The Fuse
Equity futures are trying to continue Tuesday’s late rally and get started higher. There is a modest and cautious bid this morning as the all important CPI report will drop. Most are expecting a slight drop in the month/month and also in the core rate.
Interest Rates are down slightly in front of some big inflation reports this week. The 2/10 yield curve is starting to widen again reflecting the Fed’s current hawkish posture of ‘higher for longer’. The 2 year yield has risen to 4.74%, reflecting only 2 rate cuts into 2026, far less than where the market was just four months ago. Yet some out there believe rate cuts will be coming fast, we just don’t see the need to rush it if the economy remains strong.
Stocks are looking to make a big move this week with some big data coming up and bank earnings to kick off first quarter earnings season. Gold, which has been on a tear lately is up slightly while crude oil is back up following some profit-taking Tuesday. The minutes from the March meeting will be released later today.
Nothing much yet on the earnings front but Friday will be a big day with some big banks releasing their numbers on that day. Delta posted strong earnings and guidance this morning.
A slippery day for stocks as the bulls started strong but went belly up as the bears took the markets down for a deep dive. The highs were at the open with the futures up 25 handles but then the sellers attacked and dropped the markets like a bad habit, falling some 62 handles in the next hour to tag the lows of the session. It took hours to regain that lost ground and most of it was recovered by the close.
Breadth finished in the positive again but given the fact the markets swooned just after the open there was a good chance the buyers were away all session. Fortunately for the bulls that wasn’t the case, and the Nasdaq oscillator went above the zero line. New highs also expanded versus new lows, this indicator remains on a buy signal and has since October.
We’re going to call it an accumulation day, even though the Dow Industrials were modestly lower. Volume trends turned up in brisk trade, though much of the turnover hit early in the session. That is not usually a positive development, but if the bulls can get on track today that could be the start of something stronger.
This time the SPX 500 futures headed toward support from 5274 on the open to near 5200 on the lows, quite a range. We still have this wide trading zone to deal with,, and elevated volatility is going to be the story unless the volatility sellers start ripping the VIX apart. Dow industrials have support at 38,500.
Russell could see a breakout above 210 on the IWM.
The Internals
What’s it mean?
Tough day for the bulls after the start of the trading session but they managed to scratch and claw back most of those losses. We can see how the day went just by looking at the ADD and ADPSD, which traveled downward right after the open. TRIN stayed down though, as it appeared the selling would be short-lived, that was the case. Ticks were mostly green, hence we may see some followthrough here in the next day or so if that continues.
The Dynamite
Economic Data:
- Wednesday:CPI, fed minutes, wholesale inventories
- Thursday:jobless claims, PPI, auctions
- Friday:consumer sentiment, import/export prices
Earnings this week:
- Wednesday:DAL
- Thursday:KMX, FAST, CONN
- Friday:JPM, BLK, WFC, C, SST
Fed Watch:
Lots of fed speakers last week and the main theme was – higher for EVEN longer! The data has been relatively strong and even some inflation is starting to creep in. That could be
Stocks to Watch
Inflation – Big inflation numbers coming this week with PPI and CPI. Last two months were pretty hot.
Banks – Financials will kick off the earning season on Friday, high expectations are priced in.
