The Fuse
Equity futures are trying to string together two straight up sessions for the first time this month. Thursday’s strong rally could be a sign that the worst is over, but more upside would confirm that.
Interest Rates are slightly lower this morning as bond traders dig in to buy more fixed income. It seems the data is starting to come in where markets are stabilizing a bit, which would be good news for the bulls. Market volatility is still dropping but at a slower pace.
In Europe, STOXX were up about .4% while in Asia stocks were mixed, Hong Kong and Japan up strong while Shanghai fell. Gold is rising this morning as is crude oil and silver. The dollar is slightly lower. Volatility is falling a bit as markets try to get back on track.
Earnings last night from The Trade Desk were terrific, they also guided up. ELF also beat and guided up but is down early this morning. By and large earnings have been pretty strong this month, retail is on view next week.
Solid move for the indices yesterday on good turnover. Volatility receded again, the bulls were relieved. There seemed a strong bid from the start, jobless claims were responsible for providing the tinder for the fire. But as we always say, followthrough is key, but this rally day may actually stick for a bit longer.
Good breadth but let’s hold our breadth until we see a followthrough day. Lately the strong days have been followed up by selling, and that stops a rally in its tracks. Oscillators though are still moderately oversold and with the weekend coming up anything goes. New lows continue to expand, too. Money is flowing to stocks for now after Monday’s deep selling, but if that fails to continue this might just be another downturn in waiting.
Volume trends are pretty bearish still, stocks rose on Thursday on lower volume. That’s not a positive, and today we are unlikely to have robust turnover. So, we’ll have to see if that comes around next week. The bulls would like to see expanded volume with stocks moving upward.
The support from Monday seems to be holding for now but barely. Nasdaq had a strong Thursday and bolted higher, the Russell 2K as well but that index only had an inside day. Hence, the lows from Wednesday may be solid with a followthrough day on Friday.
The Internals
What’s it mean?
Pretty bullish day for the markets, sellers were not seen or heard from. Ticks were very green all day long, buy programs hitting in a big way, especially on Nasdaq. VIX tanked again and is moving downward towards 20%, but is still elevated. VOLD was strong as was ADD, ADSPD showed a trend up day. Followthrough is key.
The Dynamite
Economic Data:
- Friday:n/a
Earnings this week:
- Friday:CGC, NIK, AMC, ALG
Fed Watch:
In what was considered a mildly dovish tone, the Fed’s decision to hold rates steady brought some controversy. Some on the committee had though a cut was the best way to start the process, and many economists thought the same. However, the weaker jobs report still showed gains, and perhaps policy is right until the next meeting in September. Already the markets’ hair is on fire, looking for 5 cuts by the end of the year. It is NOT happening.
Stocks to Watch
VIX – Volatility climbed this week to nearly 30%, a huge surge of fear. We often see that burned off quickly when worry rises up, let’s see if that happens this week.
Bonds – Fixed income had an exceptional week as bond traders flocked for some safety. Yields fell for various reasons, namely a worry the soft landing may turn into a hard landing with a recession on the table.
Nasdaq – Falling hard this past week, the tech-heavy Nasdaq is looking to recover some lost ground. With the VXN (volatility) very high and surging still we will see wide ranges, which means both big ups and downs. At this point some basing would be needed.
