Tuesday’s price action had plenty of up/down drama but, at the end of the day, left more questions than answers as the choppy consolidation in the indexes continues.  The sharp selling in Apple and Tesla didn’t help market sentiment as the uncertainty of 2023 weighs heavily, with PMI numbers continuing to show contraction in the economy.  Today we face ISM, JOLTS, and FOMC minutes release with another light day of earnings as the bulls and bear fight to find inspiration to break the consolidation log jam.  Expect more chop and uncertainty today.

Overnight Asian markets mostly rallied, with the tech-heavy HIS leading the way up 3.22% at the close.  European markets are decidedly bullish this morning, buoyed after Germany published a better-than-expected inflation rate of 9.6%.  Once again, the futures point to a gap up open to test the consolidation resistance hoping to inspire the bulls ahead of the economic data.

Economic Calendar

Earnings  Calendar

We have five confirmed earnings reports for today, but only these three are somewhat notable RGP, SLP &UNF.

News & Technicals’

The House of Representatives adjourned for the day Tuesday without a Speaker after Republican leader Kevin McCarthy failed in three consecutive votes to secure enough support to be elected to the post.  After the first ballot resulted in votes for several Republicans, the next two rounds saw McCarthy’s opponents coalesce around a new contender: Rep. Jim Jordan of Ohio, a longtime McCarthy ally.  It was the first time in 100 years that the majority party had failed to coalesce around a candidate for Speaker, and it was uncertain what McCarthy’s next steps would be. 

Nezha, named after a feisty Chinese mythological character, claims its car deliveries will more than double in 2022.  The total surpassed Nio’s, emphasizing its focus on the premium segment while hinting at plans to launch a mass-market brand.  While Nezha sells budget-priced vehicles, similar to the highly popular Hongguang Mini EV, Nezha’s vehicles are larger. 

In its 2023 macro outlook, Goldman Sachs forecasts a 1.2% contraction in the U.K. real GDP over the course of this year, well below all other G-10 (Group of Ten) major economies.  A 0.9% expansion would follow this in 2024.  The figure places Britain only fractionally ahead of Russia, which is projected to see a 1.3% contraction in 2023 as it wages war in Ukraine and weathers punitive Western economic sanctions. 

Tuesday’s price action left behind more questions than answers as the wide rage choppy consolidation continues with so much uncertainty about the path forward in 2023.  Economic data continued to show the U.S. Economy is slowing yesterday, with PMI numbers still in contraction.  Adding to the worries was the sharp selling in both Apple and Tesla that not so long ago were considered market bellwethers that could do no wrong.  This morning we face a potential market-moving ISM reading, a JOTLS report that has proven stubbornly sticky, and FOMC minutes likely confirm a resolute FOMC in combatting inflation.  That said, the U.S. futures are again trying to pump up the bullish hope in premarket, suggesting another gap into the consolidation resistance. 

Trade Wisely,

Doug