It’s no surprise Monday delivered a frustratingly choppy price action day where the bulls and bears were unable to find energy as we wait on the FOMC. Perhaps the handful of earnings and the Housing Starts figures will inject a bit more inspiration this morning but don’t be surprised if that quickly fades into more head fakes and chop.  Remember about 50% of companies are in their blackout period likely keeping volume anemic so expect a lot of consolidation in the charts.

While we slept Asian markets closed mostly lower in a choppy session as they digested the Australian Central Bank’s minutes and waited for the pending FOMC announcement.  European markets are trying to hold mostly bullish this morning in a very light and choppy session as they also wait.  U.S. futures are trying to pump up the premarket for a bullish start to the day ahead of another light day of earnings and economic data as bond yields hold strong. 

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include APOG, AZO, DAVA, and SCS.

News & Technicals’

Huawei, the Chinese tech giant, has surprised the world with its latest smartphone, the Mate 60 Pro, which features a chip that supports 5G technology. This is despite the U.S. sanctions that have tried to cut off Huawei from accessing 5G components and software. The chip called the Kirin 9000s, was made by China’s SMIC, the largest semiconductor manufacturer in the country. The U.S. government is investigating how SMIC was able to produce such a chip without violating the U.S. export restrictions, which prohibit the use of American technology in the chipmaking process. The chip breakthrough could pose a new threat to Apple in China, one of its biggest markets, as Huawei could regain its competitiveness and popularity among Chinese consumers. Huawei was once the world’s largest smartphone maker, but its sales plummeted after the U.S. banned it from using Google’s Android operating system and other key technologies. A resurgent Huawei could also raise questions for Washington, which has accused Huawei of posing a national security risk due to its alleged ties to the Chinese government and military. Huawei has denied any such risk exists. The U.S. has been trying to persuade its allies to exclude Huawei from their 5G networks, but some countries have resisted or delayed their decisions.

The Canadian intelligence agencies are investigating a possible link between Indian government agents and the murder of a Sikh community leader in British Columbia. The victim, Baljit Singh, was shot dead outside his home in Surrey on June 18, in what the police described as a targeted killing. Singh was a prominent figure in the Sikh community and a vocal supporter of the Khalistan movement, which seeks to create an independent Sikh state in India. The Canadian intelligence agencies suspect that Singh was assassinated by Indian operatives who were sent to silence him and other pro-Khalistan activists in Canada. The investigation has sparked a diplomatic row between Canada and India, which have expelled each other’s diplomats in an escalation of bilateral tensions. India has rejected the allegations of its involvement in the killing, calling them baseless and malicious. Canada has urged India to cooperate fully with the investigation and to respect the human rights and freedom of expression of the Sikh community in Canada. The case has also raised concerns about the safety and security of the Sikh diaspora in Canada, which has faced threats and harassment from Indian agents and extremists in the past. The Sikh community has demanded justice for Singh and protection from the Canadian government.

Monday as expected was a choppy price action day on low-volume finding no inspiration in either the earnings or economic calendar.  Unfortunately, today could be much of the same hurry up and wait for the FOMC decision and press conference.  We have some hope that the Housing Starts and Permits report or the handful of earnings will inspire a little action but then again I wouldn’t count on that with 50% of companies in their blackout period.  At times like this, the temptation is to trade simply out of boredom but keep in mind that any position taken, Long or Short, could be whipsawed or completely reversed as the market reacts to the Fed’s decision. As a result, the chop is likely with lots of head fakes on lower-than-average volume.

Trade Wisely,

Doug