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Jeff (00:00):

Hello everyone, and welcome to the latest edition of LPL Market Signals. Jeff Buchbinder here back in the saddle after some time off. Glad to be back with you. I'm pleased to be joined by Adam Turnquist, our Chief Technical Strategist, for a really good discussion today. We're going to certainly talk earnings and we're going to, you know, talk through some charts and, and I think generally a positive message. So Adam, thanks for joining me today. How are you?

Adam (00:31):

Good. Thanks for having me on. All good. After a little bit of a long weekend, minus some disappointment in football this weekend, but how was your weekend?

Jeff (00:39):

Yeah, it was really good. Thanks. We had a birthday party from my younger daughter, which was a lot of fun. She loves gymnastics and so we rented out her gym and she just got to run around with her friends and do back hand springs <laugh>. So, fun time. Fun time. So sorry about your Vikings, but hopefully you had a good weekend otherwise.

Adam (01:04):

Yeah, it was a tough loss, but kind of expected as a Minnesota sports fan here, so <laugh>,

Jeff (01:11):

I get it, I get it. I have family in the Twin Cities and I've been following the disappointments for probably at least a couple decades there. Yeah. But hopefully their time will come soon, so yeah, I'll be, I'll be rooting. So let's start with a quick recap of last week's market action, Adam. And then we'll get into earnings and, and some charts. I's clear that the market cares more about inflation than anything else. So, clearly CPI was the focus for last week, but we had the bank earnings on Friday. And then you know, some headlines about China reopening, some debate about whether that's going to be good or bad, <laugh>, frankly, because it could be inflationary, but it's also a driver of growth. And then lastly had a nice rebound in consumer sentiment.

Jeff (02:08):

So the University of Michigan consumer confidence index was up five points from December to January. So that was certainly encouraging. You know, the bank earnings weren't great but they were good enough for a little bit of a move higher in stocks on Friday. Actually, that was the fourth straight positive day which led to a really strong week. So here are the global equity market returns for last week, Adam. We got, you know, 2.7% gain in the S&P 500 which is certainly outstanding. And then you know, even better for the Nasdaq. So you know, we're recording this on Tuesday, January 17th. These returns are through Friday I guess which was the 13th. Right? So you know, Adam, what jumps out at you here other than just strong gains? Any themes to pull out of last week's market action?

Adam (03:07):

Yeah a couple things. I just note that small caps are kind of reasserting themselves in the leadership role. They were underperforming a little bit coming into year-end 2022. So you can see there,  the Russell 2000 up over 5% on the month you know, up 3% already. I think that was, yeah, as of as of Friday as you noted. And then just some of the price action inside the S&P 500, this kind of worst to first phenomenon in terms of the worst performing stocks of 2022. They're actually outperforming by a pretty good margin this year. I looked at the, the bottom 20% of the S&P 500, that's again, based on their 2022 returns, average gain there as of Friday was 9.3%. And when you compare that to the top 20% from last year, they're still up, but only 2% on average. So a pretty good gap there between kind of last year's losers and winners, which is pretty impressive rally so far for some of those names.

Jeff (04:12):

Yeah, it remains to be seen whether we have this last year's losers to this year's winners pattern throughout the year. But certainly that has been a very powerful trend, you know, and the average stock doing better than the market cap indexes. Certainly something we've seen this year. You know, if you look at the sector performance, it, you know, that same trend is evident. We have consumer discretionary, one of the best performers last week, and year to date, one of the biggest losers last year. We have, you know, tech and communication services, same story, really tough 2022, but have had a nice start to this year. So, you know, we'll see how long that pattern lasts. But we continue to like industrials, energy and healthcare, even though those growth sectors that were hurt last year have led so far year to date.

Jeff (05:06):

I think it's also worth noting that internationals performed really well here over the last month. And you can see, you know, gains of around 9% depending on which market you're looking at for the last 30 days, while the S&P 500 has been, you know, largely flat. So I know that's one of your charts for today, Adam. So we'll take a look at that here in a minute. You know, fixed income and commodities, we had a really strong week in the bond market. I think, you know, this is a reminder if you go back further that when rates fall from higher levels, you can get some pretty strong bond market returns. So after the worst year on record last year, we've had a really nice bounce in the bond market, particularly over the last three months there, almost 6% on the Ag. The starting yield really matters. So you know, it's not just yields falling, it's yields falling from a higher level. And then you know, on the commodity side, I think natural gas weakness is probably the biggest story. We've had pretty mild weather, although I did do some shoveling over the weekend, Adam, my guess is you've had some shoveling <laugh>.

