The Fuse
What are futures doing?
Futures are moderating, off their overnight lows and showing a more mixed picture. Nasdaq may show the lead today with strong earnings in Seagate and a few other names. Fed meeting decision and statement may move markets.
News
European stocks barely budged today, the STOXX down .1% with mixed performance in France and Germany. FTSE was down more, off .4%. Gold is down and trading under 4,600 again, silver losing 1%. Crude oil is up again, higher by 3% and above $100. Yields in the 10 YR and German bunds are steady, in Japan the Nikkei was closed, but Hong Kong up a robust 1.4% and Shanghai gained .7%.
Volatility
We have been talking 18 on the VIX for days now, it is very sticky. In fact, at this moment (8am EST) the VIX is right at 18.02. Interesting! We’ll see after some news is released (fed meeting, big earnings) if the vol sellers see an opportunity to drive the VIX down into the mid teens.
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Interest Rates
A slight bump higher in yield across the curve, with all maturities gaining. 30 yr is again flirting with 5%, the 10 yr rose up smartly yesterday, an unusual situation when bonds and stocks both moved down together. High yield spreads remain tight, the 2/10 is rising again which could be troublesome. A fed policy decision today, unlikely to move rates either way.
Earnings
What an amazing report by Seagate, which is being rewarded pre-market after posting robust earnings. Same for Visa, up better than 5% on good volume. Starbucks even pushed above 100 with a solid beat on the top/bottom line. Robinhood is a mess though, a huge miss for them. This morning also weakness in SoFi on a miss, solid beat for Brinker and Abbvie. Tonight is the big one with Microsoft, Alphabet, Meta, Amazon amongh others.
Events
Was one of those days when the bulls had no chance to gain ground. On a risk off, no bid trading day the best thing is to do very little, staying out of the way or just manage positions. Semiconductor stocks, which were white hot suddenly cooled off significantly, and helped drive the Nasdaq lower. It is a leader of the market.
Breadth
Poor breadth again, which has been a signal to lack of participation in the markets. Perhaps this rise to 7K on the SPX 500 and new highs in Nasdaq is enough for the bulls. Oscillators are now split, and a close under 7073 with poor breadth may signal more. downside to come. New highs continue to beat new lows but the margin is getting thin.
Volume
A distribution day was booked yesterday, something we have not seen much of. Remember, one mark does not make a trend, if these start to cluster then we could see more downside, but that move down might be limited in time and price. There are several levels lower that were supported by strong volume moves prior.
Support Levels
That move back to short term support was bought up but the markets were moving slow for awhile. In fact, the volatility was quite low after the markets hit their lows, buyers not in any mood to buy the dip. Some came in late but there was really no rhythm to the trading day. Moving averages are catching up though and with it so are the support levels.
The Internals
What’s it mean?
More damage due to the internals, nothing positive yesterday with the VOLD and ADD down below zero. VIX did plunge from the highs but it took quite the effort to get it below 18, ticks were demonstrably red all day, heavy selling all session long. Put/calls remain contained. We’ll find out soon if this is just a general rest period or not, expect to big moves later in the week.
The Dynamite
Economic Data:
Earnings this week:
- Wednesday:SOFI, APH, HUM CAR, REGN, JKS, EAT, CNI, ABBV, MSFT, AMZN, META, GOOGL,, F, QCOM,, CMG, KGC, KLAC
- Thursday:COP, VLO,, CAT, W, LLY, MA, MO, MRK, BMY, CI, AAPL, WDC, SNDK, RDDT, RIVN, MTZ, AMGN, FSLR
- Friday:CVX, XOM, CL, LYB, MRNA, EL,, D, FLGT, TPG, LIN
Fed Watch:
An historic meeting this week as it will be the last one Chaired by Jerome Powell. His term as Chair ends in May, it’s been quite a ride for Mr Powell over the last 8 years and no question this man has done many great things for our country. No change in rates is expected.
Stocks to Watch
MAG 7 – It’s a huge week of earnings from the biggest names of them all. No question they will report strong numbers but after rallying smartly over the last few weeks, is there enough fuel to drive prices higher?
Fed Policy – The last meeting as Chair for Jay Powell is unlikely to yield much excitement. However, during the press conference he may talk about inflation and the rise in oil prices.
Oil – Crude oil prices have come back down as it appears the war may be over soon and ships may be allowed through the Strait of Hormuz. That would be a positive. Also, GDP first look is released Thursday am.
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