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Sizing Up the S&P 500
- Index forming potential ascending channel since mid-January.
- Making higher lows above previous peak from 2022
- Wilder’s Relative Strength Index (RSI) reflects strong uptrend
- Intermarket: 10-year yield near top of recent range near 4.25%. Potential downside with yield curve near top of range since summer of 2022.
Key News
- Chips in focus:
- Citi raises 2024 revenue estimates after SIA reports December sales +1.5%
- Online advertising market recovering: Insider Intelligence
- January ISM services beats as orders, prices accelerate
- China tightens controls of margin debt, short selling to support market
- China crisis may be triple win for S&P 500: deflationary pressures and capital flight to U.S. without supply-chain disruption
- Factset: Analysts cutting Q1 estimates by 1.4% versus 2.1% average
- Hartnett of BofA: Sentiment similar to 1999 but so far not at “contrarian sell”
Sector Watch
- Semiconductors, transports, consumer discretionaries leading
- Airlines, industrials outperforming
- Banks, gold minders, energy lagging
Healthcare in Focus
- S&P Health Care Select Sector Index hits new highs this week, but remains at bottom of historical ratio vs S&P 500
- Year-over-year healthcare jobs growing 4.2% vs 2% before 2020
- Humana (HUM), CVS Health (CVS) recently warned of rising healthcare utilization
- Device maker movers: ISRG, BSX, ALGN, EW, GEHC
- Next reports: ZBH (this morning), MDT (2/20 premarket)
Movers of the Week: Petrobras & Pure Storage
- Petrobras: Brazilian oil & gas driller trades for 4x earnings
- Prices challenging 9-year resistance around $18
- PBR +27% in last 6 months vs -6% for broader energy sector
- Pure Storage: Flash-memory maker pivoting to subscription services
- Fell on weak guidance 11/30, but rebounded on hopes of higher margins as customers migrate to subscription services
- Consolidating near record highs before earnings in late February, early March
- PSTG +40% in last year
Upcoming Events
- Earnings this afternoon: PINS, AFRM,
- Fri 2/8: PEP earnings
- Tue 2/13: CPI
- Earnings: KO, SHOP, ABNB
- Wed 2/14: CSCO earnings
- Thu 2/15: Retail sales, initial jobless claims
- Earnings (premarket): DE
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