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Market Insights

Bringing you the trading news around the world.

Stocks Overbought as Traders Wait for Inflation? Market Trends This Week

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Downloads available here and here.

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.
S&P 500, daily chart, with key technical indicators and levels.

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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About the author

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.