Tuesday, January 21, 2014

Tuesday Tidings

The markets opened on a strong note following the holiday weekend here in the US, but after touching its recent highs the S&P 500 has given up most of its gains while the Dow has traded back into negative territory.  It's still early, so we will have to see if buyers show up again toward the end of the day.

There isn't any economic data moving the market.  In M&A news, Dan Loeb has taken a $1.3 billion stake in Dow Chemical aimed at increasing value for the company.  The stock is up 7% in reaction.

Commodities are mixed.  Oil prices continue to trade higher with crude now closing in on $95.  Gold prices remain weak and are trading near $1240.

The 10-year yield is roughly flat so far today around the 2.83% level.

Earnings season is set to heat up this week, and a handful of companies have already reported this morning.

Stocks rising on earnings: SBNY, BHI, DAL, AMTD, KNX

Stocks falling on earnings: SAP, HAL, TRV, VZ, JNJ

Asian markets were higher overnight.  China's GDP rose 7.7% year/year, which was slightly higher than estimates but a slowdown from last quarter's 7.8%.  Industrial production and retails sales also rose in-line with estimates.

Europe's markets are modestly higher.  Eurozone ZEW economic sentiment rose to 73.3 from 68.3.  Italy's industrial new orders rose while Spain's industrial new orders fell.

Trading comment: The S&P 500 touched 1849 this morning, which would put it in positive territory for the year.  Those watching the 'January effect' would like the SPX to close above 1848 to keep the theory intact.  So far the reactions in stocks to earnings reports have been somewhat mixed.  And we still have plenty of big companies left to report.  I think we need to see some positive reactions in some bellwether stocks to help push things higher.  But the fact that the recent pullback in the market yielded little to the bears other than a 2% dip is another bullish sign.  Our biggest concern is that investor sentiment has grown too complacent and that could lead to a bigger correction at some point in the near future.

1 Comments:

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