Consumer Price Jumped 5%

June 11, 2021 by Doug Campbell

As the consumer prices jumped 5%, the largest gain in nearly 30-years, the market seemed to have little to no concern.  The moral of the story stay with the trend and let’s continue to party like it’s 1999 as long as it lasts.  Although we ended the day respecting overhead resistance levels and leaving behind some uncertain price patterns, the VIX squeaked out a new closing low, suggesting inflation is nothing to worry about, at least for now.  Now we wait to find out if the FOMC will begin to shift policies next week.

Asian markets traded mixed overnight with modest gains and losses.  Across the pond, European markets trade in the green across the board as investors shrug off inflation.  With a light day of earnings and economic reports, U.S. futures once again are pumping the premarket, trying to inspire buyers to break overhead resistance to set new record highs.  Trade wisely, and have a fantastic weekend, everyone.

Economic Calendar

Earnings Calendar

We have a slow day of reports on the Friday earnings calendar with 14 companies listed but only two confirmed.  Though they are not particularly notable, the verified reports are CMCM & NATH.

News & Technicals’

Although the consumer prices jumped 5% in May, the most in nearly 30-years, the overall market seemed to not really care.  Will the FOMC respond to the rising costs?  Some are suggesting Fed will stay the course, at least for now.  Remarkably, to me, Treasury yields are pulling back this morning, with the 10-year trading at 1.443% and the 30-year dipping to 2.14%, shrugging off the surging inflation.  President Biden has endorsed the 15% global minimum corporate tax and a new tax linked to the places where companies make money.  Amazon faces another antitrust probe from the European Union as the country steps up its pressure on the tech giants.  On Friday, the G-7 nations gathering in Cornwall, England, plan to pledge 1 billion doses of the Covid vaccines to low-income nations. 

After the CPI number came in hotter than expected, the futures gapped the market higher buyers seemed to rush in for a brief period, with the Dow surging more than 200 points.  However, as prices ran into overhead resistance, the bears pushed back with a nasty whipsaw that filled the gap.  Buy the close the Dow left behind a shooting star pattern while the QQQ held firmly to gains through the SPY and IWM retreated.  The VIX held a new closing low, suggesting the hot inflation number is of little to no concern though the Absolute Market Breadth Index remained notable weak.  Long story short, stay with the trend and continue to party like it’s 1999 but don’t become complacent because someday I suspect the market will someday suddenly care.

Trade Wisely,

Doug

CPI Numbers

June 10, 2021 by Doug Campbell

Perhaps we can break the tight range chop today with all eyes focused on the critical CPI numbers, inflation data revealed before the open.  Some suggest the number could come at its highest level in nearly 30-years!  Will it inspire the bulls pushing the indexes to new record highs?  Or will the number engage the bears, creating some technical issues with the possible topping patterns in the charts?  Your guess is as good as mine, so stay focused and buckle up for some price volatility. 

Overnight markets traded mixed but mostly higher with modest gains and losses.  European markets hover around the flatline as they wait on the U.S. inflation data.  Ahead of the CPI, U.S. futures are trying to put on a brave face, but anything is possible by the open, depending on the market reaction.  A substantial gap is likely, so plan your risk accordingly. 

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 20 companies listed with several unconfirmed.  Notable reports include XAIR, CHWY, PLAY, PLUG, FSLR, & SIG.

News and Technicals’

The owner of the Keystone XL pipeline, TC Energy, has now offically canceled the project after President Biden revoked an essential permit earlier this year.  It would have carried 839,000 barrels per day and employed 1000’s.  India reports more than 6,100 daily Covid death in a single day though infection rates have been in decline.  According to a government announcement on Wednesday, a new 2.3 million stimulus checks for up to $1400 per person were just sent out.  In total, another 4.2 billion in payments.  Treasury yields rise slightly this morning ahead of the CPI number, with the 10-year coming in at 1.498% and the 30-year edging higher to 2.173%.  More pressure is coming to the tech Giants as the Democrats circulate draft antitrust bills aimed at Apple, Amazon, Facebook, and Google.  If passed, it could fundamentally reshape the businesses.

