Oil Prices Surged

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Oil Prices Surged

Brent crude briefly topped $130 a barrel Sunday night as oil prices surged, with the U.S. considering a total embargo on Russian oil products.  With gas prices up 65% in this year alone, worries of recession and stagflation worry investors not only in the U.S. but worldwide.  Thursday’s CPI report will be of particular interest with the sharp rise in all commodity prices this year.  However, today we have a light day of earnings of economic data, so plan for extra sensitivity to the news cycle and the rapidly rising price impacts to the consumer.

During the night, Asian markets traded sharply lower, with the Hong Kong leaning the way down 3.87% at the close.  This morning, European markets are also under pressure, seeing red across the board.  With a light day or earnings and economic data, U.S. futures point to a substantial gap down at the open in reaction to pain rise in energy prices.

Economic Calendar

Earnings Calendar

We begin the new week with a lighter day on the earnings calendar with 70 companies listed.  Notable reports include CIEN, CLAR, EGRX, IPI, ROVR, SQSP, TDUP, & VET. 

News & Technical’s

“The China-Russia relationship is valued for its independence,” Chinese Foreign Minister Wang Yi said.  Wang portrayed the bilateral relationship as separate from China’s relations with other countries or regions.  He added that the Red Cross Society of China would provide Ukraine with emergency supplies “as soon as possible.”  Economist Stephen Roach warns that the effects of any default on Russia’s sovereign debt as a result of the Ukraine crisis would spill over to emerging markets.   And China would not be unscathed, and he told CNBC’s “Squawk Box Asia.”  The U.S. has sanctioned Russia’s sovereign debt while major rating agencies slashed Russia’s sovereign rating to “junk” status.  In addition, Carl Icahn has sold the last of what was once a 10% stake in energy company Occidental Petroleum, The Wall Street Journal reported.  The sale ended an uneasy relationship between the billionaire activist investor and the oil-and-gas producer just as the latter’s shares surged.  The Journal reported that Icahn has realized a profit of some $1 billion on the Occidental investment, citing sources “familiar with the matter.”  U.S. Secretary of State Antony Blinken told NBC on Sunday that Washington is in “very active discussions” with European governments about banning imports of Russian crude.  Russia has continued to ramp up its assault on neighboring Ukraine in recent days, with forces attempting to advance and isolate the capital city of Kyiv and other major cities while being met with fierce Ukrainian resistance.  Treasury yields fell slightly in early Monday trading, with the 10-year declining to 1.7171% and the 30-year slipping to 2.1407%.

Oil prices surged over the weekend, hitting $130 a barrel, up 65% just this year, threatening recession in many countries worldwide.  The oil prices hit a 13-year high as the United States considers a total embargo of Russian oil products.  Some analysts project brent crude could reach 200 a barrel if the trend continues massively complicating the already soaring inflation.  Inflation will be front and center Thursday morning, with the CPI report before the bell.  However, we have a lighter day of earnings and economic data to kick off the new trading week.  Look for the markets to be susceptible to the Ukrainian invasion news cycle and oil prices as investors search for direction amidst the massive uncertainty.  We can no longer rule out a retest of February lows, and the huge point intraday whipsaws are likely to continue in the week ahead. 

Trade Wisely,

Doug

Uncertainty Reigns Supreme

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Uncertainty Reigns Supreme

Uncertainty reigns supreme as the unhinged Russian invasion attacks and then seizes the largest Ukrainian nuclear power plant.  Thursday proved to be another day of wild whipsaws as the market reacted to the chaotic developments pushing higher energy, food, and commodity prices.  After the morning reaction, the Employment Situation numbers the market will face another uncertain weekend that may prove difficult for the bulls working to defend recent index lows.  So, hold on tight it could be another rough day of price action.

Asian markets tumbled overnight, with the Nikkei and the HSI falling more than 2%.  This morning, European markets trade decidedly bearish due to the dangerous Ukrainian power plant developments.   Ahead of potentially market-moving economic data, U.S. futures point to a bearish open facing another weekend of uncertainty. 

Economic Calendar

Earnings Calendar

We have a much lighter day on the Friday earnings calendar, with less than 25 companies listed and most unconfirmed.  Notable reports include HIBB, INTT, & RPID.

