Equity futures are bouncing back this morning after starting the week in the hole. Stocks were mostly mixed to start the week, small caps higher on Monday and Nasdaq stocks higher on Tuesday. There seems a pretty strong bid after a positive session in Europe but it’s still early. To
Interest Rates are modestly lower on the long end of the curve early this morning as bond buyers continue to add some long duration to their portfolios. With so much data surrounding jobs this week we may see some big moves in fixed income by week’s end.
Bitcoin remains all the rage, the cryptocurrency is up strong again. We also see strength in gold, but after reversing hard Monday this needs some followthrough and base-building. Crude oil is down modestly. ADP labor report is out today, and if there is any evidence of a slowdown in hiring it will bolster the claim of the Fed needing to cut rates sooner and with more force. The futures market is pricing in 100 bp of rate cuts in 2024.
Earnings last night were strong from MongoDB but the stock is sliding today, this could be a good buying opportunity. Toll Brothers also posted robust earnings, and this morning a beat from Campbell’s and Ollie’s have those stocks higher.
Stocks are struggling right now and cannot seem to decide which way to go. Yesterday was a great example of wild swings but the VIX barely budged (more on that below). Can the employment situation help to drive stocks higher or will a further correction be felt? Wait and see.
Another down session for the markets as breadth was just atrocious. This indicator is now on a sell signal after a few days of weakness, but that could turn quickly. We noticed a high number of new highs Monday vs new lows, that is now a buy signal for the markets.
A mixed session with strength in the Nasdaq but lower turnover across the board, save for the DIA. A pullback on lower turnover is better than the opposite, and we may have hit a bottom this week if buyers suddenly decide to step up. A little back/fill is not unexpected.
We are still on 4600 watch, and then afterwards it would be new all time highs. But the market seems a bit tired here waiting for those moving averages to catch up. We’ve seen dip buyers step in to buy those breaks, if that doesn’t happen then a swift move to the 20 ma is very likely (circa 4505 and climbing).
What’s it mean?
A pretty dismal session but a continuation from Monday, as we see in the VOLD, top left. It appears the sellers were not finished late Monday and continued yesterday, markets were extremely volatile. The VIX moved downward but really was quite active, with protection being bought all day long. It’s hard to fathom a weak VIX for too much longer. Ticks shows red most of the day and in the Nasdaq, which actually finished in the green (thanks to the Magnificent 7). If the bulls want to retain control they will step up this week. Forget about 4,600 for now, though that is still rather close.
- Wednesday: ADP employment change, productivity/labor costs
- Thursday: Challenger job cuts, jobless claims, wholesale inventories, consumer credit
- Friday: Job report for November, Michigan sentiment index
Earnings this week:
- Wednesday: CPB, OLLI, UNI, GME, CHWY, VEEV, NAPA
- Thursday: CIEN, DG, GMS, AVGO, LULU, DOCU, RH, MTN
- Friday: JOUT
Chair Powell spoke a couple of times last week indicating the committee is still an inflation fighter. The market believes their work is down and it’s just about time for rate cuts. We’re not sure that’s the case yet but some fed speakers this past week indicated the hikes were probably done for now. Of course, we will watch the data as will the committee, the last meeting of the year comes in about 11 days.
Stocks to Watch
SPX 500 – We are close to breaking through big resistance at 4,600 and if that happens the SPX 500 is on its way to the old highs from 2022.
VIX – The volatility index remains low, probably too low but that doesn’t matter when traders are not buying protection and want stocks.
Eventually it’s going to matter as market players are conditioned for markets only going up. It’s time to be alert.
Employment – The November jobs report is out Friday and it could be a game changer for Fed policy if inflation trends (wages) are lower than the prior month.