Although they had a slow start, the bulls finally returned to work, raising hopes for a relief rally and defending index price supports.  Unfortunately, we still have some questions due to the light volume if the bulls have the commitment to follow through with the technical resistance of the 50-day average above and significant price resistance.  Moreover, with light day earnings, an ECB rate decision, Powell comments, and energy reports, it could be difficult for the market to find much bullish inspiration.  Therefore, expect price action to remain challenging and markets to be sensitive to the news cycle. 

While we slept, Asian markets traded mixed though the Nikkei surged 2.31% in reaction to the Wall Street bounce.  With an ECB rate decision just around the corner, European market trade mixed but essentially flat as they wait on the decision.  U.S. futures at the time of writing this report had recovered from overnight losses suggesting a flat to modestly bullish open as we wait to hear from Jerome Powell and react to the ECB decision.  Continued relief or disappointment is at stake for the market sentiment!

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have more than 30 companies listed, with less than 20 confirmed.  Notable reports include AOUT, BILI, DOCU, FCEL, LOVE, FIZZ, RH, SWBI, ZS, & ZUMZ.

News & Technicals’

Europe was already facing a difficult and unpredictable winter regarding its energy supplies as it looked to phase out all Russian imports.  But Russian President Vladimir Putin on Wednesday threatened to stop all energy supplies to Europe completely.  The comments could mean that European nations must introduce energy rationing in winter.  Last week, Nvidia disclosed that the U.S. would require the chipmaker to get a license for future export to China for specific products to reduce the risk the Chinese military uses them.  “We believe this will not have an impact on our business operations,” William Li, founder, chairman, and CEO of Nio, said via the company’s translator during an earnings call Wednesday.  That’s according to a StreetAccount transcript.  The Nvidia Drive Orin chip has become a core part of assisted driving tech for Nio and other electric car companies in China.  The pandemic fundamentally changed how audiences consume media, leading to smaller foot traffic at movie theaters, says former Disney CEO Bob Iger.  “I don’t think movies ever return, in terms of moviegoing, to the level that they were at pre-pandemic,” the veteran media executive said during a panel at Vox Media’s Code Conference in Beverly Hills, California, Wednesday.  He noted that consumers became more comfortable with streaming services while in lockdown and grew to enjoy the content on these platforms and the flexibility of being able to choose what to watch and when.

India’s Prime Minister Narendra Modi said Wednesday that he is keen to boost ties with Russia, even as the country has become an international pariah following its invasion of Ukraine.  Modi spoke of a “special partnership” between the two countries and expressed particular interest in bolstering their cooperation on energy and coking coal.  Speaking in an online address to the Eastern Economic Forum in Vladivostok, Russia, Modi also called for “diplomacy and dialogue” to end the Ukraine war.  Fed Vice Chair Lael Brainard vowed Wednesday to press the fight against inflation that hurts lower-income Americans the most.  However, Brainard said the Fed needs to remain vigilant without committing to a specific course of action.  Bond yields held steady in early Thursday trading.

Though it took time in the morning session to get organized, the bulls finally returned work defending price supports, raising hopes of a relief rally.  However, while the rally was immensely encouraging, the volume was suspiciously light, raising questions about their commitment to follow through.  One bullish day does not make a trend, and let us not forget we still have to deal with overhead price resistance and the technical resistance of the 50-day average to get through.  Furthermore, this morning the ECB is expected to raise rates by 75 basis points to combat inflation, and they’re rapidly weakening Euro against the dollar.  Finally, we will get comments from Jerome Powell and get both natural gas and petroleum reports with a light day of earnings inspiration.  Fingers crossed, the bulls find the energy to follow through but be prepared because the bears are unlikely to give up easily.

Trade Wisely,

Doug

Although the bulls enthusiastically started the day with a relief rally in mind, the shrinking global PMI figures quickly took the wind out of their sails.  As a result, the indexes remain in a short-term oversold condition with price support levels failing and the technical damage piling on insult to injury.  Though we are overdue for some relief, we face a wave of Fed speakers today and an ECB rate decision tomorrow, followed by Jerome Powell.  Will the bulls find inspiration there, or will the rate increase fears continue to fuel the bears?  We will soon find out but expect the price action to remain challenging and volatile.

Asia markets traded mostly lower overnight as China’s trade data missed expectations.  With an ECB rate decision in sight and growing fears of recession, European markets trade in the red across the board this morning.  With little market-moving data from earnings, U.S. futures indicate a flat to slightly bullish open filled with Fed speak and the Beige Book later this afternoon.  So, fasten your seatbelts tightly and stay focused because anything is possible.

