Two Best Investments for February Rally
The market pushed higher to open yesterday, but the indices closed the day at even. Volume picked up a little and financials like JPMorgan (NYSE: JPM) and Goldman Sachs (NYSE: GS) also rallied. Yesterday I mentioned how bank stocks are our trend leaders and the direction the market takes in the coming weeks will be determined largely by that industry.
For now, the bulls still look well positioned to take the indices higher through February. While I expect a short-term pullback, I'm not anticipating a large top to form this week. It could, but I don't expect it to occur. The bears just do not appear strong enough to take the major indices lower for any extended period of time.
Yesterday the bears were handed another golden opportunity to drag stocks down and they blew it. For that matter, the bears couldn't even take gold down despite a 0.5% decline to the dollar. Silver did manage to close slightly lower. Although both silver and gold look to be positioned extremely well for a big February bullish rally.
Before the open the Case Shiller home price index showed a larger than expected decline. Additionally, Chicago PMI and consumer confidence data shortly after the open missed analyst expectations by a mile.
Despite the grievous economic news, the market was largely unbothered. And by about noon the indices were trying to climb back into the green.
The bears have another chance to claw the market lower today. Amazon (Nasdaq: AMZN) reported fourth-quarter numbers that disappointed analysts. For more about their results read my colleague Chris Preston's Amazon earnings review.
Investors like Amazon because of its open-ended growth story. But shares are down 10% from their last earnings report, which suggests that the Street is losing that interest.
I like Amazon as a company and use them to purchase a variety of items fairly regularly. But the chart shows a drop to $161 is to be expected over the next several weeks. Click here for more on Amazon's chart analysis.
Amazon is a sizable portion of the Nasdaq and its decline this morning should weigh heavily on the index. Of course, the bearishness is likely to be contained by a rising euro, which is up nearly a percent this morning.
The entire rise in the stock market today is directly, and solely, because of a rally from the euro. There is speculation that an agreement between private bond investors and Greece could happen today. And such a resolution would provide some degree of certainty and clarity for Greece as well as the euro.
In addition to the news from yesterday, a big announcement that concerns U.S. employment was made today. This morning before the opening bell ADP released private payroll additions for January. Many analysts believe it is an accurate measure of job growth and they prefer ADP data over the government statistics that are due to come out on Friday morning.
Analysts expected ADP to show payroll additions of 185,000 for January. Last month ADP reported that 325,000 private jobs were added in December. The data today showed 170,000 jobs were added in January and December was revised back down to 292,000.
The market has been somewhat resilient to employment data and the slight miss shouldn't rock the boat much. ISM data came in at 54, which was to be expected.
