Rising Treasury Yields

Rising Treasury Yields

The bears became very feisty yesterday as sharply rising treasury yields shook investor confidence.  Unfortunately significant technical damage occurred in the NASDAQ, with the index closing below its 50-day average.   With bearish reversal patterns left behind in yesterday’s price action and the VIX, very elevated trades should prepare for a challenging day of price volatility.  As we slide into the weekend, the buy the dip confidence may be a bit gun-shy to rush back into the turbulence.

Overnight Asian markets joined in on the selloff, with the NIKKEI dropping a whopping 3.99%.  European markets trade red across the board this morning.  The U.S. futures point to a missed open after a choppy overnight session.  With potential market-moving reports on the economic calendar, anything is possible in the open.  Expect considerable price volatility. 

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we get a little break with just 58 companies reporting quarterly results.  Notable reports include AMCX, CNK, CRON, DKNG, SSP, FL, IEP, LAMR, LBDRA, & RHP.

News & Technicals’

Rising treasury yields brought out the bears yesterday, leaving behind concerning bearish engulfing candles in the indexes.  The DIA finished the day above a critical price support level, but SPY and QQQ broke support levels.  On the bright side, the SPY held above its 50-day average, but unfortunately, the QQQ significantly dropped through this significant psychological level.  Tensions between the U.S. Iran reached a new level after Iranian-backed militia facilities in Syria as the U.S. carried out airstrikes.  The attempt to include a mandatory $15 an hour minimum wage in the stimulus bill hit a roadblock.  According to the House parliamentarian, it can’t be included in the 1.9 trillion dollar stimulus bill planned for passage today.  However, Speaker Pelosi defiantly stated it would stay in the bill for today’s vote. 

The confidently bullish market trend suffered considerable damage yesterday.  With the VIX closing the day above 28 handles, traders should expect considerable price volatility today.  Be prepared for gaps and challenging intraday whipsaws.  As of late, any selloff has met with a strong surge of bullishness.  I suspect a good deal of that extreme confidence was shaken to the core yesterday.  However, with massive stimulus just around the corner, the bears will have their work cutout if they intend to defend price resistance levels.  Buckle up it could be a rough day.

Trade Wisley,

Doug

Foot on the Gas!

Foot on the Gas

In testimony to the Senate banking committee, Powell reiterated low-interest rates, and they plan to keep their foot on the gas with monetary operations.  With a very dovish Fed and House planning to pass the 1.9 Trillion dollar stimulus bill, the bulls stampeded the Dow to new record highs.  The Spy and the QQQ also enjoyed substantial rally though they still have overhead price resistance to clear.  With a huge day of earnings and economic data coming our way, anything is possible.  Buckle up for additional volatility.

Aian markets rallied strongly overnight, with the NIKKEI surging 1.67%.  European markets trade mixed this morning with modest gains and losses after yesterday's strong rally.  U.S. future point to a mixed open with a massive day of data to digest. 

Economic Calendar

Earnings Calendar

We have a huge day on the Thursday earnings calendar with more than 230 companies reporting quarterly results.  Notable reports include ADT, ABNB, ALRM, ABEV, AEP, AMT, BUD, ADSK, BBY, BYND, CZR, CWH, CM, CARS, CVNA, CNP, CLF, CUBE, DPZ, DASH, ETSY, STAY, FTCH, FSLR, FSR, GCI, GIL, HPQ, IHRT, SJM, KDP, KTOS, TREE, LYV, MAIN, MRNA, NTES, NLSN, NKLA, NCLH, PZZA, PCG, PLUG, RMAX, RKT, CRM, SEAS, SRE, SHAK, SHOO, STOR, RUN, TK, TD, VALE, SPCE, VMW, W, & ZS.

