Slowing Recovery?

Slowing Recovery

With a huge miss on the private payrolls number, worries of a slowing recovery added more price volatility and once again raised the bar of uncertainty.  Though the DIA and IWM show a bit of strain looking at the SPY and QQQ, one could assume jobs no longer holding within striking distance of new records. So is this constant push of bullishness warranted, or do we see a dangerous level of complacency starting to develop?  Expect the challenging price action to continue with a massive day of earnings data and jobless claims before the open.

During the night, Asian markets traded mixed but mostly lower as the Chinese online gaming stocks continued to experience selling pressure.  European market trade with modest gains and losses this morning as they wait on the Bank of England.  As earnings roll out, U.S. futures point to a modestly bullish open with the recently problematic jobless claims number just around the corner.  As you plan forward, remember the Employment Situation number before the bell on Friday.

Economic Calendar

Earnings Calendar

We have our busiest earnings calendar of the week with more the 375 companies reporting.  Notable reports include AMRN, AIG, BYND, CAH, CVNA, LNG, ED, CTVA, DIN, DBX, DUK, LOCO, EVRG, EXPD, FEYE, FSR, FNKO, GPRO, GRPN, HBI, ILMN, IFF, K, MRNA, NVO, PZZA, PRTY, PENN, SEAS, SHAK, SFM, STWD, STOR, SWCH, TRIP, OLED, VIAB, SPCE, W, WOW, YELP, YETI, ZG, & ZNGA.

News & Technicals’

Today the President will announce a new national target for electric vehicles to make up 40% to 50% of all new vehicle sales by 2020. However, some EV manufactures suggest such rapid adoption faces significant hurdles such as charging infrastructure, vehicle costs, and consumer adoption.  According to Sean Yokota of the SEB, stocks are headed into a correction and says Japanese markets could be among the hardest hit as the country strains to contain the spread of the delta variant.  In an attempt to attract workers, Target will offer 100% of college tuition and textbooks for associate and undergraduate degrees in business-related subjects.  Walmart, Chipotle, and Starbucks offer similar education programs.  Treasury yields edged higher this morning, with the 10-year trading up to 1.194% and the 30-year advancing to 1.845%.

The wild volatility continued yesterday as slowing recovery worries grew after the huge miss in the number of private payrolls.  That said, the SPY and QQQ remain remarkably resilient as if to say jobs no longer matter with the indexes within striking distance of new record highs. However, the consistent bullish pressure could also point to a dangerous complacency building in the market. So please don't bother me with details and get out of my way because I want to buy something!  Today is the busiest day of earnings report this season, and with jobless claims before the bell, traders should plan for the price volatility to continue.  Remember to plan your risk carefully with the market-moving Employment Situation number before the market opens on Friday.  Hang on tight as this data-driven rollercoaster ride continues.

Trade Wisely,

Doug

Wild Price Action

Wild Price Action

The wild price action continued yesterday with a massive whipsaw the managed to squeak out the 42nd record high for the year in the SP-500.  With a massive number of earnings reports in the pipeline for the end of the week and jobs data, we should prepare for the price volatility to continue.  With the blessing of the President, the CDC added two more months to the eviction moratorium even though the courts have ruled they do not wield power to do so. So hold on tight; the wild ride is likely to continue the rest of the week.

Asian markets traded mixed but mostly higher as a private survey showed growth in Chinese service activity though there is another infection concern in the Wuhan province.  European indexes trade modestly higher this morning as they cautiously trade earnings results.  However, with an earnings deluge and a pending ADP report, U.S. futures currently trade mixed to slightly lower. Still, the truth is anything is possible by the open, so buckle up the wild ride is about to take another lap.

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have a big day with nearly 290 companies reporting.  Notable reports include ETSY, ALB, ALL, ABC, APO, BKNG, BOOT, BWA, CVS, EA, ETR, EXC, FSLY, TWNK, HUBS, IAC, JACK, KHC, LMND, LL, MRO, MBI, MCK, MTOR, MET, MGM, NUS, PBR, DOC, QRVO, RYN, ROKU, RCL, RGR, TM, UBER, VMC, WDC, & WU.

