It’s the biggest week for stocks so far this year and could determine what the first quarter looks like. It’s an unusual week with a heavy amount of macro and earnings figures that will set the tone for the rest of the quarter. Economic Data: On the economic front, there is the US Employment Cost Index (Tuesday, which shows how employee compensation is faring); Eurozone Consumer Price Index, US Manufacturing ISM, US Job Openings and Labor Turnover Survey, and Federal Reserve decision (all Wednesdays); Bank of England and European Central Bank decisions on rate hikes (Thursday), and the US jobs report for January (Friday). Earnings: More than 20% of the S&P 500 will report this week; By next Friday, 50% of the S&P will have reported. The most important reports are global, including Caterpillar and UPS (Tuesday morning) and Honeywell (Thursday morning) and big tech such as AMD (Tuesday night), Apple, Alphabet and Amazon (Thursday night), and global consumer name McDonald’s (Thursday night). Will come from industries. Tuesday mornings) and Starbucks (Thursday nights). Most Important Events: Markets are showing broad-based strength in January. Consider: Both the advance/decline line and the 200-day moving average of the stock are showing positive signs. The most important sign for an up market is more stocks going up than going down. The NYSE Advance/Decline line is at its highest level since September. Craig Johnson at Pipersandler notes that 66% of all S&P 500 stocks are above their 200-day moving averages. For reference: above 50% is good, above 60% is very good, above 70% is a bull market. It’s not just the big-cap S&P 500 that’s moving up: Small-caps are moving up too. Johnson noted that 56% of all stocks with a $25 million market cap and price above $2 are above their 200-day moving average. The S&P 500 has broken out of a long-term downtrend of lower lows and lower highs: “Our analysis indicates that the S&P 500 set its 2022 lows last week,” Oppenheimer’s Ari Wald said in a note to clients over the weekend. Reversed the downward trend.” , Both growth and value stocks are performing well in January. The S&P Value and Growth ETFs are both up about 6% for the month. High-beta names, which trade higher than the market when the market is rising (usually tech stocks), also tend to do better. The S&P High-Beta ETF is up 16% this month, at its highest level since April of 2022. The ‘January barometer’ is glowing positive: the barometer (“as January goes, so goes the year”) trend for the first month’s performance to forecast the rest of the year. The S&P is up 6% for the month. If it holds, it would be the first positive January for the S&P 500 since 2019, when it rose 7.9%. Wald notes that when January is positive (58 out of 95 years since 1928), the period between February and December has been positive 78% of the time and the average gain has been 8.6%. Despite the advance, stocks are still not overbought: “These are better numbers than we’ve seen in more than a year,” PiperSandler’s Johnson told me, noting the strength of market internals. No more have been bought.” One area for considerable improvement: The new height. They’ve been pretty rare lately. S&P stocks hit new highs Friday in: 1 Housing (Lenar) 1 Transportation (Old Dominion Freight Line) 2 Aerospace (Transdigm Group, Houmet Aerospace) 1 Energy company (Marathon Petroleum) 5 Industrial (BorgWarner, United Rental) , Steel Dynamics, General Electric, Caterpillar) 2 casino/tourism stocks (Wynn, Las Vegas Sands) 1 restaurant stock (Starbucks) 1 retailer (Alta Beauty) 2 insurance stocks (Chubb, Arthur J. Gallagher) What does this mean? “I’m caught in those numbers if there’s no big [on the economy and on earnings]The tape is going up,” Johnson said.
Stocks face biggest test of the year this week after early year’s gains