The Fuse
Futures are dropping this morning as the big selloff from yesterday extends. We see some good support levels but they are substantially lower.
Interest Rates are heading lower as bonds are still attractive here. Money flows have slowed down sharply in the economy as treasury is preparing for the worst case scenario in the debt ceiling situation.
Europe and Asia are driving the action, the regions are down sharply and that has spilled overnight into this mornings futures. Many are blaming the continuing drama of the debt ceiling, but frankly we have not seen good economic data to support markets at these levels.
Solid earnings last night from Palo Alto while Intuit provided some disappointing guidance but beat their estimates. Later today we’ll hear from NVDA, Snowflake and Splunk, which are likely to help move markets along.
Some big earnings coming up this week including NVDA, SNOW, COST, MRVL,LOW, DKS and ZM. All eyes/ears again this coming week on Washington and the debt ceiling discussions.
Another poor day of breadth now has this indicator on a sell signal. While that likely means more downside to come, There is a heavy concentration of selling that has occurred, and that may lead to a quick exhaustion before the holiday weekend.
Volume levels were poor early on but as the sellers piled on the pace really picked up. Volume trends had been weakening of late, and now we know why.
4200 was again rejected today as an onslaught of sellers crashed the markets lower. Well, it wasn’t a crash but more of a slow motion fall.
We have support at 4100 and then below there around 4050, where an oversold reading may occur in days if the market gets down there.
The Internals
What’s it mean?
We wondered if Monday’s internals were sending a message. That was truly the case! Heavy volume flow to the downside, particularly after noon was responsible for a heavy dose of selling. Volatility rose and did not stop climbing, the VIX at 20% on the futures. Notice also another pop in the put/call, perhaps that settles down but it is a big warning flag.
The Dynamite
Economic Data:
- Wednesday: Mortgage applications, crude oil inventories, fed meeting minutes
- Thursday: GDP second estimate, jobless claims, pending home sales
- Friday: PCE for April, Durable goods, Michigan sentiment
Earnings this week:
- Wednesday: ANF, ADI, DY, KSS, AEO, ELF GES, NVDA, SPLK
- Thursday: BBY, BURL, DLTR, RL, COST, DECK, GPS, ULTA, MRVL, VMW
- Friday: BIG, BAH, BKE, HIBB
Fed Watch:
Four Fed speakers out Monday and all were pretty hawkish on monetary policy. We have one more coming up this week, Susan Collins from Boston.
Stocks to Watch
NVIDIA – This stock is up strong in 2023 on hype and promise with AI. They will deliver earnings on Wednesday, we’ll see if it is a sell the news event.
Washington DC – Those dreaded debt ceiling talks continue as we march toward a hard deadline.
Volatility – In front of a holiday week, we often see volatility get smashed down by the end of the week.