The Fuse
What are futures doing?
Equity futures are tugging lower this morning in what appears to be a risk off day setup. Volatility is up, oil is climbing and gold is down, bonds are off as well. These days have turned into good buying opportunities if the dip buyers are active. We’ll see how it goes with the CPI today.
News
Europe fell sharply overnight, the STOXX off some 1.1% on heavy volume, led down by larger drops in Germany and France. The FTSE lost big too, off 1% the dollar is climbing, up .3%. Gold is off slightly as is silver, crude oil rallying up about 3.4%. Yields are turning up, German bunds higher by 4bps while US 10 yr treasury yields rose 2bps. In Asia Japan rallied, up .5% but in China the Shanghai index down .2% and Hong Kong off .3%.
Volatility
Volatility is starting to rise as the uncertainties start to appear. Can the market momentum continue with strong earnings for much longer? How much longer will the Iran War actually last, and will there be some peace in the region? All of these worries play out in more unknowns as market players are more inclined to do some selling rather than watch their gains evaporate.
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Interest Rates
In a continuation from Monday we see rates rising across the curve, the long end (10, 30) powering up near resistance. Higher yields could mean stronger growth ahead but also worries about sticky inflation. High yield was down yesterday but is still right near old highs, fed futures not seeing any daylight for a move in 2026.
Earnings
Not much to report on earnings, ASTS down a bit after a miss on the bottom line, HIMS also smacked after missing their numbers big time. Rigetti with a nice earnings beat. Today we hear from JD.com, SE and ON Holdings had a nice beat. Later Oklo and then tomorrow am Nebius, Alibaba, Dynatrace, Wix and a few others.
Events
A decent rally for the indices as the Nasdaq and SPX 500 sported new all-time highs again, but finished well off their highs of the session. Volatility was up most of the day on worries about the Iran War, but the market is pretty much overbought here, too. Names like Google fell hard but just to support. We could see these names rise up again later in the week. Semiconductor names on fire.
Breadth
Breadth was negative yesterday, not a tragedy though but still showing some weakness. Stocks continued to move up but the margin is getting thin. Oscillators are mixed with Nasdaq clinging to a positive. New highs still beating new lows but that margin is also smaller, too.
Volume
Volume trends were lower and starting to show poor outcomes. Yes, the indices were mostly higher but the air is getting thin at these new highs. If buyers are not stepping up then sellers will start to unload stocks and that could lead to a few distribution days, and then more severe corrective action. Inflation numbers and some tech earnings might drive more volume but the market probably needs to go lower first.
Support Levels
with support levels rising like the 20 day moving average there is no reason not to like the market structure here. Sure, there is a pullback coming, perhaps a substantial one but the dip buyers are there waiting for it, much like last Thursday. We’ll see if there is more energy today.
The Internals
What’s it mean?
More weakness in the internals, the bulls would like this not to extend out this week. Maybe just a rest period, who knows. VOLD was not pushing higher today nor was the ADD, the VIX up and closed at highs of the session. That’s not normal. Ticks were heavy red most of the day, a slew of sell programs hit hard while the put/calls remain tame. More moves likely this week with economic news.
The Dynamite
Economic Data:
- 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:
- 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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