Don't throw out these Teflon stocks as you flee the market – MarketWatch

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The big day is finally here. So stand up to St. Valentine, shake your fist and say “no more roses, no more chocolates!”

Alas, it’s the OTHER big day that’s got most people zero-focused this am. If consumer prices come creeping in higher than expected, some fear mongers warn that could send stocks back to the dark days of last week.

Are Wall Street et al blowing this indicator all out of proportion? Maybe — but be warned, inflation tension could turn into a thing. “This really is going to be the main focal point every month this year, we think,” says Jim Reid, strategist at Deutsche Bank, in a note this morning.

Add that to the recent market upheaval, and it seems there’s no better time for the long-term investor to steer the course, keep a stiff upper lip, etc. — right? That brings us to our call of the day, from Daily Reckoning’s Greg Guenthner, who says the smart money is keeping a steady eye on trends that are pointing to tech strength.

“Strong trends usually persist,” says Guenthner, who adds that rather than predict the next direction for stocks, they’ve been busy “peeling back the layers” to dig up some bargains.

As for what they’ve spotted, he notes Apple AAPL, +1.00%  has been “leading stocks out of the cellar,” while the VanEck Vectors Semiconductor ETF SMH, -0.20%  also had a nice strong bust out of its recent market-driven funk, and Netflix NFLX, +0.12%  had an in-your-face rebound. Of course, when the market went down last week, techs didn’t exactly escape.


This comes after investors yanked around $4 billion from the PowerShares QQQ Trust ETF last week, the most since the dot-com bubble burst, Guenthner notes, citing Bloomberg data.

“The herd clearly believes that the strongest stocks on the market will be the ones that have the farthest to fall if market weakness persists. But we’re not so sure about that … ,” said Guenthner.

Larry Tentarelli, of the Trend Trading Signals blog, attests further to tech strength. In emailed comments, he notes that Netflix didn’t even touch its key 50-day moving average last week when stocks were melting down.

Plus, the First Trust DJ Internet Index FDN, +0.76%  didn’t close below its 50-day moving average, a “sign of extreme strength,” he says. Amazon AMZN, +2.04% Facebook FB, -1.85%  , Netflix NFLX, +0.12%  and PayPal PYPL, -0.41%  are all top holdings for the First Trust ETF.

Key market gauges

Dow YMH8, +0.48%  , S&P ESH8, +0.35%   and Nasdaq NQH8, +0.42%   futures are doing just fine. Asian stocks had a mixed session, with the Nikkei NIK, -0.43%   taking a strong-yen hit. European stocks SXXP, +0.76%  got a shot in the arm from German growth data.

The dollar DXY, -0.05% is down again, mostly against the yen. Crude CLH8, -0.84% is pulling back on worries data later will show rising supplies. The yield on the 10-year Treasury TMUBMUSD10Y, -0.29%  has slipped to 2.833%.

See the Market Snapshot column for the latest action.

The chart

Watch maker Fossil FOSL, +7.75%  shares are exploding, up 70% premarket after beating earnings expectations. The beleaguered company seems to have done the trick by announcing it will transition to wearable technology, which should boost margins.

This next chart shows just how Fossil has performed over the past two years, when it largely sat out the rally the rest of the market has enjoyed.

The buzz

Netflix NFLX, +0.12%  has lured in producer Ryan Murphy, the Hollywood bigwig behind such hits as “Glee” and “American Horror Story”, in a deal that could be worth as much as $300 million.

Chipotle CMG, -1.23%  shares are up on news that Taco Bell CEO Brian Niccol will be the burrito chain’s new chief.

Hilton HLT, +1.70%  , Dr Pepper DPS, -0.68%  and Molson TAP, -0.09%  are on the earnings list ahead of the bell, while Cisco CSCO, +1.55%  is among the late-session highlights. Check out a Cisco preview here.

Dating app makers Tinder and Match are making moves to keep their female customers happy. Meanwhile, women would like Tinder men to stop venting so much.

“…like a rollercoaster going off the tracks.” Passengers describe moments of terror, moving into crash-position for landing when an engine cover blew off a United UAL, +2.43%  flight over the Pacific Ocean. Luckily it landed fine in Hawaii, with no injuries.

The quote
AFP/Getty Images

Credit Suisse CEO Tidjane Thiam.

“Yes, it has had a lot of attention, because this kind of short vol/long S&P trade was run by a lot of people at their own risk, and it worked well for a long time until it didn’t, which is generally what happens in markets.” — That was Credit Suisse CEO Tidjane Thiam, defending the bank’s short volatility product to CNBC as his company posted its third yearly loss in a row.

Its VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Not XIV, -0.75%  turned into a spectacular one-way bet last week, resulting in plans to shut it down, and some big pain for some investors.

Speaking of, someone has sent an anonymous letter to the SEC and CFTC claiming Wall Street’s “fear gauge” — the Cboe Volatility Index VIX, -8.09%  — is being rigged.

Read: Here’s the trade that made $400 million on last week’s volatility spike

The economy

We should get the January consumer price inflation reading at 8:30 a.m. Eastern Time. Economists forecasting a 0.4% rise for headline inflation and a 0.2% gain for core inflation, which strips out volatile food and energy prices. The latter will draw the most attention. Data on January retail sales is due at the same time.

Read: Higher wages spook Wall Street, but fresh fears of inflation are probably overblown

Plus: White House may pick Loretta Mester as Fed vice chair

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