Yesterday we were reminded that bears are still around and hungry. It was all big tech holding up the market yesterday as most everything else slipped sideways or south. Their market dominance is clear, but one must wonder how much longer tech can maintain this buying pressure as valuations soar and P/E ratios hit new record highs. If nothing else occurred yesterday, the bears gave us a warning not to become complacent. Stay with the trend but stay focused and flexible because bear attacks and price volatility could signal a top is near.
Asian markets closed mixed overnight in a choppy market session. European markets are primarily bullish this morning, keeping an eye on the muted global sentiment. Ahead of the JOLTS number and the FOMC minutes, U.S. futures are trying to shake off yesterdays selling as the QQQ gaps to yet another record high as the big tech party continues.
Economic Calendar
Earnings Calendar
On the Wednesday earnings calendar, we have just eight companies listed and only four verified reports. Notable reports include MSM, SAR & WDFC.
News & Technicals’
With mass pandemic vaccinations continuing across the country, health officials warn we could see a harsh flu season this winter due to the minor season in 2020. Biden is now suggesting door-to-door efforts to increase the number of vaccinations in areas where there are low acceptance rates. At the same time, France is preparing a new law to make the Covid vaccination compulsory for those in the health care industry. The European Central Bank is now raising its forecast to a 4.8% growth rate this year with 4.5% in 2022, raising some inflationary concerns. China’s crypto-crackdown called for the shutdown of a company “suspected” of providing software services for virtual currency transactions. With the FOMC minutes just around the corner, the 10-year Treasury yield dipped this morning to 1.338%, and the 30-year fell to 1.967%.
The bears reminded us yesterday that they are still around and hungry, with the IWM testing its 50-day average and the DIA suggesting a possible test. However, trends remain bullish, and the rally back yesterday afternoon raises the question if the bears have the energy to follow through on yesterday’s threat. That said, the VIX indicated a modest increase in fear, and the Absolute Market Breadth Index saw its first increase in days on the selling wave. So there may be a reason some caution but no reason to run for the door just yet. Instead, consider this a warning shot over the bow not to overtrade or become complacent with valuations so elevated. We know a correction is way overdue and could begin at any time but stay with the trend until then.
With the DIA in striking distance of new highs and the SPY and QQQ closing at new records, there was a lot to celebrate this weekend as the economy recovers. Unfortunately, as the old saying goes, what goes up must come down. Maybe not today, this week, or even this month, but it’s tough to ignore the extraordinary valuations with the SP-500 P/E Ratio’s 93% above the historical 10-year average. Stay with the trend but avoid overtrading and have a plan to protect your capital should the bears come roaring back.
Overnight Asian markets closed mixed but mostly lower as Australia holds rates unchanged. European markets trade flat to slightly lower this morning as oil prices surge to a six-year high after OPEC talks fail to reach a production deal. After a week of daily record highs, U.S. futures are a bit muted this morning, suggesting a mixed to a flat open. Keep in mind volume could be light as traders extend their vacation.
Economic Calendar
Earnings Calendar
As we begin a short week of trading, we have 13 companies listed on the calendar with only three verified reports. The only notable report for the day is the earnings from SGH.
News & Technicals’
After a very bullish run, the SPY and the QQQ begin the week at new record highs, but according to Chris Harvey from Wells Fargo Securities, a ‘day of reckoning is coming for high flying tech stocks. The reasoning for his call is the very high multiples for growth stocks in an inflationary environment. Oil prices jumped to a six-year high after a contentious OPEC meeting that yielded no production deal. Former U.S. Energy Secretary Dan Brouillette, “you could easily see oil hitting $100 a barrel and potentially even higher.’ As we wait for the FOMC minutes coming out on Wednesday afternoon, Treasury Yields moved slightly higher in early morning trading. The 10-year ticked higher to 1.434%, and the 30-year advanced to 2.055%.
