As big tech produces historic earning numbers, it has been a puzzling week of lackluster price action.  Could the rising bonds and concerns of inflation causing the lack of momentum, or perhaps the significantly elevated P/E ratios causing the problem?  Whatever the cause, the price action continues to chop up accounts as it whipsaws in a better than 500-point consolidation range in the Dow.  As we enter the last trading day of the month and slid into the weekend, consider your risk carefully.

Asian markets traded lower across the board overnight, with the HSI falling nearly 2%.  European indexes trade mainly lower this morning as the Eurozone deals with another pandemic-related recession.  After the blowout earnings in AMZN, the U.S. point to a lower open ahead of personal income numbers.  Get ready for another day of choppy uncertainty. 

Economic Calendar

Earnings Calendar

On the Friday Earnings calendar, reports lighten up, giving us a little break after such a big week of data.  Notable reports include ABBV, BCS, CHTR, CVX, CLX, CL, E, XOM, GT, HP, ITW, NWL, PSX, PBI, QSR, GWW, & WY.

News & Technicals’

It’s been a puzzling week with massive earnings beats but a market devoid of the momentum to react to the historic results.  Make a person wonder if the saying, sell in May and stay away, will merit this year?  According to the European Commission, Apple has abused its dominant position in the distribution of music streaming apps.  The stock is indicated lower this morning.  Unfortunately, the Eurozone economy has once again slipped into another recession as they deal with the 3^rd wave of pandemic lockdowns.  Inda reported another new record with over 386,000 new infections in a single day.  In April alone, the county has had to deal with 6.6 million new cases, bringing more than 18.76 million cases in total.  As the market digests the blowout earnings reports, the 10-year treasury pushed higher to 1.647% with only a slight movement in the 30-year, moving up to 2.31%.

On the index technical front, the SPY managed to set a new record high, but the day’s price action was not exactly confidence building leaving behind a possible hanging man candle pattern on the chart.  Overall the trends remain bullish even as the price action continues in a choppy consolidation zone.  , With the price action lacking directional momentum and chop zone of more than 500 points in the Dow, it has been a challenging and punishing time for swing traders.  Holding longer-term positions in trend stocks have rewarded trader with discipline to hold through the uncomfortable chop.  However, the quick, experienced day traders seem to have the upper hand.  With the bulk of earnings inspiration behind us, significantly elevated P/E ratios, and the summer doldrums just around the corner, traders should be cautious of overtrading.

Trade Wisely,

Doug