The Fuse
More downside pressure on the futures this morning as this Friday is looking quite ugly. Down sessions overnight in markets overseas has spilled over to the US markets as bulls look to stem the tide of the selling.
Interest Rates are higher again this morning but just slightly, what’s interesting is investors/traders are not moving to fixed income as a safety trade as they see the stock market starting to correct. Fed futures are still a 50/50 toss up for next month’s meeting. 2 year yields remain steady though around 3.7%, which is where the funds rate is at currently. Junk yield spreads are starting to widen outand that could be a problem soon. 30 yr yields are steady at just under 4.8%.
Stocks are falling across the globe with a down 1% move in the European STOXX index, led down by drops in France and Germany. Asia showed the same downside, Japan off 1.8% while large losses in Hong Kong (
Earnings last night from Applied Materials were good but not good enough to rally, NU also with good numbers but the market is heavy right here. Smaller names release earnings this am as we shift into a new phase of earnings next week.
Just a miserable day for the bulls from the start of action. No question there was heavy distribution, the a/d line was filthy all session long and finished at a nasty 21-6 bearish clip. The distribution days continue to mount and with that less and less participants are in to play. There is a chance for an oversold rally but that is not likely coming soon, and with NVIDIA earnings next week and the possibility of ‘sell on the news’ and options expiration, there could be fireworks.
Heavy turnover on the downside markets more big selling by institutions. We had been warning for awhile that volume levels on the up days were poor and that a setup for the bears was shaping up. The big selloff yesterday might be the climax if the 50 ma holds again, if not look for more selling to hit the tape hard. Markets rarely bottom on a Friday, and if there is more turnover to the downside then Monday is going to be trouble.
A good pullback is what the bulls want but be careful what you wish for. No question yesterday’s sharp move might have done some technical damage but only if there is followthrough. The 50 ma is not far below here and might get tested again like last Friday. We’ll have to see if the dip buyers decide to step in if that opportunity presents itself.
The Internals
What’s it mean?
A landslide of bearishness on the internals yesterday. VOLD and ADD were whipped from the start and closed near their lows, the VIX cruised up to close around 20%. That was a big percentage move but not massive. ADSPD nearly a trend down day, put/calls were elevated and the TICKS were a rout by the bears. Ugly session.
The Dynamite
Economic Data:
- Friday:Retail sales, PPI, fed speak, biz inventories
Earnings this week:
- 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.
