The Fuse
Equity futures are mixed this morning after a very powerful Monday rally. The markets finished near their highs on the session and right at resistance. Turnaround Tuesday is a possibility as markets are modestly overbought.
Interest Rates are lower this morning after falling sharply Monday. Bond buyers are back as the 10 year yield is being driven lower towards its 50 day moving average, just below 4.4%. Fed futures have starting pricing in a better chance of a hike later in the year.
Apple has a big event later today that seems to be focused on iPad. Many were hoping they would deliver something related to AI, but that is unlikely (probably at WWDC in June). Apple also mentioned they will be producing their own AI chips, NVIDIA is taking a small hit on this today, but a pullback might be a nice buying chance before they report earnings in two weeks.
Earnings were strong last night for Axon, Palantir had mixed earning but strong numbers from Fabrinet and Coherent. This morning Disney beat on the bottom line but missed on revenues, raised their guidance for 2024. Datadog had a miss and is down sharply. Later today we’ll hear from Lyft, Arista, Upstart, Wynn while tomorrow it’s Uber, Shopify, Affirm, Toyota.
A super rally Monday pushed markets higher and lifted the indices closer to all-time highs. Nasdaq got a close above 18K while the SPX 500 is now within spitting distance of a new high. Stocks in Europe were higher as they were in Asia, the dollar index was up modestly, gold down about 10 bucks while crude was edging lower.
More strong breadth yesterday pushes this indicator into overbought territory once again. Oscillators are now at extreme bullish readings so a red flag alert is being issued. While a pullback can happen at anytime, it is prudent and smart to be prepared BEFORE it happens. New highs continue to trounce new lows, this indicator is now on a full-fledged buy signal, too.
More strong turnover readings as volume trends retain their bullish posture. Given the recent move up in the indices one would expect to see volume subside a bit, that’s not happening. So, as long as markets move higher with strong turnover, we’ll have a bullish bias. Period.
That’s more like it! A breakout through some stiff resistance gives the bulls a collective ‘whew’, but also some heavy momentum to push towards new all time highs. That level is not far off now. SPX 500 closed right at 5,180, a recent level of resistance. Only 1/5% away from all time highs, Nasdaq is about 2.5%. Russell 2K has been moving well recently and is now positive for the year, that bodes well for the rest of the market.
The Internals
What’s it mean?
Some robust readings in the internals yesterday, with a very powerful finish in the VOLD. Those ticks were particularly strong all day, means we could have some followthrough this week but today might be challenging only because of ‘turnaround tuesday’.VIX was buried today, below 13.5% whil the ADSPD was strong for a second consecutive day. Put/calls remains elevated but the 20 day moving average is starting to head lower, if it continues that will set up a strong buy signal.
The Dynamite
Economic Data:
Tuesday:Consumer Credit
Wednesday:Wholesale inventories, crude inventories
Thursday:jobless claims
Friday:Michigan Sentiment
Earnings this week:
Tuesday:BP, GFS, J, DIS, ALAB, EA, RDFN, VECO
Wednesday:AFRM, EMR, KMT, RDWR, ABNB, CAKE, TTD
Thursday:CEVA, GDRX, PZZA, RBLX, TPR, AKAM, AMN, DBX, RXT, SYNA, TREX
Friday:ROAD, DOCN
Fed Watch:Following a quiet period where speakers were silenced before the Fed meeting, we’ll have several unleashed on the public this week. No less than 10 speakers talking about the economy, inflation and monetary policy. Before last week’s meeting these speeches were watched carefully for any hint of policy shifts, and that pushed the markets around as volatility rose. Look for more of that this coming week.
Stocks to Watch
Apple – Following last week’s big earnings beat, buyback and rise up Friday the company has an event this week (Tuesday), likely about iPads but then we could hear about AI again and other new tools, maybe even a new iPhone coming out later in the year.
Disney – Last quarter this company finally delivered on the top/bottom line. They report again this week and we should see continued improvement in their earnings, revenue from parks and entertainment.
Gold – The metal has suffered a downturn and is now trading below $2,300 per ounce. If inflation is truly coming down then we’ll see gold moving lower, perhaps this recent 7% drop is telling us that already.
