Rollercoaster Ride of Whipsaws

by

As investors reacted to earnings and economic reports piling up, evidence of a slowing economy, the indexes produced a rollercoaster ride of whipsaws, leaving more questions than answers by the close of day.  On the positive side, the indexes held near technical and price support levels but did so with substantial uncertainty as the 10-year bond topped 4%.  Expect more volatility this morning with jobs and productivity numbers before the bell to set the stage for the day.  We could be setting up for a significant market move soon, but it could go in either direction, so plan carefully.

Asian markets struggled with direction overnight, closing mixed as investors grappled with the impacts of pending rate increases.  European markets trade with modest losses this morning after posting an 8.5% inflation number suggesting the ECB has a lot of work ahead to curb the rising costs.  At the time of writing this report, U.S. futures suggest a mixed open with potential market-moving economic data capable of changing everything by the open. 

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AER, AVGO, BUD, BBY, BIG, BILI, AI, CHPT, COST, DELL, HPE, HRL, KR, M, MRVL, JWN, PTLO, SIX, SWBI, SFM, SSYS, TD, UTZ, VSCO, VVNT, VMW, AUY, & ZS.

News & Technicals’

Tesla CEO Elon Musk took the stage to present his “Master Plan Part 3” for the company at its 2023 Investor Day in Austin.  The company’s manufacturing leader, Tom Zhu, revealed that as of Wednesday, Tesla had produced 4 million cars.  The presentation was long on vision and a review of prior achievements but short on specifics about new Tesla products or services. 

Inflation in the eurozone eased slightly to 8.5% in February, even as the ECB signaled that the interest rate hiking cycle might not end.  Core inflation rose to an estimated 5.6% in February from 5.3% in January.  Goldman Sachs said earlier this week that they were raising rate hike expectations for the ECB.

Salesforce beat expectations across the board.  In addition, the company is expanding its share buyback program after introducing it last year.  Salesforce announced layoffs during the quarter as activists pushed it to become more profitable.

Wednesday’s price action was a rollercoaster ride of whipsaws that marked a new low for the week, but in the indexes, while technically resolving nothing.  Though the economic data continues to signal a slowing economy, the VIX shows investors have little fear as the recession evidence grows.  The good news is that index price support levels held by the end of the day, with Dow making the most effort to rally as the first day of March trading came to a close.  I believe the indexes are setting up for a significant market move, but the question is in which direction?  Plan carefully with Jobless Claims and Productivity & Costs report before the bell setting the stage for another day likely to produce challenging volatility. 

Trade Wisely,

Doug

Disappointing Economic Numbers

by

Tuesday’s early bullish hopes faded before the open, with disappointing economic numbers inspiring the bears as slowing economic conditions raise recession worries among investors.  Though we have primarily tried to ignore the clues of a stressed consumer, the compounding impacts are becoming more evident as LOW adds to the chorus of retail companies uncertain about the path ahead.  With the majority of 1st quarter earnings in the rearview poor economic numbers will be harder to ignore as we face another rate increase later this month.  Plan for overnight reversal and significant intraday whipsaws to continue as the uncertainty grows.

While we slept, China reported a pickup in factory activity, with the tech-heavy HSI surging 4% while the ASX declined slightly.  However, the European market’s trade decided bullish this morning, hoping to relieve the recent selling.  With several pending and potentially market-moving economic reports and a bevy of retail earnings, U.S. futures push for a positive open, hoping to relieve the recent downturn and hold technical index supports.

Economic Calendar

Earnings Calendar

Notable reports for Wednesday include ANF, ACIW, BLUE, BOX, CLH, DLTR, DIN, DCI, FNKO, HGV, HZNP, INO, JACK, JAZZ, KSS, LL, LOW, NIO, OKTA, PLUG, PSTG, RY, CRM, SGFY, SNOW, SPLK, STWD, TUP, WB, & WEN.

News & Technicals’

Lowe’s sales in its fiscal fourth quarter fell short of Wall Street’s expectations.  The home improvement retailer issued a conservative outlook as the sector comes under pressure from a shift in consumer spending. 

