The Fuse
Equity futures are modestly higher this morning as traders await the important CPI number for July. The last couple of months have seen this number trending lower but as Chair Powell stated it is quite possible the tariffs are going to show some price increases. This might be the month where the statistics do not lie – are they responsible for inflation or not?
Interest Rates are trudging higher this morning before some important inflation data today and Thursday morning. Fixed income investors are watching CPI but seem to be satisfied buying/selling where rates are currently at. High yield remains robust, fed futures pointing to a cut in September but that will strengthen or weaken today.
Stocks are modestly rising overseas, the STOXX in Europe gained .4% led but a strong gain in France. The FTSE up .3%, US dollar index again was flat. Crude oil barely up while gold is down along with silver. 10 yr Bunds and US treasuries are flat, in Asia stocks where higher, Japan up a robust 2.1%, Hong Kong higher by .3% and Shanghai gained nice ground, up .5%.
Earnings from Oklo last night were pretty strong, we might see a delayed reaction here. This morning we hear from Circle for the first time, and Sea along with Pony. Solid earnings already from ON, tonight we get numbers from Cava and Core Weave.
Much like last week stocks appeared to be headed much higher early in the session but faded badly towards the close. We have spoken about the poor liquidity and how it would start to create erratic price moves. Further, being at/near alltime highs is going to scare anyone who is long and is worried about getting chopped up. This is a great environment to fake everyone out with large moves that have no context.
Another miserable day of breadth for the indices and that means this indicator remains on a sell signal. Oscillators are still negative and went further day. Recall last week the Nasdaq oscillator was quite low and called for a rally, which happened Monday. Yet, the oscillator never perked above zero, so that is concerning. New highs/lows about even. If breadth remains poor the divergence stands which means a drop will be quite painful.
Lower turnover yesterday saves the indices from a distribution day but it was clearly negative. The markets fell all session long after printing highs early, there was no volume or interest in buying at these levels. Perhaps the dip buyers are just waiting for their opportunity, which may come later in the week after a release of data.
It is now time to call or some testing of support. Failing to make new highs tells us the demand for buying is just not there right now and that means lower prices are likely to be more attractive. Given the fact SPX 500 and Nasdaq are fairly stretched away from the 20 ma means some lower levels need to be addressed. If there is a modest pullback of 1-2% it may scare enough people out for the dip buyers to step in again.
The Internals
What’s it mean?
Ugly day for the internals once more, the VOLD jsut slammed while the ADD tried to hold it together but collapsed early. VIX rose up, likely in anticipation of some downside following today’s CPI for July. ADSPD wasn’t playing around, down hard as well, ticks were mostly red all day as sell programs prevailed. The internals need to improve or look for some aggressive downside moves coming this week.
The Dynamite
Economic Data:
- 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:
- 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
