1) Most Impressive!
SPX just made new all-time highs above 2181 and is holding strong on the huge jobs report.
We're also seeing very nice outperformance in the Russell 2000 and Nasdaq.
I thought it would take a rebound in bonds and gold to keep the equity move rolling, but I'm not going to argue with Mr. Market.
He decided he's more comfortable with a possibly more hawkish Fed, and I'm not going to argue with him.
2) Watch the Bios!
I still think there's a chance we see SPX 2200 today or within the next few days.
Biotech (IBB) is key.
It's done a great job of shaking off bad news and if IBB clears $300 with authority, the bulls will really get in gear which should also send the Nasdaq to its own new record (just 9 points away).
From a big-picture perspective, biotech's comeback off the lows has been pretty impressive.
It started 2016 by falling nearly -30% into the February bottom, and now it's down “just” -12%.
This is the ultimate risk-on sector, so if starts moving, it will drag risk assets with it.
3) VIX Drops 9%
Lots of folks have been saying the VIX is “too low” and therefore must rise under the “what goes down must come up” theory of finance.
But the SPX has been showing almost no movement in recent weeks and the VIX, while low, has already been pricing in a volatility expansion.
I would not be surprised to see the VIX under 11, assuming equity markets hold steady or if we see a very slow rise.
I hear a lot of chatter about buying VXX calls or similar instruments because the VIX should go up.
That is dangerous thinking, and would only pay off if the SPX immediately made a dramatic down move.
4) FireEye Burned
Former momo highflyer FireEye (FEYE) is getting slammed today on earnings, which may draw out fake M&A rumors.
Is a deal likely? I don't know.
Presumably, there are plenty of software companies that would love to add more security offerings to their suite of services.
But if FireEye's technology is so valuable, why isn't it more popular with actual customers?
Check out the chart below of the slide in expected 2017 FireEye revenues:
A year ago, traders were expecting over $1.2 billion in 2017 revenues. Now they're forecasting below $900 million.
It's a classic case of collapsing fundamental and price momentum.
I'd really like to see oil put another hurting on the bears with a slow grind higher.
But remember, oil got a lot of mileage from supply outages, and we're coming back down the other side of that ride with production coming back online.
So the comeback, if it's in the wings, may be a little slow.
That said, equities and high-yield are holding up pretty well in the face of the oil slide, so it's hard to complain too much.