The Fuse
Stock futures are trying to reverse from yesterday’s nasty spill but are still hesitant to rise much before the speech by Chair Powell in Jackson Hole. As a refresher, last year’s speech dropped the markets by more than 4% and was the start of a move that had stocks selling off towards the October low only two months later.
Interest Rates are firming up but still remain under pressure from bond sellers. The 10 and 30 year bonds are firmly above 4% now and may stay for for some time.
Today’s the day everyone has been pointing towards, the big conference in Jackson Hole. Bankers and economists from around the world have this annual gathering to speak about their economies, world issues, monetary policy, scenarios and typically telegraph thoughts that are often extracted from the crowd about changes.
Chair Powell speaks today at 10:05am EST.
Decent earnings last night from WDAY, INTU and MRVL but guidance was not as expected, further the weakness in markets is not going to reward poor guidance. These stocks were hammered yesterday in the big stock selloff but are looking to find their footing.
Jackson Hole Conference all weekend long 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 was atrocious yesterday with a 3-1 margin to the downside, but it’s actually worse than that. Breadth was actually positive in the first 30 minutes of the day and got more negative. That my friends is a sign of institutional selling, not buying.
Much heavier turnover yesterday as the markets clocked another big distribution day. This has been the pattern for a month now as the market remains in correction mode. Do very little here.
One day giveth, the next day taketh away. Four times the markets have been up in August but none of them consecutive days, and with 3 times as many down sessions. That is a correction folks, and it has yet to finish playing out. We still think the 4330 level needs to hold but this last swing high was rejected harshly on Thursday. For the Nasdaq, a return below 15K is not bullish and sets up for lower levels to come, 14,375 is the 50 day moving average.
The Internals
What’s it mean?
Just an awful day for the bulls’ cause. Sharp reversal on heavy turnover with the VOLD sliding and finishing at its worst point of the day.
A couple of notable items on the chart above, the big move up to down in the ADSPD, that was shocking but not surprising, and the heavy concentration of red ticks, which tells us all we need to know – selling all day long from start to finish. VIX is on the move again but remains anchored under 17%. That may change soon if the volatility sellers suddenly disappear or start buying protection.
The Dynamite
Economic Data:
- Friday: Jackson Hole conference (Powell speaks), Univ of Michigan confidence
Earnings this week:
- Friday: n/a
Fed Watch:
It’s the big Jackson Hole Conference this weekend, 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.
