The Fuse
Equity futures are mixed as the Nasdaq and SPX 500 are starting off the new month in the red. It was an amazing month for stocks as the bulls hope to have a repeat performance, which would be unlikely. The new bull market continues.
Interest Rates are slightly higher this morning as we see a bit of selling on the long end of the curve. The next fed meeting comes up in two week and we’ll hear from Chair Powell twice today talking about markets, inflation and monetary policy.
Stocks moved into another gear last month but now we have December, which is often a bullish month. European stocks gained overnight as more economists believe the EU will cut rates sooner rather than later. China’s manufacturing data was strong and beat expectations. A key measure of inflation eased in October, yesterday we saw the PCE slow down sharply but mostly in line with estimates. Crude oil is off slightly as the market seems to be disappointed with the OPEC+ group not coming together for a united production cut.
Earnings were strong last night from Ulta and Dell while Marvell beat and provided lower guidance. Ambarella also provided a mixed result and is only slightly higher this morning.
What a month it was for stocks and of course the last day of trading in November had to finish it off in grand style. Better than 9% for the SPX 500, the best month in years while the Russell 2K and Industrials posted robust gains. But the Nasdaq stood out tall with better than a 10% gain on the month. Today starts a new month and if history is any guide, there could be even more upside as the bulls take control.
Breadth started out poor but managed to finish with a decent showing. What seemed to be a day of distribution turned into a strong day of gains all around. we now have breadth back on a buy signal, which can last for quite some time.
Pretty strong volume on the last trading day of the month. Stocks had been showing good accumulation all month long with nary a distribution day. Will December bring a different result? It’s hard to say, but December often brings positive results after a strong November.
Another run at 4,600 falls short but the SPX 500 did close at a new multi-month high. With only a few big earnings reports to come in December and a low VIX we may not see a dash to 4,600, but if it goes by the wayside and confirmed the bulls may just push the SPX 500 to a new all time high.
What’s it mean?
A late surge of buying in the last hour vaulted the VOLD and ADSPD to their highest levels of the day. It was clear some window dressing or tape painting was done here to push the markets higher end of day. Ticks were moderate, reflecting plenty of red early in the day. VIX fell sharply from the highs, put/call went higher but is still not in a dangerous area. New month starts today and Chair Powell speaks twice.
The Dynamite
Economic Data:
- Friday: Global PMI, ISM Manufacturing, construction spending
Earnings this week:
- Friday:
Fed Watch:
Quite a few Fed speakers will be out this week, Five on Tuesday and several later in the week including Chair Powell on Friday (twice). The committee may comment on the recent softer inflation data but will likely be paying close attention to the PCE number released on Thursday along with income/spending. Markets are not expecting a hike in December, only a 4.5% chance of that happening but is pricing in the first rate cut in June 2024. We expect to hear the committee’s comments this week to continue the hawkish statement of ‘higher for longer’, holding out for the possibility to hike rates just in case.
Stocks to Watch
Volatility – The VIX is at its lowest levels of the year and that represents a dangerous situation. We’re not calling for a rise here, in fact the VIX can stay latent for some time but with so many uncertainties that may arise out of nowhere it makes sense to have some put protection on hand.
Retail – It’s been a big weekend for holiday shoppers but we have Cyber Monday coming up and the first full week of shopping for the season.
Expectations are high for most companies this holiday and into the new year.
Technology – It is an unusually high volume week for technology earnings, with CRM, OKTA, DELL, SNOW, and CRWD, HPE, INTU coming up with earnings and guidance. Most of these charts are strong and have been solid winners in November, but it’s all about the future and how they see things turning in 2024.