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Weekly Edge: Factors In Play Following The January Rally

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Invest With An Edge


  • Last month was the best January for U.S. equity markets in over 30 years.
  • The IPO market is still expected to be strong in 2019 despite the delay caused by the government shutdown, according to MarketWatch.
  • Each of the 11 sectors represented experienced an increase in momentum last week.
  • With earnings report season in progress, the USA had jumped to number seven two weeks ago and has now climbed to number six, overtaking World Equity.

By Ansh Chaudhary

Last month was the best January for U.S. equity markets in over 30 years. Analysts at Goldman Sachs believe investors who sat out during January likely missed a bulk of the returns for the year. Although strategists don't expect markets to retest the December 2018 lows, they do expect that trading will be relatively flat and skinny following the January bounce. Despite these expectations, Goldman is bullish on the technology sector and believes the digital economy and healthcare names will pick up the slack during this flat environment.

As the Nasdaq has gained 19.5% since its December low, any gain in the technology sector could help the index exit the bear market and enter into a new bull rally. Stocks rallied in January due to rising optimism about U.S.-China trade negotiations, as well as domestic monetary policy and dovish Federal Reserve remarks. U.S. trade deficit numbers were released this morning and showed an 11.5% decline in the gap, down to $49.3 billion from $55.7 billion. "Economists surveyed by Dow Jones had been looking for a deficit of $54.3 billion," CNBC reports. The gap with China itself closed down approximately 7%, from $38.2 billion to $35.4 billion. Economists and investors now look forward with optimism to the March 2 deadline for Presidents Trump and Xi to reach a trade deal.

Ned Davis Research's Ed Clissold suggests it will take more than Fed policy and optimism about trade for the market to hit the all-time highs it did in October of last year. "We have to get back to the idea of we need better earnings. We need better economic growth," Clissold said. Although companies are missing analyst expectations, stocks rallied in January because the earnings aren't the worst of what investors expected.

The IPO market is commonly used

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Invest With An Edge (http://investwithanedge.com) is a free trading resource for everyday investors. Published by All Star Investor (http://www.allstarinvestor.com/), we’ve been delivering solid investing advice since 1991. We specialize in Exchange Traded Funds (ETFs), Mutual Funds, and Stock investing. This website includes: --Daily Market Commentary (http://investwithanedge.com/commentary) We cover the markets from a unique perspective. Our daily insight will help you to think about investing in a not-so-common way and will help you gain an edge in the markets. --Leadership Strategy Trading Method (http://investwithanedge.com/leadership-strategy) This growth strategy takes all investing styles (Large Cap Growth, Small Cap Value, etc.) and helps you to invest in the ones displaying true market leadership. --Weekly Investing Newsletter (http://investwithanedge.com/invest-with-an-edge-newsletter) We provide a powerful mid-week review of the markets with a focus on sectors, styles, and international positions. We also include a timely Pick of the Week for investors looking for more ideas.

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