4th Major Spending Bill

Spending Bill

As oil prices continue to plunge, the Senate passes the 4th major spending bill lifting the spirits of the US Futures.  The US House plans to vote on the $484 package later this week with money for small businesses, hospitals, and testing.  With a big day of earnings, reports, prepare for the volatile price action to continue.

Asian markets closed mixed but mostly higher as they monitor the slide in oil prices.  European markets are currently trading in the green across the board this morning.  After a historic drop in crude, the US Futures point to a bullish open holding onto critical price supports and current trends.  However, with nearly 150 companies reporting, traders will have to remain flexible and focused on price as anything is possible.

Economic Calendar

Earnings Calendar

On the Hump day earnings calendar, we have nearly 140 companies fessing up to quarterly results.  Notable reports include DAL, AA, T, BKR, BIIB, SAM, CSX, DFX, KMB, KMI, LRCX, LVS, DEE, ORLY, DGX, STX, SAVE,& XLNX.

Top Stories

After the bell yesterday, the Senate Passed a 484 billion relief plan that includes aid for small businesses and hospitals as well as money to expand virus testing.  The bill now heads to the House that hopes to pass the legislation by the end of the week.

Netflix saw a considerable subscriber increase when it reported earnings after the bell yesterday.  The initial reaction sent the streaming service sharply higher, but after the conference call, prices settled lower, and now the stock looks to open slightly lower than yesterday’s close. 

Home sales dropped 8% last month, and there is a worry it could get worse as many people have chosen to delist their homes as virus impacts change consumer habits.

The meltdown in oil continues as Brent falls an additional 5% with crude futures dip below $11.00 per barrel.

Technically Speaking

The last couple of days of price action has the VIX back on the rise closing back above a 45 handle, as oil continues to plunge.  Today we get a reading on oil supplies, which may continue to add selling pressure as supplies outpace demand.  However, more help is on the way as the Senate passed the 4th major spending bill to help small businesses, hospitals, including massive funds for testing.  Later today, the President plans to sign an executive order temporarily halting all immigration to slow the spread of the virus.  Legal challenges to the rule are likely. 

Although the recent pullback has raised the level of fear in the market overall, there has not been much technical damage to the index charts.  The QQQ experienced the most substantial selling on the day, but that’s not a big surprise because it was the most overextended index.  This morning even as crude oil continues to slide south, the US Futures point to a substantial gap up choosing to focus on the new 484 billion dollar relief bill that the House hopes to approve by weeks end.  We have a big round of earnings today, so expect price action to remain challenging and volatile.

Trade Wisely,

Doug

Nasty Whipsaw

After yesterday's nasty whipsaw as oil plunged into negative prices for the first time in history, a shell shocked market braces for what comes next.  Can the market hold up as businesses report the full impacts of the virus on company earnings?  Only time will tell, but traders should prepare for challenging price action and significant volatility in the weeks ahead.  As the country tries to emerge from the lockdown, one has to wonder what the new normal will look like as we wait for a possible vaccine. 

Nasty Whipsaw

Asian markets closed in the red across the board in reaction to the collapse in crude prices.  European markets are decidedly bearish this morning with the major indexes sliding south more than 2%.  US Futures point to steep losses at the open with bearish pressure seemingly growing as the morning progresses.  Hold on tight; the open is shaping up to be a bumpy one!

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have more than 100 companies reporting results.  Notable reports include KO, NFLX, CP, CB, CMA, DOV, EMR, FITB, FLR, JBLU, LMT, NAVI, PM, PLD, REV, SNAP, SIX, SYF, TXN & TRV.

Top Stories

Citing the attack of the invisible enemy, the President has decided to suspend all immigration in a move drawing criticism from some and praise from others.

Anti-lockdown protests have sprung up around the country, with many finding themselves confronted by pro-lockdown protesters. Governor's, say that its understandable everyone wants to bet back to normal but would like to see increased testing available before easing restrictions.

Yesterday oil experienced a historic event with the price dropping into negative territory.  The President is now in the market to buy 75 million barrels to top of the strategic reserve, but some analysts that suggest the price may still go lower as supply continues to surpass demand. 

