end of the yield curve have risen sharply and we anticipate they will head modestly higher over the next few quarters. The curve (2yr/10yr spread) has steepened from 82 basis points at the start of the year to 145 basis points. While the Fed will focus more on unemployment than inflation, and has pledged to keep short-term rates low, it has less influence over the long end of the yield curve. Bond investors at the long end of the yield curve are concerned inflation may spiral out of control, especially if Congress rolls out another massive spending plan. The rising long-term interest rates and steepening yield curve hold several implications for investors. One, higher rates raise valuations on equities, and this has caused the stock sell-off over the past few days. But the steeper yield curve also signals the U.S. economy may be rebounding sharply in a few months. And the wider spread between short-term and long-term bonds is beneficial for most of the Financial Services sector.

Insider sentiment continues to suggest a reasonable degree of caution. As we have said for several weeks now, this caution does not mean that a major correction is bound to occur. But it does suggest that there are few near-term catalysts that insiders see as likely to drive stock prices (around all-time highs already) quickly higher.

We have highlighted (repeatedly) the current strong market breadth, even suggesting it might be too strong and in need of a reset. We've also talked about extremely overheated market sentiment, also in need of a nice reset as we see it.

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.

Stocks rose on Thursday, but gave up some of their midday gains, as investors weighed results from a range of major companies along with new employment and GDP data. The Labor Department reported that both first-time and continuing unemployment claims fell from the prior week, and came in below consensus forecasts. Meanwhile, the Commerce Department said that the U.S. economy expanded at a 4.0% rate in 4Q, slightly below the consensus forecast of 4.2%. For the full year, the economy contracted at a 3.5% annualized rate - the first full-year decline since 2009. On the earnings front, McDonald's posted disappointing 4Q sales and earnings, with international comp sales down 7.4%, reflecting the impact of coronavirus lockdowns in Europe. Tesla shares fell 3% after the automaker posted mixed fourth-quarter results and failed to provide specific sales guidance for 2021. The Dow rose 0.99%, the S&P 0.98%, and the Nasdaq 0.50%. Crude oil fell to $52 per barrel, while gold fell $4 to $1845 per ounce.

New Year Brings More of the Same for Economy, New Sector Leadership

Capital One is a diversified financial-services holding company, primarily involved in credit card lending, auto lending, and commercial lending.

Stocks were largely flat on Tuesday morning as investors weighed earnings reports from a range of major companies. Johnson & Johnson shares rose 3% after the company posted better-than-expected 4Q earnings and said that it would provide an update on its COVID-19 vaccine candidate 'soon.' GE shares rose 5%, despite slightly lower-than-expected 4Q EPS, as the company posted strong industrial free cash flow and issued positive guidance for 2021. The Dow rose 0.1%, the S&P was flat, and the Nasdaq rose 0.1%. Crude oil traded near $53 per barrel, while gold fell $2 to $1853 per ounce.

In 1849, Jean-Baptiste Alphonse Karr wrote, "The more things change, the more they stay the same." Now, over 170 years later, his prophetic statement aligns perfectly with stock-market sentiment.

With earnings season now in full swing, the volume of weekly insider transactions reported by Vickers Stock Research has slowed and should remain slow for the better part of the next three weeks. Last week, Vickers processed some 898 transactions that meet the criteria for inclusion in this week's Weekly Insider Report, compared to 1720 at this time last month.

Stocks fell on Monday morning, giving up early gains amid concerns about congressional opposition to the Biden administration's $1.9 trillion stimulus plan and the impact of new coronavirus variants. Moderna shares rose more than 7% after the company said that it was developing a new version of its COVID-19 vaccine to better target a rapidly spreading South African variant of the disease. Meanwhile, Merck said that it would halt the development of its COVID vaccines after disappointing clinical trial data. The Dow fell 1.1%, the S&P 0.7%, and the Nasdaq 0.2%. Crude oil traded near $52 per barrel, while gold fell $4 to $1852 per ounce.