The Fuse
Equity futures are higher as traders try to continue the momentum from Monday’s nice surge. Still within the first of the month window, money flows are often strong to start the month and that may continue today. Stocks are within earshot of new all-time highs but struggle to keep gains.
Interest Rates are very modestly higher, mostly flat along the curve. 2/10 spread is tight while high yield is right new all time high in prices. Fed funds futures are steady and seeing a better chance of a cut in June.
Equities in Europe were up nicely overnight, the STOXX higher by .8% led by gains in France and Germany. The FTSE added .2%, the US dollar index fell .2%. Gold and silver are on the run again, higher by 5% and 10% respectively. Crude oil has stabilized. Yields on the 10 YR US treasury and German bunds up 1bp, in Asia Japan up a massive 3.9%, Shanghai up 1.3% and Hong Kong modestly higher, 2%.
Earnings last night from Palantir were terrific with tremendous guidance. The stock is higher in the pre-market and above some resistance levels. Teradyne also with a strong quarter, NXPI and Fabrinet with some weakness as their guidance fell short. This morning earnings from Merck, Pfizer, Paypal, Pepsi and Eaton. Tonight Chipotle, AMD, Amgen, Amdocs, Prudential, Enphase and Supermicro.
What looked like a mess overnight turned very quickly after the markets opened for business. The futures were off sharply right after the Sunday evening opener, made their lows and never really looked back. Though the indices closed off their highs it was a good start to the new month.
It appeared breadth would start out weak but it managed to finish positive. No question it was not impressive, only 15-11 to the green but the bulls will take it. Oscillators remain in the negative though new highs continue to beat out new lows, this indicator is bullish but has weakened a bit.
Volume was not greater than Friday but that is typical on a Monday, especially after month end. Regardless, we like to see an expansion of volume when the markets move higher, especially if they make a run to all-time highs. The SPX 500 is right there as is the Industrials, so maybe a nice push up this week would be welcomed.
All the testing fun seems to be happening in the overnight session. The futures again tested some key levels but the indices were not able to tag those in real time hours. No consequence, the uptrend remains in tact and if there is some good followthrough today we see more upside to the middle of February.
The Internals
What’s it mean?
I’m going to call the internals mediocre for Monday. They just were not impressive given the strong move in the indices, but that could turn around today. Ticks were strong, the VOLD and ADD barely positive, but the VIX did come off its highs of the session. Put/call continues to rise, traders are buying protection here.
The Dynamite
Economic Data:
- Tuesday:ISM services, JOLTS, services PMI
- Wednesday:ADP employment
- Thursday:Jobless claims, Fedspeak
- Friday:NFP for January, wages, consumer sentiment, consumer credit
Earnings this week:
- Tuesday:PYPL, PEP, MRK, PFE, GLXY, ETN, MPLX, HUBB, IT, AMD, SMCI, CMG, ENPH, LITE, AMGN, LUMN, DOX, PRU
- Wednesday:UBER, LLY, NVO, BSX, JCI, ABBV, ADNT, CTSH, CME, UBS, GOOGL, ARM, QCOM, ORLY, SNAP, COHR, ELF, CCI, FLMC
- Thursday:COP, BMY, ENR, SHEL, CX, CI, EL, LIN, AMZN, IREN, MSTR, RBLX, RDDT, BE, AFRM, TEAM, MCHP, GOLD
- Friday:CGC, ROIV, CNC, CBOE, BIIB, NVT, UAA, TM, AN, PAA
Fed Watch:
The committee managed to get by last week without cutting rates and seemed to have done the right thing. There is little doubt now that inflation is still a problem and lower rates will only magnify the problem. Next cut expected in June, but that will have a new Fed Chairman as well.
Stocks to Watch
Precious Metals – Was Friday’s pasting just a fluke or profit taking? It’s hard to tell but more downside is certainly going to be bearish.
Amazon and Alphabet – Two more Mag 7 names reporting this week, we’ll see if they move into the Meta camp and give investors something to shout about.
Bitcoin – The big crypto has fallen hard of late and over the weekend tested a breakout level of 78K. If that does not hold firm and find buyers there is a long way down, and much of the market may go with it.
