The Fuse
Equity futures are mixed this morning after three indices closed at all-time highs yesterday. Stocks finishing higher with good volume and breadth tells us the stock market remains bullish for the near future. Stocks are not overbought yet but soon may reach that level.
Interest Rates are bit lower this morning with the 2 year falling to 4.62% an the 10 year now at the critical 4.25% level. If bond buyers see this as an attractive yield we could see the rate fall sharply, which would be bullish for small caps, homebuilders and financial firms. Chair Powell is making opening remarks t a conference while Michael Bar (Vice Chair Supervision) speaks on international and monetary design. Raphael Bostic (Atlanta Fed) chats later.
Stocks across the globe were mixed overnight as traders continue to digest the Fed’s statement and how other central banks will be positioned.
Bank of England yesterday kept rates steady, next week’s Euro (ECB) meeting is likely to have the same outcome. European stocks overnight were down slightly, german 10 yr bund yields declined 4 bps, gold is down about .8% while in Asia the Chinese markets were down, Japan higher. Next week is a short trading week, Friday markets are closed in observance of Good Friday.
Earnings from FedEx were strong with solid guidance, Nike came in line and was cautious going forward while LuluLemon got hammered on lowered guidance and a cautious view.
Some good followthrough after a stellar finish on Fed day. Good rotation into groups that have not participated, solid action by the semiconductor names and positive trends as the SPX 500 closed at another record high. As we only have five more sessions remaining in March there could be a bit of a giveback next week as Friday is a day off from trading.
Solid breadth once again as this indicator is clearly on a buy signal. The McClellan oscillators have broken higher as well and are modestly positive, new highs are also expanding. A very strong finish for the week bodes well for more upside.
Turnover wasn’t too shabby as more money was piling into the small caps. That is important, the IWM is yet to reach an all time high but it is making a move towards it. Strong volume trends are now apparent in this index and that usually means some followthrough is likely.
More new highs for the SPX 500 and the Nasdaq, the Dow Industrials are just shy of touching 40K for the first time ever. We see resistance here at 5,300 on the SPX 500, a spot where markets can turn downward. The Nasdaq remains pretty strong and has good support at 18K.
What’s it mean?
Decent internals but not all that impressive. The ADD finished at the lows of the day though the VOLD was up strong, near highs of the session. TICKS were positive and green, but the VIX did climb on the day as did put/calls, something to watch out for if the market is getting exhausted. A pullback might be the opportunity to add.
The Dynamite
Economic Data:
- Friday:n/a
Earnings this week:
- 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.
