The Fuse
Equity futures are moving higher once again on this last trading day of June. After the close, we’ll be pushing into the second half of 2025. The SPX 500 is on a six day winning streak looking to stretch it out. This index and Nasdaq both closed at all-time highs on Friday.
Interest Rates are falling again today as bond investors snatch up fixed income before the end of the quarter. Firm bids also in high yield tell us the economy is in good shape, fed futures now seeing 3 1/2 cuts in the funds rate coming in 2025.
With futures rising they are not getting much help from overseas. The STOXX in Europe was only higher by .1%, FTSE gained the same. The US dollar fell .1% while gold is up modestly, silver and crude oil down a fraction. German 10 yr bund yields fell 1bp but US treasury 10 yr yields fell by 2bps, stocks in Asia were mixed with Japan up nicely, higher by .8% along with a gain by Shanghai, stocks in Hong Kong down .4%.
Earnings are sparse this week as we turn the page on the quarter and get prepared for the next earnings season.
Not much to worry about now, is there? Stocks have been on the move for a few weeks and have managed to hit new highs in the SPX 500 and Nasdaq. This is a short trading week and as such we could see volatility remain suppressed. That may be a good thing in the short run but eventually that gets paid back when the VIX rises up and traders pick up some cheap protection.
Breadth was just so-so Friday with a slight lean towards the bulls. After such a strong week it’s not surprising the energy is getting tapped out, but today could be interesting with the end of June coming up. The new month starts tomorrow and as is often the case new money flows find their way into the markets. Oscillators are back to positive territory again while new highs continue to expand. This is nearly ready for a buy signal, which could really suppport a move higher.
The end of day volume print was very large Friday and could be substantially higher today. We’ll have many options expiring and coming off the board later today with many in the money options exercised. More volume on the up days is very bullish for the uptrend to continue.
Support levels are far away for the SPX 500, Nasdaq and Industrials right now, but the small caps have support at the 200 ma. Two closes above there for the first time since February is a bullish event, but now there needs some followthrough. Should the other indices fail to rise the 20 ma comes into play, and that is mostly about 2-3% lower than current levels. Even if that happens the uptrend remains in tact (though it may feel quite painful).
The Internals
What’s it mean?
Mediocre internal statistics Friday even as the indices pushed to fresh new highs. Notice the big movement in the VOLD and ADD, falling sharply midday and then recovering. That is a positive, but the volatility could be a concern. VIX fell hard again and hovers near lows last seen in the Spring, dangerously low. Put/calls settled down, some heavy sell programs hit late in the day (see the TICKS), that may be a sign of exhaustion.
The Dynamite
Economic Data:
- Monday:Chicago PMI
- Tuesday:SPX PMI, construction spending, JOLTS, ISM manufacturing
- Wednesday:ADP employment
- Thursday: NFP report for June, jobless claims, services PMI, factory orders, ISM services
- Friday:N/A
Earnings this week:
- Monday:PRGS, QMCO
- Tuesday:MSM, STZ, GBX
- Wednesday:UNF, FC, ZENV
- Thursday:N/A
- Friday:N/A
Fed Watch:
Not much on the Fed’s calendar for speakers this week but I’m sure they will be watching the data closely. Recent comments from Governors has them leaning towards a more loosening policy, but according to Chair Powell more data needs to be analyzed. Last week on Capital Hill he did acknowledge inflation is moving in the right direction (down) but needs to continue the process.
Stocks to Watch
NVIDIA – The big semiconductor stock closed at an all-time high last week and helped to bring up others in the group. If this momentum continues then the Nasdaq will drive up other names, too.
Coinbase – This stock really pushed higher this past week and was the best performer in the SPX 500. COIN has strong ties to crypto and bitcoin, which is trying to break out from a recent range.
Volatility – Having fallen sharply over the last few weeks the VIX finds itself at levels last seen in February, just before a hailstorm of volatility hit the markets. In front of a holiday however we often see VIX fall or at least stay down, that is likely to be the case this week.
[thrive_leads id=’60674′]
