Tuesday’s price action had plenty of up/down drama but, at the end of the day, left more questions than answers as the choppy consolidation in the indexes continues.  The sharp selling in Apple and Tesla didn’t help market sentiment as the uncertainty of 2023 weighs heavily, with PMI numbers continuing to show contraction in the economy.  Today we face ISM, JOLTS, and FOMC minutes release with another light day of earnings as the bulls and bear fight to find inspiration to break the consolidation log jam.  Expect more chop and uncertainty today.

Overnight Asian markets mostly rallied, with the tech-heavy HIS leading the way up 3.22% at the close.  European markets are decidedly bullish this morning, buoyed after Germany published a better-than-expected inflation rate of 9.6%.  Once again, the futures point to a gap up open to test the consolidation resistance hoping to inspire the bulls ahead of the economic data.

Economic Calendar

Earnings  Calendar

We have five confirmed earnings reports for today, but only these three are somewhat notable RGP, SLP &UNF.

News & Technicals’

The House of Representatives adjourned for the day Tuesday without a Speaker after Republican leader Kevin McCarthy failed in three consecutive votes to secure enough support to be elected to the post.  After the first ballot resulted in votes for several Republicans, the next two rounds saw McCarthy’s opponents coalesce around a new contender: Rep. Jim Jordan of Ohio, a longtime McCarthy ally.  It was the first time in 100 years that the majority party had failed to coalesce around a candidate for Speaker, and it was uncertain what McCarthy’s next steps would be. 

Nezha, named after a feisty Chinese mythological character, claims its car deliveries will more than double in 2022.  The total surpassed Nio’s, emphasizing its focus on the premium segment while hinting at plans to launch a mass-market brand.  While Nezha sells budget-priced vehicles, similar to the highly popular Hongguang Mini EV, Nezha’s vehicles are larger. 

In its 2023 macro outlook, Goldman Sachs forecasts a 1.2% contraction in the U.K. real GDP over the course of this year, well below all other G-10 (Group of Ten) major economies.  A 0.9% expansion would follow this in 2024.  The figure places Britain only fractionally ahead of Russia, which is projected to see a 1.3% contraction in 2023 as it wages war in Ukraine and weathers punitive Western economic sanctions. 

Tuesday’s price action left behind more questions than answers as the wide rage choppy consolidation continues with so much uncertainty about the path forward in 2023.  Economic data continued to show the U.S. Economy is slowing yesterday, with PMI numbers still in contraction.  Adding to the worries was the sharp selling in both Apple and Tesla that not so long ago were considered market bellwethers that could do no wrong.  This morning we face a potential market-moving ISM reading, a JOTLS report that has proven stubbornly sticky, and FOMC minutes likely confirm a resolute FOMC in combatting inflation.  That said, the U.S. futures are again trying to pump up the bullish hope in premarket, suggesting another gap into the consolidation resistance. 

Trade Wisely,

Doug

Over-speculation created a wild ride on Tuesday, and all that emotion could explode in another round of extreme price volatility with Powell in focus.  Will he deliver the hoped-for pivot comments at the press conference allowing Santa to party with a rally into the year’s end?  Or will he continue the hawkish tough talk on inflation and unleash the Grinch?  With so much uncertainty, plan for a choppy morning session as we wait, followed by another wild ride of volatility this afternoon that may set the market direction for the remainder of the year. 

Asian markets rallied with modest gains after a relaxing read on inflation with all eyes on Powell.  European markets, however, trade in the red this morning, with energy prices easing their inflation slightly.  With Powell’s press conference on tap, U.S. futures have reversed some overnight bullishness to suggest a flat to slightly bearish open.  However, anything is possible with market emotion high, so plan your risk carefully!

Economic Calendar

Earnings Calendar

We have a few more reports on the Wednesday earnings calendar, but the market-moving reports are falling by the wayside.  Notable reports include LEN, MITK, NDSN, REVG, & TCOM.