News & Technicals’

Uncle Powell reiterated in the Senate that the Fed would continue to hold rates low and keep their foot on the gas, pumping money out through continued operations.  The dovish comments set a fire under the bulls lifting the Dow to new record highs as the so-called recovery stocks continued to extend.  According to reports, the JNJ one-dose vaccine will soon help in the battle against the pandemic.  Unfortunately, in a statement yesterday afternoon, the CDC director said the new Covid Variants could undermine all our efforts.  Ugg!  GameStop shares are once again surging as the Reddit crowd continues to play games with a company that is drawing attention to regulators.  This week Congress proposed a 5% per trade tax, which will affect all traders.  Charlie Munger, in an interview yesterday, explained that novice investors are being lured into a bubble.  The 1.9 Trillion stimulus bills is expected to pass the House on Friday, and President Biden will extend the national emergency declaration.

Technically speaking, the DIA is once again showing tremendous bullishness, and through the SPY rallied strongly off of support, they still have overhead resistance to overcome.  The T2122 indicator is again warning that markets are overextended but with an extremely dovish Fed and Congress ready to pump another 1.9 trillion into the economy, I’m not sure it matters.  That said, be very careful overtrading and remember to take profits because if this market stumbles, the pullback could be very damaging to your accounts.  With a huge day of earnings and several potential market-moving economic reports, price volatility could be very challenging.

Trade Wisely,

Doug

Powell Calmed Market Fears

Powell Calmed Market Fears

Though a challenging and rough day of price action, Jerome Powell calmed market fears ensuring their accommodative policy will continue for the foreseeable future.  The DIA roared back, holding onto the current bullish trend, but the SPY and QQQ still needs to clear overhead resistance and broken trends.  With a big day of earings and another round of Powell testimony, anything is possible, and volatility is likely to remain high.  However, with the House moving forward with the 1.9 trillion stimulus bill, it may be challenging the bears to garner the energy to defend market highs.

Overnight Asian markets sold-off strongly, with Hong Kong leading the way down nearly 3%.  European markets are bouncing back this morning in response to the FED outlook, and U.S. futures point to modest gains ahead of a busy earnings calendar and petroleum status numbers.  Keep a close eye on resistance levels just in case the bear attempt to mount a defense.

Economic Calendar

Earnings Calendar

We have a big day on the earnings calendar with more than 170 companies fessing up to quarterly results.  Notable reports include DDD, APA, BHC, BILI, BKNG, CSPR, LNG, EV, ELAN, ETR, EPR, EXC, FDP, GGB, LAND, GNL, HFC, HZNP, TWNK, IRM, KW, KL, LB, LOW, NTAP, NTNX, NVDA, OSTK, OMI, PBR, PSA, RDFN, RCII, RY, SIX, TDOC, TJX, UPLD, VER, & VIAC.

News & Technicals’

Jerome Powell calmed market fears saying that inflation is still soft and the Fed will stay on the gas with their current accommodation policies.  The Chairman will offer more testimony today at 10 AM eastern, but we will unlikely learn anything new.  Lowe’s earnings top estimates with store sale surging 28% but also warned that the trend of DIY’ers would likely fade.  We have a big day on the earnings calendar, but other than the Powell testimony, a light day on the economic calendar with the Petroleum number at 10:30 AM Eastern.

After a rough day of price action, U.S. futures point to modestly bullish open when writing this report.  However, with a slew of premarket earnings reports, anything is possible.  The bullish trend in the DIA remains intact, but SPY and QQQ remain challenged by overhead price resistance.  Will the bulls have the mettle recovering the trend, or do the bears have what it takes to defend the resistance?  A question yet to be answered.  As the House moving forward with the 1.9 trillion stimulus package moving lower could be difficult unless it's already priced into the market.  Stay vigilant as the price volatility adds challenge and uncertainty on the path forward.

Trade Wisley,

Doug

500,000 American Deaths

500,000 American Deaths

A sad new world record was made yesterday as the U.S.  topped 500,000 American Deaths due to the pandemic.  However, the infection rates are declining, and there may be a light at the end of this very long and grim tunnel.  Facebook struck a deal with Australia to restore service, but the tech sector remains a bit of concern after breaking the bullish trend.  Jerome Powell will testify today, and it seems to have the market a bit on edge this morning, so it may be wise to keep an eye on price action as he speaks today.

