Holiday week trading is typically challenging due to the rapid decline in volume as traders shut down for travel.  However, this week could be different with all the news hype about the beginning of a Santa Claus rally and an economic calendar full of market-moving data.  Then don’t forget the possible market volatility that could happen should Biden change with the Fed Chair!  With so much data coming our way, expect significant price volatility even as we pump the tech giants to new records and incredible P/E ratios.  Remember to take some profits along the way.

Asian markets traded mixed overnight after the central bank kept loan rates steady.  European markets trade mixed and flat this morning due to rising pandemic restrictions and protests that have erupted as a result.  We don’t seem to have the same concerns with the U.S. futures, pointing to a bullish open that includes fresh new records as the tech giants continue to surge higher.

Economic Calendar

Earnings Calendar

We have 36 companies listed on the earnings calendar to kick off the shortened holiday week, with several unconfirmed.  Notable reports include A, ARWR, IBEX, KEYS, NIU, URBN, & ZM.

News & Technicals’

The People’s Bank of China deleted several phrases in its latest monetary policy report, a move that economists say signals a shift toward easier policy.  Despite signs of a growing slowdown in the economy, the phrases had signaled a level of restraint in central bank policy.  However, the PBoC maintained a tough stance on the property market, which has struggled in the wake of Beijing’s crackdown on real estate developers’ high debt levels. In addition, Illinois legislators agreed to spend up to $694 million over the next five years to keep a handful of nuclear power plants open.  The operator of the plants, Exelon, said they were losing hundreds of millions of dollars and that nuclear can’t compete with cheap natural gas and subsidized wind and solar.  Critics say that Exelon had the state over a barrel and that longer-term solutions are necessary to make clean energy cheaper and more accessible.  Protests against fresh Covid restrictions have continued to rock Europe over the weekend.  There were demonstrations in Vienna, Brussels, and Amsterdam against new Covid rules. In addition, new coronavirus cases continue to surge across the continent.  Treasury yields rose in early Monday trading, with the 10-year climbing to 1.5583% and the 30-year advancing to 1.9107% as we wait on the Biden Fed Chair appointment. 

Holiday trading is always a hit-and-miss scenario when it comes to volume. That said, the news has laid it on thick over the weekend that we have the perfect setup for the so-called Santa Clause Rally to begin.  Now toss in possible uncertainty with a Fed Chair appointment, inflation data, and Durable goods, GDP, and Personal incomes combined with likely declining volume throughout the shortened week, and anything is possible!  However, the weekend hype seems to be working with the future, suggesting nothing but blue skies as we continue to extend the tech giants to phenomenal P/E ratios. So stay with the trend, but please remember to take some profits along the way just in case a scare or two comes along that engages the bears and price volatility. 

Trade Wisely,

Doug

A mightly shove in the tech giants got the job done for new records in the QQQ and SPY while at the same time, the number of stocks falling below their 50 and 200-day moving averages grew.  That’s awesome, but it also begs the question, what happens if big tech buying reaches an exhaustion point?  With parts of Europe re-entering pandemic lockdowns, very little earings inspiration, and only Fed speak on the economic calendar, price action could become very choppy if the bears remain lethargic. In addition, next week, heading into the Thanksgiving holiday, may see declining volumes as travel picks up, so plan your risk carefully.

Asian markets close trading mostly higher, with Hong Kong shedding 1.07% after disappointing results from Alibaba.  European markets see nothing but red this morning as sentiment declines due to more pandemic lockdowns and restrictions grow. Finally, with a very light day on the earnings and economic calendar, U.S. futures suggest a mixed open industrial’s declining sharply while the tech sector continues to surge.

Economic Calendar

Earnings Calendar

Our Friday earnings calendar is very light, with just nine confirmed reports.  Notable reports include BKE & FL.

New & Technicals

Democrats moved toward a vote on President Joe Biden’s social safety net and climate plan.  A Congressional Budget Office estimate said the Build Back Better Act would add $367 billion to budget deficits over a decade but did not account in the topline for revenue raised by increased IRS enforcement of tax laws.  Five Democratic holdouts wanted to see a CBO score before they voted for the bill.  If the House passes the legislation, the Senate will likely approve a different version of it.  Thursday evening President Biden suspends enforcement of business vaccine mandate due to court mandate and escalating legal challenges companies and states.  Austria announced this morning they would re-enter a total national lockdown while Germany added more restrictions on Thursday.  Treasury yields declined in early Friday trading, with the 10-year dipping to 1.5565% and 30-year falling to 1.9405%.

