The bears made a brief appearance yesterday to remind us there are some concerns to be aware of, but the bulls, hopeful of more stimulus, won the day defending the early selloff.  Rising treasury rates hint at the possibility of additional price volatility slow the rally of growth names and inspire more attention toward consumer cycles, and value plays as a result.  With the VIX closing above a 24 handle once again testing its 50-day average as resistance, traders will need to stay on their toes.  Swift whipsaws and reversals are possible.

Asian markets closed green across the board even as China moves to lockdown more areas of the country due to surging pandemic numbers.  European markets are mixed and mostly lower this morning as investors focus on virus impacts and turbulent U.S. politics.  That said, the U.S futures are once again on the rise this morning, hovering just below new index records ahead of the jobs opening report.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have just seven confirmed quarterly reports.  Notable reports include ACI & KBH.

News and Technicals’

After a nasty gap down at the open, the bulls went to work defending the selloff pushing the index back up but fell short of fully recovering.  The U.S. House has introduced an article of impeachment with a vote planned for next Tuesday.  I could include a provision to prevent president Trump from holding elected office.  China adds to lock down areas as the virus spikes ahead of the WHO visit intended to investigate the origin of the pandemic. The death toll in the U.S rose above 375,000 as the health care system strains to handle the growing numbers of the infected despite the efforts to vaccinate.  Treasury yields continue to climb, with the 10-year notes hitting 1.156% and the 30-year moving to 1.888% as the market reacts to the president-elect Biden promise of further economic stimulus.  Rising bond rates could signal more volatility ahead for investors.

Yesterday’s bumpy ride ended the day with no discernible technical damage to the index charts.  However, it demonstrate the potential danger of possible swift and substantial moves that could occur should sentiment shift.  It servers as a reminder that to be prepared should the bears have an opportunity to attack.  Although the bulls stepped up and defended the early selloff, the VIX rallied once again to test its 50-day average as resistance.  Closing above a 24 handle as the indexes hover near all-time highs remains a concern and keeping traders a bit on edge and alert to the potential of whipsaws and even the possibility of reversal.  Stay with the trade and remain focused with a plan as the price moves could be substantial.

Trade Wisely,

Doug