The Fuse
Equity futures are losing ground this morning after President Trump signed the bill to re-open the government. There was some expected ‘sell on the news’ following this but hopefully very quickly our country can get back to business and get paid. Stocks already reflect positive vibes but remains on shaky ground.
Interest Rates are again slightly higher this morning as bond traders seem content to wait on the data releases to come over the next several days. Fed funds futures backed away significantly yesterday from a 68% chance of a cut to just less than 50/50 chance. That number will move quite often with data releases of course, but perhaps the market is getting wiser.
Stocks are down this morning across the board but in Europe the STOXX saw a small gain of .2% led higher by France. In Asia japan was up .4% while gains appeared in Hong Kong and Shanghai (.6%. and .7% respectively). Gold is higher and well above 4,200 per ounce, silver above the old highs besting $53. Crude oil is below $60 again, the US dollar index down .2%. Yields in Germany and the US rose up 1bp overnight.
Earnings from Cisco last night were lights out fantastic, the stock moving up about 5% in the pre-market. This morning earnings from Disney were a bit disappointing on the revenue side but they guided for the future, it seems good with a big buyback announced. Tonight we hear from Applied Materials, NU and Beazer Home.
Breadth was pushing higher all session long but the sellers took it back down as the A/D line finished at flat. If the bulls want to see more upside then breadth is going to need to expand. If not, then we know buyers are not present and money is just sloshing around from issue to issue, eventually that liquidity will dry up. Oscillators are split again, volatility is certainly being felt across markets with wide moves in futures overnight.
Volume trends remain weak, if the market keeps rising on slower turnover then that is troublesome. We like to see markets rising on higher volume and positive volume trends, it means the buyers are sticky. During a seasonally bullish period we are hoping for better volume trends to appear, so far they are absent.
Stocks continue to shuffle around the highs, the industrials already in new high territory but is not able to bring the other indices with it. Technology stocks, Mag 7 and others have been hit hard the past two weeks and are correcting, small caps are hovering above the 50 ma and trying to decide which way to go. Don’t wait too long small caps, else the sellers are going to take control.
As we mentioned last week the support levels held in, in fact testing that 50 ma on Friday for the SPX 500 was a monumental. That could be the launch point for this next rally, which may be longer in price and duration. Strong technicals should start showing up soon, too.
The Internals
What’s it mean?
We are just not getting the energy for this market from the internals. Stocks are trying to breakout but are kneecapped by what is wrong under the hood. VOLD was positive but not overwhelming, the ADD and ADSPD declined badly end of day, TICKS were heavy red as the selling was concentrated. VIX fell again but remains under siege, put/calls came back down but this indicator is not on a buy signal yet.
The Dynamite
Economic Data:
- Thursday:CPI, jobless claims, Fedspeak
- Friday:Retail sales, PPI, fed speak, biz inventories
Earnings this week:
- Thursday:DIS, JD, PSFF, PLX, CSIQ, AMAT, NU, BZH
- Friday:TWST, MKT, SH
Fed Watch:
Not much data to work with but it appears the Fed is locked into a rate cut in December, only because they have been commenting about the weakening labor market. Some data put together by the Chicago Fed showed this to be true. Lots of fedspeak this week though, we’ll get a good read on their views.
Stocks to Watch
Tesla – After giving Elon Musk his desired pay objection of 1 trillion dollars, we’ll see if Tesla responds and starts moving upward. The stock has been strong in 2025 and is not far off all-time highs.
Bitcoin – the crypto tested the 100K marker this week and helped to drag the other markets down with it. We’ll need to see a basing period first and then see if the crypto currency rises up.
Nasdaq – Coming off the worst week since April, technology names were blasted this past week after many posted some very robust earnings. Can they bounce back? Certainly so but it will take better money flows and volume.
