You know the old saying: “Watch out for that second step - it’s a doozy.” Yesterday, major equity indices opened higher on the first kick out of the gate and then did what has become instinctual - they started moving lower. There was some midday tire-kicking, but in the end, it was the same old story.

• S&P 500 (SPX) -0.40%

• Nasdaq Composite (IXIC) -0.76%

• Dow Jones Industrial Index (DJI) -0.03%

• Russell 2000 (RUT) -0.60%

The S&P 500 continues to hover above key support, and the October bear bounce origins.

Heat Map

Five of the eleven sectors were higher, but it wasn’t that simple. Consumer Discretionary (XLY) was lower, but three of the four sub-industries saw shares trade higher on the session.

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The big red spots: Apple (AAPL) and Tesla (TSLA) weighing on most major indices.

January Effect

Years ago, there was a lot of money to be made gaming the so-called “January Effect.” It was the big move at the start of the new year, led by small-caps. Of course, then came the gaming of the gaming, and the “effect” began earlier and earlier until the “January Effect” began in October and ended in January. 

We’ll see if that is the case this year. But, for now, the gravitational pull to the downside is overwhelming and won’t relent simply because it’s time or due. There is a lot of important economic data this week, including the jobs report on Friday. That will set the agenda. Meanwhile, manufacturing continues to crumble.

Today’s Session

The Fed is continuing to chisel away at housing, and the latest data on mortgages should make them grin. Demand for mortgages fell 13% last week from the prior two weeks, as the 30-year mortgage rose from 6.34% to 6.58%, and up from 3.33% at the close of 2021.  Wow.

-Applications to buy a home -12%

-Refinancing applications -16% 

More music to the Fed’s ears is the latest announcement from Salesforce (CRM), which announced it is cutting its workforce by 10%. Co-CEO Marc Benioff penned a letter to employees and stated, "As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that."  The company also plans to get out of some real estate and reduce some of its offices.

Futures are again pointing to a higher open, but off the highs.  Let’s see if we will have a repeat higher open to only fizzle.  

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