News & Technicals’

The Biden administration announced a new round of sanctions targeting Russian oligarchs and their family members supporting President Vladimir Putin as he wages war in Ukraine.  Asked at the White House about the expanded sanctions, press secretary Jen Psaki said that the U.S. was confident that these measures were an effective approach.  President Joe Biden said later Thursday afternoon that the sanctions already imposed on Putin and those around him have “had a profound impact.”  Ukraine issues a dire warning after Russia attacks the nation’s largest nuclear power plant, eventually seizing control of the facility.  The assault was met with widespread condemnation as many in Europe woke to the attack on the continent’s largest nuclear facility, in Zaporizhzhya, Ukraine.  Russian military forces on Friday seized control of Europe’s largest nuclear power plant, according to Ukraine’s nuclear agency, shortly after a night of Russian shelling set a building ablaze at the complex.  However, authorities say emergency services have now extinguished the fire at the site, and radiation levels are normal.  “Dear stock market, you were close to us, you were interesting, rest in peace, dear comrade,” financial analyst Alexander Butmanov said during an interview on Russian channel RBC.  Russia’s stock market has been closed for five straight days following heavy Western sanctions over its invasion of Ukraine.   Elon Musk challenged the United Auto Workers to try and organize his company’s assembly plant in Fremont, California.  His comments followed President Biden’s praise of Ford and GM in his State of the Union address.  Musk has been a vocal critic of the UAW for years.  CNBC’s Jim Cramer on Thursday cautioned investors that buying the dip on high-growth tech stocks is a losing strategy in today’s turbulent market.  “There’s still plenty of other stocks out there, but if you’re still betting on these bouncing back … I don’t think it’s going to work,” the “Mad Money” host said. 

After another day, huge point whipsaws with the VIX holding a 30 handle as uncertainty reigns supreme.  Dip buyers have faced one disapointment after another as the wild price swings chop up accounts.  This morning we got the latest reading on the Employment Situation.  Estimates suggest a very strong number that, if correct, could hurt prices, clearing another hurdle for the FOMC to act aggressively.  Energy, food, and commodities continue to rise dramatically due to the geopolitical pressures fanning the flames of inflation, forcing Fed action at what could prove the worst possible time.  Finally, as the chaotic and unhinged Russian invasion intensifies, another weekend of uncertainty could make it tough on the bulls working to defend recent market lows.  With the violence of the moves, day traders continue to have the upper hand, while swing and position traders find it nearly impossible to matain an edge.  Remember, cash is a position often underutilized in times of extreme market conditions.

Trade Wisely,

Doug

Jerome Powell Calms Markets

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Jerome Powell’s comments helped provide a nice relief rally to the market suggesting a modest increase of just 25 basis points.  However, the big question is yet to be answered can the bullishness follow through with Brent Crude pricing above $115 a barrel this morning?  Indexes remain in downtrends with substantial overhead price and technical resistance that the bulls will require tremendous effort to overcome.  With inflation rising and the massive geopolitical concerns impacting the economy, that’s a big ask.  So, expect the extreme price volatility to continue.

Overnight Asian markets mostly rallied overnight as they tried to ignore the impacts of rising energy prices.  However, European markets find it difficult to rally as Russia seizes another major city tightening its grip on Ukraine.  U.S. futures indicate modest declines ahead of earnings and economic data at the open.  Stay focused on price action and don’t rule out continued whipsaws or overnight reversals in the days ahead.

Economic Calendar

Earnings Calendar

We have nearly 200 companies listed today on the Thursday earnings calendar, with a few that are unconfirmed.  Notable reports include AVGO, AVAV, BBY, BIG, BJ, BURL, CNQ, COST, EGLE, FNKO, GPS, GOGO, KR, PBYI, SWBI, TWI, TTC, TD, UTZ, VERI, & WB.

News & Technicals’

Fed Chairman Jerome Powell said Wednesday he still sees interest rate hikes ahead though he noted the “implications for the U.S. economy are highly uncertain” from the Ukraine war.  Powell called the labor market “extremely tight” and said inflation has risen well above the Fed’s 2% target.  His remarks are part of mandatory appearances this week before House and Senate committees in Congress.  The G-7 (Group of Seven) major economies have imposed unprecedented punitive sanctions against the Central Bank of Russia along with widespread measures by the west against the country’s oligarchs and officials.  On Tuesday, French Finance Minister Bruno Le Maire told a French radio station that the latest round of sanctions aimed to “cause the collapse of the Russian economy.”  There are fears that high oil prices will be highly recessionary, destroy oil demand and slow down a lot of economies, said Paul Sankey of Sankey Research.  According to a research note, the firm sees oil trading in a range of $100 per barrel to $150 per barrel until the situation in Ukraine is resolved.  “There’s a major, physical, immediate outage that caught an already tight market with very low inventories,” he said.  The Turkish lira has lost roughly 47% of its value in the last full year, in a rout driven by Erdogan’s refusal to raise rates as inflation consistently climbed.  The currency’s turbulence has hit Turks hard, as the value of their salaries dropped and living costs dramatically increased.  Since September, Turkey’s central bank has cut interest rates by 500 basis points to 14%.  Shipping giants including Switzerland-based MSC, Denmark’s Maersk, and France’s CMA CGM all announced on Tuesday that they would halt cargo bookings to and from Russia until further notice.  The move exempted deliveries of essential supplies, such as food, medical equipment, and humanitarian goods.  The confluence of Russia’s invasion of Ukraine and the barrage of punitive Western sanctions has triggered a mass corporate exodus from Moscow.  Treasury yields edged slightly higher in early Thursday trading, with the 10-year pricing at 1.8784% and the 30-year rising to 2.25%. 