News & Technicals’

Though the courts say the CDC does not have the authority, they went ahead with a new eviction ban with the blessing of the President through October 3rd.  The President said the legal challenge would allow time to distribute funds.  In other news, Biden called on Cuomo to resign after the state Attorney confirmed multiple accounts of sexual harassment.  However, Cuomo refuses to resign, so it will now be up to the state assembly to impeach or remove him from office.  Yellen to support the next multi-trillion-dollar spending plan, saying she believe its necessary to remain as the world's pre-eminent economic power.  Hmm, piling on more debt helps us to remain a superpower?  Treasury yields rise slightly this morning, with the 10-year trading at 1.182% and the 30-year advancing to 1.854% as we wait on the private payroll number.

With a last-minute surge, the SP-500 squeaked out its 42nd new record to close another wild day of price action.  After gapping up, sellers pushed the Dow down, breaking the consolidation support only to reverse in a volatile whipsaw that not only recovered the loss but tacked on another 200 points to boot.  Such price volatility is excellent for intraday traders but very frustrating for swing and position traders who cannot matain an edge with huge price reversals of the last couple of days.  For the rest of the week, markets will have jobs data to digest, along with a deluge of earnings reports.  We begin with the ADP private payrolls number before the bell today, followed by Jobless Claims on Thursday and the Employment Situation on Friday morning.  I suspect the wild price action is likely to stay with us through the rest of the week. So fasten your seatbelt tightly and plan your risk carefully.

Trade Wisely,

Doug

Nasty Whipsaw

Nasty Whipsaw

Gapping up to kickoff the typically volatile August market, the nasty whipsaw that followed may have woke the mean monster of uncertainty. Of course, with the VIX rising and the Absolute Breadth Index falling with more than 700 earnings reports and lots of jobs data yet to digest, a little uncertainty is understandable.  Plan your risk carefully because these big price swings can chop an account to pieces as the market searches for direction from this consolidation.

Overnight Asian markets tumbled with the Chinese government saying online gaming was opium for the mind.  However, European markets sport modest gains across the board fueled by positive earnings results.  With jobs data just around the corner and a slew of earnings reports rolling out U.S. futures, attempt to reverse yesterday’s selling, pointing to a substantial bullish gap-up.  Hold on tight as the wild ride continues.

Economic Calendar

Earnings Calendar

We have a busy day on the Tuesday earnings calendar with more than 200 companies stepping up to reports quarterly results.  Notable reports include ATVI, AKAM, BABA, AMGN, ARNC, CAR, BHC, APRN, BP, CLX, CZR, COP, DISCA, DD, ETN, EXPD, BEN, HSIC, HLF, HST, H, KTOS, LYV, LYFT, MAR, MTCH, MCHP, NKLA, PSX, RL, SEE, SEDG, SRC, SPWR, VVNT, WLTW, & UAA.

New & Technicals’

Western and China’s Henan province, which is significant transport hubs grapple with the aftermath of a devastating flood likely to trigger another shipping crisis.  Supply chain software firm [email protected] said there would probably be fewer smaller discounts during the peak Black Friday sales.  CNBC’s Jim Carmer says it is the height of irresponsibility to invest in Chinese stock right now and urged investors to stay away.  Europe’s recovery could be derailed due to pandemic fears.  According to reports, 40% of U.K. consumers are not comfortable taking vacations abroad or going to large public gathers such as sports or music events. The White House and the Congress are engaged in a game of hot potato over who’s responsible for allowing the federal eviction moratorium to expire after the CDC director could not find legal authority to extend.  Let the finger-pointing and blame game begin!

Yesterday’s nasty whipsaw and rising VIX likely planted some seeds of uncertainty yesterday, but once again, the overnight session has found reason to bounce.  The bearish engulfing candles left behind in the DIA, SPY, and IWM will only be valid if they follow through to the downside, and the overnight push is trying to ensure that is not going to happen.  As I mentioned yesterday, August is typically volatile but toss in supply chain challenges, fears of slowing growth, and the rising infection rates and uncertainty begins to raise its ugly head.  Markets hate uncertainty!  With possible market-moving jobs data later this week and over 700 earnings reports to digest, expect the wild price action to continue. 

