The Fuse
Equity futures are bouncing around and mostly mixed with SPX up slightly as is the Nasdaq. That will clearly change this day with the heavy volume and volatility arising from a triple options expiration.
Interest Rates are up slightly as bondholders cut back a bit on their fixed income. Yields have been rising across the board a bit over the last few days, maybe some profit taking following a surge higher in bond prices the last couple of months. The 2 year is flat while 10 yr treasury yields tested 4% but that was a level buyers chose to do some selling. Fed futures now pricing in rate cuts at the next two meetings.
New highs for US markets on Thursday but Europe was not impressed. The STOXX was off slightly while FTSE was flat. The dollar index rose .1%, gold and silver are back to their winning ways, crude oil down about .55%. Yields are rising, German bunds up 2bps, so where 10 yr treasury yields. Stocks in Asia were lower, Japan off by .6%, Hang Seng and Shanghai off slightly less.
Earnings from FedEx beat lowered expectations but the CEO sees improvement in US shipping. Lennar missed on most metrics as the housing market remains stalled.
A strong day for the indices as the spillover effect from the Fed policy move was evident. Markets mostly rallied around the world as the committee met market expectations. Technology and small cap stocks were flying today, the IWM finished at a new all-time closing high. Today is a big options expiration Friday, there could be a bout of volatility.
Breadth was very good once again but did come off the best levels of the session. With solid A/D numbers the markets can cruise higher, supported by positive statistics. The oscillators are now firmly bullish but not overbought, which leaves room for the markets to rally further. Volume breadth indicator hit a new all-time high, new highs continue to crush new lows.
Volume was a bit lower than expected but hold onto your hats, it will be expanding big time today. Triple witching expiration is upon us and that means options, index options and options on futures hit the road for September. We often see market volatility kick up, especially during the last 90 minutes or so of trading. It’s been a great week so far for the bulls, let’s see if it continues.
That pullback on Wednesday was enough to drive the bears crazy. It was about 1% or so but that was enough to reset the situation for the bulls, and onward to new highs. We should be mindful of the momentum in the market and an overbought condition, eventually it will matter and we will pullback to test some support levels.
The Internals
What’s it mean?
Pretty decent internal statistics yesterday, the VOLD finally made a good move as did the ADD, but the morning session was much stronger. VIX failed to drop sharply and rallied near the end of the day, ticks though were mostly green as many buy programs hit during the day. Put/call ratio was down again, leading to potentially more upside.
The Dynamite
Economic Data:
- Friday:Mary Daly speaks
Earnings this week:
- Friday:
Fed Watch:
Fed meeting this week and the market is largely looking for a rate cut. That will likely happen, we’ll see projections for the next few months and into 2026 to see where they see growth and inflation coming in the year ahead.
Stocks to Watch
Options – Friday is a big expiration day, we’ll see heavy volume and some volatility.
Bitcoin – The crypto currency looks to have bottomed and is on the rise, this may lift other markets.
Bonds – Keep an eye on fixed income, if the fed follows through with a rate cut the bond market may give some information over what may be next.
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