Year-end Run

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Year-end Run

Another day another new record as the bulls extended the year-end run, but they stumbled slightly, failing to hold it into the close. Indeed, the indexes are very extended in the short term, but the DIA, SPY, and QQQ held above new support levels. Unfortunately, volume was again anemic as the index stretched out; traders should keep in mind that it will likely diminish more as we head toward the holiday weekend as they plan forward. Nevertheless, it may be wise to capture some gains if the bears suddenly appear. 

Asian markets traded mixed but mostly lower overnight as pandemic developments tempered investors’ moods. European markets traded mixed this morning but mostly lower at the time of writing this report. However, here in the U.S., the bulls keep trying to hold bullishness in the futures, looking to extend for a sixth straight day.

Economic Calendar

Earnings Calendar

We have eight companies listed on the Wednesday calendar, with only one confirmed report coming from FCEL.

News & Technicals’

According to financial filings published late Tuesday, Tesla and SpaceX CEO Elon Musk has sold another 934,090 shares, or about $1.02 billion worth of his holdings, in his electric car company. Since Nov. 8, Musk has been on a selling spree. The Tesla CEO has said he is partly selling shares to pay a massive tax bill that he anticipates will amount to at least $11 billion. Musk also exercised options to buy nearly 1.6 million Tesla shares at a strike price of $6.24 per share, granted to him via a 2012 compensation package. In addition, batter rivel Northvolt said it’s the first battery of its kind to have been fully designed, developed, and assembled by a homegrown European battery company. The battery cell came off the production line on Dec. 28. Most of the world’s electric car batteries are currently made in the U.S. and Asia, but Northvolt hopes to change this. Finally, there was a little market reaction to the central bank’s 2022 policy document. It said it would monitor risks related to the foreign exchange market and do what is necessary to ensure it runs smoothly. The lira slipped as far as 12.11 against the dollar and traded at 12.03 by 0742 GMT. Despite surging more than 50% last week following state-backed market interventions, it has lost 39% of its value this year. “The CBRT has no commitment to any exchange rate level and will not conduct FX buying or selling transactions to determine the level or direction of the exchange rates,” the bank said. Treasury yields inch lower in early Wednesday trading, with the 10-year declining to 1.4739 and the 30-year trading down to 1.8942%. 

The bulls continued to extend the year-end run on Tuesday but stumbled slightly, pulling back from record territory. However, there was no technical damage as the DIA, SPY, and QQQ held above new support levels by the close of trading. That said, the IWM did leave behind a rather ominous shooting star candle pattern looking like a possible failure below its 50-day-average. The question now is the direction of today’s follow-through. After such a  strong upside performance on low volume, a consolidation or a pullback is not out of the question. However, the bulls seem quite resolute that nothing will stand in their way. Pandemic worries and stretched valuations don’t matter in pushing for another record. As you plan, keep in mind the risk and don’t forget to take some profits just in case the bears make a sudden appearance and expect to volumes to continue to decline as we slide into the New Year.

Trade Wisely,

Doug

Santa Claus Rally

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Santa Claus Rally

With a hefty dose of financial press hype, the Santa Claus rally is underway despite noticeably low volume.  Big tech did the majority of the work, with nearly 60% of stocks still below their 200-day averages.  That said, it looks like we go higher no matter the price or the very bloated P/E ratios.  Stay with the trend but watch closely for bears as we press to the upside with overhead resistance levels above.  The focus is clearly on buy, buy, buy, but we still can’t rule out the possibility of a pop and drop or rejection of new highs like we’ve seen in the recent past.  Trade wisely.

Overnight Asian markets closed decidedly bullish, with the NIKKEI leading the way up 1.37%.   On the other hand, European markets are more cautious on the holiday-thinned session.  With little on the earnings and economic calendar, futures have rallied off of overnight lows, with the premarket pump pointing to more records at the open.  An all too familiar occurrence of 2021!

Economic Calendar

Earnings Calendar

We have a very light day on the Tuesday earnings calendar with only one confirmed somewhat notable report from CALM. 

