Huge Point Whipsaws

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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

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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

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Talk of a New Bull Market

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

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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

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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

Relentless Push Continued

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Relentless Push Continued

Although there appeared to be a little profit-taking into Friday’s close, the bull’s relentless push continued struggling against index price resistance levels.  Last week every selloff inspired the bulls the buy, as even disappointing earnings gaps were quickly bought up as the VIX fear gauge continued to decline.  With we see more of the same with the bears stirring about this morning, perhaps window dressing the month end?  Or, will bears show their teeth, relieving some of the overbought conditions with an FOMC rate hike just around the corner?  We will soon find out with a huge week of earnings events to keep emotions and price volatility high!

Asian markets started Monday’s session higher but finished the day mixed, even as China’s outlook improves.  European indexes only see red this morning with the uncertainty of the future of central bank rate decisions.  With a week of earnings and economic calendar events U.S. points to a bearish opening as we slide into the end of a bullish January run.  Plan carefully and expect some wild price gyrations this week, with earnings speculation creating the high drama.

Economic Calendar

Earnings Calendar

Notable reports for Monday include ARE, CADE, BEN, GEHC, GGG, HP, JJSF, NXPI, PHG, PCH, SOFI, & WHR.

News & Technicals’

Automobile giants Renault and Nissan have agreed to a sweeping restructure of their decades-long alliance since 1999.  As part of the overhaul, Renault will transfer 28.4% of Nissan shares into a French trust. 

Most Adani Group companies continued to see sharp losses for a third consecutive trading session as the company released its rebuttal on short seller firm Hindenburg’s report.  Adani Enterprises’ stock price remains more than 25% lower in the month to date, Refinitiv data showed.  Founder and chairman Gautam Adani’s net worth fell $27.9 billion in the year to date, according to the Bloomberg Billionaires index. 

Dutch health technology company Philips said it would scrap 6,000 jobs on Monday to restore its profitability.  Chief Executive Officer Roy Jakobs told CNBC it was a “necessary intervention to help us to become competitive and lean in the way we go forward in the market.”  The company also says a new strategy simplified organization should improve patient safety and quality and supply chain reliability.

The bull’s relentless push continued on Friday but struggled with price resistance levels softening with perhaps some profit-taking heading into the weekend.  As we finish up the last couple of days of January and move into February, expect a lot of price volatility as the pace of earnings quickens with some big tech names that can move the market.  We will also face a busy economic calendar that includes an FOMC rate decision on Wednesday afternoon to keep traders and investors guessing what comes next.  Unfortunately, the bears seem to be stirring this morning.  Still, will the early selling continue to inspire the bulls to buy as we have experienced lately, or will the bears finally relieve some of the overbought market conditions with the uncertainty of the FOMC? 

Trade Wisely,

Doug

Relentless Bulls

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Relentless Bulls

Gloomy tech forecasts were no match for the relentless bulls determined to buy with no fear of price resistance, recession, bearish economic data, recession, and a pending Fed rate decision.  Today we have several potential market-moving economic reports before the bell and busy-day earnings reports likely to keep the price volatility high.  Simply said, anything is possible at today’s opening, depending on how the market reacts to the data.  So, prepare for fast price action, whipsaws, and possible reversals.

While we slept, Asian markets traded mixes as China accused the U.S. of economic sabotage as Hong Kong surged more than 2%.  This morning, European markets trade with modest bullishness as they wait on pending data.  Likewise, U.S. futures seem to be taking a wait-and-see approach heading into a big morning of data through the Nasdaq pushing for a sharply positive open. 

Economic Calendar

Earnings Calendar

The Thursday earnings calendar has over 80 companies listed and expected to report today.  Notable reports include ALK, AAL, ADM, BX, CNX, CMCSA, DOW, EMN, FHI, INTC, JBLU, KLAC, LHX, MMC, MA, MKC, NOK, NOC< NUE, OLN, OSK, ROK, SAP, SHP, SHW, LUV, STM, TROW, TSCO, X, V, VLO, WY & XRX.

News & Technicals’

Tesla just reported fourth-quarter earnings for 2022, including revenue of $24.32 billion and earnings per share of $1.19.  Automotive revenue amounted to $21.3 billion in the three months ending 2022 and included $324 million of deferred revenue related to the company’s driver assistance systems.  Automotive gross margins came in at 25.9%, the lowest figure in the last five quarters.

Fourth-quarter gross domestic product will be released at 8:30 a.m. ET on Thursday.  It is expected to show that the economy slowed but still grew at a solid 2.8% pace in the fourth quarter over the third, according to Dow Jones.  Economists are looking for signals of how weak or strong the consumer was at the end of 2022 since that could signal whether the U.S. will fall into a recession soon. 

