Markets are looking for a successful week

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• Markets are looking to end the week higher
• Inflation is still under the microscope
• Looking for confirmation of volatility

Despite the shortening of the week or perhaps because of it, the markets have so far been able to gain 4% as the day approaches. It has been a relatively quiet week for economic news. However, later this morning, the latest indicator of consumer confidence will be released along with the new home sales reading for May. These two numbers could gain additional importance simply due to the lack of news this week and this is something I will be watching closely.

If there is significant news this week, it is Jerome Powell’s two-day testimony before Congress. The bottom line in his message was a willingness to do whatever it takes to control inflation. Although bonds are up most of the week, lowering yields in the process, yields in the pre-market this morning are slightly higher.

Continuing the inflation narrative, it has been an interesting week in the commodity space. Prices of corn, soybeans, natural gas and oil declined during the week. This is something I particularly care about. It will be very interesting to see if this is just a temporary relief in prices or part of a longer-term trend that may indicate an easing of inflationary pressures.

Looking forward to next week, Nike
NKE
Monday earnings reports. This provides a glimpse into China and its economy, and it will be interesting to hear their future forecasts on really discretionary spending items. We’ll also hear from Bed, Bath and Beyond. It’s been a very mixed bag in the retail sector with both goals
TGT
Walmart
WMT
They posted big after their earnings, while higher quality retailers provided more upbeat news. Micron is also on deck for reporting, giving investors another look into the tech sector.

One thing retail investors should keep in mind is the general level of volatility. Although the stock markets are up this week, the volatility hasn’t happened much at all. VIX remains well above 28. This reading could be a sign of continued volatile trading. If we go higher today, ideally, those with a bullish bias would like to see the volatility swing as confirmation of easing anxiety about stock prices. One caveat in this regard would be today’s Russell index rebalancing which is likely to affect volatility as funds make adjustments to match any changes to the Russell and have the potential to move some things around.

tastytrade, Inc. Comments. For educational purposes only.