The Fuse
Futures are lower this morning after overseas markets were weak overnight
Interest Rates are slightly higher to steady again this morning after yesterday’s volatile session. Stocks will get their cue from bonds over the next few weeks into the end of the quarter.
Technology stocks remain under pressure here with news about China banning iPhones in government facilities.
Investors wonder what is next shoe to drop. After a 40% return for stocks so far in 2023 amid high rates and rich valuation, no surprise investors are taking some chips off the table.
Kroger reported earnings this morning that missed earnings expectations, the stock is falling a bit.
Nothing to drive stocks from the evening, we could see a rather quiet session into the weekend. Monday marks the 22nd anniversary of the 9/11 attack on the World Trade Center.
Breadth was again negative today, we are seeing a trend develop that seems to repeat what we saw happen in August. There is no doubt this bull rally can continue if breadth improves, but if more new lows remain the status quo then stocks are headed lower.
Another heavy distribution day as the bears had their way most of the session. Volume trends have turned sharply bearish this week, the bulls complacency is being punished. Can they take ball back? Certainly so, the price chart is still in good shape for now but the intense selling would need to stop.
Perhaps the only positive from today’s session is the indices finished off their lows. That’s a low bar of course, but we do see potential to test that 4,330 level again on the SPX 500, the Nasdaq might make a run below 15K. The Russell 2K has been the biggest problem of late, and tends to lead the markets up or down – in this case, it is down.
The Internals
What’s it mean?
Another poor session in the internals, the breadth was awful while the VOLD and ADD showed negatives on the chart above. VIX popped and dropped abit, but put/calls remain elevated and have been rising. Very heavy red arrows in the ticks too, that is telling us plenty more selling is happening in real time. Dangerous time for the bulls.
The Dynamite
Economic Data:
- Friday: Consumer Credit
Earnings this week:
- Friday: KR
Fed Watch:
Several Fed speakers this week as fed funds futures dropped sharply last week after the jobs report hit. Perhaps the Fed is closer to done than many think.
Stocks to Watch
Interest Rates – We’ve seen a slippage in rates recently, we’ll see if overseas markets keep that trend going.
VIX – look for the volatility index to move back up following the long weekend.
Technology – These stocks have been hot the last few weeks, if they pull back we’ll be looking for some good entry points.
