No News is Bad News

February 16, 2023 by Doug Campbell

While economic data and Fed members suggest more work on inflation is required, the market has covered its eyes and ears, deciding no news is bad news, at least for now.  As a result, the SPY, QQQ, and IWM continue to extend away from their 50-day averages as the DIA chops in a wide multiweek range.  Before the bell today, we have another big round of market-moving economic and earnings reports to keep the price action challenging.  Expect the big-point whipsaw to continue as fighting the Fed remains in vogue.

Asian markets traded mixed but primarily higher overnight, despite Japan posting its worst-ever trade deficit numbers.  European markets continue to extend higher, with the CAC reaching an all-time high despite the Russian spring offensive picking up steam and possible recession.  U.S. futures suggest an uncertain open, but with several pending market-moving reports, anything is possible.  Expect considerable price volatility as investors digest the data.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AEM, AMAT, AAWW, BJRI, BLMN, CHUY, COHU, CEG, CROX, ED, DDOG, DLR, DOCN, DASH, DKNG, DBX, ETR, HAS, HSIC HUBS, H, LH, OGN, PARA, POOL, SHAK, SWAV, SO, TXRH, TSEM, USFD, VMC, WE, & ZBRA.

News & Technicals’

The European Union’s embargo on Russian oil products came into effect on Feb. 5, building on the $60 oil price cap implemented by the G-7 (Group of Seven) major economies on Dec. 5.  China, India, and Turkey, in particular, have ramped up purchases to partially offset a fall in Russian crude exports to Europe of 400,000 barrels a day in January.  According to the IEA’s oil market report, Russian net oil output was down by only 160,000 barrels a day from pre-war levels in January, with 8.2 million barrels of oil shipped to markets worldwide. 

Bitcoin surged 11% to $24,655.94 at around 3:36 a.m.  ET while ether was up more than 8% at $1,684.59, according to CoinDesk.  The value of the entire cryptocurrency market rose more than $84.8 billion in the 24 hours before 3:39 a.m. ET.  Crypto markets were on edge earlier this week after a step in regulatory scrutiny from U.S. authorities on stablecoins. 

Ford expects production of its electric F-150 Lightning pickup to be down through at least the end of next week to address a potential battery issue that resulted in a vehicle fire.  The updated timing comes a day after Ford confirmed production of the highly watched EV had been suspended at the beginning of last week due to a potential battery issue.  However, Ford said it believes engineers have found the root cause of the issue.

The market seems to be in a phase where no news is bad news, as economic reports suggest the rate will continue to rise and remain elevated for extended periods.  However, fighting the Fed or perhaps ignoring the potential consequences of doing so is now in vogue.  Crypo’s also entered the game, surging 11% in the last 24 hours despite the SEC crackdown on the sector.  Through all this pushing and shoving, the Dow remains locked in a multiweek consolidation with a price range of nearly 800 points.  The tech sector continues to stretch higher even as bond yields and the U.S. dollar strengthens.  How much longer this lasts is anyone’s guess but enjoy the ride and keep watch for signs of a reversal that could be substantially punishing once the reality of rate increases and recession returns.

Trade Wisely,

Doug

Multiple Whipsaws

February 15, 2023 by Doug Campbell

Tuesday’s index prices went wild, generating multiple whipsaws as investors reacted to and tried to sort out the future ramifications of the CPI numbers.  Unfrotunitally the big point swings may well continue into Wednesday as the market reacts to market-moving economic reports and a slew of earnings events to keep speculation volatility high.  So plan carefully, as the significant point moves make it near impossible to hold onto a trading edge.  Remember, cash is a position that protects your capital in these dangerous conditions. 

While we slept, Asian markets reacted negatively to the hotter-than-expected CPI numbers seeing red across the board at the close.  However, European markets trade mainly higher this morning seemly less concerned about possible inflationary economic impacts.  Facing another big day of possible market-moving reports, the U.S. futures point to a lower open but rise from overnight lows waiting for retail sales figures. 

