The Fuse
Equity futures are off to a strong start this morning, following through on yesterday’s positive session. We have seen good action even after Tuesday’s sharp early pullback, this is clearly a bullish sign when the dip buyers are active.
Interest Rates are modestly lower as rates tick down, there has not nary a movement in rates as we have not been seeing much data due to the government shutdown. Rates are looking to move lower and may see that direction soon before the next Fed meeting in 10 days.
Stocks are moving their way higher, in Europe a slight gain of .1% but the FTSE lost the same amount. IN Asia a mixed scene with Japan gaining more ground, up 1.3%, but Hong Kong and Shanghai with slight moves. Gold is up sharply again as is silver, crude oil moving back towards $60. 10 year US treasury yields fell 1bp.
Earnings last night from United were strong but guidance was a bit suspect, the stock down about 1.5% in the pre-market. This morning strong numbers from TSM and BNY, we’ll hear from Schwab later along with Interactive Brokers, CSX, and a slew of regional banks. Tomorrow am has Amex, SLB, Ally, State Street and more regional banks.
A very positive session, stocks were up all day and while they did not go out on its highs it was a good session. We did not see the heavy turnover as earlier this week but failing to break Friday’s low was good news for the bulls, and making a run at Friday’s high is even more bullish. Stocks are poised for a good run here to the end of October, which is the heart of earnings season.
Positive breadth but not nearly as strong as Tuesday, but stocks are clearly making the turn upward. We like to see good, strong breadth when the market is breaking out, and the small caps have exerted some power in this department. No question where this leadership is coming from, and that could carry the markets much further than anyone expects. Oscillators are near the flat line again, New highs crushing new lows.
More good turnover from the small caps, equal to Tuesday’s wild session but the other indices failed to produce an accumulation day. That’s quite alright, in fact we could certainly expect to see lower turnover on some up sessions, the meaningful action is when stocks dip and power back up, like on Tuesday.
Another up session and further away from the support zone area. That’s fine, but if we get to an overbought condition it’s going to get dicey, and a sharp pullback will be expected. No worries now, especially at the start of earnings season.
The Internals
What’s it mean?
Decent internals but not the greatest. VOLD was higher but well below Tuesday’s session, the volume just did not keep up with the positive issues. ADSPD fell below the zero line, TICKS were positive all day though and the VIX, up early fell end of day. PUT/CALLS fell a bit and that is bullish.
The Dynamite
Economic Data:
- Wednesday:Empire State, more fedspeak
- Thursday:Retail sales, PPI, philly fed, jobless claims, homebuilder index, lots of fedspeak
- Friday:Housing starts, building permits, industrial production, cap utilization, import prices
Earnings this week:
- Wednesday:ASML, PGR, DLTR, BAC, MS, SYF, CFG, ABT, PLD, UAL, JBHT, SNV, PNFP, BANR, EPAC
- Thursday:TSM, BNY, KEY, INFY, SCHW, TRV, CMC, MTB, MMC, IBKR, CSX, SFNC, FNB, OZK, LBRT
- Friday:ALLY, SLB, STT, AXP, RF, TFC, HBAN, CMA, ALV
Fed Watch:
Lots of fed speakers this week coming out to talk about the economy. This will like be the last big week of fed speakers before the Oct 29th fed meeting, which seems to be one where the committee will cut rates one more time. No doubt some will be talking tariffs again along with the government shutdown, which is likely to be a drag on growth.
Stocks to Watch
Banks – This group has been weaker of late but that is perfect timing in front of earnings. Whenever the financials rally before earnings it usually means downside, we have the opposite situation here.
Tariffs and China – A mid afternoon swoon after President Trump said 100% tariffs on China starting November 1. If this is just rhetoric, a threat or something real we will soon find out after China responds. More uncertainty.
VIX – A huge move in volatility on Friday, perhaps a bit too much but we’ll see how the market responds on Monday. There is nothing wrong with a little fear but if it continues then it could be problematic.
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