Market at a Glance - 1/28/2021
By: Christopher Mistal
January 28, 2021
1/28/2021: Dow 30603.36 | S&P 3787.38 | NASDAQ 13337.16 | Russell 2K 2106.61 | NYSE 14669.52 | Value Line Arith 8281.04
Fundamental: Mixed. Vaccine rollout continues to appear to be lacking, speed, quantity and organization further extending the pandemic. New Covid-19 variants are spreading and only further muddy the already rather murky data that is available. Economic growth is improving, but likely has a cap as long as sizable portions of the economy remain restricted or shutdown. Corporate earnings from stay-at-home economy companies have been solid while other sectors, namely leisure and hospitality, languish.
Technical: Consolidating. DJIA, S&P 500 NASDAQ and Russell 2000 all broke out to new all-time closing this month, but in many areas of the market valuations have been stretched. DJIA, S&P 500 and NASDAQ are all comfortably above their respective 200-day moving averages. DJIA touched its 50-day moving average yesterday while S&P 500 and NASDAQ did not. If support at the 50-day moving average fails, the next area of support is around the highs reached last September.
Monetary: 0 – 0.25%. During the first Fed meeting of the year this week, the Fed once again confirmed its commitment to doing whatever it takes to support the economy. This commitment is linked to employment and inflation and the most recent announcement suggests near-zero rates and QE will be around for the foreseeable future and likely beyond. Should weakness appear in February, it is likely to be brief and any retreat shallow. “Don’t fight the Fed.
Seasonal: Mixed. It is the middle of the “Best Months,” but February can be a weak link. In post-election years, February ranks last for S&P 500, NASDAQ and Russell 2000. #10 for DJIA and #11 for Russell 1000. Steep losses in February 2001 and 2009 pull average performance deeply negative.
Psychological: Euphoric. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 61.2%. Correction advisors stand at 22.3% while Bearish advisors are at 16.5%. Bullish advisors are slightly lower than their recent peak at the end of November, but the CBOE Put/Call ratio fallen below 0.40 in each of the last two weeks, the lowest we have seen going back to at least 2001.