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ALB, ALKS, AIG, AWK, ADI, GOLD, BIIB, SAM, CF, CHH, CSCO, CYH, ET, EQIX, FSLY, FSR, GNRC, HL, IDCC, INFN, INVH, KHC, DNUT, LAD, MRO, MLM, NUS, NTR, PGRE, OC, RBLX, ROKU, RGLD, SGEN, SHOP, STAG, SUN, SPWR, SNPS, TTD, TWLO, UPWK, WH, & ZG.

News & Technicals’

A Goldman credit card would’ve been part of a suite of products to help enhance the profit margins and loyalty of its retail efforts, according to people with knowledge of the matter.  However, when it scaled back plans to become the primary bank for the masses, the rationale for a Goldman card evaporated, said one of the people.  Solomon acknowledged last month that the bank’s ambition in consumer finance outstripped its ability to execute on them. 

A costly trading decision sees the annual net profit of Barclays dropping by 19%.  The British lender took a substantial hit from an over-issuance of securities in the U.S., which resulted in litigation and conduct charges totaling £1.6 billion throughout 2022.

The Biden administration wants at least 500,000 publicly accessible electric vehicle chargers on US roads by 2030.  Now, companies that build and operate charging networks — including Tesla, GM, Ford, ChargePoint, and others — stand to reap the rewards of federal funding if they meet new requirements.  For example, white House officials announced that Tesla will open up 7,500 of its charging stations by the end of 2024 to non-Tesla EV drivers.  Previously the company’s chargers in the U.S. were used mainly by and made to be compatible with Tesla Evs

In reaction to yesterday’s CPI, the indexes went wild, producing multiple whipsaws as investors grappled with what it means for future rate increases and the possibility of an overall economic slowdown.  However, despite the hefty price swings, current support and resistance levels held, leaving more questions than answers as we face another day of likely market-moving reports.  Along with impactful economic reports such as retail sales and industrial production, we have a hectic day of earnings to keep prices volatility high and traders making speculative bets on the direction.  So, once again, plan for the possibility of big index point moves and continue to watch for those quick, sharp whipsaws.

Trade Wisely,

Doug

Pending CPI Report

February 14, 2023 by Doug Campbell

The bulls produced a Monday reversal on surprisingly low volume as they rushed to buy up risk ahead of the pending CPI report that could produce a substantial price move.  Will the bulls get rewarded, or will the report produce a Valentine’s day massacre?  We will soon find out and then turn our attention to Wednesday’s market-moving Retail Sales and Industrial production numbers.  A slew of earnings will only add to the challenge, so buckle up and prepare for a wild ride over the next few days,

Asian markets mostly gained relatively modest results as Japan nominated their next central bank chief.  European look to extend yesterday’s reversal rally, projecting confidence in the pending inflation number.  Despite reports that the CPI report could deliver some disappointing sticky inflation reading, the U.S. trade higher in the premarket, hoping to extend yesterday’s big upward push.

Economic Calendar

Earnings Calendar

Notable reports include ABNB, AKAM, ANDE, BTU, CLF, CRK, CNDT, DVN, GDDY, GFS, GXO, HLF, HWM, KO, MAR, QSR, SCI, SU, TRU, TRIP, UPST, WEBR, & ZTS.

News & Technicals’

All market eyes Tuesday will be on the release of the Labor Department’s consumer price index, a widely followed inflation gauge.  Economists are expecting that the CPI will show a 0.4% increase in January, which would translate into 6.2% annual growth.  However, there’s some indication the number could be even higher.  The Federal Reserve is determined to keep fighting inflation so that the report could harden their position.

Inflation in the U.S. is likely to be “far stickier” and could last a decade, according to Bill Smead, chief investment officer at Smead Capital Management.  Wall Street is gearing up for news on key inflation data later Tuesday as the Labor Department will release its January consumer price index. 

President Joe Biden is expected to name Federal Reserve Vice Chair Lael Brainard to the White House’s top economic policy position as early as Tuesday.  Brainard would replace White House National Economic Council (NEC) Director Brian Deese, who has announced his resignation.