News & Technicals’

CDC officials said the guidance is in keeping with growing evidence that people with the coronavirus are most infectious two days before and three days after symptoms develop.  The decision also was driven by a recent surge in Covid-19 cases, propelled by the omicron variant.  In addition, the change aimed at people who are not experiencing symptoms.  People with symptoms during isolation or who develop symptoms during quarantine are encouraged to stay home.  President Joe Biden pledged to aid governors struggling with the omicron variant of Covid-19  but acknowledged the states would need to take the lead in controlling the pandemic.  Speaking just before a meeting Monday with some of the nation’s governors, Biden said: “There is no federal solution.  This gets solved at a state level.” However, Biden reiterated some of the promises he made last week, including the federal government’s purchase of 500 million rapid coronavirus tests.  Some of America’s best-known VC firms have difficulty recruiting people to lead their new European outposts.  U.S. VC heavyweights, including Sequoia, Bessemer Venture Partners, Lightspeed, and General Atlantic, have opened new offices or started notable expansions in the last 12 months.  Apple closed its stores in New York City to indoor traffic due to a sharp rise in Covid-19 cases.  Customers ordering online aren’t restricted from picking up products outside retail locations.  The move, which affects its locations in Manhattan, Brooklyn, the Bronx, and Staten Island, isn’t a complete shuttering of stores like the company has done in the past to slow the spread of the virus.  Treasury Yields dipped slightly in early Tuesday trading, with the 10-year dipping to 1.472% and the 30-year declining to 1.88%.

Yesterday’s rally set more new records as the financial press turned up the hype of the Santa Clause rally.  Interestingly, this occurred with low volume and many stocks still trading below their 200-day moving averages.  So once again, a select few tech names were able to do the majority of the lifting as the gap between the have and the have-not stocks grows.  That said, it seems a forgone conclusion that the bulls will continue to push upward no matter the price and the strongly overvalued P/E ratios.  However, be careful to chase already extended stocks as we approach overhead resistance levels that harbor bears. 

Trade Wisely,

Doug

Headline-Grabbing Record

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Headline-Grabbing Record

The SPY managed another headline-grabbing record before Christmas with a low volume push.  The DIA recovered more than 1200 points on declining volume in just four trading days, with the NASDAQ surging nearly 800 points.  The question to be answered is whether they can hold and prove a higher level of support.  With price resistance levels above, will the bulls have the energy with spiking pandemic worries, or will we find entrenched bears ready to go back to work?  Plan carefully because low-volume markets add an extra element of risk.

Asian markets closed mixed overnight, with regional markets closed for Christmas.  European market edge higher incautious and thinned holiday trading environment as pandemic restrictions increase across Europe.  However, the U.S. markets have pre-market pump engaged with a substantial gap up at the open signaled. 

Economic Calendar

Earnings Calendar

To begin the last week trading week of the year, we have a very light day on the earnings calendar with just five listed and only two confirmed.  Not particularly notable reports include QIPT and AEY.

News & Technicals’

U.S. airlines have canceled hundreds of flights over the Christmas holiday, citing increased Covid cases among crews.  Airlines offered flight crews extra pay to pick up trips.  Carriers have asked the CDC to lower its recommended quarantine period for fully vaccinated staff.  Scotland, Wales, and Northern Ireland have already started new curbs to help stop the spread of the omicron variant, mainly focusing on indoor mixing.  But England has held off on adding to current stay-at-home orders and increased mask-wearing.  Johnson will reportedly digest new data on Monday looking at case rates, hospitalizations, ICU figures, and deaths.  The Christmas holiday has meant official figures have paused over the weekend, but the U.K. reported a new record of 122,186 infections over 24 hours on Friday.  Cases of Covid-19 are likely going to keep surging as the rapidly spreading omicron variant continues to tick up across the globe,  U.S. infectious disease expert Dr. Anthony Fauci said Sunday.  Every day it goes up and up.  The last weekly average was about 150,000, and it likely will go much higher,” Fauci said on ABC’s “This Week.”   Chinese authorities will allow full foreign ownership of passenger car manufacturing beginning Jan. 1, 2022.  According to a release Monday from the Ministry of Commerce and the National Development and Reform Commission, the top economic planning agency.  Treasury yields slide lower in early Monday trading, with the 10-year dipping to 1.4807% and the 30-year ticking lower to 1.880%.