Technically speaking, we begin the holiday-shortened trading week in pretty good shape. The DIA is within striking distance of a breakout to a new all-time high while the SPY and the QQQ rest confidently at new records. However, after such a massive 3-week rally, it may not be all sunshine and roses. Valuations are incredibly high, with the SP-500 sitting at a P/E ratio 93% above the historical 10-year average. Big tech-led this rally, and perhaps there is an argument that due to all the money, printing companies can support these lofty valuations. However, it is also easy to argue that a substantial correction is overdue and that the recent rally is nothing more than a blowoff top. My suggestion is to stay with the trend but be very careful not to overtrade because drinking too much of this Kool-aid could be costly should sentiment shift. Don’t become complacent and have a plan to protect your capital should the bears come roaring back.
After setting the 35th record high in the SP-500 this year, all eyes will turn their attention to the Employment Situation number released an hour before today’s open. Analysts estimates target 702,000 new jobs and a 5.6% unemployment rate as companies rush to fill open positions. After the reaction to the data, don’t be surprised if the volume quickly declines and price action becomes light and choppy as computers shut down and fireworks begin to light up for the 3-day weekend.
Overnight Asian markets traded mixed with Hong Kong falling 1.80% by the close. Across the pond, European indexes cautiously inch higher this morning, waiting on the U.S jobs data. With bullish anticipation, U.S. futures try to inspire more buying as they trade with modest gains across the board. I wish you all a safe and wonderful weekend as we celebrate Independence Day. Let’s all take a moment to reflect on the sacrifices of those that came before us to win our freedom and those standing in harm’s way today protecting us and ensuring that blessing!
Economic Calendar
Earnings Calendar
The Friday calendar is a light one with just five listed companies and only one verified report coming from WTER, which is not particularly notable unless you happen to own the small-cap stock.
News & Technicals’
According to reports, a new Tesla Model S Plaid caught fire while operating with the driver behind the wheel. Apparently, the driver noticed smoke coming from the rear of the car and had to force his way out of the vehicle because the locks malfunctioned. The fire required two firefighter crews more than three hours to put the fire out. Billions of venture capital dollars flowed into online grocery start-ups in 2021, attempting rapid delivery services. With more than $10 billion invested in all the start-ups, some suggest the sector is now overcrowded. We have a new space race underway with Richard Branson aiming to beat Jeff Bezos to space with plans to launch his own Blue Origin rocket on July 20th with himself aboard. Micron CEO sees immense growth ahead for semiconductors as electric vehicles become what he called ‘data centers on wheels.’
Today is all about the Employment Situation report with analysts targets of 702,000 new jobs and the unemployment rate falling to 5.6%. The question to be answered is if that will keep the bulls engaged, or will the bears see that as a sign of an overheating economy? There is no doubt that the bulls are in control, with the SP-500 setting its 35th record high this year! With the FOMC continuing to print, the melt-up continues even as the Absolute Breadth Index continues to decline. A growing number of analysts and large investors warn of a substantial correction, so don’t become complacent but stay with the trend as long as it lasts. After we get past today’s reaction to the jobs, data volume is likely to drop like a rock as everyone’s attention will turn toward the 3-day weekend. I wish you all a safe and happy 4th of July!
Though the DIA has struggled as the weakest index of late, the bulls went to work yesterday defending its 50-day average, and the technical picture improves. Big tech continues to dominate with the SPY, closing at its 34th record high of the year. The Absolute Breadth Index shows a substantial divergence from the indexes and suggests we stay focused and avoid complacency. However, stay with the bullish trend as long as this buying frenzy continues.
Asian markets traded in the red across the board overnight as a private survey shows Chinese factory activity slowed in June. European markets trade mixed but near the flatline this morning as they wait on the jobs data. U.S. futures are trying to kick off the second have of the year bullishly as we wait on Jobless Claims, PMI, ISM, & Construction Spending numbers.
Economic Calendar
Earnings Calendar
We have a light day on the earnings calendar as we begin the 3rd quarter with just 11 companies listed on the earnings calendar with several unconfirmed. Notable reports include WBA, AYI, &MKC.
News and Technicals’
As China celebrates the anniversary of its Communist regime, it will not accept sanctimonious preaching from others. FINRA said it fined Robinhood $57 million and ordered the stock trading app to pay nearly $13 million in restitution to thousands of clients. FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm. Due to semiconductor shortages, analysts estimate automakers sold about 4.5 million vehicles in the second quarter as signs of a slowdown continue. Treasury yields are slightly higher this morning ahead of the Jobless claims, with the 10-year trading up to 1.475% and the 30-year advancing to 2.101% early this morning.
