Bullish Sentiment Faded

The recent bullish sentiment faded in uncertainty over the last couple of days, with the bear attack creating technical damage in the index charts.  However, the technical damage is not yet severe, but the drip, drip of reminders that our economy is slowing is making it difficult for investors to matain positive sentiment.  Today we face an Existing Home Sales report, a lighter day of earnings, and more Fed speak.  Will the data continue to inspire the bears, or will bulls get a chance to relieve some of the selling pressure as we head into the weekend? 

Asian markets closed Friday in the green across the board, even as Japan’s inflation rises to 1981 high.  European markets trade modestly bullish this morning as they ponder the next Fed rate action.  With a lighter day of market-moving data, U.S. futures suggest a mixed open as investors attempt to gauge the impacts of the big tech reports starting next week.

Economic Calendar

Earnings Calendar

We have a lighter day of earnings reports but keep in mind the numbers ramp up significantly in the weeks ahead as big tech reports begin.  Notable reports today include ALLY, ERIC, HBAN, RF, SLB, & STT.

News & Technicals’

Genesis Trading filed for bankruptcy protection after suffering crippling losses from the collapses of FTX and hedge fund Three Arrows Capital.  Genesis is a part of Barry Silbert’s Digital Currency Group, which has seen mounting problems recently.  Some of Genesis’ largest clients include Circle, which operates stablecoin USD Coin, and Gemini, which the Winklevoss twins back.

Google’s parent Alphabet is eliminating about 12,000 jobs, or 6% of its workforce, the company said Friday, in the latest cuts to shake the technology sector.  Alphabet’s CEO said in a staff memo shared with Reuters that the company had rapidly expanded headcount in recent years “for a different economic reality than the one we face today.”  The job losses affect teams across the company, including recruiting and some corporate functions, as well as some engineering and product teams. 

The IMF’s Kristalina Georgieva said headline inflation was heading down, and China’s reopening was expected to boost global growth.  The IMF forecasts China’s economy will outpace global growth by 2.7% this year, at 4.4%, after slipping below it for the first time in four decades last year.  She also highlighted ongoing risks, including China’s growth resulting in higher oil and gas prices and the “horrible” war in Ukraine harming global confidence, particularly in Europe. 

Although the bears won the battle Thursday, the selling was not strong enough to compound technical damage, but the recent bullish sentiment faded into uncertainty.  While the NFLX subscriber gains shined a light of hope for better tech earnings, the GOOGL announcement of 12,000 job losses will likely keep the cloud cover of uncertainty heading into next weeks reports.  Today we will have to address Existing Home Sales that the consensus expects to decline, and more Fed speak as we slide into the weekend.  We also have a lighter day of notable earnings, which might give the bulls a path to bounce back a bit, relieving some of the selling pressure.  However, with the highly anticipated giant tech reports beginning next week, plan for another week of wild price swings.

Trade Wisley,

Doug

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