Economic Calendar

Earnings Calendar

On the midweek earnings calendar, we have about 30 companies listed with less than 20 verified reports.  Notable reports include ASO, AVAV, AEO, CASY, PLAY, GIII, GME, KFY, NIO, REVG, & VRNT.

News & Technicals’

Russian President Vladimir Putin slammed the West again on Wednesday, saying sanctions imposed on Russia for its invasion of Ukraine are a “danger” to the world.  Putin said the current global geopolitical crisis had been precipitated by the U.S.’s “slipping dominance” in global politics and economics.  He said the West had been reluctant to recognize “irreversible tectonic shifts” in international relations, particularly a pivot east.  U.S. President Joe Biden has called Putin a “war criminal.”  Google and Alphabet CEO Sundar Pichai gave more details about how he is thinking of making Google run “on fewer resources” as it faces a slew of challenges to its businesses.  Pichai said he hopes to improve efficiency by 20%.  He gave past examples of cutting down a team and merging two products into one.  Bitcoin traded below $19,000 on Wednesday, hitting its lowest level since June following a global drop in stock markets and the U.S. dollar’s continued strength.  The value of the entire cryptocurrency market also fell below $1 trillion as digital coins across the board saw a sell-off.  Policy tightening by the Fed has strengthened the U.S. dollar, which has weighed on risk assets.  Bitcoin has traded in correlation to stocks, so if equities fall, in general, so does cryptocurrency.

A recession is inevitable, says the CEO of Deutsche Bank, and Germany must cut its reliance on China.  Sewing said Russia’s invasion of Ukraine had shone a spotlight on the dangers of becoming too dependent on individual countries and regions.  “When it comes to dependencies, we also have to face the awkward question of how to deal with China,” he said.  European economies are facing an energy crisis and soaring prices over the coming months.  There have been concerns in some quarters that the increasing cost of charging an EV will disincentivize uptake among consumers.  “The cost advantage for electric vehicles versus a gasoline car is fast diminishing here in Europe, and I’m wondering to what degree that will begin to impact EV sales,” Saxo Bank’s Peter Garnry tells CNBC.  Treasury yields pull back slightly in early Wednesday trading, with the 12-month at 3.57%, the 2-year at 3.47%, the 5-year at 3.42%, the 10-year at 3.32%, and 30-year at 3.48%.

The bulls tested the waters for a relief rally only to run into the shrinking global PMI report and quickly lost the edge to the bears.  Unfortunately, the price action and technical damage continue to grow as supports give way to additional selling as the short-term oversold condition extends.  Perhaps traders extending their holiday played a part, but the slowing global economy and fears of rate increases have taken a toll on sentiment.  Today we will get a reading on International Trade followed by a wave of Fed speakers.  Keep in mind the ECB is expected to raise rates by 75 basis points tomorrow, and then we will hear from Jerome Powell.  Plan your risk carefully!

Trade Wisely,

Doug

Hot employment data continues to worry the market about aggressive Fed rate hikes.  Though the bulls triggered hopes of a relief rally yesterday, we have the Employment Situation to deal with this morning.  Analysts suggest the number could come in hot but will the bulls continue to defend yesterday’s low, or will it inspire the bears?  Traders could be thinking about an early getaway to extend the 3-day weekend, so don’t be surprised if volume quickly drops off after the data-driven volatility of the open. 

Asian markets traded mostly lower as we slept with worries about the FOMC’s next decision.  However, European markets trade decidedly bullish with cautious eyes on the U.S. jobs report.  With no earnings inspiration this morning, U.S. futures suggest a flat to slightly lower open, pensively waiting on the Employment Situation number before switching gears and heading into the long holiday weekend.  Consequently, it could be a wild morning session followed by light and choppy price action as traders get away early and extend their weekend plans. 

Economic Calendar

Earnings Calendar

Although we have about 20 companies listed on the Friday earnings calendar, only one report confirmed from GB that’s not particularly notable.

