The Fuse
Equity futures are slightly lower pre-open as the markets try to finish the week on a high note. We saw good energy yesterday at the open but then the air was let out of the balloon. The indices did finish in the positive and have a chance to close out September with a win (Monday is the last trading day of the month). A big economic number is out this morning, August PCE along with consumer sentiment and confidence.
Interest Rates are moving a bit lower this morning as fixed income managers position their portfolios for the end of the month/quarter.
Some fed speakers yesterday cleared the way for multiple rate cuts ahead as recessionary fears start to appear. Austan Goolsbee (Chicago) stated the job market may be slowing down very quickly, the FOMC has a ways for a neutral on Fed policy. Futures are still seeing three rate cuts by end of year and another 5 or so in 2025.
Stocks are mixed here with some modest gains in Europe but very heavy gains in Asia. Japan surged 2.3% overnight but China and Hong Kong were up a sharp 3% after some positive stimulus measures from the Chinese government. Crude oil is trying to crawl back from recent gains while gold pulls back from $2,700, as is silver down a bit. Semiconductor stocks, strong early yesterday are a bit weaker to start the day.
After the close last night we had earnings from Costco which were strong but may not enough to boost the stock higher. Next week is a slow week on the earnings front.
Probably the most significant event yesterday was a flurry of fed speakers on the dais including Chair Powell, who gave a keynote address and simply reiterated his comments from last week..
Breadth was positive on the session but clearly much worse at the end than in the beginning of the day. We have been using the Russell 2K (IWM) as our guide with breadth, that index rose up .5% on waning volume. Oscillators jumped to the positive yesterday, we’ll see if they finish the week higher. New highs continue to crush new lows, we talked about that in the daily bites Thursday morning.
As we mentioned here yesterday volume was starting to build and certainly rose up nicely. Though the opening print was the high of the session and plenty of short covering occurred right after, there is a good chance of a heavy volume print over the next couple of sessions. If the market chooses to rise up on those days (last two trading sessions of September) then it bodes well for continuation in October, which is often a pretty heavy volume month.
Stocks were up strong yesterday as the SPX 500 finished and traded at all-time highs. It’s been a steady stream of higher highs, higher lows and dragging up the short term moving averages. The Dow, for it’s part simply regained losses from the prior day but is bumping up against new highs. The lows from Wednesday could be considered good support levels (41,859).
The Internals
What’s it mean?
With volatility not trending and a moderately high reading in the VIX it was open season on ‘stop running’. That happened most of the session, the SPX failing to hold the highs at the open and then filling the gap, creating a doji late in the day. Ther VOLD did finish strong but the ADD continues to have problems. Oh, it was higher but tailed off all session long. Put/calls were much lower on the day, ticks were distributed evenly but mostly green, buy programs were hot all morning long.
The Dynamite
Economic Data:
- Friday:August PCE, inventories, consumer sentiment, Miki Bowman
Earnings this week:
- Friday:N/A
Fed Watch:
Several Fed speakers this week including a speech from Chair Powell on Thursday. We don’t expect too much other than some clarity following last week’s big rate cut and forecast for more. Miki Bowman, a hawkish Fed Governor will be speaking on Friday.
