The Fuse
Equity futures are in the green early this morning as the markets try to shake off a three day losing streak. Will today be a repeat of Tuesday when the market popped then dropped? Technology shares are leading the way higher as is Merck (Dow component), which received approval of a drug from the FDA last evening. Tomorrow is the last day of trading in the month and the quarter.
Interest Rates are flat this morning as bond traders await data later in the week and to see if Chair Powell makes some market-moving comments on Friday. Remember, the stock and bond market are closed that day in observance of the Good Friday holiday.
The collapse of a bridge in Baltimore brought tragedy to some families. An investigation is taking place but in the mean time it may take years to fix this thoroughfare. Supply chains may show some strain, too. Gold is up sharply while crude is down a bit, perhaps a larger rise in inventory levels is coming later today. Some historical perspective: Stocks are up 5 months straight, and historically that means more gains are to come. The IPO market is warming up with the strong open last week by Reddit, there are some big names in the pipeline, we’ll see how they go later in the year.
Earnings are few and far between this week, but we’ll hear from RH, CCL and CTAS on Wednesday. GameStop had horrible results and guidance, the stock is getting slammed today.
Stocks were set to rise sharply from the opening bell and they did, and actually made their highs in the first hour but from then on it was downhill. SPX 500 actually finished sharply down in the red but did hold onto 5,200, a symbolic figure. However, the rest of the market was simply dreadful, we are in a seasonally weak period for stocks that will only be exaggerated by more volatility later in the week. If buyers come back in hard, we could see a bit more upside but likely capped until trading in the new month begins.
Poor breadth was the story but it really did not hit hard until the end of the day. Some heavy red bars skews the breadth indicators from green to red, the MC oscillator was trying to turn positive but to no avail. This indicator is now on a sell signal, but be careful here as breadth has been flip flopping from buy to sell to buy and then sell for weeks. Just when you think it’s turning….
Tuesday was technically a day of distribution as many buyers from earlier in the day were trapped with their purchases while stocks headed lower all session long. It is these reversals of fortune that drive traders batty. Given the wild moves expected over the next few days and heavy market on close sell orders, you better hold onto your hat!
Another close above 5,200 (barely) for the SPX 500 index continues to show the buyers support that level. However, a three point differential does not give one too much room to spare. The Russell 2K performed the best but it too was negative on the day after being green for most of the session. End of the month/quarter is at work here, Perhaps we just float to next week and see how the market reacts following the long weekend.
The Internals
What’s it mean?
The end of day sell programs were heavy and very nasty. The bulls could not delight in falling 25 handles in about 30 minutes, but that is what happens end of quarter. The rout was on in the last hour, look at the big red bar in the VOLD and ADD, while the VIX ran higher. Ticks were even until the last hour before the closing bell, but red snuck in there. If the selling is over look for bargain hunters to try and make some dough on this late day drop. Internals matched the poor action of the day.
The Dynamite
Economic Data:
- Wednesday:Crude Oil Inventories
- Thursday:Jobless Claims, 3rd Estimate GDP Q4/2023, Michigan Sentiment, Pending Home sales
- Friday:PCE price index for February, income and spending
Earnings this week:
- Wednesday:CCL, CTAS, PAYX, JEF, CXM, RH, BRZE, VRNT,
- Thursday: WBA, SMTC
- Friday:
Fed Watch:
The Fed meeting last week came and went, equity buyers were eager to add more stocks if the committee and the Chairman simply lowered the bar. That was the case, though the statement was identical to January’s print. The market is finally coming around to the Fed’s thinking of 2-3 rate cuts in 2024. It’s been a painful push back but frankly a market in alignment with Fed policy is needed.
Stocks to Watch
Volatility – With a short week coming up and end of the month window dressing likely, we’ll watch for the VIX to take another dip lower.
Semiconductors – It was a big week for NVIDIA and their shareholders/conference, but news Monday from China about not using AMD or INTC chips any longer may counter some of the big positives of late.
Boeing – The company announced a big shakeup Monday with replacing the CEO by end of year. This may eventually help the company and stock, which has been performing badly this year.
