The Fuse
“Equity futures are higher on this first trading day of November. We look forward to the biggest week yet of earnings releases, which can really move markets. The focus is on technology, consumer, staples and industrials. Not much on the release front since the government shutdown continues on.
Interest Rates have been turning up since last week’s Fed decision, most curiously surrounding the expectations for the future meetings. Chair Powell threw cold water on December rate expectations and every yield from 2’s to 10’s have been rising. Slight up this morning as well but not horrible, bond sellers look to be trimming positions regularly here, at some point there will be value in the yield, but not yet.
Stocks are looking to rally early in the session here with a good rise in futures, buoyed by stocks in Europe and Asia. The STOXX was higher by .2% led by gains in Germany, the FTSE 100 added .1%, in Asia Japan was closed but China strong with Hong Kong up 1%, Shanghai higher by .5%. The US dollar index rose again, up .1% gold is back above 4K and silver is moving upward, too. Crude oil is hanging onto $60. Yields in Germany and US 10 yr both rose 2bps.
Earnings are big this week with names like Palantir, AMD, Shopify, Spotify, McDonalds, RobinHood and ARM Holdings. These are some big names which may move markets, much like the huge releases last week. We’ll get a good read on the economy with strong earnings.
Stocks finished higher Friday but well off their best levels of the session. In the early going Amazon and Apple were pacing the action after miserable trading on Thursday, but the buyers just stalled out and decided to end their quest for closing at the highs. Indicators and statistics were positive but the weekly chart of the SPX printed an inverted hammer, which could mean trouble soon. First week in November is upon us.
Breadth was positive but that is the only good thing to say about it. The a/d line has been weak for days and is expressing less desire to buy more stocks, but perhaps that is a function of October. The month is over now and we might see seasonal patterns starting to evolve. Oscillators back in negative territory but new highs still very strong.
Volume was stronger on SPX and Nasdaq so technically an accumulation day but it was not pretty. IWM and the industrials clocked in with lower turnover, we could see more volume hit this week due to a heavy earnings week.
Support levels may be tested here if the stock market decides to pull back and correct. That would not be problematic unless some longer term ma’s (like the 50) were penetrated and fell sharply. For now, it seems the dip buyers are active, that was the case earlier in the week.
The Internals
What’s it mean?
By the look of the internals you would think it was a hugely positive day. But that was not the case at the end of the session, though for a time it appeared the bulls were in a rout. VOLD and ADD finished strong, put/calls down the VIX off the highs of the session. Ticks were mostly green but distributed well, so there were some sell programs. Bears are sniffing around here, bulls will need to be careful.
The Dynamite
Economic Data:
- Monday:ISM, PMI, AUTO SALES, Fedspeak
- Tuesday:More Fed speak, possible reports
- Wednesday:ADP, PMI, ISM
- Thursday:5 fed speakers, maybe some economic data
- Friday:Potential for jobs report, consumer credit, sentiment, fedspeak
Earnings this week:
- Monday:PLTR, CPHR, ON, FRPT, AXSM, BNTX, SRPT, FN, CLX, GT HIMS
- Tuesday:UBER, SHOP, SPOT, PFE, PB, RACE, NCLH, AMD, ANET, SMCI, ALAB, BYND, UPST, AXON, PINS
- Wednesday:NVO, HUM, MCD, U, CCJ, BCO, AES, HOOD, IONQ, APP, AMC, BROS, QCOM, ARM, SNAP, FIG, ELF
- Thursday:COP, BCE, OSCR, VST, AZN, DDOG, ASPN, SBD, MRNA, TTD, OPEN, MP, IREN, SOUN, DKNG, INOD, ABNB
- Friday:CEG, WEN, FLR, SIX, BAM, DUK, HLLY
Fed Watch:
Last week’s Fed meeting was quite interesting. There were two dissents among the voters, one wanted no rate cut, another wanted 50bps. The committee gave the market what it wanted but Chair Powell refused to yield to market pressure for a December cut, instead saying it was ‘not a done deal’. That send the fed futures tanking and the market did as well, but it certainly came roaring back. It appears the markets are accepting the path of rates, whether fast or slow.
Stocks to Watch
Gold and Silver – Precious metals continue to do well with markets also strong. They could continue much higher into year end, and with strong momentum why not?
Bitcoin – With two months left in the year the shining alt coin could be poised to make a big move to end the year in style, at new highs. This week may start the process.
Earnings – Very strong earnings reports this quarter and this week will be the biggest one yet, more companies delivering that last week. We’ll get a good read on market valuations after this week is over.