News & Technicals’

A Bahamas judge denied FTX founder Sam Bankman-Fried bail and said he should be remanded to custody until February 2023, citing a heightened flight risk for the onetime billionaire.  Bankman-Fried claimed he was down to just $100,000, a stark comedown for the former crypto titan.  The Digital Commodities Consumer Protection Act is among the solutions lawmakers will consider as they probe the implosion of crypto exchange FTX and try to implement industry safeguards.  The legislation would give the Commodity Futures Trading Commission more oversight.  However, some crypto advocates say it doesn’t go far enough to protect certain kinds of exchanges.

The Federal Reserve is expected to raise interest rates by a half percentage point Wednesday yet signal it will continue its battle against inflation.  However, economists expect Fed Chair Jerome Powell to tilt toward the hawkish side in an effort to impress on markets that the central bank is not ready to give up its rate-hiking stance.  CNBC’s Jim Cramer on Tuesday outlined what needs to happen for the Federal Reserve to finally beat inflation.  “Without a well-deserved crash in crypto and a sign of higher unemployment acknowledged by [Federal Reserve Chair] Jay Powell, this CPI reading has to be treated as a one-off number,” he said.

Tuesday was a wild ride of over-speculation and over-hyped emotion, with Powell in focus!  Investors continue to hope for an FOMC pivot, but Powell is expected to raise rates by another 50 basis points today.  However, it is not likely that the act of raising rates will cause market volatility this afternoon; the press conference will light up the eratic market emotion after that.  Nevertheless, if Powell continues his tough stance on inflation and tamps down the idea of a quick pivot, it will likely disappoint the market and diminish the hope of an end-of-year Santa rally.  However, if he is perceived to be ready to back off and become more dovish, the market will celebrate, and the Santa rally could party until the end of the year!  Although it may be a choppy morning session, as we wait, the pent-up emotion will likely explode in wildly volatile price action this afternoon.  Plan carefully amid the massive uncertainty of what comes next.

Trade Wisely,

Doug

My expectation of a hurry-up and wait day turned into a big surprise as the market surged higher in the last hour of trading, with investors chasing risk with market-moving data the rest of the week.  Oddly, at the same time, the fear spiked as the VIX spiked to 25 handles, with the SPY and QQQ suffering from anemic volume.  Clearly, the appetite for speculative risk is alive and well despite the FOMC’s efforts to bring valuations down.  I’m not confident that’s a good thing with a world recession on the horizon.  Expect big price moves with morning gaps and possible intraday whipsaws with all the data coming our way the rest of the week.

Asian markets traded with mixed results as China relieves pandemic travel restrictions.  European moved higher this morning with all eyes on U.S. inflation data.  U.S. futures so tremendous confidence in the pending CPI number and the coming FOMC decision extending Monday’s buying surge, suggesting a gap up ahead of the data.  Plan for considerable price volatility as the market reacts.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include ABM, CNM, & PLAB.

News & Technicals’

Following his arrest in the Bahamas on Monday, FTX founder Sam Bankman-Fried faces the potential of a lengthy prison sentence.  FTX collapsed last month following a liquidity crunch at the crypto exchange.  “It is inconceivable to me that the Justice Department would have charged this case unless they were confident they could extradite him,” Renato Mariotti, a former federal prosecutor, told CNBC.  In addition, FTX CEO John J. Ray III plans to tell the House Financial Services Committee on Tuesday that the cryptocurrency exchange under Sam Bankman-Fried had “unacceptable management practices.”  Ray said in his remarks that FTX went on a “spending binge” from late 2021 through 2022 when approximately ”$5 billion was spent buying a myriad of businesses and investments, many of which may be worth only a fraction of what was paid for them.”  He also said, “loans and other payments were made to insiders in excess of $1 billion.” 

Binance, the world’s largest cryptocurrency exchange, said Tuesday it is pausing withdrawals of the stablecoin USDC while it carries out a “token swap.”  Changpeng Zhao, CEO of Binance, tweeted on Tuesday that the exchange is seeing an increase in withdrawals of USDC.  The move comes as investor concerns grow about Binance’s stability following the collapse of rival exchange FTX as well as a report of a potential criminal investigation from the U.S. government.

