Although the bulls pushed to test overhead index resistance and downtrend levels, the bullish energy faded into the close as we hurry up and wait for Powell’s Senate testimony this morning. Recent inflationary economic data will likely inspire some tough questioning from the committee. Will we see a tough-talking hawkish Chairman or the gentle dovish version still touting a soft landing that supports the current rally? Expect considerable price volatility as traders and investors hang on every word looking for the path forward. Anything is possible, so plan carefully.
Asian markets traded mixed with modest gains and losses, awaiting the chairman’s congressional testimony. However, European bulls work to add to recent gains, apparently expecting dovish Fed comments. U.S. futures also try to put on a brave face suggesting a modestly bullish open, hoping Powell’s comments will support the recent index surge upward with Fed pivot ringing in its ears.
Notable reports for Tuesday include CASY, CRWD, DKS, DOLE, JKS, SWIM, MANU, SE, SQSP, SFIX, SUMO, THO, & WTI.
News & Technicals’
Best Buy has struck a deal to sell devices and handle the installation of a program that allows patients to get hospital care at home. The consumer electronics retailer is expanding its healthcare business as sales of other consumer electronics slow. CEO Corie Barry said on an earnings call that Best Buy expects sales in its health division will grow faster than the rest of the business this fiscal year.
Return-to-office plans fall short leaving commercial real estate empty and at risk of default. CEO Corie Barry said on an earnings call that Best Buy expects sales in its health division will grow faster than the rest of the business this fiscal year. He added that the Covid-19 pandemic forced millions of people to work from home for the first time, and they don’t necessarily want to go back.
Meta is planning more cuts after its first round of layoffs, possibly affecting thousands of jobs. The layoffs could begin this week and affect thousands of employees. The cost-cutting comes in addition to previously announced plans to lay off 13% of Meta workers. Meta CEO Mark Zuckerberg is pitching 2023 as the “Year of Efficiency.”
Monday’s market was essentially a hurry-up-and-wait event as bulls attempted to crack resistance and downtrend levels early in the session. However, uncertainty about the pending Powell testimony faded enthusiasm, leaving shooting star patterns across the indexes. As the Senate committee grills the Fed chairman, what he says will be far less important than how the market interprets his answers. Recent economic reports could spark a bit more hawkish-sounding Powell, disappointing a market that wants to hear dovish statements to support the current rally. The charts suggest big price swings are possible, so expect considerable volatility, whipsaws, and reversals as investors try to guess what comes next as Powell speaks.
As bond yields modestly pulled back, the bulls staged an exuberant celebration rushing back into stocks, suggesting inflation, rate increases, and the slowing economic reports no longer matter. Perhaps we will find out this week as Powell testifies in Congress and the indexes deal with overhead resistance and the current downtrends. Nevertheless, I suspect the big point price swings will continue, so plan carefully as we rally into levels that could harbor entrenched bears. Enjoy the ride but be prepared for maybe a wild one!
Asian markets mostly gained overnight after China released modest economic growth targets over the weekend. European markets trade mixed this morning with modest gains and losses after the Friday surge of buying. However, U.S. futures appear a bit more unsure as we head to the open. They currently suggest a very slight bearish open as they ponder the gravity of Powell’s pending testimony in Congress on Tuesday.
Earnings season is beginning to slow down, but we still have a relatively busy week of reports. Notable reports for Monday include AVAV, CVGW, CIEN, RIDE, NTNX, TCOM, & WW.
News & Technicals’
A slew of foldable devices has hit the international market this year as electronics giants, mainly Chinese, look to catch up to Samsung in a smartphone category it pioneered. However, analysts have questioned how big the foldable category can get, given the devices’ high price and lack of apparent uses right now. Nevertheless, last month Chinese vendors Honor and Oppo launched their foldable smartphones.
Sen. Mark Warner, D-Va., said Sunday he is introducing a broad bipartisan bill that will outline an approach to banning or prohibiting foreign technology like TikTok. Warner said he is working on the bill with Sen. John Thune, R-S.D., and that he is concerned over the type of content Americans see on the platform. Warner’s bill comes after the U.S. House Foreign Affairs Committee voted Wednesday to advance a bill granting President Joe Biden the authority to ban TikTok.
