The Fuse
Equity futures are modestly lower this morning after a volatile session overnight. Stocks are trying to hang onto Friday’s gains but Monday’s very poor action may put that into jeopardy. Big earnings names start to report tonight, NVIDIA of course tomorrow after the close.
Interest Rates are higher across the board this morning, the 10 yr selling off along with the 2 yr yield. Perhaps some are reconsidering Powell’s message from Friday. High yield remains well bid, fed futures have backed off slightly.
Stocks in Europe fell sharply, down .8% led down by larger losses in France and modest losses in German. The FTSE was down nearly as much, .6%. The US dollar index was flat, gold is down a touch, crude oil is down more than 1.5%, silver is off. Yields are down, German 10 yr bunds and US 10 yr treasury yields both down about 3bps, in Asia stocks were lower, Japan off by 1%, as was the Hang Seng, China down .4%
Huge week for earnings with NVIDIA the highlight. We’ll also hear from Snowflake, Okta, Veeva Systems along with HPQ, Crowdstrike and some small Chinese companies and retail. Tech will be in focus though.
Back from the weekend after such a strong trading day to end the week the bulls were in no mood to buy stocks. From the opening bell, the theme was to sell the rip, and we experienced it across the board with heavy selling in the small caps along with technology. That does not necessarily negate the strong move Friday but a further breakdown will be viewed bearish and more pain to come.
No followthrough from the good breadth Friday as a better than 2-1 negative plagued the bulls’ cause. A bad outcome seems a bit worrisome here with stocks trying to force their way towards new highs. Of course, with strong breadth leading the way that job gets much easier but seasonal trends remain bearish for now, and poor liquidity is the issue as well. Oscillators back to the flat line.
Though the price action was poor the only positive light we can shine was the very low turnover relative to Friday’s session. That means the selling lacked conviction, and while the markets were down it was not a distribution day by traditional standards.
After pulling back to test some support levels last week and then Friday’s explosive rally we still have the moving averages running up left to right. That is a positive development, the indices are not all that stretched or overbought and can continue upward if the dip buyers come to play.
The Internals
What’s it mean?
Following Friday’s stunning move higher the bulls could not gather any positive momentum. As a result the internals were awful, the VOLD just in a malaise like the middle of last week, ADD lower and the ADSPD nearly a trend down day. TICKS were mostly red all day signaling heavy sell programs, the VIX climbed and finished near highs of the day. Bulls need to get it together this week or Friday will be a mirage.
The Dynamite
Economic Data:
- Monday:New home sales, fedspeak
- Tuesday:Durable goods, home prices, consumer confidence
- Wednesday:n/a
- Thursday:Jobless claims, GDP revision, Waller speaks, pending home sales
- Friday:PCE (July), income/spending, inventories, consumer sentiment
Earnings this week:
- Monday:PDD, NSSC, SMTC, HEI
- Tuesday:BMO, EH, DQ, OKTA, MDB, BOX, NCNO, PVH, JOYY, OOMA
- Wednesday:KSS, SJM, ANF, WSM, RY, MCFT, PLAB, DCI, NVDA, SNOW, CRWD, HPQ, VEEV, NTNX, URBN, FIVE, PSTG, NTAP TIGR
- Thursday:DG, BBY, TD, CM, BBWI, BURL, DKS, OLLI, LI, MRVL, DELL, IREN, ULTA, S, AFRM, GAP, AMBA, ESTC, WOOF
- Friday:BABA, DOO
Fed Watch:
It wasn’t a Fed meeting but it sure felt like one was happening going into it. Chair Powell flipped on everyone and is now seen as a bit more dovish but also slightly hawkish. The Chairman believes monetary policy conditions are too tight and that may warrant a cut at the next meeting or two.
Stocks to Watch
NVIDIA – The big chip maker reports earnings this week and will be the focal point of market players. Since last earnings the stock is up about 40%, a very strong move but they seem to deliver each time – we’ll see how it goes.
Google – This stock finally hit a new all time high on Friday and really has some momentum in its sails. Can it continue? Good news has been coming for the company of late.
Breadth – We noted the strong breadth figures for Friday with the small caps leading. Oscillators are up as we expect but if today is also strong there might be more upside before the end of the month.