Technically Speaking

Yesterday the indexes experienced a nasty intra-day whipsaw with Dow traveling nearly 1000 points throughout the day as oil price plunged into the negative on the short-term contracts.  With supplies far outpacing demand, some suggest that oil could still go lower as we wait for the delayed impacts of production cuts.  Coca-Cola reported this morning that the pandemic has hut demand for their products with the volume off by 20% so far in April.  Today we have a big round of earnings, and the futures point to the nervousness of the market currently suggesting another gap down of more than 300 points.  As I've mentioned before, this earnings season is likely to be very challenging with extreme volatility as we learn of the real business impacts of the pandemic.

 The good news thus far is that the DIA and SPY have built helpful consolidation that may well prove to hold as support in today's pullback.  If it does hold, we could see bulls step up buying the dip, but should it fail the slide south to the next level of support will damage the current trends and shake the confidence of recovery.  The QQQ continues as the strongest index, but appearing a bit overextended in the short-term a pullback to test the support of the 50-day average is not out of the question.  We should expect and plan our risk with the idea that more intra-day whipsaws and full-on overnight reversals are possible in the days and weeks ahead.

Trade Wisely,

Doug

Earnings & Crude

Earnings

The remarkable rally off the lows now faces the bulk of earnings, and we will finally see the actual company impacts of the pandemic.  It seems everyone and their dog is attempting to predict what comes next when in truth, anything is possible.   Expect significant price volatility, stay focused on price, and remember what we want to happen is not important; what current price action indicates is!  Predictions are worthless without price action confirmation.

Asian markets closed mixed but mostly lower overnight as China cuts prime loan rates.  European markets are modestly lower this morning across the board as Germany begins to reopen its economy.  Reacting to plummeting US Crude prices, the futures point to a Dow gap down of more than 400 points ahead of earnings reports.

Economic Calendar

Earnings Calendar

As we begin the new week and a ramp-up of earnings with 77 companies stepping up to report.  Notable reports include ALLY, ACC, EFX, HAL, IBM, MTB, NVR, TFC, & ZION.

Top Stories

US crude price dive over 20% due to the coronavirus crushes the demand and pulling the futures lower this morning.  Prices on the May contract for West Texas cured tanked 19%  to $14.80 per barrel and could remain under pressure for the next month, as reserves continue to grow.

The Senate is nearing a vote on a 370 billion dollar deal for small businesses that had quickly run out of money due to the virus impacts. 

As numbers begin to improve in Germany, the country will start to reopen, allowing some shops, car dealerships, etc. while hot spots around the world such as Singapore, Spain, and Russian continue to spike.

Technical Speaking

The remarkable rally that has recovered more than 50% of the virus sell-off now faces a big week of earnings reports and crude oil prices plunging.  The DIA remains under its 50- day average, but the SPY managed to close just slightly above the critical psychological level.  Sadly at the time of writing this report, US futures point to a gap down that could produce failure patterns at the 50-day average at the open.  The QQQ having surged well past its 50-average is not in jeopardy of failing this necessary technical support, but after rising more than 14% in just 9-day appears quite over-bought in the short-term.

There are those predicting that this current rally will continue with all the Federal spending and the unlimited operations of the FOMC seemingly buying up everything in sight.  However, there seems to be an equal number of those predicting that as earnings begin to reveal the actual damage of the virus that we will see a retest of market lows and maybe even new market lows!  As for me, I will avoid all the predictions, set aside my bias, and simply trade the chart.  The fact of the matter is that retail traders have little to no impact on the direction, so the best course of action is to stay focused on price action sticking to your rules and trading plan.  As we wade deeply into 2nd quarter earnings, expect volatility to remain high with enough intr-day whipsaws and overnight reversals to keep us on our toes.

