The market exhibited spunk, but it failed to gain any traction even as the buy-on-dips crowd made their move. Whatever is holding back would-be buyers can’t be assuaged with intraday rebounds.

Yesterday, nobody took the bait. Meanwhile, mega-cap names held up, allowing the NASDAQ-100 (NDX) to edge into the plus column.

It's all about the NASDAQ, but there might be too much enthusiasm as there is now a record number of long contracts. This is massive speculation.

The NASDAQ Composite chart is still appealing but extended.

Motley Leadership

Some household names are among the biggest gainers, including Match.com (MTCH), Uber (UBER), and Expedia (EXPE), and of the “winners,” which were not on many radars. 

On the downside, there was major profit-taking in recent winners.

Red Flags: New highs have rapidly declined and could be eclipsed by new lows.                   

Market Breadth	NYSE	NASDAQ
Advancers	848	1,534
Decliners	1,964	2,661
New Highs	35	73
New Lows	17	70
Up Volume	831.81 million	1.59 billion
Down Volume	2.66 billion	3.46 billion

The negative first five days do not bode well for the rest of the month, suggesting that gains for the quarter could be elusive.

Today’s Session

Anxiety continues to increase ahead of the start of earnings season, which kicks off on Friday.  Excitement over the Powell victory lap masked a major divergence between the direction of the market and earnings estimates.  We’ve seen these kinds of disconnects in the past, and often, the market is right and not earnings estimates.

Then, there’s the next read on inflation.  The Cleveland Fed isn’t as sanguine as the FOMC on inflation, which edges back up in their estimation in the CPI and PCE reports.

Early pre-open gains have faded away.  There isn’t panic in the air, but the tepidness of the market thus far in 2024 speaks for itself.

Comments

You are spot on about caution right now. Market still feels overbought. Just incrementally adding to bonds as yields creep upward. Steve S on 1/10/2024 3:28:19 PM

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