The Fuse
Equity futures are mixed this morning, coming off their highs of the session as the market awaits the final labor report of 2025. Expectations are for something similar to November though it is possible job growth was pretty strong with a robust economy behind it. Also, some expect a decision to come down on tariffs, that might bring a few market swings (up and down) but once it is out then the market will simply move on.
Interest Rates are barely moving this morning but pointing slightly higher. Seems fixed income investors are awaiting a crucial piece of information with the December jobs report. Recent economic data has been very positive so this report may confirm it. High yield spreads are tight as this group remains in demand. Fed futures may move on the jobs report, right now seeing the best chance of a cut being in April.
In Europe stocks rose up sharply, higher by .4% on the STOXX with gains in France pacing the way. Stocks in Asia were highs, Japan up nicely 1.6%, Shanghai nearly 1% higher and Hong Kong up by .3%. The dollar index rose .2%, gold is slightly higher, silver is rebounding while crude oil is up nearly 1%. Yields are rising, German 10 yr bunds up 4bps, 10 yr US treasury yields higher by 1bp.
Mixed earnings from Constellation Brands but the stock rose up nicely yesterday. Helen of Troy lowered their outlook citing a cautious consumer, WD40 was also weak as they reported lower earnings but reaffirmed guidance.
A rather mixed session on lower turnover but some bullish action in retailers and other groups. It is good to see rotation as money flows out of the strongest groups of 2025 and into new areas. Clearly technology was the leader for most of last year but now that appears to be changing. Monday it was the banks and financials turn to lead, Tuesday small caps and yesterday other groups like the Industrials.
Breadth was very good yesterday, better than 2-1 bullish but that only means something if there is some followthrough today. Good economic data in a jobs report and that will stoke some buying in many groups. Oscillators still in positive territory, new highs ripped on new lows and that has us believing this market has more upside down the road.
Accumulation day for the IWM and QQQ, a long time coming for the Nasdaq. This index has been trailing badly but finally put in a strong performance. We’ll see if there is more upside today, but yesterday appears a bottom may have occurred. Good volume trends into the jobs report could have this market moving higher, next week will be a heavy volume day into the long weekend..
Could this be the point where some short term support is tested? That reversal yesterday was not bullish, and if there is some followthrough to the downside today and tomorrow there could be trouble ahead. Still, testing lower levels tends to scare people into believing the trend is over, but not necessarily so.
The Internals
What’s it mean?
Interesting day for the internals, the VOLD and ADD screamed higher but it really had a bifurcated feel to it. Nasdaq was weak all session long but the Industrials and small caps ripped higher. TICKS were evenly distributed, not a distribution day at all for the bears, VIX closed slightly higher and we could see more action there today after the release of economic data.
The Dynamite
Economic Data:
- Friday:NFP for December, hourly wages, consumer sentiment, Barkin speaks
Earnings this week:
- Friday:
Fed Watch:
Fed speak is back, the countdown is on to a new Fed Chairman and with the change in the calendar a new set of Fed Presidents become very important. The first meeting of the year is at the end of the month, markets are not seeing a cut here in January but 50/50 for March.
Stocks to Watch
Technology – CES starts up this week in Las Vegas and is widely followed by analysts and technology experts. We often see deals of some sort happen during this week, as NVIDIA CEO will be a keynote speaker. Should be interesting.
Oil, Energy – With the US invading oil-rich Venezuela it stands to reason crude oil may rise in the short run. That is going to cause some big headaches for those short crude may be in for a rude awakening.
Magnficent 7 – This group has been the notable slacker in the markets of late but we could see them turn the tables as we head to a big earnings season.
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