The Fuse
Futures are ripping higher this morning after an apparent agreement was reached on trade between the US and China. If that is true in front of this week’s summit then perhaps some worry will start to leave the markets.
Interest Rates are moderating a rising a bit this am as bond holders make some adjustments before this week’s fed meeting begins. The 2 year yield is steady, high yield/junk bonds remain well bid while fed futures are locked in on a rate cut this week.
Stocks are up overnight on positive trade news. In Europe the STOXX were up barely, higher by .1%, FTSE was flat and the US dollar index fell .1%. Gold remains volatility and is giving back more than 2%< silver also pulling back sharply. Crude oil is little changed. Stocks in Japan gained sharply, up 2.5% on heavy volume as the Nikkei closed above 50K. Hong Kong and Shanghai both up more than 1%, German 10 yr bund yields and US 10 yr treasury yields up 1bp.
Earnings are front and center this week with the big names hitting the tape. Apple, Amazon, Google, Microsoft, Meta and Visa to name a few. So far earnings season has been lights out, 87% of names reporting a beat and raise, that is some of the best results.
What a week for the stock market! Indices pushed higher end of week to finish at alltime highs once again, this time with emphasis and a gap in place. At some point that gap is going to get filled for for now it will serve as a support area. With seasonal bullish trends here and a wall of worry up high, the markets can really move when there is plenty of doubt and the ‘chasers’ start coming on board.
Breadth was a delight Friday but not as much as one would expect after the rout started. In fact, the breadth figures stalled out end of day and finished off their best levels, adv/dec even fell sharply from the start of trading. Is that a concern? Well, we did have two consecutive up sessions in breadth which has not been too common of late. Oscillators are back in positive territory, new highs continue to crush new lows.
Strong turnover on the Industrials, SPX 500 and Nasdaq as these indices hit new all-time highs. We’ll consider this an accumulation day for the indices, something we have not seen much when markets hit those highs. The SPX 500 has hit 40 all-time highs in 2025 and there could be more to go by the end of the year. Better volume prints tell us big money is still flowing towards higher prices.
Support levels are not easily drawn but as usually we’ll look to the 10 and 20 day moving averages if the markets fade back. With the last week of trading in October and big earnings to come it might be challenging to see the markets fall back too much but if there is some reaction to news there are plenty of layers to drop and not kill the long term rally.
The Internals
What’s it mean?
Following the release of the CPI for September the bulls were off to the races. The internals were strong from the start though the ADD and ADSPD were a bit disappointing. The VOLD was higher but did not accelerate into the close, there was a lack of buy programs late, but TICKS were strong all session long, heavy green with lots of buy programs. put/call remains low and the VIX was pounded into the ground.
The Dynamite
Economic Data:
- Monday:Durable Goods
- Tuesday:home price index, consumer confidence
- Wednesday:trade balance, inventories, pending home sales, FOMC rate decision
- Thursday:jobless claims, GDP, Bowman speaks
- Friday:PCE, income/spending, employment cost, fed speak
Earnings this week:
- Monday:WM, KDP, SIFY, CDNS, WHR, CR, CLS, RMBS,CAR, BBBY
- Tuesday:SOFI, UNH, UPS, GLOW HSBC, JBLUE, DHI, RCL, W, ENPH, BE, OKE, BKNG, STX, V, ERTS, CAKE
- Wednesday:VZ, BA, CVS, CAT, FI, CNE, ETSY, FHC, ADP, PSX, META, MSFT, GOOGL, CMG, CVNA, NOW, SFM, MELI, SBUX
- Thursday:LLY, MRK,, CMCSA, OWL, RBLX, BAX, AAP, AMZN, AAPL, COIN, RDDT, MSTR, WDC, RKT, IOT, NET, ROKU
- Friday:CVX, XOM, ABBV, LYB, CHTR, CBOE, NINE, LIN
It’s a huge week for the Fed with some fed speakers later in the week, but the spotlight is on the committee and Chair Powell. The FOMC is expected to cut rates one more time at this week’s meeting, bringing the funds rate down to 3.75%. That is a path the committee talked about at the last meeting with their projections indicating this to be the action. How many more cuts is now the question, Chair Powell may address that in the press conference.
Stocks to Watch
Gold – The yellow metal remains quite volatile and we’ll be looking for gold to make more big moves this week. Gold volatility is extremely high and causing the severe moves up and down, silver as well.
Apple – Always have one eye on the big Apple as they report earnings this coming week. How is the iPhone 17 doing so far, will they run out of product? How about services and other items to drive margins? The anticipation and expectations are high, the stock may fade if there is not enough left into the future for investors.
Google and Meta – We are focusing on these two names here as they are both reporting on Wednesday. Google hit a new high Friday while Meta is still floundering, I expect to see both move sharply following their earnings release.
