Market Insights

S&P 500 Overview:

• Melt-up underway, with no clear resistance until 2800.
• VIX lowest since early October. S&P 500 just had best month since October 2015.
• Next 2 weeks has positive calendar bias amid earnings. Risk may return 2/15 (shutdown), 3/1 (China tariffs).
• Sector mix shows risk-on sentiment:
• Stocks rising on mediocre news, unlike last quarter.
• Merger speculation increasing (ULTI, GCI). Tech, biotech likely to benefit.
• Next possible catalyst: What if bond prices break lower?

Work Space of the Week: Cannabis

• Cannabis stocks continue to draw attention.

Strategists Remain Bearish …

• Marketwatch: Slowest earnings growth in 5 quarters.
• Business Insider: Fewest companies beating estimates in 7 years.
• JPM: China failing to boost economy, zombie companies becoming a risk.
• Stifel: S&P 500 peaking as earnings slow, multiples fully valued.
• … despite apparently positive economic backdrop.
• … despite stocks climbing on mediocre results: UPS, GE, AAPL, CHTR, AMD

Energy in Focus: Is the Tide Turning?

• High-beta frackers like SLCA, HCLP outperforming.
• Brent crude stabilizing as Saudis cut production. Is OPEC back in business?
• Stronger Brent often helps refiner “crack spreads.”
• Venezuela supply at risk amid Maduro showdown.
• Baker Hughes rig count hits 8-month low.
• Inventories last week fell more than expected.

Don’s Watch List:

• Cronos (CRON): Pot stock hitting new highs.
• Papa John’s (PZZA): Starboard Value buys a slice
• Meet (MEET): Up and coming social-media name.

Russell’s Watch List:

• Cheniere Energy (LNG) consolidating above 200-day MA before possible China deal.
• Tilray (TLRY) trying to break 50-day MA.
• Etsy (ETSY) potential bullish triangle.
• Herbalife (HLF) quietly hitting new highs.
• Diamondback Energy (FANG): New S&P 500 member trying to turn at 50-day MA.
• Whiting Petroleum (WLL), US Silica (SLCA) may squeeze higher.
• LendingTree (TREE): Golden cross, pullback may provide entry.
• Intelsat (I) breaking 50-day MA. Possible 5G, spectrum boost.
• Pollo Loco (LOCO) potential momentum pullback.
• Video games (ATVI, EA, TTWO) conspicuously absent from 2019 market bounce.

Forward Calendar:

• Tech, health care, communications/media lead the earnings.
• Wednesday: Oil inventories (mid-morning), Jerome Powell town hall (evening)
• See the Market Insights weekly recap for more.