The Fuse
Equity futures are modestly higher on the SPX 500 and Nasdaq but down a few ticks on the Industrials. Yesterday’s session was mostly about selling though some bargain hunters came in to pick up some names later in the day. This morning we will have a read on February inflation, looking for a 3.1% rise year over year on the headline number, core down a bit to 3.7%.
Interest Rates are little changed as the market prepares for the economic data that starts this morning. We’ll have PPI and retail sales a bit later on this week. Bonds and interest rates have come in line recently with the Fed’s likely slow pace of rate hikes when they get started.
Not much on the news front overnight. Oil is up slightly which gold is down about .5%. Some six trillion dollars of cash is on the sidelines, one analyst does not thing that will help fuel a rally.
Earnings from Oracle last night were blazing hot, the company turned in a fantastic performance and is now trading at all time highs. This may stoke a modest rally in tech if volatility declines further. Tomorrow we are from Dollar Tree, Petco, Williams Sonoma.
A poor day for the bulls from this vantage point. The technical condition remains mixed, however and that should be cause for concern. We are currently in a seasonally weak period, just before the Fed meeting and the end of the quarter. So far the bulls have the upper hand but notable weakness lately in some of the bigger names (like Apple, Google) may be telling us their businesses are starting to slow down some.
Breadth was actually higher Monday as the bulls tried to scrape together a positive day. It happened but was not all that impressive. The small cap bears were not handing out candy yesterday, in fact there was mediocre breadth across the board, not much that was solid but perhaps we will see a bit more fire later in the week. New highs continue to expand, oscillators are still positive.
Volume trends were up and bearish all session long, though some bargain hunters stepped in to bring the indices back from the depths. The heavy concentration of selling that hit early in the day was burned off, so now with some news coming in the next day or so we could see a reversal of this recent slide. Friday’s reversal bar was big and significant.
Perhaps the down move early on Monday was enough to scare away the hot money. That is often the case when the froth appears, as we have seen recently. Given the level of strength in the tech sector and its heavy weighting in the indices the big names will skew the indices. We have some support at the 20 ma for the SPX 500 at 5,065 and below there 4,950.
The Internals
What’s it mean?
Mixed session skewed to the positive side but it just did not have that feel of a big rally. That often happens in March and especially after a strong rally to start the year. Notice strength in the ADSPD late in the day along with the ADD, ticks were mostly red today as a slew of sell programs were lighting it up all session long. Notable was the rise in put/calls today, something we need to watch for more evidence of buying protection.
The Dynamite
Economic Data:
- Tuesday:CPI, small business optimism
- Wednesday:Mortgage Applications
- Thursday:Jobless claims, PPI, retail sales, business inventories
- Friday:Import/export prices, industrial production, Michigan sentiment surveys
Earnings this week:
- Tuesday:KSS, SKIN
- Wednesday:DLTR, LEN, S
- Thursday:DKS, DG, ADBE, ULTA
- Friday:BKE, JBL
Fed Watch:
No Fed speakers this coming week as the committee prepares for the next meeting in just over a week. This past week had Chair Powell testifying in front of Congress twice and he reiterated the committee’s pleasure with falling inflation, strength in the economy and the labor market. However, the FOMC is going to be very careful and slow when it comes to rate cuts, which the Chairman said will happen at some point.
Stocks to Watch
Super Micro – The high charged semiconductor name will officially be a member of the SPX 500 after the close Monday. It may be a sell the news event.
Apple – The biggest company in the world has been struggling of late but did manage to post a gain Friday.
The chart is challenged here but when the expectations are so bad is when the stock starts performing well. Contrarians know the name well!
Inflation – February readings from CPI and PPI will be out this week. Recall last month’s numbers were pretty hot but that did not stop the stock market from reaching new highs. However, we are in a seasonally weak period and another hot reading might derail the rally.
