Investors Remain Optimistic
Trends remain to the upside and the outlook optimistic according to analyst. Everything I read has a positive bent and hope attached. This is concerning unto itself. I am not one to begrudge making money in the markets, but I am very cautious about the move higher. There is plenty to worry about and not the least of which is fourth quarter data. Earnings are on tap and the jobs report on Friday. I don’t expect any surprises, however I have my stops in place just in case the news disappoints. For some reason that old saying, “buy on the rumor, sell on the news” keeps rumbling around in my head.
The leadership remained the same with commodities, energy and financials leading the way. I like the fact the financial stocks are participating to start the year. This is one of the laggards and any movement from the sector to the upside is positive. Big banks have taken a role as well as insurance moving higher. Goldman Sachs has bounced off the near term low with a bang and upgrades to Morgan Stanley have helped as well. Watch for this to continue short term.
Some resistance near term for the major indices are in play. Nothing goes straight up so I expect some give and take as we move forward.
What to watch today:
Oil supply data is out this morning and that could have an impact on the price of crude. The last couple of weeks we have seen the draw down be larger than expected. If this trend continues look for oil to continue higher, however, it the number is higher than expected a pullback is in order. Energy has moved quickly the last two weeks and could take a pause here short term.
Precious metals are moving higher and worth looking at short term. Gold (GLD) is poised to break back above the $110 mark. Silver (SLV) did move back above $17 yesterday and both are worth watching short term.
Base metals continue to move in an uptrend and remain a positive. Steel and copper have hit new highs over the last couple of weeks.
Agriculture stocks made a solid move higher yesterday as the commodities regain the swagger. This could be interesting as the sector attempts to move higher. I am still cautious here and would use tight stops on any plays.
Small caps have found some resistance at the 338 range, but I still like the outlook for the month of January.
ADP jobs report will be out this morning as a precursor to the Friday government jobs report. There is a sense of nervousness concerning the data, but I expect the data to be positive for once. Maybe even see a positive number with jobs added in December?
ISM Services data is out as well today and the number fell back below 50% in November. If it maintains that range not good news. Looking for the number to be in the 50.5% range. The services sector is still lagging manufacturing in the recovery, but a positive number here would help the outlook.
Plenty to ponder, but the key is be disciplined and focused on what you want and are attempting to accomplish with your money. Manage it according to your goals - it’s a lot more fun and it gives you something to look forward to!
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