The technical picture of the indexes continues to improve, with the bulls defending the 50-day average as support on the DIA. Although the QQQ suffered a little selling, the index remains exceeding strong, as is the SPY, with the tech giants leading the way. That said, momentum continues to be a bit of a concern, with more stocks stuck slipping sideways down than those moving bullishly as the Absolute Breadth Index declines as the indexes push upward. This glaring divergence may mean nothing, but it should serve as a warning not to overtrade or become complacent if the bulls stumble or simply run out of energy. However, until that occurs, stay with the trend and ride this buying frenzy as long as it lasts. Remember, as you plan forward, we have a three-day weekend ahead, and volumes could become light, and price action could become choppy rather quickly after economic data releases as traders hit the road to celebrate the 4th.
With a mighty shove by the tech giants, the SP-500 solidified a new record high for the 33rd time this year, with the QQQ set new closing records as well. Unfortunately, most of the move was again encapsulated in the morning gap as we spent the rest of the day choppy sideways in a narrow range. As the 2nd quarter comes to an end, watch for the possible end-of quarter-window dressing with jobs data in focus for the rest of the week.
Overnight Asian markets traded mixed in a choppy session. European markets trade with modest declines across the board this morning as inflation and the rising delta variant become widespread on the continent. Ahead of earnings and economic data, futures point to a modestly lower open as we wait on private payroll data. As you plan forward, keep in mind the Employment Situation number Friday morning and the upcoming 3-day holiday weekend that could see declining volumes.
Economic Calendar
Earnings Calendar
As we finish up the 2nd quarter, we have 11 companies listed on the earnings calendar, with a few that are not verified. Notable reports include BBBY, MU, STX, FC, GIS, and SJR.
News & Technicals’
On this last trading day of June and the end of the 2nd quarter jobs, data will come into focus for the rest of the week. Warren Buffett is one of the only big investors to recognize the highly uneven impact on small businesses during the pandemic. Bailouts and massive amounts of federal money flowed to big businesses while the small on-street business was primarily ignored as regulators forced their closure. There have been calls to ban British visitors into the U.K. in order to stop the spread of the delta variant that is already widespread on the continent. HSBC says Asia faces a‘ bumpy road’ ahead as Covid cases remain high. Still, vaccine rollouts offer hope as countries like India, Indonesia, Malaysia, and Nepal continue to deal with elevated infection rates. Treasury yields are moving lower this morning, with the 10-year down slightly to 1.475% and the 30-year dipping to 2.087%.
For the 33rd time this year, the SP-500 closed at a new record high, with tech giants proving the majority of the lift. But, of course, the QQQ also set a new record while the DIA and IWM turned slightly lower but holding on to crucial technical support levels. The next three days’ jobs data will keep traders and investors on their toes and guess if the results will continue to support these high prices. The SP-500 P/E ratio is now 89% above its historical 10-year average, and one has to wonder just how high can we go with the Fed keeping the stimulus pipeline continuing to pump out 120 billion per month. Futures trade slightly lower this morning with ADP, Chicago PMI, Pending Home Sales, and Petroleum Status number on deck. Please don’t rule out the possibility of the end-of-quarter window dressing and plan your risk carefully as we slide toward the Employment Situation number and the holiday shutdown.
With last week’s strong bullish performance, the Dow finally pushed through its 50-day average, rising more than 1100 points in just 5-trading days. It will not be interesting how it deals with its downtrend resistance as the SPY and QQQ push for more records with big tech leading the way. As we slide toward the end of the quarter and the 4th of July holiday, can the bulls keep up the pace, or will they need a rest this week? Logic would say yes, but in this all-or-nothing high emotion market, I’m not sure logic applies. Stay with the trend all long as it continues but avoid complacency in this very stretched condition.
Asian markets saw red across the board overnight though the losses were modest. European markets are also showing modest declines across the board as the rise in pandemic infections weigh on sentiment. Ahead of a light day, earnings and economic data futures indicate a mixed but modest open as we slide toward the end of the 2nd quarter.
