The bears relived some of the short-term overbought conditions on a light volume day as the uncertainty of what comes next inspired a bit of profit-taking as we wait for the FOMC. The selling created no technical damage, but the market appears on the cusp of a big decision. With the massive amount of pending economic and earnings data support the current bullish trend, or will it bring the bear back to work, resuming the longer-term bear trend in the SPY and QQQ? One thing is for sure were likely to see price volatility in the next few days that will challenge even the most experienced traders.
Asian markets traded modestly lower overnight, led by Hong Kong, down just 1.03%. Though a preliminary GDP report topped estimates, European markets trade lower across the board this morning. Facing a big day of earnings and economic reports on the eve of an FOMC decision, U.S. futures point to a lower open. Still, I would not expect the bulls to give up easily, so expect substantial price volatility as the data rolls out.
Preliminary Eurostat data released Tuesday showed the euro zone grew 0.1% in the fourth quarter. According to Reuters, economists had pointed to a 0.1% contraction over the same period. Energy prices cooled off in the latter part of 2022, bringing some relief to the euro zone’s broader economic performance.
Norway’s Government Pension Fund Global, among the world’s largest investors, returned -14.1% last year. “The market was impacted by war in Europe, high inflation, and rising interest rates. This negatively impacted both the equity and bond markets simultaneously, which is very unusual,” said Norges Bank Investment Management CEO Nicolai Tangen.
UBS reported $1.7 billion of net income for the fourth quarter of last year, bringing its full-year profit to $7.6 billion in 2022. “The rate environment is helping the business on one side, and that offsets some of the lower activity that we see on the investment side,” CEO Ralph Hamers told CNBC’s Geoff Cutmore Tuesday. The Swiss bank said it would purchase more shares this year.
As we approach the FOMC, uncertainty about what comes next brought some profit-taking on Monday, reliving some of the overbought conditions on another light volume day. However, the selling created no technical damage, and though the VIX registered an increase in fear, the bulls still controlled the overall trend. The intensity of market-moving reports picks up sharply today, hitting a fevered pitch by Thursday when GOOGL, AMZN, and AAPL earnings. If that’s not enough, toss in a slew of economic reports that include an FOMC rate decision and likely hawkish press conference from Powell. Plan for intraday whipsaws, overnight reversals, and fast, challenging price action to test even the most experienced trader.
Although there appeared to be a little profit-taking into Friday’s close, the bull’s relentless push continued struggling against index price resistance levels. Last week every selloff inspired the bulls the buy, as even disappointing earnings gaps were quickly bought up as the VIX fear gauge continued to decline. With we see more of the same with the bears stirring about this morning, perhaps window dressing the month end? Or, will bears show their teeth, relieving some of the overbought conditions with an FOMC rate hike just around the corner? We will soon find out with a huge week of earnings events to keep emotions and price volatility high!
Asian markets started Monday’s session higher but finished the day mixed, even as China’s outlook improves. European indexes only see red this morning with the uncertainty of the future of central bank rate decisions. With a week of earnings and economic calendar events U.S. points to a bearish opening as we slide into the end of a bullish January run. Plan carefully and expect some wild price gyrations this week, with earnings speculation creating the high drama.
Notable reports for Monday include ARE, CADE, BEN, GEHC, GGG, HP, JJSF, NXPI, PHG, PCH, SOFI, & WHR.
News & Technicals’
Automobile giants Renault and Nissan have agreed to a sweeping restructure of their decades-long alliance since 1999. As part of the overhaul, Renault will transfer 28.4% of Nissan shares into a French trust.
Most Adani Group companies continued to see sharp losses for a third consecutive trading session as the company released its rebuttal on short seller firm Hindenburg’s report. Adani Enterprises’ stock price remains more than 25% lower in the month to date, Refinitiv data showed. Founder and chairman Gautam Adani’s net worth fell $27.9 billion in the year to date, according to the Bloomberg Billionaires index.
Dutch health technology company Philips said it would scrap 6,000 jobs on Monday to restore its profitability. Chief Executive Officer Roy Jakobs told CNBC it was a “necessary intervention to help us to become competitive and lean in the way we go forward in the market.” The company also says a new strategy simplified organization should improve patient safety and quality and supply chain reliability.
