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

The hopes of a relief rally began in the last 30 minutes of trading on Friday si facing a sharp reversal at the open today.  Although we have a light earnings calendar to begin the week, we face another inflation reading with CPI coming out Wednesday and PPI on Thursday.  It will also be a hectic week of earnings reports that have not been much help to the bearish sentiment as the nasty tax of inflation changes consumer habits.  Though we are due relief, the bear market conditions will likely keep volatility high and price action challenging, so plan your risk carefully!

Asian markets have had a rough night, with the Hong Kong falling 3.81%, followed by the Nikkei down 2,53%, even as China’s trade data came in better than expected.  European markets traded decidedly bearish this morning, seeing nothing but red across the board as the impacts of inflation grow.  Finally, with a big day of earnings data, the U.S. futures point to a substantial gap, likely to set a new 2022 low as bear sentiment grows. 

Economic Calendar

Earnings Calendar

We have another busy day on the earnings calendar to begin a new trading week.  Notable reports include DDD, ACM, AMC, BNTX, BLNK, APRN, BRMK, COTY, CURLF, DUK, ELAN, ENR, GERN, GSL, GDRX, GRPN, IAC, LMND, RIDE, MGY, MBI, MCHP, NVAX, PLTR, PRTY, PETS, PUBM, RNG, SPG, SDC, TDUP, TRUE, TSN, UPST, VECO, VRM, WOW, XPO, & ZNGA.

News & Technicals’

Uber will slash spending on marketing and incentives and treat hiring as a “privilege,” CEO Dara Khosrowshahi said in an email to staff on Sunday.  “It’s clear that the market is experiencing a seismic shift, and we need to react accordingly,” Khosrowshahi said.  He added that Uber will now focus on achieving profitability on a free cash flow basis rather than adjusted EBITDA.  Russia commemorates one of the most important events on its national calendar — Victory Day — marking the Soviet Union’s victory over Nazi Germany in World War II.  Putin claimed Russia’s invasion of Ukraine had been necessary because the West was “preparing for the invasion of our land, including Crimea.”  Evoking that victory in his speech Monday, Putin urged the Russian army toward victory in Ukraine, saying there was a duty to remember those who defeated Nazism.  Bitcoin continued to slide after a broader stock sell-off in the U.S. last week sent the cryptocurrency market into a frenzy and prompted the cryptocurrency to plummet by roughly 10%.  The world’s largest digital currency by market value was lower by about 3% at 33,594.50 early Monday, according to data from Coindesk.  The drop comes after the blue-chip Dow Jones Industrial Average lost more than 1,000 points on Thursday and the Nasdaq fell 5%, losses that marked the worst single-day drops since 2020.  Disney’s theme parks have rebounded from massive pandemic-related operating losses in a little over a year.  While not all international theme parks are fully reopened, domestic parks have seen strong ticket sales and foot traffic thanks to new rides and park expansions.  Tech innovations have made the theme park experience and operations smoother for guests and cast members.  Disney reports quarterly results Wednesday.  Treasury yields continue to rise in early Monday trading, with the 5-year pricing at 3.09%, the 10-year surging to 3.9%, and the 30-year jumping to 3.29%. 

Although we have caught a slight relief in the selling during the last 30 minutes of trading Friday, hopes of a follow-through look rather dim this morning.  As painful as this may seem, this process is necessary to bring prices back into balance after the money printing party of the last several years.  The T2122 indicator suggests we are in an oversold condition, but with prices continuing to rise, the consumer is struggling with the insidious tax of inflation.  Though indexes are down into bear market teratory, we may have more selling in the coming months, with the SP-500 still 59% above the historical average.  The good news is that when this is over, there will be great stocks at bargain prices because Mr. Market tends to overcorrect as bearish sentiment piles on in the same way we overextend when over-exuberance is at work.  Don’t fight the trend; move with it and know that better times follow.

Trade Wisely,

Doug

The bears rejected Wednesday’s exuberant rally in a punishing whipsaw sending indexes back for another test of 2022 market lows.  So while hopes were high for a relief rally, traders and investors have to worry about holding market lows as support!   Analysts expect growth in the pending Employment Situation report, which, if true, could help inspire the bulls to defend.  However, a miss could make for another challenging day of selling.  Whatever occurs, expect price action to remain challenging as we slide into the uncertainty of the weekend.

Asia market traded mixed but mostly lower overnight, with the Hang Seng leading the way, down 3.81% at the close.  This morning, European markets are primarily bearish, a day after the BOE raised interest rates.   Ahead of earnings and the Employment Situation report, U.S. futures point to modest declines at the open pensive that jobs growth holds strong as we head into the weekend.