General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.  The cuts affect about 500 positions, according to a person familiar with the plans, announced Tuesday internally. 

In November, Rivian reaffirmed its full-year guidance of an adjusted loss before income, taxes, depreciation, and amortization of $5.4 billion.  For 2023, Rivian forecast vehicle production of 50,000 vehicles.  That would be roughly double last year’s amount but below analysts’ expectations of around 60,000.  Rivian is focusing on ramping up its R1 truck and SUV production and an electric delivery van it builds for Amazon, its largest individual shareholder.

The Tuesday pre-market pump faded before the beginning of trading as disappointing economic numbers that point to a slowing economy and an inflation-stressed consumer change their spending habits.  As we kick April trading, worries of a pending recession continue to grow amongst traders and investors, breaking recent index uptrends.  Still, I would not expect the bulls to give up easily, and after testing technical support, now would be the time to step up and defend.  Unfortunately, they face another round of economic reports with PMI Mfg., ISM Mfg, Construction Spending, and mortgage and petroleum data.  Once again, they are working to pump up the pre-market, so expect the wild intraday whipsaws to continue as the bulls and bears battle for directional control of the indexes. 

Trade Wisley,

Doug

Considerable Intraday Whipsaw

by

After mainly ignoring the terrible durable goods report, the bulls surged higher by more than 350 Dow points, only the quick reverse taking most of it back in a considerable intraday whipsaw.  The good news is last Friday’s index lows held as support, but facing another big day of earnings and economic data on this last trading day of February, expect more of the same wild volatility.  A recession seems inevitable, with slowing economic reports stacking up evidence of changing consumer habits and record credit card debt with more rate increases on the way.  So, plan your risk carefully as we slide into March and the market comes to grips with the challenging path forward.

Asian markets closed mostly higher but with modest gains and losses after Japan’s factory output fell.  European markets edge slightly higher this morning despite the accelerating inflation in France and Spain.  U.S. futures, once again, pump higher, the premaket facing a big day of earnings and economic data, but anything is possible by the open on this last trading day of February. 

Economic Calendar

Earnings Calendar

Notable reports for Tuesday include DDD, ADT, AAP, A, AMBA, AMC, AZO, AXON, BLNK, BLDR, CARG, CBRL, CELH, CLNE, COMP, CPGN, CRON, DUOL, FSLR, FRO, GDRX, GOGO, GO, HP, IGT, SJM, MANU, MLCO, MNST, MYGN, NXST, NCLH, PRGO, PUBM, RIVN, RKT, ROST, SEAS, TGT, URBN, SPCE, & WRBY.

News & Technicals’

A bill to revise legal protections that have shielded TikTok from U.S. sanctions is expected to pass a key House committee on Tuesday, paving the way for a broader ban on the popular short video app.  Sponsored by House Foreign Affairs Committee Chairman Mike McCaul, the bill would strip longstanding protections from companies that transfer Americans’ “sensitive personal data” to entities or individuals based in, or controlled by, China.  The bill would likely pass the Republican-controlled House easily.  However, its fate in the Democratic majority Senate is unclear. 

After the U.S. shot down an alleged Chinese spy balloon this month, China’s defense ministry declined a call with its U.S. counterpart, according to statements from both sides.  Chinese culture is why, said Shen Yamei, deputy director and associate research fellow at state-backed think tank China Institute of International Studies’ department for American studies.  The default U.S. view is quite different. 

Ukraine President Volodymyr Zelenskyy acknowledged Monday that the situation is deteriorating around Bakhmut.  Russian forces and private military contractors belonging to the Wagner Group have been trying to capture Bakhmut for months as they look to cut Ukraine’s supply lines in Donetsk.  On Monday, one Russian official claimed Russian forces now controlled all roads into Bakhmut, stopping Ukrainian supplies of ammunition and forces into the city.

