The Fuse
Equity futures are bouncing around this morning and are now pointing lower after a strong rally overnight. That is concerning only if the overnight rally highs are not exceeded soon, today or later this week. Not much on the news front yet other than the September jobs report and NVIDIA earnings, volatility remains high.
Interest Rates are modestly lower this morning as bond traders see some bargains, ever so slight. Volatility is very low for the bond market as well. 2/10 spread remains steady, 30 yr yields are down modestly. Fed futures seeing about 50/50 chance of a cut in December.
Stocks look to be a bit wobbly this morning but may get some direction later in the week. volatility is rising which means range expansion. Stocks in Europe rose up slightly, FTSE added the same amount. Crude oil is up modestly, gold and silver backing away from recent highs. Yields in Germany and the US 10 yr dipped by 1bp, in Asia Japan slightly down, China off with Hong Kong down .7% and Shanghai down .5%.
Earnings focus this week on NVIDIA but also some important retail names like Home Depot, Target, tjx, Lowes and Walmart among others.
Stocks have been on a rollercoaster ride again the last couple of weeks. Perhaps this is just a wide rangebound trade or something more. What we know is the longer the stock market just messes around the current area the harder it will be to lift higher. Nothing wrong with some sideways action but at some point the bulls need to step up and start buying, as the seasonal bullish trends won’t last forever.
Breadth was poort as this indicator remains on a sell signal. Oscillators are bearish even though the NYSE did manage to get into positive territory for a bit. Breadth figures need to improve or the weight of sellers is going to pull the market down like an anchor. New highs are barely beating new lows, this indicator may soon be on a sell signal.
Volume was brisk Friday, often seen when the markets tank and then reverse highs. ‘Just sell it’ and then the dip buyers step in, that’s how it goes. We did not see more turnover than Thursday, which was certainly a distribution day. This week sets up for more big volume as Friday is expiration for November options and right before the Thanksgiving holiday.
Tested some support levels on Friday and bounced sharply, but it seemed rather weak. Small caps had been leading on the way up and now on the way down, but the Industrials hit a new high this week on good turnover. It was smashed on Thursday but simply tested some support. This is a key week.
The Internals
What’s it mean?
Just another ugly day for the internals, they have been stacking up high. VOLD just miserable as the ADD, but the volume prints were worse on the downside than the upside. More distribution is headed our way unfortunately. Ticks were red early then green late in the day,, put/calls continue to see interest as the tech group gets mauled. No question the bears are in charge here but with NVIDIA ear.
The Dynamite
Economic Data:
- Monday:Empire State Manufacturing, fed speak
- Tuesday:(import prices, industrial production, cap utilization, builder confidence, Michael Barr speaks
- Wednesday:Philly Fed, housing starts, trade deficit, fed meeting minutes released
- Thursday:September labor report, existing home sales, leading indicators, fed speak
- Friday:More Fedspeak, SPX pmi, consumer sentiment
Earnings this week:
- Monday:TCOM, ARBE, JKT, LFMD, HP
- Tuesday:HD, BIDU, AS, FUTU, PDD, KKLAR, CAN, KULR, DLB, CCG, POWL, SQM, LZB
- Wednesday:TGT, WIX, TJX, BLSH, LOW, GDS, ICCM, KC, VIK, WSM, NVDA, PANW, CPA, JACK, BV, CRNC, HI
- Thursday:WMT, ZIM, SCVL, ALLT, WMG, VIPS, BULL, VEEV, CPRT, GAP, ESTC, UGI, INTU, TEN, POST, ROST
- Friday:BJS, VFS, MNSO, FRO, AZIA
Fed Watch:
Lots of concern that inflation is starting to run hot. That has spooked several fed members as they offer a ‘wait and see’ approach at the final meeting of the year next month. Can the committee resist the market’s desire to cut one more time? If we look at the 2 yr the market there is saying ‘slow your roll’ while fed funds still expect a cut, it’s only 50/50 now. We may see a change in the odds later in the week as more data is released.
Stocks to Watch
NVIDIA — We have to pay attention to the ‘King’ this week, reporting earnings after the close Wednesday. Lots of interest in this name but they can also pull up other semiconductor and AI-related names, too.
Bonds — It’s possible we get several data releases this week and that might move fixed income. The equity markets are mostly oversold here so any lack of bad news is going to stimulate buyers.
VIX — I’m watching the VIX closely this week along with nasdaq volatility, the VXN. We have seen a rise here as many are getting uncomfortable. Perhaps an opportunity is going to open up of the dip buyers step in. Else, just expect more selling to drop the market further.