The bull’s relentless push continued on Friday but struggled with price resistance levels softening with perhaps some profit-taking heading into the weekend. As we finish up the last couple of days of January and move into February, expect a lot of price volatility as the pace of earnings quickens with some big tech names that can move the market. We will also face a busy economic calendar that includes an FOMC rate decision on Wednesday afternoon to keep traders and investors guessing what comes next. Unfortunately, the bears seem to be stirring this morning. Still, will the early selling continue to inspire the bulls to buy as we have experienced lately, or will the bears finally relieve some of the overbought market conditions with the uncertainty of the FOMC?
Gloomy tech forecasts were no match for the relentless bulls determined to buy with no fear of price resistance, recession, bearish economic data, recession, and a pending Fed rate decision. Today we have several potential market-moving economic reports before the bell and busy-day earnings reports likely to keep the price volatility high. Simply said, anything is possible at today’s opening, depending on how the market reacts to the data. So, prepare for fast price action, whipsaws, and possible reversals.
While we slept, Asian markets traded mixes as China accused the U.S. of economic sabotage as Hong Kong surged more than 2%. This morning, European markets trade with modest bullishness as they wait on pending data. Likewise, U.S. futures seem to be taking a wait-and-see approach heading into a big morning of data through the Nasdaq pushing for a sharply positive open.
The Thursday earnings calendar has over 80 companies listed and expected to report today. Notable reports include ALK, AAL, ADM, BX, CNX, CMCSA, DOW, EMN, FHI, INTC, JBLU, KLAC, LHX, MMC, MA, MKC, NOK, NOC< NUE, OLN, OSK, ROK, SAP, SHP, SHW, LUV, STM, TROW, TSCO, X, V, VLO, WY & XRX.
News & Technicals’
Tesla just reported fourth-quarter earnings for 2022, including revenue of $24.32 billion and earnings per share of $1.19. Automotive revenue amounted to $21.3 billion in the three months ending 2022 and included $324 million of deferred revenue related to the company’s driver assistance systems. Automotive gross margins came in at 25.9%, the lowest figure in the last five quarters.
Fourth-quarter gross domestic product will be released at 8:30 a.m. ET on Thursday. It is expected to show that the economy slowed but still grew at a solid 2.8% pace in the fourth quarter over the third, according to Dow Jones. Economists are looking for signals of how weak or strong the consumer was at the end of 2022 since that could signal whether the U.S. will fall into a recession soon.
Chevron to begin a whopping $75 billion stock buyback and a significant dividend increase. The company said in a press release that the buyback program would become effective on April 1, with no expiration date. In addition, the dividend hike increases Chevron’s per share payout to $1.51 per share from $1.42 and will be payable on March 10. Chevron’s market cap was roughly $350 billion on Wednesday’s market close, meaning that the buyback would represent more than 20% of the company’s stock at current prices.
Disappointing tech forecasts that woke up the bears were no match for the relentless bulls showing no fear and recovering all the early selling to post slight gains at the close. The T2122 indicator continues to signal a short-term overbought condition with a morning filled with market-moving economic reports. We also have a very big day of earnings reports to provide us with considerable price volatility as the QQQ and SPY work to break the long-term bearish trend resistance. I think it’s fair to say anything is possible today, then keep in mind we have the Fed’s favored inflation number before Friday’s bell as we move toward their next rate decision.
Tuesday got off to a rough start, but the bulls fought back despite the very anemic volume, likely due to the after-the-bell report from MSFT. The company enjoyed a sharp initial rally, but the gloomy outlook MSFT forecasts for the future now indicate their Wednesday will be lower. Today we have a big day of earnings that includes TSLA after the bell, so plan for price volatility. It may also be wise to consider the possible market-moving economic report coming Thursday morning as you plan your risk.
During the night, Asian markets mostly rallied as Australia struggled with higher inflation reports. On the other hand, European markets see modest declines across the board this morning. With a big day of earnings ahead, U.S. futures point to a gap down open due to MSFT’s disappointing forecast. Expect the big point moves to continue as the market reacts to all the data.
Microsoft sees a gloomy tech environment will continue despite betting top-line estimates. Microsoft sees Azure growth slowing down in the following quarters as customers try to save money on their existing applications running in the cloud. In addition, the company’s finance leader said a slowdown in new business in December would continue across Microsoft’s commercial business.
Slowing inflation hasn’t relieved consumers yet because prices are still well above where they were a year ago. Commodity and freight costs are falling but won’t immediately trickle down to consumers in part due to supplier contracts and some companies’ desire to boost profit margins. But retailers are fighting back by pushing their private label products, which could win over consumers with cheaper prices and force manufacturers to offer better deals.
