The Fuse
Equity futures are rallying on the twin news of a debt ceiling agreement and a much stronger than expected jobs report.
Bonds are higher this morning which means rates are down, likely some short covering as we await today’s job report.
Positive news from Washington as the debt ceiling deal has been approved and waiting for signature. Markets are breathing a sigh of relief after the uncertainty of a debt default was removed.
Solid earnings last night from LULU, MDB and ZS are helping to drive markets higher today. Tech stocks remain well bid.
It was a strong first day of the month. Thursday’s gains in the Nasdaq and SPX 500 were on solid volume, the trend remains higher as dip buyers are active.
Breadth improved sharply yesterday, enough to push the McClellan Oscillators above the zero line. They are on a buy signal now.
Volume trends have improved this past month and that has helped keep this latest rally going. However, we are still considering this a bear market rally, of which those conditions may not change for a couple more months to come.
With some strength to start the new month perhaps the SPX 500 can get another close above 4,200 this week. If so, that would change the course of the market to at least a neutral to slightly bullish condition.
What’s it mean?
A very strong day for the markets. Breadth was solid all day long as the VOLD indicates. Volatility was smashed and will finish the week under 17%, a stunning development. Market players just do not believe there is much to fear right now, and they are right. The TRIN went lower and corrected from an elevated position.
Notice the high ticks in green, the bulls were buying dips all session long. We’ll see how things shake out to end the week.
The Dynamite
Economic Data:
- Friday: Non-farm payroll report
Earnings this week:
- Friday:
Fed Watch: Philadelphia Fed President Harker seems to think a pause may be right at the next meeting. Other Fed members are not so sure though, but the debate around the table in two weeks will be inspiring. Harker will speak more later today.
Issues/Stocks to Watch this week
Jobs Data – The recent gains in jobs data continue to confound everyone. Can we continue creating so many new jobs at this late stage of the cycle? We’ll find out more this week.
Washington DC – More drama with the debt ceiling issue, perhaps there is some progress this coming week, at least we hope so.
Volatility – The VIX fell hard last week and that often means ‘payback’ after a holiday. We’ll see if that happens and a sell the news event is the result.