The Fuse
Futures are mixed this morning with the Nasdaq and SPX up but Dow futures off. Stocks are trying to shake off a losing streak to finish the month higher.
Interest Rates are steady this morning after a sharp drop in yield yesterday.
Tomorrow’s Forum on Central Banking will be listened to carefully. Chair Powell is a speaker along with ECB Chair Christine LaGarde. Some uncertainty remains surrounding the Russian coup attempt, a rebellion was responded to quickly. This sort of uncertainty pushes volatility higher.
Earnings out later tonight from Micron, HB Fuller and Culp.
We are watching the situation in Europe closely, specifically Russia with a potential military coup at hand. That won’t affect markets too much but any drop for that reason could be a buying chance.
Breadth was pretty strong Monday even as the indices were lower. That is a sharp divergence.
Volume trends have been weaker of later, we are looking for turnover to pick up as we end the quarter and month.
Markets have corrected a bit the latter half of the month, we still see 4,300 as good support. Moving averages have pushed higher towards the price of the index.
The Internals
What’s it mean?
Very strange day on Monday as breadth was solid but the indices were down most of the day. What does it mean? Basically a rotation out of big cap names into other small names. The VOLD was strong as was ADSPD, but the VIX rose smartly. Put/call remains higher but backed down from last week’s higher levels. We may have seen the end of this correction as we head into a holiday-shortened week.
The Dynamite
Economic Data:
- Tuesday: Durable Goods, Housing Price index, Consumer Confidence
- Wednesday: Mortgage Apps
- Thursday: GDP estimate, Jobless Claims, Pending Home Sales
- Friday: PCE, Michigan Sentiment Index
Earnings this week:
- Tuesday: JEF, SCHN
- Wednesday: GIS, MU, BB,HBF
- Thursday: AYI, MKC, RAD, MSC, NKE,
- Friday: STZ
Fed Watch:
More Fed speakers out this coming week. Testimony from Chair Powell on the ‘hill last week was more of the same from the last Fed statement: More hikes coming. Currently about a 75% chance of a hike in July seems about right. Of course, data coming out to start July will change that significantly. Inflation is coming down slowly but may have plateaued, which is why the Fed is going to be more aggressive.
Stocks to Watch
Nike – Earnings coming up this week, we’ll want to hear how inventory levels are progressing along with China sales.
Volatility – Closing under 12% last week showed market players with high complacency. A back up in the VIX means the market may have more downside action.
Window Dressing – It’s the end of the month/quarter and we often see a ‘painting of the tape’, but also profit taking before the month end.
Which will it be, or will there be both? Promises a volatile week of action.