The week 22.02 – 26.02.2021

Two main events dominated last week: firstly, inflation fears coupled with the big scale sale of US bonds and secondly the appearance of the head of the US central bank before the US Senate Banking Committee. The statements and answers to the questions of the members of the Senate committee were supposed to have a calming effect. As it turned out, the assessment of market participants was somewhat different from what the head of the FED wanted to achieve. Even his unusual words, “buy the dip”, which made the rounds in social networks, or the assurance that money supply growth has no influence on inflation, could not calm the minds in the long term. The head of the Fed tried to spread optimism by predicting 6% growth for the US economy and stated that the vaccine was the only way to help the economy.

ONE SIGNAL analyses the behaviour of market participants with the intention of making short-term forecasts about the stock market. We do not try to question the causes of these behaviours. However, we have to mention one thing: The S&P500 gained 75.87% from its low in March 2020 to its all-time high on 09/02/2021. Such a rise in 226 trading days (or 11 calendar months) has never been seen before.

Last week was relatively turbulent and the individual markets were very volatile at times. As expected, the winner of the week was the US T-bonds (+7.43%) followed by oil (+4.45%). Gold was the biggest loser last week with -3.13% and ended the week at $1,733. The S&P500 declined as well by 1.91%. ONE SIGNAL was unable to escape the turbulence of the markets, delivering long signals all week. Smart traders still held up better than the benchmark index, down 1.25%. Despite the difficult week, ONE SIGNAL is far ahead of the S&P500 with a +6.25% year-to-date, which has not given buy-and-hold investors much joy with a +1.25%.