The Fuse
What are futures doing?
Stocks are trying to bounce back from a rough day, but on a net basis the indices are clearing to new highs at the moment (Nasdaq, SPX 500). Futures are up modestly on those two indices but lower on the Industrials. PPI out early this morning.
News
Europe regrouped and regained previous losses, up .7% on the STOXX led higher by France and Germany. FTSE added nice gains, up .8%, gold is slightly higher as is silver, crude oil about flat. The US dollar index rose .1%. Yields are flattish to lower, German bunds and US 10 yr treasury yields both down 1bp. Japan gained .8%, Shanghai up nearly the same but Hong Kong was flat.
Volatility
A small rise in volatility the last couple of days, just a reminder the markets do not like uncertainty. With things kinda winding down in the Iran War the attention turns to China, where President Trump and Xi have a meeting scheduled. It is hoped to be productive, and if so we might see a drop back into the mid teens in VIX.
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Interest Rates
Rates are flat this morning, likely waiting for the news on the important PPI data released before the open. Stocks may move on this but so might bonds, if it is a hot number look for bond sellers to be aggressive in shedding bonds. Yields across the curve are mostly flat, high yield remains nicely bid while fed funds futures are unchanged.
Earnings
Oklo reported last night a mixed quarter, Karman with strong guidance. This morning we hear from Nebius. Alibaba with a slight miss, Dynatrace with a solid beat but a miss for Wix. Tonight we hear from Cisco, Doximity while tomorrow it’s Yeti, Ondas, Klarna, Bullish and Viking.
Events
Stocks took a dip early in the session and made a low at roughly 1.2% down on the day but managed to rally and recover much of those losses. It was still a red session, the Nasdaq taking the brunt of the selling. Perhaps this is the long awaited corrective period, but safe to say market players will hold up the market until NVIDIA reports earnings next week.
Breadth
Another weak session of breadth now has the bulls worried there could be more selling on the other side of May. No question we are in a seasonally bearish time of year, and if breadth remains poor it could lead to a spillover effect. At this point, breadth is not on a sell signal just yet but another day or two of weakness and that condition will change. Oscillators are now in the negative.
Volume
Some good selling hit yesterday but the bulls and dip buyers managed to stem the tide. A distribution day though for the SPX 500 and Nasdaq along with the IWM, but the industrials managed to eke out a gain and post a stronger turnover day, so accumulation. As the smoke clears from the data coming out we’ll. see if more turnover comes in.
Support Levels
Stocks tested some lower support and successfully bounced off some key levels. However, that bounce may not mean much unless the markets print a higher high and higher low today. Perhaps that will happen as the news is dispensed and volatility drops, but the bulls could use a reset. Was yesterday it? We’ll find out today, key session.
The Internals
What’s it mean?
Yesterday we addressed the concern with the internals, and once the market opened the selling ignited. It’s not all bad though, the VIX did come down and finished well off the highs of the day. VOLD and ADD were miserable as one might expect, PUT/CALLS started to rise again as big money started buying protection again. Ticks were hella red all session long, which tells ups heavy sell programs were hitting. Bulls would like to re-do the day.
The Dynamite
Economic Data:
- 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:
- 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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