All eyes this morning will be on the CPI numbers revealed an hour before the market open.  Some are suggesting the number will come with the highest reading in nearly 30-years.  The market has traded in the tight range all week, challenged by overhead price resistance levels yet holding above price supports.  What happens next is anyone’s guess, but it will be nice to get enough movement to break the logjam.  With the next FOMC meeting just around the corner, today’s number could play a pivotal role in their decisions on dovish, easy money policies.  Though U.S. futures are trying to pump up the premarket, the actual open could be much better or worse depending on the reaction.  Stay flexible because new market highs could be on the cards or critical technical failures in the index charts if the bears find inspiration.  Buckle up for some volatility. 

Trade Wisely,

Doug

Range-bound as we wait.

June 9, 2021 by Doug Campbell

Choppy range-bound price action continues as the market waits on critical inflation data on Thursday morning.  Indexes continue to hold price supports but remain stuck under overhead resistance levels.  Economists expect a CPI increase of 4.7% over last year, but some worry the number may come in hot.  China’s producer prices soared 9% from last year, and inflation seems to be surging worldwide.  With all eyes on tomorrow’s number and perhaps the market will break the logjam but the question remains, which way?

Asian markets closed mostly lower overnight in reaction to surging producer prices.  European markets are lower across the board this morning though some just modestly lower, waiting on U.S. inflation data.  U.S. futures point to a mixed but essentially flat open as we gear up for the CPI number Thursday before the bell.  Expect choppy price action to continue until the release and then be ready for significant volatility at the market open Thursday.  Plan your risk carefully.

Economic Calendar

Earnings Calendar

We have just 14 companies listed, with a few still unconfirmed.  Notable reports include CPB, GME, LOVE, RH, UNFI, VRA, & VRNT.

News and Technicals’

Yesterday the Senate passed U.S. Innovation and Competition bill to counter China’s technology ambitions.  The vote was nearly unanimous, with one provision providing $52 billion for semiconductor research, design, and manufacturing initiatives.  China’s producer price soared in May up 9% from just one year ago.  The increase is the most on record, and businesses expect the price increases will last until the end of the year as raw material inflation grows.  However, in the U.S., Treasury yields are moving lower, with the 10-year note falling to 1.513% this morning and the 30-year dipping to 2.194%.  Economists forecast the CPI to rise 4.7% from last year.

The indexes remain range-bound, holding price supports, and still challenged by overhead resistance.  I had suggested in the Monday blog of the possibility of a choppy market as we wait for the inflation day Thursday morning.  That guess could be correct with one more day to wait as the market struggles to find direction.  The T2122 indicator indicates we are in a short-term overbought condition, and the Absolute Breadth Index continues to point to a lack of momentum.  The VIX suggests fear continues to subside, but one has to wonder if that could be complacency.  Perhaps at 8:30 AM tomorrow, the logjam clear with the release of the CPI.  The question is, which way?  Plan your risk accordingly.

Trade Wisely,

Doug

Struggled to Find Momentum

June 8, 2021 by Doug Campbell

The DIA, SPY, and QQQ struggled to find momentum yesterday, while the technicals’ of the charts remained little changed.  The VIX registered no increase while small-cap and higher speculation stocks enjoyed considerable buying in possible bottoming patterns.  According to reports, the Fed will begin to condition the market to reduce debt asset purchasing with the next FOMC meeting just around the corner.  The CPI reading on Thursday could be crucial in that decision.  Plan your risk accordingly.

Asian markets closed modestly lower overnight in a choppy session.  European markets trade in the green this morning but seem to be hovering near the flatline.  Ahead of a light day of earnings results, trade, and the job opening numbers, the U.S. futures point to a flat to somewhat mixed open. 

Economic Calendar

Earnings Calendar

We have 19 companies listed on the Tuesday earnings calendar, with several that are unconfirmed.  Notable reports include CASY, CHS, FTCI, JILL, MOMO, NAV, & THO.

