The Fuse
Equity futures are slightly higher this morning as traders are stepping back in front of the next fed monetary policy announcement. The SPX 500 closed at an all time high Tuesday and did so in impressive fashion. New highs continue to produce strong numbers and remains on a buy signal.
Interest Rates are slightly lower this am as the bond market prepares for some volatility in interest rates. Market volatility is low but bond market volatility is starting to rise up, and that may signal large moves up and down.
Crude oil is down modestly as is gold, recently those and other commodities have been on fire. Euro stocks were down a bit overnight , the German 10 yr bund fell 4 bps, the yield on the US 10 year fell to 4.277%, signaling 4 rate cuts by 2025. Stocks in China were up, a strong move up in Shanghai (.6%), markets in Japan were closed.
Earnings from GIS were strong this am but Signet missed on revenues and guided lower. Ollie’s posted higher sales but missed revenue estimates.
Tonight we’ll hear from Micron, Chewy, Five Below and Guess.
After fading the Monday open fairly hard the bears were ready to continue the onslaught. The selling did continue for awhile Tuesday but finished up by midday as buyers were hungry after stocks like a lion who hasn’t eaten in two weeks! This was a new closing high for the SPX 500 by a few points and puts the index within shouting distance of 5,200, a level we have been talking about recently.
A second consecutive day of positive breadth has this indicator how on a buy signal. We have seen this month the struggle for breadth to get into high gear. But now we are right near a new all time high for cumulative breadth, and once that happens even more new highs for the market will accompany the strong breadth. The only issue here is seasonality and sentiment, which currently are not in the bulls’ favor. McClellan Oscillators remain mixed and are straddling the zero line again.
Solid turnover in the Dow Industrials yesterday, very strong volume trends as price action really lead the way. The index was green all session long and pulled up the rest of the indices. The DIA has been a huge laggard in 2024 but perhaps yesterday’s price and volume action could be the start of a new uptrend.
There is nothing like a new all time high to create a bit of excitement in the room! Yesterday saw bullish participation from all four indices, even the Russell 2K was up nicely. However, we do have this event called the Fed meeting that might induce some selling today and later in the week.
What’s it mean?
Pretty solid day for the internals as we finally saw the internals and price action in sync. The ADD was strong all day, the ADSPD nearly clocked a trend up day, rather odd in front of the fed meeting today. Further, ticks were solid green all day long, VIX pointing down as well. The only fly in the ointment was a rise in put/call, clearly players are warning some downside is coming.
The Dynamite
Economic Data:
- 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:
- 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.
