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The Fuse
Stock markets are pulling back a bit this morning before the retail sales report is released. Yesterday saw a mixed session after the January CPI data was distributed, showing still very hot inflation exists. Fed funds futures took that information and started pricing in more rate hikes, now the futures market sees three more rate hikes over the next few meetings – at least. The committee is following the data, and if that leads to higher rates, then so be it. The 2 year yield reached 5% for the first time in 16 years.
The stock market has shown some resilience in the face of weak data. Some will say, ‘bad news is good news, and good news is great news’. It’s hard to argue the continued up moves with strength in price, but sentiment is getting rather full right here with many different surveys and polls showing large population of bulls. You wonder if there are any buyers left after the boat gets full, and if there are only sellers remaining. Some stocks like NVDA are up 60% so far in 2023, a year of higher rates and weaker earnings across the board. Can this continue for much longer, as the forward P/E of the market approaches 19x?
Today we have retail sales and tomorrow am is the PPI, which has been a positive lately for markets after release. Earnings are big tonight with Cisco, Roku and Shopify.
The Internals
What’s it mean?
A big day range for price but in the end markets barely moved, and we see that from the internal indicators above. The VOLD started down but found its bottom, the ADD (second from the top left) also made a move back to the flat line, there was plenty of balance (buys and sells) during the trading day, just lots of whipsaw action. With plenty of news on the horizon (today and tomorrow) it makes sense to have positions on both sides, just in case. Notice the increased pressure on the put/call (bottom right), that has been persistent and if it continues could be the first bearish signal in these internals for quite some time.
The Dynamite
Economic Data:
Wednesday: Retail sales, industrial production, empire state, biz inflation expectations
Thursday: PPI, philly fed index, jobless claims, housing starts
Friday: import/export prices
Earnings this week:
Wednesday: RBLX, TTD, ROKU SHOP, TWLO, BIIB, CSCO
Thursday: DDOG, CROX, SHAK, DKNG, AMAT
Friday: DE, AN, AMC