The Fuse
Equity futures are down slightly this morning but well off the highs from the morning. Overnight saw plenty of volatility as the vix continues to move to the upside.
Interest Rates are up slightly today, bonds are modestly lower as bond traders wait on news that can push yields in either direction. A big bond auction this week is due and may skew rates.
Overnight we heard some bad news out of China as their housing crisis continues to plague their economy. Cleveland Cliffs made an offer to buy US Steel this weekend.
Lighter release of earnings today but tomorrow am we will have Home Depo, Cardinal Health and a few other smaller names. Bigger retail releases will be later in the week.
It’s a quiet week again but could see some volatile action. Tuesday brings the last day of trading for the August VIX future, while Friday is a big options expiration day for equities.
Breadth finished positive on the day but mostly helped by strength in gas/energy and oil names along with other commodities. Certainly the rotation is healthy and positive but breadth indicators are still on sell signals.
Volume was weaker as the early selling burned off quickly Friday. The PPI number came out and was mildly hotter than expected but market volatility shot higher in response. Volume trends are bearish now with the indices falling 7 of 9 sessions so far this month.
Indices are making a run to the 50 day ma or may have already pushed below. The last few times the SPX 500 made a move down it was short and shallow, but this time around the short term moving averages are heading downward. We still see the gap at 4,439 as support (likely to be filled) while 4,400 then 4,330 as better support levels.
The Internals
What’s it mean?
A whole lot of nothing Friday, though we did see a market with some volatility. The VOLD and ADD finished flattish while the VIX headed downward.
We’ve seen that characteristic on news release days. But, put/calls remain bearish as put buyers continue to accumulate protection. Something to watch more closely.
The Dynamite
Economic Data:
- Monday: n/a
- Tuesday: Retail Sales, Import/export Data, Empire State Index, Biz Inventories
- Wednesday: Housing Starts, Industrial Production/Capacity Utilization
- Thursday: Jobless Claims, Philly Fed Index, Leading Indicators
- Friday: Eurozone CPI, Japan CPI
Earnings this week:
- Monday: MNDY, NVTS
- Tuesday: CAH, HD, A, COHR
- Wednesday: EAT, TGT, TJX, WOLF, CSCO
- Thursday: LITE, TPR, WMT, AMAT, FTCH, ROST
- Friday: BKE, DE, EL
Fed Watch:
Fed speakers last week cautioned about the committee being too complacent about sticky inflation. Yet, the inflation data actually presented some positives that the Fed can work with. We’ll be listening carefully to any comments by committee members and the FOMC meeting minutes released on Wednesday.
Stocks to Watch
Options – A big options expiration this week with a slew of equity options expiring Friday, always volatile.
Retail – Huge week for retail stocks as the ‘big names’ will deliver their earnings releases, along with retail sales Tuesday morning.
Nasdaq – This index has now fallen below the 50 day ma for the first time since early March, when the Nasdaq went on a monster run higher. Let’s see if the Nasdaq repeats the pattern.
