The Fuse
US Futures are modestly higher this morning as they take their lead from modest advances in Europe. Tesla has risen 11 straight sessions and is looking for a 12th straight today, it just might get there, the stock is up more than 1.4% pre-market. VIX futures are up 2% while VIX cash is higher by more than 4%.
Interest Rates are inching higher on the eve of the next crucial Federal Reserve meeting. As we come closer to the end of the quarter there will be some heavy position changing leading to the June 30th quarter close, which happens to land on Friday when many options will expire.
Biogen received positive news late Friday from an FDA panel on their alzheimer’s drug. Novartis is buying Kidney disease treatment company Chinook For as much as 3.5 billion. Energy is off a bit as crude oil slips more than 2%.
Only one big earnings report to coming today and that is Oracle. The stock has been very strong and is above all time highs.
The Fed meeting: Need we say any more? This could be a game changer for the markets and the economy if the committee starts to ‘loosen their ties’ a bit.
Breadth was fantastic early in the week but slipped sharply on Thursday and Friday, likely due to weakness in the Russell 2K. Gobs of breadth are a good thing for the bullish trend and we had some of that recently. Momentum remains strong until it’s not.
Volume trends are improving but weaker turnover the last few days of last week tell us buyers are exhausted. That could change quickly of course with some positive price action early in the week.
Good, strong support this week at 4,200 as the moving average continue to climb and support prices going upward. The Nasdaq 100 now has good support at 14,500.
The Internals
What’s it mean?
VIX is still driving the bus, with more lows this week. Closing under 14% is quite rare but not surprising when money is flowing into the markets. Put/calls are still on buy signals, ticks were mostly bearish as were the VOLD and ADD, which took some of recent shine off the breadth numbers. We’ll see if this ship gets ‘righted’ this week.
The Dynamite
Economic Data:
- Monday: Treasury Statement
- Tuesday: CPI, NFIB Small Business
- Wednesday: PPI, Weekly mortgage applications, Fed Statement
- Thursday: Jobless claims, Retail Sales, Empire State manufacturing, Business Inventories
- Friday: Consumer Sentiment
Earnings this week:
- Monday: STRM, TEDU, ORCL
- Tuesday: MIND
- Wednesday: ACB, LEN
- Thursday: JBO, KR, COGT, ADBE
- Friday: BHAT, BUFF, NATH, ONVO
Fed Watch:
It’s the most important Fed meeting this week since….the last one? Of course that is hyperbolic, but we should note as we move forward in time the discussion around the table during the Fed meetings will become more divided. Recent comments from Fed speakers tell us some are talking pause, while others see the need for more aggressive rate hike moves. We’ll learn more Wednesday and in the press conference with Chair Powell. In addition, the ECB will have a rate decision later in the week.
Stocks to Watch
VIX – Volatility has reached levels not seen since before the pandemic. Some say it is ‘too low’. However, it is simply an indicator that is reflecting the mood or temperature of the room.
Federal Reserve – A big meeting as mentioned above, with the strength recently in the stock market could a ‘sell the news’ follow the latest policy decision?
Inflation – Two reads on inflation this week and Retail sales. We’ll get a good view on how inflation is being worked through the system and if the Fed’s efforts of higher rates is actually paying off.