The Fuse
Stocks are mixed this morning after the release of some early Q3 earnings. Yet, Tesla is down sharply and while that is an isolated case, it could bring some tech names down with it. PPI out this morning is going to have some influence.
Interest Rates are again rising as bond investors shed some holdings ahead of the potentially worrisome PPI figure. If it comes in hot we’ll see more bond selling occur in rapid fashion.
Overseas markets mostly followed the US downward on Friday morning. Euro stocks were lower while Shanghai got clipped, down 2.8%. Hong Kong was closed, but Japan gained .6%>. Gold is up sharply this am, up nearly .8% on heavy turnover of gold futures. Crude is down 1%, the dollar was flat while the German 10 yr bund climbed 1 bp.
Earnings out this morning from JPM were strong as were Wells Fargo, Blackrock also is rolling higher following a nice beat. Next week brings out a slew of new names to report including Netflix.
Fed speakers were not in any mood to tip their hand about policy this week, rather simply put they were interested in explaining their view and examining potential outcomes and speed.
A pretty benign day of trade, made worse by the poor CPI numbers released before the open. Stocks were on the defensive from the open, breadth was negative all session as bond yields rose up, putting pressure on those small cap names. The oscillators are still negative too, tipping near moderately oversold. New highs continue to push against new lows, this indicator remains on a buy signal.
Volume trends were pretty skewed negatively to start the day but eased up as the day progressed. We did not finish with a distribution day except for the IWM, which had higher volume on the down session. That may influence the week’s close here if a bid does not appear following the important economic data.
I see some good support on the SPX 500 around the 5,700 level then below that 5,590, which is the 50 day moving average. That is a long way down from the current level of 5,780 but it is what it is. Simply means a long basing period is required to factor out those support levels. for now. Nasdaq continues to struggle with 20K, though that level is in the base-building process. The Russell 2K is presenting some problems but does still have support around $210.
The Internals
Internals
What’s it mean?
Pretty sanguine day for the indices. Stocks started lower, rallied to fill the gap and then drifted lower the rest of the day. VIX did finish well off its highs, ADSPD was down most of the day while VOLD and ADD were negative. Ticks were mostly even on the Nasdaq but reddish on the NYSE, a sign of heavier than usual sell programs. Put/calls are starting to climb, hence investors/traders are getting nervous again.
The Dynamite
Economic Data:
- Friday:PPI, consumer sentiment, fed speakers
Earnings this week:
- 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.
