Uncertainty has begun to raise its ugly head with a stark imbalance between the 7 to 9 tech giants doing all the heavy lifting with just 47% of stocks trading above their 200-day averages. So with an ECB decision pending and Jobless Claims before the bell, will the bulls find the inspiration to defend, or will the bears find an opening to attack?  Your guess is as good as mine, but the surge that occurred yesterday into real estate, utilities, and consumer staples looking for some safety is noteworthy.

Overnight Asian markets traded mostly lower, with Hong Kong plunging 2.30% on the Chinese gaming crackdown worries.  This morning, European markets see only red as they await the ECB decision, with inflation hitting a 10-year high.  U.S. futures also hint at a lower open with eyes on the ECB and Jobless Claims that have become troublesome of late. So buckle up; it could be a volatile open.

Economic Calendar

Earnings Calendar

We have our busiest day of the week on the Thursday earnings calendar, with 31 companies listed, several unconfirmed.  Notable reports include AFRM, PLAY, HOFT, JILL, LAKE, LOVE, RLGT, COOK, VRNT, ZS, & ZUMZ.

News & Technicals’

Chinese regulators summon Tencent, NetEase, and other game companies for interviews, reminding them about the restrictions on game time for children. As a result, Hong Kong plunged 2.30% as Tencent shares fell 8.48% and NetEase dropped 11%.  According to the South China Morning Post, Beijing has temporarily frozen game approvals.  Treasury Secretary Janet Yellen warned House Speaker Nancy Pelosi that the mere specter of a U. S. default could have drastic consequences.  Yellen said lawmakers have until some point in October before the department runs out of funds in its extended efforts.  Today, we will hear about the ECB’s plan to taper and battle inflation, which is now at a 10-year high.  U.S. Treasury yields dip as we wait, with the 10-year trading down to 1.321% and the 30-year falling to 1.941%. 

I don’t believe I’ve ever witnessed the stark imbalance between the haves and the have not’s in the market.  Only 47% of U.S. stocks are above their 200-day moving averages as 7 to 9 tech giant companies continue to do all the heavy lifting.  That said, the QQQ and SPY have maintained their bullish trends as long as those tech giants don’t stumble.  The DIA, on the other hand, is beginning to show some technical damage falling below the uptrend and putting in a lower high. So the question to be answered today is will the bulls defend the DIA 50-day average as support?  With Jobless Claims and an ECB decision just around the corner, your guess is as good as mine.  There is no reason to be running for the doors just yet, but caution flags are flying as market internals continue to raise uncertainty. 

Trade Wisely,

Doug

The market chose to ignore the disappointing jobs numbers and the unemployment benefits cliff as we slid into the holiday weekend with the assumption this will allow the Fed to continue printing. As a result, the index trends remain very bullish, with the DIA, SPY, and QQQ consolidating within striking distance of new record highs.  With a light week of economic and earnings data, the market may become more sensitive to geopolitical news, or we may see a light and choppy week of price action. 

Overnight Asian markets mostly rallied as Chain’s exports topped expectations.  However, European markets trade modestly bearish this morning, concerned about the declining jobs and consumer activity.  Here in the U.S., futures point to a flat mixed open that could prove to be a light volume day as traders extend their holiday with a bit of vacation time. 

Economic Calendar

Earnings Calendar

We have a light day on the Tuesday earnings calendar with 18 companies listed and several unconfirmed reports.  Notable reports include AMBA, AMWD, CHS, CRWD, DBI, NTES, & PVA.

News & Technicals’

Though a little surprising, the market chose to ignore the massive miss of the employment situation, likely due to the hope that the Fed will keep printing 120 billion a month rather than tapering.  As a result, Goldman has cut its GDP forecast for the second time in the last 30 days, citing pandemic impacts and the fading of fiscal stimulus. Moreover, yesterday was the end of the unemployment bonuses, and apparently, millions have exhausted their unemployment benefits in total, raising concerns with the declining consumer sentiment and confidence.  However, the U.S. Treasury yields seem to have shrugged off the disappointing jobs data, with the 10-year rising to 1.353% and the 30-year trading up to 1.97%.

