The Fuse
Stock futures are up strong this morning reflecting some optimism following a strong session in Europe. This region is up in front of key data that is to be distributed later in the week, including a rate decision by the ECB.
Interest Rates are on the rise this morning as bonds are selling off. When yields have risen and stayed elevated it has often put a cap on stock advances, we’ll see if that holds today.
It was the start of football season this weekend, surprises all around in the NFL. A massive earthquake hit Morocco over the weekend with thousands of casualties, Hurricane Lee is making its way up the eastern seaboard and may inflict some damage once it comes on shore.
Earnings will be released by Oracle tonight, the stock has been very strong of late and is trading at an all time high. If earnings are strong with good guidance this stock may run hard above $130.
Today is the 22 year since the 9/11 attacks on our soil. Markets will take a moment of silence to remember what happened on that tragic day.
Apple’s new products event starts tomorrow.
Breadth was negative again at the end of the week as this indicator is resoundingly bearish. After a week of positive breadth to end August there has been little reason for buyers to step up. Considering September is one of the weakest months of the year, that makes sense.
Volume trends were higher this week as the market sold down, hence some strong distribution days were counted. That simply means professional selling, and until that is completed we can expect to see price levels penetrated to the downside.
We continue to see 4,400 as strong support and below there 4,330 or so. If that falls then plenty of levels to see below. The Russell 2K fell the hardest this past week and remains trapped under $.198
The Internals
What’s it mean?
VOLD was clearly not the game on Friday. The weak showing even as the market rallied was not inspiring. Notice the heavy ticks on the red arrows, that tells us selling was concentrated all day long. VIX fell but rose smartly end of day, the PUT/CALL remains on a sell signal. We could see a bit more movement this week if lower support does not hold.
The Dynamite
Economic Data:
- Monday: Consumer Inflation Expectations
- Tuesday: Small Biz Optimism
- Wednesday: CPI, crude inventories
- Thursday: PPI, jobless claims, Retail Sales, Business Inventories ECB rate decision
- Friday: Import/Export Prices, Empire Manufacturing, IP and Cap Utilize, Michigan Sentimen t
Earnings this week:
- Monday: CASY, AVO, ORCL
- Tuesday: N/A
- Wednesday: CBRL, LOV
- Thursday: KFY, ADBE, LEN
- Friday:
Fed Watch:
Several Fed speakers out last week reiterating their hawkish views, though a couple may have hinted the Fed is much closer than everto ending rate hikes. That simply means the economy and monetary policy will be in a new phase of tightening, and that could last awhile longer. No Fed speakers this week as the committee members enter a quiet period. Currently about an 8% chance of a hike at the Sept 19th meeting, but the market is pricing in 2 hikes slightly by the end of 2023.
Stocks to Watch
Apple – The company’s latest event called Wonderlust starts Tuesday, and it is assumed they will unveil their latest iPhone creation, new watches and perhaps some other new products. Always something to watch.
Inflation – The headline reading for August is expected to be quite high, a 9.5% annualized rate. That is unacceptable, but is mostly driven by higher energy and food prices. Core levels are still elevated though and should remain so. These numbers will be important before next week’s Fed meeting.
ECB – The central bank of Europe will have their rate meeting this week, they have been aggressive with policy in trying to rein in their high inflation. They are likely to raise rates at least once more before the end of 2023.
