The Fuse
Equity futures are mixed this morning after a mixed session on Monday. Breadth was weaker following the weekend but we did see gains in the SPX 500 and strong wins for the Nasdaq as big tech was back (for a day). As always, followthrough is key. Some Fed speakers out today may influence the markets.
Interest Rates are slightly higher this morning anticipating some mildly hawkish comments from Fed Governors today. Chris Waller, a Fed Governor suggested on Monday that a rate cut wals likely next week, but of course the jobs report Friday could steer that away. The market still sees a cut happening, 72% chance.
Stocks across the pond rallied smartly, up .4% on the STOXX, the dollar fell modestly while gold and silver show modest gains. Crude oil is bouncing back and once again flirting with $70 per barrel. The German 10 yr bund yield rose 1bp as did US treasury 10 yr, Stocks in Asia were up a second straight day, Japan higher by 1.9%, Hong Kong climbed 1% while the Shanghai Composite gained .4%.
Earnings from Credo last night were fantastic, tonight we’ll hear from Salesforce, Marvell, Okta a few others. Wednesday am it is Chewy, Foot Locker, Hormel, Dollar Tree and Campbells.
Fairly good start for the new month, some very strong action from the big tech names. Seems that theme is common with bullish seasonal patterns, and nothing better for the bulls than December, especially coming off a strong November. Clearly the chase is on for adding more stocks to portfolios before the market gets too rich, and therein lies the problem: A wall of worry and a slew of investors sitting there with FOMO makes for a lot of fuel.
Breadth was poor on Monday but perhaps just a sign of exhaustion. The last couple of sessions last week put this indicator over the top. Oscillators backed away slightly but still remain in positive territory. We also had better new highs than lows, that indicator remains strong and indicates buyers are picking up dips.
Strong turnover on the small caps and Nasdaq 100 as the latter closed at a new all-time high. A strong indication of more upside to come, the bulls would like to see higher volume levels when the market breaks out to a new high. Volume trends remain bullish and could help propel the markets even higher..
More new highs for the Nasdaq yesterday with strong volume to boot. Support comes in for the tech-heavy index at 506 on the QQQ, but with a strong move higher today that may be a ways off (maybe a week or so). Still, good support levels are below on the SPX 500 and now Russell 2K at those same 20 day moving averages, if any correction hits quickly with a rise in volatility those levels will undoubtedly get tagged.
The Internals
What’s it mean?
What seemed like a rather strong day for the bulls was nothing of the kind according to the internals. The VOLD and ADD were just miserable, the VIX did finish on the lows and that was bullish, but ticks were red on the NYSE. Nasdaq pushed higher as that index was the star of the day, notice the heavy green arrows. Plenty of buy programs hitting hard, the put/call jumped from Friday’s low levels. Not much to ponder from Monday, the big shaking may be later in the week.
The Dynamite
Economic Data:
- Tuesday:JOLTS, auto sales
- Wednesday:ADP, Fedspeak, ISM services, factory orders, fed beige book
- Thursday:Jobless claims, US trade deficit
- Friday:NFP report, consumer sentiment, consumer credit, Fedspeak
Earnings this week:
- Tuesday:BMS. CM,. DCO. CRM, OKTA, MRVL, BOX, BASE
- Wednesday:CHWY, FL, DLTR, THOR, CPB, CBRL, HRL, DAKT, AEO, FIVE, SNPS, NCNO, VRNT
- Thursday:DG, TD, CSIQ, SIG, BMO, CAL, KR, CM, LULU, PATH, ULTA, DOCU, GTLB, HPE, IOT, VEEV, ASAN, WOOF
- Friday:GCO
Fed Watch:
Not much fanfare as only a couple of fed speakers this week, Goolsbee and Musalem. Most of the chatter recently has been worry about sticky inflation, the data has been telling us this as well. The next Fed meeting is Dec 10, the last of the year, the market is looking for a cut but may be disappointed.
Stocks to Watch
Sentiment – No question momentum is on the side of the bulls. This is the first week of trading in the most bullish month of the year, and coming off a spectacular November the best bet is on a continuation rally. This week is important to see if that momentum continues or if the market is looking to take a rest.
Retail Stocks – Coming of a very strong first holiday weekend, we may see a pop in some retail names as these companies ready for a big finish towards Christmas. Pay attention to deals and discounting.
Energy – Oil has been going sideways a bit but with a OPEC meeting coming up soon that may change, if the cartel decides to slice production.