Technically speaking, the price action of the index charts appears to have no concern at all about the unemployment benefits cliff or the lackluster jobs numbers. On the contrary, the DIA, SPY, and QQQ remain bullish, all within striking distance of new record highs.  Over the last two weeks, the IWM has improved dramatically yet still has significant overhead resistance to overcome.  With a holiday-shortened trading week, light earnings calendar, and an economic calendar with no significant market-moving reports, it may be difficult for the bulls and bears to find inspiration. In addition, please keep in mind volume could be noticeably light today as many traders may have extended their long weekend with additional vacation time.  As I keep repeating, stay with the trend but guard against complacency if the market suddenly decides to care about the weakening economic data.

Trade Wisely,

Doug

Economists expect a solid Employment Situation number; however, some worry the pandemic impacts could diminish its shine.  The premarket pump would like us to believe all is well but should the bears find a reason to attack; the open could change dramatically.  Index trends are bullish, but with the recent extension in prices, a stumble could be painful.  So stay focused and flexible.  After the morning reaction, look for the volume to decline and choppy price action to ensure as traders escape early to begin their 3-day weekend.

Asian market closed Friday trading mixed with the Nikkei surging on news the Prime Minister Suga is leaving office. However, European markets are taking a wait-and-see approach as they wait on the U.S. jobs data. U.S. futures are waiting for nothing, putting on a brave face ahead of the critical jobs data implying new record highs.  That said, anything is possible, so buckle up the reaction is just around the corner. 

Economic Calendar

Earnings Calendar

There may be no earnings reports this Friday.  Though we have 13 companies listed on the calendar, all of them are unconfirmed.  So we have no notable reports.

News & Technicals’

Though the Fed maintains that the recent spike in inflation will be transitory, Niall Ferguson, the top economic historian, has called that thesis into question.  He went on to say we could see a repeat of the 1960’s when the Fed lost control. In addition, the former IMF chief suggested that the perfect storm of factors could lead to 70’s style high inflation.  This morning Treasury yields rose slightly, with the 10-year tradings at 1.295% and the 30-year rising to 1.91%.

With a 3-day weekend pending, all eyes will be on the Employment Situation report coming out an hour before the bell.  The consensus is looking for 740,000 Nonfarm payrolls and 693,000 Private Payrolls, down from 943,000 and 703,000, respectively.  They are also looking for the unemployment rate to decline from 5.4% to 5.2%.  Although fingers are cross for a firm number, some are worried the rising pandemic numbers could mute the outcome.  Undeterred, the premarket pump is underway, trying to project to more record highs at the open.  Index charts remain very bullish, but anything is possible by today’s open so stay focused and flexible.  After the morning volatility, there is a high probability that traders will shut down early to begin their 3-day weekend early with light and choppy price action as the remainder of the day.  Have a wonderfull weekend, everyone.

Trade Wisely,

Doug

With another morning chalked full of data, we have the typical premarket pump up, but anything is possible at the open as the market reacts to the data.  However, with the pending Employment Situation number Friday morning, it would not be unusual to slide into choppy price action after the morning gyrations as we wait. Nevertheless, the index trends remain bullish, although the extension in the SPY and QQQ by the surge of buying in big tech is a bit worrisome that a profit-taking wave could begin anytime.  That said, stay with the trend but avoid complacency should the data shift current sentiment.

Overnight Asian markets traded mixed with Australia, recording a higher than expected trade surplus in July.  European indexes trade flat this morning as they wait on the pending jobs data here in the U.S. However, that is not the case in the U.S. future as the push for a bullish open ahead of trade and jobless claims numbers. So expect some morning price volatility as the market reacts.

Economic Calendar

Earnings Calendar

We have our busiest day on the earnings calendar this week, with 35 companies listed this Thursday.  Notable reports include SIG, AEO, AVGO, CIEN, CCEP, DLTH, GIII, GCO, HPE, HRL, JOAN, KIRK, LE, & TLYS.

News & Technicals’

The ECB will meet on Sept. 9^th, but analysts think the central bank will wait until maybe December to announce a taper.  One possible reason for the wait is to see what happens with the pandemic in the coming months.  According to the WHO, a new variant called “mu” has mutations that can evade a previous infection or vaccination immunity.  MU was first spotted in Colombia but is now being tracked in at least 39 countries.  New York and New Jersey have issued emergencies after the remnants of Hurricane Ida dropped record rainfall between 6 to 10 inches bringing transit to a near standstill and shutting down parts of the subway system.  This morning Treasury yields are moving lower, with the 10-year slipping to 1.2970% and the 30-year dipping to 1.9174%. 

