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Hey trendsters(can I make this a thing?)! While the markets take a pause today to honor the legacy of Dr. Martin Luther King Jr., we're still serving up some market magic here at Trader's on Trend! Forget puppets, we're unraveling the real strings pulling the market: Big Tech's influence! ️
In our Market Moving News, we're pulling back the velvet curtain to expose how these tech giants sway stocks with every click and cough. Prepare for mind-blowing insights and juicy tidbits like surprise IPOs and animal-powered crypto.
Our Chart of the Day throws Snowflake into the spotlight, charting its epic climb through resistance. Will this snowball into a Nasdaq blizzard? We'll have the scoop, along with actionable insights to keep your trading engine humming.
So grab your coffee (or kale smoothie, no judgment!), put on your thinking cap, and get ready for a front-row seat for today's edition. We're going deep, we're going bold, and we're making sure you're ready to conquer the market tomorrow, even with the trading break today.
Let's go!
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Today's Market Mood: EXTREMELY BULLISH!
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Market Roundup: Banks Bust a Move, Inflation Hides Behind the Curtain
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The bulls may have taken a breather before the long weekend, but the past week was all about defying gravity. The S&P 500 and Nasdaq, like seasoned tightrope walkers, notched their ninth gain in ten weeks, a feat even Houdini would envy.
But hold your celebratory confetti. Beneath the surface, whispers of mixed signals swirled. The Producer Price Index, usually a chatty inflation gossip, surprised everyone with a dip, while bank earnings, the first act of the quarterly drama, saw mixed reviews. Big names like Bank of America and JPMorgan took billion-dollar hits from the FDIC, reminding us that even financial fortresses have hidden cracks.
So, where do we stand on this Wall Street tightrope?
The Good:
- Inflation Houdini? The PPI's unexpected decline adds fuel to the "Fed might cut rates sooner than later" fire, potentially buoying risk assets like stocks.
- Tech Titans Hold Strong: Big Tech, the market's puppet masters, remained mostly unshaken by the bank drama, a sign of their continued influence.
- Energy Ignites: Oil prices took off, propelling energy stocks into the spotlight. Could this be the sector's comeback song?
The Not-So-Good:
- Bank Blues: Earnings were a mixed bag, with special FDIC assessments casting a shadow. Regional banks, in particular, felt the pinch.
- Retail Retreat: Consumer-focused stocks stumbled, hinting at potential anxieties about consumer spending.
- Small Stumbles: The Russell 2000, the little engine that couldn't quite, remained sluggish, down for the year so far.
Strategies Once Trading Resumes:
- Keep an eye on the Fed: Their next pronouncements on rates will be the melody to which the market dances.
- Seek shelter in sectors that shine: Energy's newfound fire might be worth exploring, while tech's resilience continues to hold charm.
- Don't forget the small fry: While the Russell 2000 stumbles, hidden gems may lurk within. Diversification is your friend.
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Market Mischief: Banks Take a Big Bite, But It's Not Pizza
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Remember how bank executives boasted about record profits last year? Well, someone forgot to pay the tab at the FDIC's all-you-can-eat-bailout buffet. Last week, big banks faced a billion-dollar indigestion, thanks to a special assessment to cover losses from recent bank closures. So, if you hear Wall Street whispers about "topping up capital," don't worry, they're just adding some extra napkins to the balance sheet.
Remember, folks, even in the market, sometimes you have to pay for your past overindulgences. Just think of it as financial karma with a slightly higher APR.
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$SNOW Shatters the Ice Ceiling
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Forget waiting for snow in July, Snowflake just stormed through a multi-year resistance level at $205, like a data blizzard carving its own path. This breakout could be the real deal, not just a slushy detour.
Here's what's got the bulls feeling frosty:
- The Channel Flip: Watch for the top of the channel to transform into solid support. A bounce off that level and a climb to $220 would be like building a snowman on top of Mount Everest – a bold statement, but definitely attention-grabbing.
- Supercharged SuperTrend: Keep an eye on that SuperTrend indicator staying green, dancing merrily above the red downtrend line. It's like having a trusty Sherpa on this data-driven ascent, guiding you towards higher peaks.
