The Fuse
Stocks are up strong today and pushing through some heavy resistance. Tech names are carrying the load as are energy stocks. Breadth is okay so far but not all that impressive, after five up day the bulls may be getting tired.
Interest Rates are lower today as the data is coming in favor of lower inflation and even a bit slower growth. Tomorrow’s job report will be quite telling.
PCE data came in friendly for the economy and inflation, China news continues to impact markets with much more widespread buying and Europe continues to be a hot mess but their growth prospects are improving (but not inflation).
Very strong reports last night from CRWD, CRM and OKTA have them leading the way with technology shares higher. Tonight it’s AVGO, LULU, MDB, and DELL among others.
Tremendous rally yesterday on strong turnover, the bulls took the reins from the start and never let go. This sets up for more upside towards an overbought reading, which is not very close as of yet.
Solid breadth day, the best all month with the advancers crushing the decliners. These days have typically lost it near the finish but yestreday was a different story. The wall of worry is up and is going to drag people back on board.
Strong turnover yesterday as the market registered an accumulation day, the first one since July. That’s important but even more is can there be some upside later in the week. Plenty of news and earnings to make the bulls’ case for them.
We mentioned recently the difficulty of resistance up near 4,450 on the SPX, but that fell like a hot knife through butter. Resistance now at 4,500 (currently level) and the gap at 4,576. The Nasdaq was the star of the day, blistering througn resistance levels as rates fell sharply.
What’s it mean?
It was a celebration of the bulls yesterday with some very strong price action and volume, but the internals also indicated the rout was on from the start. Note the VOLD and ADD, gapping up with the markets early and never letting up. That is solid bullish action, any way you slice it. Ticks were very strong, check those out up top – the green arrows were dominant. VIX fell again as we often see in front of a holiday weekend. More upside for the bulls would cinch an even higher move.
The Dynamite
Economic Data:
- 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:
- 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.
