The Fuse
Equity futures are starting off in the hole after a small down session in Europe while the Nikkei advanced but Chinese markets fell sharply.
This day has a ‘no bid’ feel to it, so we will approach the day cautiously.
Interest Rates are bumping around again, making this perhaps the ninth straight day of higher rates. Even though the moves have not been dramatic, it makes sense given the hotter inflation numbers, higher commodity prices and strong growth in the economy. Bond investors are going to be cautious in front of tomorrow’s Fed decision.
Bitcoin slipped down to 68K, stocks in the US look poised to retreat and peel back some of Monday’s gains. Sentiment is starting to sour from excess bullish readings. Gold is off a bit while crude oil is flat. Yesterday saw a strong move for crude as WTIC finished over $82 per barrel. Today’s Fed meeting will have a new set of economic projections and a press conference to follow – all on Wednesday.
Earnings were on the light side with only a handful of small companies reporting. Tomorrow am we’ll hear from GIS, OLLI’s and Signet.
Stocks started off strong Monday but slowly faded down to their lows of the session. It was clearly a positive day and bringing back some of Friday’s losses, but the action was not inspiring. The IWM was weak and fell sharply Monday, the lows of the day. Volatility was flattened during the course of the day, we’ll have to see how market players respond to news unexpected later in the week.
Positive breadth again but the price action across the board was not what one would expect. Traders/investors are not tripping over themselves to buy stocks right now, and while that is not a bad thing, after such a poor week we would expect dip buyers to be more active. Perhaps waiting for more of a dip or simply the let the Fed meeting/decision pass by.
Decent volume but it pales in comparison to Friday’s large turnover reading, that as a result of options expiration. The VIX futures expire today, April is now the front month. That may not cause much more turnover to occur, but we could see more put buying here as the market players reach for protection.
After last week’s strong move down it appears markets are struggling to recover lost ground. Maybe it’s just the calendar, sentiment or seasonal trends but stock buyers are not stepping up, and eventually that will signal a change in price action. We still see 5,100 as good support for the SPX 500, beyond there 4,900 comes into play.
The Internals
What’s it mean?
Tough day for the internals, though we did see plus numbers in the indices. The hard part about this market here is underneath the hood there is just no synchronicity. The price action was good but the engine under it was mediocre. Look at the VOLD and ADD, near zero on a day when markets were up nearly .5%. That smacks of short covering early and then complacency, which is going to get paid back eventually. Ticks were mostly red all session long, again another ominous indication of poor action underneat. VIX remains muted though, protection is not being considered.
The Dynamite
Economic Data:
- Tuesday: Housing Starts/Building Permits
- Wednesday:FOMC rate decision, mortgage apps, crude inventories
- Thursday:jobsless claims, S&P global flash – March, leading indicators, home sales
- Friday:n/a
Earnings this week:
- Tuesday:HQY
- Wednesday:GIS, OLLI, SIG, PDD, MU, FIVE, KBH, BB
- Thursday:ACN, DRI, BZUN, SCVL, FDX, LULU, NKE
- Friday:N/A
Fed Watch:
The Fed is likely to pass on rate moves this week but we’ll be watching the projections (new) closely and what Chair Powell says in the press conference. The most recent inflation data is not inspiring confidence in the committee to drop rates soon.
Stocks to Watch
Inflation – Last week’s readings on inflation have established a pattern, and not something the Fed wanted to see. At this point, the committeed is likely to continue taking a pass on moving rates if inflation remains troublesome.
Federal Reserve – We’ll have a meeting this week and the market’s response is going to be watched carefully.
NVIDIA – Who else? The big chip company has an event this week and we’ll be watching what they say and how much influence they have over technology after a sharp selloff.
