Jerome Powell stepped on a landmine with his inflation comments that raised some uncertainty about future interest rates.  Long-term bond yields surged bring out the bears and creating substantial technical damage to the SPY and QQQ index charts.  Although it was painful, the DIA and IWM holding at their 50-day averages could be a silver lining, not to mention the massive stimulus bill that’s moving through the Senate.  Expect price volatility to continue as we face potential market-moving reports before the bell. 

Asian markets had a rough night of volatility but ended the session only modestly lower.  European market trade cautiously this morning as they monitor the inflation-sensitive long bonds.  U.S. futures recovered from overnight losses, currently pointing to a flat or ever so slight bullish open ahead of the Employment Situation report.  With the VIX elevated cinch up your big boy pants for another day of volatility. 

Economic Calendar

Earnings Calendar

As we slide toward the weekend, we have a lighter day on the Friday earnings calendar with just 24 companies reporting.  Notable reports include BIG, HIBB, & RUTH.

News & Technicals’

Reacting to Jerome Powells inflation comments where he stated the committee would ‘probably’ not raise interest rates, the market plunged sharply.  The bears also gained energy as the longer-term treasuries rallied sharply as worried investors ran for the doors.  The Senate cleared a hurdle yesterday, paving the way for the next round of stimulus.  The hope is to have it completed by mid-March.  Before the bell today, we will get the latest reading on the Employment Situation.  Economists expect 210,000 jobs were created in February, up from the 49,000 last month but warn we have a long way to go before seeing a substantial employment recovery.

There is no doubt that yesterday’s price action was painful as it reacted to the Powell inflation comments.  The majority of the technical damage focused on the tech sector, while the DIA and IWM managed to hold their 50-day averages.  With the SPY so heavily weighted with tech giants, it also suffered substantial technical damage closing below its 50-average that now become overhead price resistance.  With the VIX closing above 28 handles and turbulent overnight futures trading, expect another rough day price action.  Keep an eye on the 10, 20, & 30-year treasury bonds.  Should they continue to rise, the bears will likely remain in control.  With market-moving economic news before the open, futures are trying to put on a positive face but stay on your toes and be ready for just about anything.  Have a wonderful weekend, everyone!

Trade Wisely,

Doug