Volatility Crush On The Horizon!

At the present time, we’ve seen Q4 results from 228 S&P 500 members that combined account for 54.1% of the index’s total market capitalization.

Total earnings for these companies are up +15.9% from the same period last year on +9.1% higher revenues, with 82% beating EPS estimates and 79.8% beating revenue estimates.

For the Tech sector, we have results from 53.4% of the sector’s market cap in the S&P 500 index.

Total earnings for these Tech companies are up +28.4% from the same period last year on +8.7% higher revenues, with 90.9% beating EPS estimates and 97% beating revenue estimates.

Apple reported quarterly earnings on Thursday that beat expectations, and revenue that also topped estimates.

Apple expects to make $60 billion to $62 billion in the current quarter, below the $65.73 that Wall Street was looking for.

iPhone units fell from a year ago, despite expectations of modest growth.

For the small-cap S&P 600 index, nearly 20% of the companies have announced numbers, with earnings up 6.1% on 10.7% higher revenues.

The number of companies with both positive EPS and revenue surprises are near 65%, respectively.

Initial Jobless Claims slipped 1,000 to 230,000 in the week ending January 27th and below forecasts for a print of 235,000.

Atlanta Fed’s Q4 GDPNow estimate was boosted to 5.4% from 4.2% following today’s economic news. The forecast of real consumer spending growth increased from 3.1% to 4%.

Fed rhetoric heats back up on Friday with Dallas Fed Kaplan and San Francisco Fed Williams scheduled to speak.

Technically, volatility began to decline once again and stocks appear to be congesting mildly.

I believe VIX levels will make new lows over the near term time period, since there’s hardly any global data or tension on the horizon at this time.

This will give stocks more upside opportunity since large institutional traders don’t like to accumulate shares when volatility levels are rising steadily.

We can expect more congestion next few days if earnings are not driving price higher.

SPY remains above the 50 day line and lack of volatility is telling me that price should remain near the current level over the near term.

There’s a few small hiccups on the horizon – especially if retail fails to perform – but that’s a few weeks away and unless there’s something unexpected, the odds of seeing more upside from the overall market is highly probable.

Roger Scott
Senior Publisher