The Fuse
Equity futures are rebounding from Friday’s late selloff as volatility is being sold down. It’s a big week for stocks as we have a Fed meeting, Apple earnings (among many others), the start of a new month and the employment report Friday. Plenty of data swerve markets.
Interest Rates are rising this morning on the long end of the curve, perhaps more selling in bonds before the Fed meeting this week.
Crude oil is down a bit to start the day but gold has a bid above 2K per ounce. European stocks rebounded overnight which has given a nice bid to US equities. Israel started a new military attack in Gaza as the war intensifies.
McDonalds delivered strong earnings this morning as the big headliner. Later today we’ll hear from ANET, PINS, WOLF, PSA, and RIG while tomorrorw am bigger names like CAT, PFE, AMGN, ETN, ZBRA and JBLU.
Plenty of events this week including Apple earnings, some other big earnings reports, a Fed meeting, a new month and a jobs report to worry about.
Whew!
Breadth was again miserable Friday, about 3-1 negative. When the breadth is so bad for so long it means large institutions are selling stock in a big way. Eventually this will turn, but for now the market is in heavy distribution and in a corrective phase. Earnings are not helping out much, witness the big reversals in names that have done well (microsoft, netflix, Meta). Being long the market with poor breadth is a dangerous game to play.
Volume was on the heavy side Friday but not as much as Thursday, but the sting of selling was still felt. Buyers tried to take the markets higher early on but failed miserably, the indices closed near lows of the session.
Well, we talked about it last week, that after 4200 fell we expected to see a quick move to 4100. That indeed happened in a very short two sessions! The low Friday was 4,103 – close enough but barely bounced at the end of the session. Below 4,100 sets up for several targets for a ‘gap fill’, about four of them out there left open from the Spring – down to 3950 or so.
The Internals
What’s it mean?
I feel like a broken record since last week. The VOLD remains under pressure and finished on its lows of the day, so heavy selling all session long. The ticks were red as could be all day as well, VIX closed near the highs of the session while put/calls ran up to finish above 1. It was nearly a trend down day on ADSPD.
Absolutely nothing bullish in this market right now.
The Dynamite
Economic Data:
- Monday: N/A
- Tuesday: Employment Cost Index, Chicago PMI, Consumer Confidence
- Wednesday: ADP, ISM, JOLTS, Fed decision, construction spending
- Thursday: Jobless claims, productivity/unit labor costs, factory orders
- Friday: NFP employment report, Global final PMI, ISM, non-manufacturing index
Earnings this week:
- Monday: CHKP, MCD, ON, SOFI, CHGG, LSCC, PINS, SPG, WELL, WOLF
- Tuesday: AGCO, CAT, ETN JBLU, PFE, SFM, AMD, CZR, FSLR, YUMC
- Wednesday: APO, EAT, CVS, DIN, DD, EL KHC, MLM, YUM, DASH, ABNB CF, CAKE, EA, MDLZ, IR,QRVO, PYPL, QCOM, ROKU, Z
- Thursday: COP, CROX, CMI, CYBR, LLY, RACE, K, MAR, TAP, PZZA, PH, SHOP,SBUX, WEN, AAPL, SQ, CRUS, NET, FTNT, MSI, SWKS, OLED, WW
- Friday: AMC, AXL, CAH, DOC
Fed Watch:
The second to last Fed meeting of the year is upon us and there is a strong likelihood the committee will pass on hikes this time around. However, we want to listen to the committee carefully to see if they are intent at continuing rate hikes. The data this past week showed inflation was still a problem and still rising higher. Tuesday/Wednesday is the Fed meeting.
Issues/Stocks to Watch
Apple – The biggest company in the world will release earnings on Thursday, everyone will be watching/waiting with great anticipation. The stock chart is horrible at this point after a severe 20% correction. Will good earnings change that and turn the chart bullish again?
Federal Reserve – It’s time for another interest rate policy decision, the committee is likely to pass on a hike this week but will continue to keep the door open for more hikes. Last week’s inflation numbers were not Fed friendly. I expect to hear the Chairman and the committee reiterate their commitment to snuff out inflation and do whatever it takes. As Powell once said, ‘there is going to be pain’.
Interest Rates – Will the news releases this coming week help to bring bond buyers back or will the 10 year finally get a week over the 5% level and stay there for awhile?