Wednesday saw a nice relief rally after Jerome Powell suggested a more modest rate increase of 25 basis points.  However, he suggested that the uncertainty of the war in Ukraine could substantially impact the economy.  With Brent Crude pricing over $115 a barrel this morning, the Fed will have a substantial change ahead of them due to the inflationary impacts and puts the credibility of the FOMC in question.  Today the market will turn its attention to the Jobless claims, Productivity, Factory Orders, and the possible market-moving report from COST.  Yesterday’s rally, though encouraging, still has a tremendous amount of work to do if it is to break downtrends and push through the substantial overhead resistance.  With the VIX closing, the day above 30 handles, traders will have to stay on their toes, watching for whipsaws and overnight reversals.  As you plan forward into Friday, keep in mind the Employment Situation number coming out before the open.

Trade Wisely,

Doug

Dangerous Market Condition

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Dangerous Market Condition

With significant daily gaps and multiple big point, intraday whipsaws make for a dangerous market condition.  Moreover, the sharply rising oil prices add inflationary pressures to an already struggling consumer.  So today, Powel will have to tiptoe through a minefield wearing magnetic shoes as he testifies in Congress.  Plan for more price volatility and prepare for just about anything with the market sensitive to the news cycle as Russia tightens its grip on Ukraine. 

During the night, Asian markets traded decidedly bearish after stating they would not join the sanctions against Russia.  But, across the pond, European markets rally, seeing green across the board as they monitor developments of the Russian advance.  Ahead of Powell’s testimony in Congress, U.S. futures point to a gap up open, choosing to ignore the surging oil prices now topping $111 a barrel. 

Economic Calendar

Earnings Calendar

We have a slightly lighter day with just under 150 companies listed on the midweek earnings calendar.  Notable reports include DLTR, ANF, AEO, BILI, BOX, DIN, DCI, GSL, GEF, NTNX, PDCO, PBPB, PSTG, RSI, SGFY, SPLK, HEAR, VEEV, VSCO, & WMC.

News & Technicals’

Netflix has offered to buy mobile game maker Next Games as the streaming giant pushes further into gaming.  Netflix plans to pay 2.10 euros ($2.33) in cash per share of Next Games, for a total value of approximately 65 million euros ($72 million).  Next Games is the Finnish studio behind a mobile game based on Netflix’s hit show “Stranger Things.”  When Russian President Vladimir Putin launched his first invasion of Ukraine in 2014, Crimea was annexed, his popularity ratings soared in Russia.  However, massive sanctions imposed on Russia that have prompted the Russian ruble to slump against the dollar, causing living costs to rise for many Russians, could mean that he doesn’t see a boost this time.  On Wednesday, China’s banking and insurance regulator said that the country opposes and will not join financial sanctions against Russia.  “China’s position has been stated clearly by the Ministry of Foreign Affairs.  According to a CNBC translation, our international policies are consistent,” said Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission.  Guo, who is also the Chinese Communist Party secretary of the People’s Bank of China, added that he hopes all sides will maintain normal economic exchanges and that the sanctions have had no apparent impact on China so far.  “Nobody is watching the State of the Union,” Musk said in an email to CNBC.  Biden’s lack of a mention leading into Musk’s latest comments comes after CNBC reported on the ongoing battle between a billionaire and a commander in chief.  In its fiscal fourth-quarter earnings report, Salesforce beat on the top and bottom lines.  The company appointed Bret Taylor as co-CEO alongside Marc Benioff in the quarter.  Treasury yields trade slightly higher in early Wednesday trading, with the 10-year trading at 1.7292% and the 30-year ticking higher to 2.115%. 

