The Fuse
What are futures doing?
Equity futures are rallying this morning, looking to recover more gains from Tuesday’s sharp losses. Futures on Industrials are up nicely today after some gains in Caterpillar, Amazon and others. Tonight we hear from Apple, which can move markets sharply up or down.
News
Weakness in Europe as earnings there are coming in soft, economic data looks poor, too. The STOXX down .5% led by losses in France and Germany. The FTSE was flat though, gold up sharply, nearly 2% while silver is rally 4%. Crude oil rushed higher but is backing away now, off about 1.4%. The US dollar index flat. Yields in Germany rose 1bp, US 10 yr treasury yields dipped 1bp, while in Japan stocks fell 1.1%, Hong Kong down the same and Shanghai up a smidgen.
Volatility
Volatility in markets is really not being. felt in the VIX, rather realized volatility is where the action is at. Realized is starting to rise again, this was a problem for markets back in February and March. It’s hard to say if that continues forward as the premium difference between implied and realized is usually quite large, so we’ll see after Apple if the decline occurs.
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Interest Rates
Getting a modest bid across the curve in the bond market. Maturities are mostly lower as bond traders take advantage of some lower prices. 2/10 spread did not change much after the fed policy decision. Rates are likely on hold by the Fed for the remainder of 2026 unless some things change for the better on the inflation front.
Earnings
Massive earnings release dump last night and this morning, topping the reports of course were Google with a stellar print and guidance, while Amazon also impressed. Microsoft and Meta are slumping but they did beat handily across the board, just more spending. These stocks should rally in the coming weeks. Ford was strong as well, Qualcomm was the star with a lights out guide, this morning very strong earnings from Caterpillar and Lilly, Merck an Philip Morris. Tonight we hear from Apple, Amgen, Sandisk, Reddit, Western Digital, Rivian and First Solar. Big oil tomorrow am.
Events
Hit em when they are down. The bears are sniffing opportunity here, as the markets were fading most of the day after a volatile overnight session. Stocks were down from the start with weakness coming from all sides. With VIX still below 20% it figures to be a case of picture perfect, or else. Take earnings, a company like Seagate soars higher on very strong guidance, while a company like Robinhood gets slashed for a modest miss.
Breadth
Breadth was ugly one more time, it seems the market just cannot catch a break. Oscillators are now well into the red and that might signal an oversold condition soon enough. Perhaps a bit more downside is left to let the moving averages catch up. New highs still with a modest advantage over new lows.
Volume
Only the IWM clocked a distribution day yesterday, but the other indices did fail to advance. Turnover was moderate elsewhere, it seem bulls are looking for some sort of catalyst to jump back in. The dip buyers are ‘lying in wait’, perhaps for a high volume selloff to occur. Regardless, the trend remains up.
Support Levels
The Industrials and the small caps continue to make their way down towards important support, the 20 day moving average. We don’t expect that to hold right away, which could happen in days. There is too much room left between price and the 20 ma on the SPY and QQQ, but plenty of time for a back n’ fill. We have seen too many times the stretched condition correct quickly, that may happen once again here.
The Internals
What’s it mean?
The misery continues for the internals, just horrific statistics. The bears want to make a statement and they are, the VOLD and ADD plunging all day long, no buyers available to add shares, the ADSPD weak, too. VIX was wild as the fed decision and big earnings trumped any trend. Another day of big ticks, a sea of red with sell programs going off all day long. Put/calls are starting to rise again, traders looking to buy put insurance. End of the month window dressing today.
The Dynamite
Economic Data:
Earnings this week:
- 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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