Asian markets closed mixed but mostly higher overnight as HSBC topped earnings estimates.  However, European markets are in decline this morning, lead by the DAX trading down over 1% this morning.  The U.S. fluctuated dramatically overnight, but the premarket pump is trying to put on a brave face, currently suggesting a flat open ahead of earnings and the Powell testimony. 

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 60 companies reporting quarterly results.  Notable reports include AAN, APLE, ARNC, AGR, BMO, BNS, BCO, COG, CHE, CLVS, CSGP, CBRL, DK, FLS, FI, HEI, HD, INTU, JAZZ, LDOS, M, MCFE, MDT, NXST, PXD, RRD, SPT, SQ, TRI, TOL, & UPWK.

News and Technicals’

Yesterday the U.S. hit a grim world record with more than 500,000 American deaths due to pandemic.  The silver lining is that the rate of infections is declining, and vaccine availability is growing around the country.  Facebook struck a deal with Australian news creators and will begin restoring the services it banded just last week.  Apparently, the trending #deletefacebook struck a chord with the company leadership.  Treasury Security Yellen sounded a warning yesterday about the ‘extremely inefficient way to conduct monetary transactions with bitcoin.  She went on to say there remain important questions about the legitimacy and stability of the blockchain and cited dangers that it poses to investors.  Home Depot tops earnings estimates this morning, reporting a 25% surge in sales. However, the stock is not seeing much price benefit from the report in the premarket. 

Tech had a rough day yesterday, even as the DIA managed to squeak out a modest gain on the day.  During the night, futures have fluctuated substantially between gains and losses, with the premarket pump once again lifting price off of overnight lows.  We have a busy day earnings and some Jerome Powell testimony that seems to have the market a little on edge this morning.  The House plans to pass the Biden Covid relief bill this week without a single bi-partisan vote in other political news setting up an interesting test for the newly formed Senate. Expect the Washington spin machine to shift into high gear in the days ahead.  Technically speaking, the SPY and QQQ are beginning to raise some concerns after the selling yesterday.  Stay focused and prepared for anything.

Trade Wisely,

Doug

Will Choppy Price Continue?

Choppy Price

Will the choppy price action continues this week?  Rising treasury rates and jobless claims coupled with declining housing numbers added some uncertainty to the market condition.  However, the indexes held onto bullish trends and price supports with the hope of big stimulus checks next month.  The QQQ and SPY are the most concerning at the moment, leaving behind dark cloud cover candle patterns that suggest more lows are possible.  A big week of earnings and economic data will keep us on our toes and likely continue price volatility.

Asia markets traded mostly lower overnight after China left the benchmark lending rate unchanged.  European markets trade lower across the board this morning, and U.S. futures point to a bearish open as treasury yields continue to rally.  Buckle up it could be a bumpy ride this morning.

Economic Calendar

Earnings Calendar

We have 38 companies reporting quarterly results this Monday.  Notable reports include AL, ACC, AWR, AU, BCC, CTB, CVI, FANG, DISCA, DISH, EXR, FIVN, DGOT, HTA, LSI, MRO, NHI, NLS, OXY, OKE, PANW, REAL, O, RSG, RCL, RIG, WMB, & ZI.

News & Technicals’

Every day last week started with a gap up open that immediately found sellers directly after.  Overall there was little to no bearishness, just a week of a week choppy consolidating price action raising a little uncertainty.  Higher jobless claims and a significant shift lower in housing as worries of rising rates battled with the expectation of more stimulus.  With treasury yields climbing this morning, the bears show a bit of feistiness this morning, suggesting a lower open.   Following a United Airlines engine failure, Boeing removed 24 777 aircraft from service as the FAA orders inspections.  During the night, China keeps benchmark lending rates unchanged.  After a brutally cold week, Texas residents are suffering once again with enormous energy bills.