The violent large point whipsaws continue to make a challenging and dangerous market condition.  Oil prices surged Tuesday, rising above $105 a barrel, and this morning the futures seem to be ignoring prices jumping again to $110.  As the energy rises, so does the prospect of higher inflation pinching the consumer wallet on just about everything we buy, sell, or do.  Fear remains high with the Vix closing the day above a 33 handle, but the wild price action in the market suggests anything is possible, and the investors sort through the uncertainty of what comes next.  Today we will turn our attention to ADP numbers and the beginning of the Powel 2-day testimony in Congress.  The Chairman has a complicated task navigating the minefield of inflation during high geopolitical pressures weighing heavily on the market.  Expect the volatile whipsaws to continue, and the high sensitivity to the news cycle as Russia continues to gain ground in Ukraine.  Respect overhead resistance levels, and as you plan forward, remember the Friday Employment Situation before the open. 

Trade Wisely,

Doug

RollerCoaster Ride of Uncertainty

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RollerCoaster Ride

We finished February with a very volatile rollercoaster ride, with price action gyrating within yesterday’s big gap to benefit experienced day traders.  Sadly all the price movement did not improve the technical damage in the index charts.  As Russia closes in on the capital of Ukraine, expect volatility to remain very high with overnight reversals and intraday whipsaws the uncertainty unfolds.  In addition, the big day of earnings reports, PMI, ISM, and construction spending numbers will add to the day’s volatility, so plan your risk carefully.

Asian markets rallied overnight, seeing green across the board, with China mainly supporting the Russian aggression.  However, European markets continue to see red across the board as a Russian convoy headed for Kyiv.  U.S. futures point to bearish open with a big day of data ahead, but all eyes are on the geopolitical events as Russia bears down the Ukrainian capital city.

Economic Calendar

Earnings Calendar

We have nearly 200 companies listed on the earnings calendar today, some not confirmed.  Notable reports include CRM, ADT, AMRN, AMC, AZO, AVID, BIDU, BGFV, BLDR, CELH, CHS, DPZ, EHTH, FSLR, HPE, HZNP, HRL, TWNK, IGT, IQ, SJM, JAZZ, KSS, MANU, MLCO, JWN, PLBY, REGI, ROST, SRPT, SGMS, SE, SOFI, TGT, URBN, VGR, WEN, WKHS, & WW.

News & Technicals’

Russia appears to have upped the ante in its invasion of Ukraine overnight with satellite imagery indicating that a long convoy — some 40 miles or 65 kilometers long — of Russian military vehicles is heading toward Ukraine’s capital Kyiv.  However, official sources have not yet confirmed the existence of the convoy.  Teneo analysts said Monday that “the movement of Russian military forces suggests preparations for new, likely heavier, military action against the capital Kyiv and other key cities in the coming days.”  Following Russia’s invasion of Ukraine, a Twitter post from an account named “Anonymous” summoned hackers worldwide to target Russia.  Subsequent posts claimed the group was responsible for pulling down the Russian oil giant Gazprom websites, the state-controlled Russian news agency RT, and numerous Russian and Belarusian government agencies.  Attracting the ire of online hackers is yet another example of how global players — from NATO powers to international businesses and everyday consumers — are protesting Russia’s invasion of Ukraine.  “The world will judge them accordingly.  And history will judge them accordingly,” Ukraine Foreign Minister Dmytro Kuleba told CNBC’s Hadley Gamble in an interview Monday.  Moscow saw a swathe of new sanctions imposed on it over the weekend for its invasion of Ukraine.  The Russian ruble tanked to an all-time low Monday, and the central bank hiked interest rates to an unprecedented 20%.  Lucid Group is cutting its car production forecast for this year by as much as 40%, sending shares of the electric vehicle start-up tumbling 14% during after-hours trading.  The company cited supply chain constraints for slashing production expectations to between 12,000 and 14,000 vehicles, down from 20,000 units.  Lucid’s CEO said the problems are more to do with commodity parts such as glass and carpet than an ongoing global shortage of semiconductor chips.  Treasury yields fall slightly in early Tuesday trading, with the 10-year dipping to 1.8044% and the 30-year moving lower to 2.1435%.

On Monday, the end-of-month trading turned out to be a rollercoaster ride as the price action seesawed in the huge point range of the morning gap.  Although indexes prices moved substantially to the benefit of day traders, the result did little to nothing to repair the technical damage in the charts.  As Russia pushes toward the capital city of Ukraine, attention will shift temporarily to PMI, ISM, and construction spending economic reports.  We also have a huge day of earnings reports, but unfortunately, none of them will likely move the market substantially or reverse the overall bearish trends.  While in a downtrend, always respect overhead resistance as uncertainty plagues the world’s markets.  Large intraday whipsaws are likely here to stay for the near future as the market reacts to geopolitical events and the news cycle.  Inflation is raging, and I suspect it will play a central role in today’s State of the Union Address and the Powell testimony on the hill Wednesday and Thursday.  Plan carefully as overnight price reversals remain highly probable with so much uncertainty in the path ahead.

