The Fuse
Equity futures are up modestly this morning following a session where stocks ran up/down but ended nearly flat. That is called churn, and for us option players it is burning premium. That means there is little to be gained from buying options.
Interest Rates are rising a bit this morning as bond sellers create some activity before the Fed meeting tomorrow.
Crude oil is on the rise again and is making its way towards $95 per barrel. The UAW is making bold demands on the auto companies and is threatening to strike more later this week.
Earnings tomorrow on GIS and FDX will give us a good read on the consumer and inflation at the retail level.
Nothing much on the events front. Oh wait, the Fed meeting starts today! Without much fanfare or volatility markets are sanguine in front of a policy decision, which can be dangerous.
Breadth was weak all session long and remains on a sell signal. Not much good on the side of technology either, the Nasdaq finished with a small gain. Energy helped the overall breadth but the Russell 2K once again was the weakest index and higher volume selling contributed to it.
Turnover was not as big as Friday, of course last week was a big options expiration and the market simply digested it. However, there is plenty of opportunity this week and next for higher volume days, and that should be expected.
A very tight range yesterday, less than .5% on the entire session, a very slow moving market right now. We are still stuck in a range from 4600 to 4330 on the SPX 500, the Russell 2K however is threatening a break lower, the IWM to 180 or so. Seems buyers are not willing to step up, sellers are not interested either.
The Internals
What’s it mean?
A boring session with the internals still pointing downward. It appears a followthrough from Friday’s disastrous session, with the VOLD weaker while the TRIN rose up. That often happens following a big expiration day, the VIX was higher most of the session. Ticks though remain bearish, see the heavy concentration of red. That could spell trouble.
The Dynamite
Economic Data:
- Tuesday: Housing Starts and Building Permits
- Wednesday: FOMC rate decision and economic projections, crude oil inventories
- Thursday: Jobless claims, Philly Fed Index, existing home sales, leading indicators
- Friday: GlobaL Flash PMI
Earnings this week:
- Tuesday: AZO
- Wednesday: GIS, FDX, KBH
- Thursday: DRI, MANU, RAD, FDS
- Friday:
Fed Watch:
Another important Fed meeting this week where policy changes will be discussed. The latest readings on inflation cannot be encouraging to the committee, but still the Fed Futures market is expecting another pause in their hiking campaign. It’s hard to think they would be less aggressive here, especially with a roaring economy that just won’t let up. The only positives the committee could see is maybe the jobs market is cooling down some. We’ll be paying very close attention to the new economic projections.
Issues/Stocks to Watch this week
Market Volatility – We have a big fed meeting this week and the market is sanguine. Therefore, it sets up for some surprises, so be ready for them.
Tesla – The EV car maker may have a slight advantage here as the UAW strike starts and hits Ford, GM and others. The company has been cutting prices lately to reduce inventory and that will hit their margins, but the stock is bouncing around in a range. Not horrible yet.
Dollar – The greenback has been remarkable this year, the best performing currency by far. We’ll be watching for a peak and turnaround if the Fed is much less hawkish in their statement and projections.
