S&P Breaks in the Bulls Favor Ahead of Powell, CPI
A few individual setups catch our eye.
Follow @MrTopStep and @BretKenwell on Twitter and please share if you find our work valuable.
Our View
While volume in the S&P futures rose to almost 2 million contracts on Friday, the volume on the 'Big Board' was just over 900 million. They say light volume on the upside is not a good indicator, but nor is global equity funds posting their 14th week in a row of outflows. I’ll also just add that volume tends to be higher on the pullbacks than on the rallies.
According to the U.S. Survey of Professional Forecasters, this is the most worried that economists have ever been about a US recession. In the most recent results, nearly 44% of respondents expected America's gross domestic product (GDP) to decline over the next year.
That's the highest number in the survey's 54-year history. I have mentioned this before: I don't believe it is a one-and-done stock market decline. And despite what Friday's better job number suggests, there have been and will continue to be massive layoffs.
We’re now seeing layoffs outside of tech and crypto. We’re now seeing it at Goldman Sachs, McDonald’s, PepsiCo, Gap and others. It’s just something to keep in mind ≥
Our Lean — Danny’s Take
After 3 days of range-bound trade in the new year — and 13 sessions overall — the ES rallied sharply Friday.
The jobs report was meaningful and in hindsight, it’s no surprise that Friday turned into FRY-day. However, this week is the big one to watch.
Three Fed governors speak this week, while Powell will speak on Tuesday morning. On Thursday we get the all-important CPI report, while the banks — BAC, C, JPM, WFC, BK and BLK — kick off earnings on Friday.
Our Lean: