The Fuse
Equity futures are up modestly this am as stocks look to followthrough from Tuesday’s monster rally. If there is a confirmation day it was suggest more movement up that can take the markets to/near all-time highs.
Interest Rates are higher again as the bond market is showing some worry in front of an important inflation piece on Friday. The PCE report is one the Federal Reserve looks at closely, consensus suggests a flat core number while Cleveland Fed nowcast says the April PCE went down. yields remain rather tight, fed futures still see two cuts coming in 2025.
Stocks are rebounded after a volatile overnight session. In Europe the STOXX index was slightly higher, FTSE also up modestly. The dollar index was flat, crude oil rallying 1% with gold and silver slightly higher. Yields are on the rise, German 10 yr bund yields up 1bp, 10 yr US treasury yields up 2bps.
In Asia Japan stocks were flat as was the case for Shanghai, Hong Kong down .5%.
Earnings from Okta last night were strong but the stock is selling off, this could be a good opportunity to add. Macy’s had a good beat this morning but guided in line. Later today we’ll have Dick’s and Abercrombie. Of course, the big one tonight is NVIDIA along with Salesforce, Nutanix, ELF and Veeva Systems.
Super strong day for the indices, nearly 2% move across the board with strong internals and statistics. Markets gapped higher on the open and it was off to the races with heavy volume, buy programs galore after the weekend news that trade talks between the US and Europe were getting serious. That idea put the bid under markets as President Trump decided to pause on 50% tariffs until July 9th.
After a couple of weak breadth sessions the markets were hungry for better statistics, and Tuesday was the day. A better than 7-1 rout of the bears was on right after the start of trading. Oscillators moved above the zero line again, an important move that tells us the bulls are in control. New highs are looking better but probably need a few more days to expand into a full-blown buy signal.
A pretty decent volume session yesterday as some of the bearish residue left from the prior week was still in effect. Hence, a huge short squeeze was on the table for the bulls as they pressed into a huge gap opening. This will eventually close of course but it could be weeks. Meanwhile, plenty of volume yesterday that moved into the close, clearly buyers are interested in these higher prices.
Resistance levels are now of interest, namely on the SPX 500 we can see the 5950 area is a brick wall. However, if that level falls then we could see a run to all-time highs, not far off at 6,150. Where we go from there is anyone’s guess, but no doubt many will start getting excited about it. As for the Nasdaq it is much simpler. A move above recent highs 21.5K should bolster the index to new highs.
The Internals
What’s it mean?
Now that’s what I call a good old-fashioned ass kicking by the bulls. The bears did not stand a chance as buyers came swarming in and lit up the markets like a xmas tree. Just look at the ticks, green all day long, nary a sell program. VOLD had its best day in over a week, finishing out strong as did the ADD and ADSPD, which finished as a trend up day. VIX was hammered as well, but this indicator now shows high complacency, which will eventually be paid back.
The Dynamite
Economic Data:
- Wednesday:Fed meeting minutes, Kashkari from Tokyo
- Thursday:GDP revised, jobless claims, pending home sales, 5 fed speeches
- Friday:PCE, consumer spending, inventories, consumer sentiment, Mary Daly speech
Earnings this week:
- Wednesday:DKS, ANF, M, NVDA, CRM, AI, ELF, NTNX, VEEV, SNPS
- Thursday:FL, BBY, KSS, BURL, MRVL, DELL, ESTC, ULTA, COST, GAP, ZS, AEO, AMBA, NTAP
- Friday:SCVL, CGC
Fed Watch:
After some suspected relief from President Trump over trade policy this weekend the Fed may be willing to take a more dovish stance. Simply put the committee is not convinced tariffs won’t be inflationary. We’ll hear more with the many speeches this week along with the minutes from the last fed meeting in May.
Stocks to Watch
NVIDIA – The big semiconductor company will release earnings this week and all signs point to another strong report. Having fallen sharply last month the stock really bounced back in a big way, but it will be this report Wednesday evening that really tells us how traders will be positioned.
Costco – With weak earnings from Target and even Walmart some out there are questioning retail stocks, so Costco’s report will be analyzed carefully. Are they seeing any slowdown of spending? How about tariffs and trade?
Interest rates – Will this finally be the week rates come down as bond buyers step up to add more fixed income? It seems the sellers have been rampant of late, causing yields to rise to worrisome levels.