With a mightly shove by the tech giants, the Nasdaq closed at a new record high, and the SP-500 squeaked out a new closing high in the process.  Unfortuntually, at the same time, the number of stocks slipping below their 50 and 200-day averages grew.  With parts of Europe re-entering Covid lockdowns, futures that were bullish during the night have taken a bearish turn.  With little on the earnings calendar to provide inspiration and nothing but Fed speak on the economic calendar, it could be an interesting day if the bears start to show some interest.  If the bulls find the energy to defend, I would expect a choppy price action day as we slide into the weekend.  Keep in mind as you plan forward that next week, we could see light volumes as traders get some post-Covid restriction family time travel for Thanksgiving. 

Trade Wisley,

Doug

Though the Dow continued to pull back yesterday, the bulls held strong defending recent lows and prevented a lower low’s technical damage.  Though the S&P is now suggesting that Evergrande is likely to default is suspect we will ignore the possible U.S. impacts in favor of new record highs in the Nasdaq and SP-500.  However, this push higher seems to be struggling with momentum, so make sure you have a plan if the tide starts to go out.

Overnight Asian markets were mostly lower, led by tech shares and developer concerns, as Hong Kong fell 1.29%.  European markets trade flat and mixed, worrying about the implications of the slipping consumer sentiment due to inflation impacts.  However, U.S. futures don’t appear to have any concerns pointing to a bullish open and possible new record high. 

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 35 companies listed with a few unconfirmed.  Notable reports include BABA, AMAT, ATKR, AHM, BECN, BRBR, BJ, CAL, CSIQ, FTCH, HP, INTU, JD, KSS, M, NUAN, PANW, WOOF, POST, ROST, VIPS, WWD, & WDAY.

News & Technicals’

Saule Omarova, President Joe Biden’s choice to lead one of the nation’s top bank regulators, is set for a fiery nomination hearing.  While Republicans have warned against recommending a candidate whose academic work calls to “end banking as we know it,” skepticism has also come from a Democrat, Sen. Jon Tester.  Just one Democratic defection on a committee vote to recommend her to the broader Senate would likely end her nomination to head the Office of the Comptroller of the Currency.  “I know that difference between the job of an academic … and the job of a regulator, which is very circumscribed,” Omarova said in an interview Tuesday.  N26′s American customers will no longer be able to use its app from Jan. 11, 2022.  The Berlin-based fintech said the move aimed at shifting focus to its core European business.  It’s a reminder of how difficult it has been for European fintech to expand its services in the U.S.  Evergrande default is highly likely, according to the S&P.  “We still believe an Evergrande default is highly likely,” S&P Global Rating analysts said in a report Thursday.  The firm has lost the capacity to sell new homes, which means its main business model is effectively defunct,” the report said.  Treasury Yields pulled back slightly yesterday and continued to relax in early Thursday trading.  The 10-year declined to 1.5838%, and the 30-year fell to 1.9713%.

Though we pulled back in Dow, creating lower high patterns, the bulls held strong preventing a lower low from occurring and avoiding technical damage. Unfortunately, the Russell was not so lucky with the price creating a lower low while holding substantial price support and the bullish trend.  Though there may be some reason for uncertainty in the industrials, the tech sector continues to surge within striking distance of a new record high and lifting the SP-500 as well.  That said, overall market momentum is slowing as inflation impacts curtail consumer activities.  With jobless claims and manufacturing data on the horizon, the bulls are back on the job in the premarket.

Trade Wisely,

Doug

Although the tech enjoyed sustained buying yesterday, bullish momentum struggled with the Dow giving back most of its gains to leave behind an uncertain shooting star pattern. So the question for today can retail continue to inspire enough bullish momentum to keep the indexes rising?  The rising dollar and increasing bond yields might signal a risk-off scenario, so keep a close eye on them if they continue marching higher. 