We began the week with another reversal as the bulls rushed to buy, pressing resistance levels, seemingly unconcerned about the potential big-point reaction from the pending CPI report.  While the VIX registered a reversal of fear, volume was surprising considering the big move in the indexes.  Expect a substantial price reaction as the number comes out, and don’t rule out the possibility of a wild whipsaw before the open.  Anything is possible, and the market will turn its eyes toward the Retail Sales and Industrial Production numbers on Wednesday morning. 

Trade Wisely,

Doug

CPI, PPI, and Retail Sales

February 13, 2023 by Doug Campbell

Not only will investors have a full plate of earnings reports to grapple with this week, but they will also have a huge week of economic data such as CPI, PPI, and retail sales, keeping them guessing and uncertain.  Although the DIA seems stuck in consolidation, the SPY, QQQ, and IWM remain in bullish patterns.  Big point index swings are possible this week, and I would not rule out significant intraday whips or overnight reversals to challenge us in the week ahead.  All eyes will be on Tuesday morning’s BLS sessional adjustments to the CPI number, so plan your risk carefully as we wait.

Asian markets started the week mostly lower with a volatile yen as uncertainty increases on the BOJ nomination report.  However, European markets trade with modest bullishness this morning, trying to gauge monetary policy ahead of crucial economic data.  While off overnight lows, U.S. futures suggest a flat, mixed open as they wait on a market-moving CPI report Tuesday morning.

Economic Calendar

Earnings Calendar

Notable earnings include AAP, AMKR, ANGI, CAR, CDNS, CHKP, DENN, FE, IAC, MEDP, OTTR, PLTR< SEDG, & VNO.

News & Technicals’

According to NBC News, the U.S. military shot down a fourth unidentified object Sunday and expects to recover it.  The White House on Friday announced a second object had been shot down over Alaska, and Canadian Prime Minister Justin Trudeau said Saturday a U.S. fighter jet shot down a third “unidentified object.”  Officials have yet to release details about the objects that were downed on Friday, Saturday, and Sunday. 

U.K. semiconductor bosses are pleading with the government for subsidies amid fears that some chip firms will be forced to move overseas.  The U.S. and EU have announced multibillion-dollar packages to boost domestic chip production, and industry executives worry that the lack of a similar strategy from the U.K. is harming the country’s competitiveness.  Prime Minister Rishi Sunak’s administration is under pressure to publish its planned chip strategy, which has faced delays due to political instability.

Life Insurance Corporation, India’s largest insurer, said it ‘might’ review its stake in the embattled Adani Group after meeting with the management.  LIC chairman M.R. Kumar said the state-owned insurer plans to discuss with the Adani management soon to get a better picture of the crisis engulfing the conglomerate.  “As an investor, it’s not often that we have this kind of a situation.  But then we have reached out to the management of Adani,” Kumar told CNBC’s Tanvir Gill in an interview.

The modest profit-taking of last week underscores the uncertainty investors face this week we readings on CPI, PPI, and Retail Sales numbers.  Nevertheless, having relieved much of the overbought condition, the SPY, QQQ, and IWM remain in bullish patterns, with the DIA seminally stuck in consolidation.  The seasonal adjustments from the BLS will have all eyes on the Tuesday CPI report setting up a morning of considerable price volatility.  However, as we wait, don’t be surprised to see a  choppy, low-volume price action today.  All the economic data will, of course, be complicated with another big of economic data to keep traders guessing and emotions high.  Plan carefully and prepare for some big point index swings with the possibility that the overnight reversals experienced last week may continue as the data rolls out.

Trade Wisely,

Doug

Big Intraday Whipsaw

February 10, 2023 by Doug Campbell

The daily index swings continued Thursday, but this time produced a big intraday whipsaw leaving behind some possible topping candle patterns.  The price action suggests the bears are hungry, but I would not expect the bull to give up easily.  The VIX hinted at some fear of returning to the market as it popped through a multi-month downtrend yesterday.  The question for the day is, will the bears find the energy to follow through, or will the bulls rush back to defend?  With this week’s significant daily reversals, I think anything is possible as we head into the weekend. 

