The Fuse
Equity futures are up modestly this morning after a rather quiet weekend as it relates to trade. Since April stocks have been moving with any announcement (good or bad) as anxiety is high while emotions tend to lead decision-making.
Interest Rates are rising slightly this morning as bond investors shy away from buying fixed income. Several auctions this week are going to signal direction of long rates. High yield remains well bid while fed futures sold off a bit last week following the strong labor report.
Stocks are ticking higher this morning after some modest weakness in Europe. The STOXX fell .1% but the FTSE was flat, German fell .4%. The US dollar index was off .3%, gold is slightly lower as is silver, crude oil up .5%. German 10 yr bund yields were lower by 3bps, 10 yr US treasury yields fell 2bps, Stocks in Asia were up as Japan gained .9%, Hong Kong with a robust gain of 1.4% and Shanghai up .4%.
Fewer earnings this week but some big names nonetheless. We’ll get reports from Oracle, Adobe, RH Chewy, GameStop and Dave n’ Busters. The reports trickle even more the next two weeks as we wrap up Q2.
The big event not many are talking about is Apple’s WWDC. The stock has been floundering of late but perhaps this event will bring out something new and special for all the Apple heads to grasp onto. This event in the past has been rather sleepy but not many have been predicting this time around, sets up for a surprise.
Good breadth on Friday, better than 2-1 positive puts this indicator back in the bullish camp. A bit of mixed action but then we did have strong bullish price moves from the small caps, which likely put this over the top. Oscillators are firmly in the green, new highs are starting to push up towards 100, which if confirmed is another buy signal.
A couple of nice volume prints in the small caps and industrials showed some bullish action, just in time for the new month to start. Though the turnover from Nasdaq and SPX 500 was less than Thursday, it is of no consequence when the price action is so strong. New highs are just a whisker away for both indices.
As the indices stretch out towards new highs again we should be concerned about markets getting to giddy. If we look at the shape of this move it is straight up since early April, and while not problematic yet it will be when the buyers run out. We currently have a moderately overbought condition but that is not a signal to sell yet. New highs in the SPX 500 would be above 6,150 while the Nasdaq at 22.2K.
The Internals
What’s it mean?
That strong jobs report was enough to tilt the buyers back into the market as we can see the internals really pushed up all session long. That VOLD and ADD were impressive as was ADSPD though weaker towards the end of the session. Ticks were moderate and mostly even all session, so just as many buy as sell programs. VIX finished sharply lower and is now below 17%, first time in awhile.
The Dynamite
Economic Data:
- Monday:Wholesale inventories
- Tuesday:NFIB optimism index
- Wednesday:CPI for May, monthly US federal budget
- Thursday:PPI for May, jobless claims
- Friday:consumer sentiment
Earnings this week:
- Monday:CASY, LMNR, SKIL
- Tuesday:ASO, SJM, GME, GTLB, PLAY, SFIX, PETS
- Wednesday:CHWY, VSCO, VRA, SAIL, JLL, ORCL, OXM
- Thursday:LOVE, ESTA, HOFT, CRMT, ADBE, RH
- Friday:MNY
Fed Watch:
It should be a quiet week from the Fed as they relax their ‘tongues’ a week prior to their next meeting (jun 17/18). The committee has been talking lately about the strong economy and the lack of need for lower rates, though President Trump still believes lower rates are the answer. We’ll err with the Fed and their policy mandates.
Stocks to Watch
Name – event, level, your expectation
Name – event, level, your expectation
Name – event, level, your expectation
