The Fuse
Futures are up
Stocks did an about face on Thursday, pushing higher and are surging again Friday morning. Futures are strong, sporting a solid gain with the ES futures looking to close above 4K for the first time in over a week. Volatility is down and pushing below 20%. The spy resistance is 400 today, we’ll see if that gets penetrated. Bulls would like to see the markets close up higher today as a followthrough from Thursday.
With Atlanta Fed President adamant about only raising rates 25bps later this month, the bulls took that as a green light to get moving. The buyers stepped in and battled back, with no obstacles to getting long the buy programs kicked in.
Solid earnings from Salesforce gave the Industrials a nice kick. We have seen some solid reports this earnings season but it’s all about the guidance, companies will be rewarded if they have good visibility for 2023.
Four fed speakers today, that is the major event on the calendar (it’s not really an event, but their commments can move markets).
Breadth was weak yesterday all day long until that rally unfolded. Positive breadth may push this indicator into a buy signal next week. Until better breadth returns we’ll have to consider every rally suspect, an opportunity to sell the rip.
Volume trends are turning bearish. Yesterday’s rally was weaker than the prior day, perhaps the buyers ran out of energy. This simply means heavier volume is weighing in on the down sessions, and they are starting to accumulate.
The SPX 500 barely closed above the 50 ma yesterday. However, a couple of tests of the 200ma level were successful, but the index was weak all session long until a massive reversal ensued. The first of the month usually means strong money flows, but that is not the case here. We see 3940, then 3900 and 3802 below as levels to test.
The Internals
What’s it mean?
A strong reversal all day long in those indicators. The VOLD and ADD pushed higher from their lows early in the day, with some powerful force.
VIX also made its high early and as has been the case, the volatility sellers were active again. TRIN fell sharply lower however and that may be a short term sell signal.
The Dynamite
Earnings:
- Friday: HIBB
US Economic Data:
- Friday: PMI services, ism non-manufacturing index
Fed Watch: A few speakers out today will be talking about inflation and the economy. Last week we had the same situation, but speakers were much more hawkish than expected, talking up higher rates. We currently see a 29% chance of a 50bps hike in March, but plenty of data will be out before then.
Stocks to Watch
Costco, Hibbett Sports, Apple and ChargePoint
