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Good Morning Today is Thursday, January 10
- S&P 500 futures are pointing to a lower opening of 15 points as of 8:45 AM
- The US 10-year rate is at 2.69%
- Dollar Index is at 95.28
- WTI Crude Oil is $51.91
- VIX: 20.80
- Critical events for today: Powell speaks at 12:45 PM, progress made on trade talks according to China
Recap of International Trading:
- Hong Kong Hang Seng Index up 0.22%
- Japan down 1.29%
- China Shanghai Comp. down 0.36%
- UK FTSE down 0.15%
- Dax down 0.40
U.S. stocks are pointing to a lower start on further concerns over China slowing. The nervousness comes despite Hong Kong rising by 22 basis points and Shanghai falling 0.36 basis point. So it makes total sense that the S&P 500 should be down 60 basis points? Of course, it makes complete sense.
Hong Kong (HSI)
The producer price index for China came in at 0.9% versus expectations for 1.6%. Despite the weaker inflation rates Hong Kong continues to trend higher, and we will continue to watch how this index progresses in what could be the creation of a double bottom technical reversal pattern.
Tencent continues to approach a potentially big breakout, and I think it could trigger a much more significant break out signal across global technology names. This was the stock that topped before any other technology name when it peaked in March.
Germany gapped lower and filled the gap, after bouncing off support at 10,790. Yes, the algo’s work the same in Europe. Keep this mind, because that is likely what happens in the US this morning.
I still think we are the cusp of a big global rally.
S&P 500 (SPX)
2,567 will hopefully act as support to start the day as investors “digest” the weaker China inflation data, which appears to carry very little weight around the rest of the world. I would not expect this “news” to weigh on US equities for very long.
What may weight more is weak retail sales out of Macy’s. Additionally, the government shutdown is sure to grab headlines too as democrats refuse to provide funding for a border wall. But the most critical event today is Powell speech at 12:45.
Retailers are getting walloped today after posting some disappointing holiday sales. Macy’s appears to be the hardest hit falling 17% to $26.40, a loss of $5.40. The stock is at risk of falling to around $23.40. Think back to a few weeks ago, who was it that reported record holiday sales? Oh, yeah, Amazon. Who was it that said e-commerce sales grew about 19% this holiday season? Yes, Mastercard. Is Macy’s weakness a surprise at the end of the day? It shouldn’t be. The concept of the department is antiquated.
Following the Skyworks preannouncement, which resulted in the stock rising, Qorvo was upgraded to a buy at Craig Hallum. Not surprising. This stock has a lot of work to do, starting with a nasty downtrend around $62 it first needs to get over.
Boeing was upgraded at Morgan Stanely to a buy from equal weight. The stock could be on it way back to $371 if it can clear the downtrend at $351.
Twitter was upgraded to buy from underperform at BofA. The stock looks like its on its way back to $36.50.
Roku has stalled out around $43, and if can’t mount a rally soon it is likely on its way back to $29, retesting the breakout.
Disclaimer: Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.