On Monday, index price action surged and fell violently as rumors and speculation swirled over a Russian invasion.  However, after hearing that Russia is sending some troops back home, futures point to another overnight reversal.  So could we see a short squeeze, a big whipsaw, or a pop and drop this morning with another PPI reports expected to come in hot.  Your guess is as good as mine as this emotional market swings wildly.  So, plan your risk carefully and keep a close eye on overhead price resistance.

Asian markets traded mixed but mainly lower overnight due to geopolitical tensions.  However, hearing the news of a partial troop drawdown, European markets trade decidedly bullish this morning.  U.S. future also points to a substantial overnight reversal ahead of PPI data and a busy earnings day.  So prepare for another day of wild price action from this emotionally charged market.

Economic Calendar

Earnings Calendar

The Tuesday earnings calendar ramps up the reports, with around 130 companies fessing up to quarterly results.  Notable reports include AKR, ABNB, AKAM, ANDE, ANGI, BWA, CEVA, CF, CINF, CRK, DENN, DVN, FELE, GXO, HSIC, HUN, IAC, IQV, LZB, MAR, PACB, QSR, RSLX, SEDG, UPST, VIAC, WH, WYNN, & ZTS.

New & Technicals’

The Russian government has announced that Moscow is beginning to return troops at the Ukrainian border to their bases.  Igor Konashenkov, a spokesman for the Russian Ministry of Defense, said troops recently posted along the border with Ukraine had begun moving back to their military garrisons.  Timothy Ash, the emerging markets senior sovereign strategist at BlueBay Asset Management, said the move could signal a significant defeat for Putin.  As a result, global attention is focused on Russia and whether President Vladimir Putin will order an invasion of Ukraine.  Until earlier this month, China had been mostly silent as tensions have risen between NATO and Russia.  In 2021, global semiconductor industry sales reached a record $555.9 billion, up 26.2% year on year, the U.S.-based Semiconductor Industry Association (SIA) said.  In addition, the SIA said that they expect demand to “rise significantly” in the coming years.  China remained the biggest market, with sales totaling $192.5 billion in 2021.  St. Louis Fed President James Bullard told CNBC on Monday that he thinks the Fed needs to push interest rates up quickly.  “Our credibility is on the line here,” he said as he advocated for a rapid interest rate increase of a full percentage point.  This year, markets have begun pricing in seven rate hikes since Bullard first made his hawkish position known last week.  Treasury Yields moved higher in early Tuesday trading, with the 10-year rising to 2.0294% and the 30-year moving up to 2.3277%. 

As rumors and speculation swirled around about a Russian invasion, index prices proved to be very volatile on Monday.  The wild price moves continued overnight, with some troops leaving the border, raising hopes of a de-escalation of tensions.  The next hurdle for the market to cross is the PPI report that many suspect will come in hot, adding to inflationary concerns and pressuring Fed to act aggressively.  Along with the big day of inflation data, we have a large group of earnings reports adding to the potential price volatility.  The significant overnight reversal could trigger a short squeeze this morning, but with so much data coming our way, traders will have to also watch for the possible pop and drop or large point whipsaws.  Market emotion is high, so be prepared for almost anything and remember the Retail Sales figures could add to the wild price gyrations with low consumer sentiment.

Trade Wisely,

Doug