News Driver: North American markets set to open lower to start February. Sentiment shifts after weak Chinese manufacturing data led the Chinese CSI 300 down over 1.5% and weak Oil futures down 3.6% (as I write this).
S&P Futures down 0.7%
Nasdaq Futures down 0.5%
Dow Futures down 0.7%
Into today’s open look to see a weak form RISK OFF tone to equities globally. BOJ Kuroda’s surprise interest rate cut created a small rally Friday but the reality of China’s problems and slowing global growth can’t be fixed with Japanese stimulus.
MID-LONG TERM (Weeks-To-3Months+): Bearish
The situation remains precarious the markets. If the S&P 500 breaks back below 1,880-1,870 (a key support floor), and if the Crude Oil (WTI) reverses back below $30 aggressively. This market has more downside risks than upside potential in the mid-to-longer-term. Look to De-risk long positions with rallies unless you can stomach the volatility. We may very well look back at this time as the start of the Bear market. Be ready for anything.
SHORT TERM (Days-To-Weeks): Bullish
We enter the week with a HOLD on short term Swing and Positions trades. If the S&P 500 breaks 1928-1921 (support) a move closer to SELL for shorter term positions is a good idea. A break below 1880-1870 for the S&P 500 suggests the “bounce” is in jeopardy and likely over and a move to de-risk is the better option.
S&P 500: Pre-market S&P 500 -0.6% with moves largely in tandem from the Nasdaq & Russell2K (Nasdaq showing some “strength” declining at -0.4%
Anticipate the S&P 500 to open to challenge support of 1,928-1,921 with better odds to hold, not withstanding a further breakdown in Oil
TSX: Should under-perform today on the back of weak Oil prices present negatively under resistance of 12,810-12,755, with better odds to hold above support of 12,547-12,497.
Bonds/Gold: Defensive assets remain relatively expensive and are more likely to under-perform this week, however today’s Oil softening and weak-form risk-off has defensives holding in (TLT flat, Gold +0.55%).
Oil: $32.66 (8:28AM): Oil futures are down after the weak Chinese manufacturing data and the increasingly unlikely prospect of production cuts from the key producers.
I still expect WTI to make another lower low but time will tell if the bottom can start to materialize. We will watch it closely.
Economic Calendar: December figures for core inflation, personal income and consumer spending have just posted:
3pm EST: ISM Manufacturing PMI for January with a forecasted reading of 48.0. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
For a review of the rest of today’s economic data visit the economic calendar here.
Earnings: Stocks to watch include Alphabet $GOOGL (still not used the to the name lol) Aetna $AET, Aflac $AFL, Cardinal Health $CAH, Sysco $SYY and Mattel $MAT
For a complete list of today’s earnings visit the earnings page on our site.
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