Although the bears controlled the majority of Friday’s trading, the sharp end-of-day short-covering surge gave rise to some relief rally hope.  Unfortunately, the window for the bulls to relieve selling pressure could be short-lived, considering the market moving economic reports throughout the week that may favor the bears.  So, plan your risk carefully and expect price volatility to remain challenging as the possibility of recession looms. 

Asian markets mostly rallied during the night, with the tech-laden Hong Kong exchange declining.  European markets traded bullishly this morning, with the FTSE up more than 1%.  U.S. futures also point to a bullish open with a light day of economic data with AAP and CRMT reporting after the bell today. 

Economic Calendar

Earnings Calendar

We have almost 50 companies listed on the Monday earnings calendar, but most are unconfirmed.  Notable reports include AAP, CRMT, NLS, NDSN, TRANS & XPEV.

News and Technicals’

The U.S. announced the Indo-Pacific Economic Framework with Asian partners, including Australia, Japan, and the Republic of Korea.  It’s a comprehensive plan to help expand the U.S.′ “economic leadership” in the Indo-Pacific region.  Notably, the IPEF is not a free trade agreement.  Biden faces political pressure from both the left and right in the United States to avoid free trade deals.  When asked at a joint press conference with Japanese Prime Minister Fumio Kishida whether the U.S. would be prepared to defend Taiwan if attacked, Biden replied: “Yes.”  Taiwan’s foreign ministry thanked Biden for reaffirming U.S. support if Beijing invaded the island.  However, Reuters reported that China’s foreign ministry said the U.S. should not defend Taiwan’s independence.  According to federal data, an estimated 42,915 people died in motor vehicle traffic crashes in 2021, a 10.5% increase from 2020 and the highest rate since 2005.  Experts say the increase stems from a combination of factors, including reckless or distracted driving and record levels of vehicle performance and weight.  Compared to 2019, fatality rates have risen by 18%.  On Monday, U.S. Commerce Secretary Gina Raimondo and Japan Trade Minister Koichi Hagiuda discussed “cooperation in semiconductors and export control.”  Chips are integral to just about every piece of advanced electronics made, with industries from automobiles to home appliances dependent on them.  The war in Ukraine is being fought both online and offline, with hackers on each side targeting the enemy’s national infrastructure.  Over the last few weeks, major tech stocks have plummeted amid concerns of a global recession, but Sorrell believes Russia’s invasion of Ukraine could boost their revenues.  Treasury yields rose in early Monday trading, with the 10-year climbing to 2.82% and the 30-year rising to 3.02%.

Friday’s trading completed the down-trending pattern by creating lower lows in the DIA, Spy, and QQQ but surged sharply upward in the last 30 minutes of trading, raising relief rally hope for the week ahead.  Although the futures have pulled back from overnight highs, they indicate a bullish open this morning.  With the economic calendar giving us a little break from the gloomy reports of late, the bulls may have a chance to push back, relieving at least some of the selling pressure.  But, of course, the retail earnings reports could easily change the bullish mood if AAP and CRMT disappoint after the bell.  However, the window for a rally could be short-lived with the likely market-moving data for New Home Sales, Durable Goods, FOMC minutes, GDP, and Personal Income & Outlay reports throughout the week.  Traders should expect volatility to remain challengingly high.  Continue to respect overhead resistance levels, whipsaws, and pop and drop patterns if the bulls find the energy to test them.

Trade Wisley,

Doug

Prices struggled for direction on Thursday as the indexes seesawed, trying to overcome the shellshock of the punishing Wednesday reversal.  Today we get a break on the earnings and economic calendar, perhaps giving the bulls some breathing room to relieve some of the selling pressure, but traders will have to stay focused on overhead resistance.  With food, housing & energy prices continuing to rise, consumers have some tough choices ahead as the Fed works to slow the economy. 

Asian market rebounded sharply overnight, with Hong Kong leading the way, up 2.96% to close the trading week.  European markets are taking that lead, trading decidedly bullish and green across the board.  The U.S. is also looking for some selling relief, with futures pointing to a substantial gap up getting a break from earnings and economic data.  Respect overhead resistance levels and watch for whipsaws and, of course, the possible pop and drop.

Economic Calendar

Earnings Calendar

We have a very light day with less than ten confirmed reports on the Friday earnings calendar.  Notable reports include BAH, DE & FL.