Asian markets closed the day mostly lower, with the tech-heavy HSI leading the way, down 2,01%.  European markets trade decidedly bearish this morning as investors mull future central bank actions and the possibility of a recession.  U.S. futures point to a lower open ahead of earnings, consumer sentiment, and more Fed speakers. 

Economic Calendar

Earnings Calendar

We get a little break on the earnings calendar on Friday.  Notable reports include AXL, ENB, FTS, IQV, NWL, SPB & WPC.

News & Technicals’

Adidas could lose around 1.2 billion euros ($1.3 billion) in revenue in 2023 if it cannot sell its existing Yeezy stock.   Shares of Adidas were down 11% around 9 a.m. London time following the news.  “The numbers speak for themselves.  But, unfortunately, we are currently not performing as we should,” Adidas CEO Bjørn Gulden said in a press release.

Yahoo will lay off more than 20% of staff, or around 1,600 workers, and the company’s Yahoo for Business unit will be slashed in half.  The company said about 1,000 of those cuts would occur by the end of the week.

Dan Schulman became PayPal CEO after the company split from eBay in 2015.  He will remain a member of PayPal’s board of directors.  “I’m proud of what we have accomplished at PayPal and of the incredibly talented and committed people I work with every day,” Schulman said in a statement.

The wild chop continued on Thursday, tossing traders a big intraday whipsaw and leaving behind bearish engulfing candles with the VIX breaking a multi-month downtrend.  That said, one day does not make a trend, and though the bears made an appearance, will they have the energy to follow through?  Don’t expect the bulls to give up easily, and with the big point swings we have experienced this week, we can’t rule out another quick swing higher.  We have more Fed speakers, consumer sentiment, a treasury statement, and a lighter day of earnings reports to provide inspiration.  Keep an eye on price support levels because if they break, some quick selling to occur as traders rush to protect profits. 

Trade Wisely,

Doug

Huge Point Whipsaws

February 8, 2023 by Doug Campbell

The markets quickly exploded with bullishness reversing the day as Jerome Powell’s comments encouraged buyers, then triggering two huge point whipsaws as emotion spilled across the index charts.   Though it is currently in vogue to chase parabolic index charts and already extended charts, be warned the danger of doing so is high.  Today we will hear from more fed speakers and another big day of earnings reports to continue inspiring price volatility.   Yesterday proved that the reversal speed of the market is high, so plan your risk carefully as indexes continue to increase.

Asian markets traded mixed while we slept, seemly keying in on the more work-to-do comments of the Fed.  However, this morning, European markets surged higher in reaction to Powell’s words, with the FTSE hitting record highs!  On the other hand, U.S. futures point to a gap down open ahead of another big day of earnings.  Trade wisely and avoid the fear of missing out as the indexes extend.

Economic Calendar

Earnings Calendar

The number of earnings reports ramped up today with just over 100 companies listed on the calendar though there are a number of them unconfirmed.  Notable reports include AFRM, AB, APP, APPS, CPRI, CME, COHR, COTY, CVS, D, DIS, ETN, EMR< EFX, FOXA, GT, HI, HPP, IFF, MAT, MGM, MOH, NYT, ORLY, PTEN, PAG, PFGC, RDN, RDWR, REYN, REXR, HOOD, SONO, THC, TRMB, UBER, XPO, YUM.

News & Technicals’

Chipotle Mexican Grill reported weaker-than-expected earnings and revenue for its fourth quarter.  However, CEO Brian Niccol maintained the company hadn’t seen a backlash to higher prices for its burrito bowls and tacos, despite declining transactions.  The company plans to open between 255 and 285 new locations in 2023 and said last month it is looking to hire 15,000 workers by this spring. 

CVS said it would pay $39 per Oak Street Health share, a nearly 16% premium to the stock’s last closing price.  With Oak Street’s acquisition, CVS will control over 160 primary care centers that serve those insured under the U.S. government’s Medicare program. 