Trade Wisely,

Doug

Hopeful Virus Treatment

Hopeful Virus Treatment

A hopeful virus treatment from GILD and the President presenting a 3-phase plan to begin reopening the economy has the futures hopping and popping this morning as we head into the weekend.  This morning's gap will bring the DIA and the SPY up to test their 50-day averages.   Good news for sure, but let's not forget that more than 20 million Americans are unemployed, and states are running out of funds to cover claims.  Stimulus checks have been delayed, and the small business loan program is nearly out of funds.  I guess what I'm saying is be careful, chasing this huge gap with the fear of missing out!

Asian markets rallied overnight despite a 6.8 quarterly contraction in the economy and a doubling the virus death toll sitting accounting lapses.  European markets are decidedly bullish this morning with the DAX and CAC up more than 4%.  US Futures point to a massive gap up heading into a very light day on the economic and earnings calendar. Let's party, but keep in mind next week we jump headlong in earnings next week.  Plan your risk carefully!

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a little lighter day with just 27 companies reporting results.  Notable reports include KSU, MUSA, RF, & STT.

Top Stories

China says its economy shrank by 6.8 in the first quarter by 6.8%, which is the first quarterly contraction in over 28 years.  They have also more than doubled the death toll from the virus calling it accounting lapses.  Hmm?

The President announces a 3-phase plan to reopening the economy.  However, 7-eastern states have already announced they will remain shutdown until May 15th.  Sadly the yesterday's daily death toll nearly doubled the all-time daily high, suggesting just how difficult and uncertain when things may get back to normal.

GILD says their treatment trial is showing promising results but also careful to say there is a lot of testing to go before a treatment protocol is approved and available for mass production.

Technically Speaking

The jobless in this country now total more than 20 million, states are out of unemployment money, and the small business loan program is also running out of money.  Banks slid sharply south yesterday, but the market does not seem care as the steep rally continues even as recession looms.  Due to what the government calls, glitches have delayed stimulus checks to reach the public.  I suspect we will soon hear that more stimulus programs needed and further debit spending on the way. 

Yesterday saw the daily death toll nearly double the previous daily record, but despite that, the President unveiled a 3-phase reopening plan putting states in charge of the decision.  The announcement that GILD has promising results from early-stage trials has the market leaping higher this morning even though an approved treatment is likely still more than a year away.  Back in the old days, they called that market manipulation, but today the market wants to grab on to any ray of hope choosing to ignore the longer-term impacts.  So be it, but be very careful chasing such a massive gap heading into a weekend.  Next week we dive headlong into 2nd quarter earnings so plan your risk carefully.

Trade Wisely,

Doug

Economic Numbers in Focus.

Economic Numbers

After a dismal round of economic numbers, the bears launched another attack yesterday. Still, the bulls met the challenge holding the selloff above the short-term uptrend and essential price supports.  The tech sector remains the strongest as the QQQ holds above the 50-average showing incredible tenacity amid ugly earnings results.  Now the focus turns once again the Weekly Jobless claims that so far, the market has been able to shrug off choosing to focus on the FOMC operations.  Will the same be true today?  Only time will tell!

Asian markets closed mixed overnight, recovering early losses after Australia's jobs data came in better than expected.   With Germany announcing plans to ease the countries lock down European markets cautiously rally this morning.  US futures recovered overnight loss and now point to a modestly bullish open ahead of earnings and economic reports.  Remember to stay focused on price.

Economic Calendar

Earnings Calendar

On this Thursday Earnings Calendar, we have just over 80 companies reporting results.  Notable earnings include ABT, BLK, BK, BX, DHR, DOV, HON, KEY, RAD, SKX, & TSM.

Top Stories

The total number of infections worldwide tops 2 million and over 134,000 people have died.  Singapore's health ministry reported a reemergence of the virus with 447 new infections, while Germany plans to cautiously ease the lockdown. 

The IMF warned overnight that it expects Asia to have a zero percent growth rate in 2020 and calling it the worst performance in nearly 60 years as a result of the outbreak. 

President Trump stated yesterday that the US has passed the peak of the virus growth, and those lock-down efforts have been successful in slowing the spread. That's great news, but with the death toll still rising and new hot spots emerging around the country when we can begin ending the lockdown is still unclear.