Adam (06:22):

We actually had rain here in Milwaukee. I don't know if I'm supposed to complain about rain in the winter in the Midwest, but it was just kind of a dreary, rainy day in the forties, but no snow on the ground in Milwaukee at least. So I know my father-in-law was actually golfing on Friday up in Green Bay. So <laugh> Wow. Definitely evidence of some warmer than season, you know, warmer than average seasonal temps here.

Jeff (06:46):

That is a dedicated golfer right there. <Laugh> yeah, Boston, we had you know, a few inches. Nothing, big, we're used to it up here, but it was definitely a little colder here than it was for you. So enjoy that unseasonable warmth.

Adam (07:04):

Yeah. For now, right?

Jeff (07:05):

As long as you have it. So anything here you know, commodities are fixed income that jumps out at you before we keep moving?

Adam (07:12):

Yeah, I think just the continued volatility in natural gas, it's been a theme going up throughout last year when we had the Russia-Ukraine invasion and the supplies get basically cut off in Europe and now you're seeing the reverse side, the downside volatility in natural gas with, you know, some of the above seasonal temps. And it's not just the U.S. story. If you look at some of the, the temperatures around the globe you know, they were much milder than forecasted. So that's created a bit of an unanticipated build in natural gas supply in the U.S. and in European natural gas markets. So a pretty good selloff in natural gas and no real signs of a bottom yet. It's kind of the proverbial falling knife in futures prices right now.

Jeff (08:04):

Yeah, after those huge rallies last year in energy prices,  it certainly made sense that you'd have a big move lower. That's, you know, that's typically the pattern no matter what the market, but maybe this recent move more weather related than, than just a natural correction. We'll keep watching natural gas. It's so important for Europe and it's certainly one of the reasons why European markets have done so well here in in recent weeks. So moving on, you know, the chart of the S&P 500, Adam, I mean, it, you know, I read some of your notes this morning on this. I mean, it, you know, you've got good participation and you've got, you know, a little bit of a, well, I'll call it a bullish pattern, at least in my amateur technician eyes, you know,  maybe talk me down like this looks like a pretty positive set up here.

Adam (08:54):

Yeah,  and it is really, I mean, when we're finally making some progress, keep in mind we've been stuck in the downtrend for the last 12 months and we're starting to see evidence of a potential reversal here on the S&P 500 chart. You know, we were previously, for the last several weeks, pretty much stuck in this kind of 3,800 to 3,900 range. Finally did see a breakout above that level. And then on Friday we had a bullish engulfing candle that recaptured the 200-day moving average. And that candlestick basically just means that we opened lower on the day from the previous day and then closed higher. And that range encapsulated the prior days trading open low range. So a bit technical, but it is a good sign, especially when you're right at a down trend reversal and you're actually recapturing the 200-day moving average.

Adam (09:49):

So  some good signs on the candlesticks, and I know there's some skepticism because we've been here before. You remember,  we've talked about recapturing the 200-day moving average late last year, also had another run in August. And without saying this time is different, I think it's important to at least kind of walk back and make at least some comparisons between now and then. So when you look at the S&P 500 and just the chart that I brought with today, you can go back to the November, December area where we retested and briefly recapture the 200-day moving average. On the middle panel of this chart, that's the momentum indicator called the MACD or moving average convergence divergence. You can see where that indicator was, and it was pretty much slowly transitioning into a sell signal.

Adam (10:47):

So really not a great breakout in terms of confirmation with momentum back in that timeframe. Pretty similar setup, if you go back to August when we briefly retested the 200-day intraday, that MACD indicator was overbought in basically kind of late cycle and it slowly rolled into, or well, pretty quickly rolled into a sell signal. And then even going back to the March, April timeframe, you can see, the momentum indicator MACD was, you know, relatively overbought at that time. And now when you compare where it's at today, you can see it's a pretty early innings crossover. So that's what we're looking at with that indicator. Basically the black line crossing above the red line, that's your buy signal. So we're relatively early innings here  on the momentum confirmation instead of, you know, the previous where we're a bit over bought.