Trade Wisely,

Doug

Relived Selling Pressure

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Relived Selling Pressure

Although the 2-day short squeeze rally relieved selling pressure to end the week, it did little to improve the technical picture of the index charts, with substantial overhead resistance and downtrends still in force.  The QQQ looks to join the IWM with the 50-day average ready to cross its 200-day to the downside.  With Ukrainian and Russian officials meeting in hopes of finding some common ground and a hectic week of market-moving, economic reports expect the wild price gyrations to continue.  Intraday whipsaws and complete overnight reversals are likely as the drama of this week unfolds.

Overnight, Asia began their trading week mixed but mostly bullish in a muted session as oil prices surged 4%.   However, this morning, European markets are decidedly bearish, with red across the board as new sanctions against Russia impact investor sentiment.  Ahead of International Trade figures and a slew of earnings reports, U.S. futures point to a substantial gap down at the open.  Keep in mind overnight futures lows could easily receive a test during the day.

Economic Calendar

Earnings Calendar

We have about 200 companies listed on the earnings calendar to kick off the new trading week.  Notable reports include DDD, AAON, ACAD, AMBA, BLNK, BRMK, CIVI, CWEN, DNMR, DVAX, ENDP, FRPT, GDPN, HPQ, KD, RIDE, LCID, LAZR, MBI, NVAX, OKE, PRTY, PDCE, PUBM, SBAC, SDC, & WDAY.

News & Technicals’

The ruble was trading as low as 119 per dollar as offshore trading started on Monday morning during Asia hours, from nearly 84 per dollar the previous day, according to Factset data.  Russian President Vladimir Putin put his country’s nuclear deterrence forces on high alert Sunday.  Last week, President Joe Biden responded to Russia’s unprovoked attack on Ukraine by announcing several rounds of sanctions on Russian banks, on the country’s sovereign debt, and Putin and Foreign Minister Sergey Lavrov.   Ukraine’s President Volodymyr Zelenskyy believes the next 24 hours will be a “crucial period” for his country.  Ukrainian troops, and citizens that have taken up arms, continue to fight to invade Russian forces.  As a result, Russia has been hit with a massive round of sanctions isolating its economy and financial system.  In addition, the start-up announced Monday that U.S.-listed Chinese electric car company Nio is set to offer its shares for trading in Hong Kong on March 10.  The move comes as regulatory risks grow in the U.S. and China for Chinese companies listed in New York, adding compliance challenges for businesses and investors.  “Based on the foregoing and as advised by our PRC Legal Adviser [Han Kun Law Offices], we are of the view that the Cybersecurity Review Measures will not have a material adverse effect on our business, financial condition, operating results, and prospects,” the electric car company said in a filing with the Hong Kong stock exchange.  Treasury yields fell sharply in early  Monday trading, with the 10-year sliding to 1.9004% and the 30-year declining to 2.2270%.

The massive 2-day rally to wrap up last week’s volatility relived selling pressure as it tested some overhead resistance levels but unfortunately did little to improve the price and technical damage in the index charts.  Increasing sanctions against Russia created currency fluctuations, with the ruble sharply declining to cause their central bank to impose 20% interest rates.  According to reports, the next 24 hours will be critical as the Russian and Ukrainian officials meet to find common ground and begin a cease-fire.  However, Putin put his nuclear facilities on high alert, heading into talks.  Expect the uncertainty to matain the wild price volatility and respect overhead resistance levels with overall market downtrends holding despite the big 2-day rally.  We have more inflation reports coming out on Tuesday, with Powell testifying in congress Wednesday and Thursday to add market stress, then ending the week with the Employment situation numbers.  So buckle up for another uncertain week where volatile is likely to remain high and where daytraders have the upper hand. 

Trade Wisely,

Doug

Oversold yet Fragile Condition

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Oversold yet Fragile Condition

With Putin seemingly pushing for a regime change in Ukraine, the indexes charts are at or near a short-term oversold yet fragile condition.  As a result, a relief rally of significance may be challenging for the bulls with the market surrounded by uncertainty.  Likely sensitive to any new developments in the conflict, overnight reversal and substantial intraday whipsaws seem likely giving day traders the upper hand and keeping swing and positions traders off balance with little to no edge.  Expect volatility to remain high with GDP and Durable Goods reports later this week.

