The Fuse
Equity futures are mixed again in the pre-markets as traders are preparing for a short trading week. Today we’ll have only a half session to trade and tomorrow markets will be closed in observance of the July 4th holiday.
Interest Rates are up slightly as we begin the first trading day in July and the first trading day for the second half of 2023. The very inverted yield curve seems to be flattening a bit over past couple of weeks.
European manufacturing numbers came in mostly mixed to positive overnight. Markets remain overbought but have a bit of room to travel higher.
Not much on the earnings front this week, we’ll hear from LEVI on Thursday. Second quarter earnings season starts in a couple of weeks.
Short trading week but we’ll be paying attention to market volatility
Breadth was amazingly strong Friday, a rout of the bears. With a 21-9 ratio on this Friday it was a huge win, putting the bulls in a great position to move the ball forward.
Volume trends were very strong Friday as it was a big expiration day (weekly, monthly, quarterly). With a continuation into July there is no reason the SPX 500 could not reach higher levels if bullish volume persists.
The SPX 500 blasted right through 4400 like a hot knife through butter. It was very impressive as many sectors participated in the action.
We now have 4400 as strong support while the index makes a run toward 4500. The Nasdaq has support at 15K on a pullback.
The Internals
What’s it mean?
What a way to end a week and month! The VOLD was spectacular for a second straight session, breadth just fantastic. The VIX, while a bit higher on the session remains in a downtrend. The ADSPD was on a trend up day all session long, and TRIN was smacked down. That may lead to an overbought condition but it certainly tells us where the money is flowing – to stocks with volume.
The Dynamite
Earnings This Week:
- Monday:
- Tuesday:
- Wednesday:
- Thursday: LEVI
- Friday: AZZ
Economic Data this week:
- Monday: Chicago PMI, Global PMI, ISM, Construction spending
- Tuesday: holiday
- Wednesday: FOMC minutes, ADP, factory orders
- Thursday: Jobless claims, JOLTS report, ISM non-manufacturing, service PMI
- Friday: Non-farm payroll report
Fed Watch:
The Fed watch tool is still telling us to expect a rate hike next month, and that is very likely. We heard from Chair Powell and other Fed heads this past week who reiterated a hawkish viewpoint. But the data is starting to turn dovish, albeit at a slow pace. This week’s job report will go a long way in determining how many more hikes are needed.
Stocks to Watch
Tesla – strong numbers out over the weekend might stoke a big rally for the EV car maker.
Semiconductor Stocks – As we heard last week, the Biden Administration is going to make it difficult for US companies to sell AI chips into China.
We’ll see if there is any followthrough.
Volatility – Again watching the VIX here as the holiday shortened week may carry some surprises, especially with an important jobs number coming up Friday.