The Fuse
Equity futures are down modestly this morning as resistance levels were rejected on Monday. We still have a market that is range bound but at/near the top of that level.
Interest Rates are slightly lower today as traders are taking a more risk off approach to the day. With volatility moving back up, gold higher and rates down it appears to be a challenging day for the bulls.
Worry still abound regarding the debt ceiling crisis, which we believe will eventually be resolved. But in the meantime, plenty of volatility due to uncertainty, so plenty of opportunities as well.
Earnings last night from PayPal were good but the guidance was weak. Palantir beat though, as did McKesson (MCK), which I spoke about on the daily bites yesterday morning.
Stocks remain in the box, under 4,200 on the SPX 500. It seems like a waiting game until that level is breached, if it ever does penetrate for
more upside.
Breadth was weak but this signal is still on a buy. However, that is tentative, a couple of bad breadth sessions and this indicator will flip over.
Volume trends were lousy on Monday with very little commitment to the trade. This often happens in front of a big event, this week being inflation numbers and big earnings.
Very tight action yesterday with a narrow range. Market players seem to be hedging themselves ahead of the important inflation data due out later in the week.
The Internals
What’s it mean?
The internals were not offering up much excitement. In fact, it seemed like a consolidation day following Friday’s jam into the close. VOLD was mostly sideways but was slightly trending upward. The ADD is also flattening out, which tells us breadth is really coiled up like a spring, ready to move. VIX declined once again, surprising with market moving data later this week. TRIN was too low and put/calls were down, some danger signs ahead.
The Dynamite
Economic Data:
- Tuesday: Small Biz Optimism Index
- Wednesday: Mortgage Apps, CPI, Crude oil inventories
- Thursday: PPI, jobless claims
- Friday: Michigan sentiment, import/export prices
Earnings this week:
- Tuesday: YOU, COTY, EVGO, AFRM, ABNB, AKAM, AXON, BLNK, EA, TOST
- Wednesday: RBLX, WEN, ALRM, CAKE HOOD, TTD, DIS
- Thursday: CYBR, DDS, TPR, UTZ,, INDI, SANM
- Friday: SPB
Fed Watch:
After last week’s meeting and a quarter point rate hike, we will see if the Fed speakers tone it down. Two Fed speakers today and two more later in the week. The key they will be looking for is a reduction in PPI. Cleveland nowcasting has CPI climbing to 7.2% on their estimate for April. The wages number last week was much too hot, and while Chair Powell seemed sanguine on more rate hikes, he was adamant about no rate cuts, too!
Issues/Stocks to Watch this week
Volatility – The VIX was smashed down again Friday, far too low for comfort. We’ll see if it rises this coming week.
OPEC meeting – The last time they met it was a cut in production. We’ll see if that happens again, which might be a surprise.
Banks and Congress – Lawmakers say they are monitoring the situation with regional banks and their problems. Let’s hope they don’t step in and try to fix markets as they did once before – that was a disaster.
