The Fuse
Equity futures are lower this morning following the weekend as Friday’s session is spilling over to today.
There may be some worry there with inflation reports for February set to be released early in the week.
Interest Rates are mixed as bond buyers are picking up short duration products as a bargain, also with some short covering before the economic data this week.
Crude oil is on the rise this morning as are some other commodities. Bitcoin rose above 70K in a milestone move, Super Micro will be added today to the SPX 500. Stocks were mixed overseas.
Earnings after the close on Oracle will give us a new look on software, data center, enterprise and cloud.
A pretty decent jobs report Friday but heavy downward revisions had everyone scratching their heads wondering what happened. The stock market turned down quickly though as bids disappeared and the sellers came out of the woodwork fast.
This is common when stocks rise up, it becomes musical chairs – better have a seat when the music stops.
Breadth was pretty good most of the day until an avalanche of sellers swamped the statistics. Oscillators are still mildly positive, but the Nasdaq oscillator remains challenged. If that continues it might be difficult for the Russell 2K to lead the markets higher.
A very heavy day of distribution, stocks were being sold heavily by big institutional players. We have had a few of these sessions over the past few weeks, if a trend or pattern develops that could be very troublesome to the uptrend. Nasdaq had its highest volume day to the downside since late October, just before the markets hit bottom.
Reversal days are tough for both sides. An upside reversal means the bears early on are frustrated because the perception of never-ending upside continues, then the bulls panic when the lows of the prior day are penetrated and there is nobody left to pick up the pieces! We still have 5,100 as a good level to hold on the SPX 500 but if a good whack occurs the 4,900 level is in play.
The Internals
What’s it mean?
The internals were not at all impressive on Friday. Notice today the ADSPD (bottom, second from the left).
We can see how this indicator traveled from top to bottom in a day, not bullish. Also, the VOLD was weak while the VIX was climbing all session long. What started out as risk off then suddenly short covering finished up as risk off. ADD was down from the highs, masking the weakness of the overall market (it actually finished positive).
The Dynamite
Economic Data:
- Monday: Consumer Inflation Expectations
- Tuesday:CPI, small business optimism
- Wednesday:Mortgage Applications
- Thursday:Jobless claims, PPI, retail sales, business inventories
- Friday:Import/export prices, industrial production, Michigan sentiment surveys
Earnings this week:
- Monday:CVGW, ORCL
- Tuesday:KSS, SKIN
- Wednesday:DLTR, LEN, S
- Thursday:DKS, DG, ADBE, ULTA
- Friday:BKE, JBL
Fed Watch:
No Fed speakers this coming week as the committee prepares for the next meeting in just over a week. This past week had Chair Powell testifying in front of Congress twice and he reiterated the committee’s pleasure with falling inflation, strength in the economy and the labor market. However, the FOMC is going to be very careful and slow when it comes to rate cuts, which the Chairman said will happen at some point.
Stocks to Watch
Super Micro – The high charged semiconductor name will officially be a member of the SPX 500 after the close Monday. It may be a sell the news event.
Apple – The biggest company in the world has been struggling of late but did manage to post a gain Friday.
The chart is challenged here but when the expectations are so bad is when the stock starts performing well. Contrarians know the name well!
Inflation – February readings from CPI and PPI will be out this week. Recall last month’s numbers were pretty hot but that did not stop the stock market from reaching new highs. However, we are in a seasonally weak period and another hot reading might derail the rally.