Chevron to begin a whopping $75 billion stock buyback and a significant dividend increase.  The company said in a press release that the buyback program would become effective on April 1, with no expiration date.  In addition, the dividend hike increases Chevron’s per share payout to $1.51 per share from $1.42 and will be payable on March 10.  Chevron’s market cap was roughly $350 billion on Wednesday’s market close, meaning that the buyback would represent more than 20% of the company’s stock at current prices.

Disappointing tech forecasts that woke up the bears were no match for the relentless bulls showing no fear and recovering all the early selling to post slight gains at the close.  The T2122 indicator continues to signal a short-term overbought condition with a morning filled with market-moving economic reports.  We also have a very big day of earnings reports to provide us with considerable price volatility as the QQQ and SPY work to break the long-term bearish trend resistance.  I think it’s fair to say anything is possible today, then keep in mind we have the Fed’s favored inflation number before Friday’s bell as we move toward their next rate decision.

Trade Wisely,

Doug

Bulls Fought Back

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Tuesday got off to a rough start, but the bulls fought back despite the very anemic volume, likely due to the after-the-bell report from MSFT.  The company enjoyed a sharp initial rally, but the gloomy outlook MSFT forecasts for the future now indicate their Wednesday will be lower.  Today we have a big day of earnings that includes TSLA after the bell, so plan for price volatility.  It may also be wise to consider the possible market-moving economic report coming Thursday morning as you plan your risk.

During the night, Asian markets mostly rallied as Australia struggled with higher inflation reports.  On the other hand, European markets see modest declines across the board this morning.  With a big day of earnings ahead, U.S. futures point to a gap down open due to MSFT’s disappointing forecast.  Expect the big point moves to continue as the market reacts to all the data.

Economic Calendar

Earnings Calendar

We have nearly 70 companies listed this Wednesday expected to report.  Notable reports include ABT, ASML, T, ADP, AXTA, BA, BOOT, CCI, CSX, ETD, FLEX, FCX, GD, HESS, IBM, KMB, LRCX, LVS, LC, LEVI, NEE, NEP, NSC, PKG, PGR, RJF, STX, NOW, SLG, STLD, TSLA, TXT, USB, URI, WFG & WOLF.

News & Technicals’

Microsoft sees a gloomy tech environment will continue despite betting top-line estimates.  Microsoft sees Azure growth slowing down in the following quarters as customers try to save money on their existing applications running in the cloud.  In addition, the company’s finance leader said a slowdown in new business in December would continue across Microsoft’s commercial business. 

Slowing inflation hasn’t relieved consumers yet because prices are still well above where they were a year ago.  Commodity and freight costs are falling but won’t immediately trickle down to consumers in part due to supplier contracts and some companies’ desire to boost profit margins.  But retailers are fighting back by pushing their private label products, which could win over consumers with cheaper prices and force manufacturers to offer better deals.

Dutch chip equipment maker ASML forecasts a 25% jump in 2023 revenue.  ASML CEO Wennink said China accounted for around 15% of sales in 2022 and will be at a “similar” amount this year, despite U.S. chip export restrictions.  For the fourth quarter of 2022, ASML’s net sales rose more than 29% to 6.4 billion euros ($7 billion).  For the full year, net sales came in at 21.1 billion euros, a more than 13% year-on-year rise.

After a rough start on Tuesday, the bulls fought back despite the very anemic volume with the uncertainty of the pending MSFT earnings after the bell.  MSFT beat top-line estimates as cloud sales soared, but in the conference call, the company forecasts challenging times looking forward.  Sharp after the bell, gains quickly diminished, and the stock is indicated lower this morning.  Unfortunately, yesterday’s bullishness fell short of breaking through the long-term bear trend, which may create another lower high due to the first disappointing big tech report.  Though we have a light day on the economic calendar, many will be thinking about the slew of reports on Thursday morning that can potentially move the market dramatically, so plan your risk carefully.  In addition, earnings numbers ramp up today, so also prepare for substantial price volatility as we wait on TSLA’s report after the bell.

Trade Wisely,

Doug

Rushed into Big Tech Names

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Investors rushed into big tech names on Monday as bulls surged higher, speculating earnings will support the higher prices.  Though the SPY and QQQ were the big winners of the day, they fell just short of breaking the longer-term bear trend established in early 2022.  With a big day of earnings that includes a report from MSFT after the bell, big point moves are possible as the indexes swing widely between substantial support and resistance levels.  Plan carefully!

While Asian observes Lunar holiday celebrations, markets rise as the global surge higher continues.  However, European markets trade modestly bearish this morning despite a better-than-expected PMI reading.  With U.S. markets in a short-term overbought condition, U.S. futures point to modest declines with a big day of earnings data to inspire the bulls or bears depending on the results.  Plan for price volatility.