News & Technicals’

U.S. officials said Monday they have seized $2.3 million in bitcoin paid to hacker group DarkSide.  The FBI was able to access the “private key” or password for one of the hackers’ bitcoin wallets.  The realization that Bitcoin may not be as anonymous or infallible as proclaimed has the world’s largest cryptocurrency down 7% this morning.  Ford has unveiled a new line of smaller hybrid pickups with a price tag of $20,000 and a 40 MPG in the city rating.  Treasury yields trade falt this morning with the benchmark 10-year at 1.562% and the 30-year tracing at 2.238%.  This comes on the heels of a story that suggests the Fed is in the early stages to prepare the market for reducing their debit asset purchases.  The CPI number on Thursday may be a pivotal factor in that decision.

Yesterday was a bit odd as the DIA, SPY, and QQQ struggled to find momentum while small-cap and very speculative stocks surged in the IWM.  An interesting change that makes one wonder if a rotation is beginning.  Though momentum was lacking in the big-three indexes, there was really no change technically as they largely chopped sideways with little to no fear indicated in the VIX.  Once again, being this close to new record highs, it seems unlikely that the institutions will miss the opportunity for the headlines.  That said, we have to be careful not to overtrade as we hover just blow new records levels should the bears find a reason to defend that could initiate market-topping patterns.  Stay focused on price and plan your risk carefully.

Trade Wisely,

Doug

SPY just below record highs!

June 7, 2021 by Doug Campbell

Jobs creation came in less than expected, easing inflationary worries, and closed the week with the SPY just below record highs.  Between now and the next FOMC meeting will be the Thursday CPI number that may come in hot according to consensus estimates.  All four indexes still have overhead resistance to deal with, but it seems unlikely getting this close to a new record, the institutions will miss that mark if only for the headline.  However, don’t be surprised to see choppy price action amid all the meme-stock frenzy as we wait for the CPI reading.

During the night, Asian markets traded mixed as China’s exports missed forecasts.  European markets trade modestly bullish across the board this morning.  With a light day of earnings and economic data, U.S. futures point to a flat open after bouncing off overnight lows.  Be careful overtrading as we test overhead resistance levels in a market struggling with momentum. 

Economic Calendar

Earnings Calendar

As we kick off a new week of trading, we have a light day as 2^nd quarter reports wind down with just companies listed on the calendar.  Notable reports include GIII, MRVL, SFIX, & MTN.

News & Technicals’

The French Competition Authority fines Google $267 million for abusing its dominant position in online advertising.  Google has agreed to end some of its self-preferencing practices as regulators across Europe clamp down on the tech giants.  According to Musk’s tweet on Sunday, Tesla canceled the most expensive Model S Plaid Plus that claimed to deliver 520 miles on a full charge.  However, the Buffett-supported BYD electric car maker has shipped to Norway with a price tag of $72,418 each.  The city of Guangdong, China, is carrying out mass testing and has locked down areas that have reported more than 100 cases in the fast-spreading Delta strain of Covid.  Treasury yields are in a wait-and-see mode this morning, waiting on the Thursday CPI number; some worry may come hot.  The 10-year ticked slightly higher to 1.578%, while the 30-year drifted slightly south to 2.258%.

The bulls put in a strong performance on Friday but closed the day with the SPY just below record highs.  As a result, we begin a new week with all four indexes challenged by overhead resistance.  As the 2^nd quarter earings wind down and a light economic calendar begins the week, traders will have to look elsewhere to find inspiration.  The meme-stock frenzy could quickly help or hurt the overall market with its wild volatility reminiscent of the 1999 tech frenzy.  Tread lightly where company valuations are pushed well beyond reasonable valuations because when it’s over, prices can fall very fast and be fundamentally different overnight.  The big news of the week will be the next reading of the CPI on Thursday.  Don’t be surprised if we see choppy price action as we wait to find out if this crucial inflation marker comes in as hot as expected. 

