Market Insights

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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?

Company News

• 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

Signals Scan

• 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.

Upcoming Events

• 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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