According to Barron’s “the Dow hitting 20,000 was no fluke. Today’s stock prices are well supported by solid prospects for corporate earnings and economic growth. In fact, if President Trump can avoid stumbling into a trade war-or a real war- the Dow could surpass 30,000 by the year 2025.”
Does anyone else find articles like this comical? Based on current pricing the Dow Jones Industrial Average has less than a 15% chance of touching 25,000 by January, 2019. Unless the gurus at Barrons have a crystal ball, I’d rather be selling any uptick in this overpriced index.
Today we will see an uptick, hopefully, in the Vix. I’ll be looking to add some new trades in some liquid underlyings. We have some big earnings being released this week, so I’ll be looking at stocks that have a high IV rank, but no upcoming earnings.
Political unrest was the main theme over the weekend with President Trump’s executive order to temporarily suspend travel from terrorist regions sparking outrage. The Dow Jones ($DJI) is in jeopardy of losing its coveted 20K status as both Asian and European markets are retreating early with the renewed uncertainty in policy. The CBOE Volatility Index (VIX) may become more active gin the near-term after hitting a shocking low of $10.30 last week with essentially no risk premium priced in. Gold Futures (/GC) are showing some signs of demand this morning as a possible safe haven just under $1195 after 3 straight daily declines last week.
Oil Prices (/CL) have remained surprisingly steady above $53 as of late with the U.S. rig count rising by 15 last week to 566 total- accounting for the largest weekly climb in almost 4 years. Equilibrium continues to prevail as OPEC countries have been slow to curb production after their recent attempt to manipulate pricing. German yields have been pushed higher this morning with inflationary signs finally detected in tandem with the U.S. 10 year hovering just above 2.48% ahead of tomorrow’s Fed meeting.
Consumer spending, personal income, and core inflationary data will all be revealed pre-market. Pending home sales will also be disseminated shortly after the market open as some of the last data points the Fed will observe before commencing their two-day meeting tomorrow. Although slightly muted today, there will be a constant flow of earnings all week with a fifth of all S&P 500 companies reporting along with 5 key DOW components with headliners Apple (APPL) tomorrow and Facebook (FB) Wednesday.
FITBIT (FIT) –Getting Slimmer! – The popular wearable device maker is slashing up to 10% of their workforce due to a barrage of growing competition. Shares have continued to decline ever since reaching an all-time high of $52 back in August of 2015 with another 10% dip pre-market after the most recent news.
Tempur Sealy International (TPX)- Back Pain!! Shares of the mattress company are down an astonishing 30% pre-market after announcing a contract termination with Mattress Firm. Shares will likely open near 2 year lows with several analyst downgrades adding to the pain.
Major Economic Reports:
7:30 am CT – Personal Income and Outlays
9:00 am CT – Pending Home Sales
9:30 am CT – Dallas Fed Mfg. Survey
12:00 pm CT – 5-Year Note Auction results
Monday – 1/30:
Before Market: BAH, CSTR
After Market: PFG, RMBS
Tuesday – 1/31:
Before Market: AET, ALLY, COH, CNX, DHR, LLY, XOM, HOG, MAN, MA, NUE, PCAR, PFE, SPG, S UA/UAA, UPS, VLO, XRX\
After Market: AMD, ALGN, APC, AAPL, CHRW, EA, OLN,X