The Fuse
Equity futures are trying to go positive after a pretty bearish overnight session.
Interest Rates are steady to lower as the strong jobs report means the chances of a rate cut diminish substantially, though wages were down a bit.
President Biden’s SOTU was front and center last night and it was definitely a political speech. Oil prices are modestly lower while gold is strong and pointing towards 2,200 per ounce. News about the infusion of capital for troubled NYCB made the rounds
Earnings were strong from Broadcom overnight and they raised guidance, while Costco was equally strong but guided a bit more conservatively.
Strong session for stocks yesterday as we saw some pretty good price action all around, and even the big tech stocks took part in the rally (mostly). Apple still remains a problem for the bulls, the stock has become a source of funds (under distribution).
We’ll be watching to see if this name can turn it around. Chair Powell reiterated his views in the Senate about the economy and inflation.
Strong breadth was indicative of this market rallying on Wednesday, 2-1 positive is constructive following some poor A/D days but we had seen better earlier in the session. With the drop in volatility and a risk on day from the start it was looking as if it would be a rout of the bears, but that did not occur. Yet, oscillators are back into the green but not overbought.
Heavy volume day across the board means distribution as stocks fell sharply. Monday’s turnover was rather light so it did not take much effort to spill the market. Later in the week might see a bit more volume as news hits and Chair Powell testimony is likely to rattle markets.
We saw 5,100 penetrated and some support tagged near 5,050 and that was enough for some bargain hunters to start nibbling. That zone (5,050-5,065) is now considered good support with resistance up at the highs from Monday, call it 5,165 or so. Nasdaq closed below good support at 18K so that will be worth watching here.
The Internals
What’s it mean?
Strong day for the bulls as ticks were green all session long, with solid statistics in the other internals.
Notice the strength in ADD and and VOLD, whil volatility remained muted. Put/calls were lower as well, meaning buyers were hitting the market all session long. We’ll see how this finishes up on the week
The Dynamite
Economic Data:
- Friday:February employment report
Earnings this week:
- 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. Chair Powell testifies today and tomorrow on Capital Hill.
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.