Federal Reserve Chairman Jerome Powell said Tuesday that disinflation “has begun” but is going to take time.  Markets latched onto Powell’s words and briefly turned positive before flipping back to negative after he cautioned about stronger-than-expected economic data.  “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in,” he said.

Intended or not, Jerome Powell’s words brought out the bulls yesterday, which triggered two huge point whipsaws to strongly positive finish the day.  The VIX saw fear diminish, and the T2122 indicator zoomed up again, nearing an overbought condition.  Chasing extending stock prices and parabolic indexes is currently in vogue, but the risks of doing so are also very high.  Plan carefully and avoid overtrading, as the reversal speed of an overextended condition can punish retail accounts harshly.  We have more Fed speak today, along with some very anticipated potentially market-moving earnings reports, so buckle up for another wild day of volatility.

Trade Wisely,

Doug

Bears Milling About

February 7, 2023 by Doug Campbell

Monday started the day with bears milling about, but they could not wrestle control from the bulls despite the extremely extended condition of the SPY, QQQ & IWM.  The VIX indicated a slight increase in fear, and volume declined, perhaps acknowledging last week’s exuberance.  International trade numbers, a mid-day Powell speech, and a slew of earnings reports are likely to keep price volatility high and traders guessing what comes next.  Testing support and resistance levels in the SPY, QQQ and IWM will require some big point moves, so plan your risk carefully.

Overnight Asian markets closed the day, mixed with modest gains and losses as Australia raised interest rates.  As uncertainty continues to linger, European indexes trade in a relatively modest chop range this morning.  U.S. futures have softened slightly from overnight highs, with earnings and a speech from Powell keeping traders apprehensive of the path forward.

Economic Calendar

Earnings Calendar

We have about 80 companies listed on the earnings calendar, although many are unconfirmed.  Notable reports include AIZ, BP, CNC, CMG, DEI, DD, ENPH, ESS, FISV, FTNT, IT, GPK, HRB, HAIN, HTZ, ILMN, INCY, J, KKR, LIN PRU, RCL, SPR, VFC, VVV, WU, & YUMC.

News & Technicals’

BP posted underlying replacement cost profit, used as a proxy for net profit, of $27.7 billion for 2022.  That compared with $12.8 billion for the previous year.  The British oil major announced a further $2.75 billion share buyback and boosted its dividend by 10% to 6.61 cents per ordinary share.  BP’s record annual profits follow bumper earnings from energy giants Shell, Exxon Mobil, and Chevron. 

Microsoft on Monday announced plans to host a news event Tuesday that could be related to the AI chatbot ChatGPT.  The company confirmed the event minutes after rival Google announced its answer to ChatGPT, called Bard.  Microsoft’s event follows the company’s January announcement regarding its new multiyear, multibillion-dollar investment with ChatGPT maker OpenAI.

Binance will suspend U.S. dollar withdrawals and deposits for international customers beginning Feb. 8, the company said.  Binance banking partner Signature Bank in January raised transaction minimums for dollar transfers.   After it announced the suspension, millions of crypto dollars flowed out of Binance, but the company says it remains “net-positive.”

Although we saw a few bears milling about yesterday, there was no technical damage, with the SPY, QQQ, and IWM enormously elevated as the DIA rested at its 50-day average.  Fortunately, index volume also contracted substantially yesterday, perhaps an acknowledgment of the over-exuberance last week and the uncertainty of the possible recession.  Nevertheless, the bulls remain in control as we head into another big day of earnings reports and a mid-day speech from Jerome Powell.  Prepare for more price volatility as the data comes out, keeping in mind some big index point moves are possible to test support or resistance in the SPY, QQQ & IWM.

Trade Wisely,

Doug

Talk of a New Bull Market

February 6, 2023 by Doug Campbell

The tech sector continues to stretch higher, with talk of a new bull market ringing in the ears of traders fearful of missing out despite the short-term overbought condition.  With a scorching hot labor market keeping the Fed active and signs of a weakening consumer raising, one has to wonder how long this can continue.  The fear of missing out is a powerful emotion but guard yourself against chasing already extended stocks or indexes because a significant reversal to test support levels is not out of the question.  Plan for another week of price volatility with another busy data week ahead.

