The Chip Stocks May Lead The Stock Market Lower

The Chip Stocks May Lead The Stock Market Lower on January 17

Today is Thursday, January 17

  • S&P 500 futures are pointing to a lower opening of 11.5 points as of 8:30 AM
  • The US 10-year rate is at 2.71%
  • Dollar Index is at 96.04
  • WTI Crude Oil is $51.62
  • Gold:$1,294
  • VIX: 19.26
  • Critical events for today: Netflix Reports 4Q Results, Consensus EPS Est. $0.24, Revenue Est. $4.207, Netflix guided 4Q Sub Adds at +9.4 Million.  More ZTE/HuaweiConcerns

Recap of International Trading:

  • Hong Kong Hang Seng Index 0.54%
  • Japan – 0.20%
  • China Shanghai Comp.-0.42%
  • UK FTSE – 0.50%
  • Dax -0.31%

Rate Hike Watch

The odds of no rate hikes through January 2020 have increased to roughly 67%. Meanwhile, the odds of rate cut in 2019 is at 21%
 

CSX (CSX)

In economic news, Jim Foote CEO of CSX noted on the company’s conference call:  Over the past few days, I have spoken to a number of large customers across different industries. General customer feedback has been positive and it’s consistent with the demand levels we are seeing today. While it’s hard to ignore the volatility in equity markets, I cannot call out any trend in our business today that would point to a significant slowdown in our business.

S&P 500 (SPY)

Stocks are pointing to a lower opening on January 17, a reflection of the weakness in the global markets.There is an unfilled gap in the S&P 500 chart down at 2,610, and that could offer technical support. But the next major level of support doesn’t come until around 2,595.

s&P 500, spy

Chips

The semiconductor sector is breaking down, and the SMH is falling below support $89.70. This sector is likely to weigh on the broader market. There is also an unfilled gap around $88.

Weak revenue guidance out of Taiwan Semiconductor (TSM) is not likely to help the group either. The company gave first quarter revenue guidance of $7.35 billion at the mid-point, below estimates of $8.08 billion.  The company cited a slower economy, mobile seasonality, and high inventory levels in the supply chain. 

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Disclosure: Michael Kramer and the clients of Mott Capital own Apple and NXPI.

Disclaimer: This article is my opinion and expresses my views. Those views can change at a moments notice when the ...

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