News & Technicals’

After a three-day visit to South Korea beginning on Friday, Biden will travel to Tokyo on Sunday to attend a summit of the leaders of the four-nation Quadrilateral Security Dialogue, being hosted by Japan.  North Korea conducted two ICBM tests earlier this year, and an expert says tunneling activity indicates preparation for a nuclear test.  Consumers are grappling with record-high gas prices, but the surge also hurts businesses.  The national average for a gallon of gas hit a new high Thursday.  California’s statewide average is now above $6.  Russia’s invasion of Ukraine sent an already tight energy market reeling.  “We did not anticipate that transportation and freight costs would soar the way they have as fuel prices have risen to all-time highs,” Target CEO Brian Cornell said Wednesday.  According to the National Association of Realtors, sales of previously owned homes in April fell to the lowest pace since the Covid pandemic started.  We are moving back to pre-pandemic sales activity, but I expect further declines,” said Lawrence Yun, chief economist for the group.  Tight supply kept home prices higher, despite rising interest rates.  The median price of an existing home sold in April was $391,200, the highest on record and an increase of 14.8% from a year ago.  Treasury yields moved slightly higher in early Friday trading, with the 10-year rising to 2.86% and the 30-year slightly higher at  3.07%.

The Thursday price action left more questions than answers as the indexes seesawed in a choppy range, as shell-shocked investors rested after the punishing selloff on Wednesday.  However, the T2122 indicator suggests, and short-term oversold condition that a relief rally could be near, and the VIX registered a slight decline in fear.  Thankfully we have muted earnings and economic calendars today, providing some calm in what has been a week filled with bearish data.  Though we hit another national gas price record, the light news day can provide the bulls breathing room to relive some of the selling pressure as we wrap up another challenging week.

Trade Wisely,

Doug

Disappointing retail earrings revealed that the consumer might not be as healthy as all the talking heads suggested triggering a massive wave of selling on Tuesday.  The negative sentiment traveled around the world as thoughts of a worldwide recession grew.  We will now turn our attention to Jobless Claims, Philly Fed MFG Index, and Existing-Home Sales numbers as the national average gas price hit another record high.  Expect another challenging day of price action as margin calls rise and forced redemptions pile on in the days and weeks ahead.

Asian markets traded mostly lower, with Hong Kong falling 2.54% after disappointing results from Tencent.  This morning, European markets trade decidedly bearish as global markets react to inflation and the weakening consumer.  With earnings and economic data ahead, U.S. futures point to a substantial gap as selling extends into Thursday’s open. 

Economic Calendar

Earnings Calendar

We have less than 30 companies listed on the Thursday earnings calendar, with several unconfirmed.  Notable reports include KSS, BJ, AINV, AMAT, RDY, EXP, FLO, MNRO, NNOX, PANW, ROST, VFC & VIPS.

News & Technicals’

Walmart, Target, Home Depot, and Lowe’s reported quarterly results this week, and they each offered a different perspective on where and how people are spending their money.  “While we’ve experienced high levels of inflation in our international markets over the years, U.S. inflation being this high and moving so quickly, both in food and general merchandise, is unusual,” Walmart’s CEO said.  As a result, analysts and investors didn’t anticipate that Walmart and Target would take a massive hit on their profits.  However, Home Depot and Lowe’s have seen more strength among shoppers in recent weeks.  In a tweet to Martin Viecha, Tesla’s senior director of investor relations, Tesla bull Leo Koguan said the company should immediately announce that it plans to buy back $5 billion of Tesla shares this year and $10 billion next year.  Tesla shares closed down more than 6% Wednesday amid a broad market sell-off.  The company’s stock is down more than 30% this year.  When a public company uses cash to buy shares of its own on the open market, a stock buyback is a method that firms use to try to return capital to shareholders.  Cisco missed on the top line in the fiscal third quarter and issued a worse-than-expected revenue forecast for the current quarter.  Analysts at Citigroup said last month that competitors are taking networking switch market share from Cisco.  Tencent, the largest Chinese company listed in Hong Kong by market value, said Wednesday that first-quarter revenue was flat, while profit attributable to shareholders plunged by 23% from a year ago.  Fintech and business services revenue, including WeChat mobile pay, fell quarter-on-quarter for the first time since the initial shock of the pandemic and by nearly as much.  Management also noted recent supportive comments on regulation from Beijing but said implementation would take time.  Treasury yields declined in the early Thursday trading, with the 10-year falling six basis points to 2.83% and the 30-year declining to 3.01%.

