The Fuse
What are futures doing?
Stock futures are mixed this morning with the Nasdaq taking the small lead but the Industrials down a bit. Many things can change of course before the end of the day, the SPX 500 sits right near strong support at 7,700.
News
Crude oil is ripping higher this morning, pushing WTIC above $86 again. Gold is flat, silver is starting to move again while the dollar is weaker. Japan added 1.4%, Hong Kong up .8% while Shanghai picked up .2%. Europe was slightly lower.
Volatility
The VIX remains subdued, that might be the case for the next week or so. With the VIX so low right now, near 15% and surprises around every corner it pays to have some put protection just in case.
If you are an existing Market Blast or Trader’s Pass member, log in here:
Interest Rates
Operation Twist helped guide the markets higher yesterday but they are giving it back this morning, yields are back on the rise. We’ll have to see if this new wrinkle actually helps to bring rates down on the long end, but selling short term paper (as is the design) may not be the best policy when the Fed is looking to shift monetary policy. Fixed income investors are nervous, rightly so.
Earnings
Really strong earnings last night from Bill.com, also from Deere this morning but Walmart disappointed. Also weakness in Alibaba and Advanced Auto. We’ll hear from Ross Stores tonight.
Events
After some news that helped push rates lower, the stock market responded positively, though closed well off its highs and the Nasdaq finished in the red. It was the fourth straight down for the tech-heavy index, it is sitting on some short term support and might actually be up later in the week, depending on how options expiration goes. To say the Nasdaq is due for a rally would be an understatement.
Breadth
Breadth was good and positive but there still seems some hesitancy with markets near all-time highs. It appears there needs to be some sort of catalyst to get traders/investors off the sidelines, and with the news of bond buying that hit the tape early this morning that catalyst has now disappeared. Oscillators still need some work, new lows hitting bigger than new highs again.
Volume
Turnover was not impressive yesterday but that seems to be par for the course in the late summer trading period. The doldrums are here, and it is only going to make things more tricky until some better liquidity flows, probably after the Labor Day holiday. Any real volume hit due to some short covering, nobody expected the markets to rally on any news but then it can come as a shock at anytime.
Support Levels
Three solid days down was enough to get the bulls back off the sidelines and into the game. Perhaps some lower levels like the 7700 area on the SPX 500 was good for the dip buyers, who have been moving very tentatively. Makes sense, there is little reason to be aggressive with markets at/near all-time highs. Nasdaq sitting on strong support here, 4 days down.
The Internals
What’s it mean?
Stocks manage to rise up for the most part and the internals were divided. The VOLD very strong, first time in about a week but the ADD and ADSPD were declining all session. That is negative, not to mention the evenness of the ticks, red and green all day. That means buy and sell programs, the bulls came in early the bears came in late. Volatility retreated though, first time this week. Put/calls went down and continue to be on a buy signal.
The Dynamite
Economic Data:
- Thursday:Jobless claims, Philly fed, leading indicators
- Friday:flash PMI manufacturing and services
Earnings this week:
- Thursday:WMT, BABA, AAP, DE, NTES, FUTU, ATHM, DQ,ROST, FLO, OSIS, FLUX
- Friday:BJ, BEKE
Fed Watch:
It seems as if the fed funds futures market is paying more attention to the data than many people may think. The CPI and PPI came in lighter than expect and the odds of a hike came down drastically. Perhaps these two reports were of relative importance. Fed meeting minutes out later in the week.
Stocks to Watch
Volatility – We are again watching the VIX here as it remains quite low, down around the 15% level. That is not bearish per se but it certainly tells us to be on alert for any selling that needs to be accomplished.
Options – This is an important week as Friday options close for the August monthlies. We call this the double witching, and with volatility low we could expect to see some wider movement as markets are higher for the month (means bulls have profits).
Gold – Nobody has been paying much attention to the yellow metal, but it has quietly moved within striking distance of an all-time high..
[/MM_Access_Decision]
