The Fuse
Equity futures are modestly lower this morning as traders eagerly await the June Non-farm payroll report, which may shake up markets.
Rates are slightly higher today as the world gets used to 4% yield on the 10 year. Further, the 2 year yield spiked above 5% yesterday in a stunning move, fed futures now seeing a 90% chance of a hike in July.
Lighter news overnight but we did hear Secretary Yellen continues discussing economic and foreign policy issues with China. Volatility is also working its way higher but we might see that move back down if the jobs report today is friendly. Meta’s social media chat called Threads was released on Wednesday to plenty of fanfare. This was designed to compete with Twitter, so far doing a nice job.
LEVI came out with strong earnings but the stock is getting hammered today after the company reduced their forecast.
The VIX shot higher yesterday but backed off those highs of the session. A fake out or something more serious? We’ll have to see how things go, with earnings season upon us we don’t expect to see too much of a corrective phase.
Working off that overbought condition, breadth was pretty weak all session long, another day or two to burn off the overbought reading is likely.
Volume was elevated as the indices notched another day of distribution. Nothing to worry about until we get a series of these.
4,400 remains support on the spx 500, that was tested yesterday and managed to close above that level. But the technicals are rolling over and one more bad session means the market is going to fall further, we see 4,330 and 4,350 next up as support levels.
The Internals
What’s it mean?
The VIX made a sharp move higher but fell back towards the close. Still, above 15% for the first time in a month was notable. The VOLD was smashed and bearish all day long, the ADSPD finished near a trend down day. The TRIN really popped as more volume to the downside swamped the bulls. Today’s job report will give us a clue if the markets remain risk off or not.
The Dynamite
Earnings This Week:
- Friday: AZZ
Economic Data this week:
- Friday: Non-farm payroll report
Fed Watch:
The Fed’s Lori Logan from Dallas reiterated the Fed’s monetary stance on higher rates for longer. She noted a surprising situation with a strong job market but much higher inflation across the board. More hikes are in store.
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.