The Fuse
What are futures doing?
Equity futures are rising up this morning but Industrials and small caps are not participating, and that could matter eventually as we are close to wrapping up August trading. It is still a seasonally weak period and once the news is behind us (tomorrow’s big Fed conference) there will be few catalysts to drive stocks higher.
News
Japan fell modestly overnight as did Hong Kong but Shanghai rose smartly, up 1.1%. Gold is about flat , silver up slightly as is crude oil. The STOXX fell about .5% led by a drop in France. England was down .35%. Yields are holding rather steady, the 10 yr yield up very little but others are holding in place.
Volatility
Market volatility is weak, the VIX hanging around 15% again and probably will for the next couple of weeks. Earnings are good but that is balanced by weak seasonal trends (nobody wants to buy this time of year).
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Interest Rates
Not much movement on the yield curve this morning, again waiting patiently for Chair Warsh to give his keynote, perhaps offering some insights into fed policy. High yield remains nicely bid, fed futures not much movement at all.
Earnings
Terrific earnings from NVIDIA and guidance as well, also from Salesforce, Okta and Veeva Systems. Not so great results from Synopsis, but Nutanix hit nicely this quarter. This morning a modest beat from Best Buy and Dollar General, in line quarter from Dollar Tree. Tonight we hear from Marvell, Affirm, Autodesk and Iren along with Workday, Elastic and Rubrik.
Events
Stocks were flat-footed yesterday in another sleepy session but woke up after the bell when NVIDIA and a few other big tech names reported earnings. Today promises to be a wild moving day session but there will be difficulty moving to much higher ground as the markets are stuck in a very tight range. Market volatility is just not there, hence big moves are not going to happen other than individual issues.
Breadth
Just the same old story, weak breadth that really masks the problems this market is seeing at this moment. Sure, earnings have been good and are anchoring the market, they act as a put underneath the indices. However, as we move into a challenging period of time for markets there is going to be payback, and we understand that under the hood the markets are not ready to accelerate, barring any specific macro news.
Volume
Even lower turnover than the prior day, in fact one of the lowest non ‘pre holiday’ sessions of the year. What will it take to get the volume levels back up? Certainly some volatility in the market, shake the trees a bit and start to scare people. As of now, the fear/greed index is on the high side of neutral, no edge whatsoever..
Support Levels
Another very tight range for the markets as they prepared for an onslaught of earnings. The NVIDIA report seems positive but we’ll have to see how things going later on this week and next. By and large most of the tech names like Salesforce and Okta will help boost the SPX 500 higher today but with a lack of participation lately could the sellers bring it back down? Very possible, and with not much driving markets to move higher other than Jackson Hole for a minute the bears could make a statement. 7620 are on the SPX 500 is good support.
The Internals
Another miserable session for the internals. If i didn’t know any better i would say they were sleep walking each day. The VOLD down hard at the end of the day, the ADD just under the zero line, gasping for air. The VIX barely budged, ticks were skewed red, so plenty of sell programs hitting the tape. Put/calls got active again, just nothing to move markets here.
The Dynamite
Economic Data:
- Thursday:Jobless claims, trade, inventories, KC fed survey
- Friday:chicago biz barometer, Michigan final survey, Jackson Hole Conference begins
Earnings this week:
- 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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