Sizing Up the S&P 500

  • 50-day MA nearing “Golden Cross” vs 200-day MA
  • 2022 bearish trendline broken
  • Breadth: Advance/decline line highest since August
  • Sector mix: “risk-on” cyclicals leading, safe-havens lagging.
  • Intermarket: Dollar index lowest since April
  • Intermarket: VIX trending lower, under 20
  • Intermarket: 10-year Treasury yield breaking 3.4 percent
    • Flashback (10/10): Paul Tudor Jones watching two-year rates as stock market signal.

Key Economic News:

  • Jerome Powell: “We are now in disinflation. That’s great.”
    • 2 more payroll reports, 2 more CPI before March 22 meeting & dot plot.
    • Congressional testimony in late February.
    • Powell will have opportunities to adjust message before next big move.
  • OPEC+: Cartel’s “nothing burger” hits crude oil.
    • What happens to inflation if oil keeps sliding?
  • IMF raises global growth outlook as China reopens

Key Earnings News

  • Advanced Micro Devices (AMD): Data centers still strong.
  • Meta Platforms (META): Zuckerberg refocuses
    • Revenue beats, core business upgrades planned.
    • Metaverse sidelined, capex plans cut 10-15%
  • American Express (AXP): Strong guidance despite earnings miss
    • Other financials like COF, DFS gained despite loan-loss provisions
    • Is market looking past fear of “default wave?”
  • Industrials: Infrastructure investment continues, economic confidence.
    • Caterpillar (CAT): Revenue beats by 5%. Stock falls on cost pressures.
    • Otis Worldwide (OTIS): Revenue beats
    • Pentair (PNR): Earnings, revenue beat
    • Old Dominion Freight Line (ODFL): Beats estimates, raises dividend
  • Homebuilders: PulteHome (PHM) earnings & revenue beat. Orders fall but what happens if mortgage rates fall?
  • Healthcare: Safe havens shunned
    • Pfizer (PFE): Revenue misses as business slows post-Covid.
    • Amgen (AMGN): Revenue beats narrowly amid heavy selling
S&P 500, daily chart, with select indicators and patterns.

Leaders & Laggards

  • Growth stocks reclaiming leadership over value
  • Chinese tech stocks, semiconductors among top performers this year
  • Airlines, homebuilders outperforming
  • Energy starting to lag after strong 2022
    • Only negative sector in trailing 3 months
  • “Safety plays” lag: Utilities, healthcare, consumer staples
    • Only negative sectors in 2023

Signals Scan

  • AngloGold Ashanti (AU): Touches bottom of Keltner Channel
    • In Scanner: Price → Low < Indicator → Keltner Channel → LowerBand
  • Alibaba (BABA), Freeport McMoRan (FCX), Gold Fields (GFI) pullbacks
    • 8-day EMA > 21-day EMA
    • 8-day EMA > 50-day MA
    • %Chg 5 (5 Day) < -3
  • Delta Air Lines (DAL): Bullish outside week

Mover of the Week: Align Technology

Align Technology (ALGN): S&P 500’s third-worst performer jumps after earnings & revenue beat.

Upcoming Events

  • Tonight: Apple (AAPL), Alphabet (GOOGL), Qualcomm (QCOM), Ford Motor (F)
  • Friday 2/3: Non-farm payrolls
  • Wednesday 2/8: CVS Health (CVS) | Walt Disney (DIS), MGM Resorts (MGM)
  • Thursday: 2/9: PepsiCo (PEP)
  • No important data next week

Using the Platform

Platform tool of the week: Fibonacci retracement tool

Downloads available here.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.