Reaction to Powell’s comments on Friday turned out to be just another day to set records as the risk-hungry bulls continued to buy, buy, buy.  With the futures bullish again this morning, we could set more records at the open.  The sharp decline in the VIX on Friday also suggests there is little to no fear, but as valuations continue to stretch, be careful with complacency.  There will be a day when the market will suddenly care about weakening economic metrics but, until then, stay with the trend and party on traders!

Asian markets closed green across the board, and Australian shared recovered early losses due to a spike in pandemic infections.  European markets see modest gains across the board this morning, and the U.S. futures point to modest gains at the open that may well set new records ahead of Pending Home Sales numbers. 

Economic Calendar

Earnings Calendar

We have 21 companies listed on the earnings calendar to kick off the week, with several unconfirmed.   Notable reports include ZM, LI, NDSN, SOL, & STNE.

News & Technicals’

Though hurricane Ida prompted the refining industry to shut down production, oil prices are remarkably lower this morning, with news that gas prices have declined 0.03 cents a gallon.  That is the first reduction in gas prices in nearly nine months.  The Colonial Pipeline halts gasoline deliveries to the east coast due to the storm, and more than 1 million are without power.  China’s slew of regulations cracking down on the tech sector may not be over, according to experts that have flagged a number of risks, including continued regulatory scrutiny, geopolitics, and the overall impacts to the business. 

Friday was another day to set records after Jerome Powell talked taper with rate increase well into the future.  Though he made light of the inflation, several major banks were quick to disagree, suggesting the sharply higher prices damaging consumer sentiment could have substantial market impacts.  But for now, the Fed chair is sticking to his story; it’s only transitory! So this morning U.S. future continues to push upward, looking to set more records at the open.  The DIA is lagging behind the SPY and QQQ but is now within striking distance of a breakout.  With the massive move in oil stocks Friday, even the IWM significantly improved as it surged above its 50-day average for the first time since mid-July. So stay with the trend, but don’t become complacent as we ignore bad economic metrics.  Someday the market may suddenly care about valuations, consumer sentiment, and inflation.   Until then, Party on Garth!

Trade Wisely,

Doug