News & Technicals’

Stocks have been selling off, and bond yields have risen ahead of Friday’s August employment report, providing a critical reading of the labor market.  It is a particularly important report because it is expected to be one of the last big economic reports the Federal Reserve will consider before it raises rates at its late September meeting.  According to Dow Jones, economists expect 318,000 jobs  added in August, and the unemployment rate held steady at 3.5%.  In addition, on Thursday, a National Labor Relations Board official recommended that Amazon’s objections to a historic union election in New York be rejected.  In April, workers at Amazon’s JFK8 warehouse voted to form its first U.S. union.  Amazon has until Sept. 16 to appeal the NLRB official’s recommendations.  Starbucks on Thursday named Laxman Narasimhan as its next chief executive officer.  Narasimhan most recently served as CEO of health and hygiene company Reckitt.  He’ll join Starbucks in October, learning about the company and its reinvention plan, before assuming the top job in April.  Morgan Stanley analysts laid out an economic scenario for China if authorities do not provide enough funding and other support to stabilize the real estate market.  The analysts said Chinese stocks would plunge, GDP would slow, and unemployment would rise.  However, they said spillover from real estate to the rest of China’s economy “remains manageable so far.”  Between April 2020 and June 2021, solar panels at Amazon fulfillment centers caught fire or experienced electrical explosions at least six times.  “The rate of dangerous incidents is unacceptable and above industry averages,” an Amazon employee wrote in an internal report viewed by CNBC.  Rooftop solar is part of Amazon’s overall plan to zero emissions by 2040. 

Thursday again saw the bears dominate early trading as hot employment data continues to worry investors about aggressive rate hikes from the Fed.  However, the bulls finally staged a bit of a comeback at the end of the day, raising hopes of a relief rally.  Unfortunately, we have the Employment Situation number before the bell this morning that analysts suggest could also come in hot.  So, I guess the question is will it inspire the bears, or will the bulls stand their ground supporting yesterday’s lows?  After we pass the data-driven morning volatility, traders will begin thinking about the long weekend ahead and the uncertainty it may provide.  I don’t think we can rule out the possibility of light choppy price action or pile-on selling to reduce risk as we slide into the 3-day weekend.

Trade Wisely,

Doug

Early bullishness faded quickly on Tuesday after the JOLTS report came in hot, re-engaging the bears with the expectation of an aggressively hawkish Fed.  Yesterday added to the technical damage of index charts with the DIA, SPY, and QQQ closing the day below their 50-day moving averages.  Sadly the 9.1% inflation report out of Europe is piling on to the bearish attitude this morning and could make it difficult for the bulls to begin an overdue relief rally.  We face a lot of economic data the rest of the week as we slide toward the uncertainty of a 3-day weekend. 

Ason markets closed mixed overnight, with China’s declining factory activity adding to the worry of their slowing economy.  European markets see red across the board as they struggle with rate tightening fears after hearing their inflation rate hit 9.1%.  U.S. futures have seesawed in pre-market trading, wanting a relief rally despite the piling on of adverse economic data from here and around the world.  Expect the volatile and challenging price action to continue with earnings and economic reports just around the corner.

Economic Calendar

Earnings Calendar

The mid-week earnings calendar has a few more companies listed than Tuesday, with around 20 confirmed.  Notable reports include BF.B, COO, DBI, FIVE, MDB, OKTA, PSTG, SMTC, VEEV, & VRA.

New & Technicals’

Eurozone inflation hit a new record high in August at 9.1%.  The rate was above expectations, with a Reuters poll of economists anticipating a rate of 9%.  It is expected that gas flows via Nord Stream 1, which runs from Russia to Germany via the Baltic Sea, will be suspended from Aug. 31 through to Sept. 3.  The temporary supply halt reflects a deepening gas dispute between Russia and the European Union.  It underscores both the risk of a recession and a winter shortage.  “Europe is in full bunkering mode and taking no chances with Russian supplies heading into the winter,” said Wei Xiong, senior analyst at energy consultancy Rystad Energy.  In addition, analysts told CNBC that Iraq’s political turmoil could bring about a considerable risk to global oil markets.  “While Iraqi production is usually fairly resilient to unrest, the current political environment is extraordinarily toxic and poses a considerable risk to the oil sector,” said Fernando Ferreira, a director at Rapidan Energy Group.  Those concerns come on the heels of escalated protests in Iraq on Tuesday after powerful Shiite Muslim cleric Muqtada al-Sadr announced his resignation from politics.  EV maker BYD falls more than 12%, dragging down Hang Seng Index on Wednesday.  According to a filing, Warren Buffett’s Berkshire Hathaway trimmed its stake from 19.92% to 20.04%.  Yang Liu of Atlantis Investment says this is a “common trend,” warning “maybe we’ll see more” of such trims.  Treasury yields tick higher in early Wednesday trading, with the 12-month at 3.42%, the 2-year at 3.48%, the 5-year at 3.30%, the 10-year at 3.14%, and the 30-at 3.25%. 