Trade Wisely,

Doug

Resting Consolidation

Resting Consolidation

Though we had a little pushing and shoving in the price action last week, the resting consolidation in the DIA, SPY, and QQQ was technically healthy after such a wild selloff and recovery. With three indexes within striking distance of new records, traders and investors will focus on jobs data this week, and we may experience some choppy price action as we wait. First, however, we begin the week with some key inflation data with the PMI report this morning.  With about 2/3rds of the SP-500 reporting this week, there will be a lot of data for the market digest.  So plan carefully and be ready for just about anything.

Asian markets began the month green across the board, with the SHANGHAI leading the way up 1.97% at the close.  European markets are trade mixed with modest gains and losses this morning.  As earnings roll out and facing PMI and ISM numbers, U.S. futures point to bullish open to kick off this busy week of earnings and jobs data.

Economic Calendar

Earnings Calendar

To begin the first trading week in August, we have nearly 100 companies stepping up to report.  Notable reports include ALX, ANET, CVI, FANG, EMN, RACE, GAIA, GPN, GPRE, HSBC, IPI, L, MOS, NXPI, OHI, ON, OTTR, PXD, O, SPG, TTWO. TSEM, RIG, & WMB.

News & Technicals’

Federal unemployment programs that have paid jobless benefits since March 2020 end September 6th.  At this point, Congress does not appear willing to extend them again.  The U. S. Senate on Sunday finalized the text for its 2700 page $1 trillion infrastructure bill.  Treasury yields rise this morning ahead of PMI data, with the 10-year trading at 1.242% and the 30-year advancing to 1.916%.  The reopening of hospitality services using vaccine passes has drawn criticism due to the rising infection rates.  Though the steel demand is on the rise, the Chinese government is likely to lower the production in the second half of the year, dropping it below 2020 levels.

The resting consolidation over the last week in the DIA, SPY, and QQQ held above support levels, though we did have some modest pushing and shoving by the bears.  As we begin the typically choppy August, all but the IWM are within striking distance of new record highs.  However, the Friday Employment Situation number will be critical if the market is to continue its advance.  Though the premarket activity suggests a bullish open, keep a close eye on the consolidation resistance because we may experience choppy price action as we wait on all the jobs data later this week.  Stay with the bullish trend but once again avoid overtrading and remain flexible should the bears find a reason to attack.

Trade Wisely,

Doug

Briefly touched the sky.

Briefly touched the sky

Shrugging off the GDP and jobless claims, miss the DIA and SPY briefly touched the sky, printing new records but was unable to hold there into the close.  Amazon reported another $100 billion quarter but missed expectations and guided lower slipping more than 200 points after the bell.  Though the futures suggest a little selling pressure, this morning, anything is possible as we digest more than 125 earnings reports and react to Employment cost and Personal income data before the open. 

Asian markets had a rough night closing in the red across the board, led by the NIKKEI falling 1.80%.  European markets are also retreating this morning, seeing red across the board as earnings roll out.  Ahead of another big day of data, the U.S. futures point to a lower open, with the NASDAQ leading the way down 1% after the AMZN miss. 

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we finish the week with more than 125 companies reporting.  Notable reports include ABBV, BLMN, BAH, COG, CPRI, CAT, CBOE, CERN, CVX, CL, XOM, HUN, ITW, JCI, LIN, LYB, NWL, PG, QSR, VFC, WPC, GWW & WY.

News & Technicals’

Amazon gave a weaker-than-expected outlook for the third quarter.  Sales topped $100 billion for the 3rd quarter in a row but missed expectations and look to open more than 200 points lower this morning.  Tesla has agreed to pay $1.5 million to settle claims that one of the company’s updates temporarily limited maximum battery charging, paying owners $625 each.  The company also suffered a setback after a Tesla Megapack battery ignited in  Australia’s Victoria State.  The 19-member Eurozone economy grew by 2% in the three months ending in June, reporting an annual inflation projection to reach 2.2%.  Treasury yields are pulling back again this morning, with the 10-year falling to 1.247% and the 30-year dipping to 1.904% ahead of the June personal consumption index and employment cost index numbers.

