The Fuse
Futures are down hard again as they were yesterday as buyers are having trouble stepping up to pick at the down market. Inflation yesterday from the UK and Euro zone pretty much indicates they will be raising rates next month.
4,200 on the SPX was the targeted zone, but we seem to have fallen short. The SPX 500 remains trapped in a box, 4,200 to 3,800 with room to 3,600 as well. This tight range with low volatility is going to frustrate many this year.
Several Fed speakers out today that may swing the markets. Interest rates remain under pressure, but NY Fed President Williams does not see a recession in his forecast, which could be meaningful.
Taiwan Semi came out and lowered their guidance, last night Tesla beat but had horrendous guidance, this stock is down sharply.
A solid comeback for the bulls yesterday but more pressure today shifts to market to more downside ahead.
Breadth is clinging to a buy signal, but a bad day of breadth here on Thursday will shift this indicator to a sell signal. These are pretty reliable. Oscillators are nearly negative.
Volume trends are weak here, seems buyers are running out of fuel.
We are still watching the 4,200 level on the SPX 500, where we would expect to see major resistance. Further, a drop to 4100 would not be unexpected, but lower than that we have 4050 as an area of interest.
The Internals
What’s it mean?
Seeing a subtle shift in these internal indicators. Notice the declines over the last few days in the VOLD and ADD, but the rise up in put/call ratio (bottom right). Volatility remains under pressure though, the VIX declined under 17%, realized volatility is about 11%.
The Dynamite
Economic Data:
- Thursday: Jobless claims, Philly Fed, Leading indicators, Ex home sales
- Friday: Flash PMI
Earnings this week:
- Thursday: AXP, T, DHI, NOK, NUE RAD, TSM, UNP, CSX, PPG
- Friday: FCX, HCA, PG, SAP
Fed Watch: Fed tool is now seeing about a 87% chance of a rate hike in early May. That’s about as close to a slam dunk as you can get. Fed speakers last week are still hawkish, yesterday’s comments by Atlanta Fed President Bostic says one more and leave rates higher for longer.
Issues/Stocks to Watch This Week
Tech earnings – The first big week of earnings with several releases, we’ll be keeping a close eye on technology names, which have surged in 2023.
Options – Friday is a big options expiration day, and with so much bullishness recently we could see a bit of those gains given back.
Fed Speakers – Notable on Thursday is hawkish Cleveland Fed President Loretta Mester, several more out there this week talking about Fed policy.