Futures began the morning pushing for some gains, but after the jobs-opening report came in hot, the bears returned to work expecting an aggressive hawkish Fed.  Unfortunately, the selling created more technical damage in the index charts closing the DIA, SPY, and QQQ below their 50-day averages.  If there is a silver lining in the clouds, it would be that the T2122 indicator suggests a short-term oversold condition, and a relief rally could begin at any time.  However, the bearish data is beginning to pile on as world economies slow and inflation remains persistent.  Though I will be watching for clues of an oversold rally, the 9.1% inflation reading out of Europe has reversed early bullishness and could keep the bears engaged.  We have a lot of economic reports coming our way the rest of the week, so plan carefully and remember we also face the uncertainty of a 3-day weekend.

Trade Wisley,

Doug

Though Thursday brought us another negative GDP, sharply rising bond yields, and declining corporate profit figures, the bulls said I don’t care, get out of my way so I can buy something.  Their effort held index price support levels, and the VIX indicated fear continues to diminish.  Although the number of earnings declines sharply today, inspiration will come in from economic reports and the Jerome Powell speech from Jackson Hole at 10 AM Eastern.  With the Chairman expected to deliver a hawkish tone, how the market might react is anyone’s guess, so plan carefully and expect some wild price volatility.

Asian market mostly rises, with only Shanghai seeing a little red to close the week.  However, European markets see mostly red in a choppy session as they cautiously wait for Powell’s comments.  Likewise, U.S. futures point to a bearish open with pending economic data and all eyes on the Jackson Hole speech from the Chairman and what it might mean for the future market direction!  So, buckle up the show is about to begin!

Economic Calendar

Earnings Calendar

The number of earings drop off shrply today with only 13 listed and just 5 confrimed.  Notable reports include JKS, & SNP.

News and Technicals’

Fed Chairman Jerome Powell speaks Friday at 10 AM.  ET in a much-anticipated appearance at the Federal Reserve’s annual Jackson Hole, Wyoming, symposium.  Fed watchers do not expect a new message from the Fed chairman, just a tougher version of the central bank’s promise to slow inflation by raising interest rates.  Powell is likely to emphasize that the Fed is unlikely to quickly reverse course after it reaches an end rate, as the futures market has been expecting.  “I think we only need 100 basis points more,” Wharton business school professor Jeremy Siegel told CNBC’s “Squawk Box Asia.” “The market thinks it’s going to be a little more — 125, 130 basis points more.  My feeling is we won’t need that much because of what I see as a slowdown.”  “If you want to do it all at once, or you want to do it over a period of two to three meetings — it won’t make that much of a difference,” he said.  U.S. Federal Reserve Chair Jerome Powell is slated to speak at Jackson Hole later on Friday, where he’s likely to emphasize that the Fed will use all the firepower it needs to snuff out inflation.  U.K. energy bills to rise by 80%!  The new cap will be in effect from October 1 to the end of the year, which is expected to rise further.  The government is under pressure to announce greater support for households and a wide-ranging plan to oversee the energy supply industry through a crisis.  However, the candidates to be the new prime minister have said a comprehensive strategy needs to wait until the leadership election on Sept. 5.  A Chipotle Mexican Grill restaurant in Lansing, Michigan, became the chain’s first location to vote to unionize.  Workers at the store voted 11 to three in favor of unionizing under the International Brotherhood of Teamsters.  The win for Chipotle organizers in Michigan comes on the heels of more than 200 Starbucks cafes in the U.S. voting to unionize in the last ten months.  Treasury yields ticked moved higher in early Friday trading, with the 12-month at 3.26%, the 2-year at 3.38%, the 5-year at 3.20%, the 10-year at 3.07%, and the 30-year at 3.28%.

With a negative reading on the GDP, declining corporate profits, and mixed earnings results, the bulls said don’t care, get out of my way so I can buy something, as they defended the index chart price supports.  Can they keep up that enthusiasm while likely facing a hawkish Jerome Powell speech from Jackson Hole?  We should also remember that on Sept. 1^st, the Fed will tighten the money supply by rolling off 90 billion from their balance sheet.  So far this week, the market has largely ignored the weakening economic reports, so how they react to today’s International Trade figures, Personal Income and Outlay, Inventory data, and Consumer Sentiment is anyone’s guess.  I would, however, suggest we could see substantial price volatility around the Chairman’s speech at 10:00 AM Eastern so plan carefully.

