The Fuse
Equity futures are mixed following a very strong day to start the week. The stock market is clearly overbought but that is just a condition rather than a signal. If there is a roll down or perhaps risk off day characteristics then we could see a more sensible pullback. For now, investors are very optimistic about the future.
Interest Rates are down a bit this morning as bond investors are rallying into fixed income. Yields have been somewhat steady the last couple of sessions following a bit pop on Fed day. High yield remains well bid and is telegraphing a strong economy, the 2 year has bounced up to 3.62% but still reflects a few more cuts coming by the Fed.
Stocks in Europe rose up .2% as the STOXX was led by strong gains in France and Germany. The FTSE also rose up, adding .3%. Gold is ripping higher to pass 3,800 for the first time, silver also showing streng as is crude oil. The US dollar index rose .1%. Stocks in Asia were lower, Japan was closed but Hong Kong shed .9%, Shanghai down .2%. On yields, German 10 yr bunds were flat, US 10 yr treasury down 1bp.
Earnings this week are sparse but we’ll hear from Costco, Micron and Jabil. These may move markets.
Stocks appeared ready to push lower at the start of the week but the dip buyers had other thoughts. With a nice winning streak lately and solid action across the board for the indices, the push by the bulls has been impressive. With only six trading days left in September it could be a wild finish.
Not great on the breadth once again as the market continues to churn underneath. Is that damaging? It could be, but as long as the money is flowing into the markets the divergences could continue. Oscillators remain mixed.
As expected the turnover numbers fell sharply. Friday’s strong volume print was driven by the expiration day, but there is always some residual selling the occurs post-expiration. As we move closer to the end of the month/quarter we’ll see more turnover start to matter. We could look toward some accumulation and distribution days to be notched.
A short term blip down was all that the bears could muster. This market continues to defy the odds. Strong trends barely give you a chance to get on board, and that is what happened Monday. However, moving averages are catching up to the indices and that means more solid support zones.
The Internals
What’s it mean?
Another moderate day for the internals as the VOLD pushed higher after establishing its low from the start of the day. We also saw that same behavior with the ADD and ADSPD, though these are much less dramatic. Ticks were evenly distributed, a fair amount of buy/sell programs. VIX rose up sharply but is starting to back away, that could lead to more gains later in the week.
The Dynamite
Economic Data:
- Tuesday:Chair Powell, SPX flash service and manufacturing
- Wednesday:new home sales, Mary Daly speaks
- Thursday:Austan Goolsbee, GDP estimate, durable goods, inventories, existing home sales, fed speak
- Friday:PCE, consumer sentiment, more fed speak
Earnings this week:
- Tuesday:AZO, MU, AIR, WOR, AYTU
- Wednesday:CTAS, UEC, THO, KBH, FUL, SFIX, SCS, WS
- Thursday:ACN, KMX, BB, JBL, SNX, LUSE, COST, CNXC, LGCY, LPTH
- Friday:KNOT
Fed Watch:
The Fed policy switched to more dovish this past week and we’ll hear quite a few of the members talking this week including a speech from Chair Powell. It’ll be interesting to hear everyone’s viewpoint so close to the window of the prior fed decision.
Stocks to Watch
AI – It’s been a big summer for the AI stocks and there could be some more upside to go before the end of the year.
Bitcoin – The big crypto currency is looking to break out and that might just happen starting this week.
Market volatility – The VIX is extremely low and displays complacency by market players. That is a dangerous situation as we come up to quarter end.