- Time for Timeframes: Remember, SuperTrends love higher timeframes, where they can truly stretch their forecasting muscles. Don't get lost in the short-term flurries – zoom out and see the bigger picture of Snowflake's upward trajectory.
Should you bundle up and join the climb? That's for you to decide. But one thing's for sure, Snowflake's breaking the ice, and the data-driven blizzard might just be getting started.
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Just five companies, all heavily involved with AI, have boosted the major averages into bull market territory.
One of those stocks, Nvidia, was up 189% in the first half alone.
Nvidia is a legendary home run, but our Weiss Ratings AI specialist, Jon Markman, has homed in on one high-rated AI stock in particular.
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Big Tech Takes Control: Can Stocks Hold On?
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Wall Street's rollercoaster might be taking a scenic detour through "meh" land. Last week, markets puttered along, ignoring whispers of optimism like a teenager at a family reunion. But beneath the yawn-inducing surface, a tug-of-war brewed.
On one side, Big Tech flexed its silicon muscles, propelling the Nasdaq to a 3.1% climb. On the other, whispers of "January effect" jitters and corporate hiccups kept the Dow grounded. So, the question on everyone's mind: Can Big Tech drag the whole market to the promised land, or is this just a tech-powered detour before a bumpy descent?
But wait, before we declare Big Tech the market commander, let's peek under the hood. Earnings season is revving up, with banks leading the charge. Tech titans like Microsoft and Apple will soon follow, their reports holding the key to market momentum. Remember, December's exuberance might need a reality check, and six expected rate cuts won't arrive overnight.
Meanwhile, whispers of external gremlins can't be ignored. A potential government shutdown and simmering global conflicts lurk like potholes on the information highway. Don't get us wrong, patience is key. But keep your risk radar humming.
Here's the lowdown:
Tech Revving: Nvidia's AI-powered engine roared last week, jumping 11.4% and reminding everyone why Big Tech remains a market mover. But remember, overheated engines sputter, and tech dominance could lead to another December-like correction if unchecked.
Midcaps Mired: While Big Tech soars, smaller stocks struggle for takeoff. This uneven runway suggests caution. Diversification might be the ticket to a smoother flight.
External Turbulence: Political squabbles and geopolitical skirmishes could throw the market into a tailspin. Keep an eye on these storm clouds, and adjust your portfolio accordingly.
The bottom line? Big Tech might be the captain now, but external risks are the unpredictable weather patterns. Stay informed and relaxed for now, and enjoy the (admittedly uneventful) scenery for now. The real market drama might be just around the corner.
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Here are some of the companies that made headlines with their stock price movements, driven by analyst ratings, quarterly results, or other news:
- Bank of America dropped 1% after the bank reported a 56% plunge in fourth-quarter net income, partly due to a hefty $2.1 billion fee charged by the FDIC.
- Bank of New York Mellon climbed 4% after the bank beat Wall Street expectations with its fourth-quarter earnings and revenue.
- Citi rose 1% after the bank posted disappointing fourth-quarter results and announced plans to slash 10% of its workforce.
- DocuSign soared 3.59% following a report that two private equity firms, Bain Capital and Hellman & Friedman, were vying to acquire the online signature company. Bain Capital shares dipped 0.39%.
- Delta Air Lines and United Airlines nosedived nearly 9% and over 10%, respectively, after the FAA said it would audit Boeing’s production line following the midair mishap involving a Boeing 737 Max 9 during an Alaska Airlines flight. Boeing shares fell 2.23%.
- JPMorgan Chase slipped 0.79% despite reporting a 15% drop in fourth-quarter net income partly related to the $2.9 billion FDIC fee. The bank also said quarterly revenue surged 12% to nearly $40 billion.
- Tesla declined 3.67% following reports that the electric vehicle maker cut its prices in China.
- UnitedHealth dropped 3.39% as higher costs reported in the health insurer’s quarterly results overshadowed stronger-than-expected earnings.
- Wells Fargo lost 3.3% after the bank warned that its net interest income for 2024 could fall from last year, overshadowing earnings and revenue that beat expectations.
Earnings season picks up speed this week with more major banks scheduled to report results Tuesday, including Goldman Sachs, Morgan Stanley, and PNC Financial Services Group. Wednesday’s lineup includes aluminum producer Alcoa, credit card issuer Discover Financial Services, and regional lender U.S. Bancorp.
