"Successful investing is anticipating the anticipations of others."
-- John Maynard Keynes
The dollar remains the key focus of the market Friday morning as we await fourth-quarter GDP, digest earnings reports and anticipate a speech by President Trump at Davos.
The greenback has been bouncing around following comments by both Treasury Secretary Mnuchin and President Trump. A slight rally yesterday lost strength overnight and that is helping to keep the indices propped up this morning.
Another positive factor this morning is a strong earnings report from Intel (INTC) . Several analysts have upgraded the stock and increased price targets, helping it to gap-up. However, another chip stock, Lam Research (LRCX) , posted a similarly strong report the other day and it saw a strong "sell the news" response Thursday.
The chip sector is often a market bellwether and Intel's earnings report has often marked a turning point for stocks. Market dynamics have shifted in recent years, but it this an important stock and sector to watch today. Chips are often the last group to make big runs in a cycle and they certainly have been running lately.
The other driving force Friday morning will be GDP and Donald Trump. The surge in economic optimism has been driving the market like nothing we have seen since 1999-2000 when the internet bubble was in full blossom. This surge is different in many ways but the emotions resemble what occurred back then.
Despite the constant attacks on his character, Trump has been the best salesman for this economy we have seen since Ronald Reagan. That is what is keeping this trend going and it is foolish to think we can guess how long it will continue.
The best thing that could happen to the market right now is some cooling off because the current action is unsustainable for long. There has been some slight cooling the last couple days with dips for a few hours but the underlying support has been tenacious. Dips are bought before they barely occur.
The best part of this market continues to be the stock-picking. There are pockets of good momentum each day as there is rotation to new sectors and stocks every day. While the cryptocurrency and blockchain names have faded, the biotechnology sector has been particularly good recently and continues to be a key group for good setups.
There will be a flood of earnings reports in the next two weeks. Next Wednesday and Thursday are the most important days of the quarter when we have key reports from Action Alerts PLUS names Microsoft (MSFT) , Facebook (FB) , Alphabet (GOOGL) , as well as Alibaba (BABA) and Amazon (AMZN) . If the market is going to do something significant that will be the time to watch for it.
This morning it is business as usual. Stay focused on individual positions, manage stops and keep looking for new buy setups. We will likely dance around a bit to Donald Trump's speech this morning at Davos especially if he comments on the dollar, but momentum continues to be the most powerful force in the market.