Although trends remained bullish last week, choppy price action raised considerable uncertainty.  The QQQ tested and held a key support area, but it looks as if it will gap below it this morning.  Both the SPY and QQQ left behind dark cloud cover candle patterns raising some concern of a possible follow-through as we begin a new week.  Today we have a very light economic calendar, but earnings reports will keep us on our toes.  Though we have some bearishness showing this morning keep in mind with big stimulus checks expected next month, we can’t rule out the possibility of a buy the dip rally.  Stay focused, avoid making rash decisions while waiting to see if the bears have the wherewithal to push on lower.

Trade Wisley,

Doug

Jobless Claims Spook Market

Jobless Claims

Indexes briefly reacted negatively yesterday with jobless claims rising and housing starts declining, suggesting the so-called recovery is struggling.  However, combat that Jannet Yellen came out with a go-big promotion for more stimulus and futures turned bullish this morning.  Today we have a relatively light day on the earnings calendar with readings on PMI and Existing Home Sales after the open.  Though the price action this week suggests some uncertainty, the overall trends remain bullish.  With our next stimulus fix on the way, soon stay with the trend and ride the wave as long as it lasts.

Overnight Asian markets recovered early losses to close with modestly mixed results.  European markets trade cautiously higher this morning, with a focus on earnings.  U.Ss futures recovered from overnight lows, pointing to a modestly bullish open ahead of earnings and economic reports.  Price action remains somewhat choppy, so plan your risk carefully as we slide into the weekend.

Economic Calendar

Earnings Calendar

We have a lighter day on the Friday earnings calendar with just over 40 companies fessing up to quarterly results.  Notable reports include AEE, DE, DTE, ERF, E, MGA, & MGI.

News & Technicals’

The indexes experienced a little selling yesterday, reacting to higher than expected joblessness and a substantial decline in housing starts.  However, this morning futures are trying to shake off the weakening recovery after Janet Yellen pitches for the massive 1.9 trillion stimulus package.  Facebook made the news again, banning thousands of Australian accounts after deciding to block publishers from sharing and viewing news content on its site.  The #deletefacebook hashtag is trending across other social platforms. 

Although the indexes price action has experienced a lot of chop this week, the overall bullish trends continue to hold.  Without question, the economic data has raised some uncertainty. Still, with the market now addicted to newly printed money and the promise its next fix is just around the corner, the economy's condition no longer seems to matter.  I believe this will end badly in the long run, but for now, all we can do as traders stay with the trend.  That said, we must remain disciplined, avoid overtrading with a fear of missing out and chasing already extended stock prices.  An outsider looking at our index charts would have to assume that the pandemic was the best thing that’s ever happened to our economy!  However, we all know that is not the case.  Stay focused and flexible, sticking to your trading rules, and be prepared should the market stumble.

Trade Wisely,

Doug

Choppy Mixed Bag of Results

Choppy Mixed Bag

With a choppy mixed bag of results on Wednesday, the bullish momentum seems to have run into a bit of uncertainty.  The DIA set a new all-time high as it defiantly rallied while SPY, QQQ, and IWM slipped modestly lower.  Today, we have another big day of data coming our way, and although the futures currently point to lower open, anything is possible as the market reacts to the news.  Keep an eye on the GameStop hearing in Congress as it could have market implications and news-related price reactions.

Overnight Asian markets traded mixed but mostly lower, and European markets flip-flop between modest gains and losses this morning.  Ahead of a big day of data that includes Housing Starts, Jobless Claims, and the Philly Fed traders should prepare for just about anything even though futures currently suggest a cautiously lower open.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have more than 100 companies reporting quarterly results.  Notable reports include WMT, BCS, GOLD, BLMN, APRN, COG, CBB, CVA, CS, DBX, FE, FVRR, FTDR, GLPI, GLOB, HL, HRL, HST, IDA, LTC, NEM, OPI, OPK, PLNT, PPL, RXT, SO, TXRH, TTD, TPH, TRIP, VTR, WM, & WST.

