The Fuse
Stock futures are mixed with the industrials lower while the Nasdaq and SPX 500 up smartly, along with the Russell 2K. We have seen good strength on Mondays recently as that streak looks to continue. All eyes remain on NVIDIA as this stock will be very active during the week.
Interest Rates are not moving much this am as the bond market remains satisfied with price and yield. Next week of course will be a market mover, the next Fed meeting is on Jun 11/12. Fed funds futures are looking for the first rate cut by December but September is about a 50/50 proposition.
A move is more likely after the election has taken place.
A quiet overnight session, the dollar was steady as traders await Friday’s labor report, gold is up modestly while crude is steady.
Many see OPEC+ production adjustments taking hold with more supply coming on line. In Europe stocks were up nicely, stocks in Aris were mixed as Japan and Hong Kong saw gains while Shanghai was down slightly.
Earnings are slowing down this week but we’ll have Crowdstrike on Tuesday, some smaller retail stores like VSCO, FIVE, BBWI nad BIG out later in the week.
It’s the start of a new month when we often find money positive money flows. The stock market is poised to move higher over the next several days as momentum starts to shift to the bullish side. Friday was a strong close, the seventh consecutive positive close on a Friday which signals faith and belief nothing will ‘happen’ during the weekend.
Breadth has been a lovely marker for the equity market this past week. After falling to a deep oversold reading we now have this indicator on a solid buy signal. The problem being this indicator flips around quickly and there are big moves associated with lopsided breadth. That said, the oscillators are back near zero, new highs continue to expand over new lows.
Volume was brisk Friday, the end of the week and month being a convergence with sideways trend in the markets. The up trend now is back in tow, with strong turnover signaling the buyers are back. Will they stay here with only a few catalysts to carry the markets higher? It’s certainly possible, fear is lacking at this point. If rates start moving higher that could be problematic.
The Industrials staged a nice comeback but was positive all session long Friday. Perhaps falling 2000 points was enough for buyers to step back in. The SPX 500 has resistance at 5,300 but firm support at 5,200, which was nearly tested Friday. We see the Nasdaq in a better spot though with support at 18.5K.
The Internals
What’s it mean?
That was some rally on Friday! Huge volume, heavy buy programs during the last two hours of trading. While some were falling asleep the buyers were ready to catch them napping, and they sure did. VOLD finished strong, check out the plunge in VIX, while the ADSPD nearly pulled off a trend up day.
Ticks were strong most of the day but heavy green the last two hours. A telling sign. Followthrough Monday would be key for the SPX 500 to re-capture the 5,300 level.
The Dynamite
Economic Data:
- Monday:SPX PMI, ISM, Construction spending
- Tuesday:JOLTS, factory orders
- Wednesday:ADP employment, SPX service PMI, ISM services, crude inv.
- Thursday:Challenger job cuts, jobless claims, productivity/unit labor costs
- Friday:May Employment report, consumer credit
Earnings this week:
- Monday:SAIC
- Tuesday:BBWI, DBI, CRWD, HPE, PVH
- Wednesday:CPB, UNFI, FIVE, LULU, VSCO
- Thursday:BIG, CIEN, SJM, DOCU, AVO
- Friday:JILL
Fed Watch:
Fedspeak will be silent this coming week as the committee prepares for it’s next meeting June 11/12. We do not expect a rate move then but a new set of projections will certainly tell us where they stand on inflation, GDP, employment and the funds rate. Last week had a mixture of policy ideas but when it comes right down to it, that is all simple noise.
Stocks to Watch
Data – Important releases this week from PMI to ISM to labor. We’ll be watching the manufacturing and production data closely, along with productivity and unit labor costs. This will tell us if growth was driven by inflation or production.
Employment – The May jobs report looms large. It’s possible to see a 4% rate on unemployment for the first time in years, and that will wake up the Fed. The expectation is about matching with April, but wages are expected to tick higher.
NVIDIA – The last week this stock trades above 1000 for some time, the stock will commence a 10-1 stock split in a week, perhaps garnering even more attention. For certain, the stock needs to cool down some but that might not come until after the split.
