New record highs printed in the Dow, SP-500 with the NASDAQ managing
to close at historic highs as the market reacted to yesterday’s dovish comments
from the Fed Chairman. Today Powell has
a repeat performance on Capitol Hill, but today his hot seat is in front of the
Senate Banking Committee. Although I
think it’s unlikely we will learn any more during today testimony, we should
still prepare for the possibility of volatility.
Overnight, Asian markets reacted bullishly to Powell’s
comments closing up across the board.
However, as I write this, European indexes are mixed and nearly flat,
but that is not affecting the US Futures that point to another bullish open. The CPI and Jobless Claims report at 8:30 AM
Eastern will, however, have the final say on the market open this morning. The trends are bullish, and the bulls are
clearly in control with the market fueled up on likely interest rate cuts.
On the Calendar
On the Thursday Earnings Calendar, we have just nine companies
reporting quarterly results. Notable
reports include DAL and FAST.
Action Plan
The Fed Chairmans testimony in Congress yesterday all but
confirmed a rate cut of at least 25 basis points is on the way. Today he must do it all over again at the Senate
Banking Committee, but I would be surprised if we learned any new details
today. The market reaction was initially
very strong, pushing the SP-500 briefly over 3000 for the first time in
history. The Dow printed a new record
high but was also unable to hold it by the close leaving shooting star pattern
on SPY and DIA charts. However, bulls
carried the day in the QQQ closing firmly in new record territory with tech now
leading the way.
A shooting star pattern is considered a bearish pattern, but
that is only true if prices follow-through with a downside move. Without a follow-through, it may signal a
little caution and possibly not even that if the bulls find the energy to move
the indexes higher. We have the CPI and
Jobless Claims at 8:30 AM Eastern that have the potential to move the market before
the open. Currently, the futures point
to a modestly bullish open with trends remaining very strong.
Jerome Powell will be walking a tightrope as he testifies on
Capitol Hill today and tomorrow. The
world is hoping he will bring some clarity to the FOMC’s next move but don’t be
surprised if he keeps us in the dark. At
times he will likely sound dovish as he shares his concerns for a weakening global
economy. However, don’t be surprised if
he also comes of hawkish as he holds to his mandate of jobs growth that is
currently exceeding expectations.
Consequently, we could experience some price volatility as
the market reacts to his comments.
Remember we also have the release of the FOMC minutes at 2:00 PM Eastern
today that can also create some market turbulence. Asian markets closed mixed, but mostly modestly
lower and European markets are currently seeing modest declines across the
board as the world waits for the Fed Chairman to speak. As a result, US Futures are also suggesting a
bit of pensiveness pointing to a modestly lower open. Plan your risk carefully.
On the Calendar
On the hump day Earnings Calendar, we have 12 companies
stepping up to report results. Amon the
notable reports will be BBBY and MSM.
Action Plan
Today will be a very big day for Fed Chairman Jerome Powell
as he testifies in Congress. He will be
walking a slippery tight rope between Washington D.C. and Wall Street trying to
uphold his mandate while trying to appease both worlds. Certainly, a tough task that is likely to
create some market volatility today and tomorrow. I expect him to lay out a case for possible rate
cuts due to a weakening global economy.
However, I also expect him not to provide us the certainty of a cut or
how deep that cut might be if the data moves them to that decision.
If that’s not enough to give the market a case of indigestion
then lest toss in the release of the FOMC minutes at 2:00 PM Eastern to keep
everyone guessing. As I write this
futures are a bit pensive suggesting a modest pullback at the open as we wait
for the Capital Hill drama to unfold. Trends
in the DIA, SPY & QQQ remain bullish while IWM continues to struggle with
an overall downtrend. Plan your risk
carefully and remember Earnings season kicks off next Monday.
Fed chairman Jerome Powell will be front and center as he makes
his rounds testifying on Capitol Hill.
Most expect him to defend the Fed’s independence from the administration
and of course many are hoping he will clarify the possibility of a rate cut. With such a strong Job number last week
expectation of a 50 basis point cut has dropped significantly. Also, remember we could learn a bit more about
the Fed’s thinking Wednesday afternoon with the release of last meetings
minutes.
