The Fuse
Equity futures are bouncing around the unchanged line but the Nasdaq is sporting a modest gain early but that may change. Not much on the schedule today other than some housing data and Fed speakers along with the FOMC meeting minutes from the January session.
Interest Rates are slightly lower as the long end of the curve begins to stabilize. We are seeing less of a chance of rate cuts happening this year, maybe one cut is priced into futures but that is probably aggressive. We may not know for sure about the Fed’s choice for months. 2 yr yields are steady.
Stock futures are mixed now this morning following. Gold prices are up again and pushing towards $3,000 per ounce, silver is up along with crude oil. The US dollar is down slightly. US 10 yr treasury yields are up modestly, in Asia stocks were mixed with Japan higher and China markets down on some profit taking.
Earnings last night from Arista were good but guidance might be a bit light. We saw weakness in Toll Brothers along with Celanese, too. Earnings this am from Wix, Etsy Garmin, Fiverr and SolarEdge.
There wasn’t much to inspire the buyers yesterday other than the fact traders were thirsty to get busy after a long three day weekend. Stocks started higher but then fell sharply under the weight of some selling, a bit of back n’ fill action and running of stop orders. Once that finished up a flurry of buying end of day took the SPX 500 to a new closing high, and the Nasdaq 100 as well.
Breadth was decent but not outrageously strong, it seems traders are still trying to climb a very high wall of worry. That is good for the bulls until the last of the ‘non-believers’ waves the white flag. At that point the market may be overbought and time for a long rest. Oscillators remains strong while new highs trump new lows again.
Turnover was decent on the Nasdaq and Industrials, so an accumulation for both but the SPX 500 and small caps were up on lower volume, so just an regular trading day. We may see the volume pick up later in the week with a big expiration day arriving on Friday, and volatility futures moving to March this morning.
The SPX 500 tested shorter term support, the 8 day moving average and successfully bounced from there. The Nasdaq did the same and powered up after, though the Mag 7 names lagged most of the session. The IWM is the one that is a concern, though it did bounce nicely Tuesday there was little conviction, so that remains vulnerable.
The Internals
What’s it mean?
A big jolt of energy late in the day caused a nice surge in the indices to close near highs of the day. Though the ticks were mostly red on the session the VOLD and ADD finished strong. So, let’s call it a mixed day with the VIX on the lows of the session while TRIN fell in line with the VOLD and ADD, put/calls remained steady.
The Dynamite
Economic Data:
- Wednesday:Housing starts, building permits, Fed meeting minutes
- Thursday:Jobless claims, philly fed, leading economic indicators
- Friday:Flash PMI, consumer sentiment, existing home sales
Earnings this week:
- Wednesday:ETSY, SEDG, GRMN, WIX, FVRR, TECK, ADI, WING, CVNA, TOST, CAKE, BMRN, EXAS, BHC, VALE
- Thursday:BABA, WMT, U, W, BAX, NICE, JMIA, SHAK, LNG, MELI, RIVN, XYZ, NEW, BKNG, TXRH, GH, FIVN, DBX
- Friday:ARR, ASIX, UNTI, BDC
Fed Watch:
HUGE week for fed speak, no less than 11 speakers hit the circuit talking about monetary policy, inflation, the economy and growth. Most have already intimated they do not see a cut coming anytime soon, though Governors like Goolsbee say that ideal could change drastically if inflation turns downward. Was this a temporary situation in January or something more sticky? The February readings next month will be an important read.
Stocks to Watch
Volatility – Once again the VIX fell hard into a long weekend, we often see that paid back quickly after traders return, which will be Tuesday. It’s been a bullish condition with VIX under 15% and below the 200 day moving average, but we know that news could change that narrative quickly.
Earnings – A lighter calendar of earnings this week but nonetheless important. We’ll be watching retail and tech names this week as the focal point.
Economic data – Mostly about manufacturing this week, but certainly important to find out if the economy is slowing and perhaps bigger layoffs are just around the corner.
