What Could Trip Up the Stock Market Bulls? By Patti

New Post Public Reply Private Reply Replies (0) Message Board
SaltyMutt

What Could Trip Up the Stock Market Bulls?

The Dow (Dow Jones Global Indexes: .DJI)has ridden a relatively smooth glide path to 14,000 since the end of December, and now traders are watching to see what's out there that could disrupt the road to new highs.

With a light week ahead for economic reports and the final major week of the earnings season, there is not much on the calendar in the week ahead to cause the stock market's bull to stumble.

"Next week my biggest fear is it's such a low news week that we may shift our focus to "sequester cliff" and those budget negotiations in Washington," said Art Hogan of Lazard Capital. The sequester is the automatic spending cuts that take place March 1 if Congress does not act. While some economists think the economy could weather the "sequester," there is an anxiety about it in the market and that could grow.

Since Congress punted the "fiscal cliff issues," the market has been humming along, with the Dow gaining 7 percent since Congress' New Year's Day tax votes. Congress since has voted to push off the debt ceiling debate until May, triggering a relief rally.

The Dow and S&P 500 ( ^GSPC )have reclaimed the high ground, and are a short hop from all-time highs, but getting there may require more signs the economy is improving, and the recent data have been spotty. While January's ISM manufacturing data was stronger than expected Friday, nonfarm payrolls were a little light of expectations at 157,000. However, revisions to past months showed job growth at 200,000 in the fourth quarter, interesting considering how much worry there was about the "fiscal cliff" and its chilling effect on corporate activity.

There is also concern that as parts of the economy improve, the consumer is facing new headwinds, both from the rise in payroll taxes as of Jan. 1 and the recent jump in gasoline prices. The national average for unleaded gasoline has risen to $3.46 per gallon from $3.33 a week ago, according to AAA, and gasoline futures this past week rose more than five percent on the NYMEX as oil prices rose.

( Read More : What Dow 14,000 Means for Your Retirement Plan )

In the coming week, ISM non-manufacturing data are released Monday, and jobless claims are reported Thursday. Chain store sales will be watched for what they indicate about the consumer in January, after robust car sales Friday showed a still confident buyer. Disney ( DIS ), BP (London Stock Exchange: BP.-GB) and Visa (NYSE: V ) are among the companies reporting earnings.

Whither Stocks

Even with the indexes pushing to big round numbers, the move lacked the enthusiasm that often accompanies big milestones. Art Cashin, director of floor operations of UBS, said it will be important to watch the impact after investors read weekend news articles highlighting the market's move.

"Is it going to be the train is leaving the station syndrome?" he said.

If investors don't jump in based on the bullish market move, traders will "be looking for the trigger if there is one out there. I think they're going to start to worry about (the sequester). There could be severe cutbacks." Cashin said the first several days of the week will be key in terms of market behavior.

"Everybody's looking for something to make this market pull back," said Hogan. "There's nobody, that's not looking for something to make it pull back."

Stocks finished a fifth week of gains, with the Dow ending Friday at 14,009, just shy of its record 14,164, and the S&P 500 ended at 1513, about three percent below its record high of 1565. Treasury yields pushed higher this week, with the 10-year at 2.025 percent late Friday.

"I would say you still want to be on the long side," said J.P. Morgan chief U.S. equities strategist Tom Lee. "I know this is a maturing rally. Not that you should be ready to batten down the hatches, but we are going to go down. Let's be realistic, we've been rallying for a long time. Just for your own sanity, own some quality." Lee said he doesn't see the market pausing just yet, but it's coming soon, and he still thinks many investors are too underweight stocks.

( Read More : 'Great Rotation' Talk Is Premature: Bond Fund Managers )

Much is being made of a possible new dawn for individual investors, but some strategists say they don't see it. Scott Wren, senior equity strategist at Wells Fargo Advisors, said many investors he speaks to are still worried about losing principle and are underinvested in stocks, and overweight bonds and cash.