Overnight Asian markets closed mixed with the Nikkei falling 1.71%, while Hong Kong saw some relief rising 0.60%.  European markets trade with modest gains, with pensive investors waiting on Ukrainian invasion developments.  U.S. futures are also pricing in a bullish open amid the uncertainty with a big earnings day and a light economic calendar. 

Economic Calendar

Earnings Calendar

We have a busy day with more than 250 companies listed on the Wednesday earnings calendar.  Notable reports include LOW, AEM, ANSS, AVA, BBWI, BCO, BCS, BHC, BIRD, BKNG, BRMN, CHDN, CLH, CPK, DOC, EBAY, EXR, GBT, HEI, HFC, HLF, HTZ, IHRT, IR, JACK, JMIA, LL, LMND, NDLS, NTAP, OLED, OSTK, PAAS, PBR, RCII, RGR, SBGI, SSYS, STLA, STOR, TAP, TJX, VICI, VIPS, & WWW.

News & Technicals’

New omicron infections in the U.S. have plummeted 90% from a pandemic high in a little over a month.  The U.S. is reporting about 84,000 new cases per day on average, according to data compiled by Johns Hopkins University, down from a pandemic high of more than 800,000 daily cases on Jan. 15th.  As the nation emerges from the omicron wave, the states and the federal government are trying to move past the crisis mentality that gripped the nation two years ago.  Russia is also the world’s top wheat exporter.  Together with Ukraine, both account for roughly 29% of the global wheat export market.  “China is also a big recipient of Ukrainian corn — in fact, Ukraine replaced the U.S. as China’s top corn supplier in 2021,” said Dawn Tiura, president at Sourcing Industry Group.  Analysts said that Russia and Ukraine are also big suppliers of metals and other commodities.  While the European Union would be affected by the escalating crisis, Germany would be especially hit.  The outcome of Russia’s incursion into two breakaway regions of Ukraine is uncertain, but it has already caused commodities prices to shoot higher.  Economists say the price of oil matters most because crude prices can drive up inflation and slow down the global economy.  What happens to oil could also determine whether the Fed continues a brisk hiking pace after it raises interest rates in March or ultimately slows the pace due to growth concerns.  Russian President Vladimir Putin is seeking “regime change” and will likely go all the way and invade the rest of Ukraine, according to Jeffrey Edmonds, a former director for Russia at the National Security Council.  On Tuesday, the U.S. and U.K. announced fresh sanctions targeting Russian financial institutions, individuals, and sovereign debt after Putin ordered troops into two pro-Moscow regions in eastern Ukraine.  It doesn’t make sense for Putin to just hold on to the separatist territories, Edmonds said.  “He’s had these territories since 2014, so just moving more troops in there, I don’t think it gets him what he wants.”  Treasury yields were back on in Wednesday trading, with the 10-year rising to 1.9807% and the 30-year slightly higher at 2.2716%.

Technically speaking, the indexes are at or near a short-term oversold yet fragile condition.  However, the market’s uncertainty could make it difficult for the bulls to mount a substantial relief rally.  If you listened to the Putin speech yesterday, it seemed pretty clear he is pushing for regime change in Ukraine, and the conflict seems likely to intensify.  Oil continues to be the pressure inflation, and as we saw in the Case-Shiller number yesterday, home prices continue to rise.  Although we have a big day on the earnings calendar, we don’t have much for significant market-moving reports.  The economic calendar has a lull before the GDP and Durable Goods, Thursday and Friday, respectively.  No matter what happens in the price action today, traders will have to keep in mind that the market will remain sensitive to Ukrainian developments.  Anything is possible, so plan carefully and be prepared for overnight reversal and intraday whipsaws to continue as the conflict rolls out.  Day traders will likely continue to have the upper hand, so taking gains faster than usual may be wise considering the volatility.

Trade Wisely,

Doug

Russia Invading Ukraine

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Russia Invading Ukraine

The guessing is over, and now the market has the increased uncertainty of what comes next with Russia invading Ukraine.  So it should be no surprise that oil prices are surging while currency, crypto, world markets, and U.S. futures experienced some extreme price volatility overnight.  Add in a big day of earnings events possible market-moving economic data, and it’s fair to say anything possible.  So plan carefully and expect substantial point whipsaws that could quickly test overnight futures lows as the uncertainty unfolds.

