The market chose to ignore the declining retail sales figures, and the 75 basis point increase inspired the bulls to push the relief rally higher after the Powell press conference.  Unfortunately, the end-of-day pullback left behind uncertain spinning top doji candle patterns raising concerns about what comes next!  Recession or no recession seems to be the question as the Fed tries to tamp down inflation.  With some notable earnings and potential market-moving economic reports this morning, expect the price action to remain challenging as we move toward a 3-day weekend.

Asian markets closed mixed overnight as they digested the FOMC decision.  However, European markets are decidedly bearish this morning, snaping the one-day relief rally.  U.S. futures point to a punishing gap-down reversal ahead of Housing numbers, Jobless Claims, and the Philly Fed Mfg. Data.  So, buckle up; the wild ride continues!

Economic Calendar

Earnings Calendar

Although we don’t have a few confirmed reports on Thursday, we have some potential market-moving companies.  Notable reports include ADBE, CMC, JBL, and KR.

News & Technicals’

Federal Reserve Chair Jerome Powell said Wednesday the central bank could raise interest rates by a similar magnitude at the next policy meeting in July.  “From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting,” Powell said at a news conference.  Bitcoin rose above $21,000 on Thursday following a jump in U.S. stocks.  However, investors are still reeling from a dramatic plunge in the cryptocurrency market which has seen bitcoin trade at levels not seen since December 2020.  In addition, the crypto market is dealing with several issues, including potential insolvency at lending firm Celsius and algorithmic stablecoin USDD losing its peg.  Western unity over the war in Ukraine is becoming more vulnerable as the war drags on.  One poll across Europe found a majority of people want an end to the war as soon as possible, even if it means territorial losses for Ukraine.  There is an increasing concern among the public in Europe and beyond about rising living costs.  CNBC’s Jim Cramer warned investors on Wednesday that while some stocks with low price-to-earnings multiples look cheap and therefore investable, it’s worth noting that they aren’t always recession-proof.  “There are the higher-quality ones that you can justify owning if you feel a little more sanguine about the economy,” the “Mad Money” host said.  GM on Wednesday said it is investing $81 million at its tech center in suburban Detroit to hand build the upcoming Cadillac Celestiq – a new electric flagship car for the brand that will be made in limited quantities.  The decision marks the first time GM will build a vehicle for commercial sales at its massive tech campus in Warren, Michigan.  GM is scheduled to officially unveil the car next month, which is expected to cost $200,000 or more.  Treasury yields pulled back slightly in early Thursday trading, with the 2-year @ 3.36%, the 5-year @ 3.54%, the 10-year @ 3.42%, and the 30-year trading at 3.44%.

Although Wednesday saw declining retail sales figures, the day kicked off on a bullish note and gained ground after the 75 basis point increase from the FOMC.  However, the price action was quite volatile, pulling back substantially from the afternoon highs.  While the modest relief rally was nice to see, the overall price action left more questions than answers with the uncertain candle patterns by the end of the day.  Today we will turn our attention to Housing numbers, Jobless Claims, and the Philly  Fed Mfg. Data.  The index chart technicals remain very bearish, while the T2122 indicator continues to show a short-term oversold condition.  Unfortunately, the bears seem to be cack at work this morning with the futures hinting at new market lows at the open today so get ready for another hectic day of challenging price action.

Trade Wisely,

Doug