The Fuse
Equity futures are slow to get moving today but the bulls are hoping for a turnaround Tuesday. Stocks were hit modestly Monday after a low volatility hangover. The VIX just got low enough for the dip buyers in vol to step in as they saw little risk of downside for the VIX. Metals remain volatile.
Interest Rates are rising a bit this morning as bond sellers give back some fixed income bought recently. Yields have been pretty steady for the past few weeks, bond volatility is rather low. High yield spreads remain tight, the 2/10 spread is narrowing and fed futures are steady, seeing the next cut likely in April.
Stocks across the pond were mixed as the STOXX in Europe rose up .1%, FTSE added the same. The US dollar index flat, gold ripping higher along with silver after a couple of volatile sessions, crude oil following through to the upside. In Asia stocks in Japan dropped .4%, Hong Kong climbed .9% but Shanghai was flat. Yields rose a bit in Germany and the US 10 yr treasury.
No earnings on tap for this week.
Stocks were down the entire day on some serious profit taking, and if yo udon’t believe me just look at the mess in precious metals! Gold and silver were pounded, but don’t feel too badly, these commodities have been up strong all year long and ramped up parabolic over the last couple months. Volatility popped as we expected after the holiday and spillover selling set in from Friday. Only four more days for the indices to show green for the Santa Rally,, but right now the SPX 500 is about flat since the start.
Breadth was poor most of the day and did not improve much as the day wore on, simply buyers were absent on the day. Not even the dip buyers showed much interest, this being the last trading week of the year there is no question the momentum is going to slow down. New highs continue to crush new lows, and that is bullish. Oscillators remain positive.
A modest pop in volume as last week’s low volume expansion in price was reversed. That is not horrible though, we continue to trade in a range as interest picks up when the market falls. That will eventually be a positive, it seems like we just need to get past 2025 and into the new year before we see an expansion of turnover.
It looks like we could be getting a nice pullback to test short term moving averages. The 8 and 10 day are of interest here, if those levels get tested and hold then we could see that rally everyone is talking about start to materialize, Pulling back is often the best thing we when the indices need to test support and bounce off those strong levels.
The Internals
What’s it mean?
Just an ugly session all around for the internals, the TICKS showed a slew of sell programs hitting all day long. One thing to note is the heavy selling hit early and often, the VOLD finished at its worst levles of the day while the ADD was also weak. The VIX climbed but did actually close in the lower half of the range, you might call that a shallow victory. Bulls would like to see better quality in the internals this week.
The Dynamite
Earnings this week:
- Tuesday:n/a
- Wednesday:n/a
- Thursday:holiday
- Friday:n/a
Economic Data:
- Tuesday:home price index, chicago biz barometer, fed meeting minutes
- Wednesday:jobless claims
- Thursday:holiday
- Friday:n/a
Fed Watch:
Not much going on with the Fed this week other than the meeting minutes will be released early in the week. No doubt we’ll see how the committee came to a conclusion and if there was some contentious moments. Remember, there were some on the FOMC who believed there should have been no cut in the meeting.
Stocks to Watch
Precious Metals – An amazing run for silver and gold this year as they hit new records and then some. Will we see them continue on?
Bitcoin – Not living up to expectations, the crypto currency is mired in a deep bear market, though we should not take that too seriously. Many are predicting doom for bitcoin, but that has been the case in the past and been totally wrong. When the bulls push the momentum is when we’ll see this start to shine.
volatility – The VIX is dangerously low and offers a great opportunity buy volatility and protection. There is not much good news to drive stocks higher but no question the sellers can get the markets lower in a hurry.
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