Equity futures are retreating early this morning as traders wait to see how the November jobs report looks. Consensus is looking for a robust 180K new jobs created and wages ticking down on a y/y basis. Historically, next week is often a soft week for the markets leading into the December options expiration period.
Interest Rates are again rising modestly into the jobs number print which will have an effect on fixed income. After pushing down to 4.1% on the 10 year yield it seems that is a floor for now. If that breaks then we could see this bond break the 4% level in a hurry.
Not much news overnight but crude oil is up sharply after penetrating the $70 level yesterday. Economic data was mild on Thursday as it appears inflation is cooling off, but more data needs to be examined. It starts with today’s labor report and wage moves. Market volatility is low but stock moves are fierce.
Strong earnings from Broadcom and Docusign last night but poor guidance from retailers RH and LULU have those stocks in reverse.
Enough of the down sessions for now! Stocks staged a nice rally yesterday on pretty strong turnover and solid internal statistics. What appears to be happening is a consolidation following the big November rise, how long this lasts is anyone’s guess but certainly with some anxiety over next week’s Fed meeting there is likely to be more stress. However, after next week we could see a bit of a ‘rest’ into the end of the year.
Really solid breadth yesterday as the bulls finally took the challenge and closed positively. There is no question stocks were overbought coming into the week, but another good breadth day would put this indicator back into a buy signal.
The Nasdaq paced the action Thursday with a better volume day, so chalk up an accumulation day for the bulls. This means professional buying took place all day long, and with a followthrough day. However, the rest of the market needs to follow along with it, the Russell 2K has been strong but needs to keep up the pace.
We move even closer to the magic 4,600 mark – and we want to stop talking about it! Support still comes in around 4,500 but as we are so close to eclipsing this key level we think once news is behind there will be a chance to close higher. Stocks remain buoyant as new highs start making a big move up on the new lows.
What’s it mean?
Pretty solid day across the board for the internals. But, it was a not a clean sweep as we can see above, the ADD and ADSPD were only marginally higher. The VOLD was strong but also saw strength in the put/calls, which is a yellow warning flag. Ticks were mostly green but dispersed evenly in the NYSE ticks. While the result was impressive, under the hood it was simply okay.
- Thursday: Challenger job cuts, jobless claims, wholesale inventories, consumer credit
- Friday: Job report for November, Michigan sentiment index
Earnings this week:
- 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.