Overnight Asian markets closed the day mostly lower, with only China posting a modest gain of 0.44%.  European markets appear to have a more bullish outlook, but current gains hover near the flatline as they wait on earnings results.  U.S. futures point to a flat to mixed open ahead of retail earnings and housing data. 

Economic Calendar

Earnings Calendar

We have 44 companies listed on the earnings calendar with another day of focus on retail.  Notable reports include TGT, NVDA, CRMT, BIDU, BBWI, BILI, CSCO, DSX, HI, IQ, LOW, MTOR, MBT, QUIK, SCVL, SONO, TTEK, TJX, UTI, VSCO, VINP, VTRU, XIM, ZTO.

News & Technicals’

Lowe’s beat expectations for fiscal third-quarter earnings, as it got a boost from online sales and business from home professionals.  Despite analysts predicting a decline, the home improvement retailer’s same-store sales rose by 2.2% in the three months. In addition, CEO Marvin Ellison said sales to home pros, such as electricians and contractors, rose 16% in the third quarter.  Amazon has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain.  The e-commerce giant cited high fees charged by the payment processor.  Visa said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.”  The U.S. Justice Department will sell off $56 million worth of cryptocurrency it seized as part of a massive Ponzi scheme case against a man who promoted the crypto lending program BitConnect.  The BitConnect scam has swindled thousands of people in the U.S. and abroad out of more than $2 billion worth of bitcoin.  In September, the Securities and Exchange Commission sued BitConnect, its founder Satish Kumbhani and Glenn Arcaro, who was the lead promoter of BitConnect in the United States.  Treasury yields dip just slightly in early Wednesday, with the 10-year trading at 1.625% and the 30-year edging lower to 2.0157%.

Substantial retail numbers brought out the bulls on Tuesday but curiously, the momentum struggled to stay on course into the close.  While tech faired much better, the Dow gave up most of the day’s gains leaving behind the uncertainty of a shooting star pattern near price resistance.  Perhaps the rising dollar with the ten, twenty, and thirty-year bonds rising are beginning to show signs of risk-off that I mentioned yesterday.  However, with another round of retail with LOW and TGT this morning followed by results from NVDA after the bell, the bulls can reignite momentum.  That said, I still believe it wise to wise to watch closely for a possible pullback to test support levels. 

Trade Wisely,

Doug

With the uncertainty of retail sales numbers out this morning, the market struggled to find direction yesterday.  The pop and drop pattern left behind would raise the possibility of a lower high at resistance if the bears were to happen to find some inspiration.  However, with analysts suggesting a solid retail sales number is likely yesterday may prove only to be a rest before stretching to new highs.  That said, anything is possible, and with earnings, inspiration to fuel the bulls market momentum could suffer.

Asian markets traded mixed during the night as the investors reacted to Biden-Xi talks with China selling slightly and Hong Kong surged higher.  Across the pond, European markets sport modest gains across the board.  U.S. futures began the morning in the red, but the bulls went to work pumping the premarket, which has become all too typical of late. Of course, anything is possible with the dollar showing strength, so buckle up the ride is about to begin.

Economic Calendar

Earnings Calendar

We have a much lighter day on the earnings calendar with just 44 companies listed, and several are unconfirmed.  Notable reports include HD, ARMK, DLB, DAVA, AQUA, JMIA, LZB, NTES, SE, SBLK, STNE, TDG, VREX, WMT, ZENV, ZEPP. 

News & Technicals’

October retail sales are expected to increase by 1.5%, boosted by early holiday shopping and higher gasoline prices.  Economists say the report will be essential to examine whether consumers are willing to spend, even as sentiment has weakened. In addition, the report should show that the effects of the Covid delta variant are fading, as parts of the economy are rebounding.  Home Depot topped Wall Street’s estimates for its third-quarter earnings and revenue.  Consumers were spending more when they visited, raising the average ticket by 12.9% to $82.38.  President Joe Biden signed the more than $1 trillion bipartisan infrastructure plan into law Monday.  The plan will put $550 billion in new money into transportation, broadband, and utilities. In addition, Biden made a case for Democrats’ $1.75 trillion proposals to invest in the social safety net and climate policy. Finally, Tesla CEO Elon Musk faces a potential tax bill of more than $10 billion on stock options granted in 2012.  Musk started exercising the options Monday, exercising $2.5 billion in shares and selling $1.1 billion of those exercised options to pay the taxes.  But he continued to sell the additional stock, and it’s likely those sales were unrelated to the stock option exercises he must complete by August. This means future stock sales are likely.  Treasury yield fell in early Tuesday trading, with the 10-year slipping to 1.6094% and the 30 pulling back to 1.9790%. 