Dutch chip equipment maker ASML forecasts a 25% jump in 2023 revenue. ASML CEO Wennink said China accounted for around 15% of sales in 2022 and will be at a “similar” amount this year, despite U.S. chip export restrictions. For the fourth quarter of 2022, ASML’s net sales rose more than 29% to 6.4 billion euros ($7 billion). For the full year, net sales came in at 21.1 billion euros, a more than 13% year-on-year rise.
After a rough start on Tuesday, the bulls fought back despite the very anemic volume with the uncertainty of the pending MSFT earnings after the bell. MSFT beat top-line estimates as cloud sales soared, but in the conference call, the company forecasts challenging times looking forward. Sharp after the bell, gains quickly diminished, and the stock is indicated lower this morning. Unfortunately, yesterday’s bullishness fell short of breaking through the long-term bear trend, which may create another lower high due to the first disappointing big tech report. Though we have a light day on the economic calendar, many will be thinking about the slew of reports on Thursday morning that can potentially move the market dramatically, so plan your risk carefully. In addition, earnings numbers ramp up today, so also prepare for substantial price volatility as we wait on TSLA’s report after the bell.
Investors rushed into big tech names on Monday as bulls surged higher, speculating earnings will support the higher prices. Though the SPY and QQQ were the big winners of the day, they fell just short of breaking the longer-term bear trend established in early 2022. With a big day of earnings that includes a report from MSFT after the bell, big point moves are possible as the indexes swing widely between substantial support and resistance levels. Plan carefully!
While Asian observes Lunar holiday celebrations, markets rise as the global surge higher continues. However, European markets trade modestly bearish this morning despite a better-than-expected PMI reading. With U.S. markets in a short-term overbought condition, U.S. futures point to modest declines with a big day of earnings data to inspire the bulls or bears depending on the results. Plan for price volatility.
The pace of earnings picks up today, with more than 30 companies listed. Notable reports include MMM, AGYS, CNI, COF, DHR, DHI, FFIV, GE, HAL, ISRG, IVZ, JNJ, LMT, MSFT, NAVI, ONB, PCAR, RTX, TXN, TRV, UNP, VBTX, VZ, WSBC & WAL.
News & Technicals’
The FBI said it was “able to confirm” that Lazarus Group and APT38, two hacking groups linked to North Korea, were responsible for the attack on the so-called Horizon bridge last year. Hackers stole $100 million worth of cryptocurrencies in the attack on the Horizon bridge, which traders use to swap digital tokens between different blockchain networks. The FBI also said that this month, the North Korean cyber actors used the Railgun system to launder over $60 million worth of the token ether stolen during the June 2022 heist.
U.S. markets are underperforming global stock markets, but analysts expect more of the same. As of Monday morning, the Russell 3000 benchmark for the entire U.S. stock market was up around 4.85% over the three months since late October. By contrast, the MSCI World ex-U.S. index had surged more than 19%, while the pan-European Stoxx 600 was up more than 12%.
Google CEO Sundar Pichai and executive leaders addressed employee questions at a town hall meeting on Monday after last week’s job cuts. “I understand you are worried about what comes next for your work,” Pichai said. Pichai said executive bonuses are getting cut.
The bulls charged forward on Monday and extended the T2122 indicator into another short-term overbought condition as investors rushed into big tech names, speculating on positive earnings reports as layoffs continue. While the SPY and QQQ surged to higher highs in the recent bullish trend, they fell just short of breaking the longer-term bear trend that began in 2022. This morning we face a significant number of earning reports along with a PMI reading that consensus expects to continue to show economic contraction. Price volatility is likely as the data rolls out, and with MSFT reporting after the bell, a substantial gap Wednesday at the open is not out of the range of possibilities. Plan carefully with big point index moves possible between index support and resistance levels.
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.
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.
The bears engaged despite the better-than-expected PPI report reminding traders of the danger of chasing an over-extended condition. The good news is one day does not make a trend, so although the index patterns raised some uncertainty, it is how we follow through today. So, will the bulls step up and defend support levels, or will the bears continue to attack? With potential market-moving economic reports and earnings, anything is possible, and the danger of big price whipsaws continues.
Overnight Asian markets traded mixed due to uncertainty. European markets also look lower this morning as bullish sentiment wains. U.S. futures point to a bearish open ahead of earnings and economic reports that could quickly enhance or reverse market direction, so plan carefully.
