I guess at this point we should not be surprised to see yet
another overnight reversal and once again confirming traders cannot trust price
the price action from one day to the next. After the market closed yesterday we learned
that Parliament voted to take control of the government and will today attempt
a vote to block a no-deal Brexit attempt by the Prime Minister. We also learned that Hong Kong has finally
withdrawn the China extradition bill that sparked so much public unrest.
Asian markets closed higher across the board last night with
the HSI zooming up 995 points after the withdraw of extradition bill. European market sees green across the board, and
the Sterling has recovered after the UK Parlement vote blocking the Prime
Ministers no-deal Brexit plans. Consequently,
US Futures point to a gap up with the Dow currently expected to open about 200
points higher ahead of earnings and a full of FOMC speakers.
On the Calendar
On the hump day Earnings Calendar, we have 26 companies
reporting quarterly results. Some of the
notable reports include WORK, AVAV, AEO, HOME, CLDR, MIK, PANW & VRA.
Action Plan
Tuesday morning brought out the sellers after manufacturing numbers declined, but the bulls found some inspiration recovering slowly but steadily throughout the afternoon. Tensions are high today in the UK after a majority voted to take control of Parliament. The action blocked the Prime Ministers plans to suspend Parliament forcing a no-deal Brexit. Later today Parliament will vote in an attempt to block the Boris Johnson no-deal plans scheduled for October 31. We could see US market volatility as a result. Hong Kong markets experienced a huge rally during the night when leader Carrie Lam announced the withdraw of the conversational extradition bill.
As a result of all the overnight news, US Futures point to a
bullish open ahead of earnings reports and the International Trade numbers set
for 8:30 AM Eastern release. Consensus estimates
suggest a decline in the trade deficit in July.
We also a full day of Fed Speakers between 9:30 AM and 3:15 PM with a
total five FOMC members on the calendar.
All in all just another day of market turmoil with yet another overnight
reversal gap making price action nearly impossible to trust from day-to-day.
While all eyes focused on the approaching Florida storm it seems
there was another storm brewing in currency markets this weekend. The British Sterling dropped by $1.20, and
the Euro slipped to a 28-month low not to mention Argentina that is nearing
total financial collapse and Lebanon declaring a state of economic
emergency. Certainly, an uncomfortable backdrop
for the market as new US-China tariffs took effect on Sunday and spilling August’s
volatility into the beginning of September.
Overnight Asian markets closed mixed but relatively flat while
Australia decided to keep interest rates unchanged. Across the pond, European markets are
slightly lower across the board as they deal with the uncertainty of Brexit and
the Sterling selloff. Here in the US,
futures markets are trying to rally off of overnight lows ahead of a big week
of economic data but still point to a substantial gap down open adding to the
technical damage of the index charts.
Hang on as the storm clouds continue to stir with uncertainty.
On the Calendar
On this morning’s Earnings Calendar, we have just over 34
companies reporting results. Notable reports
include CONN & COUP.
Action Plan
An eventful holiday weekend as Hurricane Dorian as lashes the
coast of Florida, Argentina nears financial collapse, the British Sterling falls
below $1.20 while the Euro slides to a 28-month low and additional US-China
take effect. The Market also faces a busy
Economic Calendar beginning with Housing data as well as the ISM Index today
and ending the week with the Employment Situation report Friday morning. It seems the market uncertainty that plagued August
markets will spillover into September keeping traders on edge and price
volatility high.
Although the US Futures are currently trying to bounce off
of overnight lows, it seems likely markets will open with a substantial gap
lower putting pressure on hopeful traders that picked up risk heading into the
weekend. With traders possibly extending
their holiday vacations and the disruptions that Hurricane Dorien could produce
anything is possible. Keep an eye on the
gap below that was created last Thursday that could easily fill if the bears find
inspiration after the morning gap.
As the Labor Day weekend approaches the bulls look to extend
yesterday’s rally with yet another substantial gap up open. The all or nothing emotional price action has
become tiring and honestly ridiculous considering tariffs remain in place and
negotiations have yet to begin. Having said
that, it’s still nice to have a relief rally!
The question now is, can it hold as traders head out for the long weekend,
hurricane Dorian targets the Florida coast and growing uncertainty of earnings growth?
Asian markets closed the week mixed but mostly higher as Beijing
signals a desire to come back to the negotiations table. European markets see green across the board
on the easing of trade war rhetoric even as a no-deal Brexit threat grows. The US Futures are in celebration mode this morning
pointing to another substantial gap higher of more than 100 Dow points. Be careful not to chase the open and don’t be
surprised if the price action quickly runs out of steam and become light and
choppy as traders head out to enjoy the long weekend.
