The Fuse
Equity futures are flattish before the release of March PPI. Estimates call for a slightly higher m/m number, due mainly from pressure released of the supply chain. However, y/y price changes are still way too high.
Can the SPX 500 regain the 4100 level, or will it remain elusive after a strong week above that area. Nasdaq fell below the key 13K level once again.
Consumer prices are still elevated and the Fed needs to continue raising rates, according to the data yesterday and the Fed meeting minutes.
Earnings out this morning from Delta Airlines. The company beat on revenue but missed on the bottom line, Delta raised guidance for the current quarter and backed their guidance for the full year.
This week starts off earning season, but we’ll be watching inflation data carefully along with the release of last month’s FOMC meeting minutes.
Breadth was porous yesterday as the sellers swamped the bulls following the CPI release. From 3-1 positive early in the day, the breadth turned negative, and that is a red flag alert.
Volume picked up as the markets failed to advance. That is a sign of distribution, we need to watch this carefully.
As mentioned yesterday, if 4100 failed to hold we could see 4090 and then lower levels. Well, the SPX closed right at 4092! For the Nasdaq, it’s 13K of course and the index finished below that area. Look for 12500 and 12K as the next layer of good support. The 20 ma caught up to the Nasdaq, we’ll see how much it moves from here.
The Internals
What’s it mean?
Difficult day for the bulls as volume picked up after some nasty price action ensued. A potentially strong day turned into a distribution session, and that means professional selling. VOLD was the clue as was ADD, issues just not catching a bid. Ticks were mostly negative all session long, and put/calls are on the rise. We need to pay attention to this indicator closely.
The Dynamite
Economic Data:
- Thursday: PPI, jobless claims
- Friday: Retail sales, industrial production, biz inventories, consumer sentiment
Earnings this week:
- Thursday: DAL, FAST, INFS
- Friday: JPM, UNH, PNC, C, WFC, BLK
Fed Watch: Austan Goolsbee may have tipped his hand to being a bit sanguine on inflation. Tom Barkin did not say much about the economy. We don’t expect fireworks from these speakers though a response to last week’s job data is likely.
Issues/Stocks to Watch this week
Banks – JPM, C, WFC, BLK kick off the ‘real’ start of earnings.
Gold, Silver – After a strong couple weeks, seeing if key levels of support hold.
Inflation data – CPI was out yesterday and was mostly in line with expectations.