The FuseEquity futures are rallying smartly this morning following a big options expiration day finished up. There are only nine trading days left in 2023 and it appears the bulls are going to make one last push towards the all-time high mark of 4,818 on SPX 500. It’s not far away either, less than 3% to reach that level.
Interest Rates are down slightly after last week’s collapse in yield. The front end of the curve remains elevated as the Fed considers a shift in policy. The market believes they verbally pivoted last week without exactly saying as much, hence the excitement in stocks and bonds later in the week.Stocks over in Europe were little changed on Monday but US Steel () jumped higher by 28% after Nippon Steel reportedly will buy the company for $7 billion. The dollar was steady as was gold but crude oil is rising by about .5%. Cold weather across the nation may put a bid under oil/gas prices over the coming months.Earnings are thin this week but a few big names will report. Tuesday am brings us Accenture () then later in the day we hear from FedEx () and how holiday shipping is going.Friday’s action was pretty contained but with a little volatility between ‘the lines’. As we head towards next week’s holiday there is the idea of a crush in volatility, which often happens in front of a three day weekend/holiday. That’s coming up twice over the next couple of weeks, but with the VIX already down under 13% it makes sense to at least buy some protection here as it is very cheap. You never know when you’ll need it.Breadth was solid early in the week but languished on Friday. It’s okay though, this indicator is still on a buy signal with the strong breadth the prior week and follow through this week. Still, we would like to see an expansion of breadth if the market makes that run to all-time highs. That would lead us to believe more upside was in store.Turnover was brisk on this expiration Friday with very heavy volume hitting the tape at the end of the day. It only signals heavy stock trading while traders are exercising options before the weekend, that brings the big numbers. A record number of options expired Friday (notional amount) and a hangover effect might happen this coming week.The SPX 500 is clearly on a mission to take out the old highs at 4,818. That seems pretty clear, but also 5,000 is in sight as well.
Good support now at 4,600 but a correction could take the index down to 4,450 at least. The other indices are strong and supportive of a higher move, so with nine trading sessions in the year we’ll see if buyers do what is necessary to get a new high before 2023 is over. The Internals
What’s it mean?It’s perfectly normal to have stocks slow down after a monster run higher, in fact it’s quite healthy. The internals show a lack of interest Friday with ticks demonstrably in the red and the VOLD and ADD pointing lower all session long. Put/call is still low as is the VIX, which could see even more selling this week in front of the holiday. The DynamiteEconomic Data:
Earnings this week:
Fed Watch:Some Fed talk on Friday caused many to take money off the table but the Chairman’s words Wednesday were pretty definitive. The committee kept rates in check and stated there was ‘talk’ of a time line for rate cuts. That spurred a slew of buying in stocks and yields fell sharply, the 10 year is now below 4% for the first time since August and its lowest levels since July. Truly amazing move lower but we may be at the far end of the move now. The inversion of the curve is extreme.
Stocks to WatchVolatility – The VIX remains low, hovering near 12% and could even break LOWER this week by Friday (holiday coming up, volatility sellers are active).Small Caps – The Russell 2K has been on fire lately, with yields falling sharply that means small cap names are getting heavy money flows. If rates don’t rise then the Russell 2K may finish the year strong.Retail Sales – Last week’s report was pretty good but this is the last full week for shoppers to get ahead of Santa. Can the consumer pull it off once more? More By This Author:Etsy Inc Chart Analysis Market Blast – Wednesday, December 13 Is Trading Fear And Greed Tied To Your Self-Worth?