We kicked off the week with a considerable intraday whipsaw, but despite the bearish reversal, the bulls defended last Friday’s index lows as support.  TGT squeaked out an earnings beat this morning but appeared to have the same slowing consumer concerns as HD and WMT.  We not only have a big day of earnings reports but also face several economic reports, including trade, PMI, Housing prices, and Consumer Confidence.  Reversal and intraday whipsaws seem likely to continue to stay focused on support and resistance levels as the big point range of price swings on the last trading day of the month.

Trade Wisely,

Doug

Another Whipsaw Day

by

Thursday left more questions than answers with another whipsaw day, some hopeful hammer patterns just ahead of the Fed’s favored inflation number expected to rise according to consensus.  To keep traders guessing, we will follow that up with New Home Sales, Consumer Sentiment, and more Fed jaw-wagging.  Buckle up today’s data could encourage the bulls to defend support or inspire the bear to keep attacking as we head into the uncertainty of the weekend.  Big price moves are possible, so plan carefully with critical technical and price levels in the index charts at stake. 

Asian markets traded mixed during the night even as Japan’s inflation reached a 41-year high.  European markets mixed, though cautiously waiting for market-moving economic reports.  The hope hammer patterns of Thursday look to reverse with a gap down, showing ahead of the Personal Incomes and Outlay number that could change everything by the opening bell.  Plan for big point moves as the reaction may determine who wins the battle to hold or break critical support levels.

Economic Calendar

Earnings Calendar

We have a much lighter day on the Friday earnings calendar.  Notable reports include BRC, CRI, GTLS, CNK, LAMR, SSSP, TBLA, & SLCA.

News & Technicals’

Block stock rose in extended trading after the payments company reported fourth-quarter revenue and gross profit that beat Wall Street’s expectations.  The company posted a (non-adjusted) net loss of $114 million, or 19 cents per share, for the quarter. 

According to Fidelity’s analysis, retirement account balances in 401(k) plans lost nearly one-quarter of their value in 2022.  In addition, amid ongoing high inflation and economic uncertainty, nearly half of the retirees expect to outlive their savings. 

Warner Bros. Discovery reported fourth-quarter revenue that missed analysts’ estimates as the media industry contends with a soft advertising market.  However, the company, which owns HBO Max and Discovery+ streaming services, said its global direct-to-consumer streaming subscriber base increased by 1.1 million during the quarter.  In addition, more “Lord of the Rings” movies are on the way, CEO David Zaslav said. 

Fueled by NVDA earnings, the bulls tried to resume the upside rally in the day, but the attempt quickly faded into another whipsaw day that left behind some hopeful hammer patterns and yet more questions than answers.  Interestingly yesterday’s volume spike was huge, and VIX registered a substantial decline in fear despite the big ship in price.  This morning it’s all about the Personal Incomes and Outlays report, the Fed’s favored reading on inflation.  The result is likely to set the direction for the day and determine if the bulls will resume directional control of the market or if the bears will gain the upper hand heading into the weekend.  Plan for a bumpy ride with New Home Sales, Consumer Sentiment, and more Fed speak to keep traders on edge.

Trade Wisely,

Doug

Overdue

by

The Tuesday selloff was overdue, and although a bit painful, it was finally a recognition of the inflation and the resulting pressure the consumer is dealing with in putting groceries on the table.  As a result, the indexes experienced some price action damage-breaking trends and current support levels, but only the DIA suffered the technical damage of breaking its 50-day average.  Today we have a big round of earnings with the FOMC minutes later to provide some potential price volatility.  However, traders will quickly turn their attention to the Thursday GDP report, and the Feds favored PCE number on Friday.

Asian markets followed the U.S., selling off across the board overnight as New Zealand hiked rates to a 14-year high.  European markets also feel some selling pressure this morning, pulling back after recording recent record highs.  With earnings results rolling out, the U.S. futures suggest a flat to slightly bearish open with last month’s FOMC minutes release later this afternoon.  Expect the wild price swings to continue as the bulls and bears fight for control.

