Dow Theory Update

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.

Key Earnings Week

What’s in Today’s Report:

  • Earnings Update and Outlook

U.S. futures are tracking global shares lower on renewed economic growth concerns after Chinese GDP hit a near three-decade low of +6.6% in 2018 while the IMF reduced 2019 global economic growth forecasts to 3.5% from 3.7%.

Furthermore, news that the U.S. is pursuing formal extradition of Huawei’s Meng Wanzhou from Canada is further weighing on sentiment towards the delicate political relationship between the U.S.-China right now.

There was more underwhelming economic data o/n as the German ZEW headline whiffed (27.6 vs. E: 43.2), underscoring deterioration in analyst confidence in the EU’s largest economy.

Today there is just one economic report to watch: Existing Home Sales (E: 5.240M) and there are no Fed officials scheduled to speak.

That will leave investor focus on earnings and U.S.-China relations. Notable earnings today include: JNJ ($1.95) before the open and IBM ($4.81), COF ($2.40) after the bell.