The Fuse
Equity futures are hanging onto overnight gains as they work to erase Monday’s sharp losses. With a move above 6,865 that will do the trick, and with some data out later today and big earnings that might do the trick. Volatility is weaker this morning.
Interest Rates are lower this morning as bond traders get back into buy fixed income. High yield remains well bid as spreads are tight, 2/10 spread is lower while the 30 yr slides between 4.7-4.9%. Fed futures pointing to rate cuts next two meetings.
Stocks in Europe were up overnight, the STOXX gaining .3% led higher mostly by Germany and France. FTSE lost .1%, Japan gained 1.1%, Hong Kong down 1.3% and Shanghai off .5%. Gold is higher today, as is silver which is approaching $60 per ounce, oil is robust and pushing $60 as well. Yields are lower in Germany and the 10 yr US treasury, 1 and 2 bps respectively. The dollar index lower by .1%.
Earnings last night from American Eagle were strong and guidance was up for the coming quarters, stock is up nicely. Marvell beat but offered soft guidance, added a new company they bought called Celestial AI. Pure Storage was mostly in line but provided strong guidance, the stock is down. CrowdStrike beat small and is down a bit, this morning a beat by Dollar Tree and Macy’s has those stocks higher. Tonight a big one for earnings with Salesforce, Snowflake, C3.ai, Five Below, Guidewire and few other retailers.
Well, it was a decent day for the bulls but not overwhelming. In fact, volume was much weaker than the prior down session on the IWM so this does not count as an accumulation day. Nevertheless, there is optimism that technology and. growth names can help power up the market through the holidays. It’s been a strong rally since just before Thanksgiving but there needs to be a bit more traction by the bulls with better statistics.
While stocks only breadth is on a buy signal that does not mean markets going to rise on good breadth every up session. Yesterday’s up day for example had negative breadth, oscillators went down and new highs were lower than prior days. Still, an up session is positive but we should note it is breadth that brings the market higher.
Good volume in the indices except for the IWM so there is accumulation day for the bulls. That is a good news for the bulls if there is a high quality rally today. Positive volume when the market is rising is a good thing, but would be even better for a few more sessions higher to push the envelope. Bulls can taste a new high and just need the push..
Holding those lows from Monday was definitely a big deal, but now we need to see a bit of followthrough, ideally trading above the highs from Monday. That may not be too difficult a task, given the fact market rallies have been broad over the past week or so. If one group drops, an other picks up the pieces. Still in a strong bullish seasonal period.
The Internals
What’s it mean?
Another bad day for the internals with weakness in the VOLD and ADD. Ticks were spread evenly throughout the day with buy and sell programs working, volatility was lower on the session while put/call is working its way lower. Would like to see better internals on an up day.
The Dynamite
Economic Data:
- Wednesday:ADP, Import price index, services PMI, ISM services
- Thursday:Jobless claims, trade deficit, Bowman speaks
- Friday:PCE, income/spending, consumer sentiment, consumer credit
Earnings this week:
- Wednesday:DLTR, M, THOM RBC, CRM, SNOW, FIVE, GWRE, HQY, PVH, TLYS
- Thursday:KR, DG, HML, BBW, SAIC, TD, DCI, HOV, RBRK, DOCU, S, ULTA, HPE,
- Friday:VSCO, KNOT
Fed Watch:
Plenty of talk from the Fed recently and most of it has been dovish. Since NY Fed Chief Williams said he would be voting for a cut at the next meeting, the futures market has done an about face. We’ll hear from Chair Powell this week along with Miki Bowman, who is in the rate cut camp.
Stocks to Watch
Small Caps – What a resurgence of the ‘littles’ in the market. Their leadership is certainly important to keep the market trending higher.
Retail – Several retail names will report this week but more importantly is hearing how the consumer is doing the first weekend of holiday shopping. It seems records may be broken this year.
Rates – We always keep a close eye on rates but during this start of a new month if they head lower then we are likely to see continuation of the stock rally.
