The Fuse
What are futures doing?
Equity futures are higher following the long holiday weekend, with Nasdaq pressing higher and gaining some lost ground. SPX 500 futures are holding gains from the previous Friday when equity markets were closed. Not much cooking this week but prepping for the next earnings season.
News
European stocks inched higher, the STOXX up by .1% with gains in Germany and France. The FTSE was strong, adding .3%, the dollar index rose .2% while gold and silver are catching a nice bid. Crude oil down slightly as inventories are increasing per OPEC+. Yields are gently falling, the Bunds off 1bp with 10 yr US treasury yields down 3bps, in Japan the Nikkei was flat, Hong Kong up .8% but Shanghai down .1%.
Volatility
We may see volatility bounce back today as a ‘pay back’ for falling hard on Thursday. With some beaten up sectors like semiconductors the bargain hunters and dip buyers are certain to step in, which may negate a big rise in the VIX. Look for some normalization in volatility later in the week.
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Interest Rates
Yields are starting off a bit lower this morning across the curve as inflation expectations continue to ease. No doubt the jobs report may be showing some weakness, and thus a rate cut could be back on the table in a month if there is less job growth. The economy seems to be moving along nicely, high yield bonds have a tight spread.
Earnings
A very small number of names reporting this week but we’ll have Delta out on Friday, Pepsi on Thursday and Levi on Wednesday.
Events
Stocks barely budged end of day on the SPX 500 but the Industrials made a powerful statement, finishing at all-time highs but the Nasdaq is showing some weakness again. That may change in the coming weeks and a shift make come with a tide of buying towards technology names, earnings season is coming up fast.
Breadth
Breadth was super positive early in the day but then a nasty selloff ripped through the markets and really pushed it lower. However, the a/d line did not suffer too much, still 16/10 positive and even better for the industrials. Oscillators are still positive too, new highs are crushing new lows yet again.
Volume
Coming off a high volume day last week before the holiday we saw some good turnover as well into the end of the week. This was rebalancing of the indices and repositioning for big institutions, which should be over by Tuesday. There are some large-sized option expirations on the 30th and this is a short trading week, look for less big moves as we head towards Friday.
Support Levels
The bulls have been looking for a bit of downside to work into, dip buyers interested to add on any modest, low volume pullback. Those chances are not coming enough, but I suspect higher volatility will be coming here before we start earnings season. SPX 500 has good support at 7400, and then 7200, Nasdaq 100 right at the 50 ma here, could be a good spot to add.
The Internals
What’s it mean?
Not bad on the internals Thursday, with a huge spike in the VOLD and drop lower in the VIX, along with a plunge in put/calls. That last indicator has been on a sell for weeks. Ticks though were mixed, lots of selling on the Nasdaq but a balanced view on the NYSE (bottom left). The bulls need a big rout day in breadth to get the energy kicked in.
The Dynamite
Economic Data:
- Monday:PMI and ISM
- Tuesday:N/A
- Wednesday:wholesale trade, fed meeting minutes, consumer credit, some fedspeak
- Thursday:Jobless claims, existing home sales
- Friday:N/A
Earnings this week:
- Monday:N/A
- Tuesday:PENG, EPAC, KRUS, SAR
- Wednesday:HELE, LEVI AZZ
- Thursday:PEP, BYRN, SMPL, NTIC, WDFC, SLP
- Friday:DAL
Fed Watch:
We heard from the new Chairman last week of the FOMC and he did not reveal much, as expected. With some inflation data coming out soon before the next meeting this month markets will be watching closely. Friday’s job report with fewer than expected created a bit of a buzz for fed futures, which now see less of a hike chance in 2026.
Stocks to Watch
Memory Stocks – A massive torching this week of Micron, Sandisk and others helped to squash some recent gains in semiconductors. This is all mechanical selling here, but then the buying was the same. Look for a rebound this week.
Apple – Strong week for the big iPhone maker and a solid finish, not far off the old highs. A followthrough week would be huge for this name before earnings hit end of July.
VIX – Coming into a holiday week volatility is often sold off hard and then rebounds once the market opens again. That would be more selling as futures sell off with rising volatility, but it doesn’t always happen — just usually.
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