The Fuse
Equity futures are down this morning a bit after the SPX 500 closed at a new all-time high yesterday. Certainly hitting new highs is a positive but is rather odd during a seasonally weak period. Perhaps the hangover from Jackson Hole has worn off, with volatility low here it sets up for a dangerous week after the holiday is over.
Interest Rates are up rather strong this morning as fixed income investors take some profits. Inflation is still an issue as we saw from last night data dump from France. 2 yr yields are higher this morning, junk spreads remain tight while the fed futures remain steady.
Equities in Europe were modestly lower, the STOXX down .1% paced by France which was down exactly the same, the FTSE also down .1%. The US dollar index climbed .1%, gold is just off all-time highs, silver down about 1% and crude oil slightly lower. German bund yields and US 10 yr treasury yields up 1bp, in Asia stocks were mixed, Japan off by .3%, but in China nice gains, Hong Kong up .9% while Shanghai up .3%.
Earnings last night from Affirm were outstanding, a beat and raise while Ambarella also brought the goods, too. On the flip side Dell and Marvell did beat but offered up softer guidance and are paying for it today. This morning Alibaba reported strong revenues but missed estimates on the bottom line. They came out and announced a new chip they are working on for AI.
The aftermath from the focus on NVIDIA is over. So much interest in this name but the stock really did not move much, but when you look around their influence is widespread. No question their earnings were strong as was guidance, but being up 33% already since May it is no surprise to see the brakes applied. The SPX 500 closed above 6500 for the first time ever, get out your party hats!
Surprisingly breadth was not all that hot today. In fact, it was flat, strength in Nasdaq and SPX 500 could not carry the rest of the market higher. Small caps were barely up, a rather weak performance but likely crippled by higher bond rates. That may change today and certainly next week. Oscillators are back in positive territory again. Maybe yesterday was some window dressing before the holiday.
Volume of course poured in on NVIDIA yesterday but given the overall weakness of the rest of the market the volume was more subdued. You can see that in VOLD below, which has been weak in seven of the last nine sessions. That tells us volume is just not supporting rise in stocks, and we could have a comeuppance next week, especially if volatility remains low.
Stocks were lower overnight but managed to pull back up off those lows, and impressive move given NVIDIA (biggest name in the world) was down sharply in afterhours trading. A pullback here is not required, though a chance for the dip buyers to get back in would be supportive of the market trend. IWM and the Industrials are the leaders here and are far away from the 20 ma, which is setting up for a failure next week.
The Internals
What’s it mean?
Well, we got the followthrough but the internals were still unimpressive. VOLD again very poor, it still might be due to the lack of participation this week until the holiday is over. But with one more trading day left in August it is turning out to be a strong month. ADD weak again like the ADSPD, which barely got to the zero line yesterday. VIX remains subdued, TICKS were distributed evenly but with a bit of bias to the green side (bulls). Don’t expect much improvement today.
The Dynamite
Economic Data:
- Friday:PCE (July), income/spending, inventories, consumer sentiment
Earnings this week:
- 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.
