We all enjoy a nice relief rally but keep your eyes focused on the overhead price resistance levels because that will reveal if the bulls have what it takes to plow through bearish defenses.  I wouldn’t expect smooth price action with the VIX holding a 20-handle and still above its 50-day average.  Though the DIA and SPY hold bullish trends, the QQQ and IWM remain uncomfortably below significant resistance levels.  Plan your risk carefully as we slide into the weekend.

Overnight Asian markets ended the week with a mixed and choppy session, with Taiwan surging 1.6%. European markets trade mixed with modest gains or losses as they wait on economic data.  Ahead of PMI and Housing data, U.S. futures point to bullish open as bonds pull back slightly. 

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a lighter day of reports with just 14 companies listed.  Notable reports include BAH, BKE, DE, DSX, FL, & VHC.

News & Technicals’

A nice relief rally began yesterday as the buy the dip traders satisfied their appetite, lifting tech and crypto.  The U.S Treasury calls for stricter cryptocurrency compliance with IRS suggesting it poses tax evasion risk.  Janet Yellen proposes a global minimum corporate tax rate of 15% and says discussions should continue to be ambitious to push the rate even higher.  Israel and Hamas agree to a cease-fire; however, both sides seem very skeptical about it holding as they sling insults back and forth at each other.  Treasury yields are drifting slightly lower this morning, with the 10-year dropping to 1.618% and the 30-year coming in at 2.323% ahead of PMI and housing data.

Though we experienced a nice relief rally, the bulls still need to show the willingness to follow through, clearing overhead price resistance levels.  The tech giants provided a significant portion of the rally, but a quick look at the charts shows they are still in downtrends.  The QQQ was able to get above its 50-day average, so the test now is, can it hold it as support?  This morning bond rates are softening slightly, which could be very helpful to the struggling tech sector.  The VIX closed the day above its 50-day average and a 20 handle.  We should continue to expect significant price volatility and should not rule out the possibility of reversals as we approach price resistance levels.  Be careful not to chase as you plan your risk heading into the weekend.

Trade Wisely,

Doug