After the typical premarket pump up, the indexes spent most of the day chopping, although the QQQ did squeak out a new record high by the close.  However, the technicals of the index charts remain very bullish albeit somewhat extended in the SPY and QQQ.  The substantial decrease in oil reserves also helped to support the price action in IWM, which turned in the most robust performance of the day.  With a busy morning of economic data that includes Jobless Claims, international trade, productivity, and factory orders, we should expect price volatility at the open.  That said, don’t be too surprised after the early morning reaction if the price action returns to choppiness as we wait for the Employment Situation Friday morning.  Though we see the typical premarket pump up, the open makes anything possible as the market reacts to the data.

Trade Wisely,

Doug

The bulls look ready to begin September by setting new records at the open to follow seven straight months of gains.  With bonds rising this morning, we turn our attention to private payroll and manufacturing numbers for inspiration. However, the supreme court overturning the eviction moratorium and the end of unemployment bonuses on Sept. 6^th could create some uncertainty and volatile price action as we progress through the month.  Until then, stay with the trend but guard against complacency. 

During the night, Asian markets rallied despite the Chinese factory activity shrank in August. Likewise, European markets trade green across the board this morning unconcerned about inflation data that showed consumer prices increased by 3%.  Ahead of jobs and MFG. Data U.S. futures continue to march higher, suggesting new records are possible in the SPY and QQQ to kick off September trading.

Economic Calendar

Earnings Calendar

We have 21 companies listed on the Wednesday earnings calendar with several unconfirmed reports.  Notable reports include ASAN, CHPT, CHWY, CPB, CONN, FIVE, NTNX, RYAN, SMTC, SWBI, VEEV, & VRA.

News and Technicals’

After seven straight months of gains, the bulls appear willing to push for more records as big tech continues to dominate.  Historically September is a challenging month for the market, but that has not been true for three of the last five years.  With growing evidence that the economy is slowing, the supreme overturning of the eviction moratorium, and the end of unemployment bonuses on Sept. 6^th, there is undoubtedly a reason for uncertainty.  Then on Sept. 22^nd, the FOMC will show its hand for the taper of the easy money policies.  Treasury Yields traded higher this morning, with the 10-year climbing to 1.327% and the 30-year rising to 1.945% as we slide into the last month of 3^rd quarter trading.

The bulls run will now turn its attention to Private payroll and manufacturing numbers, with the Employment Situation report looming Friday morning.  Though internals hint of an economic slowdown, the index chart technicals show no evidence of concern as the bulls power forward, suggesting tech could set more records at the open today.  The VIX hinted at a bit of uncertainty rising slightly yesterday, but the slow, choppy price action showed no sign of panic yesterday.  The only concern is that the SPY and QQQ are very stretched in the short term, but with the market seeming unconcerned about the extreme valuations, I’m not sure that currently matters.  However, complacency is becoming a concern, so guard against overtrading and have a plan to protect yourself should the tide finally decide to go out.

Trade Wisely,

Doug

Reaction to Powell’s comments on Friday turned out to be just another day to set records as the risk-hungry bulls continued to buy, buy, buy.  With the futures bullish again this morning, we could set more records at the open.  The sharp decline in the VIX on Friday also suggests there is little to no fear, but as valuations continue to stretch, be careful with complacency.  There will be a day when the market will suddenly care about weakening economic metrics but, until then, stay with the trend and party on traders!

Asian markets closed green across the board, and Australian shared recovered early losses due to a spike in pandemic infections.  European markets see modest gains across the board this morning, and the U.S. futures point to modest gains at the open that may well set new records ahead of Pending Home Sales numbers. 

Economic Calendar

Earnings Calendar

We have 21 companies listed on the earnings calendar to kick off the week, with several unconfirmed.   Notable reports include ZM, LI, NDSN, SOL, & STNE.

News & Technicals’

Though hurricane Ida prompted the refining industry to shut down production, oil prices are remarkably lower this morning, with news that gas prices have declined 0.03 cents a gallon.  That is the first reduction in gas prices in nearly nine months.  The Colonial Pipeline halts gasoline deliveries to the east coast due to the storm, and more than 1 million are without power.  China’s slew of regulations cracking down on the tech sector may not be over, according to experts that have flagged a number of risks, including continued regulatory scrutiny, geopolitics, and the overall impacts to the business. 

