The Fuse
What are futures doing?
Seeing a nice rally in equity futures as the bulls are trying to have a followthrough day to Thursday’s sharp rise. Today is the day for SpaceX to come public, also seeing strong moves in gold and silver with crude down.
News
Nice move up in the STOXX as they followed US markets, Europe higher by 1.2% led by strength in France and Germany. FTSE added .8%, the dollar index is up .2%, gold and silver are on the move higher but crude is down about 3%. Stocks in Asia were strong, Nikkei up 2.8%, Hong Kong up 1.4% but Shanghai gianed 1.1%. German bund yields fell 4bps, 10 yr US treasury yields held steady.
Volatility
All it took was some news that a deal was about to signed with Iran/Israel to move volatility down. The VIX, which had held the war premium for quite a while was hit hard and closed well under 20%, another close below there means more upside potentially for the markets.
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Interest Rates
Interest rates are mostly flat this morning as the bond market awaits next week’s Fed policy meeting. 2/10 spread is mostly unchanged, we did see positive activity with junk bonds Thursday as the equity market rallied, fed funds futures still expecting no cut/hike next week.
Earnings
Weak earnings and guidance again from Adobe has that name down sharply this morning. Oracle also was weak with their earnings as well so no surprise with Adobe. Lennar is slightly lower on a mixed quarter.
Events
When it seems the markets are ready to take another leg lower, all it takes is a friendly headline to turn that sentiment around. The Iran War is about to end — for the 25th time now, and the modestly oversold market responded with a spectacular move higher. Stocks are poised to rally further with the release of the long awaited SpaceX to the public.
Breadth
That was some good breadth yesterday, nearly 3-1 positive with some really strong moves late in the day. No question short covering started the rally but a pile on effect brought the oscillators back to the flat line (zero). That is important but even more is some followthrough. New highs continue to crush new lows.
Volume
Say hello to Mr Volume! Turnover was very strong yesterday, notching an accumulation day, some thing rare of late. Good turnover in the small caps as well with rates stabilizing is important to keep the momentum flowing. We are looking for followthrough and will probably have a big volume day show up here with the SpaceX release sometime today.
Support Levels
Was Wednesday all we got? Close to the 50 ma but no touch? I’m not convinced that is the last of this selloff, but as we move closer to July the sellers are going to disappear, moving averages have now caught up to the indices and are stabilizing, slowing down a bit. The indices are stuck in a no mans land currently.
The Internals
What’s it mean?
That was some move by the internals yesterday. The VOLD went sky high and finished at it’s best levels, heavy buying into the close. Ticks were heavy green all day, lots of buy programs while VIX tanked hard after some macro news hit in the Iran War (maybe it’s over soon). Put/calls still are elevated but moved lower, the ADD finished strong, not too common of late..
The Dynamite
Economic Data:
- Friday:Michigan sentiment
Earnings this week:
- Friday:
Fed Watch:
No question the committee is looking at this strong labor report and getting skittish over current monetary policy. Perhaps it is a bit too loose? Futures are pricing in rate hikes later in the year, and maybe into 2027. Inflation readings this week will be important markers.
Stocks to Watch
Semiconductor Stocks – This group was hammered on Thursday/Friday with a 1-2 punch to the gut. It’s going to be an uphill climb after the heavy distribution on Friday.
Apple – The big iPhone and pc company has their annual developers conference this week, what might they announce to surprise their customers?
SpaceX – Friday is the day when Elon’s big company finally trades on the open market. It’s been a long time coming and many investors will be able to participate in the offering, but no doubt overbought to start.
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