Economic Calendar

Earnings Calendar

We have about 120 companies listed on the Friday earnings calendar, with a sizeable unconfirmed number.  Notable reports include ADDYY, AXL, ABR, CI, SSP, FLR, IMGN, FWONK, NRG, RUTH, SPB, VST & WPRT.

News & Technicals’

Bitcoin cratered on Thursday as a significant stock sell-off in the U.S. spooked the cryptocurrency market.  As a result, around $129 billion of value was wiped off the cryptocurrency market in 24 hours as of 4:03 a.m.  ET, according to data from CoinMarketCap.  The selling of cryptocurrency was sparked by a painful day on Wall Street where the Dow Jones Industrial Average lost more than 1,000 points on Thursday, marking its worst single-day drop since 2020.  Customers reserving a Lucid Air in June or later will pay 10% to 12% more for their vehicles.  Lucid said it would honor current pricing for all existing reservations and any new reservations made before May.  Lucid maintained its previous full-year production guidance.  The eurozone faces concurrent economic shocks from the war in Ukraine, a surge in food and energy prices exacerbated by the conflict, and a supply shock from China’s zero-Covid policy.  Stefan Hartung, CEO of German engineering and technology giant Bosch, told CNBC that the company sees “a big recession in the making.”  Russian President Vladimir Putin could look to declare some victory in — or an even bigger assault on — Ukraine around May 9.  May 9 is “Victory Day” in Russia, marking the anniversary of the then-Soviet Union’s defeat of Nazi Germany in World War II.  A number of geopolitical analysts believe Putin will use the occasion to make a major announcement relating to the Ukraine war.  According to state media, Chinese President Xi Jinping headed a meeting of top leaders on Thursday that emphasized the country should stick to its “dynamic zero-Covid” policy and warned that economic consequences would follow if it didn’t.  Treasury yields rise slightly in early Friday trading, with the 10-year ticking up to 3.07% and the 30-year trading at 3.15%.

After an exuberant Wednesday rally, the reality of the current market conditions got the bears back to work, rejecting overhead resistance levels with a punishing whipsaw.  Yesterday everyone was hoping the relief rally could follow through for a second day, but now investors have to hope the recent market lows hold as support!  Unfortunately, the uncertainty is not just a U.S. market problem with significant concerns in Japan, China, Europe, Ukraine & Russian economies, to name a few.  This morning will turn our attention to the Employment Situation Report; the consensus expects to see job growth!  Fingers crossed, analysts are right because another disappointing report could create another day of selling.  No matter what happens, I expect price action to remain very challenging as we move toward the uncertainty of the weekend.

Trade Wisely,

Doug

As Jerome Powell took the notion of a 75 basis point increase off the table, the bull triggered a massive short squeeze rally as indexes surged to test price and technical resistance levels.  However, I would be careful not to count the bear out if the overall downtrend remains intact.  Unfortunately, the significant factors in the calculation of inflation, food, housing, and energy also surge higher on Wednesday.  With a massive day of earnings, expect price volatility to remain challenging in the days ahead.

Asian markets closed mixed overnight in a choppy session after the Fed rate increase.  However, European markets see only bullishness in reaction to the FOMC decision, and now the focus turns to the pending Bank of England decision.  Ahead of a busy earning day, the U.S. futures point to a slightly bearish open as bond yields bounce higher in early trading.

Economic Calendar

Earnings Calendar

Thursday will be the busiest day of the week on the earnings calendar as we near 400 companies expected to report.  Notable reports include ACIW, AL, APD, AMCX, BUD, APO, MT, AAWW, BLL, BDX, SQ, CAH, CHUY, CLNE, NET, COP, ED, CRSR, CROX, DDOG, DVA, D, DASH, DBX, EGLE, EOG, FND, FNKO, GCI, GOGO, GFI, GPRO, HAIN, HBI, HUBS, HII, ILMN, ICE, K, KTOS, TREE, LYV, LCID, MMP, MAIN, VAC, MCK, NWS, NKLA, NOG, NLOK, ZEUS, PZZA, PH, PENN, PBR, PBPB, PBYI, PWR, RSG, RCL, RPRX, SAIL, SEAS, SHAK, SHEL, SHOP, SWI, STLA, SPWR, SKT, TXRH, OLED, UNM, VRTX, SPCE, W, WPM, WWE, WW, YELP, Z & ZTS.