The indexes struggled for direction yesterday, challenged by overhead resistance and facing the uncertainty of retail sales figures coming out before the bell this morning.  We will also hear from HD and WMT before the bell, the only likely market-moving earnings reports today.  Yesterday’s pop and drop in all four indexes set up possible lower highs, but with economists suggesting a solid retail sales number, it could be nothing more than a rest before reaching out for more new records.  However, with the decline in earnings inspiration and seeing a rising dollar, there is a concern of fading momentum and a possible risk-off scenario forming. As a result, a noticeable shift of energy into traditional defensive sector stocks, hinting at a possible rotation toward safety.  Stay with the overall trend but never forget how elevated this market has become.  A longer-term consolidation or a pullback is not out of the question, so have a plan to protect your capital because it can begin with breakneck speed!

Trade Wisley,

Doug

The worst consumer sentiment reading in more than ten years didn’t dissuade the bulls at all as they worked a nice Friday rally.  Retail will be in focus this week, with earnings from WMT, TGT, and HD, as well as last month’s retail sales figures coming our way Tuesday morning.  It will be interesting to see if inflation and supply chain issues hampered the early holiday sales events.  With consumer debt hitting record highs, my guess is no, but we will soon find out.  Although the indexes remain very elevated, stay with the trend because the bulls seem to have no inflation concerns and want the party to continue. 

Overnight Asian markets closed with modest gains through China fell slightly even as their retail sales topped expectations.  European markets currently trade with modest gains and losses, as if searching for inspiration.  However, U.S. futures point to a bullish open, with the Dow suggesting a 100 point gap. Nevertheless, with new price resistance above, don’t rule out the possibility of a lower high or even a pop and drop pattern to occur if the bears find a reason to fight.

Economic Calendar

Earnings Calendar

We have a busy day on the Monday earnings calendar with nearly 300 companies listed, but many of them unconfirmed.  Notable reports include AAP, AND, AXON, SCPR, IBIO, JJSF, LCID, MGIC, OTLY, PLBY, RXT, STAF, COOK, TSN, WMG, STAF, COOK, TSN, WMG, XSPA.

News & Technicals’

Consumers will be a big focus for markets in the week ahead, with government retail sales data Tuesday and earnings from Walmart, Target, and Home Depot, among others. In addition, investors are watching the meeting between President Joe Biden and China President Xi Jinping Monday night for signs of any warming of relations on trade and other issues. According to contracts signed by four states, Apple requires states to maintain the systems needed to issue and service credentials at taxpayer expense.  The agreement, obtained through public record requests from CNBC and other sources, mainly portrays Apple as having a high degree of control over the government agencies responsible for issuing identification cards.  Apple has “sole discretion” for critical aspects of the program.  Last week, the European Commission, the executive arm of the EU, projected a GDP rise of 5% for both the EU and the euro area this year.  Some EU nations have started to see a high number of Covid-19 infections recently, mainly in countries where vaccination rates are still relatively low.  Austria and the Netherlands have imposed new social restrictions in the last few days.  Treasury yields look lower this morning, with the 10-year falling to 1.546% and the 30-year dipping to 1.9232% in early morning trading.

The indexes enjoyed a Friday rally choosing to ignore the worst consumer sentiment reading in more than ten years.  However, the VIX declined, and big tech rallied strongly to end a volatile week of price action.  This week we have a big focus on retail with earnings from WMT, TGT, and HD with a reading on Retail Sales figures Tuesday morning.  The SP-500 P/E Ratio eased slightly with last week’s selling but remained strongly overvalued at 98% above the historical average.  The Buffett Indicator is a whopping 215% market value ratio to GDP, holding 72% above the historical average.  That said, the bulls seem to have no concern with the premarket activity working to inspire prices higher.  So stay with the trend and enjoy the party as long as it lasts!

