With yesterday’s mild selling, there was no technical damage created by the DIA, SPY, and QQQ.  However, the rising VIX, weak Absolute Market Breadth Index, and the bearish engulfing candle left behind on the QQQ may perhaps warrant a little caution should it follow through to the downside today.  That said, with the estimate smashing earnings from AAPL, MSFT & GOOGL, there is no reason to believe at this point that the bulls are willing to give up this tremendous bull run.  So stay focused if should the market stumble and remember that anything is possible with all the data coming our way today.

Overnight Asian markets traded mixed with Hong Kong bouncing after a nasty two-day tech selloff.  European market trade cautiously higher this morning reacting to earnings and waiting on the Fed decision.  With a massive number of earnings events, trade data, oil supply numbers, and the FOMC this afternoon, buckle up for another hectic day of price action.

Economic Calendar

Earnings Calendar

Another busy day on the Hump Day earnings calendar with nearly 200 companies listed, but there are several unconfirmed.  Notable reports include FB, ALGN, ADP, BA, BMY, CN, CAJ, CRUS, CME, DB, F, GRNC, GD, GSK, HES, HUM, IRBT, LRCX, LPL, MCD, MTH, NSC, ORLY, OC, PYPL, PFE, PPC, QCOM, NOW, SHOP, SAVE, SPOT, TOM, VALE, WING, XLNX, XPO, YNDX, & YUMC.

News & Technicals’

AAPL, MSFT & GOOGL smashed earnings estimates after the bell yesterday, but the response in the stocks was relatively muted. So perhaps everyone is now in the wait-and-see mode for the FOMC decision and the Powell press conference later this afternoon.  Treasury yields ticked a little higher this morning waiting on the FOMC, with the 10-year trading up to 1.254% and the 30-year advancing to 1.911%.  According to reports, the Fed may begin talking about tightening their easy money policies and will also express concerns about the rapid spread of the delta variant.  Kelvin Tay of UBS Global Wealth is warning this morning about bottom-fishing Chinese tech stocks.  He says Chinese markets could see further losses from here, with funds likely swaying toward the liquidation side.

Though we saw some selling pressure yesterday, the DIA, SPY, and QQQ suffered no technical damage.  However, with the QQQ leaving behind a bearish engulfing candle, it may be wise to exercise little caution should that happen to follow-through this morning.  As the bulls worked to shrug off the substantial, durable goods miss, it’s interesting to note that the VIX closed the day higher.  Also noteworthy is a rotation into consumer staples seems to be underway.  With another massive day of earnings data and the FOMC decision this afternoon, anything is possible.  So stay flexible and focused because of all this emotion and create some swift and challenging price action.  That may be good for experienced day traders but can prove highly frustrating for swing traders as price wildly whips.

Trade Wisely,

Doug

After setting more records in the DIA, SPY, and QQQ, the China tech crackdown is muting the wildly bullish anticipation of tech giant earnings reports after the bell today.  With MSFT, AAPL, and GOOGL priced at or near all-time-highs and P/E ratios well above historical averages, there is a lot a stake.  As a result, plan for a substantial gap on Wednesday morning followed by an FOMC decision. Of course, anything is possible so, prepare for a wild ride the next few days.

Asian markets traded mixed overnight, with the HIS plunging 4.22% as China puts pressure on tech stocks.  European markets trade with modest declines across the board as they monitor earnings and possible infection rate impacts.  Ahead of Durable Goods, Consumer Confidence, and a slew of potential market-moving earnings reports, futures are point to a mixed open but well off of overnight lows.  Expect considerable price volatility as the market digests all the data.

Economic Calendar

Earnings Calendar

Today is big of earnings with a significant focus on the tech giants after the bell.  We have more than 100 companies listed on the calendar expected to report quarterly results.  Notable reports include GOOGL, AAPL, MSFT, MMM, AMD, ADM, BSX, BYD, CHRW, CAKE, GLW, RDY, ENPH, FISV, GE, JBLU, JNPR, MAT, MDLZ, MSCI, PACR, PHM, ROK, SHW, SIRI, SWK, SBUX, UPS, V, WM, & XRX.