"The overwhelming theme is the same as it's been for the last three years: 'I don't care if I miss any upside, I just don't want to lose any money'... People don't want to lose money. You have all these baby boomers who have been hit hard twice in the last dozen years," he said.

In the last four weeks, equity mutual funds have taken in $20.7 billion, their largest four-week total since April, 2000, according to Lipper. In the last week, they took in $5.8 billion, and half of that went to domestic stock funds.

Lee said this is a sea change, but perhaps more psychologically important for the active managers who are seeing money flowing in for the first time in a long time. If it continues, "it's changing the mind-set. The psychological impact is substantial. There'll be more dip buying. I think the downside is more limited...it broadens the tape," he said.

But the economy has to prove itself for the market to carry much higher. The consensus view seems to be that stocks will stumble when Washington addresses fiscal issues, but pick up again as the economy improves in the second half. Even so, analysts expect risk assets to continue to benefit from the Fed's easy policies.

"I don't see a really accelerating economy or accelerating inflation in that period of time, so I think the market in that kind of environment can work higher, especially since these valuations have been low," Wren said.

( Read More : Gasoline Prices: Highest Ever for This Time of Year )

David Ader, chief Treasury strategist at CRT Capital, said the bond market is casting a wary eye at the equity market's moves, and that is partly why rates are higher. "The stock market doing what it's doing has caught us by surprise, and because it's doing that we have to rationalize it," he said. "And if you're going to find rationality for a strong stock market, you're going to find rationale for a weak bond market, and one thing reinforces the other."

"I don't think this is the start of the big bear market in bonds. It's the start of the big sideways market," he said.

What Else to Watch

The euro (Exchange:EUR=) rose sharply in the past week, touching $1.37 for the first time since November, 2011 on Friday.

Deustche Bank currency strategist Alan Ruskin said he is watching central bank meetings in the coming week, particularly the European Central Bank meeting Thursday. ECB President Mario Draghi speaks at a briefing after the meeting. The ECB is not likely to take action, but Draghi's comments could have impact.

"I don't think the euro is going to soar ahead of that. There's some risk he's going to take a more dovish line than he took last time," Ruskin said. "I think he'll want to work against the uptick in short term interest rates you've seen in Europe."

Week Ahead

Monday

Earnings: Yum Brands ( YUM ), Anadarko Petroleum, Clorox, Humana, Beazer Homes, Sysco, Simon Property, Baidu, Petrobras, Banco Santander, Hartford Financial, General Growth Properties, Torchmark, Leggett & Platt

1000 am Factory orders

0200 pm Senior loan officer survey

Tuesday

Earnings: BP, Toyota Motor (Tokyo Stock Exchange: 7203.T-JP), Disney, Chipotle Mexican Grill, CME Group, Panera Bread, Shutterfly, UBS, Archer Daniels, Arm Holdings, Automatic Data, Cardinal Health, Becton Dickinson, Allergan, Church & Dwight, Teco Energy, Estee Lauder, Diamond Offshore, Eaton, NYSE Euronext, Arch Coal, Zynga, Take Two Interactive, Genworth Financial, Sirius XM Radio, Kellogg, Take Two Interactive, Aflac, Hain Celestial

1000 am ISM nonmanufacturing

Wednesday

Earnings: Visa, Arcelor Mittal, GlaxoSmithKline, News Corp ( NWSA ), Yelp, NTT, CVS Caremark, Elan, IntercontinentalExchange, Marathon Oil, WR Grace, Madison Square Garden, Ralph Lauren, Time Warner, Akamai, Allstate, Green Mountain Coffee, Lincoln National, Tesoro, Renaissance Re, Mettler-Toledo, USG, Penske Auto Group, Cummins