Friday was another day to set records after Jerome Powell talked taper with rate increase well into the future.  Though he made light of the inflation, several major banks were quick to disagree, suggesting the sharply higher prices damaging consumer sentiment could have substantial market impacts.  But for now, the Fed chair is sticking to his story; it’s only transitory! So this morning U.S. future continues to push upward, looking to set more records at the open.  The DIA is lagging behind the SPY and QQQ but is now within striking distance of a breakout.  With the massive move in oil stocks Friday, even the IWM significantly improved as it surged above its 50-day average for the first time since mid-July. So stay with the trend, but don’t become complacent as we ignore bad economic metrics.  Someday the market may suddenly care about valuations, consumer sentiment, and inflation.   Until then, Party on Garth!

Trade Wisely,

Doug

Taper talk woke up the bears hearing the intentions of Fed committee members at the virtual Jackson Hole symposium.  Today we will hear from Chairman Jerome Powell, and he has a very daunting task to accomplish.  Will his words calm market fears as he tries to walk back the easy money policies, or will he inspire the bears? Unfortunately, the market has become addicted to easy money, so Powell is between a rock and hard.  I would not want to be in his shoes!

Asian markets traded mixed overnight in a choppy session ending with modest gains and losses.  European markets trade mixed in subdued price action as they wait for the Fed Chair speech.   As usual, the U.S. futures are pumping higher in the premaket seeing green across the board ahead of the economic data.  The stage is set for wild price action, so buckle up the ride is about to begin.

Economic Calendar

Earnings Calendar

We have a light day on the Friday earnings Calendar with 24 companies, but a large majority are small-cap unconfirmed reports.  Notable reports include BIG & HIBB. 

News & Technicals’

The hot GDP and the rising jobless numbers didn’t slow down those ravenous bulls in early trading, but Fed committee members’ taper talk woke up the bears.  The terrorist attack on the Afghanistan airport killing Americans also dampened the bullish mood.  Unfortunately, the U.S. and its allies warn that more terrorist attacks are likely as the president’s self-imposed deadline quickly approaches.  The Supreme Court agreed with the lower court blocking the administration’s eviction moratorium reaffirming that the CDC does not have the power to make such decisions.  They said the nation’s landlords have been losing as much as $19 Billion a month.  California, Minnesota, New Jersey, New Mexico, New York, and Washington have state-imposed eviction moratoriums not affected by this decision. 

Yesterday’s selling adds a bit more complication to the index charts.  The DIA now could have a lower high but will need follow-through selling to confirm. In addition, the IWM has again failed at its 50-day average, suggesting the bearishness in this index may continue.  However, the SPY and QQQ suffered no technical damage in yesterday’s selling, with the tech giants holding firm and even rising in some cases.  Before the open today, we will get the latest reading on international trade and personal incomes, but all eyes will be on Jerome Powell as he tries to thread the needle.  Can his words keep the market afloat as they try to walk back the easy money policies that the market has become so addicted?  We will find out soon, so buckle up it could be a wild price action Friday!

Trade Wisely,

Doug

This morning we have to deal with GDP and Jobless Claims, and then the big question for the market to ponder is Taper or no taper.  Jerome Powell will speak at 10 AM Eastern, attempting to build the narrative to appease the market on easy money policies and inflation.  That will be a difficult needle to thread, considering the market’s addiction to freshly printed money.  After the reporting, a -0.1 durable goods, the bulls continued to buy, pushing the SPY and QQQ to their 3^rd record high this week.  Lately, both good and bad news has inspired the bulls to buy.  So perhaps none of this matters, but be prepared for price volatility as the market reacts.  

Asian markets closed the day mostly lower as South Korea hikes interest rates.  Across the pond, European markets see red across the board as global sentiment worries grow.  That said, the U.S. seems to be taking a wait-and-see approach with a mixed bag hovering near the flatline. So let’s get ready to rumble!

Economic Calendar

Earnings Calendar

We have our biggest day of the week on the Thursday earnings calendar, with 56 companies listed with several unconfirmed reports.  Notable reports include DG, ANF, BBW, BURL, COTY, DELL, DLTR, FRO, GPS, HAIN, HPQ, SJM, MRVL, QLLI, PTON, SAFM, TITN, VMW, WDAY, & XPEV.