All the talking heads keep telling us the consumer was strong, but the disappointing retail earnings reflect consumers changing spending habits due to inflationary pressures.  The data sparked a painful sell-off for traders and investors who bought the recent low, hoping the bottom was finally found.  Unfortunately, the realization that recession is now likely suggests we could have long summer of market declines ahead.  Adding insult to injury, we hit another record high in gas prices, with the national average hitting $4.59 a gallon.  This morning, a new Goldman Sachs report projects the national average could top $6.00 this summer!  Today we face Jobless Claims, Philly Fed Index, and Existing-Home Sales figures with the futures pointing sharply lower with sentiment declining worldwide.  So, buckle up for another hectic day.

Trade Wisely,

Doug

The relief rally extended on Tuesday with a substantial overnight gap that immodestly met with bearish actively pushing the indexes back down to filling gaps ahead of Jerome Powell’s comments.  However, the bulls found inspiration to rally back to morning highs after hearing the fed will continue to raise rates until inflation contracts.  We have a busy day or retail earnings along with  Housing and Petroleum numbers that likely keep traders guessing and price action challenging on Wednesday.

While we slept, Asian markets traded mixed but mostly higher as data revealed Japan’s economy shrank less than expected.  Likewise, European markets trade mixed this morning, searching for direction after the U.K. inflation hits a 40-year high of 9%.  Finally, disappointing results from LOW and TGT have U.S. futures pointing to a modestly bearish open with housing numbers just around the corner. 

Economic Calendar

Earnings Calendar

Wednesday’s earnings calendar remains retail themed, with about 30 companies listed through several unconfirmed.  Notable reports include LOW, ADI, BBWI, CSCO, HWKN, IBEX, SCVL, SQM, SNPS, TGT, TJX, TGI & ZIM.

News & Technicals’

Fed Chair Jerome Powell said he would back interest rate increases until prices fell back toward a healthy level.  “If that involves moving past broadly understood levels, we won’t hesitate to do that,” the central bank leader told the Wall Street Journal.  Just 31% of investors participating in the New York-based bank’s annual shareholder meeting voted in support of a $52.6 million award that was part of Dimon’s 2021 compensation package.  In the form of 1.5 million options that Dimon can exercise in 2026, the bonus was designed to keep the CEO and chairman at the helm of JPMorgan Chase for another five years.  While the so-called “say on pay” vote results are nonbinding, JPMorgan’s board said it takes investor feedback “seriously” and intended Dimon’s bonus to be a one-time event, according to a company spokesman.  Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April.  The bank does not expect China will start fully easing Covid controls before the second quarter of 2023.  On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%.  Finland and Sweden formally applied to join NATO on Wednesday marking another step toward the Western military alliance’s expansion.  Netflix is laying off around 150 employees across the company.  The eliminated positions represent less than 2% of the streamer’s 11,000 staffers, with most of the cuts happening in the U.S.  The staff reductions come less than a month after Netflix reported its first subscriber loss in a decade and forecasted future losses in the next quarter.  U.K. inflation jumps to a 40-year high of 9%, driven by food and energy costs.  A quarter of Britons have resorted to skipping meals as inflationary pressures and a food crisis conflate what Bank of England Governor Andrew Bailey recently dubbed an “apocalyptic” outlook for consumers.  Treasury yields traded flat early Wednesday, with the 10-year pricing at 2.96% and the 30-year at 3.16%.

Although the relief rally extended with a big gap, it quickly found some feisty bears pushing it back to fill gaps.  However, after the Powell speech, where he reaffirmed the FOMC’s inflation-fighting stance, the bulls found a willingness to rally the indexes back to highs of the day to deliver and other day whipsawing prices.  Unfortunately, this morning LOW and TGT delivered disappointing earnings results, and the national average gas prices hit another record high, increasing the bulls’ difficulty in following through on the Wednesday relief.  So, today we will turn our attention to the Housing starts and permits that the consensus suggests declined just slightly last month.  In addition, traders will alos want to keep an eye on Mortage Applications, Petroleum numbers, and a 20-year bond auction.  Price volatility is likely to remain high with overhead resistance levels near. 

Trade Wisely,

Doug

The price action in Monday’s market showed considerable uncertainty as the SP-500 squeaked above 4000 while the Nasdaq failed to reclaim 3000.  I assumed the uncertainty was due to the pending Retail Sales number coming out before the bell today, but the futures seem to project a very bullish result in the pre-market.  If correct, it could trigger a substantial short squeeze, but watch for a nasty pop and drop at the open if the number disappoints.  Watch those overhead resistance levels and remember Jerome Powell speaks at 2 PM eastern.