On the Calendar
On the Friday Earnings Calendar we have just 14 companies
reporting with BIG, CPB, and JKS among the notable.
Action Plan
Yesterday’s big rally is getting a big gap follow-through
this morning extending the indexes into a short-term overbought condition
according to T2122. With the Labor Day
weekend just around the corner, volumes could quickly decline as traders take
off early for the extended weekend vacation.
Market emotions are high that a deal will be forthcoming, but a lot can
happen over a 3-day weekend so plan your holdings accordingly.
According to forecasts, hurricane Dorian is likely to make
landfall on the Flordia Coast Monday. For
all our Flordia friends I wish you safety as you make preparations to protect
your homes and property. It now appears the storm will slow down and strengthen
so, and please don’t brave the storm, get yourselves to safety and wait it
out. Dangerous storms such as this can
have also have substantial market impacts that affect price action so prepare for
more volatility come Tuesday morning.
China surprised the market at 5:30 AM this morning saying they are willing to negotiate to resolve the trade war sharply reversing the US Futures from overnight lows. Traders holding long positions will feel the sweet relief of a big gap up open. However, traders caught short will suffer and may experience the pain of a short squeeze. Though this is a very positive development, make sure to maintain perspective and not get caught up in the hype. Saying they are willing to negotiate is a long way from signing a binding deal, and there are likely going to be a lot of drama along the way.
Asian markets closed mostly lower overnight as Treasury yields
continued to deteriorate. European markets
reversed early losses after the China news and are currently green across the
board the morning. US Futures leaped dramatically
on the prospect of a China re-engaging in trade talks with the Dow Futures now
pointing to a gap up open of more 250 points.
Price volatility will likely be wild this morning, so stay disciplined
to your trading plan and rules to avoid emotional decisions influenced by the drama
this news has created.
On the Calendar
Sixty-three companies are fessing up to their quarterly earnings
results this Thursday. Notable reports
include DG, ULTA, ANF, ABOC, BBY, BURL, COO, DELL, DLTR, HAIN, TD, and WDAY.
Action Plan
Futures that had been bearish most of the night quickly rallied
about 5:30 AM this morning when China says it willing to resolve the trade war
and return to the negotiations table. Although
agreeing to talk is a long way from agreeing to a binding deal to level the playing
field for trade between the two countries, its certainly a positive step forward. Unfortunately, China has also decided to sent
troops into Hong Kong. Lets’ hope this conciliatory
action is not merely a distraction as they use force to put down the long-running
protests.
Market bulls will, of course, be very happy this morning but
bears caught short are likely to feel the pain of a short squeeze this morning. I would be careful not to get caught up in
the hype, keeping in mind bond yields, Brexit and that an actual signed deal is
still likely months away. Also for the
market to digest is the big morning on both the economic and earnings calendars. Price volatility could be wild this morning, so
plan your approach to the market carefully.
The hits keep on coming!
There is a point in nearly every market selloff when it seems bad news continues
to pile on with one hit after another.
This morning we wake up to a worsening yield curve as the 30-year bonds
hit new record lows. The Sterling
rapidly falls as the Prim Minister confirms he is moving to suspend parliament,
raising the risk of a no-deal Brexit. As
if to add insult to injury, China has yet to confirm they will re-engage in
trade negotiations as the president alluded to Monday morning. Yesterday’s pop and drop that left behind
bearish engulfing patterns on the index charts sure didn’t help the technical’s
or inspire much confidence.
Overnight Asian markets closed flat but mostly lower in
reacting to the declining 30-year bond yields.
European markets mostly lower this morning as Brexit fears rise and the
Sterling falls. US Futures that had held
bullish gains through the night now point to a flat slightly bearish open ahead
of earnings reports. Caution continues
to be warranted as you plan your day ahead.
On the Calendar
Wednesday’s Earnings Calendar has just over 70 companies
reporting quarterly results. Notable
earnings include BOX, COTY, DAKT, EXPR, FIVE, GES, HRB, MOV, PVH, TIF, VRNT,
and WSM.
Action Plan
My goodness, there is a lot going on this morning affecting
the market. The 30-year bond is hitting
new record lows as the yield curve inverts even further. Most negatively are those on a fixed income, which
may force many into higher risk dividend investments to make ends meet. The British Prime Minister Boris Johnson move
to suspend parliament, causing the Sterling to fall and raising the risk of a
no-deal Brexit. US Futures quickly pared
overnight gains after Johnson confirmed the rumor in a speech today.
