The Fuse
What are futures doing?
Much like yesterday a separation of futures with SPX 500 and Nasdaq down sharply but the Industrial and small caps up nicely. We’ll see how things look after the May NFP report hits at 830am EST.
News
Equities over in Europe were down overnight, the STOXX off by .2% led lower by Germany. The FTSE also lost .2%, gold, silver and crude are quietly lower. The US dollar index fell .1%. US 10 yr treasury yields dipped 2bps, in Japan stocks fell 1.3%, down moves in China too with Shanghai off .7% and Hong Kong down 1%.
Volatility
The VIX remains moderately low and that presents two arguments. Market players are complacent and not adjusting expectations for and eventual pullback, or the bears are just limp here and cannot amount any sort of selling to make it count.
If you are an existing Market Blast or Trader’s Pass member, log in here:
<
Interest Rates
Not much movement on the term structure of rates but we may see something happen after the release of the labor report. The market is sanguine about the May jobs number, so any surprises will wake up the crowd. High yield remains strong, not seeing any signs of a recession here while fed funds futures are steady.
Earnings
A terrific report and guidance from Rubrik, we may see this one flying higher down the road. Planet Labs also with a very strong earnings report and guidance, but Lululemon spit the bit, as did Guidewire and Docusign.
Events
The bulls battled back yesterday but it was a fight. No question the trend is up but the bulls seem to be getting tired here, the Nasdaq taking the worst of the punishment on Thursday. The big winner? Dow Industrials for sure, which cleared 51K on the close and recovered all of Wednesday’s losses and then some. It was a swift move back up with the Dow rising more than 800 points to a new high. Jobs report coming today which may move markets even more.
Breadth
We sorta thought the markets would be higher after the first hour because breadth was strong out of the gate and extended that lead during the trading day. It was not overwhelming but certainly a positive aspect, slowing down the sellers at least for a day. Oscillators are split again but that is a far better situation than Wednesday’s close, new highs just beating new lows.
Volume
Stronger turnover for the Industrials, with a new high to boot. That means a strong day of accumulation, a followthrough day here would lock this trend in the bullish column. IWM and Nasdaq did not have higher turnover, the latter was lower. We might see heavier turnover today following the jobs report, but pay attention to volatility. If it dips the buyers will be stepping in heavy.
Support Levels
As we have seen so often the active dip buyers do not let an opportunity slip by them. Even the aggressive move lower yesterday barely found any support for moving down, and the Industrials led the way higher after a one day respite. Remember, the best trends barely give you a chance to get on board.
The Internals
Pretty good internals yesterday as Wednesday’s flop did not see any followthrough. Bulls are breathing a sigh of relief on that news. VIX plunged hard to 15%, ticks were mostly green, a sign of big buy programs all session long. VOLD finished on a high not as did ADD, something rare to see. Another strong day sets up nicely for the bulls next week.
{text}
The Dynamite
Economic Data:
- Friday: Labor report for May, wages, consumer credit
Earnings this week:
- Friday: ABM, GIII
Fed Watch:
It was a loud week for fedspeak as several speakers came out with opinions of the current economic environment. There is no way the committee can be happy with the current inflation situation and outlook, but we have yet to hear from Chair Warsh and his views.
Stocks to Watch
Big Cap Tech – A renaissance of sorts, the big names like IBM, Oracle and Microsoft along with Dell had a phenomenal month, not to mention Intel as well. Can the surge continue? It’s possible but look for some sort of retreat soon.
Energy – Oil prices finally dropped sharply this week after it appeared the Iran War may be winding down. A few more details to get the Strait of Hormuz open and then crude may decline more.
Interest Rates – Long rates are slowly moving downward and that would be a positive for stocks, especially small caps. Can yields fall enough if inflation numbers are rising?
[/MM_Access_Decision]
