U.S. Benchmarks Set The Stage For The Next Bull Leg

January 14, 2021 09:45 AM
President-elect Biden is expected to unveil his economic stimulus plan, which could have a price tag as high as $2 trillion
hina’s December Trade Balance data showed a monthly record, topping November’s at $78.17 billion
Markets seem to be more focused on the potential of added stimulus that will soothe a deteriorating jobs picture
Stock Market Update for Traders

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Wednesday's Close

E-mini S&P 500 (March): Settled at 3803.75, up 9.25

E-mini Nasdaq-100 (March): Settled at 12,972.25, up 82.00

U.S. benchmarks have played out a beautiful consolidation this week and yesterday’s steady strength sets the stage for the next bull leg. The S&P’s supportive technical pattern coincides with tailwinds from the hopes of added stimulus. Today, President-elect Biden is expected to unveil his economic stimulus plan, which could have a price tag as high as $2 trillion. As we’ve become accustomed to, the anticipation of fresh measures should keep powering the bull market, however, we welcome the move with caution as markets turn a blind eye to potential headwinds. Mainly, the aftermath of issuing unprecedented amounts of debt and a Federal Reserve that inevitably plans to slow its purchases of such; a combination that will send yields to unsustainable levels. 

For now, it’s not a concern and we look to Fed Chair Jerome Powell, who’s done a terrific job in soothing such worries. He speaks today at 11:30 a.m. CT. First, Atlanta Fed President Raphael Bostic, a 2021 voter, speaks at 10:00 a.m. CT. Earlier this week, he initiated the notion that the Fed could taper its bond purchases as early as late this year after stimulus measures, the vaccine rollout, and overall reopening create a powerful economy that doesn’t need the same level of pandemic support.

Last night, China’s December Trade Balance data showed a monthly record, topping November’s at $78.17 billion. A year ago, the market could’ve had a very different reaction to the same news. For now, we believe the market is digesting the news with cautious optimism as both Imports and Exports surpassed expectations, exuding broadly strong demand around the world.

From the U.S., Jobless Claims widely missed expectations this morning. Although this can weigh on the tape, markets seem to be more focused on the potential of added stimulus that will soothe a deteriorating jobs picture. Also, Dallas Fed President Robert Kaplan speaks at noon CT; he’s no longer a voter in 2021.

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