The Fuse
Equity futures are ripping higher this morning as the earnings news from NVIDIA is spreading across markets. Nasdaq of course is in the lead with a 1% gain so far which may improve as the day wears on. The stock not only beat but announced a 10-1 stock split as well.
Interest Rates are modestly lower this morning as the bond market remains rather quiet. Some big auctions from the treasury later in the day as we’ll see how much supply is issued and how much demand for new paper is out there. If that is true, we’ll see rates steady to lower.
Stocks in Europe were mixed as US equity futures advanced overnight. The dollar fell a bit vs the euro, gold is down about 1% while crude oil is rallying. Stocks in Asia were mixed as Japan’s Nikkei climbed 1.3%, Hong Kong and Shanghai were lower.
Earnings from the big dog NVIDIA were out last night and they did not disappoint. Margins, sales, earnings were all strong beats and raised guidance as well. Snowflake beat lowered expectations but ELF missed badly on guidance as did Synopsis. Tonight we’ll hear from Intuit, Deckers, Ross Stores and Workday.
Markets were down most of the session in a risk off day, no surprise as the recent rally had begun to stall. But, that was yesterday and now with NVIDIA earnings in the rearview mirror we could see the bulls lighting it up once again. Volatility is getting smashed down hard as we have come to expect before a holiday weekend. The action has been strong and very constructive, broad rallies often tend to move through stages.
Breadth was poor yesterday, better than 2-1 negative thanks to weak performance in the small caps. This puts breadth on the cusp of a sell signal, but that can be rehabilitated today with strong numbers. Oscillators are back down near the zero line as their overbought reading has been burned off.
Volume again was weak, summer days are upon us. Notice, the weakness has been in technology, housing and retail names which is where the heavy volume has been hitting. That makes sense, but clearly a rotation is happening – like into financials, where volume trends are certainly positive. We may see the volume peter out later this week into the three day holiday.
Another close above 5,300 for the spx 500, and the Nasdaq is about to break 19K. Strong volume as noted above in technology is the reason here, big money is putting it to work. We have support on the Nasdaq at 18.5K, the Industrials at 39,600 while the SPX 500 remains with support at 5,300. That level is going to be strong support next week if it holds, with the 10 day moving average pulling up.
The Internals
What’s it mean?
Perhaps we call this a digestion day, markets were weak from the start and ended sharply lower. They look to regain lost ground today, and that may turn the tables on the internals. VOLD was down sharply as was ADD, the VIX was higher early on but pulled down and may now land under 12%. PUT/CALL was elevated and the TICKS red all session long, especially in the Nasdaq. Avoidance was the name of the game.
The Dynamite
Economic Data:
- Thursday:Chicago Fed National activity index, SPX global flash and PMI, New home sales
- Friday:Durable Goods, Michigan consumer sentiment final
Earnings this week:
- Thursday:BJ, RL, SCVL, DECK, DLTR, MDT, INTU, ROST, WDAY
- Friday:BIG, HIBB, BKE
Fed Watch:
With some better data of late one would think the Fed committee members would be willing to ease up a bit on the hawkish rhetoric. One would think…but it’s not happening. We have several fed speakers this week, nine early in the week. Last week Chair Powell pretty much reiterated what was said at the last meeting, but that was before the better than expected CPI.
Stocks to Watch
NVIDIA – The monster semiconductor company will release earnings after the close Wednesday as many are looking for some strong numbers and guidance. They have rarely disappointed the past few quarters, at some point they will not meet those lofty expectations.
VIX – Volatility is down in the dumpster once again, closing under 12%, which is a danger zone. Could it go lower? Of course, and with the holiday coming up that is a strong possibility.
Retail – With last week’s poor April retail report it’ll be interesting to see/hear what many companies say this week. Several names will report like Target, Lowes, TJX and Ross. Will they reiterate the consumer slowing down?
