Stock Market Today: January 11th - 15th, 2021

Just copying this post over from last week's thread-


As shown in that post above, the SPX ended the "FFD" (First Five Days) period up +1.8%.

Now for some stats on those aforementioned FFD's. Since 1950, when the SPX was up +1.5% or greater during the "FFD" period, the full year has been up +15.6% on average and higher more than 90% of the time. Not too shabby eh.

 

Good Wednesday morning Stockaholics and welcome to a new day, fresh start!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone in here has a great trading day ahead today!

 

Morning Lineup - 1/13/21 - Easy Going
Wed, Jan 13, 2021

"The intelligent investor is a realist who sells to optimists and buys from pessimists." - Benjamin Graham

We've had a flurry of central bank officials on both sides of the Atlantic reiterate their stances that they are in no rush to start removing accommodation from the system. In Europe, ECB President Lagarde and council member Villeroy de Galhau both doubled down on their commitment to a 2% inflation target and that they will keep monetary policy loose for as long as needed in order to get the economy back into gear. These comments today follow comments from Fed Presidents Bullard and Rosengren who both also reiterated their commitments to get the economy back to its full potential.

Despite the dovish commentary, futures are modestly lower this morning ahead of the December CPI report. Outside of that report, though, the only other report of note is the monthly Budget Statement later this afternoon. On the political front, the House is expected to vote on impeachment again and at least some Republican members are expected to vote in favor.

Small-cap stocks have been on roll so far in 2021, but the real action now has been in micro-cap stocks. Through the first seven trading days of 2021, the Russell Micro Cap Index is up 9.4% which is the best start for the index since its inception in 2007. The only other year that was even close was in 2019 when the Micro Cap index was up 8.1% in the first seven trading days of 2021.



The chart below shows the performance of the Russell Micro Cap Index from the close on the seventh trading day of the year through year-end. For all years since 2007, the Russell Micro Cap index has seen a median gain of 11.62% for the remainder of the year with gains 64% of the time. While it's a very small sample size, in the three prior years where the Micro Cap Index was up over 3% to start the year, the index continued higher for the remainder of the year with gains all three times ranging from 11.9% up to 38.5%.

 

So, what are we all looking at, in terms of the next big events that the markets will be looking to now that we're almost 2 full weeks into the new year?

I'm guessing the big obvious one, earnings season, which kicks off with the banks tomorrow.

Anything else?

Maybe getting through next week (in particular next Wednesday) without a hitch would be one as well?

Any other one's you guys are watching, aside from that?

I guess we'll also have to keep an eye on how this so-called new COVID "strain" or "variant" or whatever it's being called, develops. Does the covid vaccine work effectively against it or?

Anyway, that's really about all I'm seeing, at least in the very near-term.

Of course, aside from anything "black swan-ish" if you will. Something that completely surprises out of left field. I'm thinking we could be kind of choppy/sideways for a little while (aka, a bit boring maybe). At least as far as the majors go. Thoughts?

EDIT: BTW, I'm going out on kind of a limb here lol. But, I think if all goes smoothly after next week. We should probably see VIX finally start to come in a bit more. Perhaps we'll finally see a close sub-20s after so long lol. I'm actually really astonished it's remained above 20 (yes, I know we've had intra-day prints below 20, but no "closes" below 20 AFAIK since last February) for this long now, even while the indices have been ripping new ATHs, just as soon as last week even.

 

I think I may have posted this chart a few times the past several weeks, but its admittedly why I'm feeling we could be a little choppy in the near-term at least. After about a +70% rip off the COVID panic lows, history would suggest that things could begin to flatten out. Not a complete reversal, or the start of a new bear or anything. But, if you look at what the previous notable bull markets have done in the past, at least in their first 2 years, after the initial rip off the lows, things kinda went sideways for a bit with pullbacks along the way. Could be seeing something similar here, absent again any totally out of left field black swans along the way of course!