LaRosa said the market is looking better technically, and not because of the “cross.” “I do think things have changed. Now, about 86 percent of stocks are above their 50-day moving average,” said LaRosa, of stocks listed on the NYSE.
“That means they’re in good shape,” he said. “That percentage was around about 10 percent last year. That means stocks are on a better footing. Over the last three to four weeks, we’ve seen dramatic improvements in the subsurface technicals of the market, which lead us to believe this rally isn’t over.”
Some strategists expect the market will make gains early in the year, then face choppier trading, until it is clear which way the presidential election will unfold. The majority of Wall Street’s strategists see the S&P making just slight gains for the year, holding under the 1,400 level.
Stocks are resilient, in part, for the same reason Treasury yields are moving lower — the potential for more Fed easing after last week’s FOMC meeting. The bond market is also trading higher, with rates moving lower, on economic news and concerns about the unresolved negotiations between Greece and its private investors.
“It’s a market that’s got a selective memory. It ignored the good data on the way up, and now some cracks in the data are showing up, and it’s the end of the world coming,” said George Goncalves, Treasury strategist for Nomura Americas.
He said the slide in rates also could be part of a bottoming process for yields. The benchmark 10-year was at 1.83 percent but fell to 1.81 earlier in the session, its 2012 low. The 2-year was unchanged at 0.215, but the 5-year touched another new all-time low at 0.71 percent.
“It doesn’t mean much unless the worst case outcome happens. I view the price action in the Treasury market as an insurance premium that could be unwound if you don’t get the worst case,” he said. But investors are, in a way, begrudging buyers.
“The reluctance to buy is why you see a grind lower, not gapping lower. If it’s not a bottoming process we should snap to even lower yields and break last year’s lows,” he said. The low yield on the 10-year in 2011 was 1.67 percent.
What Else to Watch
Wall Street is paying close attention to the Florida presidential primary where former Mass. Gov. Mitt Romeny and former House Speaker Newt Gingrich are running a close race.
Other earnings reports ahead of the opening bell include Honda, Valero, Mattel, McGraw-Hill, Illinois Toolworks, Entergy, Oshkosh, Paccar, Tyco, U.S. Steel, Celanese, Avery Dennison and Biogen Idec. Post market reports are expected from ACE, Aflac, Boston Properties, Seagate Tech and W.R. Berkley.