Without question, Monday was a big surprise for me as the bulls raced forward, heading into the very uncertain data points of the CPI and the FOMC rate decision.  The bullishness was again focused on the Dow while the SPY and QQQ continued to suffer from anemic volume.  As the indexes surged the last hour of the day, the VIX simultaneously spiked to 25 handles suggesting fear expanded during the rush to buy.  An extraordinary occurrence, indeed, that one might infer only increased the danger as we wait for the market moving reports.  One thing that seems evident after yesterday’s surge is that wild speculation still exists despite the Fed’s efforts to tamp it down.  I’m not sure that’s a good thing facing a worldwide recession in 2023.  Fasten your seat belts tightly for the next few days are likely to include significant opening gaps and big point whipsaws, so plan your risk carefully!

Trade Wisely,

Doug

Though the premarket pump will try to engage, the fear of missing out today will likely become the classic hurry-up and wait with CPI and FOMC events ahead.  Friday’s close adds to the uncertainty, with indexes hovering just above critical price support levels.  Will the coming data inspire the hoped-for Santa Clause rally, or will Powell be the Grinch that stole Christmas?  While today may prove to be a chop fest, as we wait, anything is possible in the days ahead.  Expect some sudden and substantial price reactions as Christmas hope battles recession worries.

Asian markets started the week lower, led by selling in Hong Kong down 2.20% as investors wait on U.S. data.  European markets also traded primarily lower this morning on the uncertainty of the inflation and rate decisions ahead.  However, in the U.S., premarket futures try to put on a brave face with modest bullishness with index prices posied near essential support levels.  Plan for a choppy, light day as we wait.

Economic Calendar

Earnings Calendar

Although we have a few notables, it will be a very light week on the earnings calendar.  Notables for Monday include COUP & ORCL.

News & Technicals”

Rivian said Monday it was pausing plans to manufacture commercial electric vans in Europe and would “no longer pursue” the agreement it made with Mercedes-Benz.  However, the U.S.-based electric vehicle manufacturer said it remains open to exploring future work with Mercedes-Benz “at a more appropriate time.”  Mercedes-Benz said Rivian’s decision would not impact the timeline of its electrification strategy or the planned ramp-up of its new electric vehicle manufacturing site in Jawor, Poland. 

Inflation has already peaked, but it will remain above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East, and Africa at the Mastercard Economics Institute.  “Inflation has seen its peak this year, but it will still be above what we had been used to pre-pandemic next year,” Mann told CNBC’s “Squawk Box Asia” on Friday.  He said it’ll take a few years to return to 2019 levels. 

Before founding Crypto.com, Kris Marszalek was involved in multiple ventures that collapsed, including one where suppliers claimed they could not access their earnings.  Over a decade ago, their manufacturing company paid Marszalek and his business partner millions of dollars months before it entered bankruptcy.  In a tweet thread published ahead of this story, Marszalek wrote, “startups are hard” and “you will fail over and over again.”  

Although we see a little premarket bullish blustering today is likely to be nothing more than a classic hurry-up and wait for the Tuesday CPI and the Wednesday FOMC.  I would expect some early price gyrations that will devolve into an understandable choppy price day with the uncertainty ahead.  Technically speaking, there is a lot at stake as the major indexes, with the indexes closing very near critical support levels last Friday.  If the CPI and FOMC decision inspires the bulls, we could see a Santa rally begin.  However, if the reports inspire the bears and support levels break under the pressure, Powell may be seen as the Grinch that stole Christmas.  Anything is possible, so position yourself carefully, avoiding overtrading your bias because the price moves are likely to be sudden and substantial in reaction to the coming data.

Trade Wisely,

Doug

With a growing number of major financial institutions and company CEOs dominating the news cycle, warning of a 2023 recession, the bears extended their attack Tuesday.  Though the selling raised some uncertainty for a Santa rally, critical support levels in the index charts held.  However, we will need the bulls to step up and defend now, or the bears could quickly create some technical damage that may be difficult to recover.  Earnings and economic reports could provide some inspiration, but recession worries, pending PPI and FOMC decisions, will likely keep uncertainty high for the near future.

