The Fuse
What are futures doing?
Equity futures are pushing higher as strong earnings continue to be the focus. The SPX 500 and Industrials look to open at fresh all-time highs as the other two (QQQ, IWM) are lagging behind, but are poised for a strong open.
News
Very solid day in Europe as the STOXX rose up .7%, more nice gains in France and Germany. The FTSE up a robust .6%, gold is higher by 1%, silver gaining 2% as crude falls once more. The US dollar is flat. Yields are not moving much, 10 yr US treasury up 1bp, Japan pushed higher by .3%, Shanghai up the same but Hong Kong down .5%.
Volatility
Volatility seems to have calmed down but it is still unsettling to have the fear index down under 16%. It can rise up fast without notice, but for now the markets are reaching for an overbought condition before that starts to occur.
If you are an existing Market Blast or Trader’s Pass member, log in here:
Interest Rates
Not much interest in fixed income this morning, yields are mostly staying in place, the 2/10 spread is slightly tighter, long end of the curve is up modestly. High yield bonds remain attractive, fed funds futures seeing more of a chance to hike at next month’s meeting.
Earnings
Big earnings last night with Palantir as the software/defense company knocked it outta the park with a massive beat and raise. On Semi also strong, but this morning a massive beat for Caterpillar, the stock up 9%. Also good earnings from McDonalds and Wix. Merck with a beat. Tonight we hear from AMD, Arista, Astera Labs, Booking, Kratos and SpaceX for the first time. Tomorrow Lilly, Shopify, Uber, Disney, Unity and Circle.
Events
Now that’s what I’m talkin’ about! Solid rally on good volume and breadth, maybe all it took was getting out of July, traditionally a strong month for markets. Either way, a new closing high was not to be, only about 9 handles away but we did trade for a time above 7.600, something we haven’t seen for a couple of months. Significant? Probably not, but let’s take it one day at a time – Monday’s rally was an impressive first step.
Breadth
Surprise! Solid breadth for a Monday, for a day was welcomed by the bulls. Better than 2-1 positive, not a rout but certainly very impressive numbers. Oscillators are back in positive territory, first time in a month for the Nasdaq style, so a breath of fresh air. New highs still with a nice lead over new lows.
Volume
Well we did not have accumulation days for the indices but you would be hard-pressed to believe the session was not bullish. Accumulation is nice and respected but not a requirement, we still had good strong volume to push volume trends to the bullish side of the ledger. More upside volume this week above the all-time highs would signal more continuation until an overbought condition is reached.
Support Levels
Piling on Monday after it appeared the bulls were going to run it back from the the start. The big open was followed by more and more buying as the price action became constructive. We’ll consider last Wednesday’s move lower a good low for this cycle. Of course, Thursday’s big move left a monster gap that eventually needs to get filled.
The Internals
What’s it mean?
Bears were trounced Monday and the internals reflected the sentiment. Very bullish VOLD, best day in weeks as the VIX fell again to close in the 15’s, Ticks were huge, heavy buy programs all day long as the green shows this. Put/calls nosedived as big fund managers decided not to hedge themselves Monday, ADD and ADSPD finished strong. As always, a followthrough day on the internals would be a delight to the bulls.
The Dynamite
Economic Data:
- Tuesday:Trade, JOLTS, factory orders
- Wednesday:ADP, services PMI, services ISM, fed speak
- Thursday:Jobless claims, productivity and costs, trade
- Friday:July employment report, wages, unemployment rate, consumer credit
Earnings this week:
- Tuesday:PFE, CAT, MCD, W, HUT, WIX, ENLT, ET, MRK, AMD, SPCX, ANET, ALAB, ZETA, OPEN, BKNG, KTOS, ALGT, HL
- Wednesday:LLY, SHOP, UBER, DIS, DIBS, RIOT, CRCL, BLMN, U, NVO, SNDK, WDC, APP, ELF, TTMI, MELI, RDW, AXON, BYND, ALB
- Thursday:COP, QBTS, DDOG, CELH, HIMX, DNOW, FISV, VTRS, LNG, DKNG, ABNB, AAOI, TXG, RGTI, TTD, INOD, RCAT, MP
- Friday:OKLO, VST, TTOW, PPL, WEN, UAA, ASIX, ACMR, CYD, CGC
Fed Watch:
Fed policy remains in flux, and while the committee did not move rates this time around there is a good chance September is the move, if inflation does not cool down on its own. Chair Warsh was adamant about bringing inflation, others on the committee as well but action speaks louder than words.
Stocks to Watch
Semiconductor Names – With so much volatility around these companies it seems everyone is worried about the end of AI coming soon, but as we heard from the Mag 7 names that is hardly the case. Watch for AMD, Sandisk, Western Digital this coming week.
Oil prices – If this war continues, now in its 6th month there could be another spike in crude up towards $100. The Iranians are not giving up easily, they seem to have become an expert in being bombed. Oil prices will rise if the Strait is in flux.
Industrials – A good week for the Dow 30 and now some big less tech-sensitive names report this coming week like Disney and McDonalds. These charts are horrible but maybe the bar is low enough.
[/MM_Access_Decision]