Asian markets experienced a very volatile session, with Hong Kong leading the selling down 2.69%.  Somewhat surprisingly, European markets chop around the flatline, trying to shake off the invasion concerns.  As earnings roll out, U.S. futures are well off the overnight lows, with Case-Shiller, PMI Flash, and Consumer Confidence numbers just ahead.  Be ready for anything with the market likely susceptible to the geopolitical news cycle.

Economic Calendar

Earnings Calendar

Kicking off a short trading week, we have a busy earnings calendar with more than 200 companies listed.  Notable reports include CZR, A, AU, CDNS, CNP, CBRL, CVI, FANG, EXAS, EXPD, FLR, HALO, HR, HL, HD, KTOS, DNUT, LPX, M, MDT, MELI, MOS, NXST, NU, PANW, PSA, RXT, RDN, RRC, O, RNG, TDOC, PTX, TXRH, TOL, RIG, & SPCE.

News & Technicals’

Home Depot on Tuesday said sales grew 11% in the fiscal fourth quarter, as the retailer topped Wall Street’s expectations and said it sees sales growth ahead for 2022.  The home improvement retailer said it expects earnings per share growth to be in the low single-digits and sales growth to be “slightly positive” in the coming fiscal year.  The company recently named chief operating officer Ted Decker its new CEO, as of March 1.  The world is waiting to see what happens next in Ukraine after Russian President Vladimir Putin ordered Russian forces to move into breakaway regions of the eastern part of the country.  Putin said Russia would recognize the independence of two self-proclaimed and pro-Russian republics in eastern Ukraine.  He said he would send Russian troops to the region on a “peacekeeping” mission.  Global financial markets were rattled by the latest developments in the Ukraine-Russia crisis, with European stocks falling at the open.  On Monday evening, Russian President Vladimir Putin ordered forces into two breakaway regions of eastern Ukraine and said he would recognize the independence of Donetsk and Luhansk.  Rising tensions have sent jitters through markets, driving oil prices higher.  Treasury yields fell in early Tuesday trading, with the 10-year falling to 1.9009% and the 30-year dipping to 2.2185%.

With Russia invading Ukraine, currencies, crypto, and U.S. futures markets experienced extreme price volatility with wild swings that saw the Dow futures down more than 700 points before rallying to near even by 6 AM eastern.  Overnight prices swing this rough sets up a day where anything is possible.  As a result, markets will likely be susceptible to substantial point whipsaws that could include a restest of overnight lows.  However, experienced day traders could have the upper hand with uncertainty so high due to geopolitical pressures, inflation concerns, and the pending Fed tightening.  As a result, swing and position traders may find it very difficult to nearly impossible to have an edge in this market environment.  Remember, Cash Is A Position is often underutilized in times of such wild price volatility.  This morning we have a significant number of earnings events and Case-Shiller, PMI Flash, and Consumer Confidence numbers to keep markets guessing.  Plan your risk carefully!

Trade Wisely,

Doug

Index Technicals Suffer

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Ahead of a three-day weekend filled with uncertainty, index technicals suffered more damage creating lower lows at price resistance and failing at or near their 200-day averages.  Rising inflation, indications of a slowing economy, a hawkish Fed, and geopolitical issues have created a perfect storm of uncertainty.  Markets hate uncertainty, and as we move toward a long weekend, it is understandable that the bulls face a difficult task in defending recent lows.  So expect another day of volatility.

Asian markets finished the week mixed with Hong Kong leading the selling down 1.88%.  However, this morning, European markets are trying to put on a brave face with modest gains as cautious traders weigh the Russia-Ukraine tensions.  Ahead of a light day of earnings and economic reports, the U.S. futures point to a modest recovery from yesterday’s selling with an uncertain 3-day weekend ahead.  

Economic Calendar

Earnings Calendar

As we wrap up the week, we have a light day on the earnings calendar with just 27 companies listed, several unconfirmed.  Notable reports include DKNG, ABR, B, BLMN, DE, & PPL.

News & Technicals’

The Ukrainian government and Russian state-controlled media exchanged fresh accusations of ceasefire violations near the country’s eastern border on Friday.  U.S. Secretary of State Antony Blinken warned at the U.N. Security Council meeting on Thursday that Russia plans to “manufacture a pretext for its attack” on Ukraine.  St. Louis Federal Reserve President James Bullard cautioned that inflation could become an even more severe problem without action on interest rates.  “We’re at more risk now than we’ve been in a generation that this could get out of control,” he said during a panel talk at Columbia University.  Bullard has called for a full percentage point in rate hikes by July.  Roku’s revenue growth slowed to a lower rate than analysts had expected.  However, the company said during the quarter that it would be able to keep YouTube and YouTube T.V. on its streaming service.  Finally, the Senate passed a short-term government spending bill, sending it to President Joe Biden’s desk and preventing a government shutdown.  The legislation will keep the government running through March 11.  Lawmakers hope to reach a long-term spending agreement during those three weeks.  Treasury Yields moved slightly lower in early Friday morning trading, with the 10-year dipping to 1.9685 and the 30-year falling to 2.2941%. 