Veeva Systems announced in December that it would move its customer management software off of Salesforce’s platform and onto its home-brewed technology in 2025. That will reduce revenue for Salesforce, which has contractually not been allowed to compete with Veeva in the life sciences sector. On Wednesday, Veeva said it plans to demonstrate the technology in May.
The bulls closed last week with an exuberant celebration as the bond yields subsided modestly. The SPY and QQQ regained their 50-day moving average supports; however, they left the question of the overhead resistance and the current downtrend, as did the IWM. We also have the complication of the DIA with a substantial overhead resistance of price and technicals that could serve as a bearish moving average squeeze. Perhaps this week, we will find out if we can continue to ignore the economic slowdown and rising interest rates by breaking to new highs or if the bears have regrouped for an attack at resistance levels. With the big point price swings of late, anything is possible as Powell heads to the hill to be grilled by Congress.
As investors reacted to earnings and economic reports piling up, evidence of a slowing economy, the indexes produced a rollercoaster ride of whipsaws, leaving more questions than answers by the close of day. On the positive side, the indexes held near technical and price support levels but did so with substantial uncertainty as the 10-year bond topped 4%. Expect more volatility this morning with jobs and productivity numbers before the bell to set the stage for the day. We could be setting up for a significant market move soon, but it could go in either direction, so plan carefully.
Asian markets struggled with direction overnight, closing mixed as investors grappled with the impacts of pending rate increases. European markets trade with modest losses this morning after posting an 8.5% inflation number suggesting the ECB has a lot of work ahead to curb the rising costs. At the time of writing this report, U.S. futures suggest a mixed open with potential market-moving economic data capable of changing everything by the open.
Tesla CEO Elon Musk took the stage to present his “Master Plan Part 3” for the company at its 2023 Investor Day in Austin. The company’s manufacturing leader, Tom Zhu, revealed that as of Wednesday, Tesla had produced 4 million cars. The presentation was long on vision and a review of prior achievements but short on specifics about new Tesla products or services.
Inflation in the eurozone eased slightly to 8.5% in February, even as the ECB signaled that the interest rate hiking cycle might not end. Core inflation rose to an estimated 5.6% in February from 5.3% in January. Goldman Sachs said earlier this week that they were raising rate hike expectations for the ECB.
Salesforce beat expectations across the board. In addition, the company is expanding its share buyback program after introducing it last year. Salesforce announced layoffs during the quarter as activists pushed it to become more profitable.
Wednesday’s price action was a rollercoaster ride of whipsaws that marked a new low for the week, but in the indexes, while technically resolving nothing. Though the economic data continues to signal a slowing economy, the VIX shows investors have little fear as the recession evidence grows. The good news is that index price support levels held by the end of the day, with Dow making the most effort to rally as the first day of March trading came to a close. I believe the indexes are setting up for a significant market move, but the question is in which direction? Plan carefully with Jobless Claims and Productivity & Costs report before the bell setting the stage for another day likely to produce challenging volatility.
Tuesday’s early bullish hopes faded before the open, with disappointing economic numbers inspiring the bears as slowing economic conditions raise recession worries among investors. Though we have primarily tried to ignore the clues of a stressed consumer, the compounding impacts are becoming more evident as LOW adds to the chorus of retail companies uncertain about the path ahead. With the majority of 1st quarter earnings in the rearview poor economic numbers will be harder to ignore as we face another rate increase later this month. Plan for overnight reversal and significant intraday whipsaws to continue as the uncertainty grows.
While we slept, China reported a pickup in factory activity, with the tech-heavy HSI surging 4% while the ASX declined slightly. However, the European market’s trade decided bullish this morning, hoping to relieve the recent selling. With several pending and potentially market-moving economic reports and a bevy of retail earnings, U.S. futures push for a positive open, hoping to relieve the recent downturn and hold technical index supports.
Lowe’s sales in its fiscal fourth quarter fell short of Wall Street’s expectations. The home improvement retailer issued a conservative outlook as the sector comes under pressure from a shift in consumer spending.
General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits. The cuts affect about 500 positions, according to a person familiar with the plans, announced Tuesday internally.