Adam (11:42):

So I think that's one good sign when we look at momentum. And then when you break down market breadth, so on the bottom panel of this chart, it looks at the percentage of stocks that are above their 200-day moving average. So right now you have about two thirds of the S&P 500 that's back above their 200-day moving average. So that participation in the rally is starting to expand, that gives credibility to it being more sustainable as that number continues to increase. Again, if you look back at some of these other prior retests, it was relatively high, but not as high as it is today. So we're seeing, you know, that percentage at 66.4%, that's the highest going back to early January of last year. So pretty good setup in terms of breadth, again, momentum remains bullish. And then Jeff, when you just think about the macro backdrop, when you compare the prior recaptures of the 200-day, you know, where we were at with the Federal Reserve policy, relatively early innings in terms of the rate hike cycle.

Adam (12:47):

You know,  the 10-year treasury yield, for example, was just starting it's parabolic breakout or uptrend last year when we had some of these other attempts to recapture the 200-day, and then of course the dollar was also rallying  in a parabolic way. So I think that macro backdrop also helps make the case for this being a bit more sustainable and that the, you know, the October lows adds to the evidence there that those were probably the bear market lows set with the S&P 500, but definitely still need to clear 4,100, that's the next level of upside here that would check the box for a higher high being made in the S&P 500. So that would, you know, basically establish that a new uptrend is developing here.

Jeff (13:38):

Oh, love to see that. Stocks are up a little bit Tuesday morning, I think 40, yeah, right around 4,012. So we'll be watching that. Maybe earnings can be a catalyst for pushing us up there. I mean the, you know, we haven't had great news on the earnings front. I mean, it's been kind of okay and maybe a touch better than expected, but it's been good enough to push stocks a little higher Friday and a little higher today. So, you know, there's a good segue to earnings season and we'll look at the banks here in a minute in terms of the financials chart. But just to kind of set the stage here you know, earnings season started in earnest Friday. We have about 26 companies I think reporting this week. So it's the first busy week.

Jeff (14:27):

It's going to be a tough season, frankly. We have you know, consensus calling for a decline of between three and 4% in earnings year over year. That will be the first decline since 2020. And frankly, based on the macro environment and based on, you know, the amount of upside we got last quarter, it's going to be tough to even get to flat. So we'll call flat, maybe the, the best case scenario at this point. Remember we have slower global growth, you know, much more challenging growth environment than we had last year. We have a strong dollar year over year, right? It's come back nicely in recent weeks, but it, you know, the year over year comparison, strong dollar that is a headwind to earnings produced overseas. And then we have cost pressures from inflation of course, and those have eased a little bit lately, but on a year over year basis, the margin environment's really tough.

Jeff (15:33):

So we have a hard time seeing any earnings growth in Q4. Although you know, that doesn't necessarily mean the stock market response to those earnings won't be positive. The, you know, the guidance matters most, right? Stock prices reflect more about what's going to happen than what already did already happened. And so this is a chart, this is by the way, from our Weekly Market Commentary for this week which you can find on lpl.com. So estimates for 2023 earnings are widely expected to be cut dramatically. You know, most, at least most strategists we follow, think, you know, we'll go from maybe 220 to 200 in S&P 500 earnings per share, but estimates right now, consensus still 230. Granted they came down 10 bucks last quarter and 10 bucks the quarter before that.

Jeff (16:31):

But estimates have held up a little bit better recently. So we've seen a deceleration in the earnings estimate decline which is a good sign. And then, you know, there are some macro forces here that suggests that maybe the pessimism has gone too far. So first we have, you know, we're coming off of a pretty solid GDP quarter in Q3, and so far Q4 is setting up to be, you know, pretty good, maybe 2%, maybe a little bit better based on the data we've seen so far. So that's positive. Europe has been very resilient, right? More resilient than expected. And so that could help support earnings in 2023. We have China opening, right? And that certainly, you know, could be good for growth. It could also be good for inflation, depending on the supply chain side, although as I mentioned before, it could be bad for inflation because of that additional growth potentially being inflationary. But nonetheless, overall for earnings, we think China opening is positive. And so you sort of bake all that together and maybe you end up with like $5 hit to earnings expectations in 2023, but we don't think we're going to go down 10 or $15 this quarter like many expect. So Adam,  what are your thoughts here? Does anything there sound kind of hard to believe or anything I missed maybe that you would point out?

