Equity futures are on the defensive this morning after a failure to penetrate strong resistance (SPX 500 at 4,300). However, a strong surge by the small caps should be duly noted, this index is breaking out and may help push the rest of the market with it.
Interest Rates are on the move once again as bond sellers get busy. The 10 year yield has creeped up near 3.85%, the last time it happened markets were hit rather hard. If yields continue to rise look for weakness in growth stocks, specifically in Nasdaq issues.
Jobless claims are out today, there will be a slew of bond offerings all throughout the session.
Weak earnings today from SIG (jeweler) but strong guidance from CVNA. Last night, meme name GameStop missed earnings and dismissed their CEO.
SmartSheet was hammered as well for missing estimates and guiding lower.
Stocks were weighed down by a short term overbought condition. You can’t blame investors/traders for doing some selling, stocks just don’t go up every day without a pullback.
With markets down breadth was surprisingly strong, due to the solid effort in the Russell 2K. This can act as a leader of course, technology stocks were due for a pullback and this might just be it.
Volume levels picked up yesterday as the stock market notched its first distribution day in a few weeks. Nothing really to be worried about yet, but a string of these in succession might spell trouble.
4,300 on the SPX was rejected hard yesterday but perhaps the smaller cap issues and the Industrials might start to drag up the rest of the markets later in the week. For now, we’ll grade the market modestly bullish but on guard for a more significant pullback.
What’s it mean?
This was a strange session. By the looks of the internals one would think markets were up strong at the finish, but that wasn’t entirely the case. Strong breadth and the VOLD/ADD were attributed to strength in the small caps, specifically financials and energy stocks. With Nasdaq weighing so heavily in all markets the SPY and QQQ faltered. Put/calls are on the rise as the VIX being down at 14% begs for players to buy protection.
- Thursday: Jobless Claims, Fed Balance Sheet
- Friday: Baker Hughes Rig Count
Earnings this week:
- 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.