The Fuse
Equity futures are rising this morning, attempting to build on Monday’s turnaround. Stocks are facing inflation numbers later in the week but that could bring some relief from some tension before earnings season gets underway.
Interest Rates are lower today as bonds are nicely bid this morning.
The dollar is lower and commodities are up so far today with strength in gold and a bit higher in silver.
Pepsi later in the week along with United Health,Delta and Cintas, then banks start reporting – Wells Fargo, JP Morgan, Citi, Blackrock, State Street.
A handful of Fed speakers out this week as they try and explain policy in the current economic environment.
Breadth was pretty strong and remains on a buy signal. However, the rollercoaster ride was masked by strength in the R2K, but the numbers were good overall. Nasdaq breadth suffered, something to watch for.
Volume trends were pretty strong Friday and actually all week long. After a holiday-shortened week we should see better volume coming into the markets, especially with earning season getting underway.
Failing to break 4,500 or 4,450 on a close was bad news for the SPX 500. However, good support lies below at 4,350 and 4,330 if the market corrects even further. The weekly close under 4,400 was not a positive but can be corrected this week.
The Internals
What’s it mean?
Strong finish for the markets as we saw VOLD really surge higher. Thanks to the strength in the Russell 2K, breadth was solid. Notice the strong ticks even in the weaker Nasdaq on Monday. and the ADSPD was nearly a trend up session. A followthrough day would be good for the bulls.
The Dynamite
Economic Data:
- Tuesday: NFIB Small Biz Optimism
- Wednesday: CPI, Beige Book, Mortgage Apps
- Thursday: PPI, jobless claims
- Friday: Import/export prices, Michigan Sentiment
Earnings this week:
- Tuesday:
- Wednesday:
- Thursday:CTAS, DAL, FAST, PEP
- Friday: JPM, BLK, C, WFC, UNH, STT
Fed Watch:
Mary Daly reiterated the committee’s distaste for inflation, while Loretta Mester gave some mixed signals. She said basically more hikes are coming but she is undecided about July. Raphael Bostic believes inflation is headed in the right direction.
Issues/Stocks to Watch This Week
Banks/Financials – This group starts reporting their Q2 earnings this week. Financials have been rather weak since last quarter, we’ll see if they can snap out of their funk.
Interest Rates – We saw a big rise in rates last week, the 2 year above 5% again. If that continues we could see equities shed some value.
For now it appears that 5% level and 4% level on the 10 year should be a peak.
Semiconductor Stocks – On Monday, Taiwan Semi stated their revenue would be down significantly in June. This smacks at recent talk of bullish trends, so we’ll have to see how this group responds.