Both the DIA and SPY briefly touched the sky, printing new record highs before slipping back before the close.  Though there appears to be a little selling pressure in the futures this morning, the DIA, SPY, and QQQ remain in bullish patterns.  A substantial miss on yesterdays GDP and jobless numbers topping expectations didn’t seem to bother the bulls at all as they continued to charge higher.  The China tech crackdown is also not slowing down the bullish activity, with CNBC reporting $3.6 billion flowing into the stocks in a week ending Wednesday.  The buy the dip crowd is still working hard.  The only index suffering technical damage is the IWM, still lingering below its 50-day average though well-off recent lows.  As we wind down the week, I will once again repeat; stay with the trend, avoid overtrading, and have a plan to protect your capital should the market stumble from these lofty valuations.

Trade Wisely,

Doug

Infrastructure Plan

The Fed stands pat, the Senate advanced the $550 billion infrastructure plan, and Facebook posts blowout earnings but looks ahead for growth to slow. As a result, the SPY and QQQ are within striking distance of new records, and though the DIA left behind a bearish engulfing candle, the overall price pattern remains bullish.  With a huge round of earnings, GDP, and Jobless claims coming our way, there is a lot of data to digest, and the potential for volatile prices continues.  Plan your risk carefully as the bull run continues to extend.

Overnight Asian markets rebounded, led by Hong Kong, surging 3.30% after China backs off on the tech crackdown.  European market advance seeing green across the board after the Fed decision.  U.S. futures reverse overnight lows pointing to a Dow gap up more than 100 points as we wade through earnings data waiting on the GDP and claims. 

Economic Calendar

Earnings Calendar

We have the highest number of earnings reports this week on the Thursday calendar, with more than 225 fessing up to results.  Notable reports include MO, AER, AMZN, bud, MT, AZN, CC, CNX, DECK, FSLR, GILD, HSY, HBAN, KDP, LH, LBTYA, MMP, MLM, MA, MPW, MRK, MSTR, TAP, NOK, NOC, OPK, OSTK, PINS, SPGI, SWKS, SO, STM, SU, TMUS, TWLO, X, VLO, WWW & YUM.

News & Technicals’

The Senate has advanced the $550 billion infrastructure plan targeted into transportation, utilities, and broadband.  The highly anticipated Robinhood IPO kicks off today, with some saying there’s considerable upside potential.  The FOMC moved slightly toward reversing its easy-money policies on Tuesday while keeping the interest rate near zero.  However, Jerome Powell said the committee wants to see more data and may now wait until November to begin tapering.  Facebook tops earnings expectations but warned it expects a significant growth slowdown.  Treasury yields are slightly lower this morning ahead in reaction to the Fed decision, with the 10-year falling to 1.249% and the 30-year dipping to 1.898%.

We saw some choppy price action yesterday, as the DIA, SPY, and QQQ hold very bullish price patterns.  The SPY is easily in striking distance of new record highs, and the QQQ is not far behind despite the lackluster price reactions in the big tech blowout earnings.  The DIA finished the day leaving behind a bearish engulfing candle, but that will only matter if it follows through to the downside today.  That said, Dow futures point to a gap up open of more than 100 points with the premarket pump underway. First, of course, we still have to get past a huge wave of earnings reports, the latest reading on GDP, and Jobless claims.  The GDP has the potential of coming in hot signaling inflation, and of course, jobless numbers missed last week though eventually ignored as the bulls charge forward. So expect the volatile price action to continue as the market digests all the data. 

Trade Wisely,

Doug

No Technical Damage

No Technical Damage

With yesterday’s mild selling, there was no technical damage created by the DIA, SPY, and QQQ.  However, the rising VIX, weak Absolute Market Breadth Index, and the bearish engulfing candle left behind on the QQQ may perhaps warrant a little caution should it follow through to the downside today.  That said, with the estimate smashing earnings from AAPL, MSFT & GOOGL, there is no reason to believe at this point that the bulls are willing to give up this tremendous bull run.  So stay focused if should the market stumble and remember that anything is possible with all the data coming our way today.

Overnight Asian markets traded mixed with Hong Kong bouncing after a nasty two-day tech selloff.  European market trade cautiously higher this morning reacting to earnings and waiting on the Fed decision.  With a massive number of earnings events, trade data, oil supply numbers, and the FOMC this afternoon, buckle up for another hectic day of price action.