News & Technicals’

Futures point to a lower open the day after a choppy mixed bag of results on Wednesday.  The DIA defiantly rallied to a new record high, with SPY, QQQ, and IWM indexes moving marginally lower.  Today Congress will hold a hearing to investigate the short squeeze inspired by the Reddit community.  Robinhood, Citadel, and Reddit CEO’s will testify as well as the Roaring Kitty the turn out hold a securities license and now faces fraud charges from the SEC.  Interactive Brokers chair says the financial system came dangerously close to failure during the GameStop mania.  Facebook has decided to block all news from Australia from being posted on the social platform even as Google reached a revenue-sharing agreement with news creators.  Facebook has also decided it will debunk climate change myths and will be the sole judge of truth.  Who else is getting tired of the truth filter of the all-knowing Facebook!

Though the choppy price action is raising some caution flags, index trends remain bullish.  That said, we seem to have lost some momentum, and a bit of uncertainty has crept into the mix.  Today we have another big day of earnings and economic data that includes Jobless claims.  Currently, futures suggest a lower open, but with so much data coming our way before the bell, traders should prepare for just about anything.

Trade Wisely,

Doug

Rising Bond Rates

Rising Bond Rates

Rising bond rates created a little uneasiness yesterday, robbing the bullish energy created in the morning gap to new highs.  This morning the rapid decline in mortgage applications due to the rising interest rates may also contribute to futures taking a wait-and-see approach.  We have a big day of earnings and economic reports with PPI and Retail Sales before the bell and the FOMC minutes later this afternoon.  I think it's fair to say anything is possible with that much data for the market to digest. 

Asian markets traded mixed overnight, with Hong Kong surging more than 1%.  European markets show modest declines across the board as they track rising Treasury yields.  Ahead of a big day of data, the U.S. Futures point to flat but slightly lower open at the time of this report.  However, with a significant day reports, anything is possible. Stay focused and flexible.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have just short of 100 companies reporting quarterly results.  Notable reports include SHOP, ALB, ADI, AXTA, BIDU, SAM, BCOV, FUN, CAKE, CHH, CDE, CONE, ET, EQT, FSLY, GRMN, GPC, GOOD, HVT, HLF, H, IAG, IQ, JACK, MIC, MANT, MRO, NI, OC, PAAS, SNBR, STMP, RGR, SPWR, SKT, TLRY, TWLO, WCN, WING, & WIX.

News & Technicals’

While the DIA made a new record high yesterday, it was not the kind of price action that provided a lot of confidence.  I mentioned being careful of the possibility of a pop and drop pattern after the substantial gap up.  Although we did pullback after the open, there was no technical damage in the price action; in fact, it could have been much worse with the concerns of rising bond yields.  The bitter cold snap highlighted a significant deficiency in the U.S. power grid and exposed a massive deficiency in green energy efforts.  The rolling blackouts affected a large portion of the county, with Texas being the hardest hit from the winter storm.  According to reports, SpaceX raised another $850 million in funding, increasing the company valuation overnight.  The European-based game developer Epic Games filed an antitrust complaint against Apple as the attack on big tech continues.

Trends remain very bullish, but with concerns of rising bond rates, U.S. Futures seem to be taking a wait-and-see approach this morning.  Mortgage applications reported another decline in demand at the fastest pace in months as interest rates rise.  We have a busy economic calendar with PPI and Retail Sales before the bell.  The consensus expects an increase in retail numbers due to the last stimulus checks.  Also, keep in mind the industrial production numbers and the FOMC minutes later this afternoon.  If that’s not enough to create price volatility, toss in about 100 earings reports for the market to digest as well.  Anything is possible, so stay focused on price action.

Trade Wisely,

Doug

Severe Cold

Cold

While the severe cold is slowing down most of the country, the bulls remain undeterred, with the futures pointing more index records at the open.  Although we have a short market week of trading, we have a week chalked full of earnings and economic reports for traders to digest.  Expect price volatility to remain high as a result.  Be careful chasing the morning record-setting gap with a fear of missing out.  Please make sure we see follow-through buying and not the dreaded pop and drop that we can sometimes experience at market highs.  Stay focused and flexible.

