The market is moving mostly sideways, in part to investor’s rubbernecking the latest Washington, D.C. saga: potential government shutdown.  Without a lot of earnings to key off, and the slight miss on Michigan Consumer Sentiment, the market has more time to be preoccupied with the latest threat of a shutdown and latest revelation, D.C. is broken.  But, this has been a great week, so consolidation of gains is a good sign, too.

Michigan Sentiment January 2018 Highlight

Current conditions have been in a strong uptrend for a few years, but the expectations component can’t break through resistance that goes back to late 2014.   Maybe as the new tax law impacts wider swathes of society, it could be the catalysts for greater future optimism.

Headline misses slightly, but the biggest takeaway:

The Expectations Index remained virtually unchanged at 84.8. Tax reform was spontaneously mentioned by 34% of all respondents; 70% of those who mentioned tax reform thought the impact would be positive, and 18% said it would be negative.

The disconnect between the future outlook assessment and the largely positive view of the tax reform is due to uncertainties about the delayed impact of the tax reforms on the consumers. Some of the uncertainty is related to how much a cut or an increase people, especially high income households who live in high-tax states, face.

University of Michigan

At midday, advancers far outpace decliners 1771/1104 on the NYSE and 1913/846 on the Nasdaq. 

Consumer Discretionary and Staples are strong today, helped by retailers, while Energy, Industrials, Technology and Telecom lag.  The Nasdaq and S&P500 remain in positive territory, up 0.3% and 0.2%, respectively, but the Dow is down 0.2%.