Economic Calendar

Earnings Calendar

Notable reports of Wednesday include BIRD, ATUS, APA, BIDU, BBWI, BMBL, CAKE, CHDN, CDE, CTRA, DVA, BROS, EBAY, ETSY, EXR, FNF, FEDP, GRMN, GIL, LMND, LCID, VAC, MTTR, MAXR, MOS, NTAP, NDLS, NVDA, OSTK, PDCE, PLAB, PXD, RXT, RCII, RGR, STLA, TDOC, TJX, UTHR, U, WFG, WING, & WWW.

News & Technicals’

The maker of Jeep and Dodge, Stellantis, post a record annual profit.  The company also announced a 4.2 billion euro dividend payout to shareholders, equating to 1.34 euros per share, subject to shareholder approval.  At the same time, the board approved a share buyback of 1.5 billion euros to be executed by the end of 2023. 

Amazon employees continued to sound off Tuesday night over the company’s recently announced return-to-office mandate.  A group of staffers spammed an internal website with comments expressing anger over the policy.  An internal Slack channel showed concerns about parenting, caregiving, and commuting. 

Sweden’s Foreign Minister Tobias Billström told CNBC Sweden, and Finland’s NATO membership was “just a matter of time,” with negotiations with ratification holdout Turkey set to resume.  Billström said Sweden had “worked to fulfill everything” it agreed to in a memorandum of understanding between the countries last summer, and Swedish membership at the NATO summit in July was the goal.  Sweden requested to join the military alliance after 200 years of non-alignment due to the Russian invasion of Ukraine.  But it is embroiled in a long-running dispute with Turkey, which holds veto power. 

Though yesterday’s selling may have been a bit painful, it was way overdue and an acknowledgment that rates are likely to rise to add pressure to an already stressed consumer.  Technically there was some damage to the DIA breaking below its 50-day average.  Still, the Tuesday decline reduced the overextended conditions in the SPY, QQQ, and IWM, only suffering from the break of support levels in price action.  Today we have a busy earnings calendar while we wait for the FOMC minutes that could provide some price volatility at the end of the day.  However, traders will quickly focus on the Thursday GDP report and the Friday PCE numbers.  Remember, one day does not make a trend, so it will be interesting to see if the bears have the energy to follow through with a downside push to test the 50-day averages in the SPY, QQQ, and IWM.  I would not expect the bulls to give up quickly, so expect the wild price swings to continue as the battle for control continues.

Trade Wisely,

Doug

Wild Daily Price Swings

by

The wild daily price swings continue as the bulls rush in to buy after the big morning gap lower, and this morning, it looks like we’re in for more overnight reversals and whipsaws.  Home depot numbers point to a weakening consumer, making for dangerous conditions with the market trying to ignore the higher-than-expected inflation.  But, of course, with emotions so high, perhaps the pending WMT report will patch up the overnight sentiment whipsawing us again.  In addition, PMI, Existing Home Sales, and a slew of earnings reports will likely keep price action challenging.

Asian markets traded mixed overnight, reacting to factory activity as Putin ups his dangerous rhetoric as the war enters its 2nd year on the 24th of this month.  As Credit Suisse continues to decline, with likely more Fed rate increases on the way, European markets began the day selling after recently notching record highs.  With a big day of earnings reports with clues to consumer strength, PMI, and Housing data on tap, plan for more gaps and whipsaws.

Economic Calendar

Earnings Calendar

We kick off this holiday-shortened trading week with a hectic earnings calendar.  Notable reports for Tuesday include ARNC, BCRX, CZR, CHK, COIN, CBRL, FANG, ELAN, ESPR, EXPD, FLR, TWNK, HD, HUN, IR, KAR, KEYS, KTOS, LZB, LPX, MDT, MELI, TAP, PANW, PSA, O, SBAC, SKT, TOL, WMT, RIG, & ZIP.

News & Technicals’

Home Depot reported its fiscal fourth-quarter earnings before the bell.  The home improvement retailer was a clear pandemic winner and has remained resilient despite inflation and consumer habits shifting.  Home Depot said it would spend an additional $1 billion to raise hourly employees’ wages.  The home improvement retailer is the latest to signal that the labor market is still tight.  Walmart, the nation’s largest private employer, recently announced raising its minimum wage to $14 an hour for store employees.

