The Fuse
Stocks are modestly higher this morning as they push through some resistance. The SPX 500 is trying to top 6,400 and close at an all-time high, the Nasdaq did this on Friday and is looking to make a run to 24K. We have a big options expiration week Friday and several important reports, perhaps we are seeing good news priced in (VIX quite low).
Interest Rates are down a bit this morning as the trend in rates has now shifted lower. Since the labor report, markets are seeing a bit of weakness which may trigger the Fed to start cutting rates again. Several Fed speakers are out this week and this might be the message. High yield though remains well bid, not seeing any problems with the economy here, Fed funds futures now nearly fully pricing in a cut in September.
Stocks are a bit higher this morning led by higher levels in Europe, the STOXX up .3% led by France and Germany (small gains). The FTSE also added .3%, the US dollar index was flat, gold is getting pounded, off more than 2% as is silver. Crude oil up .4%. Yields in Germany and the US 10 yr both fell 2bps, in Asia a mixed picture with Japan closed, Hang Seng Flat and Shanghai up .3%.
Earnings palooza this week with several names in retail along with Cisco, Applied Materials, Circle, Core Weave and Deere. It’s not all tech though, restaurants, gold miners, and some ai names will deliver earnings. The season is starting to slow a bit and will take a pause in September.
We are experiencing another ‘separation anxiety’, with the small caps failing to catch a bid while the biggest names just run wild. Such was the case for those Mag 7 names, the biggest names showed the best relative strength of any group. That is significant as this trend could last for quite some time as money flows to these big cap names. Yet, it means when the market breaks there will be some heavy damage.
Breadth was positive but poor once again. That was the case for most of the week, and certainly better breadth gives some room for the bulls to make an advance. Oscillators remain negative and that is bearish, new highs are beating new lows but barely. There is not much to complain about with the price action, we would just like to see better breadth numbers to come along with a rally.
The dog days of summer carry with it the lower volume trends, and often erratic price moves. We are stuck in that situation now, but we might see a bit better volume by week’s end as Friday is a good-sized option expiration day.
Support levels around the moving averages continue to buoy the markets. The 50 day test for the IWM and DIA seems to have been successfull though scary nonetheless. With the Nasdaq and SPX 500 so close to new highs we’ll have to see how they respond to moves if they clear resistance. If that comes with good breadth and volume then bigger level won’t be too far off.
The Internals
What’s it mean?
Another sanguine day for the internals but the markets still rose sharply. It seems as we get closer to a breakout move the traders suddenly become gunshy. The VOLD showed the same action over the past few sessions, just mediocre. Of course, Wednesday was a powerful day (see chart) so maybe just a little consolidation. Put/calls are lower, the VIX closed right near 15% and the ticks were eventully distributed. The bulls would like to see better internals this week.
The Dynamite
Economic Data:
- Monday:N/A
- Tuesday:NFIB optimism index, CPI, fed speak
- Wednesday:lots of fed speak
- Thursday:PPI, jobless claims, Barkin speaks
- Friday:retail sales, import prices, industrial production, biz inventories, consumer sentiment
Earnings this week:
- Monday:MNDY, WW, OKLO, AMC, ACHR, PLUG
- Tuesday:CRCL SE, PONY, ONON, CAH, CWRV, RGTI, CAVA, GRAL, HRB, DDI, ATEX
- Wednesday:EAT, ARCO, SPRY, EZX, SSTS, AMS, CSCO, EQX, ASM, RRGB
- Thursday:JD, DE, AMCR, CAN, NCE, AAP, BIRK, AMAT, NU, KULR, TMC, SNDK
- Friday:FLS
Fed Watch:
Some on the Fed are starting to weigh in on their opinions about monetary policy. Most are becoming a bit concerned about a slowing economy, the weak labor report with downward revisions. Last week we heard a few voice their opinions, but not Chair Powell. This week several members will give their view of the situation, we expect some tension at the next fed meeting in September but a rate cut nonetheless.
Stocks to Watch
Apple – Great week for the iPhone maker, it’s best in about five years. Was it all about tariff relief? Possibly so, but then again this company has withstood so many obstacles over the years that just one more hurdle means a great buying opportunity is at hand.
Name – event, level, your expectation
Name – event, level, your expectation
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