The Fuse
Equity futures are slightly lower this morning but well of the overnight lows. Stocks are in a firm uptrend, a modest pullback won’t endanger the current momentum.
Interest Rates are on the rise this morning, the 10 year has been creeping higher since Friday’s mildly warm jobs report, which said wages were on the rise.
Some new names will be added to the SPX 500, including CRWD and GDDY. Apple’s big event will start later today. Oil proces are up nicely but gold continues its retreat back towards $2,300 per ounce. NVIDIA stock splits today. The euro is down vs the dollar, France’s CAC index fell about 2%. US stocks fell sharply on Friday following a stronger than expected jobs report. The Fed meeting that starts Tuesday may reference this long phenomenon.
Earnings are in stage 4 of earnings season, a few important names trickling out. This week the focus is on Oracle, Broadcom and Adobe, which all report mid week (tue-thur).
The big Apple WWDC event starts today and many are considering the AI implications. This conference may be the gamechanger for futur Apple earnings, with potential changes in hardware (iPhone, iPad, Macs, watches) and services (app store, storage, monthly subscriptions). We’ll know more by midweek but certainly with the stock CLOSING at all time highs Friday there is plenty of optimism.
Poor breadth all day long thanks to higher rates and the stronger inflation numbers. Oscillators went down of course, breadth was better than 3-1 negative, and even as markets seemed to hold up until the very end of the day, there was little buying into the weekend. It was the first down Friday of the eight, not a record but certainly impressive.
Volume was moderately higher across the board so we have to chalk up Friday as a distribution day. That’s not a disaster of course unless there are a chunk of these printed. The heaviest volume days since early may have occurred on the up days, and even one after the last Fed meeting. This week of course is another FOMC meeting, and that may spur more turnover.
Dow Industrials have good support below at 38K while the Nasdaq should hold again at the 20-day moving average, call it 18,645.
The SPX 500 also has good support at the rising 20-day moving average, call it 5,291 or so. A pullback to these levels are likely to stimulate dip buyers to get active.
The Internals
What’s it mean?
What seemed to be a dull session was actually pretty bearish. Notice how weak the VOLD and ADD were on Friday. Pretty much that was due to weakness in small caps like the IWM, which tailed off after the heavy inflation readings From Friday’s job report. Volatility remains muted though and fell even more on Friday, Put/calls remain low and that is bullish. We should see more excitement this coming week.
The Dynamite
Earnings this week:
- Monday:
- Tuesday:ASO, ORCL, CASY, RBRK
- Wednesday:VRA, AVGO, PLAY
- Thursday:SIG, ADBE, RH
- Friday:N/A
Economic Data:
- Monday:
- Tuesday:Small Biz Optimism survey
- Wednesday:CPI for May, Fed meeting Ends, Press Conference
- Thursday:Jobless Claims, PPI
- Friday:Consumer Sentiment, Import/Export prices
Fed Watch:
It’s a big week for the Federal Reserve, which has another big meeting coming up. This two day meeting will likely result in no action on the fed funds rate, but a new set of projections will be released. Inflation remains sticky and a problem to the committee, if they see more challenges ahead they will simply reiterate ‘higher for longer’ until conditions improve.
Stocks to Watch
Apple – Their annual Worldwide Developers Conference (WWDC) is this week and many believe they will spend a generous amount of time and capital on AI functions. Many consumers are waiting on new iPhones in order to move on the new releases, which could come as soon as 2025. This conference is one that could start a gamechange for Apple.
NVIDIA – After reaching new heights last week, the most valuable company in the world, NVIDIA’s stock will split 10-1 this week.
It’ll be interesting how it trades, will more sellers show up cutting their positions? Probably so, but the stock won’t move nearly as much.
Inflation – CPI and PPI readings will be out later this week. These will be the two main economic data reports delivered. All eyes on the CPI as economists expect very little change in May (1.7% annualize for the month/month).
