The new year has been off to a pretty quiet start in terms of market movements. Not surprising due to the slow trickle of market participants coming back from holiday schedules.
In terms of economic news the monthly U.S. job report made things unclear since it was a worse report than expected. This continues the “bad economic news = good news for asset prices” cycle we have been in since the U.S. Federal Reserve Board has been participating in the markets through quantitative easing. Lately with all the prior month revisions, weather, government effects the report results have seemed to become less relevant. The event is more important. Here the prevailing opinion is that the numbers themselves don’t move markets, it’s the pent up demand or reaction trading that moves it. In a nutshell, think of the economic release as an opportunity to buy or sell and since everyone thinks the same there will be increased buying or selling. The point is that the news itself doesn’t move the markets, it’s the market using the news as an opportunity to move. More on that in a later post.
There will be some economic news this week however the pickup in earnings report this week might be the focus in market movements. This along with the U.S. employment report out of the way, it is more likely that major indices be muted and the real action will be in individual equity securities. If you follow SPY perhaps the week will end up in the range of 179.80 and 188.30.
The action will most likely be in the bank stocks, beginning with earnings reports on Tuesday with JP Morgan Chase on JPMorgan Chase and Wells Fargo. Bank of America on Wednesday and then Goldman Sachs and Citigroup on Thursday. Morgan Stanley rounds out the week on Friday. Stay tuned for some earnings play ideas.
In summary, this week might suit the stock pickers and short term players in individual names, the general index people might have a snoozer of a week.
Good luck and trade rationally.
For Entertainment and Educational Purposes Only – Not a recommendation of securites nor financial advice – Disclaimer