The Fuse
Equity futures are mixed but off their lows from the overnight session. Following the last two days where the SPX 500 has gained nearly 100 points, we might see stocks take a brief pause, but with data out this morning that could shake things up (ADP, 2nd look GDP, PCE) we could see more movement. Momentum has returned to the bulls’ side.
Interest Rates are slightly higher following a plunge in long end rates yesterday. The JOLTS report signaled a potential slowdown in the hot jobs market, which could mean the Fed could ease back on rate hikes. Nothing yet from the pulpit however.
Stocks rose smartly all day yesterday following the release of an inflation-friendly JOLTS report. We knew eventually there would be cracks in this report but the drop in openings was dramatic. Does it lead to a cooling down of the economy? Eventually it does, but for now the economy seems to be very strong on almost all fronts. The Atlanta GDPNow is still say 5.9% growth this quarter.
Poor guidance from Ambarella and Box last night along with HPQ/HPE. Tonight is a big one for earnings, we’ll hear from CRM, CRWD, OKTA, CHWY, VEEV, FIVE and PSTG. These names might move markets this week.
Tremendous rally yesterday on strong turnover, the bulls took the reins from the start and never let go. This sets up for more upside towards an overbought reading, which is not very close as of yet.
Solid breadth day, the best all month with the advancers crushing the decliners. These days have typically lost it near the finish but yestreday was a different story. The wall of worry is up and is going to drag people back on board.
Strong turnover yesterday as the market registered an accumulation day, the first one since July. That’s important but even more is can there be some upside later in the week. Plenty of news and earnings to make the bulls’ case for them.
We mentioned recently the difficulty of resistance up near 4,450 on the SPX, but that fell like a hot knife through butter. Resistance now at 4,500 (currently level) and the gap at 4,576. The Nasdaq was the star of the day, blistering througn resistance levels as rates fell sharply.
What’s it mean?
It was a celebration of the bulls yesterday with some very strong price action and volume, but the internals also indicated the rout was on from the start. Note the VOLD and ADD, gapping up with the markets early and never letting up. That is solid bullish action, any way you slice it. Ticks were very strong, check those out up top – the green arrows were dominant. VIX fell again as we often see in front of a holiday weekend. More upside for the bulls would cinch an even higher move.
The Dynamite
Economic Data:
- Wednesday: ADP employment report, GDP Q2 Second Estimate, Pending Home Sales
- Thursday: Challenger job cuts, jobless claims, PCE price index/income spending
- Friday: August job report, ISM manufacturing, S&P Global PMI for August
Earnings this week:
- Wednesday: CHWY, CRWD, FIVE, OKTA, CRM, VSCO
- Thursday: CPB, CIEN, DG, HLR, OLLI, AVGO, DELL, LULU, S, VMW
- Friday:
Fed Watch:
Well, if anyone was expecting something different from Chair Powell following last month’s Fed hike they were disappointed. The Chairman was quite hawkish again and said under no uncertain terms the committee is ready to hike rates further. The Cleveland Fed Nowcasting sees August CPI rising by 9.6% annualized on the headline number, but core about unchanged (higher than preferred). If that number comes in hot we’ll see talk of 6% rates coming very soon (fed funds). As of now, any rate cuts probabilities are dwindling.
Stocks/issues to Watch This Week
Salesforce – This company reports earnings this week and many are concerned about the valuation, which has become quite rich in a tough market.
VIX – We’ll be watching volatility again as we approach the month end, which could ignite some fireworks. A three day weekend is upon us though and that could lead to a drop in volatility.
SPX 500 – Thursday is the day, the last trading session in August. If the MACD manages to hold the crossover from July then we can designate a bull market has been established. It’s been awhile! Doesn’t mean the market goes up every single day, however.