Trade Wisley,

Doug

Although we saw modest selling yesterday, tech stocks remained the bright spot posting a gain while the industrials continued to slide lower.  However, the moves showed no fear, with VIX pulling back during the choppy light day of price action.  This morning, we will turn our attention to Consumer Sentiment and the JOLTS reports with a light day of notable earnings reports as the silly season begins to wind down.  Will the data inspire the bulls to close the week positively, or will it bring out the bears, adding to the inflationary worries?

Asian markets closed Friday, trading green across the board during the night, inspired by record Singles Day shoppers.  However, European markets trade mixed this morning with modest gains and losses.  With a lighter day of earnings inspiration and economic data coming later this morning, the U.S. futures point to a positive as they try to shake off inflation concerns.

Economic Calendar

Earnings Calendar

We have a much lighter day on the earnings calendar with 85 companies, but many of them remain unconfirmed.  Notable reports include AZN, DTEGY, VIVO, MFG, NGD, SPB, TOELY, & WRBY. 

News & Technicals’

During a politically significant press conference Friday, a top Chinese official gave a rare criticism of the U.S. and Western democracy.  The night before, Chinese President Xi Jinping joined the ranks of Mao Zedong and Deng Xiaoping in becoming the country’s third leader to oversee the adoption of a “historical resolution.”  While criticizing Western political systems, Chinese officials promoted their country’s agenda and emphasized new development models under Xi.  Alibaba and JD.com racked up around $139 billion of sales across their platforms on China’s Singles Day shopping event, setting a new record.  The record sales come despite worries about the strength of the Chinese consumer and the impact of Beijing’s crackdown on technology companies.  Singles Day was a slightly more muted affair as Chinese technology companies continue to face scrutiny from regulators and President Xi Jinping pushes for so-called “common prosperity.”  Treasury yields traded mixed early Friday morning, with the 10-year rising slightly to 1.5716% while the 30-year moved slightly lower to 1.9183%.

Yesterday proved to be a choppy day, but tech stock remained the bright spot for the market with a modest gain while the Dow slowly ground lower.  Worries of inflation elevated treasury bonds on Wednesday, and as of this morning, they continue to hold on to gains.  However, the gains in gold and silver have softened overnight while still holding essential support levels.  With earnings season beginning to wind down, we may turn more attention to economic data for inspiration.  Today, we will test the Consumer Sentiment report’s temperature and see if we are making progress with the JOLTS numbers.  Today could be interesting with the institutions wanting to close the week on a strong note, while the bears may still want to test price support levels in the index charts that remain below current prices. 

Trade Wisely,

Doug

The bears slowly react to inflation, hitting a 30-year high after an early attempt to rally the markets as if it didn’t matter at all.  The wild speculative nature of this market is evident with the pricing of Rivian that has yet to produce 10,000 vehicles an expecting to lose more than 1.2 billion next quarter, now worth more than Ford and General Motors. Of course, that happens to be just another marker that is very reminiscent of the 1999 market bubble.   Look for the possibility of light and choppy price action today due to the Federal Holiday of Veterans day.

Asian markets traded mixed with Hong Kong surging 1% as Evergrande makes another last-minute payment to avert default.  European market trade mixed with modest gains and losses this morning.  With government offices and banking shutdown, U.S. futures point to a bullish open with tech leading the way, trying to recover some of yesterday’s losses. 

Economic Calendar

We have a very rare day with nothing on the economic calendar due to Veterans day.

Earnings Calendar

We have more than 160 companies listed on the Thursday calendar, but there are quite a few unconfirmed small caps.  Notable reports include MARA, MT, ARRY, XAIR, BLNK, BRDCY, BHG, BAM, COUP, WATT, FRGI, FLO, GFI, RIDE, LAZR, OGN, SBH, SIEGY, TPR, UTZ, VPG, WB, WIX, & YETI.

