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Still Playing with Air of Resilience

Briefing.com

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Briefing.com
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Chief Market Analyst

The major indices finished lower on Monday, yet the market didn’t make much of it, as the move was largely attributed to some overdue selling interest. We know that to be the case, because there was some intraday buying interest and this morning the futures market showed a similar inclination.

Currently, the futures for the major indices are all trading in close proximity to fair value, which should lead to a flattish start.

That’s not much, but in the grand scheme of a market that has come a long way in a short amount of time, it’s enough to suggest this market continues to be governed by a bullish bias. That may not necessarily mean that it is going to maintain a vertical-minded posture, but it incorporates a view that there is apt to be a propensity to buy on weakness that keeps losses in check.

Accordingly, the correction many participants are expecting could be more of a time-based correction than a price-driven correction, absent a jarring trigger.

Such triggers could include, but not be limited to, another quick ramp in long-term rates, a disarming earnings forecast from a leading company that implies the market is ahead of itself with its earnings recovery expectations, or the unfortunate sight of additional armed attacks on government buildings.

The FBI warned yesterday that such attacks are a possibility leading up to President-elect Biden’s inauguration on January 20.

In the meantime, this stock market is keeping calm and carrying on, wedded to its recovery-minded view that showed up Monday in the outperformance of the bank and energy stocks, as well as the Russell 2000.

Helping today are press reports that suggest Apple (AAPL) had stronger than expected sales of its iPhone 12 in China in the fourth quarter, a UBS upgrade of Wells Fargo (WFC) to Buy from Neutral, and a view from Pfizer’s (PFE) CEO that COVID vaccine manufacturing is being scaled up at speeds that were unexpected.

Mostly, though, the stock market’s own air of resilience is helping, not to mention the continuation of some giddy gains in hot corners of the market like hydrogen fuel cells and electric vehicles, which point to a willingness to keep playing until someone, or something, takes the ball away.

Originally Posted on January 12, 2021 – Still Playing with Air of Resilience

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