Stocks continue to consolidate Tuesday’s gains via time (sideways consolidation) rather than price (a pullback). That is a win for the bulls. Economic data was relatively sparse and central banks did little except jawbone but the market continued its relentless march of 2013. The S&P 500 gained 0.18% and the NASDAQ 0.3%.
Let’s use the longer term charts today to see where things stand. With both the S&P 500 and NASDAQ there had been two major ascending channels in 2012, which once broken – led to major corrections. This time around there was a small headfake late in December on the fiscal cliff negotiations and a more daunting stall over the past two weeks. But at this moment it looks like it also is a headfake as the trend has resumed. Until this changes it is back to all systems go.
Tommorow morning we have the monthly employment data – there should be no major surprises but sometimes it is a market mover. Going into that number the market is somewhat overbought but not extremely so.
Facebook (FB) was back in the news today with a redesign of its news feed.
Facebook Inc. on Thursday unveiled a new design for the social site’s key news feed feature in a bid to keep pace with the habits of its more than one billion users. The design makes the feed more prominent for users, enables them to select different feeds according to category, and generally makes photos more prominent. Facebook said during the demonstration that photos have grown from about 25% of the space on users’ news feeds in 2011 to roughly 50% today.
Perhaps more importantly the stock may be forming a long term “cup and handle” formation as outlined with the purple lines below. If today was the beginning of a trigger the stock could have major upside ahead.
In terms of sector strength we have seen the resumption of leadership by the financials which is market positive…
… and oil names rejoined the party even as the commodity itself does little. These are the more pro cyclical type of sectors we were bemoaning had not been participating during the previous two weeks.
As an aside we mentioned the gold miners ETF (GDX) yesterday as forming a potentially bullish “hammer” candlestick (lots of volume, closing at the top of its range after a poor open). Well that lasted all of half a session as the gold miners rallied in the morning but promptly fell right back over in the afternoon. So to take advantage of this move in the short term you had to be very quick. Precious metals continue to show significant weakness relative to almost all other parts of the market.