This could be the greatest week for “event risk” in many years, analysts at Argus argued in a research note to clients on Monday.
The firm explained that to start, MSFT and GOOGL report after Tuesday’s close, while AAPL, AMZN, and META (NASDAQ:META) report after Thursday’s close, with the companies representing almost 23% of the S&P 500 and 32% of the Nasdaq 100.
In addition, the Fed concludes its two-day meeting on Wednesday "with a slight edge in probability that they will leave fed funds alone through their March 20 meeting and make a first rate cut on May 1," while on Friday, the January employment report is released.
"With the S&P 500, S&P 100, and QQQs at all-time highs (ATHs), there isn’t any chart resistance or overhead supply above current prices," said Argus. "In other words, everyone invested in these indices is sitting with a profit. Most of the great stock-market gains come after indices and individual stocks break out to ATHs."
"These mega-cap indices have created what we call a platform from which to march higher," they added. "But we would be remiss if we failed to express some worries about overbought and divergent momentum, overbought breadth, and certain sentiment indicators that are clearly stretched."
Argus notes that while there isn’t any chart resistance, there is trendline resistance for the S&P 500 up near the 5,000 to 5,100 area, while according to Goldman Sachs, the last two weeks of February are "historically the worst two weeks of the year going back to 1928."
The firm is neutral in both the intermediate and long term and sees technology and communication services as sectors that are strengthening and utilities and real estate as sectors that are weakening.