News & Technicals’

Shell’s results follow soaring profits seen across the oil and gas industry, even as many energy majors incur costly write-downs from exiting Russia.  U.K. rival BP on Tuesday announced plans to boost share buybacks after first-quarter net profit jumped to its highest level in more than a decade.  Shell reported a sharp upswing in full-year profit in 2021 on rebounding oil and gas prices, with CEO Ben van Beurden hailing it as a “momentous year” for the company.  The Microsoft co-founder said at the Wall Street Journal’s CEO Summit Wednesday that it’s unclear how Elon Musk will change Twitter if he takes ownership.  The tech billionaire’s comments come after Musk accused him of shorting Tesla stock last month.  Musk also tweeted a crude joke about Gates.  Facebook’s parent company sees challenges ahead because of Apple’s privacy changes, the war in Ukraine, and broad macroeconomic shifts.  As a result, the company plans to stop or slow the pace of adding mid-level and senior people.  CNBC’s Jim Cramer said Wednesday he’s still “drawn to owning stocks” despite concerns of a Fed-induced recession.  The “Mad Money” host’s comments came after Wall Street rallied in response to Fed Chair Jerome Powell’s news conference.  Cramer likes banks stocks and profitable tech companies like Advanced Micro Devices, given his economic outlook.  Treasury yields are rising again this morning, with the 10-year rising five basis points to 2.97% and the 30- rising to 3.04%.

The bulls triggered a massive short squeeze after Jerome Powell suggested a 75 basis point increase is off the table for the next couple of months.  The surge upward neared price resistance levels and tested 50-day moving averages as resistance but the overall downtrend in the indexes remains intact.  Unfortuntually, the significant factors that affect inflation calculation also rose sharply after the rate increase.  Higher rates and rising inflation may raise the concern of stagflation as more and more analysts suggest a recession is on the way.  So, the big question for today can the bulls follow through with Wednesday’s rally facing a massive day of earnings events?  Only time will tell, but I would not count out the bears yet while the overall downtrend still exists.  Prepare for another day of wild volatility.

Trade Wisely,

Doug

As traders and investors pondered the possible impacts on the economy of an aggressive Fed, the indexes struggled to pick a direction on Tuesday.  Ultimately, we had our second day of relief with a last-minute surge as the indexes eked out a small gain out the close.  Today, we have our busiest day of earnings events this quarter, with several economic reports likely to keep price action challenging as we head toward the FOMC rate decision and Powell’s press conference this afternoon.  So, buckle up for a wild day where anything is possible!

Asian markets closed mostly lower overnight, with Hong Kong leading the selling, down 1.10%.  Across the pond, European markets see red across the board as the EU proposes new oil sanctions with a Bank of England rate increase expected Thursday.  Finally, ahead of a massive amount of potentially market-moving data, the U.S. put on a brave face pointing to bullish open but expect challenging price action throughout the day.

Economic Calendar

Earnings Calendar

We have a busy day with nearly 350 companies expected to report on the Wednesday earnings calendar.  Notable reports include ADTN, ALB, ATI, ALL, ARMRN, ABC, ATO, GOLD, TECH, BKNG, BWA, EAT, CF, LNG, CIVI, CLH, CLVS, CXW, CTVA, CVS, DIN, EBAY, LOCO, EMR, ET, ETSY, FSLY, RACE, FSR, FTNT, FDP, GNRC, GIL, GBT, GDDY, GXO, HST, TWNK, IR, IRBT, JAZZ, JCI, LL, LITE, MRO, MAR, MET, MTG, MRNA, MUR< NBIX, NVO, NUS, OAS, PDCE, DOC, FXD, QRVO, QLYS, RYN, O, REGN, SBGI, SFM, STWD, STOR, RGR, SUN, RUN, TRIP, HEAR, TWLO, UBER, UTHR, VMC, WING & YUM.

News and Technicals’

Annual U.K. inflation hit a 30-year high of 7% in March as food and energy prices continued to soar.  As a result, the Bank imposed its third hike in a row at its March meeting, taking the bank rate to 0.75%, and the market expects a 25 basis point increase to 1% when the MPC meets on Thursday.  The tech billionaire, the CEO of Tesla and SpaceX, added that the social media platform will continue to be free for “casual users.” However, it’s unclear how much Musk would like to charge businesses and governments or whether certain groups such as non-profits and journalists would be exempt from any imposed fees.  Twitter is already experimenting with a paid-for subscription service called Twitter Blue in the U.S., Canada, Australia, and New Zealand that offers additional features.  AMD reported first-quarter earnings after the bell on Tuesday.  AMD’s results on Tuesday suggest that the chipmaker is still growing fiercely, with 71% sales growth in the first quarter.  Imposing measures that could reduce or entirely cut Russian energy supplies to the EU has been complicated for the bloc.  Two anonymous officials said that both nations will have until the end of 2023 to halt Russian oil imports.  The EU had moved last month to ban imports of Russian coal.  It is now about to implement restrictions on oil purchases.  And this is raising questions about whether the bloc will also stop its imports of natural gas.  Lyft reported first-quarter 2022 earnings on Tuesday.  Shares plunged on light guidance and continued driver incentives.  Treasury yields rise ahead of the FOMC decision, with the 5-year rising to 3.00%, the 10-year ticking higher to 2.95%, and the 30-year price at 2.99%.

