The Fuse
Equity futures are mixed this morning as the Nasdaq is seeing some early weakness. Volatility in Bitcoin overnight did not cause much angst this time around in equities, but yesterday’s sharp move lower needs to be corrected or more downside can occur quickly.
Interest Rates are flat across the curve this morning, the 10 yr barely up. High yield remains well bid, the 2/10 spread is static while the fed funds futures are still seeing the next cut coming in June, the data this week might change that view.
Stocks rallied slightly in Europe, not following the lead in the US markets. STOXX were down .1%, the FTSE up strong by .5%, the dollar index was flat. Gold and silver on the move once again, the yellow metal up 2%, silver higher but 8%, crude oil modest gains. Stocks in Asia were mixed, Japan losing some prior gains down .8%, Shanghai up .8%. German bund yields down 2bps, but US treasury 10 yr up 1bp.
Earnings last night from AMD were strong but some profit taking is hitting the stock today. Chipotle was awful as the chart showed it would be. Enphase with a nice beat along with Amgen. This morning strong earnings and guidance from Lilly and Abbvie but a miss by Uber. Strong beat for Johnson Controls but a wide miss for Boston Scientific. Later today Alphabet, Arm, Snap, ELF, Qualcomm and O’Reilly.
Ugly day of trading as there were just no bidders for stocks until very late in the day. The selling hit right out of the gate with some high volume bars and then some whipsaw action. The futures fell all the way down to 6,900 which has been been support and bounced heartily from there. This volatility is eventually going to cause some problems, and continually probing lows is may cause the support to break. Jobs Friday coming up soon and we’ll see volatility up until then.
Curious day as the poor breadth did not match the bigger weakness in the indices. I suppose we can thank the small caps for that statistic, with up issues actually advancing over decliners on the day. That is not common on a washout day but those small caps have a tendency to move on their own, as they did in January.
Much higher volume across the board yesterday so that counts as another distribution day, save for the IWM. HOWEVER, I’m not going to fault the bulls too much here as the heavy concentration of volume hit during the first half of the day, and dip buyers did come back in as the selling eased up. So while it counts i’m going to put an asterisk on this one and give the bulls a mulligan (do over).
More support levels are being tested daily, and with lower highs and lower lows that means a downtrend is being created. The 50 ma was tested yesterday on the SPX 500 and it appears safe for now, but a few more days above there will confirm that thesis. Small caps with a great test of the 20 ma and bounce could lead the markets higher.
The Internals
What’s it mean?
Interesting day for the internals, to say the least. If I told you the VOLD was soaring you would have thought the indices were up strong, but that only was the case for small caps. The VIX hit 20 but backed down sharply, vol sellers unafraid. TICKS were showing some heavy sell programs all day but dip buyers came in late. TRIN fell sharply as the bulls started to add more stocks end of day, the ADD just flat. Strange day.
The Dynamite
Economic Data:
- Wednesday:ADP employment
- Thursday:Jobless claims, Fedspeak
- Friday:NFP for January, wages, consumer sentiment, consumer credit
Earnings this week:
- 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.
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