The Fuse
Equity futures are up modestly this morning, trying to shake of a very negative Thursday. The SPX has now closed below the 200 day moving for the first time in awhile. The February employment report looms along with a speech by Jay Powell.
Interest Rates are falling a bit this morning on the long end as we continue to see a bit more jostling on the interest rate front. After the markets have been slammed this week the fed futures market is predicting three rate cuts for 2025, which seems very aggressive.
Stocks are up modestly this am before some Fed speakers and the jobs number but not helped by Europe. The STOXX was lower by .7%, France and Germany down better than .8% each. The US dollar dropped .3%, crude oil up nearly 2% but gold unchanged, as is silver. German 10 yr bunds were flat, US 10 yr treasuries down 1bp while in Asia stocks in Japan were down sharply, off 2.2%. Hong Kong and Shanghai were down a bit less.
The Gap delivered some strong earnings and posted stellar guidance, as did Broadcom. Both of those names are up sharply in the pre-market.
Rough day on Thursday as the gains from Wednesday were completely annihilated. Heavy selling from the start turned into a rout, nearly a 2% loss. Today brings more to the table with uncertainty over jobs and inflation along with several Fed speakers. A big rise though in volatility may get sold off today.
Horrible breadth once again with the down issues dominating the action. Nearly 3-1 negative is not good news for the bulls. Oscillators are pretty well oversold here but that does not mean they cannot stay there for some time. New lows still dominant over new highs.
Yet another day of distribution. Stocks were under pressure with several sell programs early on, that put the bulls on the defensive, it did not change much all session long. The current corrective action is playing out in real time and there is just no sense in trying to catch a falling knife. Where the market turns is anyone’s guess but there has been severe damage to the chart.
Well, as we mentioned yesterday the 200 day ma was the target and the SPX 500 closed below it. This corrective phase has been swift and shows no sign of ending. If the selling continues there are some lower targets and more prominent levels of support, let’s call it 5,650 and then down to 5,400. That would feel awful for the bulls.
The Internals
(WE DO NOT HAVE THE CURRENT VIEW TODAY DUE TO A TECHNICAL DIFFICULTY)
What’s it mean?
Internals were awful and are not spreading any confidence. We said Thursday that followthrough was key, that was not the case on that trading day. The VOLD and ADD finished awfully bad, while put/call was elevated. VIX climbed to 26% and remains high, ticks were mostly red. With so much uncertainty it is going to tough to find buyers on a Friday.
The Dynamite
Economic Data:
- Friday:January labor report, wagers, consumer credit, lots of fed speak
Earnings this week:
Fed Watch:
Last week’s data was shockingly poor, but at some point the economy is going to need to cool down. Most fed speakers last week talked about the cautionary tale of high inflation on the economy, they are in no rush to pour gasoline on the fire. We’ll hear more this week of the same, the next fed meeting is likely to be met with no change in policy, but further meetings dictate this, too.
Stocks to Watch
Retail – A heavy week of earnings from retail names, not the biggest ones like last week but more concentrated in niche areas. We saw a bit of weakness in the consumer reports last week and the prior week (spending, retail sales) so it would not surprise us to see a few misses, but it’s all about the guidance.
Costco and Target will lead the way.
VIX – Market volatility has been rising up lately due to some increased uncertainties. When there is worry about the future that is when volatility rises, ranges expand and option premiums rise. If we experience a steady down move in volatility we will know the trend up has continued.
Mag 7- The last of this group delivered earnings last week (NVIDIA) and no surprise the ‘7’ are relatively poor performers. But, with a new month starting perhaps money flows will start to return to this group.
