The Fuse
Equity futures are rallying a bit this morning, trying to tack on a few more gains from Monday’s up session. That was a wild one with the SPX moving about 70 handles intraday, or more than 1.4%. Following some sharp losses the may have found their way after bouncing off some strong support levels. It remains to be seen however if the downtrend can be reversed.
Interest Rates are mostly unchanged this morning as bond traders are holding steady. That may not be the case next week however with the next Fed meeting on tap. Small caps will be the biggest beneficiary if rates start to decline. Fed futures still seeing maybe 1 1/2 rate cuts in 2024 now.
Not much news overnight thankfully, the markets need a few days of ‘nothing’ or ‘boring’. Volatility is gently coming down here, and unless something comes unexpectedly we might see the VIX fall a bit more into the low teens.
Earnings are out this morning and the response is looking pretty good. Spotify released earnings and is climbing nearly 7% on strong subscriber growth. GE is rising as well as the aerospace portion of the company beat expectations. GM also beat reduced expectations, Pepsi was mostly in line while UPS missed on revenues but beat reduced earnings expectations.
A nice turnaround day for the markets after an deep oversold condition was present, and with few sellers left in the game it was time for the bulls to wrest control. Let’s not get too excited though, a 1% gain is nice but considering markets are down strong for the month it is going to take several more days of positive action to turn the ship around. Following a big expiration day it was a nice change of pace.
Breadth was terrific all session long with the bulls routing the bears. With about 3-1 positive the bulls took advantage of the heavy selling last week to pick up some bargains. The MC oscillator is no longer oversold and is making a charge at zero, sentiment is starting to wane though but the SPX oscillator is pretty washed out. We mentioned a whopper rally could happen at anytime, this was close.
Pretty good turnover but far less than what we saw on Friday, but considering that was expiration day we’ll measure it against other day. That said, we saw good strong turnover across the board, but some skeptical moves late in the session. After a strong run it appeared some were worried about markets selling off today so they took chips off the table. Smart move, better to wait and see what earnings will look like later in the week.
Recovering the 5K level for the SPX 500 was a stroke, and if it can hold in we’ll be able to place the Friday session as a reversal day, but it’s a bit soon. Nasdaq held 17K during the day while the Russell 2K put in a nice performance, but the IWM still has strong resistance at 200, better support at 188.
The Internals
What’s it mean?
A pretty decent day for the internals, they were improving most of the day until some late day selling pushed them lower. It’s understandable the market would be nervous, but a strong trend day (ADSPD), solid VOLD and lower VIX were hallmarks Monday of bullish action. Further, the ticks were lopsided to the bullish side, and that means we could see more upside later in the week.
The Dynamite
Economic Data:
- Tuesday:SPX global PMI, new home sales
- Wednesday:oil inventories, durable goods orders
- Thursday:jobless claims, GDP advanced look Q1, pending home sales
- Friday:PCE for March, Michigan sentiment
Earnings this week:
- Tuesday:GM, UPS, GE, PEP, LMT, SPOT, RTX, JBLU, TSLA, V, ENPH, TXN, BHI, STX
- Wednesday:BA, T, HUM, GD, BSX, BIIB, META, IBM, F, CMG, NOW, VKTX, LRCX, CLS, ALGN
- Thursday:RCL, NEM, MO,, CAT, LUV, AZN, MSFT, GOOGL, INTC, SNAP, OKU, WDC, DXCM, GILD, AEM
- Friday:XOM, CVX, ABBV, HCA, CL, CHTR, BALL
Fed Watch:
We have reached the point of ‘blackout’ period for the Fed speakers as they have become unified with their hawkish stance. Nothing on the schedule for this week. It seems almost unanimous the committee is less likely to cut rates in 2024, last week Chair Powell stated in no uncertain terms that inflation was not moving down as quickly as they wanted.
Stocks to Watch
Tesla – This stock has been a miserable performer this year and has been falling hard. Earnings are due out Tuesday after the close so we’ll be watching this carefully to see if traders respond with bearish behavior.
Semiconductor Stocks – This group was just hammered the past week, down some 10%. After some decent earnings from TSM and others it appears this has been a ‘sell the news’. NVIDIA’s poor performance contributed as did SMCI, but others’ charts are in a precarious position. Watching closely with Intel reporting Thursday.
Defense – Most names report this week and have started to improve. No doubt this was caused by the potential orders coming from the government, now spending has been approved and perhaps these companies will receive some contract benefits.