Trade Wisley,

Doug

The bulls squeaked out a win on Wednesday, defending index price support levels in an otherwise mostly choppy day despite the declining Durable Goods and Pending Home Sales.   This morning’s uncertainty will be the latest reading on GDP and Jobless Claims before the talking heads at Jackson Hole circulate a lot of hot air.  So, expect some volatility as they put their particular spin on the market and the overall economic conditions.  We also have our most important day of earnings this week to keep us on our toes and provide inspiration to the bulls or bears.  Let’s get ready to rumble!

Asian markets rebounded while we slept, with the Hang Seng surging a whopping 3.63% by the close, even with expectations of a Hawkish Fed statement at Jackson Hole.  Likewise, European markets trade cautiously in a choppy morning session with eyes on Jackson Hole.  Nevertheless, futures point to a bullish open with a full day of talking head spin, a busy earnings calendar, and pending market-moving economic reports before the bell.  However, anything is possible by the open depending on the pre-market data’s reaction. 

Economic Calendar

Earnings Calendar

We have a more hectic day on the Thursday earnings calendar with about 60 companies listed but less than 30 confirmed.  Notable reports include ANF, AFRM, BURL, COTY, DELL, DG, DLTR, FTCH, GPS, HAIN, HIBB, MRVL, OLLI, PTON, SAFM, TITN, TD, ULTA, VMW, & WDAY.

News and Technicals’

According to an internal memo on Wednesday, Amazon is shuttering its telehealth service, known as Amazon Care.  Amazon Care launched in 2019 as a pilot program for employees in and around the company’s Seattle headquarters.  However, it’s unclear how much traction Amazon Care had gained.  Sony on Thursday raised the recommended retail price of its PlayStation 5 games console in several international markets citing the global economic environment, including high inflation.  The Japanese gaming giant said that the price hikes are effective immediately except in Japan, where they will begin on Sep. 15^th.  Sony is not raising the price of the PS5 in the U.S.  Energy consultancy Auxilione estimates the price cap, currently at £1,971 a year, could climb to as high as £6,089 next April as Britain’s cost-of-living crisis worsens.  Around one in seven working adults in the U.K. worked from home between April 28th and May 8th.  However, that number could decrease as bills surge, according to Sarah Coles, the senior personal finance analyst at Hargreaves Lansdown.  Nvidia reported second-quarter earnings that missed Wall Street expectations for revenue and earnings per share.  The disappointing report aligned with Nvidia’s preliminary earnings two weeks ago.   Nvidia said that the miss was because of lower sales of its gaming products, primarily graphics cards for PCs facing “challenging market conditions.”  Salesforce beat quarterly expectations but came short on guidance for the current quarter and the full fiscal year.  The enterprise software maker is raising prices on Slack after acquiring the team communications app last year.  Salesforce said its board approved $10 billion on the company’s first buyback program.  Treasury yields dip slightly ahead of Fed comments at Jackson Hole, with the 12-month at 3.26%, the 2-year at 3.37%, the 5-year at 3.19%, the 10-year at 3.09%, and the 30-year at 3.30%.

Despite declining Durable Goods and Pending Home Sales., the bulls won another mostly choppy day  Volume remained noticeably anemic as the bulls worked to hold price support levels in the index charts.  Although NVDA and CRM disappointed after the bell, names like ADSK and NTAP jumped higher on a mixed afternoon of earnings results.  Today begins the Jackson Hole Symposium, so expect a glut of talking heads hitting the news cycle to put their particular spin on the market and economic condition.  However, before all that hot air gets circulated, we will get a reading on GDP and Jobless Claims to add a dose of uncertainty before the open.  As you plan forward, remember we have the Fed’s favorite measure of inflation, the PCE, coming out Friday morning before the Jerome Powel comments at 10 AM Eastern.

Trade Wisley,

Doug

Although the bears came out slightly on top by the end of Tuesday trading, it was a choppy hurry-up and wait session with pending Durable Goods numbers just around the corner.  With some potential market-moving earnings reports and analyst consensus that Durable Goods and Pending Home Sales could decline, it could be a volatile morning session.  Index charts are at or near critical support levels, so much is at stake as the bulls and bears battle for control.   As you plan forward, remember that we have a GDP number before the bell Thursday.  Buckle up anything is possible!

Asian markets closed mixed but mostly lower, with the tech-heavy HSI leading the selling down 1.20%.  European markets trade flat to slightly lower this morning as global growth, and potential Fed rate action raises concerns.  Finally, with a substantial morning of potentially market-moving earnings and economic reports, U.S. futures point to a slightly lower open, but in truth, anything is possible at the open as the details are revealed.  So, prepare for some price volatility and another waiting game in the afternoon for the GDP number.