While we slept, Asian markets sold off, with Hong Kong leading the way, down 3.22% as trade data disappointed.  European markets also trade in the red this morning as the bear market rally sentiment diminishes with worries of a looming recession.  U.S. futures reversed modest overnight bullishness to suggest a slightly bearish opening ahead of earnings and economic data.  Uncertainty is high so prepare for news driving price volatility to continue.

Economic Calendar

Earnings Calendar

We have more activity on the Wednesday earnings calendar, but unlikely market-moving reports.  Notable reports include AI, BF.B, CPB, GME, KFY, LOVE, OLLI, SPWH, THO, UNFI, & VRNT.

News & Technicals’

CEOs from JPMorgan, General Motors, Walmart, United, and Union Pacific are preparing for an economic slowdown.   Rising interest rates, inflation, and geopolitical concerns are among the issues cited.  The companies are taking a conservative approach to 2023.  Goldman Sachs and Morgan Stanley have cut workers ahead of a possible economic downturn, but Bank of America CEO Brian Moynihan and his CFO have said they don’t see the need for layoffs.  That doesn’t mean Bank of America’s headcount won’t shrink as it looks to cut expenses.  “We’re up to about 215,000 [employees]; we need to run that backdown,” he said Tuesday. 

Fink has become an outspoken proponent of “stakeholder capitalism” and, in his annual letter to CEOs earlier this year, pushed back against accusations that the giant asset manager was using its size to push a political agenda.  Bluebell — an activist fund with around $250 million in assets under management that holds a tiny stake in BlackRock — has previously targeted the likes of Richemont and Solvay and had a hand in successfully forcing management to restructure at Danone. 

With a growing number of banks and company CEOs warning about a 2023 recession, the bears found the inspiration to matain their attack on Tuesday.  However, on the good news side of the selling, it has substantially relieved the frothy overbought condition of the Dow and key support levels held at yesterday’s close.  The bad news is that recession worries continue to grow and wouldn’t take much to push the SPY, QQQ, and IWM below support to possibly spoil the hoped-for Santa rally.  Today we have a few more earnings reports, Mortgage Apps, Productivity and Costs, and Petroleum Status numbers to inspire the bulls and bears.  With a PPI number this Fraidy and an FOMC decision next week, understandably, making traders question the uber-bullish stance of late.  With the big financial institutions battening down the hatches and layoff projections rising, plan for a volatile end to 2022.

Trade Wisely,

Doug

Reacting to hot ISM services numbers, the bear had a little party on Monday, producing a big point move in the indexes but support levels and bullish trends remained intact by the close.  Though traders continue to worry about future FOMC rate increases and recession, the hope of the last push higher for Santa remains strong.  However, plan for the big point whipsaws and overnight gaps to continue as the bulls and bears fight it out as the uncertain path forward for the economy drives the wild emotion.

Asian markets closed mixed in a volatile overnight session, with China easing some lockdown restrictions.  However, European markets trade modestly bearish across the board this morning as future recession fears loom.  U.S. futures gave back overnight gains to currently suggest a flat open as they wait on earnings and economic data to try and find inspiration.  This could prove to be an interesting bull-bear battle at vital support, so plan carefully and expect considerable volatility. 

Economic Calendar

Earnings Calendar

As usual, near the end of the quarter, we have a few earnings stragglers we will have to keep track of, but their numbers will continue to dimmish over the month.   Notable reports include AVAV, AZO, CASY, CONN, PLAY, MDB, SFIX, SIG, SWBI, & TOL.

News & Techinicals’

The investment by TSMC is one of the largest foreign investments in U.S. history and the largest in Arizona.  Semiconductor chips are used in everything from computers and smartphones to cars, microwaves, and healthcare devices.  Once the plants open, they will produce enough chips to meet the U.S. annual demand.  The announcement comes in the wake of the passage of the CHIPS and Science Act signed into law in early August. 