News & Technicals’

Climate lawsuits will target banks and boards.  “I think that the next step is to start also litigating against financial institutions who make these emissions and fossil fuel projects possible,” said Roger Cox, the lawyer for Milieudefensie, an environmental campaign group and the Dutch branch of Friends of the Earth.  The Hague District Court on May. 26 ordered the Anglo-Dutch oil giant to reduce its global carbon emissions by 45% by the end of 2030, compared with 2019 levels.  The ruling marked the first time in history that a company had been legally obliged to align its policies with the Paris Agreement and reflected a watershed moment in the climate battle.  The congestion at U.S. ports, the trucker shortage, and the rise of e-commerce have created a unique opportunity for autonomous trucking, Embark Trucks CEO Alex Rodrigues told CNBC.  Embark has completed its SPAC merger and will begin trading Thursday on the Nasdaq under ticker EMBK.  Rodrigues will also become one of the youngest CEOs of a U.S. public company ever at 26 years old.  Disney added just 2 million Disney+ subscribers after more than 12 million last quarter. However, Netflix bounced back in the third quarter with 4.4 million net adds after just 1 million in the second quarter.  Disney, HBO Max, and AMC Networks were among the media companies affirming previously announced forecasts.

Although we saw the bears slowly react to the highest inflation reading in the 30 years, the selling appeared to be relatively controlled.  The VIX closed below a 19 handle, and the index charts held well above price and technical support levels. Nevertheless, yesterday’s selling reminded us that bears still exist and that overextended conditions can produce some painful selloffs.  I suspect today could be a very muted day with the observance of the Federal holiday of Veterans Day.  Though there may be some local exceptions, banking and all government offices are closed.  As a result, we could see light and choppy price action trading today.

Trade Wisley,

Doug

There was a modest experience of the bears yesterday as the inflation worries increased with increased producer prices.  Today that worry continues with a reading on consumer prices before the bell.  Economists expect CPT to increase to its highest level in nearly 30 years, so buckle up the stage is set for some price volatility at the open.  With Bullard suggesting two rate hikes next year and the Fed warning investors of potential sharp market declines, it’s understandable traders are a little on edge this morning.

Asian markets mostly declined overnight, with the Chinese developer Fantasia prices plunging by nearly half as the real estate crisis worries investors.  European market trade mixed and near the flatline with all eyes focused on U.S. inflation data.  Ahead of CPI, Jobless numbers and another big round of earnings futures point to lower open, but anything is possible by the open as we react to the inflation data. So prepare for an extra dose of price volatility that could easily include head fakes and whipsaws.

Economic Calendar

Earnings Calendar

We have another busy mid-week earnings calendar with more than 230 companies listed, with a number of them unconfirmed.  Notable reports include DIS, ADDYY, AER, AFRM, AWH, ATO, BZH, BYND, BMBL, TAST, HLTH, ENR, GSL, DGRX, HGBL, IFNNY, KGC, LZ, LX, NGMS, PRGO, PTE, RRGB, RSI, SIEN, SMRT, SOFI, TCEHY, WEN, WWW, & ZIP.

News & Technicals’

Central banks would usually push up rates to tame inflation, and the Fed has started to normalize policy after the economic fallout from the coronavirus pandemic.  It said last week that bond purchases would start to taper “later this month.”  The Fed also acknowledged that price increases had been more rapid and enduring than central bankers had forecast.  Economists expect the consumer price index to rise 0.6% in October and 5.9% on a year-over-year basis, the most since 1990.  The CPI is hotter than economists initially expected, and they now see it staying elevated into next year.  “What we’re seeing is there’s this second wave of inflation that appears more broad-based, and it’s also backed up with a sharp increase in wages,” said one economist.  This is not the first time the EU’s General Court has ruled on an antitrust case brought by the European Commission and directed at a tech giant Google.  Wednesday’s verdict can be appealed and taken to the EU’s highest court.  The EU is currently discussing how to toughen its rulebook to ensure fairer competition across the 27 member nations. Rivian had previously raised its expected price range to between $72 and $74, up from an initial range of $57 to $62.  The company, which Amazon and Ford back, recently began production on its electric pickup, the R1T, and plans to deliver 10,000 as soon as next year.  Rivian expects to lose up to $1.28 billion this quarter while generating no more than $1 million in revenue for the period.  Treasury Yields moved higher this morning, with the 10-year trading up to 1.4796% and the 30-year rising to 1.8519%. 