Asian markets traded mixed and mostly lower overnight as traders reacted to the hot U.S. jobs data and the likelihood of more rate increases coming.  European markets trade with a bit of bearishness to begin the week, and the U.S. futures point to gap down open with tech leading the way.  I would not expect the bulls to give up easily but don’t rule out the possibility of a substantial pullback to test support levels at any time.

Economic Calendar

Earnings Calendar

Notable earnings to kick off the new trading week, ACTVI, CHGG, CMI, FN, IDXX, LEG, ON, PINS, RMBS, SPG, SWKS, SAVE, TTWO & TSN.

News & Technicals’

China urges calm after the violation of U.S. airspace.  “What I want to emphasize regarding this unexpected accident is that both sides, especially the U.S., should remain calm,” said China’s Ministry of Foreign Affairs spokesperson Mao Ning in Mandarin, according to a CNBC translation.  She was speaking at the first of the ministry’s daily press conferences after U.S. Secretary of State Antony Blinken indefinitely postponed his trip to Beijing in light of news that a suspected Chinese surveillance balloon was flying over the United States.

In 2022, Huawei announced it signed more than 20 new or extended patent licensing agreements.  Huawei ranked fourth last year by the number of patent grants in the U.S., said IFI Claims Patent Services.  In addition, according to the China Intellectual Property Administration website, Huawei filed for a lithography technology patent late last year. 

The U.S. will transition the federal Covid vaccination program to the private market as soon as the fall.  This means Pfizer and Moderna would sell the shots directly to healthcare providers at a higher price.  However, Americans with health insurance would still get their Covid shots for free once the vaccine program goes commercial.  But the uninsured may have to pay the total price of the shots after the current federal supply runs out.  The federal vaccine program will not be affected by the end of the Covid public health emergency in May, the White House said.

As bullish confidence in tech surges with talk of a new bull market ringing in the investor’s ears, the weak manufacturing sector and the hot jobs sector fans the flames of uncertainty.  However, the capacity of this market to ignore any bad data while rushing the buy during earnings reports has been truly remarkable.  The question is, how long can it last?  Friday’s selling relieved some short-term overbought conditions, but we should not be surprised if a quick and substantial pullback begins at any time.  With another big week of reports, expect challenging price moves making for dangerous conditions for retail traders. 

Trade Wisely,

Doug

Appetite For Risk

February 1, 2023 by Doug Campbell

Tuesday’s market extension shows a massive appetite for risk as we head into another rate increase and defiance of weak economic numbers.  One thing is for sure the price action and emotion are at such a fevered pitch big point moves up or down are possible, making it a hazardous environment for retail traders.  Will the market be right and Powell rolls over, or do the instructions have retail traders right where they want them?  We will soon find out.  Protect your capital, my friends.

Asian markets posted gains across the indexes, with the tech Hong Kong exchange leading the buying.  European markets trade flat to slightly bullish this morning as they wait on the Fed’s next moves.   After a considerable stretch into the Tuesday close, U.S. futures point to lower open ahead of a big day of earnings and economic reports that may make or break the current buying rally.  So, buckle up; the stage is set for a wild price action day!

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ADTN, AFL, MO, META, ALGN, ALL, ABC, BSX, EAT, CHRW, CTVA, DXC, ELF, EBAY, EVR, FTV, HOLX, HUM, KLIC, MCK, MTH, MTG, NTGR, NVS, ODFL, OTIS, PTON, QRVO< RYN< SMG, TMO, TMUS & WM.

News & Technicals’

Annual gold demand jumped 18% to 4,741 tons (excluding over-the-counter or OTC trading) across the year.  That’s the largest annual figure since 2011, fueled by record fourth-quarter demand of 1,337 tons.  Key to the surge was a 55-year high of 1,136 tons bought by central banks across the year. 