Thursday

Earnings: Credit Suisse, Philip Morris, Sony (Tokyo Stock Exchange: 6758.T-JP), Statoil, Vodafone, Bunge, Cigna, Coca-Cola Enterprises, International Flavors and Fragrances, Starwood hotels, Cognizant, Teva Pharmaceuticals, Teradata, Sprint Nextel, Noble Energy, Scripps Network Interactive, Sigma Aldritch, KKR and Co, Mack Cali Realty, New York Times, Lazard, Snap-On, Coinstar, OpenTable, Columbia Sportswear, NCR, Primerica, XL Group, Activision Blizzard, LinkedIn, Carefusion, Hasbro, Hasbro, SunPower

January chain store sales

0830 am Initial claims

0830 am Productivity and costs

0300 pm Consumer credit

Friday

Earnings: Nissan Motors (Tokyo Stock Exchange: 7201.T-JP), Brookfield Infrastructure Partners, Buckeye Partners, CBOE Holdings, Entergy, Moody's, AOL, Carlisle, Apollo Global Management, Corporate Office Property Trust

0830 am International trade

1000 am Wholesale trade



More From CNBC
Also Read

Related Content

Scroll down for more posts ▼

Top 10 Most Recent News Articles

Historic Records Set at 2026 CNO Monumental Marathon

Updated Category News Views 421

Race to Remember: Monumental Breakthroughs In the chilly November air of Indianapolis, the 2026 CNO Financial Indianapolis Monumental Marathon wasn't just another tick on the calendar—this was a banner day for running. With record-breaking performances across every distance, we saw what happens when a community of athletes, sponsors, and volunteers hits a perfect...

Continue Reading
Intelligent Communication Forum Eyes Global Ecosystem Shift

Updated Category News Views 253

China's Grand Vision for Intelligent Communication You know what they say about big ideas—they start in the most bustling of places. And here we are in Wuxi, a city's pulse pounding with ambition, hosting the 2026 China International Intelligent Communication Forum. Picture it: From November 8th to 10th, movers, shakers, and visionaries are scribbling new blueprints for...

Continue Reading
J&J's New Study: Sjögren’s Solution Insight Sparks Debate

Updated Category News Views 281

Patient-Centric Take on Sjögren's Disease Johnson & Johnson has dropped fresh Phase 2 results on nipocalimab, reminding everyone they're at the helm of reshaping treatments for Sjögren's disease (SjD). A condition leaving about four million folks craving better days, in multiple ways, shines a light on what's gripping patients the hardest. It's hard not to sit up and...

Continue Reading
Johnson & Johnson Unveils Promising PsA Treatment Data

Updated Category News Views 282

A Game-Changer in Psoriatic Arthritis Treatment? Johnson & Johnson just tossed a headline-grabbing bone into the world of psoriatic arthritis with their new ICOTYDE results. For anyone tangled in the chronic web of psoriatic arthritis, hearing about a potential new treatment like ICOTYDE comes with cautious hope. Between stiff joints and rashy skin, sufferers are often...

Continue Reading
D-Wave's Legal Trouble: Securities Fraud Suit Looms

Updated Category News Views 34

A Looming Legal Storm for D-Wave Investors Call it another day, another legal tangle in the investing world. This time, it's D-Wave Quantum Inc. (NASDAQ: QBTS) on the receiving end of a securities fraud class action lawsuit. Yeah, those fancy quantum computers they're pushing didn't predict this one coming. The legal arena is getting ready for a bout, and if you've got...

Continue Reading
NatGold Pulling NATG From MEXC Amid Security Concerns

Updated Category News Views 536

NatGold Digital's sudden decision to yank its NATG token off MEXC Global reeks of regulatory urgency. With the U.S. Treasury clamping down on fund transfers wrapping up MEXC in their action against Russian laundering, NatGold didn't wait for the ink to dry on that order. They’re off the exchange posthaste. A bit of foresight or sheer necessity? Well, it's got the market...