Asian markets closed mixed, but mostly lower overnight and
European markets are currently seeing red across the board this morning. US futures are under some pressure this morning
suggesting a lower open though recovering slightly from overnight lows. Of course, anything that might clarify a rate
decision could move the market short of that I expect choppy price action to
continue as we wait for the kickoff of 3rd quarter earnings season.
On the Calendar
We have just over 20 companies reporting on Tuesday’s Economic
Calendar. Among the notable reports are
AYI, JEF & SMPL.
Action Plan
Yesterday proved to be about as expected with the market
taking a little break with choppy consolidation price action. Today Powell will begin a 3-day round of testimony
in Congress where he is likely to defend the Fed’s independence from
administrative meddling. All eye are on
the Fed these days with the hope of a pending rate cut. There seems to be a revolving door on the
news agencies with talking heads both for and against a cut. Even Cramer chimed in on the subject to say he
is not sure there will be a cut. Perhaps
we will learn more from the testimony and the release of the FOMC minutes Wednesday
afternoon.
Futures are slightly under pressure this morning as tech’s
slide south amid some downgrades. However,
current trends remain bullish even though there are reasons to have a little
concern with price patterns in the QQQ and IWM.
I continue to expect mostly choppy price action that holds support
levels as we wait for clarification on rate cuts and the kick off to earnings
season.
The market is showing a face of disappointment this morning as it would appear to favor an accommodating FOMC rather than strong jobs growth. Asian markets closed lower across the board overnight in reaction the better than expected US Jobs growth. European markets are currently mixed but mostly lower as Deutsche Bank announces huge job losses as it restructures the business.
US futures point to a modestly lower open this morning recovering
significantly from overnight lows as we approach the days open. Light economic and earnings calendars will
provide very little for the market to react to this morning. Considering the kick off the earnings season
is just one week away, and the current rally appears a bit stretched, a little
consolidating price action might be in order.
I would also not rule out a test of the overnight futures low.
On the Calendar
We begin the new trading week with a light day on the Earnings
Calendar that includes only six reports. Of those reporting, none are notable and likely
to move the market.
Action Plan
Markets appear a little disappointed this morning that the
US economy is strong, jobs growth is better than expected and the chance that an
FOMC rate cut has diminished. Although the
strong jobs number initially triggered some selling on Friday, the Bulls still
found the energy to fight back closing just below record highs. The question is, can the Bulls do it again today
or will the Bears show some teeth?
With earnings season set to begin in next week, it could be rather
quiet and choppy, consolidating the rally as we wait for the big banks to start
the festivities. Speaking of big banks,
Deutsche Bank (DB) announced a major restructuring Sunday that will cut between
18 to 20 thousand jobs in an effort to return to profitability. Shares are looking only slightly lower this
morning. Strong trends remain in place
for the DIA, SPY, and QQQ and though the rally may be a bit extended don’t
expect the Bulls to give up easily.
At 8:30 AM Eastern we will get a very importing reading of
the condition on the strength of our economy and the number of jobs it did or
didn’t create. If the Employment Situation
number comes in weak it could provide the FOMC hammer to drive down interest
rates in July. A strong number could
make an interest rate cut difficult if the US Economy continues to show
resiliency in the face of a slowing global economy. One thing for sure is that the number is likely
to receive a significant price action response upon its release and may well
set the direction to today’s market.
Asian markets were a bit subdued last night closing mixed up
mostly higher. European markets are currently lower across the
board and US Futures point to a modestly lower open ahead of the jobs number. The trends are bullish with DIA, SPY and QQQ
breaking out to new all-time highs on Wednesday. The task ahead for the bulls is now to prove
they defend this new price level with a worrisome earnings season beginning in 10-days.
On the Calendar
On the Friday Earnings Calendar we have 16 companies
stepping up to report quarterly results.
None of the reports today are particularly notable unless you happen to
own them.