The Federal Reserve is expected to raise interest rates by a quarter point Wednesday, its smallest increase since it began hiking rates last March.  Market pros expect Fed Chair Jerome Powell to sound hawkish, meaning he will lean toward tighter policy and keeping interest rates high.  “Powell is more focused on inflation going down and staying down than trying to help the S&P 500,” said one strategist.  “His legacy is not going to be determined by where credit spreads are or where the S&P is going.  It’s going to be determined by whether he slayed inflation and it stayed down.” 

CNBC’s Jim Cramer on Tuesday told investors that the market is in bull mode, so declines represent opportunities to buy on a dip.  Stocks rose on Tuesday, with the S&P 500 reaching its best January performance since 2019 on strong corporate earnings and softer-than-expected inflation data. 

The appetite for risk in defiance of economic numbers heading into another Fed rate increase is astonishing as the market continues to surge.  So it seems one of two things is possible over the next couple of days.  First, the markets are correct; Jerome Powell rolls over, and the market rallies despite the weakness of the consumer.  Or, the institutions have the retail traders right where they want them as Powell continues his inflation fight, fleecing their accounts as the market extension falls.  If that is not clear enough, there is a tremendous danger for the retail trader over the next few days!  Protect your capital and plan for some big point moves up or down as the drama unfolds.

Trade Wisely

Doug

What Comes Next

January 31, 2023 by Doug Campbell

The bears relived some of the short-term overbought conditions on a light volume day as the uncertainty of what comes next inspired a bit of profit-taking as we wait for the FOMC.  The selling created no technical damage, but the market appears on the cusp of a big decision.  With the massive amount of pending economic and earnings data support the current bullish trend, or will it bring the bear back to work, resuming the longer-term bear trend in the SPY and QQQ?  One thing is for sure were likely to see price volatility in the next few days that will challenge even the most experienced traders.

Asian markets traded modestly lower overnight, led by Hong Kong, down just 1.03%.  Though a preliminary GDP report topped estimates, European markets trade lower across the board this morning.  Facing a big day of earnings and economic reports on the eve of an FOMC decision, U.S. futures point to a lower open.  Still, I would not expect the bulls to give up easily, so expect substantial price volatility as the data rolls out. 

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include AMD, AMGN, AOS, ASH, CAT, CP, GLW, DOV, EW, EA, XOM, GM, HA, IP, JNPR, MPC, MTCH, MCD, MDLZ, NVR, PFE, PSX, PBI, PHM, SNAP, SMCI, SYY, UPS, & WDC.

News & Technicals’

Preliminary Eurostat data released Tuesday showed the euro zone grew 0.1% in the fourth quarter.  According to Reuters, economists had pointed to a 0.1% contraction over the same period.  Energy prices cooled off in the latter part of 2022, bringing some relief to the euro zone’s broader economic performance. 

Norway’s Government Pension Fund Global, among the world’s largest investors, returned -14.1% last year.  “The market was impacted by war in Europe, high inflation, and rising interest rates.  This negatively impacted both the equity and bond markets simultaneously, which is very unusual,” said Norges Bank Investment Management CEO Nicolai Tangen. 

UBS reported $1.7 billion of net income for the fourth quarter of last year, bringing its full-year profit to $7.6 billion in 2022.  “The rate environment is helping the business on one side, and that offsets some of the lower activity that we see on the investment side,” CEO Ralph Hamers told CNBC’s Geoff Cutmore Tuesday.  The Swiss bank said it would purchase more shares this year.

As we approach the FOMC, uncertainty about what comes next brought some profit-taking on Monday, reliving some of the overbought conditions on another light volume day.  However, the selling created no technical damage, and though the VIX registered an increase in fear, the bulls still controlled the overall trend.  The intensity of market-moving reports picks up sharply today, hitting a fevered pitch by Thursday when GOOGL, AMZN, and AAPL earnings.  If that’s not enough, toss in a slew of economic reports that include an FOMC rate decision and likely hawkish press conference from Powell.  Plan for intraday whipsaws, overnight reversals, and fast, challenging price action to test even the most experienced trader. 

Trade Wisely,

Doug