Microsoft President Brad Smith said the company offered Sony a 10-year contract to make each new release of Call of Duty available on Sony’s PlayStation console at the same time as the Xbox.  Microsoft hopes the move will assuage regulators’ and its rivals’ antitrust fears over its proposed $69 billion acquisition of Activision Blizzard, the developer behind Call of Duty.  In addition, any move to make Call of Duty unavailable to Sony’s PlayStation console would be “economically irrational,” Microsoft’s President Brad Smith said. 

The bears had a little party on Monday, reliving some of the short-term overbought condition, but they seemed to lack conviction, with index charts holding supports and bullish trends still intact.  So although the big point move may have been a bit disconcerting, the move could prove to be very positive as long as the bulls defend the price supports.  Today we have a few more earnings reports that could provide some inspiration with only the International Trade numbers on the economic calendar.  Of course, it would be healthy if the indexes consolidated in a smaller price trading range, but with the all-or-nothing condition of the market, that’s likely just wishful thinking.  Keep a close eye on the support and resistance levels and plan for the choppy volatility to continue.

Trade Wisely,

Doug

As we begin another trading week, we have the magic of Santa competing with weakening economic numbers and worries about a challenging recession over next year’s horizon.  Yet, the bulls showed incredible tenacity with a willingness to buy, buy, buy despite the hot jobs numbers likely to keep the FOMC hawkish.  With many of the Dow component stocks in very extended parabolic patterns, traders will have to watch for possible big-point bear attacks, though the Santa rally hopes remain high. 

While we slept, Asian markets rallied as China relaxed some pandemic rules prompting Hong Kong to surge 4.51%.  However, European markets trade mixed this morning, with oil moving higher as price controls compete with OPEC’s production cutbacks.  After Friday’s big recovery rally, U.S. futures point to a modest gap open as we wait for earnings and economic data.  Plan carefully for another week of volatile data-charged price action as Santa hope battles recession fears.

Economic Calendar

Earnings Calendar

Earnings reports will be light this week, but we will still have some notables to keep us on our toes.  Notable reports for Monday include GTLB & SUMO.

News & Technicals’

The Netherlands is outsized in the global semiconductor supply chain because of its star company, ASML.  ASML produces a cutting-edge chip-making machine, and China is keen to have access.  The U.S. is worried that if ASML ships the machines to China, chipmakers in the country could begin to manufacture the most advanced semiconductors in the world, which have extensive military and advanced artificial intelligence applications. 

Foxconn said November revenue totaled 551.1 billion new Taiwan dollars ($14.7 billion), down more than 29% versus October and over 11% lower compared to Nov. 2021.  The Taiwanese firm said the fall was due to “production gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou.”  Zhengzhou, a city in China, is home to the world’s largest iPhone assembly plant, which Foxconn runs.  In late October, the factory had an outbreak that Foxconn battled to control. 

The European Union is poised to ban all imports of Russian seaborne crude from Monday.  The Kremlin has previously warned that any attempt to impose a price cap on Russian oil will cause more harm than good.  Oil prices have fallen below $90 a barrel from more than $120 in early June ahead of potentially disruptive sanctions on Russian oil. 

As we begin another trading, there is still hope for the magic of Santa to keep the rally going.  First, however, Santa will need to overcome the economic data showing a slowing economy while job growth remains stubbornly strong.  In addition, the growing worries of recession, a disinflationary cycle, or even the dreaded stagflation still worry investors making for some high-risk volatility.  To begin the trading week, we have a light earnings calendar with Factory orders, ISM Services, and PMI composite readings to try and gain some inspiration.  The indexes remain in bullish patterns, yet many of the Dow component stocks are very extended in parabolic patterns, so we will have to stay focused for signals of bear attacks or longer choppy consolidations as it rests. 

Trade Wisely,

Doug

Economic reports continue to point to a slowing U.S. economy, but the bulls show no signs of concern as the index trends remain bullish in stark contrast to the data.  After the data-driven price volatility, the volume quickly declined into a choppy afternoon session, waiting for today’s Employment Situation report.  With little on the earnings calendar, the job numbers will be the source of bullish or bearish inspiration as we slide into the weekend.  Plan carefully and remember to take some profits because this extended market condition could bring sudden bear attacks, so avoid complacency. 

