The Fuse

Futures are mixed this morning as the markets prepare for words from Chair Powell on Capitol Hill. He starts is bi-annual testimony today in front of Congress, tomorrow in front of the Senate. There is often a market response to his words or comments.

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Interest Rates are up very slightly this morning in front of a slew of Fed speakers. It’s likely bond investors will shift their attention to next week, the last week of the month/quarter.

Inflation is hotter in the UK as this country prepares for another rate hike. In response, we could see a strong 50bps increase by the Brits this week.

FedEx reported last night, and while it beat on the bottom line the company is taking down their guidance for 2023. They talk about a very challenging environment facing them thought improvements in supply chain, energy prices has been notices.

Not much on the event front this week as stocks look to take a breather. Several conferences are scheduled for the next couple weeks into the next holiday, July 4th. More news over cyberattacks on the rise, AI continues to be a driver of growth.

Breadth was weak for a second straight day, more than 2-1 negative and that puts this indicator on the fringe of a sell signal. We’ve seen signals when breadth turns.

After the big expiration and three day holiday volume levels receded but were still rather strong. We expected to see a pullback in overall turnover, it would be important for some positive volume to come back if the bullish rally were to continue.

4400 on the SPX 500 seems to be strong resistance here. However, it seems lately every time there have been 2-3 down sessions in a row the bulls come firing back. Tomorrow we have the VIX rolling over into July.

The Internals

What’s it mean?

A bit more down today as the hangover effect from options expiration and a VIX that probably went down to far. But notice how the VIX in the box above peaked just under 15%, then the volatility sellers took over and whacked the indicator. VOLD was weak all session long and notice the ticks, heavy read on this indicator.
TRIN spiked up to a high level during the day as did put/calls, but in the end just right back where we started. There seems some angst here between FOMO investors/traders and the smart money.

The Dynamite

Economic Data:

• Wednesday: Mortgage apps
• Thursday: Jobless claims, Leading indicators, Existing Home Sales
• Friday: June Flash PMI’s

Earnings this week:

• Wednesday: KFY, WGO, KBH
• Thursday: ACN, DRI, SWBI
• Friday: KMX

Fed Watch:

A slew of Fed speakers out this week talking about the economy, inflation and their position on rates. Jay Powell also gives a speech tomorrow, which could be market-moving. With the last meeting just a week ago, I don’t believe there will be anything too earth shattering to shake up the markets.
 

Stocks to Watch

VIX – With a big drop below 15% last week we’ll see if some of the is burned of with a rise in volatility.

Housing – Some strong results from Lennar and others, we may see a surge in housing data this week as interest rates make their way lower.

Retail – Not much on the news front for retail but this group is due for some outperformance in the summer, we’ll see how this plays out.

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