Asian markets closed green overnight, led by Hong Kong surging 3.27% as the tech volatility continues.  European markets are also in rally mode this morning, with the DAX leading the way, up more than 1.50% this morning.  However, ahead of Retail Sales, Industrial Production numbers and comments from the Jerome Powell U.S. futures point to a substantial gap up open.  Buckle up the drama is likely to spike the price volatility, so be careful jumping the gun with the fear of missing out!

Economic Calendar

Earnings Calendar

We have a lighter day on the earnings calendar with just over 70 companies listed, but many are unconfirmed.  Notable reports include WMT, AER, AGYS, TCS, HD, HUYA, JBI, JD, JMIA, KEYS, NXGN, QUIK & SE.

News & Technicals’

Home Depot on Tuesday raised its full-year outlook after reporting strong quarterly earnings, fueled by the company’s strongest first-quarter sales on record.  For 2022, Home Depot is expecting sales growth of about 3% and earnings per share growth in the mid-single digits.  This marks Ted Decker’s first quarter at the helm of the company.  Twitter estimated in a filing earlier this month that fewer than 5% of its monetizable daily active users during the first quarter were bots or spam accounts.  But Musk estimates that around 20% of the accounts on Twitter are fake or spam accounts, and he’s concerned that the number could be even higher.  “My offer was based on Twitter’s SEC filings being accurate,” Musk tweeted early Tuesday morning.  Twitter CEO Parag Agrawal laid out how the social media company fights fake and spam accounts on the platform.  The information, posted in a lengthy Twitter thread, comes just days after Elon Musk said on Twitter that he would put his $44 billion acquisition of the company “on hold” while he researches the proportion of fake and spam accounts on the platform.  Musk responded to Agrawal’s tweets with a smiling feces emoji.  He later added: “So how do advertisers know what they’re getting for their money?  This is fundamental to the financial health of Twitter.”  Turkey’s Erdogan has doubled down on his opposition to Sweden and Finland joining the NATO alliance, in a move some analysts say is aimed at gaining concessions.  NATO’s ascension to a new member state requires consensus approval from all existing members.  Turkey, which joined the alliance in 1952, is a crucial player in NATO, boasting the second-largest military in the 30-member group after the United States.  Treasury yields rose in early Tuesday trading, with the 10-climbing to 2.92% and the 30-year rising to 3.13%.

Monday’s price action displayed considerable uncertainty as the Dow chopped in a relatively wide range while the Nasdaq struggled to find direction most of the day.  However, in the last hour of the day, the SP-500 regained the 4000 by a narrow margin, while the Nasdaq failed to reclaim the 3000 level.  The U.S. futures are remarkably happy in the pre-market ahead of Retail Sales numbers after a strong showing from Home Depot raised hope of a robust consumer.  Such a move could trigger a short squeeze at the open or a nasty pop and drop if the economic data should disappoint.  No matter what happens, keep in mind the downtrend and overhead resistance levels where the feisty bears may set up defenses.  With the National Average gas prices hitting another record at $4.52 per gallon and diesel prices at $5.57, consumer spending habits are likely to change.

Trade Wisley,

Doug

On Friday, markets breathed a sigh of relief, finding some willing bullish buyers encouraging those holding short positions to take some profits heading into the weekend.  Sadly the bullish move left more questions than answers, unable to breach overhead price resistance levels.  Additionally, with the national average gas prices hitting a new record high, possible recession talk increased over the weekend.  We will kick off the week with a reading on Empire State MFG.  Data with a retail earnings focus throughout the week.  Keep a close eye on overhead resistance levels for entrenched bears and expect price volatility to remain challenging in the week ahead.

Asian markets traded mixed overnight as China’s economic numbers disappointed as lockdowns continue to weigh on the economy.  European markets trade with modest declines this morning as inflation impacts weigh on investor confidence.  U.S. futures also point to modest declines at the open, struggling to find momentum amidst the uncertainties of the path forward.

Economic Calendar

Earnings Calendar

As we kick off a new trading week, the earnings calendar has a theme of retail reports.  Notable reports Monday include ACRX, BZFD, CCSI, DAC, FTK, GAN, IPW, KALA, NU, PASG, PTE, RYAAY, SSYS, TTWO, TME, TSEM, WRBY, WEBR & WIX.

