The Fuse
SPX futures are sharply lower this morning in a continued move down from yesterday’s wipeout. Markets ‘only’ closed down about 1% or so Thursday, but there was underlying damage, with poor breadth, elevated turnover and price support levels penetrated. The 4100 level fell like a hot knife through butter as the SPX settled about .5% below that point.
I am looking for the 4000 level to hold as the oscillators portray a weak market condition. The McClellan oscillators have the markets mildly oversold now, but sentiment is still heavily in the bullish camp. That froth needs to be wiped away, we have noticed the ‘dash for trash’ lately, traders/investors looking to ride the junk stocks higher.
Oil prices are higher today after Russia announced a cut of 500K barrels of oil in retaliation to the west. We see rates climbing as well, with the 10 year bond up solid and pushing towards 3.8%, the highest level since the start of 2023. We’ve seen pressure on bonds lately as hints about continued inflation make the rounds. Next week’s CPI and PPI may be a splash of cold water for those believing inflation is subsiding quickly.
The Internals
What’s it mean?
Clearly a down session from the start, with heavy turnover after the 4200 SPX level was rejected soundly last week. Notice the VOLD and ADD turned lower early, the selling picked up as distribution day was notched. VIX rose sharply and all day long, a persistent trend that had been missing. Notice the rise in the put/call (bottom left), if that continues look for more downside work on the indices as the big institutions add more protection.
The Dynamite
- Economic Data:
- Friday: consumer sentiment, Michigan sentiment
- Fed’s Waller speaks
- Canada Employment situation
- Earnings this week:
- Friday: ENB, HON, MG
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