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Earnings come out after the 4:00 cash close, yet the NQ was weak all day on Tuesday. It was especially weak just before the earnings came out and the NQ started getting sold hard.
Some traders in the MTS chat were asking if the earnings were leaked. I don't think it was an earnings leak as much as I think it was T+2 and a rotation out of tech. Why not? Up until yesterday's sell-off, the Nasdaq was up 4.6% YTD.
Today will be another test for the bulls, but even if the Fed says it's going to lower rates all one has to do is look at all the job cuts: UPS Cuts 12,000 Jobs, Demands 5 Day Work Week; PayPal Cuts Global Workforce by 9%.
Those are just the recent ones! The longer list for 2024 can be found here.
Let's face it, right now the S&P is taking the bad news and making good of it. Let's see if that changes today! And if it's anything like December's Fed meeting, we will go straight up.
Let’s also keep seasonality in mind here. From my friend Jeff Hirsch of the Stock Trader’s Almanac, he notes:
As the S&P 500 goes in January, so goes the year 74.4% of the time since 1938. The next 11 months follow January 67.4% of the time. The January Barometer was devised by Yale Hirsch in 1972. With a negative Santa Claus Rally and First Five Days JB holds the key. When January is up after a down SCR and FFD, S&P 500 advanced three times over the remaining eleven months and the full year with average gains of 15.1% and 19.9% respectively. It all started with the 20th “Lame Duck” Amendment to the Constitution in 1934 where newly elected Senators and Representatives take office in the first week of January and new Presidents are inaugurated on January 20. Prior to that, new members of Congress were not seated until December of the new year. Presidents were not inaugurated until March 4. Being the first month of the year, it is the time when people readjust their portfolios and try to make a fresh start. Financial analysts rethink their outlook for the coming year. There is also an increase in cash that flows into the market in January, making market direction even more important. Then there is all the information to digest: federal budgets, national goals and priorities, FOMC meetings, 4th quarter GDP data, earnings, and a plethora of other economic data.