The Fuse
What are futures doing?
Looks to be another strong open for the ES futures as they are up about .4% on good volume, Nasdaq as well and the Industrials are just on a roll.
News
Seeing more nice gains in Europe too as the STOXX rose .4% on volume, solid gain in Germany. FTSE also rose, adding .4%. The dollar index was flat, gold is ripping higher by 1.8%, silver is up and crude oil is stabilizing. Yields in Germany fell bp, the same move lower in US 10 yr treasury yields. Japan ripped higher, up 3.7%, Shanghai up 1.5% and Hong Kong slight gain of .3%.
Volatility
The VIX rose yesterday and is up slightly this morning, reflecting particular worry that volatility is going to drop further. Being under the 200 day ma on the VIX is bullish for markets and will be as long as the term structure remains bullish.
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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
Very nice quarter for Arista Networks, not so good response from AMD and SpaceX after good quarters, Astera Labs and Booking both with strong gains and rallying this morning. Earlier today robust gains by Lilly and Disney, Shopify with a monster beat and raise and Circle along with Bloomin Brands with a beat. Tonight Sandisk, Western Digital, ELF, Applovin, Axon and Mercado Libre.
Events
BLAST OFF! And we are not just talking SpaceX, which posted strong earnings for the first time as a public company. The bulls dominated the scene yesterday with a massive 2% rally on the SPX 500 that went virtually unchallenged. So much for FOMO, if you’ve been on the sidelines since last week you’re in bad shape. Typically when the market senses most of offsides it tends to move the most and more than anyone expects, and here we are.
Breadth
More good breadth, better than 2-1 positive as the markets roared from the start of trading. That is not usual to see but remember the markets are here to surprise everyone and make us all look stupid for trying. Oscillators moved up strong, the Nasdaq at its highest levels since April. New highs crushing new lows again, on the cusp of another buy signal.
Volume
More volume as we talked about yesterday, the SPX, Nasdaq and Industrials with a strong statement about the trend. Accumulation days for all three indices, only the SPX and Industrials achieved new high levels. We may see more turnover this week but when it slows down there will be some back n’ fill opportunities.
Support Levels
That liftoff from the Wednesday lows last week was impressive. Four days straight of massive gains that broke right through the old highs. Even the Nasdaq is within spitting distance of a new high, so is the IWM. Resistance it tough to see here at the moment as strong momentum lifts the markets even higher. This trend will slow down and we’ll have some levels to consider, but for now the old high of 7.600 on the SPX 500 is it, and the Industrials about 53,300.
The Internals
What’s it mean?
Again, the internals align with the markets and isn’t it just a beautiful thing for the bulls. No resistance whatsoever, the VOLD took flight from the start and never looked back. The ADD and ADSPD were solid gains as well, just not a rout but the put/calls really took a dive, no need for protection by the hedge funds here. Impressive was the ticks, where we saw green arrows all day long in Nasdaq. VIX rose end of day but that may just be a breather by short vol traders. Impressive.
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.
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