Stretching out last Thursday on light holiday volume, the SPY managed to squeak out another headline-grabbing record before Christmas.  The question for today can they hold these price levels with pandemic infection numbers spiking around the world, making for some challenging holiday travel. Nevertheless, index technicals have improved, with only the IWM languishing below the 50 and 200-day averages.  However, getting above the averages is just the first step, and now we need to see some proof they can find some price support and hold above them.  Expect volume to be lighter than usual this week due to the holiday unless the bears get active, increasing fear.  As we challenge resistance levels in the DIA and QQQ, and IWM, we can’t rule out the possibility of entrenched bears.  After such a huge point gain in just 4-days the long risk is high, so plan your risk carefully as we make our way toward the new year.

Trade Wisely,

Doug

Improved Technical’s, But…

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Improved Technical’s

Yesterday’s significant reversal move improved technical’s for the SPY and QQQ indexes as they recovered 50-day morning averages, but overhead resistance remains a concern. So, on the one hand, the recovery was nice to see; on the other hand, it significantly increased the risk of additional whipsaws or reversals as we slide toward the uncertainty of the Christmas shutdown.  We turn our attention to potential market-moving economic reports with market emotion high.  Anyone’s guess how we react, but remember, the volume may quickly decline as traders take off for holiday plans.  Plan your risk carefully!

During the night, Asian market trade mixed but mostly higher, with travel stocks suffering the uncertainty of rising infection rates.  Across the pond, European markets trade flat to slightly positive, keeping a close eye on possible pandemic impacts.  U.S. futures currently suggest moderate gains and losses at the open, facing a morning of market-moving economic data.  Expect price volatility as we react and then choppy conditions due to holiday travel.

Economic Calendar

Earnings Calendar

We have just 12 companies listed on the Tuesday earnings calendar, with several unconfirmed.  Notable reports include KMX, CTAS, PAYX.

News & Technicals’

CES, which serves as an annual showcase of new trends and gadgets in the technology industry, has attracted more than 180,000 people from around the world to a sprawling array of casinos and convention spaces in the past. However, Amazon and its smart-home unit Ring said they would not be onsite at next month’s event due to the “quickly shifting situation and uncertainty around the Omicron variant” of coronavirus.  U.S. wireless carrier and conference sponsor T-Mobile also said the vast majority of its contingent would no longer be going. In addition, its chief executive would not deliver a keynote speech.  The CDC currently recommends isolation for 10-days after a positive Covid test. Delta wants to cut that in half to five days.  The call comes as Covid cases spike and the heavily mutated omicron variant spreads rapidly, straining testing supplies.  The head of Germany’s navy said China’s rapid naval buildup underlines a desire by leaders in Beijing to project strength.  Vice Adm. Kay-Achim Schonbachsaid China is increasing the size of its navy by the equivalent of the entire French navy every four years.  Schonbach commented that the German frigate Bayern is docked in Singapore as part of an effort to safeguard security and stability in the region.  Treasury yields ticked lower on Wednesday morning, with the 10-year trading down to 1.463% and the 30-year dipping to 1.876%. 

Yesterday’s significant reversal improved technicals, with the SPY and QQQ reclaiming their 50-day averages.  However, there remain questions about overhead resistance levels, and the sharp rally just increased the risk considerably for those jumping back into long positions heading into the long weekend.  Today we turn our attention to the economic reports of GDP before the bell and Consumer Confidence, Existing Home Sales, & Petroleum Status during the morning session.  Hopefully, price action can calm down with these potentially market-moving reports and the high emotion shown in the price action; anything is possible!  When considering positions, it would be wise to remember that volume is likely to decline as traders shut down for holiday plans putting them at risk during Christmas closure.

Trade Wisley,

Doug

Rapidly Spreading Variant

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The rapidly spreading variant engaged the bears yesterday with a nasty gap down that created new lows in the QQQ and IWM while the DIA and SPY held above early December lows.  This morning the futures point to another big overnight gap putting traders willing to rush back in at high risk. However, plan your risk carefully, with volumes likely to decline heading into the Christmas shutdown and the pandemic economic uncertainty.  Expect the whipsaws and overnight reversals to continue as we approach the significant overhead resistance levels.

Asian markets closed green across the board last night, led by the Nikkei surging 2.08%.  European markets also want to shake off the pandemic concerns showing green across the board this morning.  With another light day of earnings and economic reports, U.S. futures point to another big overnight gap keeping the risk high for those willing to rush back into the fray.  Don’t rule out the possibility of a pop and drop at the open and watch for head fakes and intraday whipsaws as volume contracts due to holiday travel.