In November, Rivian reaffirmed its full-year guidance of an adjusted loss before income, taxes, depreciation, and amortization of $5.4 billion. For 2023, Rivian forecast vehicle production of 50,000 vehicles. That would be roughly double last year’s amount but below analysts’ expectations of around 60,000. Rivian is focusing on ramping up its R1 truck and SUV production and an electric delivery van it builds for Amazon, its largest individual shareholder.
The Tuesday pre-market pump faded before the beginning of trading as disappointing economic numbers that point to a slowing economy and an inflation-stressed consumer change their spending habits. As we kick April trading, worries of a pending recession continue to grow amongst traders and investors, breaking recent index uptrends. Still, I would not expect the bulls to give up easily, and after testing technical support, now would be the time to step up and defend. Unfortunately, they face another round of economic reports with PMI Mfg., ISM Mfg, Construction Spending, and mortgage and petroleum data. Once again, they are working to pump up the pre-market, so expect the wild intraday whipsaws to continue as the bulls and bears battle for directional control of the indexes.
After mainly ignoring the terrible durable goods report, the bulls surged higher by more than 350 Dow points, only the quick reverse taking most of it back in a considerable intraday whipsaw. The good news is last Friday’s index lows held as support, but facing another big day of earnings and economic data on this last trading day of February, expect more of the same wild volatility. A recession seems inevitable, with slowing economic reports stacking up evidence of changing consumer habits and record credit card debt with more rate increases on the way. So, plan your risk carefully as we slide into March and the market comes to grips with the challenging path forward.
Asian markets closed mostly higher but with modest gains and losses after Japan’s factory output fell. European markets edge slightly higher this morning despite the accelerating inflation in France and Spain. U.S. futures, once again, pump higher, the premaket facing a big day of earnings and economic data, but anything is possible by the open on this last trading day of February.
A bill to revise legal protections that have shielded TikTok from U.S. sanctions is expected to pass a key House committee on Tuesday, paving the way for a broader ban on the popular short video app. Sponsored by House Foreign Affairs Committee Chairman Mike McCaul, the bill would strip longstanding protections from companies that transfer Americans’ “sensitive personal data” to entities or individuals based in, or controlled by, China. The bill would likely pass the Republican-controlled House easily. However, its fate in the Democratic majority Senate is unclear.
After the U.S. shot down an alleged Chinese spy balloon this month, China’s defense ministry declined a call with its U.S. counterpart, according to statements from both sides. Chinese culture is why, said Shen Yamei, deputy director and associate research fellow at state-backed think tank China Institute of International Studies’ department for American studies. The default U.S. view is quite different.
Ukraine President Volodymyr Zelenskyy acknowledged Monday that the situation is deteriorating around Bakhmut. Russian forces and private military contractors belonging to the Wagner Group have been trying to capture Bakhmut for months as they look to cut Ukraine’s supply lines in Donetsk. On Monday, one Russian official claimed Russian forces now controlled all roads into Bakhmut, stopping Ukrainian supplies of ammunition and forces into the city.
We kicked off the week with a considerable intraday whipsaw, but despite the bearish reversal, the bulls defended last Friday’s index lows as support. TGT squeaked out an earnings beat this morning but appeared to have the same slowing consumer concerns as HD and WMT. We not only have a big day of earnings reports but also face several economic reports, including trade, PMI, Housing prices, and Consumer Confidence. Reversal and intraday whipsaws seem likely to continue to stay focused on support and resistance levels as the big point range of price swings on the last trading day of the month.
Thursday left more questions than answers with another whipsaw day, some hopeful hammer patterns just ahead of the Fed’s favored inflation number expected to rise according to consensus. To keep traders guessing, we will follow that up with New Home Sales, Consumer Sentiment, and more Fed jaw-wagging. Buckle up today’s data could encourage the bulls to defend support or inspire the bear to keep attacking as we head into the uncertainty of the weekend. Big price moves are possible, so plan carefully with critical technical and price levels in the index charts at stake.
Asian markets traded mixed during the night even as Japan’s inflation reached a 41-year high. European markets mixed, though cautiously waiting for market-moving economic reports. The hope hammer patterns of Thursday look to reverse with a gap down, showing ahead of the Personal Incomes and Outlay number that could change everything by the opening bell. Plan for big point moves as the reaction may determine who wins the battle to hold or break critical support levels.