Limited Seats Available
Action Plan
The key focus this morning will be the Employment Situation number
at 8:30 AM Eastern. If the number comes
in weak it would seemingly provide the FOMC with the cover needed to lower the interest
rate next month. However, the consensus
estimate is suggesting that the number could come in strong with nearly double
the jobs creation from last month. No
matter how the number comes in it’s how the market reacts to the data that important.
At the close on Wednesday the bulls were in full control setting
new all-time high records in the DIA, SPY and QQQ in a show of force rather
remarkable considering the holiday-shortened trading day. Now that we have the breakout it will be
important for the bulls to hold these new levels as price support. That may be a difficult task with so many companies
warning they will miss analysts estimates when earnings season kicks off in
about 10-days.
After some light jousting with bears during yesterdays
morning session the bulls reasserted themselves once again closing the SP-500
at new record highs. With the US/China
trade uncertainty, rising tensions with Iran and a slew of company warnings
about a difficult earnings season ahead the bulls continue to find the energy to
push higher. The current trends are
bullish and as of now the bears appear to have no teeth.
Asian markets closed lower across the board as trade worries
continue to weigh heavily. European markets
are higher the board with the nomination of Christine Lagard as the new head of
the European Central Bank. US Futures
are currently pointing to a modest gap up open ahead of busy Economic Calendar
and an early market close at 1:00 PM Eastern.
After the morning rush volume could drop significantly as trader’s head out
early to celebrate the holiday.
On the Calendar
On the Wednesday Earnings Calendar we have just two
companies ISCA & OMN reporting today.
They are not notable reports and unlikely to move the market.
Action Plan
We have a busy Economic Calendar this morning with ADP,
International Trade, Jobless Claims, Factory Orders, ISM Non-Mfg & the EIA
Petroleum Status. Although we could experience
a morning flurry of activity with the markets closing at 1:00 PM Eastern, the volume
could decline quickly creating anemic price action.
Yesterday’s price action saw choppy slightly bearish price action
during the morning session but the Bulls refused to let that stand to stage an
impressive comeback particularly in SP-500 that closed at another record
high. Trends are still bullish although they
appear to be a bit stretched however that is not stopping the bulls relentless
push higher as the futures point to yet another gap up open this morning. I wish you all a safe and Happy 4th
of July!
The concern I expressed regarding yesterday huge gap seemed
to be shared by the majority of the market producing a pop and drop pattern on
the day. Although the SP-500 inked a new
record high the price action left behind more question than answers about the
path ahead. Asian markets closed mixed
overnight as Australia’s Central Bank cuts interest rates. European markets are flat to ever so slightly
bullish this morning as the world looks for more details and clarity on
US/China negotiations.
US Futures are currently flat to slightly lower this morning
with very little to react to on both the Earnings and Economic calendars. Baring a market-moving news report don’t be
surprised to light and choppy price action today with rapidly declining volume
as traders head out to celebrate the 4th of July. There is a chance that condition lasts for
the rest of the week. Keep in mind the
market closes at 1:00 PM Eastern on Wednesday.
On the Calendar
On the Tuesday Earnings Calendar we have 14 companies
reporting quarterly results. Among the
notable reports AYI, JEF & SMPL.
Action Plan
It would seem my question about what had changed to create yesterdays
huge gap up was shared by most of the market after printing pop and drop
patterns on all major indexes. Although
were was a late day rally to lift the indexes off the day’s lows yesterdays price
action leaves more questions than answers to the path ahead. Further complicating the issue is the growing
Iranian tensions, and the will they or won’t they question regarding interest
rate cuts.
With little for the market to respond to today on the Economic
Calendar and Earnings Calendar as well as the coming holiday futures are suggesting
a flat to modestly lower open this morning.
As I suspect many traders have already headed out to take advantage of some
holiday vacation time don’t be surprised to see some very light choppy price
action today will low volume. It will
not be a surprise if this problem persists the rest of the trading week.
The bulls are in beast mode this morning after the US and
China agreed to a cease-fire and agreed to resume negotiations. Looking at the futures this morning one might
assume the tariff war is over but as of now there is still no clear path to a
deal and current tariffs will remain in place.
The good news is there was no escalation in the rift between the countries.
