The Fuse
Equity futures are moving up as the bullish momentum continues. Regardless of the news there is an insatiable bid in this market right now leading to new highs just about each day. Small caps look to be in the best condition for an outsized move over the next few weeks.
Interest Rates
Stocks are looking higher this morning after a couple of strong sessions to start the week. The beginning of the month is often strong with good money flows, The STOXX was up nicely, higher by .6% paced by strong gains in France and Germany. FTSE added a small amount, US dollar index was lower by .1%. Gold is still hovering above $3,900 per ounce, silver is backing off slightly and crude oil is down .3%. Asia stocks were up, China coming off a holiday but Hong Kong ripped higher by 1.8%, Japan up .9%. Yields remain steady in Germany but up 1bp for 10 yr US treasuries.
Not much on earnings the remainder of the week.
It certainly looked ugly this morning and overnight Wednesday morning following news of a US government shutdown. But alas, ‘that is why we play the game’. With real time hours (RTH) we get a very true and genuine idea of how the market is flowing. With decent statistics and a followthrough rally there couuld be some big noise later in the week.
Breadth was better but not overwhelmingly positive. Yet, the bulls still won the day with solid price action and huge reversal intraday was impressive. Oscillators are still negative but it won’t take much to turn those into positive territory, and we are now in a seasonally bullish period. New highs are besting new lows again, that is impressive for such a long string of weeks. This indicator is bullish.
The only index with better volume than Tuesday was the Industrials, which barely finished in the green. That’s fine, especially on the first trading day of the month. We don’t always want to see fund managers rushing to buy everything all the time. A more methodical approach is better, preferring to wipe out its tracks. We may have some big volume prints by the end of the week, stay tuned.
These early pullbacks and buys are a good test to see if the bulls are serious about advancing the ball forward. With the uptrend still in tact it is up to the dip buyers to step in on ever test of lower support, so far so good.
The Internals
What’s it mean?
Some improvement in the fundamentals yesterday, take a look at the ADD and VOLD, both finishing near highs of the session. PUT/CALL remains low and on a buy signal, VIX rose up early but the vol sellers were active, bring the VIX back under 17%. Ticks were distributed evenly but mostly green, heavy concentration of buy programs. Good first day of the month.
The Dynamite
Economic Data:
- Thursday:jobless claims, factory orders, Lori Logan (dallas)
- Friday:Sept NFP, wages, service PMI, ISM, Philip Jefferson
Earnings this week:
- Thursday:ANGO
- Friday:N/A
Fed Watch:
We had several fed speakers out last week talking about fed policy and the economy. Most of them tipped their hands to show where they stood on the last policy meeting, which ended with a rate cut. The committee sees a couple more cuts coming this year and slowing down the pace considerably in 2026. The jobs report this week will be watched carefully, but it seems even if it is weak then two cuts may still be right. Chair Powell this past week mentioned stock prices perhaps being a bit high.
Stocks to Watch
Banks – The financials had a pretty nice week considering the markets were lower. Perhaps they are setting up bullishly before reporting in a few weeks, that makes sense.
AI – Stocks have been all over the place as the AI revolution rages on. However, the main catalysts are not there for a month or so unless some shocking news hits the tape. The big names may be entering into a consolidation phase for a bit.
Gold and Oil – Gold has been a big winner so far in 2025, but crude is also on the rise. Further, refiners have started to run hard and that may lead to higher gas prices eventually. This group finally found some love this last week.