Economic Calendar
Earnings Calendar
We have a light day on the earnings calendar with just four verified reports to kick off the week. The only somewhat notable report is MLHR.
News & Technicals’
Britain’s Financial Conduct Authority said that Binance Markets Limited “is not permitted to undertake any regulated activity in the U.K.” It’s the latest sign of a growing crackdown on the crypto market from regulators around the world. After losing a confidence vote in parliament on June 21 after the left party withdrew its support, the Swedish prime minister resigned after losing a confidence vote in parliament. The 10-year treasury is easing slightly this morning, declining to 1.516% and the 30-year slipping to 2.143%. U.S. Senator Rob Portman, R-Ohio, said Sunday that the bipartisan infrastructure deal could move forward, following President Joe Biden’s clarification that he’ll sign the bill even if it comes without a reconciliation package. The president last week said that he would refuse to sign the deal unless the two bills came in tandem, a remark that angered and surprised Republican lawmakers.
After rising more than 1100 points in last week’s bullish surge, the Dow recovered its 50-day average and is now testing its downtrend as resistance. The rally led by strong bullishness big tech seems unconcerned about inflationary pressures, supply chain challenges, and antitrust efforts in Europe and those moving forward in the U.S. Though technically a bit stretched out, the trends in the SPY and QQQ showed no signs of slowing down by the close on Friday. After such a strong bull run, one has to wonder, can it continue this week, or will we need a little rest or even a profit pullback to check support levels. We have a light earings calendar as we slide toward the end of the 2nd quarter, with not much on the economic calendar to begin the week to inspire. Moreover, it is possible by mid-week that volumes may begin to decline as trader extend their 4th of July holiday.
A deal on infrastructure and another Trillion in deficit spending inspired the bulls to record highs in the SPY and QQQ, with the technicals in the DIA and IWM continuing to improve. After the bell, the big banks all passed their stress tests, and blowout earnings from NKE continued to inspire buyers in the overnight futures session. Assuming we get past the pesky inflation data coming out before the bell, it looks like we can bullishly party on right into the weekend.
Asian markets closed green across the board, lead by the HSI, which surged 1.40% by the close. Across the pond, European markets trade mixed with inflation worries and fears of tapering raising caution. However, U.S. markets don’t seem to at concerned about inflation, pointing to a bullish open ahead of key inflation data. After such a strong recovery rally, don’t forget to take some profits as we slide into the weekend.
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have a total of 16 companies listed, with just six verified reports. Notable reports include KMX, JKS, & PA.
News and Techinicals’
The big banks get clean bill health after all passing their stress tests as expected, with the FOMC continuing to push 120 billion a month. A bipartisan Senate group agreed on an infrastructure bill totaling nearly $1 Trillion without a plan to pay for it other than printing more money. The market surged high on this news because there is nothing this market likes more than deficit spending. It makes you wonder if they will be as inspired when it comes time to pay the piper? According to the National Association of Manufacturers, supply chain disruptions and inflated prices are not diminishing due to workforce shortages, and demand exceeds supply. Hackers are now attacking PC gamers with the malware “Crackonosh” hidden in free versions of games. Once installed, it hijacks the computer’s processing power to mine cryptocurrencies for the hackers. The 10-year Treasury yields edge higher this morning ahead of inflation data, trading this morning at 1.489%, with the 30-year dipping slightly to 2.093%.
Yesterday’s big gap up at the open quickly lost momentum until the announcement of another trillion of deficit spending was on the way for infrastructure. For now, deficit spending is like stock market crack, and we can’t seem to get enough these days. New records in the SPY and QQQ and the technicals continued to improve in the DIA and IWM. After the bell, the banks passed their stress tests, continuing to inspire the bulls in the overnight futures session with the DIA set to recover its 50-day on the opening gap. There is just one hurdle to cross this morning on inflation with the Personal Income and Outlays report before the bell. If there is no stumble there, a bullish push to close the week strong looks very likely. Party on!