News & Technicals’

The China tech crackdown triggered a plunge in Hong Kong, with the HSI falling 4.22%.  According to Scott Kennedy, high-level meetings between the U.S. China concluded with deteriorating relations setting unreachable demands for each other. So I guess it’s also no big surprise that China has not lived up to the phase one trade agreement with the United States.  Today begins the FOMC two-day meeting with the announcement scheduled for Wednesday at 2 PM eastern followed by the chairman’s press conference at 2:30.  Treasury yields are falling slightly this morning, with the 10-year dipping to 1.249% and the 30-year slipping to 1.907% ahead of auctions for 20 billion in 42-day bills and 61 billion of 5-year notes.  Shipping is once again experiencing massive disruptions due to floods in China and Europe, straining global supply chains. 

Though one would think all the issues listed above would slow the bull run, buyers continued to snap up stocks producing new records in the DIA, SPY, and QQQ yesterday. In addition, there is palpable anticipation for the after the bell reports from GOOGL, MSFT, and AAPL, with all of them at or near record highs.  With P/E ratios already well above historical averages, the market has priced in an expectation of perfection.  With these reports coming after the bell today, be prepared for a substantial market gap tomorrow morning.  Your guess is as good as mine in which direction!  Adding in Durable Goods and Consumer Confidence economic reports to the slew of earnings, the price action of the next couple of days are likely to challenge even the most experienced traders.  Buckle up.

Trade Wisely,

Doug

After an extraordinary bullish rally that shrugged off jobs and rising infection rates, futures suggest a little profit-taking this morning.  While setting new record highs, the market suffered from low volume, and VIX could not fall below support, closing above 17 handles.  That said, we have a big week of tech earnings, and with the strong bullish in the sector, more records highs are certainly possible. So expect wild price volatility with large morning pops or drops because the tech giants report after the bell. 

Overnight Asian markets traded mostly lower as the Chinese tech crackdown weighed on stocks.  This morning, European markets trade in the red, worried about the rising infection rates amid solid earnings results.  Ahead of New Home Sales and earnings, U.S. futures point to a lower open as we wait on big tech and an FOMC decision. 

Economic Calendar

Earnings Calendar

We have more than 70 companies listed on the earnings calendar to kick off a week of big tech market-moving events.  Notable reports include TSLA, AMKR, CDNS, CJKP, FFIV, HAS, LII, LMT, PKG, PETS, PCH, RRC, SBFG, & TTM.

Futures point to another gap up bullish open as the Tokyo Olympics begin under a state of emergency.  Infection rates topped 56,000 here in the U.S. yesterday, with the 3^rd straight day over 50K.  However, though there has been a noticeable decline in volume, the bulls appear undeterred with new record levels within striking distance.  If we have the ability to ignore inflationary pressures and rising jobless claims, don’t bother us with all those delta variant stories we have stocks to buy!  Stay with the trend but stay focused as we approach overhead resistance just in case the bulls run stumbles.

Asian markets traded mixed overnight, with tech falling due to China’s regulatory fear.  European markets advance this morning, keying off earnings results.  Though we struggled to gain traction during the day yesterday, the overnight futures are once again pushing for a bullish gap up open to close out this volatile week of price action. 

Economic Calendar

Earnings Calendar

We have a little slower day on the Friday earnings calendar with 41 companies listed, but a large number of them are unconfirmed.  Notable reports include AXP, HON, KMB, NEE, RF, & SLB.