Walmart will report its earnings before the bell.  The big-box retailer will likely share its outlook for the year ahead.  Investors and economists are eager for clues about the health of the American consumer as inflation remains high. 

Western nations and Ukraine have repeatedly rejected Putin’s narrative.  However, the U.S. administration on Saturday formally concluded that Moscow had committed “crimes against humanity” during its year-long invasion of its neighbor.  Feb. 24 will mark one year since Russia mounted a large-scale invasion of Ukraine, beginning a ground war in Europe that Putin still calls a “special military operation.”

The wild daily price swings continued on Friday with a substantial gap down open, but the bulls quickly rushed in to buy the lows on relatively low volume as VIX registered declining fear.  Unfortunately, as I write this report, futures suggest yet another pre-market reversal as disappointing HD earnings hint at a weakening consumer amid higher-than-expected inflation reports.  With the DOW consolidating rage expanding to 800 points, nearly daily overnight reversals, and huge point intraday whipsaws, there is little to no edge to be had for the average retail traders.  This wild price action is a paradise for the quick in and out day trader but be warned because such times can end swiftly and painfully if the euphoric bullish assumptions suddenly shift.  With a big week of earnings and potential market-moving economic reports, expect more of the same in the days ahead.

Trade Wisely,

Doug

Hawkish Fed

by

Hawkish Fed tough talk engaged the bears on Thursday as disappointing inflation data brought the thing the market hates the most, uncertainty!  The challenging big-point whipsaws and the short-term extension of the SPY, QQQ, and IWM exacerbates the situation as we move toward a 3-day weekend.  Of course, one day does not make a trend, and I wouldn’t expect the bulls to give up easily.  However, should price support levels break, fear could quickly spike as traders run for the door to protect capital heading into the long weekend.  So expect another day of wild price swings as the drama unfolds.

Asian markets sold off across the board last night due to possible rate increases and the plunging Singapore exports.  After notching record highs, European markets trade decidedly bearish this morning as traders grapple with the prospect of Fed uncertainty.  U.S. futures also see the bears engaged this morning, pointing to a gap down open that could threaten support levels and the current bullish trends. 

Economic Calendar

Earnings Calendar

We get a break in the pace of earnings today, but we still have some market-moving reports.  Notable reports for Friday include AMCX, ABR, AN, B, CNP, & DE.

News & Technicals’

Dropbox recorded a real estate impairment of $162.5 million in the fourth quarter, bringing the markdown for the year to $175.2 million.  The company signed a record office lease for its San Francisco headquarters in 2017 and then got hit with the Covid pandemic and a market downturn.  “We were relatively quick to market with our subleasing plans, but the market has deteriorated, with many companies reducing their real estate footprint,” finance chief Tim Regan said Thursday. 

The three unmanned aerial objects that were shot down over the weekend by the U.S. military were “most likely tied to private companies, recreation or research institutions,” President Joe Biden said.  “Nothing suggests they were related to China’s spy balloon program,” he added.  The remarks came after days of mounting pressure on the White House from Democrats and Republicans in Congress to share more of what was known with the public. 

DoorDash reported better-than-expected sales for the fourth quarter and gave upbeat guidance for the current period.  As a result, the stock climbed in extended trading on Thursday.  The food delivery company said it authorized a buyback of up to $750 million of its shares.

Disappointing wholesale inflation numbers and hawkish Fed speeches encouraged the bears to engage yesterday with another huge point intraday whipsaw to keep traders guessing.  However, the DIA remained within its wide-range chop zone by the end of the day, and the current bullish trends in the SPY, QQQ and IWM held above support levels by the close of trading Thursday.  Although the price action left behind some concerning daily candle patterns, we must remember that one day does not make a trend.  With Friday being a much lighter day of economic and earnings reports, the tough-talking Fed members and uncertainty that may create could be the driving force as we slide into a 3-day weekend.  Expect the big point swings to continue on this expiration Friday with high emotions and indexes extended away from crucial moving averages.

Trade Wisely,

Doug

No News is Bad News

by
No News is Bad News

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

by

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

by
Pending CPI Report

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