Technically Speaking

After such a steep rally in the market, yesterday's selloff amid ugly earnings and shockingly bad economic numbers was not a big surprise.  The surprise is how well the market handled the bad news with the bulls working very hard to defend price support levels and even finding the energy to rally by the end of the day.  Overnight futures traded lower, but after Australia reported better than expected jobs, numbers markets around the world began to improve.  Hopeful news that Germany plans to ease lockdown restrictions and the President saying the US has crested provided additional levity allowing the futures to recover and turn positive.  

The DIA, SPY, QQQ, and IWM all held above the short-term uptrend and critical price support levels.  The QQQ remains the technically strongest index having recovered its 50-day average with the IWM drags along behind as the weakest.  Gold and Bonds were strong yesterday as fears rose early in the day after very disappointing retail sales and housing numbers were released.  This morning US Futures point to modestly bullish open ahead Housing Starts, Jobless Claims, and the Philly Fed Survey, including several notable earnings reports.  To date, the market has been able to shrug off the historic unemployment numbers perhaps today will be the same with expectations of 5 to 6 million new claims.  Anything is possible, so stay focused and stick to your rules.

Trade Wisley,

Doug

Power of the Fed

Power of the Fed

With the US economy mostly shutdown and no certainty as to when it may begin to reopen, the indexes have displayed the power of the Fed and its multi-trillion dollar operations.  The Dow has retraced 50% of the selloff while the AMZN led QQQ has recovered more than 60% off the March lows.  The question now is, can this remarkable rally hold-up as we begin earnings and see the full impacts of the virus in the economic data?  After such a strong rally, a pullback or a lengthier consolidation would not be out of the question.  Be careful, the fear of missing out is a strong emotion that causes traders to chase and over-trade extended rallies.

Asian markets closed modestly lower across the board after the IMF warns a severe global recession on the horizon.  European markets are pulling back this morning as they weight the massive economic impacts after the IMF warning.  US Futures point to a substantial overnight reversal ahead of big bank earnings and several economic reports that may prove to be market-moving.

Trade Wisely,

Doug

Due to a computer issue the rest of the blog will not appear today. Sorry for the inconvenience.

Kickoff of 2nd Quarter Earnings

2nd Quarter Earnings

All the uncertainty about the pandemic business impacts will begin to come to light with the kickoff of 2nd quarter earnings.  With there will be companies that have benefited from the pandemic, most will likely suffer profound impacts.  Expect significant volatility, stick to your rules, and stay focused on price action.  Trying to predict and biased trading with so much uncertainty will be very dangerous.

Asian markets closed in the green across the board last night as Chinese exports fall less than expected.  European markets are flat to slightly positive this morning as they mull a lock-down exit strategy.  US Futures put on a brave face ahead of the earnings kickoff, pointing to a substantial gap up open.  Tighten your seat-belt; this could be a wild ride!

Economic Calendar

Earnings Calendar

Today we begin the 2nd quarter earnings calendar with more than 70 companies reporting.  Notable reports include JNJ, JPM, FAST, INFY, JBHT, and WFC.

Top Stories

While US officials talk about reopening the country, the UK is likely to extend the lockdown.  Cases in Germany jump by more than 2000, Singapore reported 386 new cases.  India continued its lockdown until May 3rd, with Russia hitting a new record in daily infections of 2774.  There are now nearly 2 million cases worldwide with the virus as the US quickly approaches 600,000 infections.

JPM reports this morning, but one has to wonder with such uncertainty looking forward, how the numbers can be meaningful.  The SEC has told companies not to be too concerned if their guidance changes rapidly, and some have suggested that may companies will suspend guidance altogether.

Technically Speaking

After an uncertain and choppy day of price action, the overnight futures market surges upward ahead of the 2nd quarter earnings season kickoff.  With the Fed seemingly buying up everything in sight, including junk bonds to bolster the market, it would appear they are worried about the earnings season.  While fighting the Fed is a bad idea, it's hard to imagine that company earnings could be anything other than dismal.  With there will be companies such as AMZN, WMT, KR & COST that may well benefit from the lockdown, the vast majority have suffered devastating impacts.  Expect this earnings season to be extremely volatile.  One thing for sure it won't be boring!