Economic Calendar

Earnings Calendar

We have 15 companies listed on the earnings calendar as we head toward the holiday shutdown.  Notable reports include AIR, APOG, BB, CAMP, FDS, GIS, NEOG, & RAD.

News & Technicals’

The Biden administration will deploy 1,000 medical personnel from the military to back up hospitals if they face a wave of omicron patients in January and February.  The White House also purchases 500 million at-home Covid tests that Americans can order for free through a website starting in January.  On Monday, the Centers for Disease Control and Prevention reported that omicron is rapidly spreading and is now the dominant variant representing 73% of U.S. cases.  In January, the Senate will vote on the Build Back Better Act despite Sen. Joe Manchin’s opposition to the bill, Majority Leader Chuck Schumer announced.  Manchin dealt a crushing blow to President Joe Biden’s top domestic priority, which would invest in the social safety net and green-energy programs.  It is unclear if Democrats will try to pass a smaller bill that includes only the Build Back Better Act.  The enhanced child tax credit, which the bill would renew, expires at the end of the year.  According to data published Monday by the Centers for Disease Control and Prevention, the rapidly spreading omicron variant is now the dominant Covid strain in the U.S., representing 73% of sequenced cases.  Omicron has displaced the previously dominant delta variant, which CDC data shows is now an estimated 26.6% of sequenced cases for the week ending December 18.  Treasury Yields edged higher in Tuesday morning trading, with the 10-year trading up to 1.420% and the 30-year rising to 1.849%.

Fear of possible economic impacts from the rapidly spreading variant brought the bears yesterday, creating new lows in the QQQ and IWM.  However, DIA and SPY held at lows higher than the beginning of December, providing some hope that a relief rally could soon occur.  Unfortunately, the technical damage has left significant price resistance levels above that may now harbor entrenched bears willing to defend.  As volume begins to contract due to the Christmas travel, the question to be answered is wheather traders weary of the wild volatility will be as willing to take the high risk of rushing back into risk.  This morning futures are attempting to inspire buyers with another big overnight gap.  Will it trigger a short squeeze, or could it be just another pop-and-drop trap?  The risk is high so plan your risk carefully, my friends.

Trade Wisley,

Doug

More Technical Damage

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The selling on Friday created more technical damage as the DIA and QQQ joined the IWM below their 50-day averages.  However, the DIA and SPY still hope they can avoid dipping below the Dec. 1st low.  Unfortunately, follow-through selling this morning will officially create lower lows in the QQQ and IWM and likely dampen the spirit of the buy-the-dip buyers who will feel the pain of another gap down today.  The highly hyped and hoped-for Santa rally looks to have been stolen by the Grinchy new variant and its possible economic impacts.  Expect volume to drop quickly this week as traders head out for holiday plans.

Asian market closed red across the board as pandemic worries intensified.  European markets are also decidedly bearish, with the FTSE leading the bears down 1.96% this morning as restrictions expand.  Ahead of a light day of earnings and economic data, U.S. futures point to a nasty gap down to begin this holiday-shortened week.  So, buckle up and get ready for a dose of volatility in the open.

Economic Calendar

Earnings Calendar

Kicking off a holiday-shortened week, we have 14 companies listed with a few unconfirmed.  Notable reports include CCL, MU, NIKE, & BLDE.

News & Technicals’

The Netherlands entered full lockdown from Sunday until mid-January, leaving only supermarkets and essential shops open.  In the U.K., government ministers are also refusing to rule out further restrictions over Christmas as cases skyrocket.  President Joe Biden’s Chief Medical Officer Anthony Fauci said on Sunday that it was clear omicron was already “raging through the world.” However, modern said that its currently authorized booster could “boost neutralizing antibody levels 37-fold higher than pre-boost levels,” which it described as reassuring.  However, it also said that a double dose of the booster shot — 100 micrograms, rather than the approved 50 micrograms — was significantly more effective.  Sen. Joe Manchin, a conservative Democrat, said Sunday he won’t support the Biden administration’s “Build Back Better” plan.  Manchin’s decision will likely kill the $1.75 trillion social spendings and climate policy bill as it is now.  Democrats need Manchin’s vote in the 50-50 Senate, plus a tie-breaker from Vice President Kamala Harris.  Treasury Yields traded lower in early Monday trading, with the 10-year slipping to 1.3716% and the 30-year falling to 1.7897%.

