After the bell, a group of positive earnings continue to inspire the bulls but stay focused as the indexes slam into significant overhead resistance and declining 50-day averages.  Next, our attention will turn toward job numbers culminating with the Employment Situation report Friday morning.  Last week, the government began warning that the infection rates likely hurt jobs growth.  So, plan your risk carefully, watching for whipsaw or reversals as we test resistance levels.

The Nikkei rose sharply overnight, with many Asian markets still closed for the Lunar New Year.  European markets see green across the board this morning as the rebound continues.  Fueled by a group of positive earnings, U.S. futures point to a bullish open with jobs data and earnings results to keep price volatility high.

Economic Calendar

Earnings Calendar

We have nearly 130 companies listed on the Wednesday earnings calendar, with a few unconfirmed.  Notable reports include ABBV, ADTN, AFL, ALGN, ATI, ALGT, ABC, AVB, AVY, BSX, EAT, CHRW, CPRI, CTSH, DHI, ELF, EMR, RACE, GHL, HI, HOLX, HUM, IDXX, JCI, KLIC, LNC, MHO, MMP, MPC, MCK, FB, MET, MTG, NYT, NVO, ODFL, OHI, QRVO, QCOM, RYN, SPOT, TMUS, TMO, & WM. 

News & Technicals’

Ukraine’s President Volodymyr Zelenskyy warned any military confrontation with its neighbor Russia would amount to “a full-scale” war in Europe.  Russia has amassed troops along its border with Ukraine and within its ally Belarus.  However, Ukraine has played down confrontation concerns and warned of the possible consequences of a conflict on Europe’s doorstep.  PayPal reported mixed Q4 2021 earnings Tuesday and guided for the next quarter that fell short of analyst estimates.  The company expects Q1 non-GAAP earnings per share of 87 cents, short of the $1.16 analysts anticipated.  It also reported weak full-year revenue growth guidance for 2022.  AMD reported fourth-quarter earnings after the bell on Tuesday.  AMD expected $21.5 billion in sales in 2022, higher than analyst expectations.  Starbucks earnings fell short of Wall Street’s expectations, but the company’s quarterly revenue topped estimates.  The company saw higher-than-expected costs throughout its supply chain, and a resurgence of Covid-19 meant paying more employees sick leave.  China’s same-store sales fell 14% in the quarter as the country reimposed travel restrictions on some areas.  GM said it expects to generate an operating profit this year of between $13 billion and $15 billion as a semiconductor shortage shows signs of improving.  The forecast is in line with many Wall Street analysts’ expectations and the company’s record $14.3 billion pretax adjusted earnings in 2021.  In addition to the guidance, GM reported fourth-quarter earnings Tuesday that beat Wall Street’s expectations despite slightly missing revenue.  LAST YEAR, the U.S. economy grew at its fastest pace since 1984, but that momentum isn’t carrying into 2022.  An inventory build fueled most of the second-half growth that put annualized GDP up 5.7% for the year.  In the first quarter, the economy may not show any gain and possibly show a loss in GDP.  The pandemic, along with declining help from fiscal and monetary policy, will keep growth in check.  Treasury yields declined slightly early Wednesday, with the 10-year dipping to 1.7769% and the 30-year moving down to 2.0988%.

The index charts have dramatically improved, with Dow more than 2200 points off the low just eight days ago.  However, now face the challenge of significant overhead resistance and the declining 50-day moving averages across all indexes.  After the bell, a group of positive earnings should provide the bulls more inspiration to rally, but can they overcome the technical challenges above?  That will be the question to answer with FB, AMZN earnings, and a slew of jobs data coming our way the rest of the week.  In addition, the T2122 indicator is quickly nearly a short-term overbought condition, so a rest or profit-taking pullback cannot be ruled out in the days ahead.  Finally, the significant point rally has relieved a lot of pressure and kept the market emotionally charged, setting the stage for additional price volatility.  So stay focused and remember to take some profits as prices slam headlong into resistance levels.

Trade Wisely,

Doug