Economic Calendar

Earnings Calendar

The pace of earnings picks up today, with more than 30 companies listed.  Notable reports include MMM, AGYS, CNI, COF, DHR, DHI, FFIV, GE, HAL, ISRG, IVZ, JNJ, LMT, MSFT, NAVI, ONB, PCAR, RTX, TXN, TRV, UNP, VBTX, VZ, WSBC & WAL.

News & Technicals’

The FBI said it was “able to confirm” that Lazarus Group and APT38, two hacking groups linked to North Korea, were responsible for the attack on the so-called Horizon bridge last year.  Hackers stole $100 million worth of cryptocurrencies in the attack on the Horizon bridge, which traders use to swap digital tokens between different blockchain networks.  The FBI also said that this month, the North Korean cyber actors used the Railgun system to launder over $60 million worth of the token ether stolen during the June 2022 heist.

U.S. markets are underperforming global stock markets, but analysts expect more of the same.  As of Monday morning, the Russell 3000 benchmark for the entire U.S. stock market was up around 4.85% over the three months since late October.  By contrast, the MSCI World ex-U.S. index had surged more than 19%, while the pan-European Stoxx 600 was up more than 12%. 

Google CEO Sundar Pichai and executive leaders addressed employee questions at a town hall meeting on Monday after last week’s job cuts.  “I understand you are worried about what comes next for your work,” Pichai said.  Pichai said executive bonuses are getting cut.

The bulls charged forward on Monday and extended the T2122 indicator into another short-term overbought condition as investors rushed into big tech names, speculating on positive earnings reports as layoffs continue.  While the SPY and QQQ surged to higher highs in the recent bullish trend, they fell just short of breaking the longer-term bear trend that began in 2022.  This morning we face a significant number of earning reports along with a PMI reading that consensus expects to continue to show economic contraction.  Price volatility is likely as the data rolls out, and with MSFT reporting after the bell, a substantial gap Wednesday at the open is not out of the range of possibilities.  Plan carefully with big point index moves possible between index support and resistance levels.

Trade Wisely,

Doug

Bullish Sentiment Faded

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The recent bullish sentiment faded in uncertainty over the last couple of days, with the bear attack creating technical damage in the index charts.  However, the technical damage is not yet severe, but the drip, drip of reminders that our economy is slowing is making it difficult for investors to matain positive sentiment.  Today we face an Existing Home Sales report, a lighter day of earnings, and more Fed speak.  Will the data continue to inspire the bears, or will bulls get a chance to relieve some of the selling pressure as we head into the weekend? 

Asian markets closed Friday in the green across the board, even as Japan’s inflation rises to 1981 high.  European markets trade modestly bullish this morning as they ponder the next Fed rate action.  With a lighter day of market-moving data, U.S. futures suggest a mixed open as investors attempt to gauge the impacts of the big tech reports starting next week.

Economic Calendar

Earnings Calendar

We have a lighter day of earnings reports but keep in mind the numbers ramp up significantly in the weeks ahead as big tech reports begin.  Notable reports today include ALLY, ERIC, HBAN, RF, SLB, & STT.

News & Technicals’

Genesis Trading filed for bankruptcy protection after suffering crippling losses from the collapses of FTX and hedge fund Three Arrows Capital.  Genesis is a part of Barry Silbert’s Digital Currency Group, which has seen mounting problems recently.  Some of Genesis’ largest clients include Circle, which operates stablecoin USD Coin, and Gemini, which the Winklevoss twins back.

Google’s parent Alphabet is eliminating about 12,000 jobs, or 6% of its workforce, the company said Friday, in the latest cuts to shake the technology sector.  Alphabet’s CEO said in a staff memo shared with Reuters that the company had rapidly expanded headcount in recent years “for a different economic reality than the one we face today.”  The job losses affect teams across the company, including recruiting and some corporate functions, as well as some engineering and product teams. 

The IMF’s Kristalina Georgieva said headline inflation was heading down, and China’s reopening was expected to boost global growth.  The IMF forecasts China’s economy will outpace global growth by 2.7% this year, at 4.4%, after slipping below it for the first time in four decades last year.  She also highlighted ongoing risks, including China’s growth resulting in higher oil and gas prices and the “horrible” war in Ukraine harming global confidence, particularly in Europe. 

Although the bears won the battle Thursday, the selling was not strong enough to compound technical damage, but the recent bullish sentiment faded into uncertainty.  While the NFLX subscriber gains shined a light of hope for better tech earnings, the GOOGL announcement of 12,000 job losses will likely keep the cloud cover of uncertainty heading into next weeks reports.  Today we will have to address Existing Home Sales that the consensus expects to decline, and more Fed speak as we slide into the weekend.  We also have a lighter day of notable earnings, which might give the bulls a path to bounce back a bit, relieving some of the selling pressure.  However, with the highly anticipated giant tech reports beginning next week, plan for another week of wild price swings.

Trade Wisley,

Doug