The selling on Friday added more technical damage to the index charts, with the QQQ, IWM, and now the DIA trading below their 50-day averages.  Central bank changes and the rapidly spreading pandemic variant may have ended the hope of a Santa Clause rally this year.  Heavy selling in Asia and Europe suggests the short holiday weeks ahead could see challenging price action.  Once again, the buy-the-dip buyers will feel the sting of disappointment with futures pointing to a substantial gap lower.  The QQQ and the IWM look to open lower than the December 1st lows, but the DIA and SPY still cling to hope a lower low can be avoided.  Keep in mind volume will likely decline throughout the week as traders head out for holiday plans.  Moring price volatility could easily slip quickly into low volume choppy price action unless otherwise inspired by news events. 

Trade Wisely,

Doug

Quadruple Witching

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Quadruple Witching

Thursday morning’s early bullishness turned to the bear’s favor with yesterday’s pop and drop, leaving behind concerning price patterns on the SPY, QQQ, and IWM.  Today with little inspiration available on the earnings and economic calendars, the quadruple witching could add to the wild price gyrations as we slide into the weekend.  That could make it challenging for the bulls to defend price supports if traders and investors reduce or avoid weekend risk.  Remember, cash is a position!

During the night, Asian markets closed red across the board, with tech stocks sliding south.  This morning, European market trade is mainly in the red market, and infection rates, surges, and tech fall 1.7%.  This morning, U.S. futures point lower across the board as uncertainty raises its ugly head heading into the weekend.  Plan your risk carefully with price gyrations expected due to options expiration.

Economic Calendar

Earnings Calendar

We have a very light day on the Friday earnings calendar with just 12 companies listed but only three confirmed.  Those listed but not particularly notable are DRI, WGO & YCBD.

News & Technicals’

The Consumer Financial Protection Bureau is seeking information from Affirm, Afterpay, Klarna, PayPal, and Zip on the risks and benefits of their products. For example, “Buy now, pay later” services let shoppers defer payment for items, typically throughout monthly installments and with no interest attached.  Affirm’s shares closed down by 11% Thursday, while Australian companies Afterpay, Zip, and Sezzle on Friday dropped 8%, 6%, and 10%, respectively.  Rivian said it expects to fall “a few hundred vehicles short” of its 2021 production target of 1,200 vehicles.  The company said it faced supply chain issues and challenges ramping up production of the complex batteries that power the vehicles.  The updates come alongside Rivian’s first quarterly report as a public company and confirmation of plans for a new $5 billion plant in Georgia that’s expected to come online in 2024.  Adobe’s guidance for its fiscal first-quarter badly missed analysts’ estimates.  The stock plummeted 10%, its second-worst day in the past decade.  In December, it’s the third time that Adobe shares have plunged, putting the stock on pace for its steepest monthly drop since June 2010.  Treasury yields dip slightly in early Friday trading, with the 10-year sliding down to 1.4208% and the 30-year declining to 1.8538%.

Yesterday’s pop and drop increased uncertainty, with the QQQ leaving behind a bearish engulfing candle and opening the door for a possible reversal.  Today is a quadruple witching day, so the market may experience odd price gyrations as the institutions and investors adjust positions.  Unfortunately, we have little to nothing on earnings and economic calendars to inspire direction.  That said, with the uncertainty displayed in the charts heading into the weekend, the bulls may have a tough time defending price support levels.  Sadly, the hoped-for Santa rally may well succumb to the Grinch’s shenanigans.  I wish you all a safe and restful weekend!

Trade Wisley,

Doug

Aggressive Taper

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Aggressive Taper

With the Fed announcing an aggressive taper and three possible rate increases next year, the market surged, triggering a short squeeze that is now looking to gap setting new record highs in the SPY!  Go figure?  I guess it tells us just how problematic inflation had become! Of course, with a big gap up comes the risk of a pop and drop, so watch carefully for follow-through buying before diving into risk.  We have a quadruple witching this Friday so expect price gyrations to remain challenging.

