The Fuse
Equity futures are rallying smartly this morning, working to erase some of the negative day that occurred on Monday. Volatility is lower as is crude, but that could change quickly.
Interest Rates continue to rise today as the market prepares for the latest inflation figures. Rates may be on the rise due to the influence of higher crude oil on inflation as that may incline the Fed to slow down on rate cuts. The futures market sees a slightly better chance of 2 cuts by end of the year.
Stocks were down sharply yesterday and are trying to regain some footing on a potential turnaround Tuesday. Euro stoxx fell .9% on volume, the dollar was flat while crude fell about 2%. Gold is marginally higher as is silver. German bund yields declined by 2bps. Stocks in Asia were mixed, the Nikkei in Japan was down 1%, Hong Kong down a whopping 7.8% while Shanghai had a volatile session, up 4.8%.
Pepsi reported earnings this morning and missed and revenue, also cutting their guidance. Earnings later this week from Delta, JP Morgan, Wells Fargo and Blackrock.
Lots of Fed speakers out this week, a slew of them as they intersect with some important inflation data.
Breadth was horrendous on Monday with price action very poor. Oscillators are pretty negative here and could lead to a temporary bottom, but that will be challenging. New highs continue to beat out new lows, that indicator remains on a buy signal.
Pretty heavy volume Monday as the indices notched a distribution day. There is a problem when we see a series of these on display, stocks going down for a longer period tend to cluster to the downside. This seems not much more than a modest corrective period though. Catalysts are there to push markets higher later in the week.
The SPX 500 again flirting with the 5,700 level. Traders see this as a marker now, the index closing just under that level on Monday. That seems like pretty firm support. The Nasdaq is challenged by the 20K level to the upside, still good support at 19,300 if it decides to test it one more time.
The Internals
Internals
What’s it mean?
All red Monday as stocks were pounded all session long. VOLD and TICKS were the big losers here, down and in red all day. TRIN pointed lower, which means the volume was heavy vs the number of down issues. VIX rose up smartly, levels not seen since August. ADSPD was down as well, let’s see if turnaround tuesday happens or not.
The Dynamite
Economic Data:
- Tuesday:More Fed speakers, trade deficit, optimism index
- Wednesday:Lots more fed speakers, wholesale inventories
- Thursday:CPI, jobless claims, fed speakers
- Friday:PPI, consumer sentiment, fed speakers
Earnings this week:
- Tuesday:PEP
- Wednesday:HELE, AZZ
- Thursday:DAL, DPZ, TLRY, AEHR
- Friday:JPM, BLK, FAST, WFC
Fed Watch:
A heavy dose of fed speakers this week as the Euro zone kicks off their monetary conference. This is their version of the Jackson Hole conference. Several speakers will be there in Germany but also many others speaking at other locations, no less than 15 speaking engagements this week.
Stocks to Watch
Volatility – We are now 30 days out from the election and the VIX is telling us this. A big pop today in volatility as many traders prepare for some uncertainty, adding protection where they can. It may recede later in the week though with inflation reports.
Oil – Crude oil has been climbing higher for about 10 days now. This is due to the continuing and mounting issues surrounding the Middle East. If there is some resolution we may see oil tank hard, but for now it seems the direction is higher.
China – Stocks have been robust from the Chinese region after they announced a massive stimulus. That helped boost stocks and also cause a massive short squeeze to occur. We are now pretty well overbought on these names.