On Tuesday, indexes struggled to pick a direction as prices whipped between gains and losses to eke out small gains with a last-minute surge up at the close.  However, the choppy price action was not a surprise as investors pondered the possible outcomes of the FOMC decision.  At 2 PM eastern today, we will finally get their decision that will likely trigger an explosion of wild price action through the Powell press conference at 2.30 PM.  If that’s not enough to keep traders and investors on edge, we have nearly 350 earnings reports ADP, International Trade, ISM Services, and Petroleum Statis numbers to deal with first.  Expect a day jampacked with uncertainty and challenging price action where anything is possible! 

Trade Wisley,

Doug

Investors worry about an aggressive Fed and the real possibility of a recession, as a result, gave a rough start to May trading.  However, in the last hour of the day, the bulls recovered the early selling leaving behind some hopeful bullish hammer patterns that still have some heavy resistance levels above.  As the FOMC meeting begins, we have a deluge of earnings events and economic reports to keep traders guessing and price action challenging.  Although we are overdue for a relief rally, be prepared for just about anything as the data rolls out, and we wait on the rate decision.

While we slept, Asian markets traded mixed in reaction to an Australian central bank rate increase.  European markets trade with modest gains and losses waiting on the FOMC decision.  U.S. futures are currently giving back overnight gains pointing to a slightly bearish open as earnings results roll out and the Fed meeting begins.

Economic Calendar

Earnings Calendar

Tuesday is a busy day with over 200 companies listed on the earnings calendar.  Notable reports include AMD, PFE, AGCO, AKAM, AMCR, AIG, ANDE, ARNC, BTG, BGFV, BIIB, B.P., CZR, CWH, CNP, CPK, CRUS, LODE, CRK, CEIX, CMI, DENN, D.D., ETN, ETRN, E.L., AQUA, EXPD, EXR, BEN, I.T., GRBK, GPOR, THG, HRMY, HSIC, HLF, INCY, J, KKR, LEA, LOGI, LPX, LYFT, MPC, MLM, MTCH, MTOR, MSTR, TAP, MPLX, OKE, PRU, PSA, RDWR, QSR, ROK, SEE, SWKS, SMCI, TEVA, WAT, WLK, YUMC, & ZBRA.

News and Technicals’

On Wednesday, markets expect the Federal Reserve to announce a half-percentage point increase in its benchmark interest rate.  However, fears are growing over how aggressive the central bank will have to be to tame inflation.  “A recession at this stage is almost inevitable,” former Fed vice chair Roger Ferguson told CNBC.  B.P.’s first-quarter underlying replacement cost profit, used as a proxy for net profit, came in at $6.2 billion.  Analysts had expected B.P. to report a first-quarter profit of $4.5 billion, according to Refinitiv.  The oil and gas giant also announced a further $2.5 billion share buyback.  Instead, however, B.P. reported a headline loss for the quarter of $20.4 billion.  This included pre-tax charges of $24 billion and $1.5 billion relating to the exit of its Rosneft stake in response to Moscow’s invasion of Ukraine.  The Securities and Exchange Commission announced Tuesday that it would almost double its staff responsible for protecting investors in cryptocurrency markets.  The regulator’s Crypto Assets and Cyber team, a unit of the SEC’s broader Enforcement division, will increase its headcount by 20 for 50 dedicated positions.  The SEC said that the 20 additions would include investigative staff attorneys, trial lawyers, and fraud analysts.  The Reserve Bank of Australia said 25 basis points would increase the cash rate to 0.35% — the first rate hike since November 2010.  Analysts had widely expected the central bank to hike rates, given the rapid rise in inflation.  In the last quarter, prices for food, petrol, and other consumer goods were all up.  Lowe acknowledged in his statement that inflation had picked up more than expected, though it remains lower than in most other advanced economies.  Treasury yields continue to inch higher in early Tuesday trading, with the 5-year up slightly to 3.02%, the 10-year trading at 2.98%, and the 30-year holding at 3.02%.

Monday got off to a rough start with investors worried about an aggressive Fed and the genuine possibility of a recession.  However, the bulls finally found a surge of energy in the last hour of the day to reverse the early selling leaving behind some impressive hammer candle patterns.  As we wait for the FOMC decision, the big question is, can the bulls follow through to confirm the pattern?  Along with a busy earnings calendar, we will get readings on Motor Vehicle Sales, Factory Orders, and the Jobs Opening report adding to the already challenging price action.  The T2122 indicator indicates we are overdue for a relief rally, but with so much uncertainty, anything is possible.  So, continue to be on the lookout for intraday whipsaws and be prepared for total overnight reversals as this deluge of data rolls out.

Trade Wisley,

Doug