Yesterday’s pop and drop price action added some technical
damage, leaving behind bearish engulfing candle patterns as another day passes
with China not confirming a resumption of trade negotiations. I think the market must come to grips with
the very likely increase from 25 to 30 percent tariffs. With little on the economic calendar today, there
will little to distract the market from the yield inversion and trade war
uncertainty. Plan your risk carefully.
Although the overnight reversal was a welcome relief from Friday’s
selloff there remains a lingering uncertainty that there will progress made on trade
negotiations. We have been here before
with high hopes only to see the negotiations breakup in a matter of hours. Fool me once shame on you, fool me twice shame
on me seems to be the attitude of the market.
It’s time to see some actual progress rather than platitudes and political
spin. Expect price volatility to
continue as the indexes continue to deal with significant technical damage.
Overnight Asian markets closed mixed but mostly positive,
and traders moved tentatively watching trade developments with caution. This morning European markets trade cautiously
mixed as well this morning as the world waits for some clarity. US Futures have recovered from early losses pointing
to a relatively flat open ahead of earnings and Consumer Confidence
reports.
On the Calendar
On the Tuesday Earnings Calendar, we have just 37 companies
reporting results. Notable earnings
reports today include ADSK, BMO, BNS, BNED, EV, FRO, HPE, SJM, and VEEV.
Action Plan
Yesterday’s relief rally on hopes of US and China re-engaging
in negotiations was very nice but technically speaking very little changed. While it’s encouraging that the indexes held
Friday’s lows as support the overall downtrend of the indexes remains intact
with significant price and moving-average resistance above. While the President talks favorably about China’s
desire to make a deal, there is a palpable uncertainty by the market.
That uncertainty is justified because we have been here before
only to be disappointed with negotiations attempts breaking up just hours after
restarting last time. That appears to be
making the US Futures a bit tentative this morning pointing to a flat open. Expect volatile price action to continue as
the market continues to hope for but still waits for clarity.
A massive overnight reversal of market sentiment after China announces its willingness to return to the negotiation table and the President speaks favorably of a future deal. Indeed very encouraging but I would expect the market to remain very news-driven as they attempt to hammer out the details. There is obviously a lot at stake here for both countries so I would guess a completed deal could still be months away.
Overnight the Yuan slid to an 11-year low, and Asian markets experienced an ugly selloff across the board. This morning European markets are mixed but have recovered from the lows after signaling the resumption of US-China negotiations. US Futures, although fluctuating wildly, point to a substantial gap open ahead of earnings reports and a Durable Good number that consensus estimates expect will decline at 8:30 AM Eastern. Hang on tight; the price volatility is likely to remain quite high this morning as the market reacts.
On the Calendar
On the Monday Economic Calendar, we have 30 companies reporting
results with none that are particularly notable.
Action Plan
As China and US lobbed tariff bombs back and forth on Friday,
it was looking pretty grim with the US Futures declining 300 points at the open
yesterday. However, during the night China
trade officials called the US, interested in re-engaging in negotiations. The future responded in kind not only
recovering losses but as of now point to a positive open. I’m not exactly sure how an agreement to talk
warrants such a big change in sentiment, but I’ll take it and happy to see the
change this morning.
Unfortunately, even with the big overnight reversal significant
technical damage was created in the index charts with Friday’s selloff. News of a trade deal could quickly correct the
damage, but I doubt a return to the negotiation table will do the trick. Both countries have a lot at stake, and I
would expect a lot of tough talk in the near future as they try to hammer out
their differences. Expect more drama as
this battle continues to unfold.
FOMC Chairman Jerome Powell’s tightrope walk begins at 10:00
AM Eastern from the Jackson Hole economic policy symposium. The entire financial world will be watching
hoping to gain some clarity as to the committee’s future rate plans. If the market perceives dovishness, we could end
this choppy week with a nice rally. Hints
of hawkishness and can expect the very sensitive bonds to react negatively and
emboldening the bears triggering an attack.
No matter what you want, the Fed to do, it would be wise to remain flexible
and stay focused on the price action likely to become volatile.
Asian markets finished up their week positively even as tensions
grow between Japan and South Korea and the Yuan dipped to new lows. European indexes are cautiously higher this morning
as they wait for Powell’s address. As a
result, US Futures have held positive all night long indicating a modestly
bullish open with the hopefulness of a dovish FOMC. How today ends up is anyone guesses but
consider your risk carefully as we head into the weekend.
On the Calendar
On the Earnings Calendar, we get a little break with only 28 companies reporting this Friday. Among the notables are FL, and BKE.
