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Sizing Up the S&P 500

  • S&P 500 holds tight range 1.6% from record high
  • Friday’s last price was the index’s highest weekly close ever
  • Holds 21-day EMA, forming inside week
  • Breadth weaker as megacaps keep leadership
  • VIX peaks at 15 (old support in 2021)
  • S&P 500 may resemble April-May 2023 period before debt ceiling was raised. (This time, the 1/31 Fed meeting is a potential catalyst.)
  • Treasury yields may be near top of recent ranges
    • 10-year (TNX) potentially topping at lows of 12/6 and 12/7
S&P 500, daily chart, with select indicators and patterns.

Key News

  • Retail sales beat estimates for 6th straight month
  • NAHB homebuilder sentiment beats estimates on sales optimism
  • Christopher Waller and WSJ’s Timiraos cite QT reduction.
    • Waller sees rent inflation coming down amid data lag
  • Dec PPI lower than expected, Nov revised lower
  • Jan Empire Index misses estimates amid weak orders and shipments
  • UBS raises S&P 500 yearend target to 5150 from 4850, citing rate cuts and lower inflation
  • Bill Ackman on CNBC: Fed needs to move early, cut more than 3x in 2024 with “inflation cooling very meaningfully.”
  • More oil: Norway grants 62 exploration permits, up from 47 a year ago

China Slowdown in Focus

  • Q4 GDP +5.2%, missing +5.3% estimate
  • Retail sales +7.4%, missing +8% estimate
  • New home prices -0.4%, worst decline since February 2015
  • Population falls 2.08mln, second straight annual decline
  • China Beige Book: “The recovery from COVID — disappointing as it was — is over.”
  • Moody’s Analytics: Stimulus needed

Microsoft vs Apple

  • MSFT’s market cap surpasses AAPL thanks to enterprise-level AI focus.
  • MSFT outperformed AAPL in 1990s, then lagged after iPods and iPhones
  • Is a 15-20 year era of AAPL outperformance ending?
Microsoft (MSFT) vs Apple (AAPL), percentage changes since January 2023, courtesy of TradingView.

Sector Watch

  • Healthcare is top-performing sector so far in 2024
  • Growth stocks mostly outperforming
  • Energy and Materials lead to downside amid strong economic data, Chinese weakness
  • Small caps lag, but Russell 2000 revisits mid-December breakout zone
  • Solar energy, electric vehicles lagging this year
  • Chinese stocks revisit 2022 lows
  • Weakness in precious metals could be a positive for stocks

Mover of the Week: Cameco

  • Canadian uranium producer rallies as nuclear-fuel prices increase
  • Kazakhstan’s Kazatomprom (world’s top uranium producer) warns of potential output cut
  • Global uranium supplies already squeezed by Niger unrest
  • CCJ +87% in past 12 months

Upcoming Events

  • Fri 1/19: Consumer sentiment, existing home sales
  • Tue 1/23:
    • Earnings include NFLX, JNJ, HAL, TXN, PG
  • Wed 1/24:
    • Earnings include TSLA, NOW, IBM
  • Thu 1/25: GDP
    • Earnings include INTC, V, AAL

About 13% of the S&P 500 report earnings next week. Reminder: “Next Earnings Date Studies – Next Earnings Date RS” can turn RadarScreen into an earnings calendar. See “Earnings dates” tab on “MT Main Jan 2024” workspace for more.

Using the Platform

  • Keltner Pullback shows location within Keltner Channel, which creates price bands using Average True Range (ATR).
    • 0% = price at bottom of Keltner Channel
    • 100% = price at top of Keltner Channel
    • Lower values suggest potential pullbacks
  • Custom indicator for RadarScreen and Scanner (see zip file above). It was added to the “price grid” tab in newest version of the Market Trends workspace.
  • Keltner Pullback can be used with moving averages to find upward-trending stocks that have pulled back, or downward-trending stocks that are overbought.

Security futures are not suitable for all investors. To obtain a copy of the security futures risk disclosure statement Investment and Trading Disclosures Booklet – Futures.

Exchange Traded Funds (“ETFs”) are subject to management fees and other expenses. Before making investment decisions, investors should carefully read information found in the prospectus or summary prospectus, if available, including investment objectives, risks, charges, and expenses. Click here to find the prospectus.

Options trading is not suitable for all investors. Your TradeStation Securities’ account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See Characteristics and Risks of Standardized Options.

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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.