Thursday is typically the busiest earnings day of the week, and today is no different. Notable reports include AAL, CMA, CBSH, FAST, FITB, HTLD, KEY, NFLX, MTB, NTRS, PPG, PG, SJR, SIVB, & TFC.
News & Technicals’
Jamie Dimon believes interest rates could go higher than the Federal Reserve projects as inflation remains stubbornly high. “I actually think rates are probably going higher than 5% … because I think there’s a lot of underlying inflation, which won’t go away so quickly,” Dimon Thursday from the World Economic Forum.
Hertz is teaming up with the city of Denver to build out its EV-charging infrastructure. The rental car company will add more than 5,000 electric vehicles to its Denver fleet, install public EV chargers, and offer tools and training in and around the city. Hertz hopes to strike similar deals with other cities around the country.
According to people familiar with the matter, Bed Bath & Beyond has been in discussions with lenders as it tries to nail down financing that would keep it afloat during a likely bankruptcy filing. The people said that the company is also running a sale process in hopes of selling its home goods chain of stores, as well as its Buybuy Baby banner. Interested buyers include Sycamore Partners and Authentic Brands, they added.
The danger of chasing an overextended market condition made itself apparent on Wednesday as the bears engaged, testing index support levels by the close of the day. Though the IWM and DIA continue to hold above long-term downtrends, they also left behind some bearish patterns raising some uncertainty. The more significant issue is the possibility the QQQ and SPY created lower highs in the prolonged bear trend. Keep in mind one day does not make a trend, so the big question is how the indexes follow through today with potential market-moving economic data pending. Big price moves, both up and down, remain possible, making for dangerous trading conditions. Plan your risk carefully.
Following a mixed bag of earnings created mixed index results as the DIA reversed sharply and QQQ closed slightly positive at the close. However, the day increased uncertainty with anemic volume and a rising VIX facing a busy Wednesday of market-moving economic reports. The bulls seem to have no concern about the weakening economic conditions or the likely recession. However, the market conditions could quickly produce big moves up or down, so plan your risk carefully.
During the night, Asian markets primarily rallied as the Band of Japan surprised the market, making no change to the yen yield range. European markets trade modestly higher this morning as the UK inflation rate declines for the second consecutive month to 10.7%. The U.S. futures have recovered from some overnight lows to trying to put on a brave face ahead of the market-moving PPI, Retail Sales, and Industrial Production numbers.
The number of notables will increase today and Thursday, back off on Friday, and then it gets nuts for a few weeks. Notable reports include AA, DFX, FHN, FUL, KMI, PNC, PLD, SCHW & WTFC.
News & Technicals’
Analysts believe that Russian President Vladimir Putin could be ready to announce another mobilization round as Russia looks to bolster its armed forces in Ukraine. “Putin may announce a second mobilization wave to expand his army in the coming days—possibly as early as January 18,” analysts at the Institute for the Study of War said Tuesday.
United Airlines’ fourth-quarter profit topped Wall Street estimates thanks to strong demand and high fares. United expects to expand by flying 20% in the first quarter from a year ago. United executives will hold a call with analysts and media on Wednesday at 10:30 a.m. ET.
The Japanese yen weakened by more than 2% after the Bank of Japan announced no changes to its yield curve control. Coinbase’s decision to exit comes only a few weeks after rival exchange Kraken said it would cease its operations in Japan this month. In addition, several firms have suffered from waning investor appetite for crypto after the major exchange FTX blew up in September.
A mix of earnings data created mixed index results on Tuesday, with the DIA reversing Friday’s strong rally, but the QQQ managed to squeak out a $0.57 gain at the close. The VIX rallied, but the volume was very light, facing PMI and Retail Sales numbers before today’s morning bell. We also have several notable earnings reports with Industrial Production, Business Inventories, Housing Market Index, Beige Book, Treasury International, and Fed speakers tossed in for good measure. Despite the uncertainty, the T2122 indicator continues to warn of a short-term overbought condition, and the bulls appear to have little to no concern about recession or the weakening economic data points. Big moves are possible in either direction, so plan your risk carefully.
With money markets flush with capital due to institutional recession warnings, the VIX dropped dramatically last week on relatively light volume. The only explanation I can come up with is that the CTA algorithms are buying up stocks, and institutions are buying the dark pools while continuing to warn retail investors of the tough times ahead. However, one thing seems inevitable with all the data coming our way in the next several weeks. Wild price fluctuations, big-point intraday whipsaws, and overnight reversals will likely make conditions challenging and dangerous for retail traders. Plan your risk carefully!
