Another day and another big whipsaw as the Dow bounced back from more than a 500-point loss to squeak out a second day of gains.  Unfortunately, the SPY, QQQ, and IWM did not enjoy the same bullish result closing lower on the day though well off intraday lows.  Today we have Durable Goods, Petroleum Status, the FOMC minutes, and the potentially market-moving report from NVDA after the bell.  Remember Thursday; we have another nail bitter with a reading on GDP to keep traders on edge and price action volatile. 

Asian markets traded mixed overnight after the New Zealand central bank raised interest rates again to curb inflation.  Across the pond, European markets show modest gains this morning, trying to recover slightly from Tuesday’s selling.  As we wait on the Durable goods, report Mortgage applications continue to decline with futures retreat from overnight highs currently suggesting a lower open.  That could suddenly get better or worse as soon as the number comes out.   Buckle up for another day where anything is possible!

Economic Calendar

Earnings Calendar

We have just over 30 companies listed on the Wednesday earnings calendar with only about 20 confirmed reports.  Notable reports include NVDA, BOX, DKS, DY, ENS, EXPR, MOD, NTNX, PLAB, SPLK, VSAT, WSM & ZTO. 

News & Technicals’

Russia may now create a historic debt default.  Up until Wednesday, the U.S. Treasury Department had granted a key exemption to sanctions on Russia’s central bank that allowed it to process payments to bondholders in dollars through the U.S. and international banks on a case-by-case basis.  However, the Treasury Department’s Office of Foreign Assets Control has allowed the exemption to expire as of 12:01 a.m.  ET on Wednesday, it was announced in a bulletin Tuesday.  Adam Solowsky, a partner in the Financial Industry Group at global law firm Reed Smith, told CNBC on Friday that Moscow will likely argue that it is not in default since payment was made impossible, despite having the funds available.  According to a filing, Trian Partners, the largest shareholder of Wendy’s, is exploring a potential deal with the company.  Along with its partners, Trian owns a 19.4% stake in the burger chain.  According to the filing, the hedge fund said it was seeking a deal to “enhance shareholder value” that could include an acquisition or merger.  In addition, Georgia’s Republican Gov. Brian Kemp was projected to win his party’s nomination for reelection.  Kemp is projected to defeat ex-President Donald Trump’s preferred candidate, former Sen. David Perdue.  Kemp will face Democrat Stacey Abrams in a rematch of the gubernatorial contest she narrowly lost to him in 2018, NBC News projected.  Treasury yields little changed in early Wednesday trading, with the 10-year traded flat at 2.75% and the 30-year dipped slightly to 2.96%.

The Dow managed to squeak out a second day of gains whipsawing up from an early 500-point loss.  However, the SPY, QQQ, and IWM remained lower on the day despite the significant late-day rally.  Before the bell today, we get a reading on Durable Goods Orders that consensus estimates suggest a decline.  That should not be a surprise given the overall market condition, but the market seems to be holding its breath this morning, hoping the decline is not enough to inspire more selling!   After that, we will deal with petroleum numbers, more Fed speaks, the FOMC minutes, and a potential market-moving report from NVDA.  If that’s not enough drama to deal with, remember we have a GDP reading before the bell on Thursday.  Anything is possible, so stay focused on price action and avoid overtrading in a likely day of uncertainty and volatility.

Trade Wisely,

Doug

Although the Dow enjoyed a steady relief rally, the SPY, QQQ, and IWM struggled to maintain bullish momentum.  Facing potentially market-moving economic data the rest of the week, the bulls may have missed their chance to improve the index chart technicals.  This morning traders will turn their attention to PMI and Housing data along with another round of retail earnings reports and more comments from Jerome Powell at 12:20 PM Eastern.   As you plan forward, keep in mind the Durable Goods report before the bell that’s expected to decline and the FOMC minutes to keep things interesting.

Asian markets had a rough night of selling, seeing red across the board with possible tariff cuts on Chinese goods.  This morning, European markets also have a bearish look showing red selling across all indexes.  Ahead of earnings and economic data, U.S. futures point to a bearish open as the bear look to claw back some of Monday’s rally.  Get ready for another wild day of price action!

Economic Calendar

Earnings Calendar

The Tuesday earnings calendar has about 50 companies listed with the heavy retail focus continuing though many are unconfirmed.  Notable reports include BBY, ANF, A, CAL, CSIQ, CTRN, DSX, ESLT, INTU, NTES, JWN, WOOF, RL, SBLK, TOL, URBN, & ZEPP.

News & Technicals’

A growing number of economists and money managers sound the alarm over a possible return to1970s style stagflation as the Federal Reserve moves to tame Sky-high inflation.  According to a recent survey from BOA Global Research, about 77% of investment fund managers now say they see “ below-trend growth and above-trend inflation” as the most likely outcome for the economy over the next year.  Walmart is expanding drone deliveries across six states with the operator DroneUp, bringing its total network to 37 sites by year-end.  The big-box retailer said it would be able to deliver items like batteries and Hamburger Helper to 4 million households in parts of Arizona, Arkansas, Florida, Texas, Utah, and Virginia.  Walmart has been testing how drone deliveries could drive e-commerce growth and turn stores into a way to outmatch Amazon on speed.  A survey by PwC of more than 52,000 workers in 44 countries indicates the Great Resignation is set to continue.  Some 35% say they plan to ask their employers for a pay raise, with the pressure highest in the tech sector.  More money is the biggest motivator for a job change, yet finding fulfillment at work is “just as important,” according to PwC.  Snap will miss its revenue and adjusted earnings targets in the current quarter, CEO Evan Speigel warned on Monday in a note to employees.  The social media company will also slow hiring through the end of the year as it looks to manage expenses.  Zoom narrowly beat on the top line but sailed past estimates for earnings while also giving a better-than-expected outlook for the second quarter.  Before Monday’s earnings report, Zoom shares had lost about 85% of their value since October 2020.  The company reported five straight quarters of triple-digit revenue growth during the pandemic, but expansion is now much more challenging.  Treasury yields declined in early Tuesday trading, with the 10-year dipping to 2.81% and the 30-year trading lower to 3.02%.

Monday saw a steady rally in the Dow while the SPY, QQQ, and IWM rallied but struggled to maintain bullish momentum to squeeze out short traders.  However, with potential market-moving economic the rest of the week, the bulls may have missed their chance to improve the chart technicals as the data points ahead may favor the bears.  Consensus expects the PMI and New Home Sales to weaken, and then we have more comments coming from Jerome Powell at 12:30 PM to keep traders guessing the price volatility likely high.  Ahead of the data with more disappointing retail news from SNAP, futures look to take back a significant portion of Monday’s relief at the open.

Trade Wisley,

Doug

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