The Fuse
Equity futures are up strong this morning after pullback in the futures on Tuesday was bought up. That could lead to a big finish higher for the end of March.
The SPX 500 is once again knocking on the door of 4K, the Nasdaq knocking at 13K. After a modest correction lower towards the start of 2023 the bulls are trying to make a turn, with higher lows. The key for the bulls would be rising above 4200 on the SPX 500, which is about 5% away.
Consumer confidence surged with yesterday’s reading, which came after the SVB bank implosion. Testimony by Michael Barr (supervision) was a bit surprising, with only a little knowledge of the bank’s problems leading to failure. Bond yields are on the rise though and so is gold. Hence, even though the stock market is enjoying a strong month, there are bets being made to the contrary.
Strong earnings and guidance from retailer LuluLemon will help push this and other retailers higher today.
As we approach month end, the range is starting to tighten up as realized volatility collapses. Appears there is no fear that the banking crisis will spread to the economy.
Decent breadth today as the oscillators improved to neutral. There is potential for a buy signal here in the coming days.
Volume was weaker today, it was the fourth lowest level of the SPY for 2023.
We still see 4K on the SPX and then 4100 as significant resistance. On the downside, 3900 clearly is good support and below there we have 3850.
The Internals
What’s it mean?
A very weak showing by the internals on Tuesday. Notice the poor action in the VOLD, lethargic – while the VIX declined most of the day and finished near its lows. It broke 20 on the close and may run towards the mid teens. ADSPD was trendless today, while put/call went sharply lower. Nothing to read into the internals about the next few days.
The Dynamite
Economic Data:
- Wednesday: Mortgage apps, oil inventories
- Thursday: Jobless claims, GDP estimate for Q4
- Friday: PCE, Michigan sentiment survey
Earnings this week:
- Wednesday: CTAS, PAYX, SMTC
- Thursday: EVGO, BB
- Friday: N/A
Fed Watch: Fed speakers are out this week. Vice Chair Michael Barr testifies in front of Congress about the SVB situation. Fed futures continue to look for massive rate cuts coming later in 2023, quite a stark difference from what the Fed has been saying.
Issues/Stocks to Watch this Week
Still unresolved, this banking crisis remains a hindrance to the markets.
MU – Micron earnings are going to be watched closely as the chip sector has made a huge leap forward.
End of month/quarter buying that often happens with some vigor.