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Equity futures are surging higher again today as the SPX 500 looks to make a bullish sweep this week. We should not the indices look fairly overbought here, a condition that is ripe for some selling. Remember, overbought is a condition and not a signal, which means this could last longer than anyone expects. Just be ready for a pullback and trade accordingly.

Interest Rates are turning lower this morning as bond buyers are back to join the party. Spreads continue to tighten, junk bonds are not associating any recession yet, fed futures see the first rate cut coming perhaps as late as September, though if the data throws it off that may be a miscue.

With another rise in US market futures overnight we also had good strength overseas. In Europe the STOXX were up .5% led by gains in France and Germany. The FTSE also added the same. Gold is down sharply, nearly 2%, while crude is flat and silver down.
The US dollar index dropped .2%. German 10 yr bund yields and US 10 yr treasury yields fell 3bps, in Asia stocks were mixed with Japan flat but Chinese markets both declined .4%.

Earnings last night from Doximity were good but guidance poor, Cava delivered strong numbers but light on guidance as well. Applied Materials beat but cautioned on tariffs.

More odd behavior yesterday, it’s as if the bulls are trying to hang on for dear life but the weight of the world is very heavy. No question the stock market is now very overbought but who wants to be first to jump ship? That is always the age-old question, as most investors are simply followers – preferring to let others lead the way, perceived safety. That is not always right.

Strong breadth was again the case and after Wednesday’s lighter session stocks righted themselves midday. It was a nice rally, fairly broad and expansive. Yet, we still are not seeing new highs dominate the lows as we would expect. Making new highs in the cumulative breadth is a positive, new all-time highs might not be far off now. Oscillators are back to overbought, as they have been for over a month.

Mixed volume again but for the most part matched Tuesday’s levels. It is okay not to have accelerating volume all the time, especially after such a big move up on Monday. A rest or slower turnover period would be good here into the end of the week, where we could see volume pickup on expiration Friday.

Closing above the 5,900 level on the SPX 500 is a huge positive, but as usual some followthrough is key. Can the bulls make a clean sweep in the SPX 500 and Nasdaq, closing green all week long? Remains to be seen, but the action is clearly positive. The PPI number helped goose the rally, while small caps are still challenged with higher rates. If rates do start to fall that will be bullish for IWM.
 

The Internals

(Click on image to enlarge)

What’s it mean?

I’m going to say the internals were just meh yesterday. Notice the VOLD, weaker than the up day on Tuesday but the ADD was super strong. Ticks were bullish, plenty of green and strong buy programs all session. Put/calls rose and then fell, the VIX declined a bit but still ended up on the cautious side.
 

The Dynamite

Economic Data:

• Friday:Import prices, consumer sentiment, howsing starts

Earnings this week:

• Friday:CDRO, FLO, BRC
   

Fed Watch:

After last week’s Fed meeting when the committee held firm on rates we have to now turn our attention to the data. That is going to be the main driver of trader/investor sentiment over the coming weeks, given the fact much of big earnings season is behind us. Yet, we have several speakers out this week including Chair Powell who will deliver a speech midweek. Nothing likely to change their view of slow and steady.
 

Stocks to Watch

Interest Rates – We are again watching rates and how they move to the news of trade and the Fed.

Retail – Walmart delivers earnings this week and we’ll also get retail sales numbers for April. Recall the last couple of months were rather mixed but if they show the consumer slowing down that will be troublesome.

Trade News – Apparently some movement lately with tariff stimulating talks between the US and other nations. We’ll have to see of they can move the ball across the goal line. All positive news is good or investor sentiment.

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