Asian markets had a rough overnight session, wanting clarity on pandemic rules as the lockdowns continue.  European markets trade slightly bearish this morning as they wait on the U.S. job data.  With a very light day of earnings, all eyes will focus on the Employment Situation number out before the bell.  The question is will it inspire the bulls or the bears?  We will soon find out, so plan carefully and expect a shot of price volatility as we wrap up another trading week.

Economic Calendar

Economic Calendar

We have a light day on the Friday earnings calendar to wrap up the week.  Notable reports include CBRL & GCO.

News & Technicals’

While the European Union has dubbed China as a “strategic rival” on different occasions, it is pursuing a different approach from the U.S.  Data from Europe’s statistics office showed that China was the third largest buyer of European goods and the most important market for imported EU products in 2021.  The importance of China as a market for Europe becomes even more relevant at a time when its economy is struggling from Russia’s invasion of Ukraine. 

OPEC+, a group of 23 oil-producing nations led by Saudi Arabia and Russia, will convene on Sunday to decide on the next phase of production policy.  The highly anticipated meeting comes ahead of potentially disruptive sanctions on Russian oil, weakening crude demand in China, and mounting fears of a recession.  However, RBC Capital Market’s Helima Croft said there was no expectation of a production increase from the upcoming OPEC+ meeting and a “significant chance” of a deeper output cut.

The Senate passed legislation that would force a tentative rail labor agreement and thwart a national strike.  A separate vote on adding seven days of paid sick leave to the agreement failed.  The legislation now goes to President Joe Biden, who urged Congress to move quickly on its passage.

Economic data continued to roll in, indicating a slowing U.S. economy, and although we saw some selling, the index trends remained bullish in another light volume session.  However, as we slide into the weekend, we could get a spark of inspiration today from the Employment Situation numbers.  Once again, the T2122 indicator is signaling a short-term overbought condition, but despite so many parabolic-looking charts, we still have no sign the bulls are ready to stop.  That said, stick with the trend but be careful not to overtrade, watching for a bearish attack that could begin any time.  Remember to take some profit along the way and enjoy the ride as long as it lasts.

Trade Wisely,

Doug

Though yesterday’s economic data was primarily bearish, Powell’s statement of slower rate increases triggered a powerful short squeeze ripped through recent price resistance levels.  The emotional move was remarkable, considering rate increases will continue to a restrictive level according to the chairman’s comments.  So, the question for today is, can the bull hold or even follow through to the upside with another busy morning of market-moving economic data?  Expect more wild price gyrations as this very emotional market reacts.

While we slept, Asian markets rallied in response to the Fed’s smaller rate hikes.  Likewise, European markets are trading with bullish energy across the board as the Powell comments reverberate worldwide.  However, U.S. futures point to a slightly lower open, possibly suffering from a little hangover after parting hard yesterday afternoon with another big round of economic data just ahead. 

Economic Calendar

Earnings Calendar

Notable reports include AMBA, AOUT, BIG, CHPT, DBI, DG, GIII, KR, LI, MANU, MRVL, PCEO, TD, ULTA, VEEV, WEBR, & ZS.

News & Technicals’

The 27 countries of the European Union agreed in June to ban the purchase of crude oil from Dec. 5.  They have been working on the details ever since.  The EU discussed a $62 barrel limit this week, but Poland, Estonia, and Lithuania refused, arguing it was too high.  India and China are crucial to the success of the ban.  But India’s Petroleum Minister Shri Hardeep S Puri told CNBC in September: “We will buy oil from Russia, we will buy from wherever.” 

A year after being promoted to the co-CEO role alongside Marc Benioff, Bret Taylor is leaving Salesforce.  It’s the second time in less than three years that Benioff has lost a co-CEO.  Keith Block held the position for 18 months before leaving in 2020. 

Former FTX CEO Sam Bankman-Fried said he’d had a “bad month” but denied committing fraud at his crypto exchange.  Bankman-Fried spoke at the Dealbook Summit weeks after FTX filed for bankruptcy protection amid a cryptocurrency meltdown.  He also started Alameda Research, a crypto hedge fund that allegedly commingled FTX customer funds with trading funds.  Yet, the former FTX CEO claims he committed no fraud.