The current bullish short-trends are holding support levels, but the potential for big price moves add significant risk to an already very challenging market condition.  While there is tremendous hope we have seen the worst of this crisis, we can not rule out the possibility of another test lower as the real business impacts are finally revealed.  What we want to happen or what we might think will happen doesn't matter.  What matters is that we set aside our bias, focus on the price action remaining disciplined to our trading plan and rules to ride out this earnings season with success. 

Trade Wisely,

Doug

Big weekly Rally

weekly Rally

Traders shrugged off historic unemployment, choosing to bet on the massive FOMC and Federal Government stimulus programs and staging the biggest weekly Rally since the late 1970s.  The question now is, can the bulls maintain control as we enter the 2nd quarter earnings season and witness the staggering impacts to business.  Analysts estimates suggest earnings declines of 20 to 30 percent with expectations that recovery may not occur until 2021.  In actuality, the numbers won't matter nearly as much as how the market reacts to them.  Anything is possible as there is no benchmark for reference to this health crisis.

Asian markets closed mixed but mostly lower as China reported more than 100 new infections attributed to foreign travelers.  European markets are higher across the board this morning in reaction to the FOMC's new 2.3 Trillion stimulus plan.  After sliding more than 300 points in the overnight session, US Futures have bounced, trying hard to rally and shake off the worry of the pending earnings season.  Expect the extreme volatility to continue.

Economic Calendar

Earnings Calendar

This week we have the official beginning of the 2nd quarter earnings.  We start this Monday with 46 companies reporting results. 

Top Stories

Despite the rising virus infections, US Markets choose to focus on hope with the largest weekly Rally since the late 1970s.  As US infections top 550,000, the President is hoping to begin reopening the economy in May, but health officials are concerned that it is too soon with a possible vaccine still more than a year away. 

OPEC reached an agreement over the weekend to cut oil production by nearly 10 million barrels per day, which is the single largest output cut in history.  The deal could save as many as 2 million jobs in the United States. 

JPMorgan Chase said it would raise mortgage borrowing standards as the economic outlook continues to diminish due to virus impacts.  New applicants will need credit scores of at least 700 and will be required to make a 20% down payment of the home's value.

Technically Speaking

According to the T2122 indicator, we swung from extremely oversold to overbought in last week's optimistic relief rally.  As officials proclaim that the spread of the virus in the US has slowed the infections numbers swelled to more than 550,000 over the weekend with a death toll of topping more than 22,000.  The big question on everyone's mind this week, can we keep the optimistic Rally going as we begin the 2nd quarter earnings season?  To this point, the market has been able to ignore the historic unemployment numbers, but as companies start to report, it will be hard to ignore the massive economic impacts of the outbreak.  Only time will tell how the market will react, but we should prepare for a rough road ahead and the likelihood of a long, tough road to recovery.

Last week's Rally significantly improved the technical appearance of the index charts, holding higher lows and establishing at least a short-term uptrend.  Several price support levels were reclaimed with the QQQ leading the way managing to close the week just above its 200-day average.  Even with the historic oil deal, the US futures point to a substantial gap down this morning as traders and investors attempt to price stocks.  A difficult task considering there is no benchmark of reference, and no one knows how much longer this crisis could extend, making any company guidance issued nothing more than a hopeful guess.  Hold on tightly, the bumpy ride of uncertainty is likely to continue.

Trade Wisely,

Doug

Jobless Claims

Jobless

Futures are flat this morning as we wait on the next Jobless number as the virus impacts create the worst unemployment situation in the nation's history.  Heading into a 3-day Easter weekend with a CPI report, possible oil production cuts on Friday, and infection rates continuing to grow, anything is possible by Monday morning.  Plan your risk carefully as we head into the weekend.

