The Fuse
Equity futures are down modestly this morning as a turnaround tuesday is in effect. Monday’s terrific price action could use some followthrough though if a pullback occurs today we would like to see it contained. Earnings are the big driver of performance this week.
Interest Rates are steady this morning, the 2 year flat along with other maturities along the curve. High yield spreads are tightening up again, fed futures see a cut happening at next week’s meeting.
Stocks over in Europe were only up a fraction, higher by .1% on the STOXX. Very quiet session, and in Asia Japan continued its renaissance rallying .3% while Hong Kong and Shanghai posted robust gains. The dollar climbed .1%, gold backed off from huge gains Monday, silver as well which is now below $50. Crude is up about 1%. Yields fell a bit in Germany and the 10 yr US treasury bond.
Earnings this morning are being taken positively, MMM and GM posted robust earnings and better guidance, GE also with solid results. We’ll hear from RTX and KO later. Also a strong beat from Northrop Grumman. Tonight we find out what Netflix did this past quarter, along with Capital One, Texas Instruments and Intuitive Surgical.
Stocks started off the week on the right foot for the bulls as some very positive action was seen from the start of the day. Good action across the board especially in the small caps that helped pace a very strong move up in the indices. The Russell 2K finished just under the key $250 level on the IWM, and if that can be taken out then we might see a very sharp breakout. No doubt gold and silver names have been helping to move these small caps./span>
Really good breadth figures yesterday, and another one like that would put this indicator in the bullish column. A 5-1 rout of the bears is not all that common but with better action from all participants that is what you get. New highs crushing new lows, and with strength in the oscillators to move them into positive territory. Nothing bearish about that.
With the powerful rally on Monday we did not see the heavy volume that often accompanies such a move. That could be a concern if there is a quick move down, but then it could also mean the volume levels could expand later in the week. Don’t forget, plenty of big earnings this week will drive volume trends either bullish or bearish, and price breakouts are most important to attract more buyers.
As the indices pull away from the moving averages there will eventually be a pullback or reset at certain levels, we just don’t know where that is just yet. The trend is still bullish with the indices making new highs and seasonally bullish trends in place.
The Internals
What’s it mean?
Is it purely coincidental or does the market really like Mondays? We have had some very strong action on this calendar day for months, maybe there is something positive about getting involved after a weekend is completed. Strong VOLD action, it finished at its highs of the day while the ADD and ADSPD were very high all session long. TICKS were heavy green, mmany buy programs all day long, the VIX gapped lower and finished below 19%.
The Dynamite
Economic Data:
- Tuesday:Fed speaker
- Wednesday:Fed speaker
- Thursday:jobless claims, existing home sales, fedspeak
- Friday:CPI, SPX PMI, sentiment final
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.
