The Fuse
Stocks are modestly weak this morning as the retreat follows a very strong up session for the indices. Yesterday’s explosive rally puts the bears on their heels, if today turns around later and becomes green we’ll have a followthrough day, what the bulls are looking for.
Interest Rates are slightly higher this morning but mostly flat along the curve. Bond investors are in wait/see mode here, but if there is some supply coming along look for rates to start spiking again. Most have realized the fed will cut again next month but it might be a close call. If the data that gets released soon points to higher inflation, that might trigger more selling in the fixed income markets. High yield is back on track.
Stocks are mixed this morning but the tech-heavy Nasdaq is taking the biggest hits, down about 100 points. In Europe the STOXX gained some solid ground, up .6% but the FTSE rose up even more, higher by 1.1%. IN Asia stocks were mixed, Japan down modestly along with Shanghai, Hong Kong up a fraction. Gold is higher again and near all-time highs, silver back above 50 per ounce while crude oil is also ticking higher. The US dollar index up .1%, yields in Germany and the US up slightly.
Earnings last night from CoreWeave were quite disappointing and has the stock down about 10% or more on heavy volume and downgrades. We also heard from quantum name Rigetti, they missed on the revenue line while TeraWulf also missed slightly. Today we’ll hear from Sea, then later Beyond Meat, Oklo, Amdocs and Pixelworks.
That was a nice rally for the markets all around. Good turnover, price action, bonds down and a full risk-on made carried the indices at least 1.5%% higher. It was a welcomed rally, which came after some talk this weekend that the Senate had agreed in principle on ending the government shutdown. It was eventually going to happen but the sooner the better. Bullish candle formations all abound here, so with a bit of followthrough today there is certainly more upside attainable.
Good breadth but not overwhelming as we might expect with such a landslide in price action. Given the fact stocks rallied sharply we would have expected a 3-1 or better a/d ratio but it was not to be. Without strong breadth the bulls can get buried in a hurry, it won’t take much to get the market offsides.
Decent turnover statistics but most of the volume was early in the morning as the markets gapped up sharply. But finishing near the highs of the day was a positive, volume trends can turn bullish with a few more days of strong numbers. We may get that with some headliner earnings this week.
It appears that pullback Friday was the real deal, and bulls took it seriously. Given the fact the indices have now crossed back above some key resistance the bulls would like to see followthrough. If that happens it sets up a bull run scenario to the end of 2025.
The Internals
What’s it mean?
Internals were slow to get going but eventually the VOLD and ADD sported some positive moves. They did not close right on the highs but right near it, the VIX fell sharply and pushed down below the 20 ma again, another close below would put this indicator on a buy. Put/calls fell sharply again, ticks were heavily green as the buy programs were dominant. As mentioned, the key here is some followthrough.
The Dynamite
Economic Data:
- Tuesday:NFIB optimism, Michael Barr
- Wednesday:Fedspeak
- Thursday:CPI, jobless claims, Fedspeak
- Friday:Retail sales, PPI, fed speak, biz inventories
Earnings this week:
- Tuesday:SE, BYND, OKLO, PXLW
- Wednesday:CRCL, INVZ, GILT, CSCO, CCAP, LB, PAAS
- Thursday:DIS, JD, PSFF, PLX, CSIQ, AMAT, NU, BZH
- Friday:TWST, MKT, SH
Fed Watch:
Not much data to work with but it appears the Fed is locked into a rate cut in December, only because they have been commenting about the weakening labor market. Some data put together by the Chicago Fed showed this to be true. Lots of fedspeak this week though, we’ll get a good read on their views.
Stocks to Watch
Tesla – After giving Elon Musk his desired pay objection of 1 trillion dollars, we’ll see if Tesla responds and starts moving upward. The stock has been strong in 2025 and is not far off all-time highs.
Bitcoin – the crypto tested the 100K marker this week and helped to drag the other markets down with it. We’ll need to see a basing period first and then see if the crypto currency rises up.
Nasdaq – Coming off the worst week since April, technology names were blasted this past week after many posted some very robust earnings. Can they bounce back? Certainly so but it will take better money flows and volume.