Action Plan
Today the market with turn all of its attention to Jackson Hole and the Chairman Powell’s address at 10:00 AM Eastern. The market is seeking clarity of FOMC’s plans for rate cuts later this month and into the future. If his speech comes off with a dovish tone, the market will likely react quickly with a bullish move to end a week of otherwise choppy and frustrating price action. However it there is even a hint of hawkishness in his speech the bears could quickly attack, and bond yields could once again invert. Indeed a difficult tightrope to walk for the chairman as the entire financial world watches.
Yesterday the market chopped in lockstep with the bond rates. Early in yesterday session bond yields inverted
but later recovered as did the market. This
morning there is a slight improvement in yields with the hopefulness of an FOMC
action. The indexes are still facing the
challenge of overhead price resistance and their respective 50-day moving averages. Prepare for volatility as Powell speaks and
consider your risk carefully as we head into the uncertainty of the weekend.
I think the best description for the price action of late is Pop & Chop. An exciting gap up market open followed by sheer boredom as uncertain bulls and bears milling about waiting for the next tidbit of news hoping for clarity. The FOMC minutes provided no clarity, and now it looks like the best hope for inspiration is the Powell address at 10:00 AM Eastern from Jackson Hole. I would not be at all surprised is we see more of the choppy price action today as we wait.
Asian markets closed mixed overnight as manufacturing data showed a decline putting pressure on the Nikkei. Across the pond European indexes are seeing modest declines across the board in reaction to another US bond yield inversion. Here in the US, futures also point to modestly bearish open ahead of morning earnings reports and the weekly Jobless Claims.
On the Calendar
We have more than 50 companies reporting earnings this Thursday. Among the notable reports are CRM, VMW, GPS,
HPQ, INTU, ROST, DKS, FLWS & CM.
Action Plan
After great earnings results from LOW and TGT gaping the market
higher at the open the price action once again went flat and chopped sideways
the rest of the day. The FOMC minutes release
was a non-event providing no further clarity as to interest rate path forward. Perhaps, Powell’s address in Jackson Hole
Friday morning will provide enough inspiration the shake loose of the summer doldrums.
Once again the US 10-year bond rates have slightly inverted with
the 2-year bond rates, but the market seems to be taking it in stride this morning
lifting off the overnight lows slightly while still pointing to a modestly bearish
open. However, that could easily change
a earnings result roll in, and we get the latest reading on Jobless Claims. Overhead resistance of price and moving-averages
continues to challenge the index charts clearly defining the battlefield of the
bulls and bears. Although price action
has been very challenging, let’s keep in mind the Dow is less than 5% below its
record highs in July, which is a pretty mild correction at this point. Nonetheless its have still been very frustrating,
and I would expect more chop today amid so much uncertainty.
August is traditionally a very challenging month for the market, and so far, AUG19 has certainly lived up to its reputation. Erratic even violent price swings with big overnight gaps have tortured traders trying to make some sense of the uncertainty. Today, markets are hopeful the FOMC minutes will provide some clues as to the thinking of the committee and their next possible rate decision. What we know now is there were three dissenting votes for the rate cut we received last month. The question is, what has changed? Perhaps, we will not get any clarity until Powell speaks in Jackson Hole Friday morning.
Asian markets were mixed and mostly flat overnight as they
also wait for central bank guidance. European
seem much more confident this morning solid bullish price action and green
across the board. US Futures are also
pointing to a bullish open in response to strong earnings results from LOW and
TGT this morning. Be careful not to
chase the opening gap keeping in mind we could easily slip back into consolidation
as we wait for the 2:00 PM minutes release.
On the Calendar
On the Wednesday Earnings Calendar, we have just short of 40 companies
reporting. Notable reports include LOW,
TGT, JWM, SMAR, SNPS & ADI.
Action Plan
After two days of very choppy price action, the market today
is hopeful it can find some clarity as to the thinking fo the FOMC with the
release of last months minutes at 2:00 PM Eastern today. Positive early morning earnings result from
LOW, and TGT has the early morning futures pushing higher to once again challenge
price resistance in the index charts. President
Trump is discussing payroll tax reductions and is pushing with all his might attempting
to pressure the FOMC into a 100 basis point rate cut this month to avoid recession
fears.
We will also have to keep an eye on the Existing Home Sales
number at 10:00 AM Eastern this morning.
The consensus expects housing sales to increase, but this is a potential
market-moving report, particularly if the actual results miss estimates. After the morning rush gap, I would not be at
all surprised to see the market slip back into consolidation as we wait for the
2:00 PM minutes release. After the release
expect an explosion of volatility so be prepared for about anything to occur.