Adam (18:10):

No,  I think that's a great summary. You know, I think it's relatively balanced and when you think about what's happened over last year, I mean, the S&P 500 was, was down, call it 20%. So, you know, some of this discounting I think has been done. TBD on, you know,  what that number looks like. But yeah, I think the earnings narrative, it's a challenge, especially when you look at what's happening on the technical side. It's starting to improve clearly. The earnings backdrop is not necessarily conducive of a big rally here for the S&P 500. So those stories don't necessarily align, but we haven't really seen the breakout yet or the reversal on the S&P 500. But I think, you know, hearing you go through some of the rationale,  it speaks to a lot of the negative sentiment that's in the market right now and around earnings. So I think, you know, what I hear is a relatively low bar for earnings. So maybe it's kind of this better than feared type of environment that we're going into for Q4 or even as we look ahead to 2023. Because sentiment is, it really can't get much worse, I don't think.

Jeff (19:29):

Oh, yeah, absolutely. There's pessimism everywhere. It's a bull market for pessimism <laugh>. Sure. So better than feared sums it up. I mean, we, you know, soft landing is still less likely, but if we do get something like a muddle through and, you know, maybe it's not a technical recession, it's just sort of, you know, a tiny bit of a decline in overall economic activity that could, you know, set earnings up to surprise to the upside in, in, in 2023, again, relative to those pessimistic expectations. And we know the consumer still has a lot of cash. Consumer balance sheets are in good shape, the job market's in good shape. So there are reasons to think that maybe you know, we get something like 210 or 220 in earnings this year from the S&P,  not 200 or less, which is what a lot of the recession playbooks will tell you.

Jeff (20:27):

So the last thing on earnings, we did attribution. This is from our quant team led by Tom Shipp and the quant team just looked at, you know, estimate revisions and whether they were predictive of outperformance or not last year. And they were, so if you look at the best earnings revisions stocks last year, they outperformed by about 6.5 percentage points. So this is a way of telling you that earnings really matter. This helps stock pickers by the way, too, active managers. If earnings matter then we want to pay closer attention to earnings season and our assessment is they do. So I'll go back to you on this, Adam. So banks got a, I don't know, mixed reviews for their start to earnings season, right? I heard a lot of mild recession coming, right? Which granted prepares them or prepares us for you know, tough times ahead and sometimes that can lead to overly pessimistic expectations. What do you see here on the financials chart and you know, kind of how does that sync up with what we heard from the the banks last week?

Adam (21:38):

Yeah, I think it's pretty interesting when you look at the S&P 500 financial sector because basically we're coming into earnings season, or kicking off earnings season, right at this inflection point on the technical side. So if you look at the setup here, you basically created a double bottom off support going back to the pandemic highs, and you're consolidating right below the August highs at 602. So not enough evidence to suggest that we're seeing a breakout within the financials sector, but we are seeing some improvements in overall momentum. You can see the 50-day crossing above the 200-day moving average. So that's a bullish crossover in the technical world. So that does suggest, you know,  there could be a potential breakout on the absolute price chart. And then when you look at the ratio chart, it's really interesting because basically the financials sector versus the S&P 500, has gone nowhere for the last, call it, year and a half, two years.

Adam (22:42):

It's just been consolidating sideways and now that ratio chart is right at the upper end of that range. So it's kind of make or break for the financials sector in terms of relative performance. If we do see a breakout here, that would be indicative of financials sector leadership, obviously a good sign for the sector. And then I think a good sign for the market, really, when you think about the nature of the financials sector, it is more cyclical or offensive. You do want to see those offensive sectors lead the market out of a bottom. You know, prior to this we've seen, you know, utilities, staples, healthcare, some of the more defensive names outperform the S&P 500. So I think if we can see that rotational shift at the leadership level, that would add to the evidence of you know,  this market rally, at least in the S&P 500 being a little bit more sustainable. I would just note that within the financials sector, obviously it's not just banks, some of that leadership inside of here has been really driven by the insurance space, which is a bit more defensive when you compare it to the banking space. So would want to see some of the, you know, the regional banks or, you know, the banking sector across the board start to pick up relative strength as well. Haven't really seen that quite yet and see how earnings season shakes out with some of the banks.

Jeff (24:05):

Yeah,  it'll be interesting to watch. I mean, we had some, I don't know, negative reaction to the Goldman earnings this morning. And then we had, you know, Morgan Stanley, which is more wealth management driven, do better,  and that stock actually was initially higher on earnings. So it's I don't know, the bank results have been kind of, and the reactions have been kind of all over the map. I guess you could say we're kind of taking the easy way out. The LPL Research house view is neutral, <laugh> on financials, it's hard to get hurt when you're neutral. But we'll see if we can get this breakout and, you know, maybe some yield curve relief that can help this sector break through. So Adam, you mentioned offense defense. So you know, obviously financials are a little more of an offense play. This is another way to measure offense versus defense, right? It's equal weight, consumer discretionary versus equal weight staples.

