Futures reverse from overnight lows, but traders should prepare for very volatile price action with the VIX remaining quite elevated.  Toss on in earnings, economic reports, and the Reddit community’s uncertainty, and anything is possible.  The bears are not likely to give up as easily as they have in the recent past, having broken the long-standing uptrend creating price resistance levels on the index charts.  Big gaps, intraday whipsaws, and overnight reversals are possible, so stay focused and flexible.

Asian markets traded very bullishly overnight, closing green across the board.  European markets are climbing this morning as the U.S. futures rebounded off overnight lows, pointing to a substantial gap up reversal from Friday’s close.  Prepare for another hectic day of price action.

Economic Calendar

Earnings Calendar

As we begin the first trading week of February, we have nearly 40 companies reporting to kickoff the week.  Notable reports include ARE, CBT, CRUS, FN, KRC, NTDOY, NXPI, ON, TMO, & VRTX.

News & Technicals’

The Futures point to a bullish open rebounding off of overnight lows as the wild price volatility continues.  Although the market is hoping for more stimulus, senators present President Biden with a slimmer version of the 1.9 Trillion dollar plan preposed.  While very likely there will be more stimulus on the way, it looks as if this will be Biden’s first major political test and has the potential to create additional market uncertainty.  Silver is in the news this morning as the Reddit traders attempt a short squeeze.  As long as this activity continues, expect price volatility to remain relatively high due to the uncertainty.  An uncertainty that attracts the attention of Congress and the SEC could mean a new flurry of new regulation could be on the way that creates own brand uncertainty for traders and investors to digest.

The long-standing bullish trend broke on the technical front, encouraging the bears to continue the selloff into Friday close creating technical damage to the long-standing bull run.  Now with resistance levels above, the bulls may find it more challenging to regain control.  With a busy week of earings, the Employment Situation number Friday, and the Reddit community creating uncertainty, anything is possible.  The T2122 indicator suggests we are near a short-term oversold condition, but with the VIX elevated, expect a bumpy ride ahead.  Big morning gaps, whipsaws, and overnight reversals are likely to test all traders and investors’ metal.

Trade Wisley,

Doug