S&P 500 Overview:
- Melt-up underway, with no clear resistance until 2800.
- VIX lowest since early October. S&P 500 just had best month since October 2015.
- Next 2 weeks has positive calendar bias amid earnings. Risk may return 2/15 (shutdown), 3/1 (China tariffs).
- Sector mix shows risk-on sentiment:
- Stocks rising on mediocre news, unlike last quarter.
- Merger speculation increasing (ULTI, GCI). Tech, biotech likely to benefit.
- Next possible catalyst: What if bond prices break lower?
Work Space of the Week: Cannabis
- Cannabis stocks continue to draw attention.
Strategists Remain Bearish …
- Marketwatch: Slowest earnings growth in 5 quarters.
- Business Insider: Fewest companies beating estimates in 7 years.
- JPM: China failing to boost economy, zombie companies becoming a risk.
- Stifel: S&P 500 peaking as earnings slow, multiples fully valued.
- … despite apparently positive economic backdrop.
- … despite stocks climbing on mediocre results: UPS, GE, AAPL, CHTR, AMD
Energy in Focus: Is the Tide Turning?
- High-beta frackers like SLCA, HCLP outperforming.
- Brent crude stabilizing as Saudis cut production. Is OPEC back in business?
- Stronger Brent often helps refiner “crack spreads.”
- Venezuela supply at risk amid Maduro showdown.
- Baker Hughes rig count hits 8-month low.
- Inventories last week fell more than expected.
Don’s Watch List:
- Cronos (CRON): Pot stock hitting new highs.
- Papa John’s (PZZA): Starboard Value buys a slice
- Meet (MEET): Up and coming social-media name.
Russell’s Watch List:
- Cheniere Energy (LNG) consolidating above 200-day MA before possible China deal.
- Tilray (TLRY) trying to break 50-day MA.
- Etsy (ETSY) potential bullish triangle.
- Herbalife (HLF) quietly hitting new highs.
- Diamondback Energy (FANG): New S&P 500 member trying to turn at 50-day MA.
- Whiting Petroleum (WLL), US Silica (SLCA) may squeeze higher.
- LendingTree (TREE): Golden cross, pullback may provide entry.
- Intelsat (I) breaking 50-day MA. Possible 5G, spectrum boost.
- Pollo Loco (LOCO) potential momentum pullback.
- Video games (ATVI, EA, TTWO) conspicuously absent from 2019 market bounce.
- Tech, health care, communications/media lead the earnings.
- Wednesday: Oil inventories (mid-morning), Jerome Powell town hall (evening)
- See the Market Insights weekly recap for more.