The Fuse is Lit
- Fallout from Chair Powell’s Q/A at the Economic Club (higher rates coming)
- Fed funds futures see high probability of 3 more hikes (to 5.25%)
- VIX remains under pressure (selling volatility into/out of news
- Heavy options volume expiring over the next few sessions
- Indices remain above the 200ma, heavy positive volume for 2023
The Internals
What’s it mean? After falling sharply during the day, the VOLD (top left corner) did an ‘about face’ and turned higher, this fueled by short covering and a pile on effect. volatility (3rd from the top) fell sharply while we saw very heavy ‘plus’ ticks on the NYSE and nasdaq during the second half of the day (bottom left, top right boxes). All in all, a tough day to dig in your heels if you were bearish yesterday.
What I’m looking for today: If the lows from Tuesday hold, if we see a risk-off session and back off towards 4,100 on the SPX 500. Breadth improved in the afternoon yesterday and remains on a buy signal, broad participation from many groups. Can tech remain bid? Gold seems to be catching some interest, oil is strong and other commodities have showing good relative strength. With five fed speakers out we’ll see if the market takes their comments in stride.
The Dynamite
- Earnings from Disney, MGM, Robinhood, PayPal, Toyota, Pepsi, Kelloggs
- 5 Fed speakers on 2/8
- 2 Fed speakers on 2/10
- Jobless claims, fed balance sheet, consumer sentiment