Commenting on Apple, Tesla, Facebook Q4 earnings, and today’s trading Gorilla Trades strategist Ken Berman said:
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Stocks Settle Down
Today's low-volatility session was a typical pre-Fed-day one, it’s still a bullish sign following a hectic week of trading. The fact that stocks settled down today, avoiding a deeper pullback shows just how resilient this market is in the face of the growing valuation fears.
Volatility was very low at the level of the key sectors today, and the clear trends of the past weeks were less apparent. Communication services, consumer-related issues, and real estate stocks performed better than the broader market, but most cyclical sectors also stabilized. Energy stocks and the defensive utilities and healthcare sectors were the weakest in the choppy environment, but most sectors closed the day in the red. The second half of the week will likely see larger-scale moves and it will be interesting to see how cyclical issues will fare following tomorrow's Fed announcements.
Possible Changes To President Biden's Stimulus Proposal
White House officials hinted at possible changes to President Biden’s stimulus proposal in the wake of a bipartisan push for a smaller, more focused bill to help the most-affected industries and households. Reduced eligibility for the proposed stimulus checks is among the suggested changes, but for now, the rumors had a limited impact on stocks. Small-caps continued to face headwinds today, but the Russell 2000 is still stronger than its large-cap peers on a year-to-date basis, as investors remain upbeat regarding the U.S. economic outlook.
The pandemic hit another grim milestone today as global cases topped 100 million as the European outbreaks continue to rage. In the meantime, the number of cases continues to decline in the U.S., with daily infections hitting their lowest level since late-November yesterday and their seven-day average also dropping sharply. That said, the level of economic uncertainty remains high globally due to the looming vaccine shortage and the danger posed by the new variants of the virus.
Tech Giants Including Tesla, Apple, Facebook And More To Report Q4 Earnings Tomorrow
While we will have a relatively quiet day of economic releases, the Fed’s monetary statement will be very closely watched following the first meeting of the Central Bank under President Biden. Besides the Fed’s announcements, the durable goods report will be out tomorrow, but corporate earnings are more likely to make waves on Wall Street. Apple (AAPL, +0.2%), Tesla (TSLA, +0.3%) Facebook (FB, +1.5%), and AT&T (T, +2.2%) will highlight tomorrow’s earnings calendar, with Boeing (BA, -0.6%) and Abbott Labs (ABT, +0.1%) also releasing their fourth-quarter numbers.
After breaking out of a five-year consolidation pattern last year, the biotech sector continues to show relative strength in 2021, and the XBI (XBI, -1.8%) and IBB (IBB, -1.7%) ETFs both hit new all-time highs today. The sector confirmed the long-term technical breakout following a slight pullback in December, and it could be ready to extend its bull run in the coming months. The ETFs are both above their rising 50- and 200-day moving averages, and despite the overbought short-term momentum readings, buying pressure remains apparent in the sector.
We finally saw encouraging post-earnings moves today, with Johnson & Johnson (JNJ, +2.7%) especially making bulls smile. The stock recently broke out of its broad trading range that it spent the second half of 2020 in, and today’s move to a new record high once again confirmed the healthcare giant’s strength. JNJ is trading well above both its moving averages, and given the encouraging long-term developments, any pullback could be considered as a buying opportunity for bulls. Stay tuned!
- The major indices finished flat following a choppy and quiet session on Wall Street as investors took a step back ahead of the Fed meeting and the crucial tech earnings
- The S&P 500 eked out a marginal new all-time high but small-caps remained under pressure amid the stimulus-related uncertainty
- Industrial giants Raytheon (RTX, +1.4%), 3M (MMM, +3.3%), and Lockheed (-3.7%) all beat expectations on their top and bottom lines and cyclical issues stabilized slightly following days of weakness
- The global tally of confirmed COVID cases topped 100 million despite the promising U.S. trends
- Microsoft (MSFT, +1.2%, +4% after-hours) reported blowout earnings just after the closing bell, and the stock extended its record-breaking rally thanks to the firm’s successful cloud push Volatility was very low at the level of the key sectors today, and the clear trends of the past weeks were less apparent. Communication services, consumer-related issues, and real estate stocks performed better than the broader market, but most cyclical sectors also stabilized. Energy stocks and the defensive utilities and healthcare sectors were the weakest in the choppy environment, but most sectors closed the day in the red. The second half of the week will likely see larger-scale moves and it will be interesting to see how cyclical issues will fare following tomorrow's Fed announcements.
|Index||G/L||Current level||Year-to- date||50-day||200-day|
Decliners outnumbered advancing issues by a 3-to-2 ratio on the NYSE today, with 84 stocks hitting new 52-week highs and 1 stock hitting a new 52-week low, while volume was slightly below average.
Price Action Gauge ******** (reading for 01/26: 64)
Today’s choppy session hasn’t changed the technical setup on Wall Street, and the major indices continue to be mixed with the Dow and the S&P 500 being held back by the key cyclical sectors.
Oversold/Overbought Gauge ******** (reading for 01/26: 43 Color: green)
The large-cap benchmarks continue to be slightly overbought according to the most reliable momentum indicators, and the Nasdaq is now close to joining the Russell 2000 in the “danger zone” thanks to the recent Big Tech rally.