The Fuse
Equity futures are rallying up this morning but are well off their overnight highs. Monday’s have been mixed sessions with the majority of days higher, yet we do have some volatility here and that could mean a bit more back n’ forth and perhaps a wider range.
Interest Rates are a bit higher this morning after last week’s explosion in bonds and fall in rates. Perhaps the bond market is sniffing out some weakness in the economy, we’ll find out if that could be true later this week when some big earnings hit the street.
Stocks look to carry forward last Friday’s nice rally, stocks in Europe were higher led by Germany, the FTSE was also up .4%. Gold is rallying sharply, up near 4,300 per ounce, silver has held the $50 level. US dollar is higher, Hong Kong up sharply, US 10 year treasury yields up modestly.
First big heavy week of earnings from the 3rd quarter is here, with names like IBM, Intel, Tesla, Netflix, RTX, Coke and MMM. We’ll be paying close attention to the reaction and the response to earnings and guidance.
Decent week though quite volatile but the bulls prevailed. A very poor showing with breadth but volume trends did pick up and turned bullish on the small caps. When this group is leading higher the rest of the market usually follows suit. We’ll see how strong the small cap energy is, if rates stay down that’s a great sign.
Breadth again has been awful, even as the market rallied Friday the breadth was barely positive. That will eventually create problems for the indices and stocks, but for now it is just a warning sign, a strong one at that.
Volume trends are starting to perk up and that may continue into the end of the month. Some heavy hitters will be reporting earnings over the next two weeks and we should expect to see some volume expansion.
I’m not sure the pullback recently was a good test of support, but no doubt the bulls have been carrying the water faithfully. A much better response at the 20 day moving average would give us a bit more confidence in a pullback, and that might still happen in the coming days.
The Internals
What’s it mean?
Once again, markets were sparked by late buyers yet the internals were not lighting it up much. Just look at the VOLD and ADD, totally limp compared to the price action of the indices. VIX fell sharply and is now on a buy signal, that certainly worked to stimulate buyers. Put/calls raced higher then back down, this indicator is low and remains on a buy signal..
The Dynamite
Economic Data:
- Monday:
- Tuesday:
- Wednesday:
- Thursday:
- Friday:
Earnings this week:
- Monday:CLF, DX, AGNC, CCR, ZION, CADE
- Tuesday:KO, GE, ELV, LMT, RTX, MMM, PHM GM, NOC, NFLX, ISRG, TXN, COF, MAT, EQT, WCH
- Wednesday:APH, GEV, VRT, BSX. HLT, T, TMHC, TECK, TMO, WGO, TSLA, IBM, KMI, QS, SAP, AA, LRCX
- Thursday:AAL, DOW, HON, HAS, NOK, DOV, LUV, AN, TMUS, INTC NEM, ALK, NXT, DECK, BYD, F
- Friday:PG, GNTX, FLG, ITW, GD, HCA, VRTS
Fed Watch:
With the lack of data from the government the Fed finds itself in a quandary. Do they trust the own tools and make the assumption that inflation is not running rampant and the labor market is indeed slowing, or do they take a more cautious approach. Governor Waller seemed to believe the latter, we’ll hear from him this week along with Miki Bowman. Next fed meeting is coming up in about a week.
Stocks to Watch
Netflix – For all of its controversy, this company just continues to execute on their plan and deliver for shareholders. Expectations are somewhat high but that has never stopped Netflix in the past from beating and guiding higher.
IBM – Big blue has been on a roll lately and continues to surge higher as a non-AI play. We’ll find out more in the earnings call this week.
Industrials – A big week for the Dow as many names will report earnings this week and even more next week. With the index about 1% below all-time highs a surg through there might signal 50K is next up.
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