The Fuse
Futures are up strong this morning, the Dow Industrials extending strong gains from yesterday. The SPX 500 looks to open higher but still below the 4K level, the R2K looks to followthrough as well. Perhaps some positioning in front of the Fed decision tomorrow.
3900 on the SPX remains in view, but the impressive index yesterday was the R2K, which powered up and led most markets higher. Nasdaq was up but stumbled most of the session, 12800 is clear resistance while 12500 is good support on the Q’s.
Banking pressures continue as this group was solid most of the day but sold down a bit during the afternoon session. We find the big banks are having some trouble too, perhaps waiting a month for some clarity when first quarter earnings are released.
No big earnings last night but we will have Nike later on this evening.
The big event this week is the Fed meeting and their projections will be released. We’ll also keep a close eye on the banking situation and if there is some resolution to the crisis.
Breadth was better than Friday’s horrendous numbers but not all that impressive, about 18-11 positive. We should note more than 75% of stocks in the SPX 500 are below their 50 ma, so basically in their own bear market.
Perhaps a reflex response from Friday’s drubbing, but the bulls pushed some good volume Monday, but closing below strong support levels tells us the trend of the market remains down.
We continue to see 3800 on the SPX 500 as good support, below there is 3762. This past week the low was 3810 and that held firm, but Friday’s poor session means there could be much more down if Monday has some followthrough. The Russell 2K has been very weak of late, about to break the December lows (which the Dow Industrials already did).
The Internals
What’s it mean?
Solid day from the start but just a modest reversal from Friday’s poor showing. The VOLD was up but barely, VIX was up early and traveled lower as the volatility sellers were active. ADSP showed a trend up day, but of course plenty of news this week that will rock the markets up or down.
The Dynamite
Economic Data:
- Tuesday:FOMC meeting starts, mortgage apps
- Wednesday: FOMC decision on rates
- Thursday:Jobless Claims, new home sales
- Friday:Durable Goods, Global Flash PMI
Earnings this week:
- Tuesday: NKE, CSIQ, HUYA, GME
- Wednesday: WOOF, CHWY, WGO, OLLI, SHOE, KBH
- Thursday: ACN, GIS, DRI
- Friday: XPRS
Fed Watch: It’s the second meeting of 2023 and plenty to discuss around the table. Will the FOMC consider the banking issues a systemic problem and pause on rate hikes, or will they continue to fight inflation with impunity? Markets are waiting for it and the projections for the year, too.
Stocks to Watch
Nike – big retailer reports earnings this week, looking at China outlook (which was better last quarter).
Federal Reserve – committee will talk about inflation and their objectives over the coming year.
Bonds – Yields are creeping higher once again.