The Fuse
After a spectacular finish to September stocks are off to a mixed start for the new month. Five straight up months and eight of nine as the stock market rumbles higher with a new Fed policy as its tail wind. We often see a strong fourth quarter after such a string of wins.
Interest Rates are lower as bond buyers are back in force this mornings. After a couple weeks of rising rates we finally see yields falling a bit, the 10 year may be stuck at 3.8% and might drift lower. Fed futures are aggressively pricing in more rate cuts, yesterday Chair Powell tried to be a bit more sanguine but could not hold back his enthusiasm.
Stocks across the world we mixed as the European markets continued their slow ascent, higher by .1%. Japan rebounded with a 1.9% gain, stocks in China and Shanghai were closed. Gold is running higher, up nearly .5% while crude oil is down about the same. Commodities across the board have been strong this past month, perhaps fueling a resurgence of inflation. A dock workers strike may also contribute to shortages and higher prices if it extends.
Earnings are sparse this week, the biggest names include Nike, Constellation Brands, Paychex, Levi and McKormick.
A pretty wild session on this last trading day of September. During the daily bites, I talked about how things could get bumpy on this day. Turns out the month finished very positive after a very negative start. That makes 5 straight up months and with only 3 left in the quarter and the support of a new dovish Fed policy there is certainly room for upside action to finish the year on a high note.
Breadth was positive most of the session but not lights out. However, the cumulative volume breadth remains on a buy signal. Oscillators are positive but are not jumping out lately, new highs continue to make positive gains, and that will help support the market moving upward. Remember, strong breadth is a key indicator of market health.
As we mentioned last week some big volume was due to come in Monday with a monthly and quarterly expiration on several indices. That did occur but now we are into a new month and quarter, which is often the scene of some heavy money flows in. We’ll see if that happens early in the week, remember some big data as far as the Fed is concerned with labor data and statistics due out all week long. Earnings season will get kicked off in a big way next week and with it more volume to boot.
The 5,700 level held firm for the SPX 500 today as the index finished at a new closing high. A followthrough day here would be important for the bullish trend to continue. The Industrials were on their back all day until the last 45 minutes of trading, this index actually finished in the green. There is good support at 42K. We still have interest in the small caps, the IWM seems ready to make a run at all-time highs at some point.
The Internals
What’s it mean?
Pretty painful day of little movement until the last couple of hours, when all the excitement occurred. TICKS were pretty scattered among green and red arrows Monday. VIX started higher and stayed up, stubbornly but did manage to close in the red. ADD was solid at the end of the day as was ADSPD, the VOLD did finish better. The key here is for a followthrough day, no better than the first day of the new month.
The Dynamite
Economic Data:
- Tuesday:US PMI, ISM, construction spending, JOLTS, More fed speak
- Wednesday:ADP, more Fed speak
- Thursday:Jobless claims, ISM, services PMI, more fed speak
- Friday:Jobs report, NY Fed President
Earnings this week:
- Tuesday:PAYX, MCK, ACU, NKE, RGP
- Wednesday:RPM, CAG, LEVI
- Thursday:STZ, ANGO
- Friday:APOG
Fed Watch:
This has to be a record week for Fedspeak. No less than 13 speeches/opening remarks from everyone on the FOMC committee. That includes Chair Powell on Monday. This past week had several speakers as well as Powell but they did no harm. This week’s labor report is likely to cause a bit of indigestion for some.
Stocks to Watch
Gold – Last week saw the metal close above 2,700 per ounce, gold is on a roll in 2024. It can continue, perhaps towards 2,800 by year end.
China – Stocks from China have been very hot and moving sharply higher of late following some stimulus measures in the country. We’ll see if that continues or if a pullback is seen.
Energy – We have seen oil prices pulling back from the $70 per barrel level amid OPEC+ officials saying they plan to push more oil onto the market.
