The Fuse
Market Futures are higher this morning as bargain hunters are out following Friday’s test of the 200 moving average. Also, we are at the end of the month when we often see some buying occur to pack portfolios with stocks. We call that ‘window dressing’, a phenomenon that perks up stocks with strong bids but tends to last for only a couple of days, irrespective of the market trend. With an oversold reading on the oscillators it’s not a surprise, especially after a sharp market drawdown last week. We’ll have to see if there is momentum leading into early March of if the buying just fizzles.
Markets fell sharply to close the week well under the 4100 mark on the SPX 500. That puts the index back in a range. Of course, some spurts of buying can happen in a flash, but the evidence of indicators show pressure continues to mount. Sentiment is starting to turn sour, AAII survey data showed the bulls in retreat.
Not much to move markets but certainly the strong economic data has many concerned the Fed may do too many rate hikes. The PCE data however did nothing to deter their mission of higher for longer.
Over 1000 companies will report earnings this week, we’ll get a better view of things by Friday from an earnings perspective.
Start of a new month often brings in new money flows.
Breadth remains on a sell signal, more negative breadth Friday rolled this indicator down to oversold.
Turnover has been elevated over the past few weeks as the market undergoes a corrective phase.
The 200 ma at 3940 may get tested soon, below there 3900 and then 3802.
The Internals
CLICK ON THE BOX ABOVE TO OPEN IN A NEW WINDOW
What’s it mean?
The octagon shows a big crack at the start of the day, but a mild move later on. We see that with VIX in the top chart, second from the right. The trin also collapsed, telling us volume to the downside stalled. The VOLD was lower all day though, telling us more downside could be coming in days.
The Dynamite
Earnings This Week:
- Monday: ZM, OXY, WDAY, AXSM
- Tuesday: TGT, NCLH, AZO, RIVN, NVAX, AXON, MNST
- Wednesday: LOW, WEN, CRM, DLTR, VEEV, SPLK, OKTA
- Thursday: BBY, COST, M, ZS, AVGO, JWN, DELL
- Friday: HIBB
US Economic Data:
- Monday: Durable Goods, Pending Home Sales
- Tuesday: PMI, Consumer confidence, retail/wholesale inventories
- Wednesday: global PMI, ISM, construction spending
- Thursday: jobless claims, productivity, unit labor costs
- Friday: PMI services, ism non-manufacturing index
Fed Watch: A few speakers out this week will be talking about inflation and the economy. Last week we had the same situation, but speakers were much more hawkish than expected, talking up higher rates. We currently see a 30% chance of a 50bps hike in March, but plenty of data will be out before then.
Stocks to Watch
End of month, buying of stocks (window dressing)