The Fuse
Stock futures are slightly lower as the recent bounce from an oversold condition starts to fade away. As we come up to the last trading session in August the indices are behind the curve though had a solid move up on Monday. That was the 8th straight up Monday, but before you get to excited 6 of those time were followed by a down Tuesday. It seems the markets are trying to simply levitate here until after the holiday next week.
Interest Rates are modestly higher this morning as the curve remains inverted but is flattening out a bit. The 2 year yields are steady at 5.01% while the 10 yr remains at 4.12%.
Several Fed speakers this week including Michael Barr today, he is the main guy on banking regulation and may introduce new restraints on banks.
We’ll hear from Susan Collins, Raphael Bostic and Loretta Mester later in the week.
Strong earnings this am from Best Buy and Pinduoduo along with BigLots is helping to drive a bit of interest. Crude oil is steady but with hurricane season getting underway production issues will be called out, hence refineries may be shutting down for a time, a period when driving peaks.
Strong price action again today but there is little conviction behind the buying. If this is the ‘wall of worry’ it’s presenting a nice challenge to the bears, and we’ll see if this rally sticks further.
Good breadth all session long as markets managed to shake off the boredom of a long summer day. Maybe we chalk it up to a mark up session as we prepare for the end of the month. Regardless, a good start for the bulls, a second straight up session.
In one of the lowest volume days of the year the stock market rose up sharply. That’s no the conviction you want to see and leaves the markets vulnerable to some volatility and downside action.
A good close for the SPX 500, above 4440 and the Nasdaq with a win over 15K. We still see the markets in a trading range, the action Monday typical of that description. The opening bell saw a high of 4443 on the ES futures, the close was right at 4443. An up day but volatile action within the sidelines.
What’s it mean?
Price action is all that matters, even if it’s not pretty getting there. Good price action is often backed by strong internals, yesterday saw pretty decent readings with a strong VOLD and sharp drop in VIX and TRIN. Buyers stepped up and bought the market from the start, with positive news out of China. A second straight day of wins, but we have end of the month coming and plenty of data left, including the jobs situation.
The Dynamite
Economic Data:
- Tuesday: Consumer Confidence, JOLTS
- Wednesday: ADP employment report, GDP Q2 Second Estimate, Pending Home Sales
- Thursday: Challenger job cuts, jobless claims, PCE price index/income spending
- Friday: August job report, ISM manufacturing, S&P Global PMI for August
Earnings this week:
- Tuesday: BBY, BIG, SJM, AMBA, BOX, HPQ, PVH
- Wednesday: CHWY, CRWD, FIVE, OKTA, CRM, VSCO
- Thursday: CPB, CIEN, DG, HLR, OLLI, AVGO, DELL, LULU, S, VMW
- Friday:
Fed Watch:
Well, if anyone was expecting something different from Chair Powell following last month’s Fed hike they were disappointed. The Chairman was quite hawkish again and said under no uncertain terms the committee is ready to hike rates further. The Cleveland Fed Nowcasting sees August CPI rising by 9.6% annualized on the headline number, but core about unchanged (higher than preferred). If that number comes in hot we’ll see talk of 6% rates coming very soon (fed funds). As of now, any rate cuts probabilities are dwindling.
Stocks/issues to Watch This Week
Salesforce – This company reports earnings this week and many are concerned about the valuation, which has become quite rich in a tough market.
VIX – We’ll be watching volatility again as we approach the month end, which could ignite some fireworks. A three day weekend is upon us though and that could lead to a drop in volatility.
SPX 500 – Thursday is the day, the last trading session in August. If the MACD manages to hold the crossover from July then we can designate a bull market has been established. It’s been awhile! Doesn’t mean the market goes up every single day, however.
