The Fuse
Equity futures are trying to rally this morning to another new high in the SPX 500. Yesterday’s strong close was further confirmation of this bull rally, but another strong day of breadth is needed for us to see a buy signal in that indicator, which would likely launch the markets to a milestone level (6K).
Interest Rates are down this am as bond buyer are back in there adding fixed income following an off day for the bond market.
Yields on the 2 year are back under 4% but the 10 year remains stubbornly above it. Fed funds futures are steady as this market continues to see a rate cut in November but is on the fence now for December.
Stocks in Europe were higher overnight, reflecting the strength in the US markets on Monday. The dollar continues its strength as well, rising up .1% while crude oil came crashing down, off a whopping 4%. Gold and silver are rallying modestly, stocks in Asia wwere mixed with Japan higher but Shanghai and Hong Kong down sharply, 2.5% and 4% respectively.
Earnings are coming out this am from Goldman Sachs and Citi, already reported was Bank of America, they beat on the top/bottom line. UNH also reported but is retreating sharply on higher medical costs, but they did beat but only provided in-line guidance.
A pretty strong day following the weekend but more importantly was the followthrough. The price action was favorable all day long, new highs were tagged early as the bull rally carried on. The SPX 500 is that much closer to the magical 6K level, now just a bit more than 2% away. Nadaq had a good showing with good breadth and volume. The VIX has a buy signal here with a 3 point move below recent highs.
Breadth was impressive following pretty good stats on Friday, but just barely hung on. Oscillators inched closer (NYSE) to zero and positiveness but did not quite get there. A minor tilt of advancers will do the trick today. Nasdaq is already positive and making progress. New highs trounced new lows again, this indicator on a buy signal.
Better volume in the Nasdaq yesterday enabled that index to notch an accumulation day. However, the SPX, Industrials and R2K were simply positive but big institutional sponsorship did not count towards accumulation. That’s quite alright though, because a positive market move is always good to see for the bulls. We should see more volume hit as we approach Friday’s big option expiration.
Pullbacks are being bought, and thus it becomes difficult to peg good support levels. We’ll stick to the 10 and 20 moving averages for now, but as the markets climb higher there becomes quite a distance between lower support and current price levels. There are much lower points that are relevant and can be achieved on a swift pullback. SPX levels include 5,600 and 5,550 but also some support at 5,521 (100 day moving average).
The Internals
What’s it mean?
If you’re a bull you love to see a followthrough day. The internals were strong but not as much as Friday, but the bulls will still take it home. VOLD positive as was the ADD, the ADSPD climbed all session long. That’s important to see for this trend to continue. VIX moved down sharply and is now on a buy signal, this indicator could easily move down to the mid teens. TICKS were mostly green, the Nasdaq especially, which bodes well for strength in today’s session.
The Dynamite
Economic Data:
- Tuesday:Empire State, Fedspeak
- Wednesday:import prices
- Thursday:Retail sales, jobless claims, philly fed, industrial production, cap utilization, biz inventories
- Friday:housing starts, building permits, fedspeak
Earnings this week:
- Tuesday:UNH, C, JNJ, BAC, SCHW, GS, PNC, WBA, UAL, IBKR, FULT
- Wednesday:ASML, MS, ABT, USB, SFY, AA, KMI, CSX, DFS, EFX
- Thursday:TSM, TRV, ELV, INFY, MTB, NFLX, ISRG, WDFC, MRTN,
- Friday:CMA, SLB, AXP, PG, RF, ALLY
Fed Watch:
More Fedspeak this week but not as much as last, when we had 15 speakers in total! Whew! The inflation reports last week were mixed but they still see the fed cutting at least once and likely twice before the end of the year. Last week’s release of the Fed minutes pretty much told the story there, rates have backed up to be more aligned with fed talk.
Stocks/Issues to Watch
Retail sales – With a huge jump in retail spending over the summer will this be cooling down before the holidays?
Earnings – Later in the week some big names will report earnings, and this will likely be a market moving event.
One thing to remember, you don’t want to be too short during earnings season.
Boeing – Not that it matters much, but Friday after the close the company snuck in their earnings results early, a huge loss and 17K jobs being cut. Who does this on a Friday night, like a massacre? The stock may be hit hard.
