E Market Briefing For Monday, Feb. 4

Synergies prevailed as a 'Worry Wall' was climbed and persists. Factors outlined have combined to allow the S&P to ignore Amazon's missteps that we discussed (in China and India); helped quite a bit by Semiconductor and Oil rebounds. The Fed is sidelined as a concern for now; and while many of course worry about Treasury demand later (mentioned this week); overall it is not anything to be concerned about, despite 'tight job market' concerns.  


Let's summarize where we stand going into the new month's first full week:

  • A blockbuster January S&P move (best in it seems 30 years); will set it up for consolidations; but likely within-context of the overall uptrend;
  • Having anticipated 2018's rolling purges, especially in the Fall; we had a pivot that set-up a down-and-up 'V bottom' reversal that could pause;
  • The nature of those having to 'chase' the upside, plus skeptical short sellers, contributed to the extension to and above our congestion zone, which we thought would see the market 'nudge' higher, and occurred;
  • We do anticipate a fade or pullback perhaps after another thrust or two; as key headwinds have softened (for now) from a monetary standpoint;
  • The calmer Fed 'and' progress on China trade were essential to our call for the market to move forward, and extend it it has and is ongoing;
  • We got the former, and anticipate the latter over the weeks ahead;
  • To a degree, the fuel (shorts and seasonal buyers) will gradually fade, but that doesn't mean better quality growth won't advance overall;
  • We discourage chasing stocks that turned nicely in December; at the same time we thought many FANG stocks would also rebound, but are more dangerous to trade with (that's more so after the recent run);
  • We do anticipate a short-term battle just ahead; in line with our call all month to be wary of upside extensions later, in February;
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