The Fuse
What are futures doing?
It is a big day for earnings and data but the ES futures are down. Will this be a sell the news event? It is quite possible, a very thin trade in the market right now makes for a very choppy environment.
News
Japan was down early, about 1.4% but turned it around and finished positively. Shanghai up modestly, Hong Kong down about the same. Solid gains in Europe led by strong moves in France and Germany. Gold is down slightly as is silver, crude oil threatening to break $80 to the downside. Bunds and 10 year yields were steady overnight.
Volatility
The VIX is staying put for now, earnings are the put option underneath the market. However, the biggest of them all – NVIDIA – reports tonight and that might cause some selling on the news. Long term uptrend is in tact while the VIX long term downtrend remains as well.
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Interest Rates
A strong correlation between crude oil and bond yields. When crude is down, so are yields as bond prices rise. The 10 yr is holding steady, 30 yr as well but the short end of the curve is slightly lower, that is is a positive. High yield remains well-bid, fed funds futures are not seeing much of a chance of moving next month but Chair Warsh could change that Friday.
Earnings
Disappointing earnings from Intuit and Box, but Semtech with a big beat. Kohls with a mixed quarter, later this am we have Williams Sonoma and ANF. Of course tonight is Salesforce and NVIDIA along with Okta, Veeva, Synopsis, Everpure and Nutanix.
Events
The moment arrives, it is the big dog NVIDIA earnings tonight, which will no doubt wake up the markets by tomorrow. There should be some good pin action on other names in semis and AI-related, only if the earnings are taken positively. We are now in the ‘time window’ of window dressing for the month of August, Friday is an options expiration of course (minor) and of course Chair Warsh give the keynote at Jackson Hole. I don’t see to much read into this speech.
Breadth
We just keep churning this market and with barely impressive breadth. Sure, it was higher but again nothing special, 15-11 as the oscillators remain split. New highs slightly ahead of new lows, this indicator remains neutral. It is difficult to trade this market with the conditions as they are at the present.
Volume
Another day of weak volume, at this rate the end of the week will show some of the worst turnover readings of the year. One could look at this from both sides, where the bulls are saying the recent buyers are not willing to give up, but the bears see little chance of advancing unless the buyers step up. A stalemate.
Support Levels
We spoke recently about how the moving averages were looking to catch up to the current price, specifically the 20 day moving average. It only too about seven trading days to get there and here we are. Does it matter much? It does, if the indices decide to trade below then there is the danger of a new downtrend and heavy resistance above. Still better support at much lower prices, but those can be hit very easily if the conditions do not improve.
The Internals
Some better internals yesterday but it may be on the front end of disappointment. The VOLD has had some good days recently but has failed miserably in following through, in fact the same for ADSPD and ADD as well. Ticks were surprisingly strong, with lots of green and buy programs all session long. Put/calls went down, risk was on yesterday .
The Dynamite
Economic Data:
- 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:
- 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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