Economic Calendar

Earnings Calendar

Another busy day on the Hump Day earnings calendar with nearly 200 companies listed, but there are several unconfirmed.  Notable reports include FB, ALGN, ADP, BA, BMY, CN, CAJ, CRUS, CME, DB, F, GRNC, GD, GSK, HES, HUM, IRBT, LRCX, LPL, MCD, MTH, NSC, ORLY, OC, PYPL, PFE, PPC, QCOM, NOW, SHOP, SAVE, SPOT, TOM, VALE, WING, XLNX, XPO, YNDX, & YUMC.

News & Technicals’

AAPL, MSFT & GOOGL smashed earnings estimates after the bell yesterday, but the response in the stocks was relatively muted. So perhaps everyone is now in the wait-and-see mode for the FOMC decision and the Powell press conference later this afternoon.  Treasury yields ticked a little higher this morning waiting on the FOMC, with the 10-year trading up to 1.254% and the 30-year advancing to 1.911%.  According to reports, the Fed may begin talking about tightening their easy money policies and will also express concerns about the rapid spread of the delta variant.  Kelvin Tay of UBS Global Wealth is warning this morning about bottom-fishing Chinese tech stocks.  He says Chinese markets could see further losses from here, with funds likely swaying toward the liquidation side.

Though we saw some selling pressure yesterday, the DIA, SPY, and QQQ suffered no technical damage.  However, with the QQQ leaving behind a bearish engulfing candle, it may be wise to exercise little caution should that happen to follow-through this morning.  As the bulls worked to shrug off the substantial, durable goods miss, it's interesting to note that the VIX closed the day higher.  Also noteworthy is a rotation into consumer staples seems to be underway.  With another massive day of earnings data and the FOMC decision this afternoon, anything is possible.  So stay flexible and focused because of all this emotion and create some swift and challenging price action.  That may be good for experienced day traders but can prove highly frustrating for swing traders as price wildly whips.

Trade Wisely,

Doug

China Tech Crackdown

China Tech Crackdown

After setting more records in the DIA, SPY, and QQQ, the China tech crackdown is muting the wildly bullish anticipation of tech giant earnings reports after the bell today.  With MSFT, AAPL, and GOOGL priced at or near all-time-highs and P/E ratios well above historical averages, there is a lot a stake.  As a result, plan for a substantial gap on Wednesday morning followed by an FOMC decision. Of course, anything is possible so, prepare for a wild ride the next few days.

Asian markets traded mixed overnight, with the HIS plunging 4.22% as China puts pressure on tech stocks.  European markets trade with modest declines across the board as they monitor earnings and possible infection rate impacts.  Ahead of Durable Goods, Consumer Confidence, and a slew of potential market-moving earnings reports, futures are point to a mixed open but well off of overnight lows.  Expect considerable price volatility as the market digests all the data.

Economic Calendar

Earnings Calendar

Today is big of earnings with a significant focus on the tech giants after the bell.  We have more than 100 companies listed on the calendar expected to report quarterly results.  Notable reports include GOOGL, AAPL, MSFT, MMM, AMD, ADM, BSX, BYD, CHRW, CAKE, GLW, RDY, ENPH, FISV, GE, JBLU, JNPR, MAT, MDLZ, MSCI, PACR, PHM, ROK, SHW, SIRI, SWK, SBUX, UPS, V, WM, & XRX.

News & Technicals’

The China tech crackdown triggered a plunge in Hong Kong, with the HSI falling 4.22%.  According to Scott Kennedy, high-level meetings between the U.S. China concluded with deteriorating relations setting unreachable demands for each other. So I guess it's also no big surprise that China has not lived up to the phase one trade agreement with the United States.  Today begins the FOMC two-day meeting with the announcement scheduled for Wednesday at 2 PM eastern followed by the chairman's press conference at 2:30.  Treasury yields are falling slightly this morning, with the 10-year dipping to 1.249% and the 30-year slipping to 1.907% ahead of auctions for 20 billion in 42-day bills and 61 billion of 5-year notes.  Shipping is once again experiencing massive disruptions due to floods in China and Europe, straining global supply chains. 

