The Fuse
After a rocky session early markets are rallying nicely this morning after some favorable earnings reports. In addition, not too much released on the economic data front means buyers can step in with perceived little risk.
Interest Rates are slightly higher as bond players start selling their holdings. Yesterday’s bond auctions were not great but we’ll have a better read on that later today. Fed futures still pointing towards a late 2024 rate cut, if that.
Gold is higher today as is crude oil, several commodities are pushing higher. Stocks in Asian ran higher overnight, jobless claims here in the US rose up sharply, their highest level in nine months. The British pound fell after two Bank of England members voted for a rate cut, the Brits held steady however.
Earnings this week have mostly been poor reactions, look at Roblox, AirBnB, The Trade Desk and Uber. These growth names are not keeping pace and have high risk multiples, if they don’t deliver their stocks get whacked. Applovin was very strong in contrast with very good guidance.
A very choppy session for the markets as the bulls managed to pull the indices back up following a poor start. We noted poor breadth could become an issue and that was the case early on, but buyers did come back and bring the losses to a more ‘respectable’ point. There seems to be some energy or force in the markets recently as the run for all time highs in Nasdaq and SPX 500 is engaged. Lacking any news to push back we could certainly see that happen quite soon.
Breadth was poor Wednesday but well off the lows of the day. Oscillators fell but remain overbought, so a major pullback could happen at any time. It is important to keep protection working, and we’ll heed the warning. New highs are starting to expand but were a bit lower than Tuesday’s reading.
A little back n’ fill is not something you feel good about if you’re bullish, as prices tend to move back before they move upward. It’s not easy stepping in to buy at these moments, but the patient investor/trader does tend to win out. Turnover was poor and in a mixed market that is what you like to see. If we start printing higher volume with some selling then the next road is likely to be lower.
We’ll keep the levels mentioned yesterday, 5,180 was exceeded again but it was looking shaky all session long. There is now good support there, and next up would be all time highs around 5,260 if the bulls can gather enough energy to make it happen. Nasdaq was weaker on the day but it was due for a pullback, Industrials remain well-bid and strong for the 6th straight session.
What’s it mean?
The internals showed how much of a ‘meh’ day the market was. VOLD was barely moving all day while ADD started lower and did rally, but not much to brag about. Ticks were pretty red all day long, the VIX went down as well. We are in dangerously low territory with the VIX so this might be a good time to add protection.
The Dynamite
Economic Data:
- Thursday:jobless claims
- Friday:Michigan Sentiment
Earnings this week:
- Thursday:CEVA, GDRX, PZZA, RBLX, TPR, AKAM, AMN, DBX, RXT, SYNA, TREX
- Friday:ROAD, DOCN
Fed Watch:
Following a quiet period where speakers were silenced before the Fed meeting, we’ll have several unleashed on the public this week. No less than 10 speakers talking about the economy, inflation and monetary policy. Before last week’s meeting these speeches were watched carefully for any hint of policy shifts, and that pushed the markets around as volatility rose. Look for more of that this coming week.
Stocks to Watch
Apple – Following last week’s big earnings beat, buyback and rise up Friday the company has an event this week (Tuesday), likely about iPads but then we could hear about AI again and other new tools, maybe even a new iPhone coming out later in the year.
Disney – Last quarter this company finally delivered on the top/bottom line. They report again this week and we should see continued improvement in their earnings, revenue from parks and entertainment.
Gold – The metal has suffered a downturn and is now trading below $2,300 per ounce. If inflation is truly coming down then we’ll see gold moving lower, perhaps this recent 7% drop is telling us that already.
