The theme of this week looks to continue as Thursday is shaping up for another overnight reversal of direction as earnings speculation drives the index price swings.  While the DIA has chopped in a significant point consolidation, the SPY, QQQ, and IWM remain in an extended condition.  Today we have a reading on Jobless Claims and another big day of reports, so expect more volatile price action as we slide toward the end of the week.

Asian markets concerned about future rate increases traded mixed overnight with modest gains and losses.  However, European markets see only green this morning as earnings results drive trading, with economic conditions taking a backseat.  With earnings and Jobless claims, the U.S. futures point to a bullish open to once again reverse the previous trading day. 

Economic Calendar

Earnings Calendar

Notable reports include ABBV, APO, MT, AZNL, BWA, BAM, CGC, CC, NET, COHU, CYBR, DUK, EXPE, FLO, GPN, HLT, HIMX, K, KIM, LITE, LYFT, MAS, MHK, MSI, NWSA, PEP, PM, PLUG, PM, PROS, QLYS, RL, SPGI, SWI, TPR, TPX, TRI, UAA, VRSN, WTW, & YELP.

News & Technicals’

Disney said it would reorganize into three divisions: Entertainment, ESPN, and parks and experiences.  Disney will slash 7,000 jobs from its workforce and plans to cut $5.5 billion in costs, including $3 billion in content savings.  CEO Bob Iger said the company isn’t considering a spinoff of ESPN. 

PepsiCo’s fourth-quarter earnings and revenue topped Wall Street’s estimates.  The food and beverage giant’s price hikes to mitigate inflation buoyed sales for snacks and drinks, but the strategy has also hurt demand.  Nevertheless, looking to 2023, Pepsi is projecting a 6% increase in organic revenue and 8% growth in its core constant currency earnings per share. 

The Credit Suisse quarterly result was worse than analyst projections of a net loss attributable to shareholders of 1.32 billion Swiss francs.  It took the embattled Swiss lender’s full-year loss to 7.3 billion Swiss francs.  Credit Suisse in October announced a plan to simplify and transform its business in an effort to return to stable profitability following chronic underperformance in its investment bank and a litany of risk and compliance failures. 

Every day this week has begun with an overnight reversal of direction, and it looks as if Thursday is shaping up to follow the same pattern.  SPY, QQQ, and IWM charts remain extended, while the DIA has primarily consolidated in a substantial point range.  Both volume levels and the VIX also have flip-flopped daily while earnings speculation and uncertainty drive the volatility.  Today we have another big round of earnings reports and the Fed inflation nemesis, the strong jobs sector, as we wait for the weekly claims reading.  Expect the whippy price action week to continue, so plan your risk carefully.

Trade Wisely,

Doug