We have a much lighter day on the Friday earnings calendar. Notable reports include BRC, CRI, GTLS, CNK, LAMR, SSSP, TBLA, & SLCA.
News & Technicals’
Block stock rose in extended trading after the payments company reported fourth-quarter revenue and gross profit that beat Wall Street’s expectations. The company posted a (non-adjusted) net loss of $114 million, or 19 cents per share, for the quarter.
According to Fidelity’s analysis, retirement account balances in 401(k) plans lost nearly one-quarter of their value in 2022. In addition, amid ongoing high inflation and economic uncertainty, nearly half of the retirees expect to outlive their savings.
Warner Bros. Discovery reported fourth-quarter revenue that missed analysts’ estimates as the media industry contends with a soft advertising market. However, the company, which owns HBO Max and Discovery+ streaming services, said its global direct-to-consumer streaming subscriber base increased by 1.1 million during the quarter. In addition, more “Lord of the Rings” movies are on the way, CEO David Zaslav said.
Fueled by NVDA earnings, the bulls tried to resume the upside rally in the day, but the attempt quickly faded into another whipsaw day that left behind some hopeful hammer patterns and yet more questions than answers. Interestingly yesterday’s volume spike was huge, and VIX registered a substantial decline in fear despite the big ship in price. This morning it’s all about the Personal Incomes and Outlays report, the Fed’s favored reading on inflation. The result is likely to set the direction for the day and determine if the bulls will resume directional control of the market or if the bears will gain the upper hand heading into the weekend. Plan for a bumpy ride with New Home Sales, Consumer Sentiment, and more Fed speak to keep traders on edge.
The Tuesday selloff was overdue, and although a bit painful, it was finally a recognition of the inflation and the resulting pressure the consumer is dealing with in putting groceries on the table. As a result, the indexes experienced some price action damage-breaking trends and current support levels, but only the DIA suffered the technical damage of breaking its 50-day average. Today we have a big round of earnings with the FOMC minutes later to provide some potential price volatility. However, traders will quickly turn their attention to the Thursday GDP report, and the Feds favored PCE number on Friday.
Asian markets followed the U.S., selling off across the board overnight as New Zealand hiked rates to a 14-year high. European markets also feel some selling pressure this morning, pulling back after recording recent record highs. With earnings results rolling out, the U.S. futures suggest a flat to slightly bearish open with last month’s FOMC minutes release later this afternoon. Expect the wild price swings to continue as the bulls and bears fight for control.
The maker of Jeep and Dodge, Stellantis, post a record annual profit. The company also announced a 4.2 billion euro dividend payout to shareholders, equating to 1.34 euros per share, subject to shareholder approval. At the same time, the board approved a share buyback of 1.5 billion euros to be executed by the end of 2023.
Amazon employees continued to sound off Tuesday night over the company’s recently announced return-to-office mandate. A group of staffers spammed an internal website with comments expressing anger over the policy. An internal Slack channel showed concerns about parenting, caregiving, and commuting.
Sweden’s Foreign Minister Tobias Billström told CNBC Sweden, and Finland’s NATO membership was “just a matter of time,” with negotiations with ratification holdout Turkey set to resume. Billström said Sweden had “worked to fulfill everything” it agreed to in a memorandum of understanding between the countries last summer, and Swedish membership at the NATO summit in July was the goal. Sweden requested to join the military alliance after 200 years of non-alignment due to the Russian invasion of Ukraine. But it is embroiled in a long-running dispute with Turkey, which holds veto power.
Though yesterday’s selling may have been a bit painful, it was way overdue and an acknowledgment that rates are likely to rise to add pressure to an already stressed consumer. Technically there was some damage to the DIA breaking below its 50-day average. Still, the Tuesday decline reduced the overextended conditions in the SPY, QQQ, and IWM, only suffering from the break of support levels in price action. Today we have a busy earnings calendar while we wait for the FOMC minutes that could provide some price volatility at the end of the day. However, traders will quickly focus on the Thursday GDP report and the Friday PCE numbers. Remember, one day does not make a trend, so it will be interesting to see if the bears have the energy to follow through with a downside push to test the 50-day averages in the SPY, QQQ, and IWM. I would not expect the bulls to give up quickly, so expect the wild price swings to continue as the battle for control continues.
