/ February 05
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Wednesday:
ISM Services PMI (54.3 exp.)
Fed Speakers
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Thursday:
Initial Jobless Claims (214K exp.)
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Friday:
Non Farm Payrolls (170K exp.)Unemployment Rate (4.1% exp.)
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Wednesday:Walt Disney DIS
Capri Holdings CPRI
Uber Technologies UBER
Yum! Brands YUM
Alpha and Omega Semiconductor AOSL
Arm Holdings ARM
Ford Motor F
MicroStrategy MSTR
Skyworks Solutions SWKS
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Thursday:
Amazon.com AMZN
Eli Lilly LLY
Huntington Ingalls HII
Ralph Lauren RL
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Friday:
N/A
Daily Briefing
*The market enjoyed a positive bias, with investor sentiment buoyed by several key developments related to tariffs and their potential impact on inflation and corporate earnings growth; specifically, Canada was granted a 30-day reprieve from tariff actions, while China’s latest retaliatory measures appear more symbolic than substantial;
*Market expectations were high that President Trump would engage in talks with Chinese President Xi Jinping; however, those discussions did not materialize; nevertheless, the S&P 500 logged a +0.7% gain and the Nasdaq Composite jumped +1.4%;
*SPY bounced from technical support at the 50-DMA and is trading in a tight range; downside risk can be substantial, with -6.88% potential losses to the 200-DMA ($550-$560 area); upside is capped at around $612 - $615 (M-Trend and Gamma Call Flip);
*The MACD signal is close to turning into a negative crossover, with potential selling follow through to occur;
*From an options market perspective, dealer gamma exposure has turned positive on SPY, though the total impact might be small given that it’s just a fraction of the ETF’s volume; in other words, the consolidation is likely to continue; the relatively high values in TLT and Financials (XLF) sets up these two benchmarks for lower volatility in the days ahead;
*Significant contributions to the market's performance were from large-cap stocks, with Alphabet (GOOG, +2.5%) standing out, rising +2.5% to a fresh 52-week high before dropping in after hours;
*Other stocks with notable gains included Palantir Technologies (PLTR, +24.0%), which surged +24.0% following strong earnings results, and Spotify (SPOT, +13.2%), up 13.2% after posting better-than-expected numbers;
*On the downside, some earnings reports weighed on stock prices, with Dow component Merck (MRK, -9.1%) dropping -9.1%, Estee Lauder (EL, -16.1%) falling -16.1%, and PepsiCo (PEP, -4.5%) retreating -4.5%, following disappointing results in their latest earnings reports;
*Among sectors, Energy (XLE, +2.1%) stood out with a +2.1% gain, while Staples (XLP, -0.84%) and Utilities (XLU, -0.88%) underperformed; all S&P sector ETFs are posting both 6 month and 1 year positive returns, an overall good omen for market breadth;
*The overall upside bias in stocks was also helped by the decline in rates following the December JOLTS - Jobs Openings Report, which showed a stark drop in openings to 7.600 million versus an upwardly revised 8.156 million (from 8.098 million) in November; this should pour cold water on any excessive inflation fears;
*The decline in job openings was interpreted as an indication of a softening labor market, with employers posting fewer job listings than in previous months; this shift did not significantly alter market expectations regarding future rate cuts, but it does align with the prevailing sentiment that the Federal Reserve’s next policy move is likely to be another rate reduction;
*The 2-yr yield, dropped five basis points to 4.22%;
*TLT gained +0.31% and its prospects are boosted by an immense amount of short interest that has built up; the options data aligns with our technical analysis, in that $89 represents a key level — the Gamma Flip for TLT, and our Stop-Loss;
*In this sense the way that Enterprise has selected bonds for inclusion in the portfolio makes a lot of sense, as dealers will be forced to start covering quite agressivley on a break above $89;