Economic Calendar

Earnings Calendar

For the Wednesday earnings calendar, we have less than 30 companies listed, most of which have been confirmed.  Notable reports include ADSK, BOX, CRM, EAT, DY, GES, IIVI, NTAP, NVDA, WOOF, SNOW, SPLK, VSCO, & WSM.

News and Technicals’

Packable, the parent company of top-ranking Amazon seller Pharmapacks, is laying off employees and ceasing operations, according to documents viewed by CNBC.  The health and beauty product retailer was the largest seller on Amazon’s third-party marketplace.  Packable is liquidating after a failed effort to go public through a special purpose acquisition company.  Nordstrom slashed its financial forecast for the entire year as the department store chain faced a glut of inventory.  The retailer’s lowered forecast came even as it reported fiscal second-quarter earnings and sales ahead of analysts’ estimates.  Xpeng’s Hong Kong-listed shares plunged more than 12% on Wednesday after the Chinese electric vehicle maker reported a wider-than-expected loss for the second quarter.  Xpeng said it expects to deliver between 29,000 and 31,000 electric vehicles in the third quarter, representing a year-over-year increase of around 13% to 20.8%.  Xpeng said it is confident that the launch of the G9 SUV in September and two new models in 2023 will help it enter a “growth cycle.”  It’s been six months since Russia began its invasion of Ukraine, an act that shocked the world and one that was almost universally condemned.  Russia was widely perceived to have been preparing to claim a quick victory in Ukraine, but hopes of swiftly overthrowing Volodymyr Zelenskyy’s pro-Western government soon evaporated.  Six months on, the invasion is now facing a long, grinding “war of attrition” that causes widespread death, destruction, and displacement in Ukraine — and is costly for Russia too.  Treasury yields ticked slightly lower in early Wednesday trading, with the 12-month at 3.24%, the 2-year at 3.29%, the 5-year at 3.16%, the 10-year at 3.04%, and the 30-year at 3.25%.

Tuesday proved to be a choppy hurry-up and wait for the Durable Goods numbers coming before the bell on Wednesday.  Although the bears won the day with all but IWM slightly lower, the volume was very light, with the VIX hovering just above the 24 handles.  Today could be an exciting day with the consensus suggesting a weakening Durable Goods number with Pending Home Sales expectations likely declining, adding to the concerns of a slowing economy.  However, we also have several potential market-moving earnings reports that will keep the bulls and bears locked in a battle near index price support levels.  Expect price volatility through the morning session but don’t be surprised if the afternoon becomes light and choppy as we wait for NVDA earnings and the pending GDP report Thursday before the bell.

Trade Wisley,

Doug

Fears of future rate hikes and the weakening economies of China and Europe emboldened hungry bears to bear current uptrends and test price support levels in the index charts.  As a result, the Treasury Yields spiked, and the U.S Dollar reached a multi-year high, further complicating foreign economic conditions.  So who will gain inspiration today with few notable earnings, PMI Composite Flash, and New Home Sales data just around the corner?  With the VIX spiking on the fear of yesterday’s selling, expect some challenging price volatility as we wait for the market-moving economic reports later this week.

With Singapore inflation hitting a 14-year high, Asian markets closed in the red across the board overnight.  European markets trade mixed this morning, with energy prices rising and the Euro at a 20-year low.  Ahead of earnings and economic data, U.S. futures look to bounce slightly after the sharp selloff on Monday that broke the recent trend in the index charts.  Plan carefully with potentially market-moving economic data coming Wednesday and Thursday.

Economic Calendar

Earnings Calendar

We have 30 companies listed on the Tuesday earnings calendar, with more than 20 confirmed to report.  Notable reports include AAP, CAL, DKS, INTU, SJM, JD, JWM, M, MDT, PYCR, TOL, & URBN.

News and Technicals’

The Euro is trading at a two-decade low of 0.9903 against the dollar; with some speculating, it could slide much lower.  However, strategists are “definitely biased towards further euro depreciation,” says a head strategist at Citi Bank.  According to analysts, China’s power cuts this year are not likely to stretch too far beyond summer, as the conditions of this year’s power crunch differ from last year’s.  This year’s crisis is a result of two factors: “abnormally hot weather” and a lack of rainfall.  Last year, power generation plants cut back on production due to high coal costs they could not offset with fixed electricity sales, and provincial governments rationed power usage to meet yearly emissions targets.  The growing risk of a “major financial accident” that causes a market capitulation later in the year could open up opportunities for investors, according to Beat Wittman, chairman, and partner at Zurich-based Porta Advisors.  Wittman argued that until central banks were forced to begin tightening this year, monetary policy and liquidity conditions had been “too loose for too long,” and policymakers, led by the U.S. Federal Reserve, were now scrambling to restore lost credibility.  Zoom’s revenue growth slowed to 8% from 12% in the year-ago quarter, a lesser result than analysts had predicted.  The video-calling software maker blamed the strong revenue miss partly on the U.S. dollar.  Ford Motor is cutting about 3,000 jobs from its global workforce, most of which are in North America.  The cuts will include 2,000 salaried positions and 1,000 agency jobs in the U.S., Canada, and India, Ford Chair Bill Ford and CEO Jim Farley.  Treasury yields drifted slightly lower in early Tuesday trading, with the 12-month at 3.21, the 2-year at 3.33%, the 5-year at 3.17%, the 10-year at 3.02%, and the 30-year at 3.23%.