With inflation worries on the mind of investors, the market broke its record-setting streak yesterday with some modest selling.  Inflation weighs on the market this morning as well, with the pending CPI report before today’s bell.  Economists expect the number to come in at its highest level in nearly 30 years. In addition, the Fed late afternoon yesterday warned that the recent rally in the market has the potential to trigger an abrupt crash.  That will make a person wonder if the Fed thinks the CPI might come in higher than expectations?  Because there is little in the way of price support for the recent rally, a substantial selloff is undoubtedly within the realm of possibility.  However, with the current bullish energy, it is also possible we could experience a sharp rally today if the number comes in better than expected.  Plan your risk carefully as the price volatility could be high, and intraday whipsaws have the room to be quite punishing to those rushing into the fray this morning.

Trade Wisely,

Doug

Though we experienced modest pop and drop patterns in the index charts, we still managed closing records across the board.  The daily records in the Dow hit its 8^th straight day not seen since 1997 even has the VIX rallied.  Today we will get a reading on inflation with the Produce Price Index, and consensus is looking for a slight month over month increase.  If it were to come in hot, will it wake up the bears, or will it just keep ignoring the impacts on the economy?  Stay tuned; we will find out soon.

Overnight Asian markets traded mixed as the real estate price declines are beginning to raise some contagion concerns from the Fed.  European markets trade mostly higher, but gains are modest as they keep an eye on the pending inflation data. Finally, with a big day of earnings, PPI, and more Fed speak, U.S. futures suggest a flat open except for the continued push in the Nasdaq. 

Economic Calendar

Earnings Calendar

We have a big day on the Tuesday earnings calendar with 250 companies listed, but many of them are small-cap.  Notable reports include COIN, ADT, ACB, AXON, BAYRY, BNTX, APRN, ELY, CAH, CCEP, DHI, DASH, EGRX, EBIX, FTEK, GLNG, HAIN, TWNK, IIVI, INO, IGT, JBI, JAZZ, NDUT, MNKD, MCFE, MLCO, NIO, PLTR, PAAS, PRTY, POSH, PUBM, RNG, SGMS, STWD, SYY, U, UPST, WES, WRK, WKHS, & WYNN.

News & Technicals’

The White House on Monday said businesses should move forward with the requirements despite the court-ordered pause.  The U.S. Court of Appeals for the 5th Circuit considered one of the most conservative appellate courts in the country, halted the requirements Saturday pending review. In addition, Republican attorneys general in at least 26 states has challenged President Joe Biden’s vaccine and testing requirements in five different U.S. appeals courts.  The Biden administration asked the court to lift the pause Monday evening, claiming it could cost dozens or hundreds of lives per day.  “Stresses in China’s real estate sector could strain the Chinese financial system, with possible spillovers to the United States,” the Federal Reserve said Monday in its financial stability report, released twice a year.  “The nexus of the Fed’s concern is that China’s real estate activity is slowing, but the developers have large debts [and] some of them (like Evergrande) are diversified into other areas of the economy,” said Paul Christopher, U.S.-based head of global market strategy at Wells Fargo Investment Institute.  The bulk of the report discussed domestic U.S. financial conditions, and analysts downplayed the significance of the Fed’s comments on China real estate.  Treasury yields dipped early this morning, with the 10-year dipping slightly to 1.488% and the 30-year falling to 1.8835%.

Closing records across the board in all for indexes with the Dow hitting its 8^th straight daily record in a row which has not been seen since 1997.  At the same time, the VIX rallied for the 3^rd day while the price action in the indexes largely chopped sideways.  The T2122 indicator continues to ring the bell that the indexes trade in a short-term overbought condition, but bulls are having none of it as they continue to push higher.  Technically speaking, the odds of consolidation or pullback continue to grow.  That said, the relentless buying is unwise to fight, so stay with the trend but have a plan in place because the tumble from these hights would likely be very painful.  Today we will get a reading on inflation with the PPI.  However, even if the number comes in hot, we may ignore it and keep plowing in new records but ready if it wakes up the bears.

Trade Wisely,

Doug