Overnight Asian markets rallied with lead by the HIS up nearly 2% on the day.  However, European markets are trading nearly flat and have fluctuated throughout the morning, seemly concerned about the extending risk rally.  The U.S. Futures don’t share that concern with the bulls charging forward, likely to set new records in the DIA, SPY, and QQQ at the open.  Fasten your seatbelts as the buying frenzy continues.

Economic Calendar

Earnings Calendar

As we begin a short market week, we have about 80 companies stepping up to report quarterly results.  Notable reports include AAP, A, ALX, ACC, AIG, ANDE, AN, CAR, BYD, CLR, DENN, DVN, ECL, ES, EXAS, EXPD, GEO, INVH, LZB, LPX, OXY, PLTR, RNG, TRU, VNO, YNDX & ZTS.

News & Technicals’

As ugly cold snap grips, the country’s oil hits pandemic highs, with rolling blackouts due to the massive demand for power.  However, the cold has not dampened the spirit of the bulls as they pushed sharply higher overnight.  The 30-year Treasury yield is holding above 2%, a level not seen in nearly a year.  Not satisfied with the Trump acquittal, Speaker Pelosi has announced an independent 9/11-style commission on the Capitol riot.  According to reports, Australia will support the proposed media law on Facebook and Google.  The new law would require the media giants to pay for the news created by other agencies.  Google has threatened to turn off its search app in the country should it pass.  Should other countries join in with this tactic, it would have far-reaching impacts on social media. 

Though the market experienced a little price weakness last week, the futures are fired up this morning.  If current prices hold until the open, the DIA, SPY, and QQQ will set new record highs a the open, with a sharp gap-up move.   Trends are decidedly bullish, but I suspect the T2122 indicator will suggest a very extended condition at the open.  Before chasing in with a fear of missing out, let’s make sure we see follow-through buying rather than getting caught in a classic pop a drop price pattern.  We have a busy week of earnings and economic calendar news, so continue to expect wild price volatility while trying to price in the next round of government stimulus.

Trade Wisely,

Doug

3-Day Weekend!

3-Day Weekend

Although most of the country will be dealing with cold conditions over this 3-day weekend, I would not rule out the possibility of light and choppy day as traders get way early to extend their time off.  Even though indexes seemed to struggle to hold the bullish momentum, there was little to no fear that accompanied yesterday’s profit-taking.  As we slide into the uncertainty of a long weekend, it would not be odd to see additional profit-taking with traders reducing risk.  As long as index trends and support levels hold banking, some recent gains may be a wise move.

Asian markets we mostly closed to as they celebrate their new year.  European markets trade mixed but mostly flat this morning as they react to the 9.9% economic slump reported in the U.K.  U.S. futures currently suggest a slightly lower open with light earnings and economic calendars.  Plan your risk carefully as we head into the weekend.

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have just about 40 companies expected to reports quarterly results.  Notable reports include D, ENB, FTS, MCO, NWL, & WPC.

News & Technicals’

Although there was little increase in fear, the indexes seemed to struggle to hold on to the bullish momentum.  Perhaps it was a light recognition that the Jobless claims were higher than expected but, it may have been nothing more than the 3-day weekend and traders heading out early.  The White House secures a deal for more than 200 million more Covid vaccine doses as the public finds it difficult to access the shot.  The United Kingdom reported that its economy contracted by 9.9% in 2020, the worst performance since the Great Frost of 1709.  Yesterday the U.S. reported a deficit expectation of more than 2 Trillion dollars for 2121, not including the 1.9 Trillion stimulus or the college loan forgiveness moving through Congress.  That said, Speaker Pelosi intends to include the 15 dollars per hour Federal minimum wage mandate in the stimulus package.

We have a light day on the earnings calendar with only a Consumer Sentiment report for traders to react to at 10 AM Eastern.  With a 3-day weekend ahead, price action could become relatively light and choppy as traders get away early to enjoy the extra time off.  Recently, something of a rare event in the current market is seeing the U.S. futures pointing to a flat to slightly lower open this morning.  Perhaps a little profit-taking is possible heading into the weekend?  Plan your risk carefully.

Trade Wisely,

Doug

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