Santoli: Stocks tick higher on megacap earnings, but are the real-money investors back?

Published Fri, Jan 28 20221:13 PM ESTUpdated Fri, Jan 28 20224:13 PM EST

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. The Monday low in the S & P 500 went unchallenged the rest of the week — even with all the whippy action, the dramatic surge in Fed tightening expectations, and the further liquidation in "story stocks." This has helped the market make some use of oversold conditions and the daylight let in by some megacap earnings reports to get a bit of a lift into month-end. As noted in recent days, the S & P had been churning near the down-10% level and as of last night's close entered what's historically among the stronger multiday phases of the year. With deep underperformance of stocks vs. bonds in January, there is likely an added push from some rebalancing flows into equities. The inflation data this morning was no worse than forecast. It allowed two-year Treasury yields to slip from recent highs above 1.2% to 1.16%, which gave the wink to equity traders to buy the premarket dip, which itself began overnight with the European market open. It all is coming together as, perhaps, a tentative base being put together right near where things bottomed in early October. Would most investors sign up for a huge trading range developing from this area, just to take the pressure off? Probably. It's tough to tell a relief/oversold/short-covering bounce from an assertive rush of buying from "real money" investors, but one can turn into the other in time if things break right. The correction has sent investor sentiment toward multiyear depths of pessimism, flushed out hedge-fund risk exposures, knocked five price-earnings points off the Nasdaq 100 and dragged the S & P 500's forward price-earnings down toward pre-Covid levels just above 19x. All this said, the environment remains jumpy and hard to trust. Reminiscent in some ways of December 2015-February 2016: The Fed was intent on starting its first tightening cycle in years even as the global economy was softening, and Wall Street had convinced itself