The wild daily price swings continue as the bulls rush in to buy after the big morning gap lower, and this morning, it looks like we’re in for more overnight reversals and whipsaws. Home depot numbers point to a weakening consumer, making for dangerous conditions with the market trying to ignore the higher-than-expected inflation. But, of course, with emotions so high, perhaps the pending WMT report will patch up the overnight sentiment whipsawing us again. In addition, PMI, Existing Home Sales, and a slew of earnings reports will likely keep price action challenging.
Asian markets traded mixed overnight, reacting to factory activity as Putin ups his dangerous rhetoric as the war enters its 2nd year on the 24th of this month. As Credit Suisse continues to decline, with likely more Fed rate increases on the way, European markets began the day selling after recently notching record highs. With a big day of earnings reports with clues to consumer strength, PMI, and Housing data on tap, plan for more gaps and whipsaws.
We kick off this holiday-shortened trading week with a hectic earnings calendar. Notable reports for Tuesday include ARNC, BCRX, CZR, CHK, COIN, CBRL, FANG, ELAN, ESPR, EXPD, FLR, TWNK, HD, HUN, IR, KAR, KEYS, KTOS, LZB, LPX, MDT, MELI, TAP, PANW, PSA, O, SBAC, SKT, TOL, WMT, RIG, & ZIP.
News & Technicals’
Home Depot reported its fiscal fourth-quarter earnings before the bell. The home improvement retailer was a clear pandemic winner and has remained resilient despite inflation and consumer habits shifting. Home Depot said it would spend an additional $1 billion to raise hourly employees’ wages. The home improvement retailer is the latest to signal that the labor market is still tight. Walmart, the nation’s largest private employer, recently announced raising its minimum wage to $14 an hour for store employees.
Walmart will report its earnings before the bell. The big-box retailer will likely share its outlook for the year ahead. Investors and economists are eager for clues about the health of the American consumer as inflation remains high.
Western nations and Ukraine have repeatedly rejected Putin’s narrative. However, the U.S. administration on Saturday formally concluded that Moscow had committed “crimes against humanity” during its year-long invasion of its neighbor. Feb. 24 will mark one year since Russia mounted a large-scale invasion of Ukraine, beginning a ground war in Europe that Putin still calls a “special military operation.”
The wild daily price swings continued on Friday with a substantial gap down open, but the bulls quickly rushed in to buy the lows on relatively low volume as VIX registered declining fear. Unfortunately, as I write this report, futures suggest yet another pre-market reversal as disappointing HD earnings hint at a weakening consumer amid higher-than-expected inflation reports. With the DOW consolidating rage expanding to 800 points, nearly daily overnight reversals, and huge point intraday whipsaws, there is little to no edge to be had for the average retail traders. This wild price action is a paradise for the quick in and out day trader but be warned because such times can end swiftly and painfully if the euphoric bullish assumptions suddenly shift. With a big week of earnings and potential market-moving economic reports, expect more of the same in the days ahead.
Hawkish Fed tough talk engaged the bears on Thursday as disappointing inflation data brought the thing the market hates the most, uncertainty! The challenging big-point whipsaws and the short-term extension of the SPY, QQQ, and IWM exacerbates the situation as we move toward a 3-day weekend. Of course, one day does not make a trend, and I wouldn’t expect the bulls to give up easily. However, should price support levels break, fear could quickly spike as traders run for the door to protect capital heading into the long weekend. So expect another day of wild price swings as the drama unfolds.
Asian markets sold off across the board last night due to possible rate increases and the plunging Singapore exports. After notching record highs, European markets trade decidedly bearish this morning as traders grapple with the prospect of Fed uncertainty. U.S. futures also see the bears engaged this morning, pointing to a gap down open that could threaten support levels and the current bullish trends.
We get a break in the pace of earnings today, but we still have some market-moving reports. Notable reports for Friday include AMCX, ABR, AN, B, CNP, & DE.
News & Technicals’
Dropbox recorded a real estate impairment of $162.5 million in the fourth quarter, bringing the markdown for the year to $175.2 million. The company signed a record office lease for its San Francisco headquarters in 2017 and then got hit with the Covid pandemic and a market downturn. “We were relatively quick to market with our subleasing plans, but the market has deteriorated, with many companies reducing their real estate footprint,” finance chief Tim Regan said Thursday.
