The Fuse
What are futures doing?
Markets are taking the route south into the weekend as equity futures are selling down again. We have had a volatile week with only a couple of ups and several down moves. Risk off seems the right place with erratic price moves, next week could be even worse.
News
Stocks fell in Europe with the STOXX down .4% led lower by Germany and France. FTSE lost .3%, the dollar index was flat. Silver is trading below $59, a new low since it started rising in December, gold is holding above 4K. Crude oil is down below $70. Yields fell across the board on the long end as bond traders are more attracted to that side, German bunds and 10 yr US treasuries down 1bps each. Japan was off a whopping 4.2%, Hong. Kong down 1.6% and Shanghai down 2.3% in volatile trading.
Volatility
The VIX is picking it up here and is starting to say market feat is showing up. A weekly close above 20% would be the first one since early June and only the second one since the market bottomed on March 30th.
If you are an existing Market Blast or Trader’s Pass member, log in here:
Interest Rates
The long end of the rate curve seems more attractive here, perhaps the bond market is sniffing out a slow down in the economy later in the year. High yield is starting to question the strong economy too, these are tied strongly into equity markets. 2/10 continues to flatten out, while fed funds futures still see 2 hikes coming in 2026, perhaps a bit more hawkisn than the Fed.
Earnings
/FedEx freight reported mostly in line results last night.
Events
Markets have suddenly gone bonkers. Not even a strong report from Micron could keep the sellers from taking some profits. That stock performed well, along with several other tech names but on the whole there was another day of consolidation. Given the fact the big tech names like Mag 7 have folded like a cheap suit this month it is surprising to note markets are so close to all-time highs. Might get there by July 4th even without their help.
Breadth
The broad rally continues to impress, another day of positive but not overwhelmingly strong breadth. It just seems the bulls are dangling a carrot over the bears here and are ready to pull the rug out. Oscillators are churning around the zero line, Nasdaq still negative. New highs are ahead of new lows, that indicator remains on a buy signal.
Volume
So-so turnover on Thursday, typical of a summer trading day when many traders head out for an early weekend. In fact, next week might see the same thing with markets closed on Friday. Without the liquidity we get choppy markets, and that has been the case all week long, frustrating many traders who seem to be on the right side but suddenly find they are not. Look for some heavy volume in the days ahead leading to end of quarter.
Support Levels
Nasdaq came down and tested some major support, right near the 50 ma while the SPX 500 is already working on that line. A test there is often a good measure of whether the trend will continue or not. Without too much of a catalyst expect more erratic trading into next week’s holiday shortened week.
The Internals
What’s it mean?
More noise from the internals, and more confusion with the markets. We have not seen the internals and market action in sync even for one day in quite awhile The VOLD has simply rolled over, the ADD just cannot get moving to the upside even when the a/d line is positive. VIX was mostly nascent, put/calls were again on the rise while TICKS were demonstrably red.
The Dynamite
Economic Data:
- Friday:Trade numbers, inventories, sentiment final
Earnings this week:
- Friday:APOG
Fed Watch:
Kevin Warsh spoke last week after the Fed decision and it really was not surprising what we heard. The new Chair of the Fed is going to do things differently, and not just with rates. He is creating several task forces to deal with changes and new initiatives, expect less transparency though, which will create some uncertainty in the markets.
Stocks to Watch
SpaceX – This was one to watch last week, and no doubt the first trading week was turbulent. But this week coming up may help define a trend for the Musk company, as some sellers decide to cut bait — if the stock falls more that may not happen.
VIX – Market volatility often declines into the end of the week, that happened and now we’ll see if there is some payback. It may open the door for the dip buyers if the market swoons.
Micron – The big DRAM producer reports earnings this week and many are wondering how much higher it can go. The stock has been on fire and caused some other names like Sandisk to rip higher as well. Expect strong earnings and a solid report.
[/MM_Access_Decision]
