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Sizing Up the S&P 500

  • S&P 500 rises five straight days to test 4900.
  • Price above Keltner Channel and near top of drawn channel.
  • Potential downside level near 4800.
  • Potential volatility with Fed meeting on 1/31.
S&P 500, daily chart, with select indicators and levels.

Key News

  • Tesla (TSLA) earnings and revenue miss as margins keep falling. “Redwood” model coming in mid-2025.
    • Note: Margins often narrow (across industries) as slower growth/increased competition hurts pricing.
  • IBM, ServiceNow (NOW) beat on AI boost.
  • Morgan Stanley lowers PCE outlook by 10bp on lower new tenant rents
  • Bloomberg: U.S. chip-export curbs driving Chinese demand for semiconductor equipment
  • China cuts reserve ratio requirement to boost economy.
  • S&P Global PMI shows faster output in January, smallest price increase since May 2020.
  • Crude oil inventories fall more than expected but gasoline inventories rise more than expected

Sector Watch

  • Semiconductors, tech still leading amid AI growth.
  • Property & casualty insurers outperforming other financials.
  • Precious metals languish amid potential Goldilocks environment.
  • Small caps, value lag.
  • Utilities, real estate lag so far in 2024.

Scans & Signals

  • Potential down channels forming in Citi (C), Synchrony Financial (SYF)
  • False breakout in iShares U.S. Home Construction ETF (ITB)
  • Ford Motor (F) breaks under the 50-day MA.
  • Carnival (CCL) breaks 50-day MA after potential double-top under $20.

Mover of the Week: Spotify

  • Streaming-media company advancing since results beat estimates on 10/24
  • Analysts see potential benefits from cost cuts, increased monetization.
    • 17% of employees cut on 12/4
  • SPOT +111% in past year

Upcoming Events

  • Fri 1/26: PCE inflation
    • Big earnings: AXP, CL
  • Tues 1/30: JOLTs job openings, consumer confidence
    • Big earnings: AMD, MSFT, GOOGL, GM
  • Wed 1/31: ADP payrolls, *Fed decision at 2pm ET*
    • Big earnings: QCOM, BA, MA

About one-fifth of S&P 500 members 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

  • “MA streak chart” counts candles a moving average has been rising or falling.
    • Setting “MA_to_test” to 1 will count days up/down
    • This can help spot pullbacks based on time instead of price

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 VP of Market Intelligence at TradeStation Group. Drawing on 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 apprised 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.