/ January 31
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Friday:
Core PCE Price Index MoM (0.2% exp.)
Personal Income MoM (0.4% exp.)Personal Spending MoM (0.4% exp.)
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Friday:
AbbVie ABBV
Colgate-Palmolive CL
Exxon Mobil XOM
Phillips 66 PSX
Daily Briefing
*The stock market closed on a positive note after a sharp dip and quick recovery in the afternoon trade after President Trump told reporters that he will impose 25% tariffs on Canada and Mexico beginning Saturday due to immigration, trade deficits, and fentanyl, according to Bloomberg;
*The S&P 500 logged a +0.5% gain, the Nasdaq Composite closed +0.3% higher, and the Dow Jones Industrial Average registered a +0.4% gain while the Russell 2000 outperformed, jumping +1.1%;
*SPY looks to be ending the week (and indeed the month of January) on a positive note, and being able to hold support at the 50-DMA); this level of technical resilience will surely embolden the bulls going forward into earnings season in February; resistance stands at the $611 - $614 area (M-Trend and Call Gamma Flip), while short term support is currently at $596 (50-DMA); SPY’s real downside, however, is closer to the 200-DMA, near the $550 area, where the Combined Gamma Flip and the S1 retracement level also reside;
*The MACD signal is tapering off to a certain extent, as the mini-consolidation runs its course; the Weekly MACD remains negative for now, indicating that some selling pressure still remains;
*All Sectors ETFs with the exception of Transports (XTN) had a Positive day, especially Utilities (XLU), which logged a +2.08% jump yesterday; Real Estate (XLRE, +1.32%) and Healthcare (XLV, +1.15%) were also notable leaders on the day;
*On the week, Utilities are close to neutral, after several names sold off agressivley on Monday due to their exposure to the AI Data center business; however, the sector rotation is clear as daylight - Tech (XLK) is the big loser in the short term, to the benefit of Staples (XLP); on average, all sector ETFs recorded a +0.13% gain for the week;
*Contributing to the decline in Tech (XLK) was Microsoft’s poor performance after announcing earnings (MSFT, -6.2%); however, this was overshadowed by positive responses to earnings results from the likes of IBM (IBM, +13.0%), Meta Platforms (META, +1.6%), and Tesla (TSLA, +2.9%);
*On the factors side, we’ll note the solid performance of the Equally Weighted S&P500 (RSP, +1.05%), as well as the rebound in Momentum names (MTUM, +1.64%); in contrast, the price action in Nasdaq shares (QQQ, +0.43%) was disappointing;
*Market participants were also digesting this day’s economic releases, which featured an encouragingly low level of initial jobless claims (207,000) for the week ending January 25 and a refreshingly strong 4.2% growth rate for personal spending in the fourth quarter, which was the best since Q1 2023;
*Dollar Transaction Volume continues to surge during this consolidation period, leading us to believe that there is ample liquidity for stocks at the moment, which should translate into more upside next month;
*The market will be focused on further earnings news, followed by the release of the December Personal Income and Spending report, which includes the Fed's preferred gauge on inflation (PCE Price Indexes) at 8:30 ET; - one more bump to pass before this key week is out;
*The upside bias in equities was also supported by the price action in Treasuries; the 10-yr yield settled four basis points lower at 4.52% and the 2-yr yield settled three basis points lower at 4.20%;
*TLT gained +0.37% but still trades below our stop level ($89); notably, dealer Gamma Exposure in the short term is the highest for TLT out of all the major asset class ETFs, leading us to believe that this rally has some legs at least for now;
