Another volatile week for stocks as we saw an early week bounce lead to another selloff following the destruction that was Facebook's stock. Amazon's strong earnings reaction gave us another bounce to end the week Friday that could look to continue early into this week. The SPY is sitting at an important inflection point that will surely determine the direction for the next couple weeks. If the SPY is able to break above the 453 resistance area (Thursday and Friday's highs), I believe we'll see the market continue to move higher into the 465-470 range. I think we're due for a lot of volatility this year and when the Fed finally begins to raise rates in March, we could see a strong selloff in equities. But as for this week, I'm looking for us to move higher in the near term. If we do see Friday's lows swiftly taken out, then it is likely we test the lows from late January.
Friday we saw jobs data come in way above expectations, signaling the underlying recovery is strong. While strong earnings allowed stocks to be strong, this good news could be taken as bad news in the short run as this gives the Fed a higher propensity to aggressively raise rates this year. This week we will get the data points that have seemingly been most important so far this year -- inflation. Thursday we get the inflation indicators known as January CPI and January Core CPI as well as December's Consumer Price Index, which is tracking the costs of dozens of items. We saw this number rise 7% (year over year) in last month's report which was the greatest increased since 1982. We also get initial jobless claims to round out a busy Thursday of data.
We have another big week of earnings on our hand with hundreds of companies reporting. It's our job to continue to track the strongest earnings as they become the market leaders of tomorrow.
TRADE OF THE WEEK
It's rare TSLA gives great technical pattern but that's what we're walking into this week. There was a saying back at the desk "Tesla Monday's" because everyone gets all hyped on their chart over the weekends. I wouldn't be surprised to experience one this week. After first selling off on earnings, TSLA pivoted at major support and spent last week consolidating, giving us an inside week at a major macro support level. Looking for big volume through 937 this week.