The Fuse
Equity futures are getting hammered this morning as weakness from overseas markets is spilling over to the US. Weakness in technology could be the reason here after sputtering on Monday.
Interest Rates are sharply lower this morning as traders are taking a risk off approach. Volatility is up, gold is up, bonds are higher and the dollar is tight. This equates to investors taking a wait/see approach, especially with Chair Powell speaking tomorrow
Apple is getting hammered for a second straight day as news their sales were down sharply in China has cooled investors on the name. The stock has been in a tailspin for weeks and now is finally dropping to some support levels. Look for suppliers to get nicked off this news. Asian stocks pulled back overnight, oil is modestly lower while gold continues to remain elevated above 2,100 per ounce. Hong Kong was volatile, down 2.6% after China’s NPC failed to stimulate the economy with a heavy dose of incentives. Bitcoin was trading higher but not Microstrategy, which is offering a convertible debt package which might dilute shares.
Earnings from Target this am were spot on, the stock pushing ahead by nearly 10%. Gitlab beat but guided lower last night, we’ll hear from Ross Stores tonight along with Crowdstrike, Nordstrom, Box while tomorrow am as Abercrombie, Campbell’s, JD.com and Foot Locker.
It sure looked like the bulls were going to finish with some flash yesterday, rallying hard all throughout the day from the lows but some heavy sell programs hit during the last half hour of the day and crippled the effort.
Still, markets are holding well above support and perhaps a bit of consolidation before some news events hit.
Poor breadth again as the Russell 2K fell down during the last hour on pretty good turnover. We were looking for that positive close by the small caps which were leading the market rally all session but it was not to be. With little to be gained the sellers took control and we had bearish breadth, perhaps a bit later we’ll see the bulls arrive.
Reversal patterns on the indices but the volume did not expand too much so no distribution day.
That does not mean the session was a positive, certainly the pullback was bearish and if the market reacts poorly to the economic data we could see the forming of a short term top.
Nothing much changed from Friday, support still is 5,100 on the SPX 500 but the Nasdaq level has pushed higher. Plenty of news to drive stocks up and down though volatility is lower and may reach into the 12’s after news has passed. Russell 2K is trying to get above resistance at 2,100.
The Internals
What’s it mean?
Rough day for the bullish cause, internals were marginally lower most of the session. Even after midday when it appeared the selling would subside the bears came out of hibernation. Notice the heavy red ticks on both NYSE and Nasdaq, indicating bigger sell programs. VIX was up modestly, likely in anticipation of some sharp words from Chair Powell later in the week. Put/call was lower and that is bullish, ADD declined again so we see a string of poor breadth numbers in this indicato .
The Dynamite
Economic Data:
- Tuesday: S&P global PMI, ISM services, factory orders
- Wednesday: ADP report, JOLTS, wholesale inventories, fed beige book
- Thursday: jobless claims, productivity and unit labor costs, consumer credit
- Friday:February employment report
Earnings this week:
- Tuesday:TGT, CRWD, JWN, ROST, BOX
- Wednesday:ANF, SPB, FL, VSCO
- Thursday:AEO, BJ, CIEN, KR, AVGO, COST, MRVL. MDB, DOCU
- Friday:
Fed Watch:
Plenty of comments last week with most of the Fed speakers preaching patience and not willing to commit to a timeframe for rate cuts. That is pretty much standard fare though, members preferring to play it safe. A couple of fed speakers this week and then a quiet period before their next meeting in mid March.
Stocks to Watch
SMCI – this hot semiconductor name is going to be added to the SPX 500, announced on Friday.
That could help lift the entire sector one more time, this group has been big outperformers in 2024.
Interest rates – we are again on rate watch, as the 10 year is still threatening to break above the 200 day moving average. There is room for yields to rise if the economic data this week shows strength.
Crude Oil – OPEC+ has said they will continue cutting supply for the foreseeable future. That will put a nice bid under the commodity, and a weekly close above $81 could have oil move back into the $90’s.
