The Fuse
Equity futures are skittish this morning after yesterday’s tremendous comeback. Though the internals were not spectacular, the price action was strong and volume beat Monday, so an accumulation day was notched. More action this week as we get some inflation reports.
Interest Rates are again bumping up as the market adjusts for a stronger economy. Last week’s job report was all that, showing good economic strength, job growth and low inflation. The Fed may not have to cut rates quickly in this case, gently guiding down the economy to that elusive soft landing.
Stocks may start a bit lower this morning influenced by overseas markets. Euro stocks were flat, the dollar index up modestly while gold and crude are up fractionally. In Asia stocks were mixed, Japan up nicely but Shanghai down sharply, more than 6.6% as Hang Seng also fell 1.8%.
CPI out tomorrow morning may move markets.
Earnings were strong this am from Helen of Troy, the stock is higher by 12%, reaffirmed guidance. Tomorrow am we’ll hear from Delta, Domino’s and Tilray.
Lots of Fed speakers out this week, a slew of them as they intersect with some important inflation data.
Markets were strong all day but breadth was pretty average. Whoa! That doesn’t make sense, the indices up about 1% but advancers/decliners very weak? We can explain that with the poor performance by the Russell 2K, which barely rose. Oil names were down on the day and that was a big reason, small company commodity names were weak. Oscillators are still negative, new highs continue to expand.
Powerful rally on good volume is what the bulls needed on this turnaround Tuesday. This is the sort of positive action that gets the noisy sellers out of the way. Strong turnover with good price action means there is big institutional sponsorship, big buyers of stock. We’ll see if that continues.
Stocks were off to the races Tuesday, no chance to really test any support levels, but retrieving those losses from Monday was impressive. Given the one day pullback on moderate volume and a turnaround day bodes well for some continuation, we’ll have to see if it happens. Some catalysts in CPI, PPI this week would be a good start.
The Internals
Internals
What’s it mean?
Turnaround Tuesday! The bulls were loving it yesterday but the internals were not impressive. The VOLD was down all session, the ADD barely higher. Ticks were evenly distributed and while the VIX did fall, it still needs more down the next couple of sessions. The jury is out on the rest of the week but the bias seems to be higher.
The Dynamite
Economic Data:
- Wednesday:Lots more fed speakers, wholesale inventories
- Thursday:CPI, jobless claims, fed speakers
- Friday:PPI, consumer sentiment, fed speakers
Earnings this week:
- Wednesday:HELE, AZZ
- Thursday:DAL, DPZ, TLRY, AEHR
- Friday:JPM, BLK, FAST, WFC
Fed Watch:
A heavy dose of fed speakers this week as the Euro zone kicks off their monetary conference. This is their version of the Jackson Hole conference. Several speakers will be there in Germany but also many others speaking at other locations, no less than 15 speaking engagements this week.
Stocks to Watch
Volatility – We are now 30 days out from the election and the VIX is telling us this. A big pop today in volatility as many traders prepare for some uncertainty, adding protection where they can. It may recede later in the week though with inflation reports.
Oil – Crude oil has been climbing higher for about 10 days now. This is due to the continuing and mounting issues surrounding the Middle East. If there is some resolution we may see oil tank hard, but for now it seems the direction is higher.
China – Stocks have been robust from the Chinese region after they announced a massive stimulus. That helped boost stocks and also cause a massive short squeeze to occur. We are now pretty well overbought on these names.
