The Fuse
Equity futures are bouncing back from a rough start to the new month. Stocks are catching a bid today after a very negative reversal on Friday put the indices on the verge of starting a corrective period.
Interest Rates are rising on the long end of the curve this morning as bond sellers continue to shed fixed income. Last week’s debt downgrade was taken harsh by the bond market, 10 year yields are still ticking above 4%.
News
Plenty of earnings out this week, today we have SWKS, PLTR, LCID, PARA and RING. Earnings have been pretty decent so far but many stocks have shown they may have positive outlooks priced in.
Nothing much to highlight this week but we’ll see if stocks can turn it around and post their first gain of the month later today.
Poor breadth early in the week, but positive readings Friday yet well off the highs of the session. Can we read anything into this? Absolutely, as stocks remain under pressure with selling following news of earnings or other events. Character has changed for the time being.
Volume was elevated again and we see another day of distribution. Buyers came in early but the selling was strong and intense later in the day, no stopping the bears at all.
Some easy numbers to see for support on the SPX 500: 4439 is a gap fill, strong support at 4,400 and then below at 4,330. If that level breaks the chart turns quite bearish.
The Internals
What’s it mean?
It’s hard to spin the action on Friday. Markets were up, then down, up strong again and failed miserably. This is erratic market activity, we often see that happen during the summer months. VIX surged up Friday in a big way, notice the huge turnaround move in the ADD and VOLD Friday, sellers took control midday and just wouldn’t let go. If the trend continues and indicators get more bearish, the market will follow in kind.
The Dynamite
Economic Data:
- Monday: Consumer Credit
- Tuesday: Small Biz Optimism, Trade Balance, Wholesale Inventories
- Wednesday: Crude Inventories, China CPI
- Thursday: CPI, Jobless Claims, Japan PPI
- Friday: PPI, Michigan sentiment
Earnings this week:
- Monday: FRPT, GOGO, TSN, IFF, LCID, PLTR, PARA, SWKS, VECO
- Tuesday: IFF, LCID, PLTR, PARA, SWKS, VECO, ADT, DDOG, LLY, QSR, UAA, UPS, AKAM, AXON, BROS, LYFT, TTWO, WYNN, ZIP
- Wednesday: CAVA, JACK, RBLX, WEN, ALRM, TTD, DIS
- Thursday: CYBR, DDS, HBI, RL, INDI
- Friday: SPB
Fed Watch:
The fed futures continue portray a higher chance of rate hikes coming later in the year. Of course, only three meetings left and with the Jackson Hole conference coming up there could be some fireworks. Last week’s data on productivity was positive, first strong number in years. That is going to help make decisions easier for the Fed, even as expectations for higher inflation this summer make it hard to pass on a rate hike. We’ll have some speakers out this week.
Stocks to Watch
Interest rates – A huge pop this week has started to flatten the yield curve, which could be bearish for markets. If yields retreat then stocks may become attractive.
VIX – A spike in the volatility index this week surprised everyone, and markets fell sharply. This indicator could see a move up to 20% before it’s all over.
Disney – Earnings this week from the ‘house of mouse’, the stock has been a huge disappointment for months. I don’t expect any relief here but the stock is probably done going down.