The Fuse
Stock futures are rallying one more time as this is becoming a very bullish week, but with some important inflation data due out we have to be ready for any scenario, and yes…even for the markets to retreat.
Interest Rates are up slightly as the market prepares for some inflation reports, sentiment and consumer confidence. We still see the 2 year yield reflecting lower rates down the road. High yield is still strong telling us the market is not nearing a recession and the fed futures are steady, looking for three cuts this year.
Stocks in Europe were up nicely overnight, the STOXX higher by .5% led by strong gains in Germany and France. The FTSE was up modestly, the US dollar indext was flat. gold is higher by 10 bucks, silver climbing about .9% and crude oil is showing slight gains. Stocks were higher in Asia, Japan up nearly 1% on volume, Hong Kong nicely higher by 1.1% and Shanghai showing tiny gains. US 10 yr treasury yields were flat, German 10 yr bund yields fell by 2bps.
Earnings last night from Oracle and their guidance were tremendous. The stock is ripping higher and bringing some tech names up along with it. Rubrik hit one out of the park as well, but Synopsis was a miss. We’ll hear from Chewy later this morning.
Nothing like some good followthrough on a day when nobody really notices things. The wall of worry is up but not too high, and that means stocks can float higher again. However, the are some impediments coming, and as markets drift higher there is risk we may see a bit of profit-taking or selling coming at some point.
Interestingly market breadth was not positive but that doesn’t mean too much if prices continue to rise. Yes, that is a negative divergence that needs to be watched carefully but with oscillators still hovering around the positive side of the ledger there is no need for panic. New highs continue to crush new lows.
Volume trends continue to weaken but we are suddenly seeing a bit more accumulation occur. Perhaps with the data released this week some buyers will step up, but then again the Fed meeting/decision next week is likely to slow their roll. Dip buyers are waiting anxiously, and that is when we might see better turnover.
Forget about testing support until the market loses its bid. We talked the other day about the rising moving averages and how they will continue to help support the price action. That is true and will be the case until the market resets at the next dip.
The Internals
What’s it mean?
Just pathetic again with the internals. There is nothing good here to see and frankly I am concerned if there is weakness in the market that the internals will drive more selling. The VOLD is dismal but then again is not negative, so there is that. ADD and ADSPD remain weak, no doubt a result of the poor breadth in the IWM and elsewhere. VIX remains lower, Ticks were evenly distributed.
The Dynamite
Economic Data:
- Wednesday:PPI, wholesale inventories
- Thursday:CPI, jobless claims, US budget
- Friday:Consumer sentiment
Earnings this week:
- Wednesday:CHWY, DART, ZENV, SLAR, OXM, CULP, VNCE
- Thursday:KR, LOVE, VRA, HOFT, ADBE, FARM, KMTA
- Friday:
Fed Watch:
We heard plenty from the Fed last week and will have nothing this coming week as the committee is in a ‘quiet period’ before the next meeting. That could be raucous, with both doves and hawks digging their heels in to support policy measures. Will it be one, two or no cuts?
Stocks to Watch
Bonds – Once again, we’ll be watching bonds here, especially yields and if they move sharply higher following CPI and PPI. That might only happen if a hot number comes.
Gold – Some big central banks have been buying gold hand over fist, and that has pushed the metal to all-time highs. Gold and silver are outperforming markets in a huge way this year and that may continue.
Technology Stocks – Some were hot early in the week like Google, but NVIDIA fell sharply even as Broadcom rose up to new all-time highs. Semiconductor stocks have not responded well to President Trump’s rhetoric.
