Stocks are waking up slowly this morning as traders continue to digest the strong up moves from the first two days of the month.
Interest Rates are heading lower this morning after a couple of strong treasury auctions Monday. Fixed income remains well bid into next week’s Fed meeting.
News of the weekend that OPEC+ has decided to cut production even more could put a strong bid into crude oil. This morning we see WTI crude up near $80 a barrel again. With holiday driving season getting underway, higher oil prices may translate into higher prices at the pump.
Poor earnings from Cracker Barrel (CBRL) has that company down hard this morning. They reiterated what BAC CEO Moynihan said last week that it appeared the consumer spending was slowing down.
Apple hinted at a new virtual reality product and they delivered that during a presentation at the start of the WWDC. The new VISION PRO is going to cost $3,499 a pair and offers some unique features related to the iPhone and Mac.
Breadth was mediocre but remains on a buy signal. This indicator is still overbought.
Volume was light most of the session, hence the reason why markets sold off after midday and never recovered.
We nearly saw 4,300 on the SPX 500. 4,299 was the high of the session Monday and that could mark the high for this latest move unless there is a catalyst to get buyers off the sidelines. A consolidation that does not break 4,250 would be ideal for the bulls.
What’s it mean?
Digesting of the prior days’ up sessions is not a bad thing if you’re a bull. However, we need to see a higher low stick in the chart eventually, or sellers will start getting busy. The VOLD and ADD were muted on Monday, but notice the blue arrow in the VIX, which may shift up the trend in volatility with a few more down market sessions. Put/calls are on a strong buy signal but reached a low level last week, put buyers came back in Monday.
- Tuesday:German Factory Orders, Euro zone retail sales, Aussie GDP
- Wednesday: Consumer credit, crude inventories
- Thursday: Jobless Claims, Fed Balance Sheet
- Friday: Baker Hughes Rig Count
Earnings this week:
- Tuesday: CIEN, THO, CHS, GIII, PLAY, CASY,, BASE
- Wednesday: CPB, LOVE, OLLI, JILL, VRA, GME, SMTC, SMAR, RENT, HCP
- Thursday: TTC, SIG, FCEL, DOCU, PL, MTN, NAPA
- Friday: NIO
Fed Watch: Fed Officials are ‘officially’ on a quiet period. The next meeting starts in a week. Fed Futures are seeing a 1 in 4 chance of a rate hike at the June meeting.
Issues/Stocks to Watch this Week
Apple – WWDC is happening this week, and all eyes will be on some new products that are in development.
Crude Oil – An OPEC+ meeting was to be held this past weekend, if some production cuts are announced we could see big moves in crude.
VIX – Volatility is down sharply and as such protection is rather cheap to come by. I don’t expect to see volatility this low for much longer.