News & Technicals’

Ukraine has been unable to export grains, fertilizers, and vegetable oil, while the conflict also destroys crop fields and prevents a typical planting season.  In addition, some nations have imposed restrictions on exports.  This is the case in India, for example, which announced Saturday a ban on wheat sales “to manage the country’s overall food security.”  On Sunday, Amazon’s Jeff Bezos tweeted that inflation is most hurtful to the least affluent in the United States.  The comments from Bezos were in response to a thread in which President Joe Biden claimed the U.S. was on track to see its largest yearly deficit decline.  Bezos on Friday called out President Biden over a tweet that said taxing wealthy corporations could help lower inflation.  Former Goldman Sachs CEO Lloyd Blankfein said he believes the economy is at risk of recession.  Speaking on “Face the Nation” on CBS, Blankfein said a recession is “a very high-risk factor.”  There’s a path.  It’s a narrow path,” said Blankfein, who retired from Goldman Sachs several years ago and now holds the title of senior chairman.  The pandemic exacerbated a pilot shortage by slowing down training, hiring and creating a wave of early retirements.  Airlines offered pilots early retirements to cut labor bills during the depths of the pandemic.  The process to become airline-qualified in the U.S. is lengthy and expensive, making entry barriers high.  After disagreeing on pricing, the Irish low-cost airline terminated talks over a substantial order of Boeing 737 Max 10 jets worth tens of billions of dollars in September 2021.  O’Leary told CNBC following Ryanair’s full-year results that the company had been “very disappointed with the performance” of Boeing from a commercial perspective over the last 12 months.  Treasury yields eased slightly in early Monday trading, with the 10-year slipping to 2.91% and the 30-year dipping to 3.08%.

We finished the week with a sigh of relief as the market found a few willing buyers giving short some traders a good reason to take profits heading into the weekend.  But unfortunately, the technical picture of the index charts remains strongly bearish, with substantial resistance levels blocking the path to recovery.  Moreover, during the weekend, the talk of a likely recession increased as the insidious inflation tax continues to impact consumer spending.  The national average gas price set another new record this weekend at $4.48 per gallon, with diesel rising to $5.57, adding pressure to everything we buy, sell or do.  It will be interesting to see how this might impact the earnings performance of the retailers scheduled to report this week.  As for me, I will plan for the wild volatility to continue watching for bear attacks at or near price resistance levels.

Trade Wisley,

Doug

Unfortunately, PPI disappointed investors as the inflation improvements hyped by analysts and the financial media failed to show a meaningful change.  However, there was a silver lining in the last thirty minutes of the day as the bulls finally pushed back, giving hope that an overdue relief in the selling might begin.  With a light day on the earnings calendar, we still have to deal with the Import/Export and Consumer Sentiment reports to find out if the bulls can stay inspired to rally, so stay focused on potential whipsaws as we move toward the uncertainty of the weekend.

Overnight Asian markets rallied, with Hong Kong and the Nikkei surging upward by more than 2.50%.  European markets are also in the spirit of a relief rally, seeing green across the board this morning.  With a lighter day of earning and economic data U.S. point to a bullish open after six straight days of selling.  Expect price action to remain challenging, watching for large point whipsaws as we slide toward the uncertainty of the weekend amid all the geopolitical tensions.

Economic Calendar

Earnings Calendar

We have a much lighter day on the Friday earnings calendar with about 75 listed but a large number of them unconfirmed.  Notable reports include DTEGY, HMC, LFMD, RGF, and SDPI.

News & Technicals’

Bitcoin jumped back above $30,000 on Friday as it rebounded from levels not seen since late 2020.  Luna, the cryptocurrency associated with TerraUSD, or UST, is now worth $0 as the stablecoin has dramatically lost its $1 peg.  On top of the UST saga, crypto markets have been hit by a number of other headwinds.  Elon Musk says the Twitter deal is on hold as he waits to find out the number of fake accounts.  Twitter’s stock plummeted 18% following the announcement.  Musk announced last month that he intends to buy Twitter for $44 billion.  He’s tweeted that one of his main priorities would be to remove “spambots” from the platform.  Fed Chairman Jerome Powell cautioned Thursday that getting inflation under control won’t be easy.  “Nonetheless, we think there are pathways … for us to get there,” he said in an interview with Marketplace published Thursday.  Senior administration officials said that the Food and Drug Administration would announce specific actions to increase baby formula imports in the coming days amid a nationwide shortage.  During the first week of May, 43% of baby formula supplies were out of stock at stores across the U.S., according to Datasembly, a company that tracks retail data.  The shortage comes after Abbott Nutrition, the nation’s largest baby formula manufacturer, closed its plant in Sturgis, Michigan, amid a recall due to contamination concerns.  Four infants who consumed products from the plant were hospitalized with bacterial infections.  Two of the infants died.