The three unmanned aerial objects that were shot down over the weekend by the U.S. military were “most likely tied to private companies, recreation or research institutions,” President Joe Biden said. “Nothing suggests they were related to China’s spy balloon program,” he added. The remarks came after days of mounting pressure on the White House from Democrats and Republicans in Congress to share more of what was known with the public.
DoorDash reported better-than-expected sales for the fourth quarter and gave upbeat guidance for the current period. As a result, the stock climbed in extended trading on Thursday. The food delivery company said it authorized a buyback of up to $750 million of its shares.
Disappointing wholesale inflation numbers and hawkish Fed speeches encouraged the bears to engage yesterday with another huge point intraday whipsaw to keep traders guessing. However, the DIA remained within its wide-range chop zone by the end of the day, and the current bullish trends in the SPY, QQQ and IWM held above support levels by the close of trading Thursday. Although the price action left behind some concerning daily candle patterns, we must remember that one day does not make a trend. With Friday being a much lighter day of economic and earnings reports, the tough-talking Fed members and uncertainty that may create could be the driving force as we slide into a 3-day weekend. Expect the big point swings to continue on this expiration Friday with high emotions and indexes extended away from crucial moving averages.
While economic data and Fed members suggest more work on inflation is required, the market has covered its eyes and ears, deciding no news is bad news, at least for now. As a result, the SPY, QQQ, and IWM continue to extend away from their 50-day averages as the DIA chops in a wide multiweek range. Before the bell today, we have another big round of market-moving economic and earnings reports to keep the price action challenging. Expect the big-point whipsaw to continue as fighting the Fed remains in vogue.
Asian markets traded mixed but primarily higher overnight, despite Japan posting its worst-ever trade deficit numbers. European markets continue to extend higher, with the CAC reaching an all-time high despite the Russian spring offensive picking up steam and possible recession. U.S. futures suggest an uncertain open, but with several pending market-moving reports, anything is possible. Expect considerable price volatility as investors digest the data.
Notable reports for Thursday include AEM, AMAT, AAWW, BJRI, BLMN, CHUY, COHU, CEG, CROX, ED, DDOG, DLR, DOCN, DASH, DKNG, DBX, ETR, HAS, HSIC HUBS, H, LH, OGN, PARA, POOL, SHAK, SWAV, SO, TXRH, TSEM, USFD, VMC, WE, & ZBRA.
News & Technicals’
The European Union’s embargo on Russian oil products came into effect on Feb. 5, building on the $60 oil price cap implemented by the G-7 (Group of Seven) major economies on Dec. 5. China, India, and Turkey, in particular, have ramped up purchases to partially offset a fall in Russian crude exports to Europe of 400,000 barrels a day in January. According to the IEA’s oil market report, Russian net oil output was down by only 160,000 barrels a day from pre-war levels in January, with 8.2 million barrels of oil shipped to markets worldwide.
Bitcoin surged 11% to $24,655.94 at around 3:36 a.m. ET while ether was up more than 8% at $1,684.59, according to CoinDesk. The value of the entire cryptocurrency market rose more than $84.8 billion in the 24 hours before 3:39 a.m. ET. Crypto markets were on edge earlier this week after a step in regulatory scrutiny from U.S. authorities on stablecoins.
Ford expects production of its electric F-150 Lightning pickup to be down through at least the end of next week to address a potential battery issue that resulted in a vehicle fire. The updated timing comes a day after Ford confirmed production of the highly watched EV had been suspended at the beginning of last week due to a potential battery issue. However, Ford said it believes engineers have found the root cause of the issue.
The market seems to be in a phase where no news is bad news, as economic reports suggest the rate will continue to rise and remain elevated for extended periods. However, fighting the Fed or perhaps ignoring the potential consequences of doing so is now in vogue. Crypo’s also entered the game, surging 11% in the last 24 hours despite the SEC crackdown on the sector. Through all this pushing and shoving, the Dow remains locked in a multiweek consolidation with a price range of nearly 800 points. The tech sector continues to stretch higher even as bond yields and the U.S. dollar strengthens. How much longer this lasts is anyone’s guess but enjoy the ride and keep watch for signs of a reversal that could be substantially punishing once the reality of rate increases and recession returns.