The Fuse
Equity futures are down this morning following a couple of nice up sessions for the markets. After a rough month of October the bulls will try and get the new month started in a positive fashion. Look for plenty of volatility through the week starting with a Fed decision later today.
Interest Rates are up modestly but look for that to change drastically after 2pm EST when the Fed announces their decision on interest rates.
Surprisingly, there is a small 3% chance of a rate cut at today’s meeting, which is unlikely to occur. The futures market is certainly trying to guess the Fed’s next move, which would be a cut – they want it sooner rather than later.
As we start the new month of November there is plenty to worry about. The wars overseas continue to sap everyone’s energy while the economic malaise that seems to be coming has many people worried. Today we’ll get our first employment data from ADP and JOLTS, along with ISM and PMI data.
Mixed earnings last night from AMD and a disaster from Paycom, which is down more than 20% today. Caesars posted a nice quarterly earnings but warned of labor strike issues. First Solar missed badly on revenue but did beat earnings estimates and offered modest upside guidance.
Plenty of events this week including Apple earnings, some other big earnings reports, a Fed meeting, a new month and a jobs report to worry about. Whew!
Breadth came in strong for a second straight session as the bulls took control following a mid morning swoon. Internals were strong all session long but price action did not kick in until late. Was this week all about window dressing the month? We’ll find out soon.
Turnover was decent but not overwhelming, yesterday was a continuation move from Monday. That is how you get a rally started, but being below many key levels makes rising up a challenge. Oscillators are back to positive now as the market remains rather sloppy. Look for some big volume and price moves over the next few sessions.
A solid move for day two off strong support but the SPX 500 still could not finish above 4,200. Perhaps that is for later in the week or next, but for now that is strong resistance. Support lies much lower at 4,100 now which is just about the low from last Friday. Beginning of the month is here and often brings in new money flows.
The Internals
What’s it mean?
The bulls had it going on yesterday with some very solid internal readings. The VOLD escaped with a very strong day after starting off slow, VIX was smashed as the volatility sellers really took the fear index to the woodshed. Check out the ticks, mostly green all session long while we the ADSPD showed it was nearly a trend up day. Can the bulls bring it one more time?
The Dynamite
Economic Data:
- Wednesday: ADP, ISM, JOLTS, Fed decision, construction spending
- Thursday: Jobless claims, productivity/unit labor costs, factory orders
- Friday: NFP employment report, Global final PMI, ISM, non-manufacturing index
Earnings this week:
- Wednesday: APO, EAT, CVS, DIN, DD, EL KHC, MLM, YUM, DASH, ABNB CF, CAKE, EA, MDLZ, IR,QRVO, PYPL, QCOM, ROKU, Z
- Thursday: COP, CROX, CMI, CYBR, LLY, RACE, K, MAR, TAP, PZZA, PH, SHOP,SBUX, WEN, AAPL, SQ, CRUS, NET, FTNT, MSI, SWKS, OLED, WW
- Friday: AMC, AXL, CAH, DOC
Fed Watch:
The second to last Fed meeting of the year is upon us and there is a strong likelihood the committee will pass on hikes this time around. However, we want to listen to the committee carefully to see if they are intent at continuing rate hikes. The data this past week showed inflation was still a problem and still rising higher. Tuesday/Wednesday is the Fed meeting.
Issues/Stocks to Watch
Apple – The biggest company in the world will release earnings on Thursday, everyone will be watching/waiting with great anticipation. The stock chart is horrible at this point after a severe 20% correction. Will good earnings change that and turn the chart bullish again?
Federal Reserve – It’s time for another interest rate policy decision, the committee is likely to pass on a hike this week but will continue to keep the door open for more hikes. Last week’s inflation numbers were not Fed friendly. I expect to hear the Chairman and the committee reiterate their commitment to snuff out inflation and do whatever it takes. As Powell once said, ‘there is going to be pain’.
Interest Rates – Will the news releases this coming week help to bring bond buyers back or will the 10 year finally get a week over the 5% level and stay there for awhile?