NATO membership would be a historic decision for Finland, which shares a 1,300-kilometer border with Russia.  Atlantic Council’s Northern Europe director Anna Weislander says both Finland and Sweden are well prepared to meet the oft-repeated political and military threats against the move by Russian President Vladimir Putin.  The armed forces of both countries enjoy high compatibility with NATO member states, she said.  Japanese conglomerate SoftBank Group may, for the first time, spend more on share buybacks than investments through its landmark Vision Fund, according to CLSA’s Oliver Matthew.  SoftBank on Thursday posted a record $27 billion loss in its Vision Fund as tech stocks have plummeted in recent months.  Shares of SoftBank soared more than 12% on Friday but still finished the week more than 2% lower as investors globally have shunned riskier assets such as tech stocks.  Treasury yields surged higher in early Friday trading, with the 5-year up nine basis points to trade at 2.91% as the 30-year also rallied nine basis points to 3.07%. 

The bears kept up the selling pressure yesterday after the PPI disappointed investors hoping for more of an improvement.  However, in the last 30 minutes, a sharp larry began cutting the day’s losses substantially.  Futures suggest a bullish open, hoping that the Import/Export and Consumer Sentiment numbers don’t give more inspiration to the bears.  After six straight days of selling, indicators suggest we are overdue for a relief rally.  If we do trigger some short covering, remember to respect overhead resistance and downtrend levels for entrenched bears likely willing to defend. 

Trade Wisely,

Doug

Despite the analyst’s prognostication that the CPI had peeked, we learned yesterday that inflation keeps chugging along at 40-year highs bringing out the bear to set new 2022 lows by the close.  Today we get another look at the impact of inflation on producers with the PPI report.  We will also see if jobless claims declined as analysts expect before the bell.  Though bond yields are declining this morning, the national average gas price ticked higher to $4.42, increasing the consumer’s pressure which does not bode well for the consumer sentiment report expected Friday morning.

Asian markets saw red across the board, with Hong Kong leading the selloff down another 2.24%.  European markets also see nothing but red this morning, with the DAX, FTSE & CAC down more than 2%.  With another busy day of earnings and critical economic data pending, U.S. futures point to a bearish open but have recovered substantially from overnight lows.  Get ready for another day of wild price swings.

Economic Calendar

Earnings Calendar

We have a busy day on the Thursday earnings calendar, though the number of notable’s continues to decline.  Notable reports include AFRM, ACB, TAST, COMP, CEG, CYBR, DUOL, AG, HGBL, HIMX, LSF, LZ, PDFS, PHUN, POSH, RYAN, SIEGY, SIX, DTC, SQSP, TPR, TTM, TOST, UTZ & VZIO.

News & Technicals’

Tether sank to as low as 98 cents Thursday morning, according to data from CoinGecko.  It’s meant to be pegged one-to-one to the U.S. dollar.  Tether’s decline came after terraUSD, a different stablecoin, plummeted below 30 cents Wednesday.  Bitcoin continued to decline losing 2021 gains, falling as low as $26,595.52 Thursday morning, hitting its lowest level in over 16 months.  Ether’s second-biggest digital currency tanked as low as $1,789 per coin.  A growth slowdown is underway in the U.K. after the economy shrank by 0.1% in March, with economists expecting further contractions this year.  The surprise monthly contraction presents a worry for Prime Minister Boris Johnson’s government as the country’s cost-of-living crisis is yet to reach its peak.  Sterling hit a two-year low versus the U.S. dollar following the GDP data as traders digested growing uncertainty about the U.K.’s economic outlook.  NATO membership would be a historic decision for Finland, which shares a 1,300-kilometer border with Russia.  Atlantic Council’s Northern Europe director Anna Weislander says both Finland and Sweden are well prepared to meet the oft-repeated political and military threats against the move by Russian President Vladimir Putin.  The armed forces of both countries enjoy high compatibility with NATO member states, she said.  A growth slowdown is underway in the U.K. after the economy shrank by 0.1% in March, with economists expecting further contractions this year.  The surprise monthly contraction presents a worry for Prime Minister Boris Johnson’s government as the country’s cost-of-living crisis is yet to reach its peak.  Sterling hit a two-year low versus the U.S. dollar following the GDP data as traders digested growing uncertainty about the U.K.’s economic outlook.  Treasury yields fell in early Thursday trading, with the 10-year dipping to 2.84% and the 30-year declining to 2.99%.