Weekly Recap: Inflation pressures ease
Friday’s PPI numbers added to a long list of easing inflation readings over the past year. The latest numbers showed how the Fed’s aggressive policy-tightening cycle, launched nearly two years ago, seems to have mostly tamed the soaring price pressures.
For December PPI, a 0.4% fall in goods prices was mainly responsible for the monthly decline in headline PPI, while services prices were flat. PPI tracks wholesale prices—what manufacturers and other companies, not consumers—pay for goods. Because companies often pass higher or lower costs on to consumers, PPI can be seen as a gauge of future consumer prices.
On Thursday, the Labor Department said the overall and core rates of CPI each rose 0.3% in December from November, both above expectations for increases around 0.2%. But compared to year-earlier levels, the core rate posted a 3.9% year-over-year increase in December, down from a 4% rise in November and the first sub-4% core rate increase since mid-2021.
Late last week, investors continued to hold relatively high expectations for rate cuts from the Fed this year, starting in March. The Fed’s key rate is at 5.25% to 5.5%, and affects almost all other interest rates. The 10-year Treasury yield is at 3.944%, down from 5% in October. This is good news for mortgage rates, which are at 6.69%, down from 8% in October. This could boost the housing market, which is a key driver of the economy.
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Random Musings and the Time Machine
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Random Musings?
Bank Earnings Rollercoaster: This week's bank results were a thrill ride, with some soaring like BNY Mellon on a double espresso of earnings, while others like Citi stumbled after a rough quarter. Buckle up, folks, next week brings another round of bank earnings – popcorn optional, but anxiety-reducing strategies recommended.
DocuSigned: Love or Acquisition? The private equity bidding war for DocuSign is heating up like a virtual inkwell. Is it true love, or just a strategic power play? Remember, folks, sometimes the biggest deals are not about romance, but about market dominance.
Tesla Price Cuts and Investor Jitters: The electric carmaker's price adjustments in China caused a tremor in the market. Is it a temporary hiccup, or a sign of deeper demand concerns? Keep your eyes peeled, folks, this could be a bumpy ride for Tesla and the broader EV sector.
Boeing Grounded, Airlines Plunge: The FAA audit hammer sent Boeing and the airlines spiraling like a paper airplane in a hurricane. This isn't just turbulence, folks, it's a potential storm cloud on the horizon for aviation stocks.
Inflationary De-Escalation: A Mirage or Oasis? The recent inflation readings have offered a glimmer of hope. But before we break out the champagne, remember, the desert can be deceiving. Keep your boots on, folks, and be prepared for the possibility of another inflationary mirage.
On this day in history, January 15th:
1935: The First Social Security Tax is Collected. Remember, folks, this tiny bite out of your paycheck back then has grown into a complex system vital to millions. So next time you hit "submit" on your tax return, take a moment to appreciate the safety net this little levy weaves.
1973: The First Arab Oil Embargo Begins. This historical event sent shockwaves through the global economy, reminding us of the delicate dance between energy prices and financial stability. Keep an eye on that oil barrel, it can still throw a wrench in the market's gears.
2008: Wikipedia goes dark for 24 hours in protest against proposed anti-piracy legislation. A powerful demonstration of the internet's collective voice and its potential impact on policy.
2004: Facebook is Founded. Who knew a dorm room idea would become a social media behemoth? Even the most modest beginnings can lead to market-shifting empires. So, keep your entrepreneurial flame burning, you never know what sparks might ignite.
2013: The U.S. Suspends Aid to Egypt. This geopolitical event highlighted the complex relationship between financial markets and global events. Remember, the world is a tangled web, and even a seemingly distant conflict can have ripple effects on your portfolio.
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Final Ledger: A Market of Surprises
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Wall Street's script last week was ripped straight from a mystery novel. Big banks stumbled on the stage of earnings disappointments, while tech giants showed who is the boss in the market spotlight. Inflation took a backstage break, leaving investors guessing about the Fed's next act. Grab your popcorn, not for a predictable drama, but for a suspenseful thriller.
As Robert Arnott quipped,
“In investing, what is comfortable is rarely profitable.”
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