Trade Wisely,

Doug

Strong dose of Price Volatility

June 4, 2021 by Doug Campbell

We received a strong dose of price volatility yesterday, but there was very little change technically in the index charts by the end of the day.  We are still dealing with overhead resistance and possible topping patterns, and at the same time, the bulls remain vigilant defending price support levels.  Today the market may pick a direction depending on how we react to the employment situation numbers.  Come in strong, and we could finally get the bulls to challenge resistance levels and perhaps set some record highs.  Come in hot, and the bears might act up as they worry about the possible changes to FOMC easy money policies.  In short, anything is possible!

Overnight Asian markets traded mixed as the RBI keeps interest rates unchanged.  Across the pond, European markets trade flat and slightly lower ahead of the U.S. jobs data.  This morning stock futures are taking a wait-and-see stance but prepare for just about anything after the number release an hour ahead of the open.  Prepare for more volatility as the market reacts. 

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a very light day with only 12 companies listed.  The only notable report on the day is that from HOFT.

News & Technicals’

AMC is seeking approval to boots it’s stock authorization by 25 million shares laying out its case on a YouTube program.  Facebook ran into another antitrust issue with the U.k.’s Competition and Markets Authority.  The regulatory agency will investigate whether Facebook is abusing a dominant position in the social media or digital advertising markets through its individual data collection.  Elon Musk is at it again, tweeting a meme about a couple breaking up and adding the hashtag Bitcoin and a broken heart emoji.  Bitcoin fell 4%, and other cryptocurrencies also sank.  How much longer will the SEC allow him to manipulate market prices!  U.S. Treasury yields traded slightly higher this morning, with the 10-year ticking up to 1.6267% and the 30-year rose to 2.3024%.

Although we had a lot of price volatility yesterday, technically, there was very little change in the index charts.  The bulls defend support levels, and the bears seemed to stand their ground defending overhead price resistance levels.  The VIX made no decision, and the T2122 indicator ended the day back in the upper range after the bounce.  All eyes will be on the Employment Situation number this morning that estimates that it will come in strong.  The worry from the market is if the number comes in too hot, it could raise the pressure on the FOMC to act reducing some of the easy money policies.  So your guess is as good as mine as to what happens next.  Futures currently point to a flat to mixed open, but everything could change rather dramatically after the release of the numbers at 8:30 AM eastern.  Stay focused and settle in for another bull/bear fight near overhead resistance.

Trade Wisley,

Doug

Sideways Waiting on Data

June 3, 2021 by Doug Campbell

Index prices drifted sideways in a choppy market session as the market struggles with momentum waiting on jobs data.  The big question of the morning is, will the data inspire the bulls, or will it bring out the bears?  Anything is possible, and the market has proven it’s not shy about making huge moves, so plan your risk accordingly.  Keep in mind we still have the Employment Situation number to deal with before the market open on Friday.  Stay focused and flexible!

Asian markets traded mixed overnight, with Hong Kong selling off 1.13%.  European markets trade decidedly bearish this morning in reaction to Chinese data.  Ahead of a big day of earnings and economic data, the U.S. futures currently point to a bearish open, but in truth, anything is possible as the data rolls out.  Buckle up it could be a wild ride!

Economic Calendar

Earnings Calendar

We have our busiest day this week, with 24 companies on the earnings calendar.  Notable reports include ASAN, AVGO, CEIN, CRWD, DOCU, DLTH, EXPR, FIVE, SJM, JOAN, LULU, MDB, SCWX, WORK, SUMO, TLYS, & ZUMZ.

News & Technicals’

The frenzy of meme-stock traders nearly doubled the share price of AMC on Wednesday, with more than 70 million shares traded.  The stock is up more than 2800% year to date as this dangerous activity continues to draw the attention of regulators.  Analysts suggest oil prices continue to rise this summer as economies around the world reopen.  Demand in the U.S. has begun to draw down reserves built during the pandemic, with $80 per barrel or higher expected targets.  Russia is warning this morning that its economy is showing signs of overheating as consumer inflation accelerated again in May to top the 5.5% reading in April.  Treasury yields traded mixed this morning ahead of private payrolls and jobless claims data.  The 10-year rose to 1.5926% as the 30-year dipped to 2.2774%.