Asian markets traded mostly lower as data suggested the Chinese economy grew by 3%, and the population declined for the first time in a decade. European markets so modest declines across the board this morning. U.S. futures currently suggest a modestly lower open but could quickly change as we wait on earnings and economic data that could move the market suddenly and substantially.
The number of earnings ramp up this week so prepare for volatility. Notable reports include CFG, FULT, GS, IBKR, MS, PRGS, SBNY, & UAL.
News & Technicals’
Goldman will report this morning with Wall Street expecting earnings of $5.48 per share, 49% lower than a year earlier, according to Refinitiv. In addition, revenue is expected to be 14% low than a year earlier at $10.83 Billion.
China’s population declined in 2022, the National Bureau of Statistics said Tuesday. The drop was the first since the early 1960s, according to Yi Fuxian, a critic of China’s one-child policy and author of the book “Big Country With an Empty Nest.” The statistics bureau said that Mainland China’s population, excluding foreigners, fell by 850,000 people in 2022 to 1.41 billion. The country reported 9.56 million births and 10.41 million deaths in 2022.
Some 73% of CEOs think global growth will decline in the next year, according to a new survey by PwC. The survey was made up of 4,410 CEOs across 105 countries. It also showed that almost 40% believe their business will not be economically viable within a decade on current trajectories.
While volume remained low last week, the VIX dropped dramatically, suggesting no fear in the market. At the same time, economic indicators continue to suggest a recession, and money market funds are flush with capital. It would seem institutions are quietly buying in the dark pools, and their CTA algorithms are buying stocks while continuing to warn retail investors of difficult times in the year ahead. With the next several weeks chalked full of earnings reports, expect considerable price volatility despite the collapsing VIX. Add in some big market morning reports like PPI, Retail Sales, manufacturing and housing data, substantial price whipsaws, and overnight reversals should be expected. Plan carefully!
With investors anticipating better numbers in this morning’s pending CPI report, the bulls pushed higher with nervous energy as the VIX rose simultaneously. Jobless claims will be the next hurdle to cross this morning, and then Friday morning’s big bank reports will become the center of attention for the market. The coming 3-day weekend may be a welcome respite after the wild price volatility we will likely experience over the next 48 hours. But, of course, anything is possible, so be prepared for big point moves that may include quick whipsaws as the drama unfolds.
Asian markets mainly saw modest gains overnight with eyes on pending inflation data. European markets have stretched to their highest level since April 2022 on a report the eurozone may outperform the U.S. in 2023. With the highly anticipated CPI report pending, U.S. futures suggest a flat open, holding their breath, hopeful the numbers show the current FOMC rates are good enough.
We have a few more small-cap companies reporting today, but the only notables are INFY and TSM.
News & Techncals’
Economists expect a slight decline in December’s consumer price index when it is released Thursday at 8:30 a.m. ET. The consensus forecast for CPI is for a decrease of 0.1% on a monthly basis but a 6.5% increase from the prior year, according to Dow Jones. Stocks rallied Wednesday ahead of the report on expectations the data will show a continued easing of inflation pressures and optimism that it could slow the Federal Reserve’s rate hiking.
Zeynep Ozturk-Unlu, Deutsche Bank’s chief investment officer for EMEA, said she could see Europe outperforming the U.S. in economic growth and capital markets in 2023. Other analysts also told CNBC they believe the U.S. had reached the end of a post-Global Financial Crisis rally. Moreover, some early data points look positive for the eurozone compared to the U.S.
Ubisoft shares slumped as low as 18.80 euros apiece Thursday morning, hitting their lowest level in more than seven years. Ubisoft said Wednesday it expects full-year net bookings will likely fall 10% after an earlier forecast called for a 10% increase. It’s the third gaming firm this week to issue a disappointing trading update. Devolver Digital and Frontier Developments issued separate profit warnings on Monday.
The bulls pushed higher on Wednesday, speculation that the pending CPI report will show a decline, but interestingly the VIX also rallied on another rather anemic volume day. Before the opening, we will get earnings from TSM and INFY, along with highly anticipated inflation and Jobless Claims numbers. Traders should prepare for some wild price gyrations as the market reacts. Will it be the bulls or bears inspired? We will soon find out! Though we have some Fed speakers and a 30-year bond auction, Treasury Statement, and Fed Balance Sheet later in the day, market attention will quickly shift to big bank reports happening Friday before the bell. Buckle up, it’s going to be a wild end to the trading week as we head into a 3-day weekend.