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Sizing Up the S&P 500

  • S&P 500 holds December 20 low, ended Wednesday 1% from record high
  • 1/5 low near 50% retracement of December rally
  • Failure to test July high may trigger continued upside
S&P 500, daily chart, with key indicators and patterns.

Key News

  • Employment weakens:
    • (AMZN) cuts 500 jobs at Twitch, “several hundred” at Prime Videos, MGM Studios.
    • S&P Global: Fewer temp jobs reflect weaker labor market.
    • Unity Software (U) cuts 25% of staff
  • Walmart (WMT) teams with Alphabet (GOOGL) on drone deliveries
  • Fedspeak:
    • Michelle Bowman drops hawkishness, doubts further hikes
    • Raphael Bostic: Inflation has fallen quicker than expected
  • Intuitive Surgical (ISRG) nears all-time highs after preannouncing strong results
  • Fannie Mae: “Significantly” better sentiment toward mortgage rates
  • Palantir Technologies (PLTR) jumps on potential Israel demand
  • Semiconductor Industry Association (SIA) expects double-digit chip growth in 2024
  • S&P Global: Merger activity recovering from slow period
  • Wells Fargo raises S&P 500 target range from 4,600-4,800 to 4,800-5,000, citing potential rate cuts.
  • New York Fed inflation expectations hit lowest since January 2021
  • November consumer credit growth more than 2x forecasts (potential confirmation of strength)

Energy Weakness Continues

  • EIA: U.S. crude oil production to grow 290K barrels per day in 2024, hit records in next 2 years
  • Saudis cut Arab Light crude price to 27 month low
  • EIA: U.S. crude oil inventories rise more than expected. Gasoline inventories +8 million barrels

Sector Watch

  • Early-quarter buying in large-cap growth: technology, consumer discretionary, communications
  • Airlines bounce as oil remains weak
  • Biotechnology gains amid M&A, J.P. Morgan conference
  • Homebuilders advance following December breakout
  • Energy leads to downside
  • Chinese stocks, solar energy remain under pressure
  • Gold miners weak despite rate-cut expectations

Mover of the Week: Natera

  • Genetic-testing company preannounces Q4 revenue about 9% above estimates on 1/9
  • Earnings, revenue beat on 11/8, 8/3
  • IPO in June 2015
  • NTRA +55% in 12 months, near two-year high

Upcoming Events

  • Fri 1/11: Producer price index (PPI)
    • Earnings: JPM, BAC, C, WFC, UNH
  • Sat 1/13: Taiwan elections
  • Mon 1/15: Market closed for MLK day
  • Tues 1/16
    • Earnings: GS, MS
  • Wed 1/17: Retail sales
    • Earnings: SCHW, USB
  • Thu 1/18: Housing starts/building permits, initial jobless claims
    • Earnings: TSM, KEY

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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.