/ January 22
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Wednesday:
N/A
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Thursday:
Initial Jobless Claims (218K exp.)
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Friday:
Existing Home Sales (4.16M exp.)
S&P Global Services PMI -
Wednesday:
GE Vernova GEV
Abbott Laboratories ABT
Halliburton HAL
Alcoa AA
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Thursday:
Alaska Air Group ALK
Elevance Health ELV
Union Pacific UNP
Texas Instruments TXN
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Friday:
American Express AXP
NextEra Energy NEE
Verizon Communications VZ
Daily Briefing
*Yesterday marked the first trading day under the new US Administration, and it was a positive start; a barrage of executive orders following the inauguration did not include any tariff actions against China, at least not right away; investors nonetheless had to digest the president's added observation that he is thinking of 25% tariffs for Canada and Mexico starting February 1;
*It was not lost on stock market participants either that tariff actions against China are likely in the offing, but they seemingly resolved to take things one day at a time and they liked what they didn't hear yesterday on the tariff front; in that sense, we can deem the price action yesterday as a “relief rally”;
*SPY was already well positioned going into the week, as we’ve already discussed in the previous newsletter; with the 50-DMA breached to the upside, the focus now moves to the all-time highs, and the $606-$610 breakout level; closing above would be very bullish and possibly trigger a small gamma squeeze from dealers trying to hedge their positions; in any case, our automatic strategies have shifted to “risk-on” again;
*The MACD signal has crossed over bullishly from a fairly low level, and we can now expect a degree of “follow through” to occur, with plenty of upside left;
*Sentiment was also helped by a CBS News report indicating President Trump will be announcing a $500 billion AI infrastructure initiative that involves OpenAI, Softbank, and Oracle (ORCL 172.59, +11.56, +7.2%), and presumably some fear of missing out on further gains;
*Elon Musk, on X, noted that the half-a-trillion USD figure is more of an ambitious target than reality at the moment;
*The gains were all the more remarkable given that they didn't include Apple (AAPL, -3.2%), Tesla (TSLA, -0.6%), or Microsoft (MSFT, -0.1%); Apple was a real outlier, feeling the pinch of analyst downgrades at Jefferies and Loop Capital, and a Bloomberg report suggesting its iPhone sales dropped 18% in China during the December quarter;
*In contrast, Eli Lilly (LLY, +2.29%), NVIDIA (NVDA, +2.27%) and Amazon (AMZN, +2.11%) were solid gainers on the day among the top S&P 500 stocks;
*Among Sectors, Energy (XLE) was the single outlier, posting a -0.51% loss; we view this as a reaction to President Trump's declaration of a national energy emergency that will allow for increased oil and gas production; increased production would obviously put downward pressure on prices;
*On that note, WTI crude futures settled -1.7% lower at $75.99 per barrel, pressured by the notion that a "drill, baby, drill" approach could create too much supply;
*The other 10 S&P 500 sectors, though, were on board with the rally effort; the industrials sector (XLI, +2.05%) topped yesterday’s performance rankings along with the real estate (XLRE, +1.83%), health care (XLV, +1.66%), utilities (XLU, +1.53%), and materials (XLB, +1.28%) sectors in a predominately pro-growth tape;
*A majority of stocks are now trading above the key 20 and 50-DMAs, as the major indices all closed at, or near, their highs for the session on a day that was devoid of notable economic data;
*The inflation-sensitive 10-yr note saw its yield drop another four basis points to 4.57% after hitting 4.80% last week;
*TLT rose +0.89% on the day, but remains well below our stop-loss level and won’t be included in automatic portfolios this week;
*Signal Sigma strategies have rebalanced portfolios today, so look out for trade alerts in your inbox; we will cover all platform metrics in our upcoming Portfolio Rebalancing Article, due to be published soon;