Asian traded chiefly higher led by Japan surging 2.13%, seemingly celebrating the more hawkish Fed.  European markets are also surging higher after digesting the FOMC decision to taper aggressively.  Ahead of earnings and a slew of possible market-moving reports, Dow futures point to a gap up open or nearly 300 points, and the SP-500 is set for new record highs at the bell.  Remember, big moves like this increase trading risk dramatically, so plan carefully and trade wisely.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 15 companies listed with several unconfirmed.  Notable reports include ADBE, FDX, CAN, GTIM, JBL, SCS, & WOR.

News & Technicals’

As Sen. Joe Manchin withholds his support, Democrats are unlikely to meet their goal of passing President Joe Biden’s Build Back Better Act this year.  The delay will have immediate implications, as the enhanced child tax credit is set to expire, and Democrats could instead turn their focus to voting-rights legislation. However, failure to pass the plan could have broader long-term implications, not only on the country’s social and climate policy but also in next year’s midterm elections.  According to the Statens Serum Institut in Copenhagen, omicron cases are doubling every two days in Denmark, with variant expected to overtake delta in the next week.  The rapid spread of omicron in Denmark, where 80% of the population is vaccinated, is an ominous sign for the U.S.  Dr. James Lawler, an infectious disease expert at the University of Nebraska, said the U.S. has just weeks to take action to stem omicron.  House Speaker Nancy Pelosi scoffed at the idea of banning congressional lawmakers and their spouses from owning stock shares of individual companies.  “We’re a free-market economy,” Pelosi said. “They should be able to participate in that.”  Since the beginning of the Covid pandemic, stock purchases by some senators have sparked investigations.  Treasury yields traded mixed in early Thursday trading, with the 10-year dipping slightly to 1.4582% and the 30-year rising to 1.8627%.

The market surged, triggering a short squeeze after the Fed begins an aggressive taper and sees three rate increases next year.  Though this is the opposite of how the market would generally react to a hawkish Fed but may suggest the impacts of inflation is the greatest evil.  Yesterday’s rally didn’t break price resistance levels, but this morning, ahead of potential market-moving reports, the futures point to a considerable gap up that will set new record highs in the SPY and put the QQQ within striking distance.  That said, a big gap sets up a possible pop and drop at the open, so be careful.  Wait until you see some follow-through before diving in headlong.  Expect price volatility to remain challenging as we head into the quadruple witching Friday.

Trade Wisely,

Doug

Highest PPI on Record

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Highest PPI on Record

The highest PPI on record kept the bear engaged yesterday, but surprisingly, the bull worked pretty hard, trying to convince us that inflation doesn’t matter.  Today we turn out attention to retail sales figures and the FOMC decision. Finally, we will learn how big the Taper will be and when the U.S. could expect interest rate increases as the Fed finally moves to fight inflation.  Expect price volatility!  Keep in mind we have several potentially market-moving events Thursday and a quadruple witching on Friday to keep us guessing.

Asian markets traded mixed overnight as investors digested a slew of economic data.  European markets trade mostly bullish this morning as they monitor the Fed decision with modest gains and losses.  Facing a big day of market-moving data U.S. Futures trade flat to mixed as we wait. So let’s get ready to rumble.

Economic Calendar

Earnings Calendar

This Wednesday, we have a bit more activity on the earnings calendar, with 20 companies listed through several remaining unconfirmed.  Notable reports include ABM, BLBD, HEI, LEN, NDSN, REVG, & TTC.

News & Technicals’

Congressional Democrats voted to raise the debt ceiling just before the deadline to mark the first U.S. default.  The Senate passed a borrowing cap increase late Tuesday afternoon, and then the House followed suit early Wednesday.  The bill headed to President Joe Biden’s desk when the Treasury Department estimated the U.S. could run out of tools to pay its bills.  The Biden infrastructure bill included $65 billion to build broadband internet access.  Commerce Secretary Gina Raimondo told CNBC she is confident that every household will have a connection by the end of the decade – if not sooner.  But some experts believe it will cost much more to close the broadband gap. In addition, Chinese companies listed on Wall Street will likely be cut off from U.S. capital markets in the next three years as tensions between Beijing and Washington persist, according to David Loevinger from the TCW Group.  He predicted that by 2024, most Chinese companies listed on U.S. exchanges would no longer be listed in the United States.  Many of China’s top internet companies listed in the U.S. have already undertaken dual listings in Hong Kong. Some high-profile names include e-commerce giant Alibaba, its rival JD.com, search engine giant Baidu, gaming firm NetEase and social media giant Weibo.  Treasury yields rose slightly in early morning trading, with the 10-year climbing to 1.4445% and the 30-year moving up to 1.8301%.

