The Fuse
What are futures doing?
Stocks are mixed but the Nasdaq is pointed lower along with the ES futures. More seeing overseas in Korea (Kospi down hard) has bled into the US markets. No other reason other than some profit taking though after a strong Monday.
News
In Europe the STOXX was flat again, but France gained some nice ground, the FTSE picked up .3% while the dollar climbed .1%. Crude oil is rallying, up better than 1% but gold and silver are slightly lower. Yields are rising this morning with German bunds and 10 yr US treasury yields up 3bps, in Japan stocks were down sharply, off 2.1%. Hong Kong was also lower by .8% and the Shanghai index off 1.3%.
Volatility
VIX perked up to start Monday after the long weekend but the vol buyers did not participate. Good bullish action all day long but today might be a different story, there is little bid in the semiconductor names and that group caused some deep losses recently.
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Interest Rates
Bonds are weaker this morning as the yield curve rises, global inflation still a concern. 2/10 spread seems to be settling in here but remains rather tight, also junk bonds hit a new all-time high yesterday, no recession seen from that view. Fed funds now seeing just a strong chance of a hike in 2026 down from a predicted two last month.
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
A pretty nice start to the new weeks as the bulls were in a good mood following the long weekend. No doubt pressed by the buying in technology, stocks were very strong across the board, the Industrials managed to close above 53K for the first time and at a new all time high. With earnings season coming up expectations are rather high.
Breadth
Once again, good not great breadth but as long as the market rises up that shouldn’t be a problem. Oscillators are pointing upward again, new highs just crushing new lows. I suspect at least one day of giveback this week, but then it’s game on.
Volume
Modest volume day but we should expect that following a long weekend. Very little news on the horizon to drive stocks and few catalysts until we get going on earnings, where we may see implied volatility moving up.
Support Levels
There was little giveback on Monday, surprising actually after the VIX got shredded on Thursday. Given the low level of complacency at some point the bulls will get tired again (might be today) and a pullback to short term support will be tested. This bull market is very strong and not giving you much chance to get on board, but the pullbacks on individual stocks have proven very profitable opportunities.
The Internals
What’s it mean?
I guess you can call it followthrough, but the internals were not overwhelmingly bullish. Ticks on the Nasdaq were impressive, and the NYSE also strong. Put/calls were down, showing bullish behavior while the VOLD and ADD were barely moving. Another downtick in the VIX, TRIN remains steady. Seems a good setup for a pullback, but probably not too much.
The Dynamite
Economic Data:
- 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:
- 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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