This is the biggest week for stocks so far this year and it may set up what the first quarter looks like. It’s an unusual week with an enormous amount of macro and earnings data that will determine the tone for the rest of the quarter. Economic data : On the economic front, there is U.S. employment cost index (Tuesday, which shows how employee compensation is growing); Eurozone consumer price index, U.S. manufacturing ISM, U.S. Job Openings and Labor Turnover Survey, and the Federal Reserve decision (all Wednesday); Bank of England and European Central Bank decisions on rate hikes (Thursday), and the U.S. jobs report for January (Friday). Earnings : More than 20% of the S & P 500 will report this week; by next Friday, 50% of the S & P will have reported. The most critical reports will come from global industrials including Caterpillar and UPS (Tuesday morning) and Honeywell (Thursday morning) and big tech such as AMD (Tuesday night), Apple, Alphabet and Amazon (Thursday night), and global consumer names McDonald’s (Tuesday morning) and Starbucks (Thursday night). The most important development : The market is showing broad-based strength in January. Consider: The advance/decline line and stocks above their 200-day moving averages are both showing positive signs. The most important sign for an up market is more stocks going up than going down. The NYSE Advance/Decline line is at its highest level since September. Craig Johnson at PiperSandler noted that 66% of all S & P 500 stocks are above their 200-day moving averages. For reference: above 50% is good, above 60% is very good, above 70% is a bull market. It’s not just the big-cap S & P 500 that is advancing: So are small-caps. Johnson noted that 56% of all stocks above a $25 million market cap and a $2 price are above their 200-day moving averages. The S & P 500 has broken a long-term downtrend of lower lows and lower highs : “Our analysis indicates the S & P 500 reversed its 2022 downward trend last week,” Ari…
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