Asian markets closed mixed but mostly higher on the G20 developments and European markets are currently sharply higher this morning. US Futures currently indicate a soaring gap up that will likely set new record highs and punish any traders caught short. Keep in mind with the market closing early Wednesday for the holiday volume will likely begin to decline sharply over the next 2-days as traders head out to celebrate. It is entirely possible the biggest price move of the day will be the gap so be careful not to chase.
On the Calendar
On Monday’s Earnings Calendar we have 14 companies reporting
results but none are particularly notable.
Action Plan
Tariffs remain in place but the US and China have agreed to
come back to the negotiations table. The
President also agreed to ease restrictions American companies from selling products
to Huawei. Chetan Ahya, global head of
economics describes the meeting results as “an uncertain pause”, with no clear
path to a deal. However, the bulls are
celebrating the meeting results of the meeting this morning and the futures are
flying high.
I would expect new record highs this morning and anyone
caught short will likely be squeezed out this morning. Unfortunately the biggest price move of the day
may be the gap so be very careful not to get caught up in the excitement and
chase into the open. Let’s keep in mind
that the market will close early on Wednesday in observation of the 4th
of July holiday. That means volume is likely
to begin dropping as traders head out early to celebrate.
With the big meeting between the US and China presidents on Saturday
it would seem that anything is possible by Monday morning. Will they or won’t they? The hope of a deal seems to remain remarkable
high as the bulls once again show strength in the morning futures. Asian markets closed lower across the board
overnight but European markets are all cautiously higher ahead of the G20.
Even the beleaguered IWM managed to join the DIA, SPY and
QQQ yesterday by closing just above its 50-day average. Although the futures suggest a modest gap up
this morning we must be very careful and thoughtful of the potential risk of
this weekend. I don’t know about anyone
else but I will avoid adding additional risk ahead of this weekend and will likely
reduce my current holdings to protect my capital from the unknown.
On the Calendar
On the Friday Earnings calendar we only have 13 companies
reporting their results. Among the notable
are STZ & KHC.
Action Plan
The bulls remain very tenacious this morning even after
learning that next quarter earnings are expected to flat. One must wonder how we can remain near
all-time highs without earnings growth. Possible
rate cuts will certainly help and of course a trade deal with China would be a
game changer but those are still some big unknowns. It seems a lot would have to go exactly right
which makes me wonder if we’re coming close to pricing the market to
perfection. Only time will tell.
Technically speaking the current trend is up and the bulls are
in control with the Futures pointing to a bullish open. Remember the potential market volatility in
reaction to the G20 meeting results after the president meets to discuss trade
relations with China. Plan your risk carefully
heading into the weekend keeping in mind the holiday week that follows. Have a wonderful weekend everyone!
Let’s all hope cooler heads prevail or the 4th of
July shortened trading week could create some wild fireworks in price action volatility. Futures markets have currently recovered since
the report and now suggest a relatively flat open. However, it would be wise to consider the
risk of this coming weekend and carefully plan how you can protect your capital
given the price volatility that may result.
Early this morning the Wall Street Journal report seems to
have upset the apple cart quickly reversing futures markets that had held
positive all night. If the report is
correct the list of demands that Chinese President XI Jinping will present to
President Trump at the G20 seems only to inflame trade war tensions and diminish
the odds of a deal.
On the Calendar
On the Earnings Calendar we have nearly 40 companies reporting
results today. Notable earnings include CAN,
CAG, JEF, MKC, NKE & WBA.
Action Plan
US Futures held positive most the night until but quickly
reversed negative after the Wall Street Journal reported that Chinese President
Xi Jinping will present a list of demands to resolve the trade war to President
Trump at the G20 meeting. If the report
is correct it would seem the odds of a deal at the G20 decline to zero. Let’s us all hope it’s not true or we are likely
to face another round of tariff increases.
Other troubling news for the Dow Futures is the BA has
reported it found another software problem in their grounded aircraft. BA is indicated to gap more than 4% lower at the
open today. As you plan your risk for
the weekend ahead consider the volatility that could result from the G20 developments
and the 4th of July holiday the following week. It would seem to be a near impossibility to hold
on to a trading edge heading into this weekend.
