The Fuse
Stocks are again facing some headwinds this morning as the SPX 500 is down nearly 1% in the pre-market. Nasdaq is faring worse, the futures are about to fall below 20K for the first time since November (on the close). Plenty of news to drive markets this week, and the VIX is strong. Important inflation data later in the week.
Interest Rates are moving lower, a nice bid in bonds being felt. Rates have been undulating for months now between 4-4.5% on the 10 yr. The 2 yr actually slipped below 4% last week. Fed futures still expecting rate cuts later this year, yet Chair Powell on Friday did not hint at this action. Over the weekend President Trump would not rule out a recession in the US.
Stocks are on the move today but the Euro zone is flat, France and Germany climbed a small bit. The dollar was also flat. Gold is down 10 bucks, silver is off a bit while crude is higher. by .5%. Nat gas futures down .4%. In Asia stocks were mixed, Japan rose up .4%, but China experienced downside, Hong Kong down 1.8% while Shanghai down a modest .2%. German 10 yr bund yields rose 2bps, 10 yr treasury yields fell 4 bps on growth worries.
Earnings calendar this week is loaded up with Oracle, Dick’s Sporting Goods, Viking, Ciena, Kohls, Adobe, Ulta, DocuSign and American Eagle.
Not much on the events front other than a few conferences and investor days coming up. March has often been a tough month for the markets, at least during the first half. No question the bears are out in force right now but if we get to a deeper oversold reading there could be a turn around.
Breadth was positive on Friday, barely. That is the only good thing to say as the prior few days left plenty to be desired. The dominant trend is down. Oscillators are bearish and in negative territory, new lows, the NYSE and Nasdaq continue to print large numbers of new lows. We cannot have rallies until this indicator turns bullish.
Volume levels spiked early in the day as the sellers took control but after that selling was completed the buyers stepped up and started to do some nibbling. Dip buyers have been nascent, but if they have been active they have clearly been torched. High volume prints when the market is lower is professional selling or distribution. We have seen a cluster of these form and now the moving averages are starting to bend lower.
Markets continue to probe lower levels to see where buyers are located. Lower highs, lower lows are not going to get it done for the bulls. Nasdaq stopped on Friday right under the 200 ma, the SPX 500 fell below but did close above it. The Russell 2K is well below that level, there is no end in sight for this index. Perhaps a good low will be found this week, but who knows?
The Internals
What’s it mean?
Let’s call it a mild up day for the market and the internals. Yes the VOLD and ADD finished strong, but the other internals were not impressed. The VIX climbed but sold down after Powell’s speech. Ticks were mostly red, especially on the NYSE. Put/calls eased up as they had been much higher earlier in the week. We could see a bit more downside here but when oversold gets extreme a massive turn can hit at anytime.
The Dynamite
Economic Data:
- Monday:N/A
- Tuesday:NFIB optimism, job openings
- Wednesday:CPI, federal budget
- Thursday:PPI, jobless claims
- Friday:consumer sentiment
Earnings this week:
- Monday:BNTX, TLS, ORCL, ASAN, PAY, MTN, RDW, GAIA
- Tuesday:KSS, DKS, VIK, CIEN UNFI, FERG, FCEL, SMSI, HRTG, VTS, BWMN, CASY, GRPN
- Wednesday:ZIM, ARCO, IRBT, MX, AMRN, CXM. ADBE, S, CCI, AEO, TLYS
- Thursday:DG, WB, QBTS, BLDP, VFF, DOCU, ULTA, SMTC, PTMN, RBRK, SOL
- Friday:GOGO, HSON, AIRS, LI
Fed Watch:
No fed speak this week but the committee will be watching the inflation readings closely. Recall the recent miss in PCE, the reading the Fed pays very close attention to. Further, it seems job growth is strong enough to handle the current 4.25% fed funds rate for some time, that will discourage many who are looking for cuts in 2025. It just doesn’t seem in the cards this year.
Stocks to Watch
Volatility – The VIX rose up sharply and remains stubbornly high. There is the notion that high volatility readings can continue until a very large selloff happens. That is likely the case, and the longer we go without it the more pain will be delivered.
Mag 7 – This group of mega tech names has been very weak since the start if February. Can they turn it around? The correction in this group has been deep but so far buyers are not sniffing around just yet.
Inflation – More critical data with the release of the CPI and PPI for February. These numbers have been relatively hot and showing much stickier inflation than ever, so we continue to wait for more inflation of prices dropping.
