The Fuse
Equity futures are off to a slow start this morning but some economic data and earnings trickle out before the open that may get the energy flowing. NVIDIA earnings hit last night and the stock is down modestly but that could change by end of day.
Interest Rates are coming in as fixed income buyers pick up some bargains. 2 yr yields are down a bit, high yield remains robust with tight spreads, fed funds remain steady, 87% chance of a cut in September.
A mild open for stocks helped by gains in Europe, the STOXX up .3% paced by strong gains in France, Germany also higher. FTSE was up slightly, the US dollar index fell .1%. Gold remains well bid above 3,400 per ounce, silver nicely higher, crude oil modestly lower. Yields are down, German bunds off by 1bp with US 10 yr treasury yields down 2bps. Asian stocks were mixed, Japan gained .7%, Hong Kong slid .5% but Shanghai up 1.1%.
Earnings last night from NVIDIA were spectacular as expected with a beat on the top/bottom line, a huge share buyback, raised guidance and boosted gross margins. Nothing bad here, the stock is up 33% since last earnings so maybe a breather before it moves back up. Snowflake and Pure Storage hit the ball outta the park (we have those in the swing trade service), this morning Dollar General, BestBuy and Dick’s, tonight we’ll hear from Dell, Marvell, Affirm, and Ambarella.
We could call it a followthrough day after Tuesday’s turnaround, the SPX 500 DID reach an all-time high but for some reason it seems rather shallow. You have to admit that rising up and making new highs during a seasonally bearish time of year is rather impressive but the conviction just does not seem to be there. We’ll see if it is after the holiday.
Breadth was again positive and it seems like this indicator is now on a buy signal but the statistics were not overwhelming. Sure, the bulls won the day 16-10 but that sort of spread means there was selling to go along the way. We may be nit picking here but to not have a more impressive breadth day since Friday bear rout seems rather suspicious.
It was a mixed session with volume better on the IWM and QQQ barely than the prior day, so technically it was an accumulation day but the Industrials fell short of higher volume, so that was not accumulation after reaching a new high last Friday. These next two days are pivotal to see if the Industrials can make a new high before the holiday weekend.
No pullback yesterday but the moving averages are climbing again, and that means support levels keep rising. The interesting index is the IWM, which has nearly gone parabolic and is within spitting distance of a new all-time high. Lower rates eventually matter for the small caps. The IWM finished at its highest level since late last year and is now 2% away from all-time highs.
The Internals
What’s it mean?
No question the internals improved well over the prior session. Given the fact we are in a ‘slow motion’ market this week, you have to be impressed with the strong VOLD and rising ADD. PUT/CALLS were subdued but are sell on sell signal, ticks were evenly distributed with red/green, so buy and sell programs all day long. However, more buy programs hit late in the day, could that be window dressing before month end or is that yet to come? Followthrough is important.
The Dynamite
Economic Data:
- Thursday:Jobless claims, GDP revision, Waller speaks, pending home sales
- Friday:PCE (July), income/spending, inventories, consumer sentiment
Earnings this week:
- 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.
