Even as Friday’s session looked to get ugly in a hurry following disappointing report from Amazon AMZN, -2.20% stocks managed to cut their losses in a big way, with the Dow DJIA, +0.39% even finishing higher at another record.
Nevertheless, we’re entering “the danger zone,” and not because of that stuff, according to Northman Trader blogger Sven Henrich. He says he’s “macro bearish” and warns a troubling technical setup could ultimately be the market’s undoing.
Henrich has been looking key levels on the S&P 500 SPX, +0.06% for a while, and the broad market gauge is resting just below one critical number right now.
“We got to 2484 and we rejected,” he writes. “Not massively, but we immediately rejected when we got to this price, which tells me it is relevant. It means something to this market.”
In fact, Henrich warned that he saw this kind of ominous chart action before the epic market meltdowns in 2000, and again in 2007.
“Based on long-standing technical targets,” he says, “we have entered the danger zone, and we have done so with record low volatility, unprecedented in all of market history.”
In our chart of the day, Henrich backed his bearish view with this look at the volatility gauge VIX, +0.68% and the similarities it has with other market tops.
“Nobody can call tops in advance, nor should anyone as odds are you look like a fool in the process,” but “if markets can’t make new highs soon and instead revert lower toward the 100MA at least or lower (currently 2402) over the course of the next few days or weeks, then markets may indeed follow a familiar and historical script,” he says.
That’s a script bulls are hoping to avoid.
Key market gauges
The markets are perking up on the last trading day of the month, with futures on the Dow YMU7, +0.38% , the S&P ESU7, +0.01% and Nasdaq NQU7, -0.30% higher ahead of the opening bell. Asia markets ADOW, +0.69% finished mostly higher, led by Hong Kong HSI, +1.28% Europe SXXP, -0.13% is moving up.
The dollar DXY, -0.33% is rebounding, but still on course for its worst month since January. The Russian ruble USDRUB, +0.8176% is getting pounded this morning, after President Vladimir Putin said he would expel 755 U.S. diplomats and embassy workers in retaliation for looming U.S. sanctions. Gold GCU7, +0.01% is off just a bit.
The buzz
Oil CLU7, -0.56% is pretty flat, but keep an eye on it. Investors are waiting to see if the U.S. slaps sanctions on Venezuela after the referendum that will likely allow President Nicolás Maduro to rewrite the constitution. Some say the chaos could spark an oil rally.
Keep an eye on shares of the tobacco giants this morning. On Friday, an FDA proposal to lower nicotine in cigarettes to non-addictive levels crushed Altria MO, -2.61% and British American Tobacco BTI, -4.00% , though Philip Morris International PM, -0.58% managed to recover its losses.
Lots of buzz over the delivery of the first Model 3 from Tesla TSLA, -2.26% on Friday. CEO Elon Musk got the price tag he wanted, and the reviewers are pouring on the praise for the $35,000 car. Tesla shares are up in premarket.
Jeff Bezos was the richest man in the world for a few hours last week, but then Amazon AMZN, -2.20% shares retreated from their highs (though they could make another push this week). Here’s a list of 13 other men who, at some point, have held the title over the years.
The call
President Donald Trump might be a 140-character nightmare for a sizable chunk of this country, but you’d think he’d be an absolute blessing for Twitter TWTR, -3.11% That’s not the case, however.
Translating his Twitter addiction into profits hasn’t really materialized. What’s worse, Twitter’s user base actually appears to be slipping. The stock moved below $17 a share after the social media company handed in a less-than-inspiring report last week.
Jack Hough of Barron’s says the stock could be heading toward a “hat size” price. Considering that the average hat size is somewhere around 7, it’s safe to say Hough isn’t exactly bullish on Twitter. As Trump might tweet, SAD!
“Twitter has to get better or cheaper in a hurry,” Hough wrote in a feature over the weekend. “Absent clear signs of the former, bet on the latter.”
10% — That’s the amount of quarterly earnings calls that have mentioned Amazon in recent weeks.
According to Reuters, the e-commerce giant’s name has popped up in one out of every 10 conference calls so far this earnings season, with almost 700 companies reporting so far.
There are surely more to come, as the real “victims” of Amazon’s complete overhaul of the retail business have yet to post their numbers.
The economy
The jobs report is the big number to watch this week, but that doesn’t hit until Friday. In between, we’ll get ISM manufacturing and nonmanufacturing indexes, along with July car sales.
Read: Ignoring all the chaos in Washington, companies likely kept up strong hiring in July.
For Monday, the Chicago Purchasing Managers Index hits at 9:45 a.m. Eastern, followed by pending home sales 15 minutes later.
“There are 168 hours in a week. You should be working most of them” — Grant Cardone, a self-made millionaire who told CNBC he works about 95 hours a week.
“If you can outwork the rest of the population, you’re going to get lucky,” he added.
Earnings
Here comes the last of the FAANG stocks, and perhaps the most influential. Apple AAPL, -0.41% , the most valuable company in the world, reports third-quarter earnings Tuesday, setting the tone for the tech sector and, really, the broader market.
See: Apple earnings preview — how long will iPhone sales be on ‘pause’?
Slightly more than half of the S&P SPX, +0.06% has already reported, with 73% turning in better-than-expected results. Next week, 133 S&P 500 companies, including two Dow components, are on tap to release quarterly results.
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