It has been a rough week for the index technicals, new lower highs created at price resistance, and failures at or near 200-day moving averages.  Yesterday’s economic data continues to confirm a slowing economy as the Fed moves becomes more aggressive in fighting inflation.  A combination that could easily trigger a recession as we head toward spring and summer.  Add in the geopolitical tensions rising just before a 3-day weekend only intensifies market uncertainty.  With a light day on earnings and only the Existing Home Sales report to inspire the bulls or bears, I suspect the sensitivity to the Ukrainian border news cycle will play a substantial role as the long weekend approaches.  So plan your risk carefully because anything is possible.

Trade Wisely,

Doug

Retail Sales Better than Expected

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Retail Sales

Wednesday traded like an opposite day with better than expected retail sales numbers bringing out the bears, and then the bulls went to work when the FOMC confirmed a more hawkish Fed ready to raise rates.  However, par for the course in this down-trending volatile price action still has significant overhead resistance despite the recent relief rally.  Expect more of the same today with a bevy of earnings reports, with economic data including housing starts, jobless claims, and the Philly Fed. 

During the night, Asian markets closed mixed but mainly higher though gains were relatively modest.  European markets traded mixed this morning, weighing the geopolitical tensions as Russia adds more troops to the Ukraine border.  Ahead of a busy day of data, U.S. futures point to a lower open after a mixed after the bell reaction to tech earnings.

Economic Calendar

Earnings Calendar

We have another busy Thursday with nearly 200 companies listed on the earnings calendar.  Notable reports include WMT, AFLYY, EADSY, AAWW, AN, BAX, BJRI, BRC, CIM, CHUY, ED, DLR, GPC, GMED, IDCC, KEYS, LBTYA, LKQ, MATX, MERC, OGN, PLTR, PK, POOL, RDFN, ROKU, SEE, SHAK, SWI, SO, RUN, SKT, TSEM, UEIC, WFRD, WST, AUY, & YETI.

News & Technicals’

Nvidia reported fiscal fourth-quarter earnings on Wednesday.  Datacenter sales rose 71%.  Nvidia has boosted as cloud providers and enterprises turn to graphics processors the company makes for artificial intelligence applications.  The U.S. government’s “dithering” has left the country “well behind” China in the race to build out 5G technology, former Google CEO Eric Schmidt said in a Wall Street Journal op-ed.  Schmidt and co-author Graham Allison, a Harvard professor, urged the Biden administration to make 5G a “national priority”; otherwise, “China will own the 5G future.”  The authors said 5G development is key as applications could “advantage a country’s intelligence agencies and enhance its military capabilities.”  Amazon and Visa agree to end the global dispute over credit card fees.  The deal means Amazon customers in the U.K. can continue using Visa credit cards, as previously announced by the two companies.  Amazon will also drop a 0.5% surcharge on Visa credit card transactions in Singapore and Australia, introduced last year.  Amazon has been piling pressure on Visa to lower its fees, signaling growing frustration from retailers over the costs associated with major card networks.  Treasury yields declined Thursday morning, with the 10-year falling to 2.0015% and the 30-year declining to 2.3211%. 

Wednesday traded began with slightly more robust than expected retail sales, but the bears continued to apply pressure until the FOMC minutes confirmed rates are going up next month.  The bulls took that as a reason to rally, recovering early losses closing the indexes essentially flat on the day.   Tech earnings after the bell had some mixed reviews from investors with CSCO indicated higher at the open, but NVDA is indicated slightly lower despite its upbeat report.  Geopolitical concerns continue to hang a dark cloud over the market, with NATO reporting that Russia has added more troops to their Ukraine border activities, keeping uncertainty high.  Today we will turn our attention to housing numbers, jobless claims, and the Philly Fed numbers, along with another busy day of earnings data to keep the price volatility challenges.  Also, keep an eye on the comments from Jame Bullard today as one of the most hawkish Fed members; his words could move the market at 11 AM eastern today.  Although we have seen a slight relief in the selling, technically, not much has changed in the charts, so keep a close eye on the overhead resistance levels for entrenched bears. 

Trade Wisely,

Doug