After learning that inflation keeps chugging along at 40-year highs, we experienced another hectic day of whipsaws on Wednesday that set new 2022 lows at the close.  Though indicators suggest a substantial short-term oversold condition, the market faces another reading on inflation before today’s open to determine the level of pressure in producer prices.  We will also get a reading on the Jobless Claims that analysts project declined last week, and they are also expecting a decline in PPI.  However, futures markets don’t seem to share that confidence this morning after yesterday’s disappointment.  So, will the data continue to pile on the gloom inspiring the bears, or will it give confidence in the bulls to begin a relief rally?  We will soon find out.  The news that Findland and Sweden may apply to join NATO is another thing to keep an eye on as Russia warns of a Catastrophic conflict that could be the result.  Traders should expect the wild price action to continue with so much uncertainty.

Trade Wisley,

Doug

As we waited for the CPI number, Tuesday proved to be a rollercoaster ride of uncertainty, starting with a nasty pop and drop that made new 2022 lows while chopping all afternoon wildly.  We will soon know the result, and the question is, will it inspire the bulls or the bears?  Get past that, and we still have to deal with a PPI number on Thursday as prices at the pump hit new record highs.  So, prepare for just about anything as the drama unfolds amidst another big day of uncertain earnings results.

While we slept, Asian markets caught a modest rally with data showing their inflation heated up in April.  Likewise, European markets are in rally mode despite a substantial jump in natural gas prices as the ECB confirms rate hikes ahead.  With hopefulness, the CPI will show that inflation has peaked, U.S. futures suggest a gap up open similar to yesterday.  Will this one hold, or will we see another disappointing pop and drop?

Economic Calendar

Earnings Calendar

We have a little lighter day on the earnings calendar with under 175 companies listed.  Notable reports include DIS, AWH, BYND, BMBL, CNFR, CPNG, WATT, GPRK, DNUT, NGMS, PAAS, PAYS, PAAS, PRGO, RIVN, SONO, TAK, TM, COOK, WEN, WWW & YETI.

News & Technicals’

Investors are eyeing what could be a pivotal consumer price index report for April, anticipating that the data shows inflation has already reached its height.  Economists warn that prices could remain elevated.  The issue is how fast inflation could decline when determining how the Federal Reserve will respond with interest rate hikes.  CPI is expected to rise 0.2% in April or 8.1% on an annualized basis.  That’s compared with a 1.2% monthly increase or 8.5% gain year-over-year in March.  UST, a so-called stablcoin meant to maintain a $1 peg, was trading at less than 50 cents Wednesday.  Sister token luna dived more than 80%, as the creator said he is close to announcing a recovery plan.  According to a J.D. Power survey published Wednesday, packed planes and more expensive tickets drove down customer satisfaction with airlines over the past year for the first time in a decade.  Customer satisfaction dropped among travelers across all the ticket classes.  According to Adobe data, in March, domestic U.S. airfares were 20% higher than in 2019.  ON TUESDAY, Gas TSO of Ukraine (GTSOU) announced force majeure – unforeseeable circumstances that prevent the fulfillment of a contract – the first declaration of its kind since the Russian invasion.  From Wednesday, it will not accept through its Sokhranivka entry point, which delivers Russian gas to Europe.  TTF European natural gas prices were up more than 6.4% by around 9:15 a.m.  London time on Wednesday, according to Refinitiv data.  Lagarde was cementing market expectations that the ECB will raise its policy rate for the first time in over a decade in July to tame record-high eurozone inflation — the result of surging energy prices spilling over to other goods.  Most other central banks have already raised borrowing costs, but the ECB, which had fought too low inflation for a decade, is still pumping cash into the financial system via bond purchases.  Treasury yields pulled back again in early Wednesday trading, with the 10-year declining to 2.94% and the 30-year dipping to 3.08%.

