The Fuse
Equity futures are soft on this Thanksgiving Eve as traders are likely to step away early and get their holidays underway before the market closes. This lays the groundwork for some volatile movements today, Friday is a short trading session. Lots of important economic data.
Interest Rates are still trending lower, another up session for bonds would be a huge positive for the trend down in rates. The 2 year has now slipped below 4.3% and is below the 20 day moving average, making a run to the 4.2% level, the bond market is getting more in line with Fed policy thoughts but is still looking for a rate cut at the next meeting. It may be a tough call.
Stocks overseas were weak but that was likely due to poor volume trends here in the US and a lack of momentum. In Europe the STOXX were down .2%, gold is ripping higher by more than 1% and is making another run at 2,700 per ounce, crude oil is up .5%. The dollar dropped sharply, down .4% while the German 10 yr bund fell 3 bps, the US treasury 10 yr fell 4bps to be under 4.3%. Stocks in Asia were mixed, Japan down .8% but in China robust gains, Hong Kong up .3% and Shanghai up by 1.5%.
Earnings last night from Dell were not impressive but Crowdstrike had some very strong numbers, but the stock is peeling off recent gains.
Workday disappointed but strong numbers and guidance from Amba and Nutanix have these stocks pushing higher. Hewlett Packard also tanking on weak PC sales.
Markets continue to spin higher and this time with some big headwinds. The internals were awful the entire session, volume was elevated early on but as we know it is the price action that matters most. When all other indicators are negative as they were today we must defer to the price action if it is positive and call it a bullish session. What might happen today is a different story, but clearly the bulls won Tuesday.
Breadth was atrocious all session yesterday, holding at better than 2-1 negative for most of the day. However, this indicator still clings to a buy signal but barely. Cumulative volume breadth (CVB) made a brand new high, which is what you want to see when markets also hit new highs. Oscillators pulled back from a modest overbought condition. New highs are still crushing new lows, that indicator remains bullish.
Volume trends are bullish but we will often have days like these when the turnover just sputters. With the IWM taking the day off that index of small caps was lower but so was volume, hence no distribution on the Russell 2K, which is a positive. We may continue to see less and less turnover and erratic price action later this week, especially today as many traders leave early for the holiday.
Overnight saw quite a bit of action and volatility, the futures being sold down sharply on some new administration news. Regardless, the futures bounced back strong and the indices powered up for a new all time high. We like the pullbacks to support even if they are not seen on the chart (futures are not the cash). Any pullback or dip will be watched carefully as we end the month, we could have some heavy window dressing later today.
The Internals
What’s it mean?
It is not often you see an entire octagon of negative internals when the markets rise up strong. Just look at how bad the internals were, under the hood there could be some real problems in the short term. Put/calls were rising again, breadth was horrendous, the ADD and VOLD right back down again, the VIX being the only positive of the day (it was down). Ticks were heavy red all session, just no relief at all. End of month is nigh, and that could flip things around quickly.
The Dynamite
Economic Data:
- Wednesday:Jobless claims, durable goods, GDP first revision, Income/spending, PCE,
- Thursday:N/A
- Friday:N/A
Earnings this week:
- Tuesday:KSS, BY, ANF, M, DKS, BURL, ADI, MANU, DELL, WDAY, CRWD, AMBA, HPQ, URBN, NTNX
- Thursday:N/A
- Friday:FRO
Fed Watch:
No Fed speakers this week though the prior week had a slew of them, they seemed to be sounding the same cautious tone. Waiting on the data as usual. Tuesday we’ll get the meeting minutes and that will give us a clue as to how the discussion went on the last rate cut meeting.
Stocks to Watch
Volatility – We often see volatility fall off a cliff in front of a holiday. Friday 11/22 saw the vix drop 10%, there could be more down in volatility into Thursday.
Small Caps – These were the star performers last week, just a shade off all-time highs. If rates decline we’ll see this group posting even better numbers, driving positive breadth and pacing the rest of the market.
Bitcoin – Nearly tagging 100K Friday was a tease. We are likely to see much higher prices down the road, crypto currency is very strong and moving at a rapid pace. The gold rush is on!