Adam (25:04):

Yeah. So we use the equal weight just to eliminate some of the mega cap names within each sector or the larger cap weightings. So just to get a little bit more balanced approach in determining the, you know, kind of this offense versus defense shift. And this is a ratio chart comparing those two sectors. So when the ratio chart's moving higher, that's indicating that consumer discretionary is outperforming staples. So we'll call that offense, you know, on the field versus defense. And then on the flip side, obviously, when it's moving lower, you have the more defensive staples outperforming discretionary. And I thought it was an interesting chart to bring today just given where the technical setup is here for that ratio chart. You know, you've basically kind of consolidated sideways from, you know, June to December and now you're starting to see that rotational shift with consumer discretionary outperforming.

Adam (26:03):

You can see it's breaking out to multi-month highs and it's also back above its key moving averages. So something we're watching to see if this will continue, I think another good sign for the market, if this moves higher, you know, when this ratio chart's moving higher, it usually coincides with the S&P moving higher. So especially coming out of a bottom, you know,  this would be another piece of evidence for the technical case for at least those bear market lows being set on the S&P 500.

Jeff (26:37):

Moving on to the 10-year treasury yield. So this chart to me, Adam's really interesting, you know, right at support <laugh>,  if you know, from a technical perspective, how low could we go if we break that 3 50, I think we're at 353 this morning.

Adam (26:53):

Yeah, we did see a little bounce this morning. So that's the key level that we've been watching that lines up with the June highs on the 10-year treasury yield and then also an uptrend that's been in place for the last several months. So we're starting to see that potentially rollover here. So if we do break 350, you do have the 2018 highs and then the rising 200-day moving average right at around 325, we'll call it. So that would be the next major area of downside support. And that 325 level is going to be key because when you zoom way out into a multi-year timeframe, that 2018 high was the actual breakout point for the 10-year breaking out of a bottom. So if we do pierce that level to the downside that would be a pretty bearish sign for treasury yields,  not prices and, you know, get you back to maybe the 3% level on the 10-year.

Adam (27:54):

So that's going to be another, a key level to watch if we get below 325. When you look at momentum, again, this is another look at the, the MACD indicator on the bottom panel, you did just get a sell signal as well. So some of the momentum signs that we're seeing do point to more downside in the 10-year. So we'll see if that plays out or, you know, we got decent amount of economic data. We also have the Bank of Japan influencing some of the global rates as well with their policy decision tomorrow. So we'll see how this looks by the end of the week.

Jeff (28:30):

Yeah, absolutely. This is you know,  I mentioned inflation as being probably the most important thing for determining market direction, but it ties closer to yields. And so if we can get through the week with, you know, all the Fed speakers and the BOJ and economic data, we got the beige book coming, get through all of that. Yeah. And yields are at 350 or lower, I think that's going to be market positive certainly,  and evidence that the Fed maybe is getting closer to ending its rate hiking campaign than maybe some people think, so that's cool. The developed international, I think is one that we're getting a lot of questions on Adam in the LPL Research department, considering how much outperformance we've seen relative to the domestic markets over the last you know, couple of months. So, boy, this looks like a really bullish pattern. And we've become, you know, a little bit more positive in our asset allocation on international. Do you think this is maybe suggesting that we have to, you know, up that again?

Adam (29:39):

Yeah,  I think  just looking at the progress, I think it's been relatively surprising when you look at some of the economic data from the developed international markets. But again, it was, you know, this sold off 35% from the high, so you kind of have to put that into context. But when you kind of look, break down the MSCI developed market or developed international index here, you know, you've reversed this declining price channel that's been in place for over a year, and now you're starting to get back above your pandemic highs and your key moving averages. So it might be a little bit overbought from a tactical standpoint right here, but you can see the direction has clearly been higher. Same on the ratio chart when you look at the, the EFA index versus the S&P 500.

