The Fuse
What are futures doing?
Equity futures are retreating on this first day of the week in what appears to be a risk off day. Volatility is higher, the VIX again above 16% while tech stocks are getting hit hardest, Nasdaq off nearly 1%.
News
Japan fell a modest .7% overnight, Hong Kong down more at 1.9% and Shanghai down . 59%. The STOXX in Europe was slightly higher led by small gains in France. Gold is up, ticking ov er 4,700 per ounce, crude oil down 2% and silver off just under 1%. The dollar index was flat. Yields on the 10 yr and German bunds edged lower.
Volatility
VIX is pushing higher but today might just be a drop and stay down sort of day. Clearly a risk off session before some news and earnings later in the week. Perhaps some positive moves later in the week but today looks as if tech will lead lower early in the day.
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Interest Rates
Modest drop in yields across the board as we’ll hear from Scott Bessent today, likely talking about economic sanctions against Iran. That may not move markets much, and the announcement about a twist of the curve was mostly short-lived. 2/10 spread continues to rise, high yield spreads have widened a little, not too concerning. Fed funds futures trying to price in a chance of a hike next month, we may learn more on Friday at the Jackson Hole Conference.
Earnings
Some big earnings releases on tap including NVIDIA Wednesday and Salesforce, Marvell on Thursday with Ulta, Affirm, Autodesk, Elastic. Several retail and tech names report, the last full week of trading in August.
Events
Stocks finished the week with a thud but there is encouragement for the bulls after a record-setting week. Trading above 7800 for the first time and closing just under that mark is new territory for the bulls and may see them continue to push the averages higher. Nasdaq was looking very strong for most of the week, the IWM the only index higher on Friday, and yes new highs for the small caps.
Breadth
Good breadth on Friday but again not a romp over the bears. This indicator remains on a sell signal but a couple more up days could change that rating. Oscillators are still negative, new lows with a slight edge over new highs.
Volume
Interesting that volume levels were not much higher on an options expiration day. That may not mean much, but perhaps the turnover is building for the coming weeks. Certainly with some events (NVIDIA earnings, others and Jackson Hole) this week it may push some volume, also the last full week of trading in August.
Support Levels
Stocks remain in sideways mode here, and that may continue for a couple more weeks. With very few catalysts to drive stocks higher a bit more consolidation is likely. Resistance at 7700, and then at all time highs at 7800 on SPX 500.
The Internals
What’s it mean?
Good to see the bulls go out on a positive note Friday in front of the weekend. VOLD climbed all day long and finished on its highs, VIX sank and now sits right near 15%, ticks were evenly distributed but with a bias toward buy programs, put/call ratios plummeted, this indicator back on a buy signal soon. Very mixed message from the internals.
The Dynamite
Economic Data:
- Monday:n/a
- Tuesday:Case-Shiller index, new home sales, consumer confidence
- Wednesday:Durable goods, GDP 2nd estimate, PCE, for July, income/spending
- Thursday:Jobless claims, trade, inventories, KC fed survey
- Friday:chicago biz barometer, Michigan final survey, Jackson Hole Conference begins
Earnings this week:
- Monday:XPEV, PDD, GRRR, PICS, TUYA
- Tuesday:DKS, BNS, GI, VIPS, BMO, BZ, INTU, SMTC, ZM, BOX, NCNO, JOYY, HEI, ELMD QFIN, STRT
- Wednesday:KSS, ANF, DY, WSM, SJM, LIK, DCI, BBWI, NVDA, CRM, CRWD, OKTA, SNPS, A, VEEV, OOMA, P, NTNX
- Thursday:BBY, BILI, CM, DG, RY, TD, DLTR, HQY, HRL, BURL, MRVL, IREN, ADSK, ULTA, AFRM, WDAY, S, RBRK, ESTC, GAP
- Friday:CHA, MNSO
Fed Watch:
All eyes and ears on the Fed Chair this week as the annual Jackson Hole Conference takes place. This is the scene where in the past there have been policy shifts ‘hinted’ at, but of course anything drastic will have to wait until the September meeting. I do not expect much to change in the language or the message from Warsh, other than talking down inflation and how it needs to be the committee’s goal to get to 2%.
Stocks to Watch
NVIDIA – The giant chip company is in the spotlight as they will deliver earnings on Wednesday. Can they continue to beat and surprise to the upside? Many believe so but the price action has been subdued.
Metals – We talked about gold last week and now it is in the area of new highs. Silver is also on the move and should be making some breakout moves soon.
Oil – Black gold had a good week and looks to make a run at higher prices, the problem is the Iran War continues to linger. That could be problematic as we head into a big driving weekend (holiday).
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