The bear ran roughshod over the bulls for the fourth consecutive session on Friday erasing October’s gains.  A hawkish Jerome Powell drove bond yields higher and Middle Eastern war worries drove the market sentiment further damaging index chart technicals.  Today, with the 10-year bond topping 5% we have a few notable earnings and a light economic calendar to inspire price movement.  The T2122 indicator is in an extremely oversold condition suggesting a relief could begin at any time unless the bearish data continue to pile on. Plan for substantial price volatility, whipsaws, and maybe even a short-squeeze rally sometime this week.

Overnight Asian market closed red across the board as the China CSI fell to 2019 levels.  European markets also see red across the board as they monitor rising rates and developments in the Middle East. U.S. futures gave up early gains as the 10-year yield topped 5% but as we move toward the open they have also recovered off session lows in a very volatile premarket trade.  Plan for just about anything in this short-term oversold condition.

Economic Calendar

Earnings Calendar

Notable reports for Monday include AGYS, ARE, BRO, CADE, CALX, CLF, CR, MEDP, PKG, SSD, WRB, & WSFS.

News & Technicals’

Chevron, one of the largest oil companies in the world, has announced that it will acquire Hess, a smaller oil company, in a $53 billion deal. The deal will be paid entirely in stock, meaning that Hess shareholders will receive Chevron shares in exchange for their Hess shares. The deal will allow Chevron to expand its presence in Guyana, a South American country that has huge oil reserves. Chevron and Hess are already partners in some oil projects in Guyana, along with Exxon Mobil, another oil giant. The deal will make Chevron and Exxon Mobil the main competitors in two of the most promising oil regions in the world – shale and Guyana. Shale is a type of rock that contains oil and gas and can be extracted using a technique called fracking. Guyana is a new frontier for oil exploration, as it has been discovered to have billions of barrels of oil under its seabed.

Google, the tech giant owned by Alphabet, is facing an antitrust investigation in Japan over its search practices on mobile devices. The Japan Fair Trade Commission (JFTC) announced on Monday that it is looking into whether Google has violated the country’s competition law by making deals with Android smartphone makers to give preference to its apps and services. Google denied any wrongdoing and said that Android is an “open-source platform that has enabled a diversity” of partners and device manufacturers. The JFTC’s probe comes amid growing scrutiny of Google’s dominance in the global digital market.

Philips, a Dutch company that specializes in health technology, has raised its full-year outlook after reporting strong results for the third quarter of 2021. The company said its core profit more than doubled to 457 million euros ($483.3 million), beating analysts’ expectations. The company also saw an 11% increase in comparable sales, reaching 4.5 billion euros. The growth was driven by higher demand for its medical scanners, patient monitoring equipment, and personal health devices, which helped the company cope with the impact of the COVID-19 pandemic. Philips said it expects to deliver a double-digit improvement in adjusted earnings per share and a high single-digit increase in comparable sales for the full year.

The equity markets continued to slide for the fourth consecutive session, erasing the gains made in early October. Investors are nervous about the rising Treasury yields, which reached new highs for this cycle, and the increased geopolitical tensions in the Middle East. Fed Chair Powell delivered a hawkish message saying the inflation is still too high and more rate increases are possible but data dependent. The defensive sectors outperformed, while growth-style investments fell behind. Banks also struggled as Regions Financial warned of further drops in net interest income. Today the bulls and bears will look for inspiration in the earnings reports and of course bond yields that continue to rise this morning. The economic calendar is light for the beginning of this week but market-moving reports are pending at the end of this week. 

Trade Wisely,

Doug