January 24, 2019

Early Gains quickly fade

Index & Sector performance 1/06/14

The Market:

Pre-market optimism was met with early selling which took the S&P 500 from $137 on the open own to $1824 by midday.  The market bounced along crafting a bottom until roughly 2pm EST when the S&P managed to rally off the lows.  While it never made it back to the morning high, the S&P managed to rally back toward even on the day but then sold off in the last hour closing near the lows of the day.

In economic news we saw Factory Orders and Services PMI come in as expected while ISM Non- Manufacturing PMI missed expectations.  Tomorrow is a lighter day but traders should watch the Trade Balance at 8:30 am EST as well as Economic Optimism.

Economic Calendar

In the News:

Boeing (BA) closed slightly higher today on news that they have struck a deal with its largest union and for 10 years with the new contract not expiring until 2024.

A big mover of note which is also listed below is Solar City (SCTY) which received an upgrade to Conviction Buy at Goldman Sachs with an $80 price target.  Also in solar, Goldman Downgraded First Solar (FSLR) to Sell from Buy with a $45 price target.

After having their $55 offer rejected by Jos. A. Bank (JOSB), Men’s Wearhouse (MW) has increased their offer to $57.50 and also announced that they will be seeking two board seats at the upcoming Annual Meeting.

Joining FSLR in losing ground in today’s session included Select Comfort (SCSS) which lost X% after lowering Q4 guidance. Also down but not on any news we could find was Office Depot (ODP) closing over 7% lower on higher than average volume.  ODP has big support around $4.50 and will be an area to watch if we get there.

The following noteworthy companies are scheduled to report earnings before tomorrow’s open: IHS, CMC

Analyst Comments:

Upgrades 1/06/14

Downgrades 1/06/14

Initiations 1/06/14

Price Target Changes 1/06/14

The Game Plan:

Three straight down days in the S&P 500 to start the year may not be what some would have expected from this market but is also not a cause for panic.  The market appears to be digesting and taking back some of that holiday fluff we added when no one was around to be opposition.

Our stance is and has been that a correction is healthy for the market and it can become concerning when we do not get one as that can open the door for a much sharper and relentless decline.  These three straight down days are far from a true pullback but could be a start.

In the meantime the $1770-$1815 region remains support and as the market approaches the 20 day SMA we will have to see if it can prove to be support.  There is the potential for a nice shorter term trade if the intraday charts line up with the test of the 20 day SMA.

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