Though recent market data such as yesterday’s negative durable goods orders hint at a slowing economy, the bulls ignored the data charged forward on Thursday.  Big tech led the way yesterday, surging sharply upward, but new European regulations that may curb their dominance could slow their rally today.  This morning we will get another reading on the already weak Consumer Sentiment and Pending Home Sales.  Plan your risk carefully as we slide into the uncertainty of the weekend with indexes at or near significant price resistance levels.

Asian markets traded mixed overnight, with the volatile HSI leading the selling dropping 2.47% to wrap up their trading week.  After striking a natural gas deal with the U.S, European markets trade with modest gains with monetary policy data pending.  Finally, with a light day of earnings reports, the U.S. futures point to a modestly bullish open hoping to extend the winning streak a second week.  However, expect price volatility to remain challenging in the days ahead as continued geopolitical and inflationary pressures weigh on world markets.

Economic Calendar

Earnings Calendar

As we wrap up the week, we have a light day on the earnings calendar with about 30 companies listed, with the vast majority unconfirmed.  Notable reports include DOOO, DCTH, MOV, PNT, & TRUHY.

News & Technicals’

U.S. President Joe Biden and European Commission President Ursula von der Leyen announced the formation of a joint task force to bolster energy security for Ukraine and the EU for next winter and the following one.  The primary goals of the task force, the U.S. and EU said in a joint statement, would be to diversify LNG supplies in alignment with climate objectives and reduce demand for natural gas.  It comes amid heightened concern that energy-importing countries continue to top up President Vladimir Putin’s war chest with oil and gas revenue on a daily basis.  In addition, the European Parliament and EU member states reached a historic deal on the Digital Markets Act.  The reforms aim to prevent tech giants from abusing their market position to harm smaller rivals.  So-called “gatekeepers” that violate the DMA face potential fines of up to 10% of their global revenues.  Neon is required for the lasers used in a chip production process known as lithography, where machines carve patterns onto tiny pieces of silicon made by the likes of Samsung, Intel, and TSMC.  These machines are produced by Dutch firm ASML.  According to Peter Hanbury, a semiconductor analyst at research firm Bain & Co, more than half of the world’s neon is produced by a handful of companies in Ukraine.  This marks the first high-level visit between the two sides since bloody clashes on their contested border led to the deaths of 20 Indian and 4 Chinese soldiers in June 2020.  Both governments are mum on the agenda and expectations from the visit, which remained cloaked in unusual secrecy.  As the host of the annual BRICS summit later this year,  China is also believed to be seeking India’s presence at the forum, putting India, China, and Russia at the same table.  Treasury yields tick higher in the early Friday trading, with the 10-year rising to 2.3630% and the 30-year pricing up to 2.5182%.

The bulls ignored the worse-than-expected Durable Goods orders as they worked hard to rally the tech giants on Thursday.  Unfortunately, new European regulations targeting the tech giants may hamper their efforts a little today.  Nevertheless, index chart technicals continue to improve as the bulls work to hold higher lows and finish the week strong.  This morning we will turn our attention to the Consumer Sentiment reading and the Pending Home sales.  Finally, with earnings winding down and only four days next week to wrap up the 1st quarter of trading, watch for the possible end-of-quarter window dressing.  Price volatility is likely to remain high, with the world seemingly becoming a more and more dangerous place filled with uncertainty.  So, plan your risk carefully as we move toward the weekend. 

Trade Wisely,

Doug