The Fuse
What are futures doing?
A nice bid in the market this mornings as the ES futures point north for stocks. Of course, the July jobs report might have an effect but when there is a strong bid it often tells the direction for the day unless there is an outlier.
News
Let’s make it a clean sweep this week, the STOXX up again, rising .2% with help from Germany and France. The FTSE added .3% while the dollar was flat. Gold continues its resurgence, now pushing 4,400 as silver rises as well. Crude oil down just under 1%. Yields are flat to slightly down before the July jobs report, Bunds flat with 10 yr US treasuries down 1bp. Japan fell .1%, Shanghai with strong gains up 1% and Hong Kong up .4%.
Volatility
VIX continues to settle down and even pushed lower as the markets were down on Thursday. That is unusual but not unprecedented. Fear is not showing in markets right now, rather FOMO is more the issue. When the buyers halt for a time a low vix will matter and it might take stocks down with it.
If you are an existing Market Blast or Trader’s Pass member, log in here:
Interest Rates
Another quiet start as fixed income investors await to see how many jobs were created in July and how wages are moving. Some stability here might well keep a nice bid under stocks and even bonds, where the yield curve is not moving much this morning. 2/10 spread is steady while high yield remains well bid, spreads are tight again. Fed funds futures still seeing the best chance of a hike in September but today’s numbers may change that.
Earnings
Great earnings from Cloudflare last night with solid guidance, a mixed quarter for AAOI and robust earnings from AirBnB. This morning mixed guidance from TakeTwo and Oklo, while Wendy’s with a beat.
Events
Stocks retreated yesterday, just a lack of buyers yesterday and perhaps traders waiting patiently for the July labor report, to see how the market takes it. It was not a horrible day, just more of the same chop we had been used to before this recent surge. Market structure looks pretty bullish here, but we need to be careful not to get too complacent.
Breadth
Breadth was down again and that means oscillators took a hit. The NYSE is now negative while the Nasdaq is just hovering above zero. We expect gyrations around the zero line when the market is in chop mode. Perhaps a sideways move over the next several days leading into the Jackson Hole conference is in order, new highs beating out new lows but it was a close call again.
Volume
Support Levels
The SPX 500 finished just above 7,700, and that might be the level of support now as the markets continue to move into higher ground. The Nasdaq fared the worst and has some resistance near 30K, that’ll be tough to mount a rally above without a catalyst. Some big Nasdaq earnings are coming up so maybe the bulls get their chance. The 20 ma on most indices is now moving up swiftly.
The Internals
What’s it mean?
More weakness for the internals today as the TICKS told the story as well as the VOLD. Ticks were super red, sell programs hitting all session long while the VOLD just collapsed late in the day. VIX did manage to sink further and that is worrisome, there is little fear of the markets going down, call it high complacency. ADD and ADSPD just awful.
The Dynamite
Economic Data:
- Friday:July employment report, wages, unemployment rate, consumer credit
Earnings this week:
- 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]