News & Technicals’

The Tokyo Olympics kick off today under a state of emergency, with spectators banded, resignations from sexist remarks, and a bear near a stadium used for matches.  Here in the U.S., the new infections topped 56,000 yesterday, with three days in a row over 50k.  According to the CDC, they are considering masking requirements but say at this point, those vaccinated are okay without masks.  They went on to say the delta variant is one of the most infectious respiratory diseases seen by experts.  In its annual report, the IMF said the Fed must carefully communicate its thinking of the eventual withdrawal of the easy monetary policies.  They raised concerns that higher U.S. interest rates will drain capital flows from emerging markets at a critical time.  Hmmm, why is IMF worried about interest rates when our Fed says inflation is transitory? 

Another bullish day as indexes rallies back toward resistance highs with possible new records just around the corner.  Unfortunately, as indexes stretch up, there has been a noticeable decline in volume, and the Absolute Breadth Index continues to show a struggle with momentum.  In just three trading days, the Dow up more than 1000 points from the Monday low, increasing the danger if the market should stumble.  Inflationary pressures, increasing jobless numbers, and the rapidly rising infection rates are just a few of the possible stumbling blocks placed in the path of this bull run.  Stay with the trend but remain focused to avoid complacency.  This morning the 10-year Treasury ticked up to 1.281%, and the 30-year rose to 1.917% ahead of PMI.

Trade Wisely,

Doug

The fears that triggered Monday’s selloff appear completely forgotten as most earnings beat estimates. Traders and investors alike also seem unconcerned about the lofty valuations as indexes once again push toward record levels. So let’s keep the party going but never forget just how quickly sentiment can shift so avoid complacency and overtrading.  As we approach price resistance highs in the indexes, we can’t rule out the possibility of entrenched bears that can create pop and drop patterns or even complete reversals should they see an opportunity.  Plan carefully!

Asian markets rebound, led by Hong Kong surging 1.83% as China blocks pandemic origin investigations.  European markets trade green across the board this morning, waiting on the ECB decision.   Ahead of jobless claims, housing numbers, and a plethora of earnings data, U.S. futures point to bullish open to test price resistance levels. So hang on tight as the rollercoaster ride continues.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have nearly 90 companies listed, with several unconfirmed. Notable reports include ABT, ALK, AAL, T, BIIB, BX, SAM, COF, CLF, CROX, DHI, DHR, TACO, DPZ, DOW, FITB, FCX, INTC, MMC, NEM, NUE, DGX, SNAP, SKX, LUV, TWTR, & UNP.

News & Technicals’

As infection rates rise, local officials across the U.S. are starting to reimpose masking rules.  According to reports, the travel industry is looking at uncertainty with infection rates rebounding, threatening summer tourism.  In a related report, China has rejected the plan to study the origin of the pandemic with mounting evidence it was a lab leak in Wuhan.  Additionally, Indonesia reported the highest number of new cases globally despite emergency measures to curb the spread.  Ahead of the latest reading on jobless claims, Treasury yields continue to decline this morning.  The 10-year dipped to 1.275%, while the 10-year fell to 1.924%. 

As most earnings beat estimates, the bulls continue surging back unconcerned about the lofty valuations.  Worries that created Monday’s selloff seem totally forgotten, even as infection rates with indexes recovering.  Now the question is can they push right on through the price resistance highs to set new records?  The buying frenzy would suggest, yes.  However, with price volatility high and prices stretched well off-price supports, the risk is high should the market suddenly care about the pandemic resurgence.  Plan your risk with care, keeping in mind just how emotional the market has become.  Be prepared with a plan to protect your capital should the sentiment.  As we test resistance levels, take some profits or consider hedging positions if the bears happen to mount a defense.  The bulls are clearly in control, but price volatility is making for a risky environment.

Trade Wisely,

Doug

Yesterday’s selloff was a reminder that bears still exist and how quickly sentiment can shift with these lofty company valuations.  Though the SPY and the QQQ experienced substantial selling, there is no significant technical damage.  However, that is not the case with DIA, as it joined the IWM below the 50-day average.  We now have overhead price resistance in all the index charts, and with the VIX above a 22 handle, expect volatile price action to challenge even the most experienced traders.  With valuations so high, inflationary pressures on the rise amid earnings season, the threat of a Covid rebound will be a lot for the market to sort out. 