Hungry bears drove index charts sharply lower Monday, breaking current uptrends and testing price support levels that mostly held.  Additionally, the U.S. Dollar surged upward yesterday as weakening economies in China and Europe spiked treasury yields raising concerns about future rate hikes.  With a few more notable earnings and economic data from PMI Composite Flash & New Home Sales to provide some inspiration, expect price volatility.  The question to be answered will it be the bulls or bears inspired, and will support levels hold or fail?  It would be wise to plan carefully with the Durable Good number Wednesday before the bell and the GDP report out Thursday morning.  As a result, it would not be out of the question to see some choppy price conditions as we wait.

Trade Wisley,

Doug

A bit of profit-taking began with the bear’s more active on Friday as the rising bond yields raised concerns to suggest the Fed may remain aggressive.  However, don’t count out the bulls just yet because by Friday’s close, the bullish trend remained intact, and price supports were not at risk of failing.  Unfortunately, the bears are showing their teeth in the premarket, so expect a bit more price volatility, and the battle to hold at price support begins.  In addition, with little on the earnings and economic calendar to inspire, markets could be more sensitive to the news cycle.

Asian markets traded mostly lower during the night as China once again surprised the market with another rate decrease just one week after the last cut.  European markets also trade in the red this morning as rate hikes fears grow with the Euro at parity with the dollar again.  With a light day of earnings and economic news, the bears seem hungry, with futures pointing to a gap-down open testing trend and price support levels.  Plan for an extra dose of price volatility this morning.

Economic Calendar

Earnings Calendar

To begin the week, we have over 30 companies listed but only 20 or so confirmed, most of them coming from small-cap names.  Notable reports include NDSN, PANW, & ZM.

News & Technicals’

China trimmed its key lending rates again on Monday, one week after it cut two interest rates in a surprise move.  The People’s bank of China trimmed its five-year loan prime rate to 4.30% from 4.45% and its one-year- prime loan rate to 3.65% from 3.70% on Monday.  Last week, the Chinese central bank lowered the one-year medium-term lending facility (MLF) loan rate for some financial institutions by ten basis points.  The U.K. faces substantial energy bill increases.  As a result, a cap on annual energy prices is set to rise to more than £3,500 this fall and over £4,000 next year, a level considered unaffordable for most households.  The current package of government support is widely viewed as inadequate, but further plans look set to be delayed until a new prime minister is elected on Sept. 5^th.  Proposals include an increase in windfall taxes on energy companies, tax cuts, a commercial bank financing package for suppliers, and the temporary nationalization of some firms.  Alibaba and Tencent executives have been focusing on cutting costs across the business, from headcount to exiting non-core businesses.  It comes after both Alibaba and Tencent posted a set of second-quarter results confirming that these once free-wheeling and high-flying behemoths are not growing anymore.  Alibaba and Tencent have felt the effects of a Covid-induced economic slowdown in China which is hitting areas from consumer spending to advertising budgets.  Officials said that South Korea and the United States began their largest joint military drills in years on Monday with a resumption of field training as the allies seek to tighten readiness over North Korea’s potential weapons tests.  The annual summertime exercises, renamed Ulchi Freedom Shield this year and scheduled to end on Sept. 1st, came after South Korean President Yoon Suk-yeol, who took office in May, vowed to “normalize” the combined exercises and boost deterrence against the North.  South Korea launched the four-day Ulchi civil defense drills on Monday, designed to boost government readiness, for the first time since the pandemic’s start.  Treasury yields ticked slightly lower early Monday, with the 12-month at 3.18%, the 2-year at 3.29%, the 5-year at 3.11%, the 10-year at 2.98%, and the 30-year at 3.22%.

