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
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Briefing.com and is being posted with permission from Briefing.com. The views expressed in this material are solely those of the author and/or Briefing.com and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Disclosure: Futures Trading
Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.