The Fuse
What are futures doing?
Futures are slightly lower this morning, not much news over the weekend on the macro/war front. Crude futures are higher this morning but that may just be an effect from a lack of movement on closing out the Iran War. After a strong week expect some pullbacks but the uptrend remains in tact.
News
Stocks across the pond were up modestly, the STOXX higher by .1% but France fell .5%, FTSE in London added .4%. The dollar index rose .2%, gold is off more than 1% while silver is slightly higher. Crude oil is higher by 3%. Yields are rising, German bunds up 2bps, US 10 yr treasury yields up sharply, 4bps. In Japan the Nikkei fell .5%, Shanghai a nice gain up 1.1% and Hong Kong up .1%.
Volatility
The VIX is on the move this morning as a bit of ‘payback’ happens from Friday surge in the markets. So far not too much damage, volatility was rising sharply when futures opened last night but have cooled off a bit. Perhaps buying opportunity on this minor dip.
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Interest Rates
Rates are climbing along the term structure this morning, 2’s 5’s and 10’s are up in yield. This is likely some profit taking following a nice move higher and worries over potential inflation. CPI and PPI early in the week. High yield remains attractive here, fed futures still seeing no chance of a cut or hike in 2026, but both can be priced in very easily if the data supports it.
Earnings
Phase 2 of earnings season, but some big names like Cisco Nebius, and WIX, smaller upstart names will be reporting this week. The wave of big reports is bigger next week with retail and energy.
Events
New highs across the board, a strong rally in stocks this past week had the SPX 500 up 2.3% but the Nasdaq showed clear leadership, up some 5.5% to new all-time highs. The air is getting thin up here and there is worry that market players are getting complacent. That wall of worry is not up all that high.
Breadth
Breadth was positive but not overwhelming, but the bulls retain a slight advantage. The oscillators are positive and may stay that way for a bit longer, seems that every time there looks to be a huge drop the dip buyers come in to save the day. New highs just crushing new lows again, this indicator is very bullish now.
Volume
Better volume on the day for the Nasdaq, notching another accumulation day. That would be the fifth one over the last few weeks, very impressive. However, the SPX 500 did not rise on better turnover and that means there is a potential vulnerability there. Earnings have been carrying stocks higher, we’ll see if that continues.
Support Levels
Stocks remain well above support levels, so even a 1-2% pullback will feel bad but not upset the uptrend. Rallies typically need to test or retrace areas where buyers/sellers come together on price. It is difficult to maintain a crazy uptrend like this for much longer, so any rally day can turn on a dime. Not saying it is going to happen today, but be aware.
The Internals
What’s it mean?
Not much enthusiasm in the VOLD or ADD Friday, probably due to the less than impressive breadth. That’s fine, can’t have many days in a row like Tue/Wed, which had sharp up moves in breadth and high quality readings. VIX was wild and moved sharply with the strong jobs report, put/calls continue to decline and ticks were about even on the day. Another week of big earnings, we’ll see if the bulls can keep the rally moving.
The Dynamite
Economic Data:
- Monday:Existing Home Sales
- Tuesday:Fedspeak, NFIB optimism, CPI, US federal budget
- Wednesday:PPI, Susan Collins speech
- Thursday:Retail sales, import prices, jobless claims, biz inventories, lots of fedspeak
- Friday:Empire state, industrial production, cap utilization
Earnings this week:
- Monday:HIMS CRL, B, MNDY, MOS, CG, CRON, VFF, GPRO, ACHR, MARA, PLUG, ASTS, RGTI
- Tuesday:AG, KOPN, VG, ONON, SE, JD, BETA, AMTM, KRMN, OKLO, ELMD, NXT, FNV, ANDG, ATRO, OPRX, EVLV
- Wednesday:NBIS, BABA, EOSL, DT, WIX, ICL, VLN, VSH, GLBE, CSCO, ENVX,USAR, PWW, DOCS, BEAT, CPA, LESL, FLNT
- Thursday:ONDS, KLAR, BM, LUNR, BLSH, IMSR, SBC, YETI, SUNI, VIK, NU, FIG, AMAT, NM, RUM, BZAI, BLNE, BRFM, COOK, RSFM
- Friday:SPRY, PAVM, RMIX, SACH, SLE, AZ, ALK, RBC
Fed Watch:
The Fed will have plenty to chew on this week as the data is going to likely point to higher inflation overall. That is reflective of higher energy prices, which will hit the consumer hard in the wallet. It is possible the committee will look through the data but if it lasts quite a bit longer there will be necessary adjustments, like a rate hike. Last full week for Jay Powell as Chairman.
Stocks to Watch
Semiconductor Stocks – This group has been on fire lately and could really ignite the markets higher. Even a modest setback could trigger dip buyers to engage.
Oil/Energy – We continue to watch the developments in this Iran War. It seemed last week there was progress towards a resolution but oil prices continued to rise following. More good news could send oil down to the 80’s.
Cisco Systems – The big networking company reports earnings this week and it could be a blockbuster.
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