The Fuse
Equity futures are bouncing around this morning with a slight bias to the downside. When futures opened up Sunday evening traders encountered some good selling, but that finished up and now we are mixed to nearly flat. We’ll see if the SPX 500 can catch a bid and push through 5,100 on the close.
Interest Rates are lower this morning as bond buyers are back in to grab some bargains. The 10 year yield pushed up to the 100 day moving average and stalled, if rates continue lower the next area of support is at 4.135 on the yield, currently 4.26.
In political news former President Trump won the S Carolina primary and seems a lock to win the Republican nomination. Fighting continues in Ukraine, oil is modestly lower while volatility is a mixed picture. Several Fed speakers out later in the week.
Earnings are in phase 3 and that means fewer but bigger names will come out. This week in particular is important with Salesforce, Lowes, Dell and several other names like BestBuy and Zoom. This morning saw earnings from Domino’s, a beat/raise and increased buyback and bigger dividend. This stock is higher this morning.
A pretty quiet time here but we have the end of the month coming up Thursday, which means window dressing (buying into the end of the month) and new money flows to Friday (a new month). February has been strong, can it keep up for the end of the month? It’ll be a challenge with few catalysts other than Fedspeak and some economic data. This is normally the time we can make good money in our trading.
Pretty strong breadth to end the week as this indicator is on a moderate buy signal. Oscillators turned up at the end of the week and are barely positive. That may give the indices fuel if they choose to advance further in the coming days. Remember we have end of month coming up and that means we may see some heavy buying towards the end of February to finish the markets up.
Volume trends were very positive on Thursday but buying interest subsided on Friday. That’s fine though, as money flows continue to add to the markets. We may see good turnover metrics later in the week as the month end is nigh. What might spur more upside would be better strength in the small cap Russell 2K.
The SPX 500 continues to hover above 5K, and that area should provide good support and leverage. The Nasdaq 100 had trouble holding above 18K but that might be the next level to conquer. We are on watch for 40K on the Dow Industrials, a level that seemed impossible to fathom just a couple of years back.
The Internals
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What’s it mean?
A positive for the intenals but as we see clearly a mixed picture and eventually stall out of buyers. We see the latter happening in the ticks where the green arrows were sparse late in the session. More sell programs hit end of session. VOLD did manage to rise up so volume trends were positive but the ADD line pointed downward. That is a divergence we don’t see too often. VIX remains muted, under 14% and below the 200 day moving average. Bullish for markets.
The Dynamite
Economic Data:
- Monday:New Home Sales
- Tuesday:Durable Good, Consumer Confidence
- Wednesday:GDP second estimate, Crude Oil Inventories
- Thursday:Jobless Claims, PCE January, Pending Home Sames
- Friday:ISM Manufacturing SPX global PMI, Construction Spending, Michigan Sentiment
Earnings this week:
- Monday:DPZ, PPC, TREX, U, WDAY
- Tuesday:AMT, SJM, SEE, AXON, EBAY, IPAR, RDFN, SPLK
- Wednesday:DY,, BLD, TJX, HPQ, OKTA, CRM, SNOW
- Thursday:BBY, GDRX, HRL, PZZA, UTZ, HPE, ZS
- Friday:HIBB
Fed Watch:
Fed speakers were out in force this past week emphasizing their view that rate cuts are not coming in a hurry. That may have disappointed the market somewhat, but it is the reality. No doubt the market’s chagrin is going to be felt for weeks as they come more in alignment with the Fed’s forecast. More speakers out this week may give us more information about policy, but for now we have to believe two cuts are about as far as the committee is going in 2024 (down from 2 1/2 cuts). A big slate of Fed speakers this week.
Stocks to Watch
Interest rates – They have slowly been climbing upward as concerns over higher inflation linger. We’ll have some data this week that might dispute the fact.
February Month End – It’s been a pretty positive month for the stock market, getting the year off strong. But perhaps with the next phase of earnings season to come (in March) we may see a bit of a slowdown.
NVIDIA – This was the name last week that everyone moved on, the markets were queued up and ready to fire – the did that. Will there be followthrough? Let’s pay attention here and watch other names in the AI and semiconductor space for answers.
