Oil is Back
The market is worried about the rising Treasury yield as another possible crash sign. — More on that in the “Overall Market” section.
Beyond the overall market, a cruise line’s shares jumped despite delays in resuming operations, while one more recent Chinese IPO crashed due to fraud allegations by short-sellers. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, the oil price is back to where it was a year ago. What can it teach us about our investment psychology? — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
- U.S. markets: The stock market indices started the short trading week with mixed results. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price surpassed above $50,000 per coin for a short little while.
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Treasury Yield Concerns
The stock market indices didn’t do too well on Tuesday. The Nasdaq and the S&P 500 finished the day in the red, while the Dow ended Tuesday above zero but only barely. As is customary these days, the stock market crash warnings were widespread across the media, especially after the market indices hit new record-high levels last week.
Moreover, there is a new warning sign coming from the Bond market. The 10-year Treasury yield hit 1.3% on Monday. This is the rate banks, and credit providers use to price their loans. It is quite higher than what it was during 2020 and makes investors worried about possible lower economic activities such as new mortgage applications and slower money flow into equities. Those are some of the key reasons we saw negative or barley-moving indices today.
Hoping for the Best
So, what happened?
Shares of Royal Caribbean Group (Ticker: RCL) were up more than 10% today. The news surrounding major cruise lines is quite grim as they are forced to postpone the reopening until a later date in 2021, and debt is ballooning across the board. Moreover, financial analysts are downgrading them one after another.
However, the vaccination is well on its way, and hope is rising among investors. On Friday, in a letter to its employees, Royal Caribbean confirmed that vaccination of the crew is a part of the company’s plan to return to normal as soon as possible. Investors are hoping for the best.
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One More Fraud Allegation
So what happened?
Shares of Ehang (Ticker: EH) were down by more than 60%. On Monday, during the long-weekend stock market recap, we introduced you to a company from China that was one of the best-performing stocks in 2021 so far. However, it seems the company has become the target of short-sellers from Wolfpack Research, calling EHang “an elaborate stock promotion” that has lied about its products, manufacturing, revenues, and partnerships. The fate of Ehang is unclear for now.
Oil is Back
So what happened?
By the way, the cold winter weather has pushed the oil price up, especially because several Texas oil pumps are forced to halt operations due to winter storms. West Texas Intermediate crude oil price is now at the highest since January 2020.
Do you remember when the oil price tanked so much that you could have been paid money if you ordered oil barrels? Back when that happened, did you think the oil prices ever recovered?
If you have some time, think about your reaction to the oil price drop back then. What can you learn about yourself and your investment psychology knowing that what once seemed a disaster has recovered nicely?
Our takeaway is that things are rarely as bad in the stock market as they appear amidst a crisis.
If you have any questions, or suggestions let us know by emailing us at [email protected]. We look forward to hearing from you.