Asian markets closed overnight red across the board as China keeps the benchmark lending rate unchanged.  European markets are trying to rebound this morning, but so far, the gains are modest as traders worry about more Covid impacts.  As earnings events ramp up, U.S. futures point to a substantial gap up as we bounce back.  The question is, will it be a sustained relief rally or a short-lived dead cat bounce.  Buckle up the road ahead could be pretty challenging.

Economic Calendar

Earnings Calendar

The number of earnings ramp-up with more than 30 companies listed stepping up to report quarterly results.  Notable reports include NFLX, ALLY, CMG, CNI, HCA, CFG, HAL, ISRG, KEY, OMC, PM, UAL, TRV, UBS, & SYF. 

New & Technicals’

Bitcoin holders are squealing from the feeling as the popular crypto drops below $30,000, wiping away about $100 billion in valuation.  Another billionaire is making a quick trip to space today as Jeff Bezos prepares for launch in a flight expected to take about 11 minutes to complete.  The United States is asking folks to avoid travel to the UK due to the rising covid numbers.  Warnings from the CDC and the State Department reached Level 4, which is the highest warning level. 

Yesterday was a painful reminder that bears still exist and that complacency can damage retail trader’s accounts.  The DIA joined the IWM below their 50-day moving average, suffering the brunt of the technical damage.  The SPY tested its 50-day but found buyers by the end of the day to hold it as support.  Though the selling was painful for big tech, the QQQ remains significantly elevated its 50-day averages maintaining the title of the strongest of the indexes.  However, as the market works for a bounce this morning, we have created substantial overhead price resistance levels.  With earnings numbers on the rise and the VIX elevated above a 22 handle, expect price action to be challenging and volatile. Significant morning gaps, quick intraday whipsaws, and full-on reversals are likely as the market struggles to balance high valuations and inflationary pressures as Covid increases threaten the recovery.  Plan your risk carefully and remain alert and agile as the market tries to sort out the details.

Trade Wisely,

Doug

Yellen says we should expect several months of rapidly rising inflation. At the same time, Powell defends the FOMC easy money policies, and the bond king, Jeffery Gundlach, says the U.S. Dollar is doomed in the long term due to deficits in budget and trade.  That said, the trends in the DIA, SPY, and QQQ remain bullish, while the Absolute Breadth Index bounces along the bottom.  Retail sales numbers will be in focus this morning and remember we have an FOMC rate decision next week as earnings ramp up.

Asian markets traded mixed but mostly lower to end their trading week as the Bank of Japan holds a steady monetary policy.  European market trade cautiously mixed this morning while U.S. rally off overnight lows suggesting a bullish open across the board ahead of retail sale data.  I wish you all a great day of trading profits and a wonderful weekend!

Economic Calendar

Economic Calendar

We have just nine verified reports on the Friday earnings calendar.  Notable reports include SCHW, KSU, & STT.

News & Technicals’

Janet Yellen says she expects the U.S. economy will see several more months of rapidly rising inflation.  However, she goes on to say it will ultimately fall back to more normal levels.  Some analysts now suggest we will enter a longer-term deflationary market cycle after the inflationary surge.  That sentiment would seem to support Jeffrey Gundlach’s ideas, the so-called bond king, which yesterday said the U.S. dollar is “doomed” over the long term.  The Doubleline Capital CEO went on to say,” the dollar is going to fall pretty substantially” due to increasing U.S. trade and budget deficits.  Treasury yields rose Friday morning, with the 10-year up three basis points to 1.329% and the 30-year climbing 3.9 basis points to 1.958%.

