The Fuse
Equity futures are quiet this morning following a volatile trading session yesterday and some movement overnight. We may not see too much action today as many traders have left their desks for the long weekend. Volatility is muted here and we just might write off today.
Interest Rates are down modestly as some short-covering before the weekend is in order. Junk yields and spreads with treasuries has widened out the last few sessions and that could be concerning for the growth case. Fed futures remain steady as well, the market still looking for only two rate cuts in 2025, in line with the Fed’s baseline case (from March projections).
Stocks in Europe rose slightly led by gains in France and Germany. Gold is ripping higher by 1% this am while the dollar is falling, off .4%.
Crude oil is steady, bitcoin is making a run at all-time highs. German 10 yr bund yields were down 3bps while US 10 yr treasury yields fell by the same amount. Stocks in Asia were mixed, Nikkei up .5%, Hong Kong was flat but Shanghai down about 1%.
Earnings last night were mixed with strong numbers and guidance from Intuit and Autodesk, in-line guidance from Workday and a miss by Ross Stores and Deckers. The latter two have concerns over tariffs and their effect on business this year.
Stocks were extremely volatile yesterday, moving up and down in unusual fashion. I say this as market volatility declined overall during the day but the erratic price action had the makings of a nervous market. The SPX 500 slid more than 60 handles from high to low but managed to close near the breakeven point. That was some feat and really crushed those looking for extended movement. Today is going to look similar but might even have a tighter range.
The breadth was mostly poor all day but finished barely negative. Is that a signal here? Certainly one could argue this fact since Wednesday’s rip down seems to indicate buyers are not stepping up. The internals for breadth were looking better but turned down by end of day, which tells us big money players had simply stepped away. Oscillators are still bearish here, new lows are starting to rise again.
Yesterday’s turnover was lower than the prior days distribution but that hardly is a positive. This being a slow week before a holiday sorta explains why. We should not expect to see too much action today but next week is going to be compact and the end of month so there will likely be bigger volume sessions during those four trading days. The new month coming up may offer better reads on volume.
It seemed as if the bulls took the reins and would counter-attack from Wednesday’s drubbing. It was a feeble attempt and that means if price hangs right here this bullish rally is in jeopardy. Big swings like yesterday and a full concentration of selling Wednesday means there is trouble ahead, and that could mean a much more severe pullback. Next month offers some catalysts.
The Internals
What’s it mean?
It sure looked as if the bulls were going to have their way. Not once but twice did the market rally off some serious selling but the bears are hanging around longer. Notice the late hit to the VOLD and ADD, just nasty that pushed these below the zero line. VIX rose up too and finished well off the highs of the session, Ticks were spread evenly with red and green, so several buy programs offset each other. Put/calls remain active.
The Dynamite
Economic Data:
- Friday:New home sales, fed speak
Earnings this week:
- Friday:
Fed Watch:
It’s going to be a busy week of fed speakers, in fact everyday someone will be out with speeches or Q/A. We might here some comments about the recent debt downgrade and that won’t be positive. Yet, with better inflation readings this past week there is some indication the committee may start talking about rate cuts and when those might happen.
Stocks to Watch
Nasdaq – As this tech index leads the way, markets have been looking for some leadership and finally got it.
The Mag 7 names have come alive again and while they are not at all time highs yet, that could be coming soon.
Interest Rates – A late downgrade by Moody’s of US debt may cause some heavy selling in bonds this week.
That may just be an initial response as bond buyers still picked up fixed income when other firms had downgraded the debt prior.
Tariffs and Trade – The news of a potential deal between US/China sparked a nice rally on Wall Street but it was more relief than anything. We don’t expect too much more until the negotiations get underway.
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