The highest PPI on record kept the bears active yesterday, raising the stakes for the big day of data today.  Before the bell, we have a significant economic data dump, including the highly watched holiday retail sales figures.  Will, the Santa Clause rally make an appearance this year, or will the Grinch sneak in to steal all the goodies?  We will soon find out.  After that, everyone will brace for the uncertainty of the FOMC decision on Taper, future rate decisions, and the chairman’s press conference.  I think it’s fair to say anything is possible, so prepare for more price volatility.  With the VIX elevated and index chart price patterns showing uncertainty, there is a reason for caution as traders and investors digest the data.  As you plan forward, notice several potential market moving reports Thursday morning and a Quadruple Witching this Friday that typically creates unusual price gyrations. 

Trade Wisely,

Doug

Bears Returned to Work

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Bears Returned to Work

The SPY could not hold onto Friday’s record as the bears returned to work, creating minor technical damage in the QQQ and raising uncertainty with bearish candle patterns left behind. In addition, concerns of economic impacts from the rapidly spreading variant dinted investor sentiment.  Today we will turn our attention to the pending PPI report and the beginning of the FOMC meeting.  If the inflation numbers come in hot will, we again choose to ignore?  If we don’t get a significant reaction from the PPI, then look for choppy market conditions as we wait on the FOMC decision Wednesday afternoon.

Overnight Asian markets worried about potential impacts of the new variant closed in the red across the board with led by Hong Kong falling 1.33%.  This morning, European markets trade mixed and muted, keeping an eye on rising pandemic infection rates and central bank decisions.  With a light day of earnings and key inflation data just around the corner, U.S. futures point to mixed open with a notable gap down forming in tech before the data.

Economic Calendar

Earnings Calendar

We have just 15 companies listed on the Tuesday earnings calendar, with several unconfirmed.  Notable reports include ASPU & CLSK.

News & Technicals’

The report said that the recovery to be affected by a new surge in Covid-19 cases, with jet fuel getting hit hard. In addition, its authors noted that the emergence of the new omicron variant had already brought about new restrictions on international travel. Toyota, one of the world’s largest automakers, is planning to invest 4 trillion yen ($35 billion) to build a full lineup of 30 battery-powered electric vehicles by 2030.  It aims to increase global sales of battery electric vehicles by 3.5 million units a year by 2030.  Most of Toyota’s current electric vehicle sales are hybrid EVs powered by an internal combustion engine and battery-operated electric motors.  ACCORDING TO FINANCIAL FILINGS OUT LATE MONDAY, Tesla CEO Elon Musk sold another 934,091 shares of his electric car company, which are worth around $906.49 million.  Musk also exercised options to buy 2.134 million shares of Tesla at the strike price of $6.24 per share granted to him via a 2012 compensation package.  Musk, the wealthiest person globally and was just named Time Magazine’s 2021 Person of the Year, still has millions of stock options that he needs to exercise by August 2022.  Treasury yields tick higher in early Tuesday trading, with the 10-year trading up to 1.4326% and the 30-year inching higher to 1.8145%. 

The bears returned to work on Monday; the rapidly spreading variant fears of economic impacts grow.  Adding to the uncertainty, another key inflation PPI report and the beginning of the FOMC meeting may double the amount of taper and signal rate increases possible in 2022.  The DIA left behind an evening star pattern at price resistance but managed to hold current support levels.  The SPY could not hold onto Friday’s record falling back into a consolidation zone holding just above support. Finally, the QQQ suffered technical damage in the Monday selling, breaking support and falling into the huge gap left behind on December 7th.  IWM remains the weakest of the indexes nearing a retest of the December 1st low.  The question for today is, will the bulls find the energy or inspiration to defend, or will the bears gain the edge?  Last Friday, the market chose to ignore the surging inflation. Can they do the same today if the PPI number comes in hot?  We will soon find out.  So, buckle up and prepare for another dose of price volatility.

Trade Wisely,

Doug