The bulls are on a roll extending the indexes on Wednesday with better-than-expected retail numbers in the short-term government spending bill to avoid shutdown worries until after the holidays.  Today investors will key off earnings reports with a big box retail theme and a busy economic calendar full of reports and Fed speakers.  Although the fear of missing out is strong right now be wary of chasing this parabolic because a pullback to punish those last in the door could begin at any time.  That said it is entirely possible the extremely bullish enthusiasm could remain through the rest of the week so plan carefully.

Asian market closed mostly lower overnight seeming not very encouraged by the U.S.-China talks.  European markets trade cautiously mixed this morning with consumer weakness worries as luxury brand seller Burberry posted disappointing results.  U.S. futures also suggest a hesitation to keep driving higher this morning ahead of a busy day of earning and economic reports. 

Economic Calendar

Earnings Calendar

Notable reports for Thursday include BABA, AMAT, BBWI, BZH, BERY, BORR, BRC, BV, DLB, DOLE, GPS, M, POST, ROST, SCVL, SSYS, UGI, WMG, WMT, & ZTO.

News & Technicals’

China’s President Xi Jinping delivered a message of cooperation to U.S. business leaders on Wednesday, after meeting with U.S. President Joe Biden for the first time since he took office. Xi said that China and the U.S. have to choose between being partners or adversaries, and urged them to work together on global issues such as climate change, trade, and pandemic response. He also announced that China would send two of its giant pandas to the San Diego Zoo, as a gesture of goodwill and friendship. The dinner, which was held in San Francisco, was part of the Asia-Pacific Economic Cooperation conference, where leaders from 21 countries discussed ways to boost economic growth and cooperation in the region.

Cisco, a leading provider of networking and communication products and services, reported its quarterly earnings on Wednesday, beating the analysts’ expectations. However, the company’s guidance for the next quarter was lower than anticipated, as the company faced a slowdown in product orders from its customers. The company explained that its customers were busy implementing the Cisco products and services that they had purchased in the previous quarters, and therefore had less demand for new orders. The company also said that it was facing some supply chain challenges and higher costs due to the global chip shortage and the pandemic. The company’s shares fell by 4% in after-hours trading.

The Congress has averted a government shutdown for now, by passing a short-term funding bill on Wednesday night. The bill, which would keep the government running until February 18, 2024, received bipartisan support in the Senate, with 87 senators voting for it and 11 voting against it. The bill had already passed the House of Representatives on Tuesday. The bill now goes to President Joe Biden, who is expected to sign it into law. The bill also includes some emergency funding for disaster relief, health care, and defense. The bill does not address the debt ceiling, which is expected to be reached by mid-December. The Congress will have to deal with the debt ceiling and other contentious issues, such as immigration and social spending, after the holidays.

The bulls are on a roll this week, reaching up in a parabolic bull run trying once again to anticipate how the FOMC will approach the rates in the future. However, it would be wise to keep in mind that the market’s track record on Fed predictions has been 100% wrong over the last year. The positive mood continued Wednesday, as retail sales beat the forecasts and producer prices moderated. Another factor that boosted the confidence of investors was the House passing a bill to prevent government shutdown worries until after the holidays. We have a busy day of economic reports and Fed speakers on the economic calendar with a big box retail theme on the earnings calendar to keep investors guessing in the current extremely over-bought parabolic conditions.  Be very careful chasing stocks higher as a pullback could begin at any time.

Trade Wisely,

Doug