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Home / Business / Stock market rally lacks deep roots warns Standard Life strategist

Stock market rally lacks deep roots warns Standard Life strategist



It's in the middle of the week, and even a glimpse of good news can push the S & P 500 past the high resistance level of 2,800 – one that is watching right now.

There are two great events to see today that could have an expression in the index's ability to keep grinding higher. The first is Fed minutes, with markets looking for more details about the bad thing by the central bank, and whether there are really hiking trails. Details on balance normalization will also receive attention.

When it comes to the second focus ̵

1; trade lectures – there may be trouble getting back. One day after POTUS encouraged stocks and said it was not a "magic" deadline, Bloomberg reports that the US wants China dealers to keep the yuan stable as part of any deal. yuan

USDCNY, -0.5297%

goes straight up on that news.

On our call of the day by Andrew Milligan, head of global strategy of Standard Life Investments, telling MarketWatch that while stock increases look pretty good from Christmas, it is not backed by great conviction right now, a little small money.

"Investors will continue to put money into jobs as long as they get a lot of good news, but will swing quickly on their heels if they start to look blinking yellow. There is not much depth to this market, it has not yet received deep roots, Milligan says in an interview, Tuesday.

How do we know about these gains we can continue to count on? He says it comes down to how quickly the stock market responds to extreme news and notes that January and February have been A little better on that front. Ugly downbeat retail data was definitely shaken by stocks, and some downbeat corporate news over the past few weeks has been contested.

For investors to continue to add that risk and make this rally stronger, it is obviously a The trade agreement needed, and if the White House Administration announces tariffs on key auto and auto parts that feared, investors will definitely use it as an excuse to sell. Turn into revenue that comes in the first and second quarters of 2019.

"We've seen relatively good earnings news in the fourth quarter for US firms … which is going to slow down very sharply in the first half of this year. There are prospectuses from companies that want importance, he says.

Milligan says they are looking for industry and cyclists to lead the market in the second half. In cyclical space they like tech and Microsoft

MSFT, -0.05%

on the prospect that there is a strong competitor in the commercial cloud area and can take on Amazon, as the ecommerce group has its tentacles in so many other places. Equinix

EQIX, + 2.18%

is another tech-cloud favorite of Standard Life.

Opinion: A drop in American stocks can be fast and furious, according to Elliott Wave theory

The Market

Dow

YMH9, -0.09%

S & P 500

ESH9, -0.06%

and Nasdaq

NQH9, + 0.01%

futures are flat. Monday's session saw modest gains around Nasdaq

COMP, + 0.19%

Dow

DJIA, + 0.03%

and S & P 500

SPX, [0.1545014] + 0.15%

.

dollar

DXY, -0.01%

is flat, gold

USA: GCU8

is up and raw

USA: CLU8

going back.

Read: Gold has a great run and so are gold reserves

Europe stocks

SXXP + 0.23%

is a mixed bag. Asian shares lined up with Nikkei

NIK, + 0.60%

manages gains despite news of Japan's biggest five-year trading deficit.

Read: Stock investors fall in love with emerging markets – that's why there may be a problem

The chart

Everywhere you look these days, global capital markets are sending various signals, notes Chris Weston, research director at Pepperstone Group. S & P, for one, he says, looks tired and needs more clarity in trading than the tired old "talks have gone really well," to keep moving higher.

"Cash on the sidelines is still there, and the stock bulls will point this out all day, but we have priced in a lot of" go very well "now and the risk of buying rumors, sell the fact & # 39; scenario is growing We now need real meat on the leg and real dialogue that shows that the $ 200b tranche of goods currently subject to 10% tariffs will not be set up to 25%, or sellers will hit the stock market, he says clients in a note

Our charts of the day show us exactly what he is concerned about. First and foremost, he looks at high-grade investment tailor-made (green) as a guide for S & P 500 (white-inverted) Previously, a high rate of return spread has increased before the start of a stock market

The table below shows that cracks can be expanded, which may seem like a headwind for the S&P 500, but there are no clear sales signals for stocks, he says.

Pepperstone

He is also looking at cyclical / defensive sectoral conditions (the white line). He says the volumes have been OK, "there is no conviction that this is a reflection of better earnings and good will toward finances. If this relationship is lower, it means defensive sectors work better, it could be a red flag for the stock market to roll over, says Weston.

Pepperstone

Buzz

CVS Health

CVS, + 0.50%

Newspaper Budget

CAR, + 3.10%

and the cheesecake factory

CAKE, -1.13%

are all due to report results.

South

LUV, -0.05%

is down after the airline announced that the government's closure will turn the company much more difficult than expected. Meanwhile, some aircraft have been grounded and can be linked to the conflict with the mechanics.

POTUS Large Lender, Deutsche Bank

DB, -2.16%

was extremely worried that Trump Organization could standardize their loans but decided not to restructure and do nothing more with their big client for fear of a PR disaster , sources said by Bloomberg. Team trumpet says baloney.

At the front, Huawei Technology Cos founder and CEO Ren Zhengfei says there is "no way the US can crush us", in a spiritual defense of its company that has come under pressure from the US and Allies.

In his annual report, Tesla

TSLA, -0.73%

says that cheaper model 3 will be out at an unspecified time in the future.

Economy

Home start and construction permits from January are due in front of the open, followed by the Fed minutes from the last afternoon meeting.

Read: A Jekyll-and-Hyde economy? Nah. Long expansion unlikely to morph into recession

Stat
Getty Images

Mr. President, he hopes

$ 4 million plus – That's how much Vermont Sen. Bernie Sanders has traveled for the first 12 hours by announcing his 2020 presidency, with nearly 150,000 donors opening the wallet.

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