The Fuse
Equity futures are mixed as we trudge our way through the end of August. There is little interest at this time to either buy up the market or sell it off. NVIDIA earnings out later tonight, perhaps that will shake things up a bit.
Interest Rates are moving lower as bond buyers are back to pick up bargains. Yields on the 10 year have gotten comfortable below 4%, we don’t see too much action below 3.8% unless the economy is falling off a cliff. Between the 3.8-4.1% is the area where the Fed sees a soft landing. Fed futures are still looking for aggressive rate cuts.
With the potentially flat open for stocks in the US we did see Europe gain a bit of ground overnight, up about .2%. The dollar index rose up, bitcoin was hammered and stocks associated with crypto are down sharply this morning. Gold is down about .5% but crude oil is feeling the pain, down 1.5%. German bund 10 year yields fell 3 bps, stocks in Asia were mixed, Japan gained .2%, but Hong Kong and Shanghai both posted losses.
Earnings last night from BOX and AMBA were pretty strong, these stocks are higher this am. AMBA may bode well for some in the semiconductor space. CHWY and ANF report later this am along with KSS, it appears Foot Locker missed the mark.
Stocks started off strong but faded early and never recovered those losses. The small caps were showing good initial strength but the sellers came out and did some damage. Another bifurcated market with weakness in Nasdaq and SPX 500 but higher closes in the Industrials and Russell 2K. The Industrials traded at a new all time high Monday.
As we mentioned yesterday even the positive breadth Monday was not going to be enough to goose the markets higher. In fact, yesterday’s session started off with very poor breadth but it improved to a manageable loss. Oscillators moved lower, but the new highs continue to expand. This could just be a digestion period for the markets until something bigger hits.
Volume trends were weak once again, that’s not troubling this time of year when most traders are away from their desks (the B team is manning the stations). Given the conditions it is a bit surprising the bulls have not given much up from gains earlier in the month, but there are three more sessions left. We could see a bit of window dressing before Friday’s close.
Some good support levels tested on Tuesday and held firm, stocks were up modestly but the impressive part was the Nasdaq. It looked ready to fail once again but fought off the sellers to close positive. That’s a big deal coming into heavy earnings later in the week. The IWM fell but on moderate turnover, the Industrials pulled off a nice win and closed in record high territory again. The SPX 500 has 5,600 as good support levels, if that holds again if tested we’ll see good moves off that area.
The Internals
What’s it mean?
Internals once again were pretty pathetic. Notice the VOLD and ADD, which usually guide the action. That was clearly MIA, the ticks were mostly red though some green hit on the NYSE end of day. Put/calls were on the rise, the VIX tanked hard though. It’s hard to see anything really pushing before the NVIDIA earnings circus later tonight, but there is always a chance some bargains can be scooped up.
The Dynamite
Economic Data:
- Wednesday:Atlanta Fed President Bostic
- Thursday:Jobless Claims, retail/wholesale inventories, pending home sales
- Friday:PCE, income/spending, consumer sentiment
Earnings this week:
- Wednesday:ANF, CHWY, KSS, FL, BBWI, NVDA, CRWD, CRM, AFRM, OKTA, VEEV, HP, FIVE, NTAP
- Thursday:BBY, DG, AEO, OLLI, CPB, BURL, BIRK, FLWS, DELL, LULU, ULTA, MRVL, GPS, ADSK, MDB
- Friday:JKS
Fed Watch:
Last week’s speech by Chair Powell on the view of monetary policy was just what the doctor ordered. It is not too often the markets guess exactly right what the Fed is going to say or do, but it happened last week. A strong surge higher with Chair Powell pouring gasoline on the fire. That’s nice, until things get too giddy. Two Fed speakers scheduled this week (Daly, Bostic) so we may hear more about policy before next month’s meeting.
Stocks to Watch
NVIDIA – The big chip maker will report earnings Wednesday after the close, and no doubt they will hit the ball out of the park once again. Expectations grow each earnings report as the bar is raised, but the company continues to see more money flow into the stock. A huge report for tech.
Volatility – We have seen a huge run down in volatility the past few weeks, and given we are in front of a three-day holiday we may see the VIX tumble even more. Below the 200 day moving average would be a bullish situation for the markets.
PCE – End of week we’ll get the Fed’s preferred inflation gauge, the personal consumption expenditures. This indicator has been trending down slowly, if that continues it bolsters the Fed’s stance to cut rates sooner rather than later.
