The Fuse
Equity futures are quiet this morning as the market tries to settle down following a few consecutive volatile sessions. It seems liquidity is short here, the driving force for moving prices higher. We say that because the erratic price movements are not normal when money is flowing freely. Perhaps just a slight step back after a strong January.
Interest Rates are slightly higher this morning as fixed income investors take some profits. The yield curve remains slightly upward sloping but not on the short end of the curve, which is looking to invert. 2/10 spread remains tight, high yield names remain well-bid. Fed futures are steady as well, that might change after the January jobs report is released.
Stocks are trying to shake off the last couple of weak days, but Europe was not helping much. The STOXX was unchanged, FTSE down .2% but France and Germany were higher. The US dollar index rose .1%, gold and silver are pulling back in volatile trade, crude oil coming off a recent rally is down about 1%. Natural gas up 3%. US 10 yr treasury yields were up 1bp, in Asia stocks were mixed with Japan down .9%, Hong Kong up .1% but Shanghai down .6%.
Earnings last night from Alphabet were very strong as the company also increased its plans to raise CapEx figures. Beats across the board except. for YouTube but the stock is under a bit of pressure this morning, we’ll see if that corrects later in the day. Very weak numbers and guidance from Qualcomm and Arm Holdings, but SNAP and ELF both beat and are bouncing back from recent downtrends. This morning earnings from ConocoPhillips, Shell, Estee Lauder, Bristol Myers, Energizer and Cigna. Later tonight Amazon, Roblox, Reddit, Bloom Energy, IREN, Atlassian, and Strategy.
Another tough day for the bulls as the sellers took control after a midday lull and turned on the pressure. Stocks fell hard but into some good support as the bulls managed to get themselves together and rally the markets back to only a decent loss. Once again, breadth was not bad, it was actually positive but the price action tells the story – bearish trends are here. We are near the end of a seasonally bullish period and that might just turn this market into more of a rout. Look for some action after Friday’s labor report.
Another interesting day for the breadth as it was positive, just something you believe happens when the market gets pasted. Well, at least the Nasdaq, which took the brunt of the punishment. Liquidity seems to be a problem these days, but the oscillators still ticked higher, at least the NYSE is positive. What’s it all mean? Bearish divergences here, and the weight of the indicators may soon pull down the price action to test lower support.
Another day of strong volume that nearly leads to a distribution day. Nasdaq volume has been swelling on these last few down sessions, there is nothing bullish about that. In fact, the IWM also cloced a distribution day – barely. These are starting to cluster, and that means they start to matter sooner rather than later.
Testing lower levels of support is going for two reasons. First, you get rid of the froth from those speculators who think they can buy the dips and keep buying – the market never goes down. The second reason is to get the crowd to panic and get the ‘real’ dip buyers involved. Support for the SPX 500 is right here at the 50 ma, the Nasdaq just broke the 100 day ma for the first time since December, when the index rallied back strong. However, this is not the seasonally bullish time for that to happen. More downside could be in store here to the 200 ma, that is quite a ways down.
What’s it mean?
Another odd session for the internals as the VOLD really spiked hard end of the day, finishing at the highs. So too did the ADD which finished higher but not on the highs, the VIX spiked and fell hard as it did on Tuesday, while the ticks were spread even green/red, plenty of buy/sell programs all day. It is hard to get a read here as the stock market is still in a range and just oscillating.
The Dynamite
Economic Data:
- Thursday:Jobless claims, Fedspeak
- Friday:NFP for January, wages, consumer sentiment, consumer credit
Earnings this week:
- 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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