The Fuse
Equity futures are moving up nicely this morning trying to recover from last week’s miserable showing. The SPX 500 fell about 2% on the week and is down near 4% for August. This index and the others are in a correction mode but oscillators are very oversold.
Interest Rates are on the rise again this morning as bigger supply of bonds continues to hit the markets hard. Some are pointing to the strong economic data this quarter that has Atlanta Fed GDP estimating 5.8% gains, but certainly higher inflation is playing a big role, too.
A massive hurricane swirled around Southern California this weekend and caused some heavy damage. China is looking to stimulate their economy with lower interest rates and perhaps a fiscal stimulus package. Nothing seems to be working for the world’s second largest economy.
It’s a big earnings week as NVDA reports Wednesday. Many will be watching this monster chip company for guidance. Tonight we’ll hear from Zoom,
tomorrow Macy’s, Lowes, Baidu, Medtronic, Canadian Solar and Dick’s Sporting Goods.
Jackson Hole Conference later this week where we’ll hear from Major Bank leaders, topping it off is Chair Powell, who decidedly spooked the markets in 2022 with a very hawkish speech.
Breadth has been atrocious this month but did manage to squeak out a win Friday, barely. The problem we have seen of late is an expansion of new lows versus new highs. That will eventually be a problem.
Volume expanded Friday on this double witching expiration day. We’ll see more volume today and tomorrow as those who were put stock end up selling shares (common occurrence). As we forge towards Jackson Hole and the Labor Day holiday we’ll see turnover thin out and market volatility rising.
The SPX has pretty strong support at the 4330 level and Friday we nearly touched that price. But, a modest rally into the close following a pretty oversold condition put that test on hold for another day. Still, only 1% away from that spot and when that happens it’s decision time.
The Internals
What’s it mean?
A rather quiet day according to the internals but it did not start off that way. Some pretty heavy selling carried over from Thursday but after that was. completed the markets drifted upward. The VOLD shot higher end of day as did the ADD, aided by strength in energy names. The VIX rose up near 19% but did finish on the lows of the day as volatility sellers were active. Put/calls continue to move higher as protection is being bought.
The Dynamite
Economic Data:
- Monday: n/a
- Tuesday: Retail sales ICSC Richmond Fed, Existing home sales
- Wednesday: S&P Global PMI Flash, New Home sales data
- Thursday: Jobless claims, Durable Goods, KC Fed manufacturing index
- Friday: Jackson Hole conference (Powell speaks), Univ of Michigan confidence
Earnings this week:
- Monday:
- Tuesday: BJ, COTY, CTRN DKS, LOW, M, LZB, URBN, TOL
- Wednesday: AAP, ADI, FL, KSS, DY, PTON, WSM, ADSK, GES NTAP, NVDA, SNOW SPLK
- Thursday: BBW, BURL, DLTR, AFRM, GPS, INTU, JWN, MRVL, ULTA, WDAY
- Friday: n/a
Fed Watch:
It’s the big Jackson Hole Conference later this week, and if you recall Chair Powell’s last appearance there (2022) he brought down the house – so to speak. Stocks were punished and led a path towards the October lows as the Chairman reiterated a hawkish view on interest rates. A year later much has changed and we don’t anticipate the same rhetoric, but it could be market-moving.
Stocks to Watch
NVIDIA – Earnings are out midweek from the big chip maker and many are wondering if NVIDIA can once again pull off a big quarterly report.
Interest Rates – Once again, rates rose up this week and tagged levels not seen in about 15 years. There was a pullback of sorts on rates Friday but plenty of selling in the bond market all week long.
Volume – As we pass a big expiration day on Friday we may see volume levels start to quiet down, approaching the Labor Day holiday. That makes for some erratic movements. We’ll also be watching crude oil as it climbed once again this past week.