After a low volume, choppy record-setting day, all eyes are on the Durable goods figures just around the corner.  Consensus suggests a decline to a -0.2 reading according to the Econoday analysts.  With consumer confidence dropping to 2011 low and the unemployment bonuses expiring on September 6th^th investors hope the numbers can support the current prices.  What happens is anyone’s guess, and then we will quickly turn our attention to Jackson Hole and thoughts of tapering.  Be prepared as price volatility is likely.

Asian markets closed the day mixed in a choppy session as Chines tech stocks retrace recent gains.  This morning, European markets trade with modest gains and losses, waiting on data and gearing up for the Fed summit.  However, the bulls continue to push higher, sporting modest gains ahead of the retail sales numbers across the board.  One must wonder if the market will ignore the data as it has done lately with negative economic news. 

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have 33 companies listed but several small-cap unconfirmed reports.  Notable reports include CRM, ADSK, ATHM, BOX, DKS, EXPR, GES, NTAP, PLAB, PSTG, SCVL, SNOW, SPLK, ULTA, & WSM.

News & Techincals’

The U.S. House voted to approve a $3.5 trillion budget resolution to forward sweeping social programs without a single Republican vote.  Leaders have pledged to a vote on the deficit spending plan by September 27^th.  Vice President Harris called out China’s bullying tactics while visiting Vietnam and donating a million vaccine doses.  According to reports, the U.S. is also opening a review of U.S – China trade policies. Treasury yields moved higher this morning, with the 10-year lifting to 1.29% and the 30-year rising to 1.91%. 

Another day of record in the SPY and QQQ in a choppy below-average volume session as we wait on the Durable Goods figures that will release an hour before the market open.  The market is also gearing up for the Jackson Hole symposium that kicks off on Thursday.  Jerome Powell will speak at 10 AM Eastern time on Friday, where investors will be listening and hoping to gain some insight into the central bank’s plans on tapering the $120 billion a month program.  The bulls remain in control on the technical front, with the DIA and IWM still lagging behind the big tech-driven rally in the SPY and QQQ.  Now the question is, what will the retail numbers say?  Will it continue to support this short-term extension, or will we see a re-emergence of the bears?  The big miss on consumer confidence has traders and investors on the edge of their seats as they wait for the data.  Another question to be answered is if the number does miss, will it matter?  Lately, the market has had an incredible ability to ignore bad economic news.  We will soon find out.

Trade Wisely,

Doug

The choppy relief rally slowly gained strength on Friday, providing a considerable improvement on the technical front as the SPY and QQQ recovered price supports.  Of course, we still have overhead resistance levels to deal with, but if the premarket surge holds through the pending economic report, the QQQ is easily within striking distance of new records.  The small-cap IWM remains the weakest index, but with oil perking up this morning, look for some modest improvement.  That said, the economic data may still put some stumbling blocks in the path forward, so prepare for the wild price volatility to continue.

Asian markets surged off last week’s lows, lead by the NIKKEI up 1.78%, as it recovered from last week’s bearishness.  This morning, European markets trade in the green across the board, feeling some sweet relief after the recent selloff.  Ahead of earnings and possible market-moving economic data, U.S. futures look to extend Friday’s rally, with the QQQ pushing for a record-breaking breakout. 

Economic Calendar

Earnings Calendar

We have 25 companies with several unconfirmed expected on the Monday earnings calendar.  Notable reports include JD, MSGE, & PANW.

News & Technicals’

As evacuations continue from the Kabul Airport, a firefight broke out between Afghan security and unknown attackers.  Once Afghan security personal was killed and three others wounded.  Treasury yields begin the week slightly higher this morning, with the 10-year trading up to 1.273% and the 30-year trading at 1.889%. 

On Friday, we saw considerable improvement on the technical front, with the SPY and QQQ surging above resistance levels.  With futures surging this morning, the DIA will join them as the QQQ stretches toward a possible new record.  However, we do have some possible stumbling blocks in this week’s economic reports.  Which includes PMI, Durable Goods, GDP, housing data, and even some Fed speak from the chairman.  Keep a close eye on the price action as we test record resistance highs, and with earnings reports winding down, it may not be as easy to ignore concerning economic data as we have seen of late. In addition, the sharply lower consumer sentiment may prove to be problematic for market gains if housing and durable goods orders continue to slip or inflationary numbers continue to rise. 

Trade Wisely,

Doug