Monday January 28, 2019

// January 28th, 2019 // Daily News

Stocks could be in for a sharper decline as Apple and other big tech firms report

Apple, Microsoft and Amazon are among the avalanche of earnings releases this week, as stocks work through a period of choppiness following the big run up from December’s low.
Some technical strategists see a potential return of the S&P 500 to 2,500, as the market consolidates and continues to build off a base.
The next level to watch on the downside is 2,600, the Oct. 29 low and a zone that spurred more selling when it broke again in December, one technical analyst said.
CNBC.com

The stock market could be in for a period of rocky trading to lower levels, as investors work through earnings season and wait for developments on trade, analysts said.
Stocks were slammed Monday in a selloff that accelerated on negative earnings news from global cyclical Caterpillar and chipmaker Nvidia. Both companies pointed to weakness in China, feeding fears of a global slowdown.
“We’re not making big bets for or against stocks and bonds. We’re trying to see if this is a garden variety slowdown or if it’s the beginning of something worse. I don’t think any of us knows the answer to that now,” said Ed Keon, portfolio manager and chief investment strategist at QMA.
Some technical strategists who say the S&P 500 could fall further, see a drop of 5 percent as a possibility with the S&P dipping to a support level of around 2,500. But some analysts, like Keon, say more than declining, it would not be surprising if the market becomes locked in a sideways move for awhile.
For the month of January, the S&P 500 was up 5.2 percent as of Monday and up 12.2 percent since the Dec. 24 closing low. The S&P 500 was trading just under 2,640 Monday afternoon, a decline of 1 percent. Stocks were selling off Monday on the eve of a Fed meeting where the Fed is not expected to take any action on interest rates but is expected to sound very wiling to pause its rate hiking.

“Tactically, February does sport a mixed performance reputation and may be a catalyst for a pause or consolidation after a +15% rally. There’s been some modest loss of momentum over recent days, but we’d look to the 2500/2550 area to offer support and contain weakness moving forward,” Strategas analysts wrote in a note. On average, the S&P 500 has been flat in February, going back to 1950, according to Strategas data.

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