It's been an odd start to the 'weak'. And I don't mean weak earnings. $MMM, $CAT led a massive earnings frenzy yesterday vaulting the Blue Chip Index almost 200 points higher. Yet, as I pointed out yesterday and on Friday, momentum may be shifting for at last a short term pull back.
Curious action in the formerly $120,000 now $35 $VXX. The daily smackdown has abated and the $VXX actually is finding buyers. Perhaps some hedging into the ECB? Or maybe there is more at play.
In some of the earnings reports thus far I am seeing two words come together in the same sentence.
Prices and Higher. Whether is for raw materials, or companies looking to raise prices for their products, as NFLX did recently, higher prices has not been a theme for this market since 2008.
It's actually been a flat price utopia. A Central Bankers Wet dream.
If prices are indeed on the rise, that would be why banks have taken another step higher, with $JPM roaring over $100 for the first time.
But what does that mean for the record supply of corporate debt? Higher prices should equate to higher interest rates, whether the Central Banks want them or not.
Higher interest rates down the road could crimp the ability to service the massive corporate debt bubble. On the flip side banks would see their earnings grow. Perhaps the market will strike that happy medium when everything adjusts perfectly in a higher priced world.
Or perhaps this bump in prices is just a quick blip on the stagflation radar screen.
Either way short term the market looks to be on the cusp of a pull back.
Small caps have already lost momentum. Tech is close behind and S&P500 futures are on the brink of losing short term support.
....almost 25% of the $QQQ weight will report at the end of this week. We could be getting an early warning signal at what the market reaction will be come Thursday after the bell.
The opening bell is here. See you in the chat room.