The price activity in the indexes drifted sideways yesterday in a choppy session as the market continues to struggle with momentum.  On the good side, the bearish activity on Tuesday found no followthrough sellers holding as price supports.  That said, we still have overhead resistance in all the index charts, and the possible double top pattern in the SPY and weakness in big tech remains a concern.  Today, we face our biggest day of earings coupled with several possible market-moving economic reports that could provide inspiration.  The question yet to be answered is will that inspiration favor the bulls or the bears? Premaket futures are currently under pressure suggesting a bearish open, but anything is possible as the market reacts to jobs data.

Trade Wisely,

Doug

Resistance Won the Day

June 2, 2021 by Doug Campbell

Yesterday’s big morning gap lost buying energy almost immediately as resistance won the day.  Though the price action left behind bearish engulfing, dark cloud cover patterns and a possible double top on the SPY price supports also proved to hold.  Is there a reason for concern?  Yes, but there is also no reason to believe the sky is falling.  A follow-through down today could become very concerning but should the bulls find inspiration in the jobs data holding on to price supports, the uncertainty may shift to those holding short positions.  Stay focused as anything is possible.

Overnight Asian markets traded mixed but mostly lower as Australia’s GDP came in stronger than expected.  European markets trade modestly bullish this morning near record highs.  U.S. futures are once again pumping the open ahead of the ADP jobs data.  What happens next is anyone’s guess, so keep a sharp focus on price action, support, and resistance levels for clues.

Economic Calendar

Earnings Calendar

The Wednesday earnings calendar lists 19 companies reporting, with several as unconfirmed.  Notable reports include AAP, CLDR, LE, NTAP, PVH, & SPLK.

News & Technicals’

According to Fed official William Dudley, the recent spike in U.S. inflation is “likely transitory for now, but could become more persistent in the coming years.”  That kind of like saying you’re a bit pregnant but plan for the next few years to be a lot of work!  Ahead of the private payroll jobs data, treasuries ticked slightly lower to 1.606%  on the 10-year and 2.288% for the 30-year yields.  Economists look for private payrolls to improve over the April reading at 266,000 to 674,000 in May.  ZOOM reports blowout earnings but now sees a 50% revenue growth for the full fiscal year but warns of a coming slowdown.  ZM stock price is little changed this morning.  Amazon has set its big summer sales event, Prime Day, for June 21 and 22. 

Yesterday proved to be a bit disappointing after the overly rambunctious morning gap that was stopped in its tracks by price resistance.  I think you would have to say that resistance won the day leaving behind some concerning bearish candle patterns and a possible double top on the SPY.  However, it was not that bad if you consider the overall chart and the fact that price supports held by the close of the day.  What will be very important is how price action follows though today!  Should price move on lower today, confirming the bearish engulfing and dark cloud cover patterns, that’s a more serious concern.  If today the price action holds price support, we may still have a reason for caution, but odds of new record highs improve.  A lot will depend on the market reaction to the Private Payroll numbers released before the bell. Buckle up; anything is possible.

Trade Wisely,

Doug

Bulls Found Inspiration

June 1, 2021 by Doug Campbell

Though futures opened lower Monday evening, the bulls found inspiration overnight as European markets surged to new records after better than expected economic data.  With the SPY in striking distance of a new record at the open, it seems unlikely the institutions will miss the opportunity to grab a new headline to kick off the first trading day of June.  That said, keep we still have substantial resistance in the QQQ and IWM to overcome.  With bond yields ticking higher this morning with inflation pressures growing, that may still be problematic, particularly for the tech sector.  Stay focused and flexible as we test price resistance levels.

Overnight Asian markets traded mixed with Chinese factory activity expanding.  However, European markets are decidedly bullish this morning on solid data and rallying oil prices.  U.S. futures have sharply recovered off opening lows ahead of manufacturing data to kick-off the first trading day in June.  Keep in mind that big gaps can create significant price volatility.  Plan according.

