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Sevens Report – Dow Theory Update

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What’s in Today’s Report:

  • Dow Theory Update: The Transports Continue to Lag
  • Gold Update

Futures are down slightly as the recent run to new highs in the S&P 500 is digested after a quiet start to the week.

Trade optimism faded modestly overnight amid several less encouraging news articles while there were no notable economic data releases overseas.

Today is lining up to be a busy day as there are a lot of potential market catalysts to watch ahead of the G20 this weekend.

On the economic data front, there are several housing numbers due out: Case-Shiller HPI (E: 0.2%), FHFA House Price Index (E: 0.2%) and New Home Sales (E: 680K) as well as Consumer Confidence (E: 132.0).

There are also multiple Fed speakers: Williams (8:45 a.m. ET), Bostic (12:00 p.m. ET), Powell (1:00 p.m. ET), and Bullard (6:30 p.m. ET). Powell will clearly be the most important to watch, however it remains very unlikely that his tone changes much (or at all) from last week’s FOMC press conference.

There is also a 2 Year T-Note Auction (1:00 p.m. ET) and if demand is soft (so yields rise) that could pressure stocks as it would show the market is dialing back expectations for a very dovish Fed in the back half of 2019.

Lastly there are a few companies reporting earnings today, but the FDX report after the close will be the key to watch as the release could offer insight (positive or negative) into the latest influence that U.S.-China trade tensions have had on global trade.

 

Dow Theory Update

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What’s in Today’s Report:

  • Dow Theory Update
  • Existing Home Sales Analysis

US futures are bouncing modestly as yesterday’s spike in volatility is digested while major averages in Europe and Asia were little changed during a quiet night of trade.

Economically, Japanese Trade figures from December missed expectations adding pressure to the Nikkei o/n.

Today, there are two economic reports due to be released in the US. First the FHFA House Price Index (E: 0.3%) which is generally not very closely watched but after yesterday’s soft Existing Home Sales report, it may get some attention today.

The other report is the Richmond Fed Manufacturing Index (E: -3.0). Again, not usually a very widely followed report but after the string of soft regional Fed survey reports last month, another big miss could add downward pressure on an already fragile market today.

There are no Fed officials speaking today which leaves earnings as the other major focus with: PG ($1.21), UTX ($1.51), and SYF ($0.93) reporting ahead of the bell and F ($0.30) after the close.

Lastly, the market will remain sensitive to any developments on relations between the U.S. and China as trade headlines and growth concerns were largely viewed as the reason behind yesterday’s heavy price action.