The Fuse
Equity futures are again mixed with the Industrials rising modestly but the SPX 500 and Nasdaq down a touch. Volatility is on the rise, up about 2% or so before the opening bell, we’ll have some important data to work through during the trading session. Stocks are looking to pad their gains from early in the week as we approach the December jobs report come Friday.
Interest Rates are falling slightly across the curve, the long end getting some buyer interest. Fed futures still looking like a cut is coming in April, though that may change drastically following the December jobs report. High yield remains well-bid and hit highs recently. 2 yr yields continue to move lower, fans of the fed futures will appreciate it.
Modest gains across the pond as the STOXX index rose up only .1%, but in Japan the Nikkei fell 1.1% after some strong gains, Hong Kong down .9% but Shanghai with a slight bump higher. Yields are falling, Germany off 2bps and the 10 yr treasury yield down 1bp, gold is off as is silver on some profit-taking, crude oil the same. FTSE lost .3%, Germany was up with a strong .5% on volume. The dollar index rose .1%.
Earnings start trickling in this week with HELE, STZ, WDFC amd a few other smaller names. Bigger earnings hit the following week.
Back to back strong days for the bulls as the SPX 500 made a new all-time high and closing high. We see the index now within striking distance of 7K, a major feat but also for the Industrials which are knocking the door of 50K. Stocks have been rallying broadly this week, seeing good volume and sector strength in many groups. While we are nearly overbought here there is a chance to catch our breath (bulls) before earnings season gets kicked off next week.
Nice to see the markets put together two straight days of strong breadth, something that has been lacking. No question the markets were suffering the last couple of weeks, a lack of interest and tax loss selling. But a turn of the calendar offers up some fresh money opportunities, and that means the trend remains up for now. Momentum has been very strong, new highs just crushing new lows again, in very impressive fashion. Oscillators pushing higher but not quite overbought. Expect some profit taking later in the week.
Another strong volume day as the traders who came back from vacation are quite serious about buying this market up. Strong turnover means there is a conviction behind the buying, and that willingness to buy shows up when the dips come unannounced.
No settling in here for the bears as they get whipped around one more time. There will be a pullback soon, we are not predicting when that will happen but suffice to say that will likely be a good buying opportunity. If the markets cannot get whacked after the news this past weekend about Venezuela, there isn’t much to surprise the markets these days.
The Internals
What’s it mean?
Can we say it? BACK TO BACK! Two consecutive big bullish days for the internals is almost unheard of, yet that was the result after yesterday’s close. Tremendous breadth and volume on that breadth, the VOLD and ADD finished ath the highs of the day. it was a rout from the start and only expanded throughout the day, the TICKS getting strong with each buy program. VIX declined as one would expect, but sitting at a dangerously low 14% level. Gold ripped higher, ADSP not quite a trend up day but the PUT/CALL did come down, plenty of buyers on this day.
The Dynamite
Economic Data:
- Wednesday:ADP, ISM services, JOLTS, factory orders, Bowman speaks
- Thursday:Jobless claims, productivity, trade deficit, consumer credit
- Friday:NFP for December, hourly wages, consumer sentiment, Barkin speaks
Earnings this week:
- Wednesday:APOG, MSC, ACI, STZ, JEF, AZZ, PSMT, SAR, RGP
- Thursday:SNX, HELE, RPM, SMPL, NTI, TLRY WDFC, AEHR, GBX
- Friday:
Fed Watch:
Fed speak is back, the countdown is on to a new Fed Chairman and with the change in the calendar a new set of Fed Presidents become very important. The first meeting of the year is at the end of the month, markets are not seeing a cut here in January but 50/50 for March.
Stocks to Watch
Technology – CES starts up this week in Las Vegas and is widely followed by analysts and technology experts. We often see deals of some sort happen during this week, as NVIDIA CEO will be a keynote speaker. Should be interesting.
Oil, Energy – With the US invading oil-rich Venezuela it stands to reason crude oil may rise in the short run. That is going to cause some big headaches for those short crude may be in for a rude awakening.
Magnficent 7 – This group has been the notable slacker in the markets of late but we could see them turn the tables as we head to a big earnings season.
