Here's our daily buy list of stocks that have been identified by our technical indicators as strong buys. If the overall market continues higher, these stocks should outperform:
*Buy and Sell signals are not recommendations and are a starting point for further analysis.
U.S stock indexes this morning are modestly higher as the S&P 500, Dow Jones Industrials, and Nasdaq 100 all posted new record highs. Stocks are higher on optimism that additional U.S. pandemic stimulus will revive economic growth and bolster corporate earnings. The overall market also found support on stronger-than-expected U.S. economic data along with a rally in technology stocks.
Positive S&P 500 quarterly earnings results are also supporting gains in equity prices. According to Bloomberg data, 91% of the S&P 500 companies that have announced Q4 earnings results thus far have beaten estimates, above the 76% that beat earnings estimates the same time last year.
Today's U.S. economic data was bullish for stocks. U.S. weekly initial unemployment claims fell -26,000 to 900,000, showing a stronger labor market than expectations for a decline to 935,000. Also, Dec housing starts rose +5.8% to a 14-1/4 year high of 1.669 million, stronger than expectations of 1.560 million. In addition, Dec building permits unexpectedly rose +4.5% to a 14-1/4 year high of 1.709 million, stronger than expectations of a decline to 1.608 million. Finally, the Jan Philadelphia Fed business outlook survey rose +17.4 to an 11-month high of 26.5, stronger than expectations of an increase to +11.8.
Weighing on the overall market is a decline of nearly -6% in United Airlines after the company failed to forecast when a demand in air travel would improve earnings, saying this year will serve as a "transition" after the pandemic-related collapse in travel demand. Also, Discover sank more than -5% after it warned that rising unemployment among white-collar workers could lead to greater losses in the second half of the year.
A bearish factor for stocks is the worsening Covid pandemic, which is forcing countries to tighten lockdowns that undercut economic growth and corporate profits. Data from Johns Hopkins shows global daily Covid deaths climbed to a record 17,500 on Wednesday. Globally, Covid infections have risen above 97.423 million, and deaths have exceeded 2.086 million.
The VIX S&P 500 Volatility Index ($VIX) this morning recoverd from a 3-week low of 21.15 and is currently up +0.08 at 21.66. The VIX is down sharply from last March's 12-1/4 year high of 85.47 but is holding above the late-November 10-1/2 month low of 19.51.
*Our Daily Buy List is a list of stocks that have been identified by our indicators as being at a buy point. They are not recommendations and do not take into account an investors risk tolerance, time horizon or liquidity needs. The Buy List is a starting point for further analysis.