Though one would think all the issues listed above would slow the bull run, buyers continued to snap up stocks producing new records in the DIA, SPY, and QQQ yesterday. In addition, there is palpable anticipation for the after the bell reports from GOOGL, MSFT, and AAPL, with all of them at or near record highs.  With P/E ratios already well above historical averages, the market has priced in an expectation of perfection.  With these reports coming after the bell today, be prepared for a substantial market gap tomorrow morning.  Your guess is as good as mine in which direction!  Adding in Durable Goods and Consumer Confidence economic reports to the slew of earnings, the price action of the next couple of days are likely to challenge even the most experienced traders.  Buckle up.

Trade Wisely,

Doug

A little profit-taking?

Profit taking

After an extraordinary bullish rally that shrugged off jobs and rising infection rates, futures suggest a little profit-taking this morning.  While setting new record highs, the market suffered from low volume, and VIX could not fall below support, closing above 17 handles.  That said, we have a big week of tech earnings, and with the strong bullish in the sector, more records highs are certainly possible. So expect wild price volatility with large morning pops or drops because the tech giants report after the bell. 

Overnight Asian markets traded mostly lower as the Chinese tech crackdown weighed on stocks.  This morning, European markets trade in the red, worried about the rising infection rates amid solid earnings results.  Ahead of New Home Sales and earnings, U.S. futures point to a lower open as we wait on big tech and an FOMC decision. 

Economic Calendar

Earnings Calendar

We have more than 70 companies listed on the earnings calendar to kick off a week of big tech market-moving events.  Notable reports include TSLA, AMKR, CDNS, CJKP, FFIV, HAS, LII, LMT, PKG, PETS, PCH, RRC, SBFG, & TTM.

Tokyo Olympics Begin

Tokyo Olympics

Futures point to another gap up bullish open as the Tokyo Olympics begin under a state of emergency.  Infection rates topped 56,000 here in the U.S. yesterday, with the 3rd straight day over 50K.  However, though there has been a noticeable decline in volume, the bulls appear undeterred with new record levels within striking distance.  If we have the ability to ignore inflationary pressures and rising jobless claims, don’t bother us with all those delta variant stories we have stocks to buy!  Stay with the trend but stay focused as we approach overhead resistance just in case the bulls run stumbles.

Asian markets traded mixed overnight, with tech falling due to China's regulatory fear.  European markets advance this morning, keying off earnings results.  Though we struggled to gain traction during the day yesterday, the overnight futures are once again pushing for a bullish gap up open to close out this volatile week of price action. 

Economic Calendar

Earnings Calendar

We have a little slower day on the Friday earnings calendar with 41 companies listed, but a large number of them are unconfirmed.  Notable reports include AXP, HON, KMB, NEE, RF, & SLB.

News & Technicals’

The Tokyo Olympics kick off today under a state of emergency, with spectators banded, resignations from sexist remarks, and a bear near a stadium used for matches.  Here in the U.S., the new infections topped 56,000 yesterday, with three days in a row over 50k.  According to the CDC, they are considering masking requirements but say at this point, those vaccinated are okay without masks.  They went on to say the delta variant is one of the most infectious respiratory diseases seen by experts.  In its annual report, the IMF said the Fed must carefully communicate its thinking of the eventual withdrawal of the easy monetary policies.  They raised concerns that higher U.S. interest rates will drain capital flows from emerging markets at a critical time.  Hmmm, why is IMF worried about interest rates when our Fed says inflation is transitory? 

Another bullish day as indexes rallies back toward resistance highs with possible new records just around the corner.  Unfortunately, as indexes stretch up, there has been a noticeable decline in volume, and the Absolute Breadth Index continues to show a struggle with momentum.  In just three trading days, the Dow up more than 1000 points from the Monday low, increasing the danger if the market should stumble.  Inflationary pressures, increasing jobless numbers, and the rapidly rising infection rates are just a few of the possible stumbling blocks placed in the path of this bull run.  Stay with the trend but remain focused to avoid complacency.  This morning the 10-year Treasury ticked up to 1.281%, and the 30-year rose to 1.917% ahead of PMI.

Trade Wisely,

Doug

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