The Fuse
Equity futures are modestly higher as traders await the May jobs report. The data this week points to a report that may show a modest slowdown in job creation, which is what the Fed is looking for to start cutting interest rates.
Interest Rates are slightly higher today but will be on the move in the coming days. A fed meeting next week along with May readings on inflation will certainly have an influence. The 10 year yield has slowly moved lower over the last few weeks.
Stocks on Nasdaq and SPX 500 hit new all time highs again, oil prices are slightly higher while gold is getting slammed, down almost 1.5%. The ECB cut rates yesterday but raised their inflation forecast, a curious move. Stocks in Europe were up slightly, while in Asia a mixed picture. German 10 year bund yields were unchanged.
Earnings from GameStop came out as the company missed, Vail Resorts also missed while disappointing guidance from DocuSign last night. Jill is slightly higher after a nice beat and raised guidance.
After Wednesday’s very strong rally the bulls took the day off and languished. The range was rather tight all session long with the SPX 500 stuck in a 27 handle range (high to low). That is the issue when volatility is low and does not rise, which happened yesterday. Likely traders/investors are waiting for the green light following today’s employment report for May.
Breadth was pretty poor all session long, and while it was barely negative the bulls never saw the light of day. NVIDIA was higher early on but finished in the red, which has recently paced the action for tech and the Nasdaq. Oscillators remain slightly negative but a sharp upward move in breadth will turn those around quickly. New highs continue to expand.
An all around down session as volume trends were bearish most of the day. That’s fine, when turnover is low into a negative print that is not a sign of selling conviction. Hence, buyers from Wednesday and the prior sessions (dip buyers) went nowhere. The SPX 500 still hovers near a record as does the Nasdaq. With a friendly jobs report turnover will expand and the markets will head higher.
The Nasdaq and SPX 500 did fall a bit yesterday but not enough to call support levels. The 20 and 10 day moving averages are catching up though, and there could be a downdraft coming before too long to test those levels. Bulls don’t seem to be finished yet. Russell 2K put in an awful performance and continues to pace the markets and breadth lower. Support for the IWM is firmly at $200.
The Internals
What’s it mean?
Not much excitement Thursday from the internals. The VOLD and ADD were pretty stagnant, the VIX barely budged and ticks were spread evenly in the NYSE but pretty well red on the Nasdaq. .
The Dynamite
Economic Data:
- Friday:May Employment report, consumer credit
Earnings this week:
- Friday:JILL
Fed Watch:
Fedspeak will be silent this coming week as the committee prepares for it’s next meeting June 11/12. We do not expect a rate move then but a new set of projections will certainly tell us where they stand on inflation, GDP, employment and the funds rate. Last week had a mixture of policy ideas but when it comes right down to it, that is all simple noise.
Stocks to Watch
Data – Important releases this week from PMI to ISM to labor. We’ll be watching the manufacturing and production data closely, along with productivity and unit labor costs. This will tell us if growth was driven by inflation or production.
Employment – The May jobs report looms large. It’s possible to see a 4% rate on unemployment for the first time in years, and that will wake up the Fed. The expectation is about matching with April, but wages are expected to tick higher.
NVIDIA – The last week this stock trades above 1000 for some time, the stock will commence a 10-1 stock split in a week, perhaps garnering even more attention. For certain, the stock needs to cool down some but that might not come until after the split.
