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Can Stocks Snap 5-Day Skid With Fed, Job Data on Tap?

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January 7, 2015

Early signs point up after Tuesday’s loss landed the S&P 500 (SPX) some 4% off the fresh record-high hit December 29. SPX and other primary stock indexes have retreated as oil prices cratered and global investors dove for cover in U.S. Treasuries, which they continued to do overnight even as global stocks recovered (Keep an eye on this.). Bond demand has sent benchmark yields (aka market interest rates) to multi-month lows in a time that the U.S. interest-rate bias is supposed to tilt up. Today, stock sellers look to come up for air as oil trading calms and global markets set an upbeat tone. The SPX’s close above support at 2002 (it poked through this line intraday Tuesday) could help stem the recent slide but watch for continued congestion around this mark. And, even with SPX improving, the CBOE Volatility Index (VIX) has held above the psychologically significant “20” line (figure 1).

FIGURE 1:

The CBOE Volatility Index (VIX) charted on the TD Ameritrade thinkorswim® platform hit an intraday high near 23 on Tuesday and remains above the closely watched 20 reading. Data source: CBOE. For illustrative purposes only. Past performance does not guarantee future results.

Fed in Focus. The Federal Reserve releases December meeting minutes this afternoon—the closest we get to being a fly on the wall at its Constitution Avenue fortress. You’ll recall December’s meeting produced a nuanced change in the group’s policy statement about the timing of eventual interest-rate hikes. Essentially, the Fed said it will be reactive, dependent on data to adjust ultra-low rates. Janet Yellen and crew were also clearly more upbeat about economic growth. Luckily, we’ll get some details today, but there may not be much new to chew on. The Fed release follows a morning report from ADP showing a better-than-expected 241,000 private-sector jobs created last month. For Friday’s broader hiring tally from the Labor Department, Wall Street had been expecting around 220,000 new jobs, shy of the 321,000 payroll add-ons in November but still tracking higher, obviously. The ADP data may prompt some Street economists to nudge their forecasts higher.

Gotta-Have Gadgets? The Consumer Electronics Show is underway in Las Vegas—an event that draws plenty of business press and occasionally features stock-moving product parades. This year, wearables remain a big topic as are the tech names joining the electronics-as-appendage party. Interesting to note that chip-veteran Intel’s (INTC) CEO Brian Krzanich was seen showing off a computer built into a jacket button for the “smart” clothes of the future (it’s due out later in 2015, he says) and sporting a wristband (announced in the fall) that turns into a self-snapping, flying drone camera.

Broad Retail Indicator? J.C. Penney Co. (JCP) jumped after hours and early Wednesday after saying its Q4 comparable-store sales will be at the top end of its forecast range for a 2% to 4% gain. The bump up is because Christmas sales proved merrier than expected for the department-store chain that’s taken a few lumps of coal for image issues and executive shuffling. Good news for JCP, sure, but more importantly, is this a positive sign for the retail sector?

Good trading,
JJ
@TDAJJKinahan

NC
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