The Fuse
Equity futures are bouncing around the flat line this morning and are mixed after a volatile overnight session. The vix futures were up sharply but fell back down during the overnight. Stocks are relatively calm and that may reflect some complacency.
Bonds are catching a bid this morning as we see rates drifting lower. That is a good sign, especially for small cap stocks which have been on a roll lately. High yield remains in demand as well, we also see less interest in fed funds futures, likely no move in policy changes the next couple of meetings.
Stocks are mostly flat as they take their cue from Europe, which barely budged. France gained .1%, Germany fell .1%, the FTSE up .4%. The dollar gained ground, gold is slightly lower as is silver. Crude oil up .5%. German 10 yr bund yields fell 2bps as did the US 10 yr treasury yield, stocks in Asia were mixed as Japan gained .3% but Hong Kong was down .3% and Shanghai off .4%>
Earnings last night were not a big deal but tonight we’ll hear from GameStop, Play, StitchFix and Gitlab, then a slew of retailers in the morning.
The big event not many are talking about is Apple’s WWDC. The stock has been floundering of late but perhaps this event will bring out something new and special for all the Apple heads to grasp onto. This event in the past has been rather sleepy but not many have been predicting this time around, sets up for a surprise.
Another strong day of breadth and it looked as if that would carry the markets much higher but it was not to be. With plenty of momentum behind them it seems the bulls are not yet ready to take the markets to new heights, though it seems a foregone conclusion. With more good breadth this indicator is on a buy signal, and with more new highs printed that tells us the trend is unquestionably bullish.
A solid volume print on a Monday is a good start to the week. With some inflation data due out Wednesday and Thursday one would think caution action before the news hits, but we did see good turnover most of the session, especially in the small caps. The renaissance building in the Russell 2K has been impressive and tells us about the broadening out of the market rally. Good news for the bulls.
We continue to be on ‘new high’ watch with the markets and that mostly refers to the Nasdaq and SPX 500. These two indices made more strides towards lifetime highs, that goal does not seem far off. Further, with some tight consolidation there is a good chance this next big move up (when it happens) takes the indices through new highs and beyond. Gotta wait and see.
The Internals
What’s it mean?
Is the VIX starting to tell us something? No doubt the bulls have little fear of downside at the moment, and that could be troublesome. Eventually buyers will run out of funds and all that will be left (for a time) are the sellers. VIX did rise up a bit but not too threatening, ticks were very strong as buy programs were rampant. ADD and ADSPD fell sharply on the close but tha.
The Dynamite
Economic Data:
- Tuesday:NFIB optimism index
- Wednesday:CPI for May, monthly US federal budget
- Thursday:PPI for May, jobless claims
- Friday:consumer sentiment
Earnings this week:
- Tuesday:ASO, SJM, GME, GTLB, PLAY, SFIX, PETS
- Wednesday:CHWY, VSCO, VRA, SAIL, JLL, ORCL, OXM
- Thursday:LOVE, ESTA, HOFT, CRMT, ADBE, RH
- Friday:MNY
Fed Watch:
It should be a quiet week from the Fed as they relax their ‘tongues’ a week prior to their next meeting (jun 17/18). The committee has been talking lately about the strong economy and the lack of need for lower rates, though President Trump still believes lower rates are the answer. We’ll err with the Fed and their policy mandates.
Stocks to Watch
Name – event, level, your expectation
Name – event, level, your expectation
Name – event, level, your expectation
