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The Fuse
Market futures are a bit soft to start the morning but there is plenty of news on tap to shake things up. We’ll have the January PPI number released about an hour before the open, estimates call for this number to be much higher than the December reading. Tuesday’s read on CPI was also expected to be hotter and came in line, but markets rallied sharply from the open. There is a strong bid in the market that has been there since the start of the year, and with conditions as tight as they are (liquidity-wise) it is quite curious as to why buyers continue to chase after stocks. But we are not here to explain why, just go with the flow.
Rates climbed once again, the 2 year yield now above 5% for the first time since 2006. That’ll put pressure on stocks eventually. Breadth was horrible all day but managed to turn positive end of day, a bullish development. Volume was lower but continues to stay above recent trends. Volatility is falling into the holiday weekend as we often see happen. This week we saw the 4100 level remain very solid support on the SPX 500, with a rising 20 ma. Until that breaks, the dip buyers are helping to drive the action. There has been solid improvement in the outer breadth figures such as new highs/new lows. Another arrow in the bulls’ quiver.
The Internals
What’s it mean?
A slow motion rally that started weaker, but the buyers again lifted prices up and sellers were nowhere to be found. In fact, the VOLD made a huge run at the end of the day (top left corner). as did the ADD. TRIN fell sharply but so did put/calls, hence the bulls had it going all day long. VIX once again fell as the ‘news’ release pushed volatility around. As we head into a holiday weekend, we can see how this market remains well bid by looking at the internals.
The Dynamite
Economic Data:
- Thursday: PPI, philly fed index, jobless claims, housing starts
- Friday: import/export prices
Earnings this week:
- Thursday: DDOG, CROX, SHAK, DKNG, AMAT
- Friday: DE, AN, AMC