The Fuse
Futures are not moving at this moment due to a cooling issue at the CME data centers, they are halted. But, according to trade in the SPY it looks like futures are probably up by 24-25 handles, Nasdaq up 135 points. Last day of trading in November.
Interest Rates are slightly higher this am but not moving too much. No doubt bond traders are satisfied with yields where they are currently, high yield spreads remain tight, fed futures now pricing in an 84% chance of a cut at the December 10 meeting.
Stocks in Europe were slightly lower overnight with modest fall in STOXX led by drops in Germany and France. FTSE though added .1%, in Asia Japan was up .2%, Hong Kong down .3% but Shanghai up the same amount. Gold is higher and staying above 4,200 per ounce, silver making a new high as crude rallies 1%. Yields in Germany and the US 10 YR climbed 1bp.
Earnings are not happening this morning, we’ll have a few dropping next week.
Nothing like three up days in a row to get the juices flowing for the bears. A tremendous comeback this week for the indices, a broad rally which has been stoked by a resurgence in the small caps. That is no ‘small feat’, this index had been choking of late but the talk of easier monetary policy is helping their cause. Today is short trading. day but it would really be something to close out the week higher.
Breadth powered higher and now this indicator is on a buy signal. No question this indicator has been responsible for the poor market performance but the bulls just flipped a switch and turned this one around. Oscillators are strongly in bullish territory, what you like to see for a continued rally but they are nearly overbought. That means a pullback might be coming sooner rather than later, but seeing as though the seasonal trends are bullish that may not last too long. New highs back above 100.
The turnover has been declining this week as we spotted a week ago, this being a holiday week. That’s not a problem though when it is expected, price action still remains the frontrunner. We could start to see more positive volume trends when the new month starts on Monday.
We’re going out on a limb to say the test of the 100 day moving average was successful! That of course was the level stocks held firm and stopped falling, but given the 5% drop and stop we can make that assumption here. The rally this week has been impressive and now the SPX 500 is within earshot of an all-time high, the small caps are actually much closer. We have seen the average stock actually perform better than the big names like Mag 7, interesting to see and much healthier for the markets.
The Internals
What’s it mean?
Nothing better than a string of solid VOLD days, makes you wonder where the buyers have been all month long! ADD finished higher as well, but a selloff on ADD has us wondering. Ticks were mighty strong, buy programs all session while the VIX plunged again to very low territory, into the mid teens. It might stay there for a bit through the Fed meeting and even the holidays, but no complacency here! Put/calls heading lower, another week and this will be on a buy signal.
The Dynamite
Economic Data:
- Friday:chicago biz barometer
Earnings this week:
- Friday:CHA
Fed Watch:
We heard from several fed speakers the past couple weeks and John Williams of NY Fed seemed quite influential. The head of this important bank seemed to indicate he was willing to vote for a rate cut at this next meeting even if more data is yet to be seen. That is not too surprising, Williams is seeking the Fed Chair along with some others. There is no doubt some contentious comments will be made during the next meeting, and maybe Chair Powell will be able to stick to a consensus decision.
Stocks to Watch
NVIDIA — After posting very strong earnings and guidance, the big chip company fell back to earth late this week but is now establishing a range. We may not see too much movement here to the end of the year as volatility recedes, but suffice to say big money managers may want back in end of the year.
Crude Oil – Don’t look now but crude is firmly below $60 per barrel and not looking bullish. This week estimates for oil demand were slashed, meaning supplies are too high and that could mean negatives for the economy. Prices down yes, but oil is a key economic indicator.
Name – event, level, your expectation
