The Fuse
Futures are mixed this morning as the spx 500 tries to make it eight straight up sessions. The indicators are pretty overbought still even after a modest pullback in the internals the last couple of sessions. The burst last week is sticking so far, but buyers may be hesitating up here.
Interest Rates are modestly lower on the long end of the curve as inflation pressures are intent on falling, and stock market investors are keying on some important comments from Jay Powell over the next couple of days and more Fed speakers.
Nothing much overnight but European inflation came in line. Chair Powell has a talk early this morning and that may move markets, while the election yesterday was a resounding victory for the democrats in several states.
Earnings were strong last night from Gilead, Axon and Rivian, while some misses by Upstart and Toast. This am good numbers from Roblox and raised guidance from Biogen.
A pretty quiet day overall as it seems the market continues to consolidate last week’s robust gains. We could see a bit of a pause here and if support fails to hold we’ll be back in a range.
Breadth was poor again as the oscillators cooled off from hot levels last Friday. We could withstand another day or so of poor breadth but anything more and they will be on sell signals.
Volume trends are improving, last week’s volume levels were very strong and this week we are seeing lighter turnover on a modest pullback.
If you’re bullish that’s what you want to see. However, if the selling picks up there are plenty of gaps down to fill from the prior week.
As mentioned last week, 4,400 is very clear resistance on the SPX 500. The last visit to that area was not good, a subsequent move down of 300 points followed. But, we had a strong turn above 4,103 and that move is not yet completed. A higher low on the chart would be very useful to the bull case.
The Internals
What’s it mean?
As we see in the internals there is a consolidation taking hold. That should be expected after the week we just experienced. The VOLD is flat to slightly down, while the ticks are moderately bearish, the vix still subdued and that is a concern. ADSPD is flat while the put/calls are bending lower. Nothing conclusive here on these internals for now, perhaps as we hear from more fed speakers and earnings this week it may change.
The Dynamite
Economic Data:
- Wednesday: Crude Inventories
- Thursday: Jobless claims, wholesale inventories
- Friday: Michigan sentiment, treasury budget, consumer sentiment
Earnings this week:
- Wednesday: YOU, EVGO, K , RL RBLX, UAA, AFRM, FICO, CART, LYFT, MGM TTOW, DIS
- Thursday: BDX, HBI, SONY, TPR, ALRM, TTD, SYNA
- Friday: MGA
Fed Watch:
Quite a few Fed speakers out this week including Chair Powell twice (today/tomorrow). We’ll see if he puts a bit of zest back into the market action or if he follows the same script as last week.
Stocks to Watch
Disney – The House of Mouse will deliver earnings this Wednesday and after a stellar week the setup is there for some disappointment following the release. However, if the stock pulls back it could be a good buying opportunity.
Interest rates – This past week saw a huge drop in rates on the long end of the curve, and the stock market rallied on it. That move down in yield was exaggerated enough, but many still see inflation coming down. We need to see more evidence, else rates will climb right back up.
Seasonal patterns – November is considered on of the best performing months for the stock market over the last 20 years, tied for first.
It is even better than December when Santa Claus is due to arrive. We’ll see how far this seasonality is carried.