Tuesday trading was a rollercoaster ride of uncertainty as analysts worked to convince investors that inflation peaked last month even as food and energy prices surged to new records.  National average gas prices jumped to $4.40 a gallon, and diesel increased to $5.55, punishing Americans on everything they buy, sell or do.  As a result, all eyes will be on the CPI number coming out before the bell, so although the futures indicate a hopeful outcome, expect considerable price volatility as the market reacts.  The T2122 indicator suggests that we are overdue for a relief rally; however, the bears are likely to attack if the CPI comes in hotter than expected.  On the other hand, should the CPI come in better than expected, the bulls could trigger a short squeeze rally.  There is a lot at stake with the SP-500 clinging to 4000 and the QQQ trying to hold 3000 price levels.  We also get the Petroleum Statis number and have a 10-year bond auction to keep an eye on today.  As you plan forward into Thursday, remember the PPI number will also be critical to investor sentiment.  Ready or not, here it comes!

Trade Wisely,

Doug

Inspired by selling pressure around the world, the bears continued to drive the indexes lower, pushing the SPY below 4000 and the QQQ below 3000 at the close of the day.  Today, we have another busy day of earnings data, a Fed speakers parade, and a 3-year bond auction.  Indicators suggest a short-term oversold condition, but traders will need to remain nimble with key inflation numbers coming Wednesday and Thursday.  So, plan your risk carefully with challenging price action expected in the days ahead!

Asian markets traded mostly lower as we slept, with Hong Kong extending Monday’s losses by another 1.84%.  European markets see green across the board this morning rebounding to relieve some selling pressure though the indexes remain in downtrends.  U.S. futures also look ready for a bit of relief in the selling this morning, pointing to a gap up open ahead of a busy day of earnings.  AS you plan forward, remember the CPI number coming out before the market opens on Wednesday.

Economic Calendar

Earnings Calendar

Tuesday is a busy day with nearly 250 companies listed on the earnings calendar.  Notable reports include OXY, BIRD, ARMK, BHC, SKIN, BLDR, ELY, CHH, COIN, CRON, EA, FOXA, FTCI, GFS, GMED, HL, IIVI, KGC, LI, LBTYA, MTTR, NXST, KIND, PTON, PLNT, RXT, REAL, RBLX, RKT, SOFI, SU, SWCH, SYY, TDW, TTD, U, VERX, WMG, WELL, FREE, WKHS, XL & XPEL.

News & Technicals’

According to new data from Realtor.com, the supply of homes for sale is finally showing signs of improvement.  In April, inventory was 12% lower than the year-earlier month, the smallest year-over-year decline since 2019.  The shift in supply is likely due to a slower sales pace stemming from the recent increase in mortgage rates, making expensive homes even pricier.  However, the number of active listings is still down 67% from pre-pandemic levels.  The most valuable publicly traded company, Apple, had seen its market capitalization trimmed by over $200 billion since Wednesday when the Fed raised interest rates by a half percentage point.  However, like Campbell Soup, General Mills and J.M. Smucker, Staples have outpaced Big Tech in three trading days.  Moscow last week made payments to holders of two dollar-denominated Russian sovereign bonds, maturing in 2022 and 2042 and worth a collective $650 million.  Russia has benefited from an exemption in U.S. sanctions that allows bond payments to be made on Russian sovereign debt from sources authorized by the Treasury on a case-by-case basis.  However, this exemption expires on May 25, and MSCI suggested that unless extended, it could trigger a default event when several Russian bond payments are due on May 27.  Crypto project Terra is buying billions in bitcoin to support UST, a controversial stablecoin.  Its creator Do Kwon believes bitcoin can become the “reserve currency” of the Terra ecosystem.  However, that belief is being tested as UST falls below its $1 peg.  Amazon recently fired two employees involved in the organizing effort at a Staten Island warehouse, where workers voted to join a union last month.  Tristan Dutchin and Matt Cusick, who are part of the Amazon Labor Union’s organizing committee, said they were fired by Amazon last week.  Treasury yields pulled back in early Thursday trading, with the 10-year trading at 3.02% and the 30-year declining to 3.13%.

The bears continued to drive the indexes lower Monday, with the SPY closing below 4000 and the QQQ ending the day below 3000.  The Dow set a new 2022 low by a few ticks as the IWM pushed sharply lower.  Interestingly even as the VIX rose, it seemed somewhat controlled, with the indexes largely chopping in a range most of the afternoon.  The T2122 indicator is in a short-term oversold condition suggesting a relief rally may be possible soon.  However, with a big day of earnings data and the tense geopolitical events, traders will have to stay focused on watching for intraday whipsaws.  With the CPI number out Wednesday morning, get ready for another dose of volatility that could squeeze out short traders if there is an improvement or quickly inspire the bears to keep pushing for new market lows.  So, buckle up as the wild ride continues!

Trade Wisely,

Doug