Continue Reading
Invasive Procedures Don't Extend Life in Stable Heart Disease

Updated Category News Views 462

Challenging Longstanding Beliefs Today’s news from the heart research front might set a few cardiology heads spinning. We’ve got big-time findings out of the ISCHEMIA-EXTEND study, throwing more weight on the evidence pile that early invasive heart procedures for patients with stable coronary artery disease don’t actually extend your life. Managing care with a blend...

Continue Reading
Evaluating GLP-1 Telehealth? Key Questions to Consider

Updated Category News Views 547

Navigating the Landscape of GLP-1 Telehealth Providers In the sprawling jungle of telehealth options for GLP-1 care, it's easy to feel like you're drowning in sameness. Picture this: you land on a sleek page promising the moon and stars, but who knows what's behind the curtain? That's where seasoned advice comes in, like a compass in this murky digital forest. Meant, a...

Continue Reading
2027 Toy of the Year Finalists Energize Play Market

Updated Category News Views 308

A Kaleidoscope of Innovation in Toys There's a familiar buzz in the air, folks. The 2027 Toy of the Year Awards finalists have been unveiled, and they're bringing a fresh wave of creativity to children's playrooms. These aren't just toys; they're miniature innovators ready to light up the market this holiday season. The reveal happened at the Chicago Toy & Game Fair and...

Continue Reading
Boston STEM Expo Sparks Young Minds in Engineering

Updated Category News Views 243

If you really want to light up a kid's imagination, throw them into a room full of science experiments and let 'em have at it. That's exactly what happened at the recent Society of Women Engineers' Innovation Expo in Boston's Seaport District. The place was buzzing, and not just because of all the engineering gadgets on display—it was the energy of young minds...

Continue Reading

Top 5 Most Recently Viewed Articles

Silexion Therapeutics to Showcase Innovations at Upcoming Conference

Updated Category News Views 127

Silexion Therapeutics and Its Future in Oncology Silexion Therapeutics Corp. is at the forefront of the biotechnology sector, focusing its efforts on innovative treatments specifically designed for oncology. This clinical-stage company is dedicated to transforming the landscape for patients with hard-to-treat cancers, primarily those with the mutated KRAS oncogene, known...

Continue Reading
UBS Predicts Slowdown in Nvidia-Led Tech Rally - Key Insights

Updated Category News Views 172

UBS Foresees Changes in Tech Rally Dynamics Analysts at UBS suggest that the excitement surrounding the recent tech rally, driven by Nvidia, is beginning to wane. They predict a shift towards a more volatile market environment, influenced by ongoing economic challenges and increasing regulatory scrutiny in the semiconductor sector. Analysts' Perspectives on Future Stock...

Continue Reading
OS Therapies (OSTX) Unveils Encouraging Survivorship Data

Updated Category News Views 222

OS Therapies Inc. Reports Promising Results in Bone Cancer Therapy OS Therapies Inc. (NYSE: OSTX), a company focused on developing innovative cancer treatments, recently reported compelling findings from its Phase 2b clinical trial on OST-HER2, an off-the-shelf immunotherapy designed for addressing osteosarcoma, a challenging form of bone cancer. Significant Survival Data...

Continue Reading
Jeito Capital Boosts Aviceda Therapeutics with $207.5M Funding

Updated Category News Views 239

Jeito Capital's Strategic Investment in Aviceda Therapeutics Jeito Capital has recently announced a significant investment in Aviceda Therapeutics, securing a substantial participation in an upsized $207.5 million Series C financing round aimed at advancing the company's lead program, AVD-104. This funding is specifically intended to support pivotal trials for AVD-104,...

Continue Reading
Apple's Innovative M4 Mac Mini Sets New Standards in Tech

Updated Category News Views 293

Apple Launches the Game-Changing Mac Mini Apple Inc (NASDAQ: AAPL) has once again captivated technology enthusiasts and consumers alike with its latest innovation — the redesigned Mac mini equipped with groundbreaking M4 and M4 Pro chips. This launch not only showcases Apple's commitment to performance but also its pioneering approach to sustainability, marking the Mac...

Continue Reading