Although we saw a little selling in the tech sector pulling back, we experienced no technical damage across the DIA, SPY, and QQQ indexes. Unfortunately, the same can not be said about the IWM creating a lower low after failing at its 50-day average.  Futures we slightly lower overnight after Yellen’s comments that she expects several more months of rapid inflation.  That being the case, Jerome Powell defended the easy money policies of the FOMC and planned to keep the pedal to the metal pumping $120 Billion per month.  As you plan forward, keep in mind an FOMC rate decision is on for next Wednesday.  Until then, let the good times roll, staying with the uptrend while avoiding complacency. 

Trade Wisely,

Doug

Powell calms the waters with more transitory inflation talk in Congress while at the same time the Social Security Office prepares for the highest cost of living adjustment in decades due to inflation.  Hmm, you can’t make this stuff up, folks!  Beginning today, up to 36 million families will begin receiving more stimulus checks from the IRS each month through the end of the year, and the FOMC will continue to print $120 billion per month to keep the party going.  Markets will have a lot to digest this morning, with several economic reports as the number of earnings events ramp up.

Overnight Asian markets closed the day mixed with the NIKKEI down 1.15%, while the SHANGHAI rose 1.02% after China reports its economy grew in the second quarter.  However, across the pond, European markets see red across the board this morning.  Ahead of a big day of earnings and economic data, U.S. futures currently point to mixed open with the Dow looking lower and Tech Sector trying to hold on to some green. So buckle up; it could be a bumpy ride as we react to all the data from this extended market condition.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have our biggest day of the week of reports with 35 companies listed.  Notable reports include AA, AOUT, BK, CTAS, MS, PBCT, PGR, TSM, THC, USB, UNH, & WIT. 

News & Technicals’

Seniors could receive the highest cost of living adjustment in decades.  Based on estimates from the Consumer Price index data, the increase could be as high as 6.1%.  Hmm, how can that be when Jerome Powell told us yesterday that inflation is transitory and that the Fed will continue printing $120 billion per month.  About 36 million families will start receiving monthly IRS checks starting today through the end of 2021!  The Biden Rescue Plan increases the payments up to $3600 per child.  General Motors warns Bolt EV owners not to park the vehicle inside or to charge them unattended overnight due to a fire risk.  Approximately 69,000 Bolt’s between 2017-2019 are involved in the recall.  Treasury yields fell this morning after the Jerome Powell testimony in Congress yesterday.  The 10-year fell to 1.317% this morning, with the 30-year sliding 1.94%

Markets bulls surged in early morning trading yesterday but could not hold onto the early gains pulling back by the close. As a result, the QQQ squeaked out a 0.16 cent gain while the DIA, SPY & QQQ ended the day with modest losses.  However, the only index suffering technical damage was the IWM after failing its 50-day average, creating a lower high within a downtrend pattern.  This morning we will get the latest reading on the Jobless Claims, Philly Fed MFG, Empire State MFG, Import/Export Prices, Industrial Production, and more Jerome Powell talk in Congress.  If that’s not enough, we will also have a busy morning of potential market-moving earnings reports.  So buckle up and expect anything to occur as the market sorts through the data in a very extended condition.

Trade Wisely,

Doug

With the CPI coming in at its highest level since 1981, markets experienced some mild selling contrary to the frantic buying of late, leaving behind a bit of caution in the candle patterns.  The most prominent being the potential shooting star pattern on the QQQ.  I say possible because to be valid, the QQQ price must follow through to the downside today to confirm the signal, which may be a tall order with the recent big tech buying enthusiasm.  That said, stay on your toes, avoiding complacency with another key inflation data point on its way this morning.

Asian markets traded mixed but mostly lower overnight due to inflation jitters of hot CPI numbers in the U.S.  European markets trade modestly lower this morning as they cautiously monitor inflationary data.  Ahead of the PPI numbers and big bank earnings, the U.S. futures are trying to put on a brave face pointing to flat to modest gains at the open.  However, the PPI could easily inspire the bulls or bears, depending on the report. So stay focused and flexible and be ready for price volatility as the market reacts.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have about 20 companies listed that expect to report today.  Notable reports include BAC, BLK, C, DAL, INFY, PNC, & WFC.