Friday saw the bear’s more active, with the indexes pulling back with a morning gap down with only a modest selling pressure through the rest of the day.  However, by the close bullish trends and price supports remained intact.  Bond yields rose throughout the day on Friday, suggesting the Fed will continue to remain hawkish while the yield inversion points to a deepening recession possibility.  In addition, the rising rate of auto repossessions remains worrisome as consumers struggle with rising housing and food prices.  With a very light day on the earrings and economic calendar, the bears are showing some aggression in the premarket that may break uptrends and test support levels at the open.  As a result, expect an extra dose of price volatility but don’t expect the bulls to give up easily.  A bounce back to resistance is not out of the question.

Trade Wisley,

Doug

The bulls worked hard on Thursday amid a bit more bearish activity due to economic data supporting a hawkish Fed at the next meeting.  With a light day on both the earnings and economic calendar today, the growing inflationary issues in Europe may drive the price action.  Though the bullish trend remains intact, we may want to keep an eye on support levels if the bears start showing their teeth.  I would not expect the bulls to give up easily, but if trends or support begin to falter, it could inspire a sharper profit-taking sell-off due to the extreme index extension.  As this bull/bear battle at price resistance grows, expect price volatility to become more challenging.

Asian market closed Friday mixed and primarily flat as a heat wave in China complicates an already challenged economy.  European markets see red across the board this morning after economic data shows a worsening inflation problem.  Finally, with a light day of earnings and economic reports, U.S. futures point to a bearish open in reaction to the deteriorating world economic conditions.

Economic Calendar

Earnings Calendar

We have a very light day on the Friday calendar with less than 15 companies confirmed, most of which are small caps.  Notable reports include BKE, DE, FL, & VIPS.

News & Technicals’

After a sudden sell-off, Bitcoin is trading under $22,000, a more than three-week low.  Ether, Binance Coin, Cardano, and Solana all fell simultaneously.  The reason for the drop was not immediately apparent.  The filing shows that Cohen’s RC Ventures dumped its stock on Tuesday and Wednesday at a range of prices between $18.68 per share and $29.22 per share.  The firm also sold its call options.  Cohen originally purchased his Bed Bath & Beyond shares at an average of roughly $15.34 per share.  U.K. inflation jumped to a 40-year high of 10.1% in July as food and energy costs continued to soar, exacerbating the country’s cost of living crisis.  The Bank of England expects consumer price inflation to top 13.3% in October.  The country’s average energy bills (set via a price cap) are expected to rise sharply in the fourth quarter to eventually exceed an annual £4,266 ($5,170) in early 2023.  Germany’s economy stagnated in the second quarter as soaring energy prices and the pandemic and supply disruptions caused a gloomy outlook for Europe’s largest economy, according to its finance ministry.  The office said that energy prices were up 105% compared with July 2021, due mainly to higher prices for natural gas and electricity.   China is caught in a devastating heatwave that could seriously impact its economy, according to a chief economist at Hang Seng Bank China.  The heatwave “is a quite dire situation,” Dan Wang told CNBC’s “Squawk Box Asia” on Thursday, adding it probably could last for the next “two to three months easily.”   “It will affect those big energy-intensive industries, and it will have[a] knock-on effect throughout the economy and even the global supply chain,” she said.  Starbucks Chief Operating Officer John Culver is departing the company after two decades with the coffee chain.  His exit comes in the middle of a broader executive reshuffling at Starbucks.  The company will eliminate the role of the COO, instead shifting many of its responsibilities to its head of strategy and transformation.  Morgan Stanley cuts Meta price target, citing declining engagement and lower monetization from reels.  Treasury yields were little changed in early Friday trading, with the 12-month at 3.21%, the 2-year at 3.25%, the 5-year at 3.07%, the 10-year at 2.92%, and the 30-year at 3.17%.

Though the bears showed a little activity on Thursday, the bulls work hard to hold their ground, ignoring the economic reports likely to keep the Fed aggressively hawkish.  However, the details of the slowing world economy have bears showing their teeth this morning.  The ECB was slow to react to the rising inflation and, consequently, produced the highest PPI number on record while the U.K. had a 10.1% inflation rate!  Perhaps we need to embrace the aggressiveness of the Fed, considering the deficit spending from Congress, lest we may suffer similar consequences here in the United States.  With a very light day on the earnings and economic calendars, the compounding world economic issue could drive the days’ price action.   The bullish trends continue to hold but watch for the possibility of aggressive bear attacks if supports begin to fail.  However, don’t expect the bulls to give up easily, so plan for some price volatility as the battle at resistance ensues.

Trade Wisley,

Doug