The Fuse
Equity futures are nicely higher this morning, trying to put a bow on a strong market week. We would normally have the payroll/jobs data this morning but it is being delayed by the government shutdown. Perhaps next week the report will be released.
Interest Rates are slightly lower as bond buyers are back for some recent bargain hunting. The 2 yr has moved down sharply of late, towards the lows in September. That is good news for those looking for more rate cuts. High yield remains in demand, spreads are tighter than ever. Fed futures maintain the FOMC will be cutting rates at each of its next two meetings.
Stocks are higher this morning with a bit lower volatility. Europe had nice gains, the STOXX up .4% paced by gains in Germany and France. FTSE also added .3%, gold is higher but is back below 3,900 but silver is ripping higher by more than 2%. Crude is higher as well. Japan was up sharply again, 1.9% but Hong Kong fell .8%, Shanghai was closed. Yields on US 10 yr treasuries were up 2 bps, flat for German 10 yr bund yields.
<Not much on earnings the remainder of the week.
Pretty solid day for the markets on Thursday, but the statistics were not overwhelming. It seems the bulls are just trudging along here without much resistance from the bears. That won’t last forever though, but as we enter earnings season we ponder this question: Do you really want to be short during earnings?
Once again, the market rises without the support of key indicators or internals. Breadth was poor, several names going higher but a bit more going lower. That sort of churning can last awhile and eventually become meaningful. Think of a trap door opening under your feet and you have nowhere to go but down. Oscillators are split once again.
If you were looking for trouble you might find it in volume trends. The Industrials actually had a nice accumulation day but the other indices rose up on putrid turnover. Like breadth, this condition could last a bit longer and eventually become troublesome. We won’t judge the market solely based on volume trends, but it would help if they were positive.
Buy the dip is the mantra right now, there is no disputing this fact. We are not even near overbought, which tells us the wall of worry remains high. I suspect many traders/investors are hesitant to add before earnings season starts, preferring to wait on results. That might be the wrong and late approach.
The Internals
What’s it mean?
Internals were mixed once again, the VOLD and ADD rather poor given the strength in the markets. No wonder breadth finished negative. We really won’t see this market fly until these two indicators improve greatly. TICKS were mostly green, big buy programs – a win for the bulls. Put/calls were lower, also bullish. VIX ran up but is backing off this morning.
The Dynamite
Economic Data:
- Friday:Sept NFP, wages, service PMI, ISM, Philip Jefferson
Earnings this week:
- 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.
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