Global Stock Markets Start Year Strong; Follow-through in Week 2?

Talking Points:

  • S&P 500 off to strong start, could use a breather to work off overbought conditions; dips viewed as potential buying opportunities.
  • DAX rallied sharply last week after initial weakness, looking to challenge record highs soon; a couple of key events on the docket, political concerns
  • FTSE is solid as long as it continues to stay above 7550/600, targeting 7950/900 on further strength
  • S&P 500

    To end the week, the U.S. jobs report disappointed as NFPs clocked in at +148k vs. the estimate of +190k. The unemployment rate came in as expected at 4.1%, as did average hourly earnings with a reading of 2.5% YoY. Looking ahead to next week the calendar is light with data releases. Both ‘high’ impact data is slated for Friday, when CPI and Advance Retail Sales are scheduled. For the full docket of releases, see the economic calendar.

    The S&P 500 started the year off on a strong note, posting gains each day last week. The market is at a juncture where chasing might not prove to be fruitful without a setback, but shorting until we see weak price action doesn’t hold any appeal. A constructive dip, where we don’t a sharp drop, could present an attractive opportunity for dip-buyers. There is a confluence of lines below which could offer the best spot to see any dip lower turn back higher.

    S&P 500: Daily

    Global Stock Markets Start Year Strong; Follow-through in Week 2?

    DAX

    Next week, there are two ‘high’ impact data events on the docket, with ECB minutes on Wednesday and German GDP on Thursday. There is some political risk with the German government trying again to form a new coalition government. The market isn’t showing much concern as the rally off last week’s low has been fierce.

    To start the year, the DAX initially sold-off and rebounded sharply to finish out Tuesday. The key-reversal bar turned attention higher and buyers took notice as momentum beget more momentum. The rally has the DAX back facing the December swing-high at 13339. A breather may be in store in the short-term, but a breakout above the December high will quickly bring into focus the record high at 13525 or better.

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