Stocks last week soared; the S&P and Dow both hit 5 year highs. Although the NASDAQ was not as successful, mostly because of Apple shedding another 14% on rough earnings. Exxon Mobile passed Apple last week as the most valuable company in the market. So with a good week (except for some techs, and Apple) what will the market do next week?
- The markets last week enjoyed consecutive gains even with a correction in question, the S&P and Dow hit 5 year highs, and most forecasters did not predict these consecutive gains, especially from a key earnings report from Netflix. So now, with such great gains last week in consecutive trading sessions what should we expect this week?
- This week is critical for 3 reasons. Big earnings reports continue with the earnings season still in force. More and more investors are turning their head sideways on these markets trying to figure out if it could really support these consecutive gains. The next reason is because this week is a big week for economic data coming out. Now before I go into each reason in depth, you should expect a couple of things this week. The last week of January is the busiest week for 4th quarter earnings results with many S&P companies releasing earnings. Hard for all of these companies to have huge earnings reports especially when most of them are expected to be week. Although that could help the markets if they do beat reports, it would be easier for them too. Also, even though the fiscal cliff has been averted till May now, the only problem from Washington is the March 1st budget deadline which is coming closer and closer with us switching the calender from January to February. The closer we get the more chances of the market getting spooked, although come Friday this week, we will still be 27 days away. Finally, with huge economic data coming out, and with the US economy picking up its pace can it keep ahead of steam? Well only thing stopping this market is a brick wall, which stands for surprisingly bad data. Which could happen, but seems unlikely. What is more likely to bring this market down are critics. Anyone knows whether it be sports or the markets, streaks have to come to an end at some point, and as more investors climb aboard this bull run, investors need to be prepared for a pull back or correction at some point. The question is when, and I'd have to say this week it might drop 1 or two days. I'm not saying big drops (unless some reports are negative) i'm saying some minor drops. Volume in the market is growing and more investors seem to be willing to spend in the market and stopping now wouldn't be a good idea, although the date might be coming up soon.
- Here are some notable earnings reports coming out this week: Yahoo, Caterpillar, Jet Blue, Harley Davidson, Ford, Amazon, Boeing, Facebook, Time Warner, Exxon Mobile, Illinois Tool Works, Pfizer, NextEra Energy, and many many more. Look for some big companies to release some big earnings, I prefer to look at a good Illinois Tool Works earnings as well as Exxon Mobile and NextEra Energy. There are some other reports that I think will be notable, Facebook might not have good earnings as well as Time Warner, and Boeing could be interesting although it has been resilient through its 787 debacle. It might have bad earnings.
- The data that could move the markets, durable goods orders, consumer confidence, nonfarm payrolls, and other sales could also be potential data that could move the markets. With an economy that is picking up these data numbers are crucial to back up the claim that the market is making true gains. Make sure these are good number or else the markets could get worried and fall.
- One thing to keep in mind about this week is that the streak of the markets having gains will probably come to an end this week. Whether it be off of earnings reports or economic data or a mix I do not know, but that assumption seems to be a fair one with many investors.
This week will be crucial with everything said. And to sum it up, it could be a good one depending on some reports. As an investor, staying in the market seems to be a good idea, and looking at stocks carefully could also be an idea to think about, but once Washington gets to business with the debt deal and fiscal cliff. Unless Disney spreads some of there magic to Washington, congress won't agree on much, and so a deal would be hard to come by. But with postponing the deadlines could give some hope of getting a good deal done. I'd advise on contemplating getting out of the market come fiscal cliff time although it depends on the months coming up if I'd keep that opinion. For now, and this week, look at the earnings reports and the data to see how the markets will do and see if any big news comes out to shake the markets. Invest with care & confidence.
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