Rising bond rates created a little uneasiness yesterday, robbing the bullish energy created in the morning gap to new highs.  This morning the rapid decline in mortgage applications due to the rising interest rates may also contribute to futures taking a wait-and-see approach.  We have a big day of earnings and economic reports with PPI and Retail Sales before the bell and the FOMC minutes later this afternoon.  I think it’s fair to say anything is possible with that much data for the market to digest. 

Asian markets traded mixed overnight, with Hong Kong surging more than 1%.  European markets show modest declines across the board as they track rising Treasury yields.  Ahead of a big day of data, the U.S. Futures point to flat but slightly lower open at the time of this report.  However, with a significant day reports, anything is possible. Stay focused and flexible.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have just short of 100 companies reporting quarterly results.  Notable reports include SHOP, ALB, ADI, AXTA, BIDU, SAM, BCOV, FUN, CAKE, CHH, CDE, CONE, ET, EQT, FSLY, GRMN, GPC, GOOD, HVT, HLF, H, IAG, IQ, JACK, MIC, MANT, MRO, NI, OC, PAAS, SNBR, STMP, RGR, SPWR, SKT, TLRY, TWLO, WCN, WING, & WIX.

News & Technicals’

While the DIA made a new record high yesterday, it was not the kind of price action that provided a lot of confidence.  I mentioned being careful of the possibility of a pop and drop pattern after the substantial gap up.  Although we did pullback after the open, there was no technical damage in the price action; in fact, it could have been much worse with the concerns of rising bond yields.  The bitter cold snap highlighted a significant deficiency in the U.S. power grid and exposed a massive deficiency in green energy efforts.  The rolling blackouts affected a large portion of the county, with Texas being the hardest hit from the winter storm.  According to reports, SpaceX raised another $850 million in funding, increasing the company valuation overnight.  The European-based game developer Epic Games filed an antitrust complaint against Apple as the attack on big tech continues.

Trends remain very bullish, but with concerns of rising bond rates, U.S. Futures seem to be taking a wait-and-see approach this morning.  Mortgage applications reported another decline in demand at the fastest pace in months as interest rates rise.  We have a busy economic calendar with PPI and Retail Sales before the bell.  The consensus expects an increase in retail numbers due to the last stimulus checks.  Also, keep in mind the industrial production numbers and the FOMC minutes later this afternoon.  If that’s not enough to create price volatility, toss in about 100 earings reports for the market to digest as well.  Anything is possible, so stay focused on price action.

Trade Wisely,

Doug