STTG Market Recap January 29, 2013

A bit of a head scratching session Tuesday as the S&P 500 and Dow had nice gains but other indexes such as the Russell 2000 of small caps and NASDAQ barely budged (down 0.02%).   While the S&P added 0.51% it was a very concentrated rally in certain sectors, specifically groups that had been laggards of late (outside of energy).  A lot of metals, mining, steel, etc were the head of the pack along with specific niches such as financials and home builders.  A lot of other areas did nothing or were negative, so a very specific marketplace.

Not much to add to the S&P 500 chart today, it simply is in one of those magnificent runs – it continues to only be stopped by the top of this ascending channel on a daily basis now as bears are being run over.

The NASDAQ continues to be far less impressive – while Apple was not the issue today a whole group of stocks in the cloud and networking space were hit by the earnings report of VMWare (VMW) we reported on last night. (AMZN) had a rough day during the normal session but in the after hours reported earnings that at first caused selling but a huge reversal led the stock to the mid $280s which is near the highs of the previous two sessions; immense volatility here.   It is a very forgiving environment right now; the company missed estimates as its costs continue to surge but investors gave it a free pass.

Amazon’s fourth-quarter net income fell 45 percent, as sharply higher revenue failed to keep pace with increased spending on order fulfillment and digital content, a trend that’s become the norm for the world’s largest online retailer.   The company’s financial results missed Wall Street’s expectations — but investors sent the world’s top online retailer’s stock up more than 7 percent in after-hours trading.  “It boggles the mind,” said BGC Financial analyst Colin Gillis, who attributed the stock price jump to slightly stronger-than-expected operating income. “A lot of people scratch their head at the valuation given to Amazon and the support the stock has.”

Coal and refining stocks led the pack today as giants in the indutries, Peabody Energy (BTU) and Valero Energy (VLO) reported earnings that investors gobbled up.  Coal has been a major laggard in January while refiners have had a nice month.

One area to point out is crude oil which tried a push through over its bull flag today – while it did not close near the highs it did finish above the top of the recent flag; this is an area to watch in the coming days to see if this pattern continues.

As noted above the energy sector was one area there was a lot of strength.

Tomorrow we have the announcement from the Fed from the January meeting.  While it should be a big non event, lets see if there is any positive tone to it, which has recently caused the market to panic in the near term as it fears any loss of constant Fed support.

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