The Fuse
Stock futures are very strong this morning with Nasdaq leading the way. It is the last trading day of the month and quarter, traders are looking to end the month on a high note. With strong finishes the SPX 500 and Nasdaq can sport a 5% gain for the month of June.
Interest Rates are higher again as the selling in fixed income from the prior days continues. The 10 yr yield has now risen above 3.85%.
Inflation in Europe dropped sharply last month as those markets overseas rallied sharply on this last day of the month.
Nike showed solid earnings and growth last night but missed the bottom line target by a penny. Regardless, revenues were strong, China sales robust and inventory levels were flat, which was a major concern in 2022.
Not much on the event front but we will be watching the monthly PCE reading which comes out this morning. As we head into a weekend we should note that Monday is a half session day and we expect lower volumes and some volatility to show up.
Breadth was terrific yesterday, led by strength in the Russell 2K. Gobs of breadth are a good thing for a bull trend to continue. Oscillators or
Volume levels starting to rise again as the indices make a run at new relative highs. Today is a big expiration and there will be some big selling and buying all day long.
The SPX 500 is standing just below 4,400. Will today be the day? It would be great for the bullish trend to finish the week and month higher.
The Russell 2K really made the difference yesterday, rising up sharply.
What’s it mean?
Markets moved rather slowly yesterday but due to the strong breadth readings we did have a spectacular run higher in the VOLD. Also, a strong move up in the ADSPD while we saw the TRIN plunge for the second time this week. VIX remains calm and make get clipped today as we head into a holiday week. Notice the strong ticks on Nasdaq, plenty of buying interest here.
The Dynamite
Economic Data:
- Friday: PCE, Michigan Sentiment Index
Earnings this week:
- 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 84% 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.