Economic Calendar

Earnings Calendar

We have 27 companies listed on the earnings calendar as we begin trading this short trading week.  Notable reports include ZM, Kirk, AMBA, CGC, APPS, & HPE.

News and Technicals’

Futures opened trading lower Monday evening, but the bulls found inspiration to surge higher with the SPY in striking distance of new record highs sometime during the night.  Oil prices surged overnight, with the benchmark Brent crude futures up 2.15% and U.S. crude advanced 2.8%.  The world’s largest meat processors were hit over the weekend by an organized cyberattack.  Australian and North American units were affected, but the Australian attack shut down operations across several states with no indication as to how long the stoppage might last.  Tesla is raising prices again due to supply chain pressures in raw materials.  Treasury yields tick higher this morning, with the 10-year coming in at 1.6130% and the 30-year rising to 2.2924% after April’s Core inflation number rose 3.1%, which was hotter than expected.

When it comes to the technicals, the DIA and SPY bull trends continue to test record levels, and with this morning’s gap up, the SPY could breakout at the open.  Strength in the financial, oil, and healthcare sectors allowed the IWM to recover its 50-day average; however, it still has substantial overhead resistance to overcome.  The QQQ is also dealing with overhead resistance, and though the bulls are pushing in the premaket to kick off the first trading day in June, rising bond rates may prove problematic for the tech sector.  Getting this close to new records, I can’t imagine that the institutions will pass up on the opportunity to gain the headline but remember, the possibility of pop and drop at resistance also exists.  That said, try not to chase overextended stocks at the open.  Let’s wait and see if there is a follow-through of buying after the gap. 

Trade Wisely,

Doug

Stuck near Overhead Resistance

May 27, 2021 by Doug Campbell

Despite all the premarket blustering trying to inspire the bulls the last couple of mornings, the indexes remain stuck near overhead resistance.  NVDA reported an 84% increase in sales last quarter, but the stock is nearly unchanged this morning as the market seems to struggle with momentum.  How we open today will depend on the reaction to the Durable Goods, GDP, and Jobless Claims numbers.  I think it is fair to say anything is possible.  However, keep in mind the coming 3-day weekend, and don’t be surprised if trading volumes quickly decline after the morning session as traders head out to extend their time off.

During the night, Asian markets traded mixed in a somewhat choppy session.  European markets traded mixed this morning and primarily flat, cautiously waiting on U.S. Economic data.  U.S. futures have rallied off of overnight lows as earnings roll out, and we wait on crucial data points to be revealed.

Economic Calendar

Earnings Calendar

We have our most significant day of earnings data this week, with 40 companies listed on the calendar.  Notable reports include BBY, CRM, ADSK, BOX, BURL, COST, DELL, DG, DLRT, GPS, GCO, HPQ, MDT, OLLI, SAFM, ULTA, VEEV, & VMW.

News & Technicals’

NVDA crushed 1^st quarter results with sales up 84% compared to last year and sold $155 million in crypto mining chips.  Interestingly the stock is basically unchanged this morning.  The US and China talked on the phone for the first time under the Biden administration and were stated as candid, pragmatic, and constructive.  It is beginning to look more and more likely that the pandemic origin was from a Wuhan lab where game of function activities took place.  After ending the Trump investigation immediately after entering office president, Biden has now ordered an investigation.  Russia has decided it will not make Covid vaccines compulsory for its citizens, with Putin telling officials on Wednesday that it would be “counterproductive.”

Though there was an effort in the premarket futures to inspire the bulls yesterday morning, the indexes remained stuck near overhead resistance.  Overall we chopped in a very narrow range in the DIA, SPY, and QQQ while IWM enjoyed a surge of activity bolstered by oil numbers.  This morning futures appear uninspired after the huge beat from NVDA.  However, they have significantly improved from overnight lows.  That said, with Durable Goods, GDP, and Jobless Claims before the open, anything is possible when trading begins today.  As you plan your risk, keep in mind the coming 3-day weekend and the possibility that trading volumes could quickly decline if traders wrap up their week early. 

Trade Wisely,

Doug