The Fuse
Equity futures are bouncing back sharply this morning following a second straight down week. There is optimism this week as some events and the Fed meeting will help stoke buyers to step up and buy shares again. The trend is still up long term but the short term moves recently have been choppy. That movement might lead some to think a bit of downside work needs to be accomplished.
Interest Rates are up slightly as bond traders position themselves for some big movement before/after the fed meeting. Last week’s inflation reports were concerning to bond investors, if the trend keeps rising that will cool any thoughts of interest rate cuts coming faster than expected.
Russia’s President was re-elected over the weekend. Oil prices are up again with crude over $81 per barrel, it’s been stair-stepping its way higher. Gold is modestly higher as is the dollar. Google and Apple may be coming together for AI introductions into the iPhone in what would be a mega deal. The Fed meeting this week may give us some clues as to how soon the committee might entertain rate cuts.
Earnings results were rather poor reaction last week so we will see if there is a different result coming. Big names later in the week include LuluLemon, Nike, FedEx, Accenture and Darden.
NVIDIA is planning a big AI event this week, this might light a fire under some semiconductor stocks which have pulled back sharply over that last couple of weeks. The VIX is higher this morning as some buyers of protection are getting active. Historically this has been a poor week for stocks. March vix futures expire this week as April will become the front month.
Breadth was positive Friday but that was maybe the only saving grace of the day. We cannot really spin the action positively as the markets fell sharply. Breadth is often a good reader of the trend but even positive breadth can mask what is really going on under the hood. It seems as if there is some knocking and pinging going on right now.
Volume expanded as we would have expected on an expiration Friday. We’ll see if there is some spillover today of the heavy distribution but more importantly is if we see more distribution this coming week. A catalyst could be the Fed meeting midweek.
The SPX 500 nearly tagged the 20 ma on Friday, an area of strong support on multiple occasion for the past few months. The doji though is a dangerous formation when we see price action failing as it did last week. A couple of closes this week below the 20 ma (5,095) and the 50 ma is in play at 4,965.
The Internals
What’s it mean?
What seemed to be pretty mellow in the internals Friday was fairly messy with the rest of the stock market. VOLD and ADD were actually positive, likely due to the relative strength in the Russell 2K. VIX spiked up and then came down but put/calls rose again, and check out the red in those ticks. Green in the Nasdaq end of day but price action was still rather poor. Big week for the internals coming up.
The Dynamite
Economic Data:
- Monday: Housing Market Index
- Tuesday: Housing Starts/Building Permits
- Wednesday:FOMC rate decision, mortgage apps, crude inventories
- Thursday:jobsless claims, S&P global flash – March, leading indicators, home sales
- Friday:n/a
Earnings this week:
- Monday:SAIC
- Tuesday:HQY
- Wednesday:GIS, OLLI, SIG, PDD, MU, FIVE, KBH, BB
- Thursday:ACN, DRI, BZUN, SCVL, FDX, LULU, NKE
- Friday:N/A
Fed Watch:
The Fed is likely to pass on rate moves this week but we’ll be watching the projections (new) closely and what Chair Powell says in the press conference. The most recent inflation data is not inspiring confidence in the committee to drop rates soon.
Stocks to Watch
Inflation – Last week’s readings on inflation have established a pattern, and not something the Fed wanted to see. At this point, the committeed is likely to continue taking a pass on moving rates if inflation remains troublesome.
Federal Reserve – We’ll have a meeting this week and the market’s response is going to be watched carefully.
NVIDIA – Who else? The big chip company has an event this week and we’ll be watching what they say and how much influence they have over technology after a sharp selloff.