Jerome Powel triggered a powerful short squeeze Wednesday, stating a slower pace of rate increases is possible beginning in December, with increases continuing to a restrictive level.  The emotional reaction to was nothing short of remarkable as the indexes sliced right through resistance levels, and the SPY popped its 200-day average for the first time since last April.  Interestingly, most of the economic data delivered yesterday were bearish, indicating that the economy is slowing down.  So, now the big question is can it hold or follow through?  This morning we face Jobless Claims, a Core PCE reading, PMI MFG., ISM MFG. numbers meaning a volatile morning of price action is likely.   

Trade Wisely,

Doug

The wait for the GDP report and another speech from Jerome Powell was not a surprise to have produced another frustrating day of low-volume chop.  However, today we have a lot of potentially market-moving data, but will it inspire the bulls or the bears?  The stakes are high, with the SPY and QQQ near critical support levels, so plan carefully with a likely spike in price volatility.  Intraday whipsaws, head fakes, and quick reversals could be seen today as the data rolls out.

Asian markets finished the day primarily bullish after a volatile session as China’s factory activity declined.  European markets are moving higher this morning, reacting to a decline in inflation to 10%.  U.S. futures traded flat most of the night, but as the premarket pump began, the bulls try to put on a brave face with GDP, housing, and jobs data just around the corner.  So, buckle up, keeping in mind that Uncle Jerome will have the final say on today’s overall market sentiment later this afternoon.

Economic Calendar

Earnings Calendar

The Wednesday earnings calendar picked up the pace of reports with nearly 30 confirmed though several are tiny small caps.  Notable reports include DCI, FIVE, FRO, HRL, LZB, NTNX, OKTA, WOOF, PSTG, PVH, RY, CRM, SNOW, SPLK, SNPS, TITN & VSCO.

News & Technicals’

A Nov. 9 software update included an additional AirDrop feature applying only to iPhones sold in mainland China.  AirDrop, which allows users to share content between Apple devices, has become important in demonstrators’ efforts to circumvent authoritarian censorship.  The feature relies on wireless connections between phones rather than internet connectivity, placing it beyond the scope of internet content moderators.  While Chinese authorities could gradually unwind restrictions in March, zero-Covid policies are starting to hurt global confidence in the country’s industrial supply chains, said Li Daokui, Mansfield Freeman professor of economics at China’s Tsinghua University.  In the short term, supply chains will be largely unaffected since factories are still operating, Li, a former advisor to the People’s Bank of China, said in an extended interview with CNBC’s “Squawk Box Asia” on Wednesday.  If China relinquishes its Covid-zero policies, it should be able to get back to a “magic” growth rate of 5% to 6%, which is the right amount of growth given the current size of China’s labor market.

The Euro Zone reported slightly easing inflation to 10% due to a modest decline in energy prices.  Energy and food continued to contribute to the lofty inflation figures, but with a noticeable drop in the former.  According to Eurostat, energy is expected to have stood at an annual rate of 34.9% in November, compared with 41.5% in October.  With inflation at record highs and a number of rate hikes under its belt, markets are awaiting details on how and when the European Central Bank will sell bonds.  In October, ECB President Christine Lagarde said the discussions over bond sales would consider three main factors.  “It is appropriate that the balance sheet is normalized over time in a measured and predictable way,” Lagarde said Monday.

Tuesday turned out to be another frustrating day of choppy price action accompanied by low-volume waiting on the GDP and more conversation from Jerome Powell.  Perhaps today, with all the data coming our way, the bulls or bears will find inspiration, breaking the wide-range consolidation in the index prices.  The good news is that the selling has successfully relieved the short-term overbought condition providing some upside space if today’s reports can inspire the bulls.  On the other hand, both the SPY and QQQ are flirting with critical price support, so if it happens to be the bears that find inspiration today, a painful market selloff could result.  It would be wise to plan for considerable price volatility, including substantial intraday whipsaws, head fakes, and reversals. 

Trade Wisely,

Doug