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Awaiting New Catalysts, Q4 Earnings on the Way

Tuesday, January 12, 2016

(This is Mark Vickery covering for Sheraz Mian, who is conducting an interview this morning.)

Another day, same situation. Waiting for the other shoe to drop in a number of different settings: China’s stability, oil price bottom, geopolitical strife, election year politics, etc. Investors seem to be going out of their way to find reasons to sell off the market. It’s been an unfortunate — but undeniable — aspect of the market since we rang in 2016, one long week and a half ago.

Really, we’re just looking for catalysts. A strong jobs reading last Friday was a shot in the arm for U.S.-centric trading, but China continually taking steps down the ladder, along with oil prices, are still an albatross. None of this should be investment-averse, ultimately; it seems the market is trying to fit comfortably at a particular bottom, but no one is quite sure where that is.

We saw a bounce-back in Chinese markets and Europe early this morning, and that has put futures in the green an hour before the markets open this morning. Nothing data-related is really pushing stocks higher, it’s more a sense of value plays filling the void. But without more solid data shining a light on the markets in the near future, this sort of rebound is necessarily seen as flimsy.

Here at home, with investors coming to terms with things like 2 percent growth considered a relatively positive outlook, we’re basically just waiting for something to help point arrows higher. That’s where Q4 earnings gets to play a role.

Alcoa (AA) put out a stronger-than-expected Q4 earnings report after the bell yesterday, and in a hopeful sense this might mean positive news is forthcoming for the beleaguered industrials space. All growth lately has come from tech, and specifically companies that aren’t liable for a lot of “stuff.”

But as oil — energy — prices continue to stay at multi-year lows, eventually other areas of the economy are going to reap the benefit. We’ve already seen this in the Consumer Discretionary and Retail spaces, but how long til we see the Enterprise side of the market showing improvements in the bottom line because the lower cost of energy is saving everyone money?

Anyway, that’s the hope. We’re getting big banks of Wall Street reporting later in the week, as well as the first big tech stock to report Q4, Intel (INTC). There are plenty more tea leaves to read going forward; make sure to look into stocks’ Zacks Rank and Style Score when making your next investment decisions.

Mark Vickery
Senior Editor

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