Adam (30:31):

I didn't zoom all the way out, but the downtrend that you can clearly see here that's been in place for several, several years. So it's really been more of a secular downtrend. And now there's evidence that that downtrends being reversed. You can see the ratio charts back above its 50- and 200-day moving averages also back above the summer highs. So you're starting to see, you know, higher highs, higher lows being made on the ratio chart. So more evidence of potential for developed international to continue outperforming. I think one factor this too is just looking at Japan, that's the largest weighting within this index that I think it's around just over 20%. So there is a little bit of risk there when you break it down on a weighting basis depending on how the Bank of Japan what kind of volatility happens with their monetary policy. I know, looking at the Nikkei 225, that's not really the greatest technical setup. It's kind of at the lower end, lower end of its range right now. So something I'm watching within developed international just looking at some of the Japanese markets, but definitely making a lot of progress here on the technical side.

Jeff (31:48):

Yeah, it's really been more of a Europe story, the resilience there with, you know, energy prices cooperating. So let's wrap up with just a quick look at the week ahead, Adam. We've got retail sales this week, which is really evidence that sales were pulled forward. You've also got, you know, gas prices falling, certainly, but looking for at least based on consensus, a decline in retail sales to end the holiday shopping season. Producer price index is of course, with inflation so important, going to get a lot of attention. Hopefully it confirms what we already saw in the CPI last week, which was a cooling. I mentioned the beige book, and then we got Janet Yellen meeting with the Chinese vice premiere in Davos, which was unexpected. And, you know, maybe there's a path towards a less combative relationship between the U.S. and China.

Jeff (32:45):

We'll see, we're not holding our breath, but that'll be a big newsmaker this week. And then earnings, just a barrage of earnings as I mentioned 26 companies. And then next week it gets even busier. So here's the full calendar highlighting the two key reports, PPI and retail sales. Frankly, there's really nothing else here in my view that's going to be broad market moving, but you know, we will get some housing data that you know, certainly tied to the broad inflation story. And obviously there's a number of companies that are leveraged to the housing markets. Then, you know, internationally, the BOJ you mentioned Adam. We also have a lot of European inflation data this week, so that will get some attention. They are of course, much higher than we are.

Jeff (33:37):

You know,  Germany 8 ½+, Italy 12, the U.K. is 10.6, you know, I mean, these are big, big numbers. So obviously the market and Europe doing better. It's partly the falling dollar, but also suggests some optimism that these high inflation numbers aren't going to last. And that just like in the U.S., inflation has peaked. So those are really the only I think data points that'll be market moving this week. Did I miss anything, Adam? No, I think you got it there. All right, great. So let's go ahead and wrap there. So thanks Adam for the technical analysis insights. It's great to be back with you on Market Signals after taking a few months off to take care of my family. But everything is good and so look forward to being with you more in the future. I think it's, maybe it's going to be like Forrest Gump, right? You never know what you're going to get in the box of chocolates. Well, you never know what, what you're going to get when you tune into Market Signals either. So you probably get myself, Adam, and Marc a fair amount. But we'll mix in you know, Lawrence and Jeff and Quincy too over time. So thank you as always for joining. And we'll look forward to talking to you next week.

In the latest edition of LPL Market Signals, Chief Equity Strategist Jeffrey Buchbinder and Chief Technical Strategist Adam Turnquist recap a strong week for capital markets, preview fourth quarter earnings season, and highlight several key charts to watch.

Last week’s market gains came alongside more evidence that inflation is cooling, with the Consumer Price Index (CPI) data meeting expectations across the board. Mixed bank earnings didn’t prevent the S&P 500 Index from a fourth straight gain on Friday, January 13.

Earnings for S&P 500 companies are expected to show a year-over-year decline in the fourth quarter according to the LPL strategists, on weaker growth, cost pressures, and currency impacts. However, estimates for 2023 may hold up better than many market-watchers expect due to the recent reversal in the U.S. dollar, resilience in the U.S. and European economies, and China’s reopening.

Despite ongoing negative sentiment, equity markets continue to make technical progress and climb the wall of worry. The S&P 500 has recaptured its 200-day moving average with improving momentum and market breadth. A similar technical story is playing out across international developed markets. Early signs of cyclical sector leadership have also recently emerged.

Key data and events to watch in the week ahead include the Producer Price Index (PPI), Retail Sales, the Bank of Japan’s policy announcement, and Treasury Secretary Janet Yellen’s meeting in Davos with China’s Vice Chair.

Tune In Now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the U.S. and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunesGoogle Podcasts, or Spotify and find us on the LPL Research YouTube channel.

 


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References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Stock investing includes risks, including fluctuating prices and loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

High yield/junk bonds (grade BB or below) are not investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States.

The Bloomberg U.S. Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC.  

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