Brace for another nose-dive for stocks — and welcome it – MarketWatch

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In what would have seemed like a miracle on Wall Street last week, a fifth up day in a row is simmering away for stocks this morning.

The Teflon equity market we know and love resurfaced yesterday as it marched onwards and upwards, past inflation data and a pop higher in the 10-year Treasury yield nearer the 3% line-in-the-sand. VIX futures this morning are under 20.

The only problem is that it all looks a little too easy, like a “Scooby-Doo” mystery that’s all squared away in the first 10 minutes. Ruh-roh?

There are some doubts that equities can just sail on upward from here, end of story. Among them is our call of the day, which comes from CFRA’s chief investment strategist Sam Stovall, who says the S&P 500 “will likely have to retest its recent low.”

That low came last Thursday, when the S&P careened down to 2,532.69 before snapping back. As Stovall and others have pointed out, the index didn’t break its 200-day moving average, which helped it then sling-shot upward more than 6% over the next four trading days.

However, the reason a retest can’t be avoided is “recoveries from sharp selloffs require reassurances,” the CFRA strategist says. In other words, investors will need proof that the bounce was for real.

The good news? That pullback will “present a second buying opportunity, rather than usher in a new bear market, since we don’t see recession on the horizon,” says Stovall.

Arbeter Investments

A similar view comes from technical analyst Mark Arbeter, who says there’s more than a “50/50 chance we rollover and test (within 1% to 2%) the recent lows.”

A V-shaped bottom is unlikely, “as there was a fair amount of technical damage to a lot of stocks,” the Arbeter Investments president tells clients.

Key market gauges

Another rally looks to be on the cards with Dow YM, +0.78%  , S&P ESH8, +0.44%   and Nasdaq NQH8, +0.49% futures all climbing. Asian stocks matched Wall Street’s prior ride higher with strong gains in Hong Kong and Japan, though several markets there are closed for the Lunar New Year holiday. European stocks SXXP, +0.65%  are also charging higher.

The dollar DXY, -0.33% is getting mugged again, crude CLH8, -0.15% is up a bit, but pared back an earlier stronger bump. Gold GCJ8, -0.23%  is flat. The yield on the 10-year Treasury TMUBMUSD10Y, +0.22%  is right at 2.923%.

See the Market Snapshot column for the latest action, and check out Why the U.S. dollar isn’t getting any love.

Bitcoin BTCUSD, +4.70%  , or “noxious poison” as Charlie Munger calls it, is hovering around $9,600.

The chart

It’s been quite a ride down for the dollar USDJPY, -0.37%  against the yen recently, and it looks like the same is on tap for Thursday. Our chart of the day comes from London Capital Group’s head of research, Jasper Lawler, whose chart below shows how the yen has broken out of its long-term trading range to hit a 15-month high recently.

“The current bout of dollar weakness could still stumble, particularly as EURUSD and GBPUSD approach multi-year peaks at 1.25 and 1.43 respectively. But the breakout in the yen skews the risks in favour of another leg lower in the buck,” says Lawler.

London Capital Group
The buzz

Cisco CSCO, +2.09% is also cruising higher on signs it has turned a corner. It’s hovering at post-2000 highs in premarket after its earnings and outlook topped estimates.

Read: Cisco is ‘putting together newer growth engines’ — analysts react to earnings

TripAdvisor TRIP, +2.11%  is soaring after a bullish forecast.

Applied Materials AMAT, +4.86%  is up a bit on a dividend rise and earnings beat.

Avon AVP, +3.18%  is on the early earnings docket, with Shake Shack SHAK, +3.74%  coming after the close. As well, Kraft Heinz KHC, +0.29%  is due to release a post-merger update after the bell.

It’s 13-F time, which means investors can peek inside the portfolios of big institutional managers, though the info is from the fourth quarter. Sometimes shares mentioned react. Among the highlights, Warren Buffett’s Berkshire Hathaway BRK.A, +1.18% BRK.B, +1.29%  added Apple AAPL, +1.84%  and Teva TEVA, +4.37%  shares and cut a stake in IBM IBM, +2.66%  .

David Tepper’s Appaloosa Management upped exposure in Micron , Facebook FB, +3.68%  , Apple and Bank of America BAC, +2.63%  , and made bets on Caesars CZR, +4.49%  and MGM, +3.95% David Einhorn’s Greenlight Capital added to a Brighthouse BHF, +4.01%   stake and took a small Twitter TWTR, +0.93%  stake.

Amazon AMZN, +2.58%  and Bank of America BAC, +2.63%  may be teaming up over lending, says report.

Healthier Happy Meals? McDonald’s MCD, -1.48%  sets that as a worldwide goal for 2022.

The economy

It’s another big day for economic data, kicking off with weekly jobless claims, the Empire State and Philly Fed indexes and producer prices. That will be followed up by industrial production and a home builders index.

The stat
Everytown

School shootings in the U.S. since 2013

18 — That’s how many school shootings the U.S. has seen so far in 2018, according to Everytown for Gun Safety.

The death toll from Wednesday’s gun attack at Florida’s Marjory Stoneman Douglas High School stands at 17, with many more injured. Everytown’s map above shows the locations of the 290 school shootings since 2013, as of Feb. 8.

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