News & Technicals’

The CPI came in at the highest level since 1981 and slightly dampened buying enthusiasm with the worry the Fed may have to act sooner than expected.  Today we will hear for BAC, C, WFC as the big investment banks report results.  According to reports, hospitalizations are once again on the rise as the delta variant spreads throughout the country. In addition, Apple is reportedly ramping up production in anticipation of a big wave of phone upgrades to take advantage of 5g.  Norwegian Cures Line is suing the Florida surgeon general to end the vaccine passport ban because they say it will force them to cancel cruises with its first sailing scheduled for August 15^th. 

Yesterday’s mild selling didn’t create much technical damage to the index charts, but it did offer a little caution by leaving behind some concerning candle patterns.  The QQQ left behind a shooting star pattern that can sometimes signal a top, but it would require a bearish follow-through today for that to be valid.  With the recent wild enthusiasm to buy big tech no matter the price, we will need a bit more proof of bearish price action to become worried.  However, the IWM failing at its 50-day average creates some technical damage if it tries to lead the markets lower.  We will get another reading on inflation this morning with the Producer Price Index, and if that were to come in higher than expected, it could overshadow the big bank earnings rolling out this morning.  On the other hand, if the PPI comes in less than expected, I would not be surprised to see the market shrug-off inflation worries.  Stay focused and flexible, prepared for price volatility as the market reacts to the data.

Trade Wisely,

Doug

First out of the gate early this morning, PepsiCo kicked off the 3^rd quarter earnings season by crushing the estimates and raising forecasts.  Soon to follow will be the possible market-movers JPM & GS setting new high records in the DIA, SPY, and QQQ  in anticipation.  Let’s hope companies can produce the results that support these very lofty valuations!  Except for considerable price volatility and possible morning gaps as traders and investors react to the data.

Overnight Asian markets mostly higher, with the HIS leading the way, advancing 1.63%.  Europe markets are taking more of a wait-and-see stance with mixed and muted results this morning.  Ahead of big bank reports and the latest reading on CPI, U.S. Futures trade mixed but primarily flat.  There is a lot at stake this earnings season due to the high valuations so consider your risk carefully as the fireworks begin.

Economic Calendar

Earnings Calendar

Today we kick off the 3^rd Quarter earnings season with 12 companies listed to report.  Notable reports include CAG, FAST, GS, JPM, KRUS, & PEP.

News & Technicals’

Kicking off the 3rd quarter PepsiCo crushes estimates, and the company raises forecasts seeing a return of demand from foodservice customers.  We will hear earnings results from both major market movers JPM and GS this morning.  France, the Netherlands, Greece, and Spain all announced new restrictions on Monday in a bid to curb the rise in Covid infections.  At the same time, the U.K. confirmed that it would lift its remaining restrictions on July 19^th despite its infection rate remaining high.  According to Husein Kanji, a partner at Hoxton Ventures, ‘this feels a  lot like 1999,’ with tech venture investors writing bigger checks than ever before.  A record 249 firms achieved $1 billion “unicorn” valuations in just the first half of 2021, doubling those produced last year.  Treasury yields moved higher this morning, with the 10-year up four basis points to 1.368% and the 30-year climbing just one basis point to 1.994%.

The DIA, SPY, and QQQ continue to surge to higher highs with little regard to the inflated valuations as the frenzy of buying continues.  New record highs have become so commonplace this year it’s barely newsworthy. However, the 3^rd quarter earnings expectation energy is palpable with the big question can companies produce enough to support these lofty prices?  Technically the T2122 4-week new high/new low ratio signals a possible over-bought condition, while the Absolute Breadth Index points to an extreme divergence with the index leaders.  Though it’s become very redundant, I will continue to suggest we stay with the trend as long as it lasts but avoid over-trading and guard against complacency.  We can expect some wild earnings fueled price volatility with substantial morning gaps, so plan your risk accordingly.

Trade Wisely,

Doug