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Sizing Up the S&P 500
- S&P 500 is challenging mid-September high and March lows around 4120.
- 10-day moving average rising for 23 candles, the longest streak since August.
- Fewer index members above 20-day MA than above 50-day MA. (See MT Breadth chart.)
- RSI oscillator falling.
- Wednesday was the 1st failure to hold a 50% retracement this year.
- Intermarket: U.S. dollar index climbs after bullish outside week.
- Intermarket: Two-, 10-year Treasury yields continuing higher.
- Inflation optimism has been priced in, but seven weeks remain until next Federal Reserve meeting.
- Nasdaq-100 at potential resistance.
Key Economic News:
- Jerome Powell incrementally less hawkish on 2/7.
- Remember: Several more events before 3/22 meeting and dot plot.
- Lisa Cook: No need for “large increase in unemployment.”
- John Williams: 5.1% peak rate from last dot plot “very reasonable” for 2023. (Implies 50 basis points of further hikes.)
- Chris Waller: “we have farther to go,” rates could go higher than expected.
- January Non-farm payrolls +517K vs +185K est. Unemployment 3.4% (lowest since 1969) vs 3.6% estimate. But wage growth inline +0.3%
- Morgan Stanley: Weather, California teacher strike, seasonal adjustment may have distorted job growth to the upside.
- ISM services: 55.2 vs 50.4 estimate. New orders jump. Price growth eases.
- CNBC: Wholesale egg prices have dropped 52% from December peak. Bird flu passes and demand eases.
- Good news for CPI?
- Apple (AAPL): Earnings, revenue miss but one-off items like currencies and supply chains blamed.
- AAPL viewed as cleaner growth story than Amazon.com (AMZN) or Alphabet (GOOGL), which face weaker demand.
- Travel Stocks Climb:
- Uber Technologies (UBER) earnings, revenue beat, margins improve. Bookings +19%, forecast +20-24% in Q1.
- Royal Caribbean (RCL) earnings beat, revenue misses. Wall Street may focus on pricing/margins as business fundamentals improve.
- Hertz (HTZ) earnings beat, revenue inline. Strong demand environment apparently supports pricing/margins.
- Avis Budget (CAR), which reports 2/13, also climbed.
- Cybersecurity gains on government spending.
- Dan Ives of Wedbush bolsters Fortinet (FTNT) and Tenable (TENB)
- Freshworks (FRSH) earnings, revenue beats. (Down ~50% from September 2021 IPO)
- Recent bullish notes by Cantor Fitzgerald, Needham, Canaccord Genuity, Morgan Stanley
- Buybacks, dividends offset mixed results: Skyworks Solutions (SWKS), Du Pont (DD).
- M&A news & speculation:
- CVS Health (CVS) buys Oak Street Health (OSH)
- Criteo (CRTO) exploring sale: Reuters
- Danaher (DHR) considers buying Catalent (CTLT): Bloomberg
- Public Storage (PSA) makes unsolicited bid for Life Storage (LSI)
- Voya Financial (VOYA): Earnings beat. BofA raises price target.
- Short interest is 25% of float.
Leaders & Laggards
- Growth stocks extended their lead over value in the past week.
- Software, cybersecurity, recent IPOs outperform
- Global weakens
- Banks & financials quietly challenge resistance
- Safe havens like utilities and consumer staples continue to lag
- Pharma & biotech struggle
- Occidental Petroleum (OXY): “Death cross”
- Chevron (CVX) slides under 50-day MA after failed gap
- LKQ (LKQ): Holds rising 50-day MA
- Tesla (TSLA): Stalls after 50% retracement
- AT&T (T) nears bottom of Keltner channel
Mover of the Week: C3.ai
C3.ai (AI) started climbing in late January as “ChatGPT” trended on Google search. The rally and volume accelerated after it announced a new artificial intelligence product suite on January 31.
- AI reports earnings after the bell 3/2.
- Tuesday, 2/14: CPI inflation
- Likely the main item in the coming week
- Wednesday, 2/15: Retail sales
- Cisco Systems (CSCO) reports in post market.
- 2/15 & 2/16: Housing active with NAHB sentiment, starts & permits
- Thursday, 2/16: PPI
- Applied Materials (AMAT) reports in post market.
Using the Platform
Platform tool of the week: Scanning for recent IPOs
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