EB Daily Market Report - Friday, January 12, 2024

Dear Members.

A brief update today as Tom Bowley is tied up for the day.

First, as a reminder, the market will be closed Monday in observation of Martin Luther King, Jr. day. Accordingly, we will return on Tuesday with our regular schedule.

Yesterday, CPI was seen to be a bit too hot, worrying traders that the Fed might not be done raising interest rates. Today, PPI was a bit weaker than expected, giving traders hope that the Fed might be done raising rates. Accordingly, traders are trying to figure out which scenario might play out first with the S&P barely higher after once again flirting with the 4800 level.

Earnings season has started with JPM giving a mixed picture with the stock moving up nicely earlier in the session only to give is all up as the day progressed. Starting next week we'll see some big names start to report, giving traders more clues as to where the market might be heading next.

But for right now, the S&P is holding up quite nicely with the bulls hoping it clears its all time high of 4818 that was achieved on January 4, 2022. Tom has pointed out that a developing negative divergence could result in some selling that could ultimately take the S&P down to the 4550-4600 level. The question is, might that happen before we get a look at some additional earnings, or will traders start locking in profits sooner rather than later?

To the downside, the first key level of support on the S&P will be the 20 day moving average, currently at 4727. To the upside, the S&P got as high as 4802 earlier today so if it clears that level, then we might see a challenge of the all time high.

At your service,

John Hopkins