Asian markets closed mixed but mostly modestly higher overnight.  European markets are trading slightly higher this morning, and the US Futures point to flat open ahead of the weekly jobless claims with estimates that another 5 million Americans are out of work.  We will also hear from Jerome Powell and get a reading on Consumer Sentiment, which may see a sharp decline. 

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 41 companies reporting quarterly earnings.  Notable reports include SJR.

Top Stories

All 11 sectors of the US market rose yesterday, with traders reacting to an ever so slight improvement in virus infections in New York.  However, New York now holds the title of the highest number of diseases in the entire world!  Health officials now suggest the actual death tools are 100 to 200 higher each day due to undercounts of those that died at home. 

Bernie Sanders dropped out of the Presidential race yesterday, making Joe Biden the presumptive Democratic candidate.

OPEC and allies will meet on Friday with the hope of an agreement to cut oil production as supplies continue to historic levels.  There is a possibility that some states may see gas prices fall to near $1.00 per gallon in the coming weeks.

What just a little planning can do in just one week.

Technically Speaking

 Yesterday's rally was broad-based with all 11 sectors of the market seeing gains with the oil and energy sectors leading the way.  All the major indexes challenged the resistance of Tuesday's high, but at the close, all fell just short of breaking out to new weekly highs.  The QQQ is in the best technical position of the indexes, having recovered its 200-day average with the IWM continuing to suffer the most substantial damage. 

This morning futures point to flat open with all eye focused on the jobless claims number at 8:30 AM Eastern.  Consensus estimates suggest an additional 5 million people are out of work this week but keep in mind the forecasts have missed the actual number substantially in the last 2-weeks. That's understandable because this country has never experienced this level of unemployment.  How that translates into company earnings that begin next week is anyone's guess.  Friday, we will get the latest reading on CPI, but the market will have to wait to react because of the Good Friday closure.  I wish you all a 3-day happy Easter weekend.  Stay safe, my friends.

Trade Wisely,

Doug

Schizophrenic Price Action

Schizophrenic

Yesterday a considerable gap and selloff displayed the schizophrenic nature of the current price action as the market attempts to price stocks ahead of a likely turbulent 2nd quarter earnings season.  With analysts suggesting a 2020 earnings decline from 20 to 30 percent and the US outbreak numbers hitting new highs, the uncertainty of the path forward is understandable.  Expect the volatility to continue as the administration rushes to put out another stimulus package hoping to curb the rising unemployment.

Asian markets closed flat to mostly lower overnight while European decline as hopes of the pandemic recovery fade.  US Futures continued to display volatility overnight but currently point higher open ahead of petroleum numbers and the FOMC minute release.  

Economic Calendar

Earnings Calendar

We have about 20 companies reporting quarterly earnings on this hump day.  Looking through the list, the only notable report today is PSMT.

Top Stories

A new spike in infections and the highest day of deaths the US has seen to date.  New York led the way with more than 730 deaths.  With now more than 400,000 infections and 12,800 deaths, the market gave up early gains.

The administration is moving forward as quickly with another business stimulus spending bill as we continue to hear about more and companies forced to layoff or furlough 10’s of thousands of employees. 

The Euro zone failed to reach a deal on a new stimulus plan after 16 hours of negotiations.

Technically Speaking

After a wild 2-day rally, markets sold off, giving back all of the gains huge early morning gains.  The DIA, SPY, and QQQ failed at resistance levels in the daily chart leaving behind dark cloud cover candle patterns adding more technical confusion an already messy set of charts.  Yesterday’s virus numbers hit a new daily high disappointing a market that was trying to shrug off the outbreak impacts.  The volatility of this market is not only very challenging but reflects the complete uncertainty of the earnings season set to kick off next week. 

Today we will get a reading on Petroleum supplies, and we get a glimpse at what the FOMC is thinking with the release of the minutes at 2:00 PM Eastern.  Mortgage applications reported a drop of 18% this morning, which is not all that surprising with most of the country concerned about the future of the jobs.  During the night, futures remained volatile, and what happens next is anyone’s guess. We will get another round of jobless numbers Thursday morning and will hear from Jerome Powell.  Plan your trading very carefully.

Trade Wisely,

Doug

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