The indexes chopped in a very tight range yesterday, but despite the uninspired price action, the NASDAQ was able to post its 16th record high this year. The tech sector continues to surge upward even as the antitrust bills aimed at the tech giants move forward with bipartisan support. The Dow remains the weakest of the indexes, still languishing below its 50-day average. However, the overnight surge in bullishness ahead of market-moving economic reports could test that resistance level in the Dow and may even break the SPY to another record high. Amazing!
Overnight Asian markets closed the day mixed in a choppy flat session. However, Europiean markets are decidedly bullish this morning after digesting Fed comments of longer-lasting inflation pressure. Though uninspired yesterday the bulls are pushing hard this morning in the premarket futures ahead of retail sales, GDP, and Jobless data. Fasten your seat belt; it could prove to be a wild price action morning.
Economic Calendar
Earnings Calendar
The Thursday earnings calendar is the busiest of the week, with 16 companies stepping up to report quarterly results. Notable reports include FDX, NKE, CAN, BB, DRI, RAD, & WOR.
News & Technicals’
After the bell today, we will hear the results of the banking stress testing. The big banks had a bumper year in with the Fed pumping money to them, and most expect all will pass the test. I would expect the banks will immediately announce stock buy-backs and increased dividend payments. The Amazon Prime day event looks to has set new records in the U.S., with sales totaling 9 to 12 billion, according to Adobe analytics. Despite massive lobbying efforts, the U.S. House Judiciary Committee voted to approve a bill to give antitrust enforcers more money as antitrust efforts aimed at tech giants in anti-competitive abuses. Treasury yields move higher this morning after Fed officials warn of longer-lasting inflationary pressure, with the 10-year rising to 1.502% and the 30-year climbing to 2.129% ahead of retail and GDP data.
Though the market marketed time chopping sideways, the NASDAQ managed to squeak out its 16th record high this year. Rather remarkable, in my humble opinion, the U.S. House voted to increase funding as the bipartisan aimed at the tech giants move forward. Moreover, with the Fed officials warning of a long-lasting inflationary environment, traders appear to no concern with futures pointing to new record highs at the open. The struggling financial sector could get a boost later today as the Fed releases the bank stress test results. Reports are already inferring they all passed with easy money continuing to flow to them from the Fed. With retail sales, GDP, Trade, and Jobless numbers before the bell, anything is possible by the open, and the premarket pump pushes for new records.
With the NASDAQ setting a new record, and the SP-500 within striking distance, the index technicals’ improved through overhead resistance in the DIA, IWM, and SPY are still a concern. The Dow remains the most significant concern after rallying 670 points off Friday’s low; it must yet deal with its 50-day average as resistance. Despite antitrust probes and bipartisan-supported proposed antitrust legislation, the tech giants did the vast majority of the market recovery, with Microsoft briefly hitting a two trillion market cap. We’ve come a long way in just two trading days. Remember to take some profits!
Asian markets traded mixed overnight, but the HSI was on fire, surging 1.79% by the close. With a stronger than expected PMI and inflation worries creeping in, European markets trade primarily in the red this morning though the FTSE is clinging to modest gains. Ahead of earnings and housing data, the U.S. futures currently suggest a flat to modestly bullish open. As you plan your day, keep a close eye on overhead resistance levels that may harbor entrenched bears.
Economic Calendar
Earnings Calendar
On the hump day earnings calendar, we have nine companies listed on the calendar though some are unconfirmed. Notable reports include FUL, INFO, PDCO & WGO.
News & Technicals’
Although pressed several times pressed with hyperinflation questions, Jerome Powell stuck to his guns, suggesting the recent spike is likely temporary. All we can do is hope he’s right as the Fed continues to pump 120 billion a month into the system. The China crypto crackdown continues to impact Bitcoin prices falling below 30,000 once again. The new Delta variant of Covid is likely to become the dominant strain in the next couple of weeks, according to Dr. Fauchi. He has declared this strain as the greatest threat to the attempt to eliminate the virus. In the U.K., consumer price inflation came in 2.1%, and chief economist Andy Haldane urges policymakers to cut their quantitative easing program or risk what he calls the “tiger of Inflation” incoming. The Eurozone business activity surged to its highest levels in 15-years. However, as inflation worries crop up worldwide, U.S. Treasury yields saw little movement this morning, with the 10-year holding at 1.472% and the 30-year drifting slightly lower to 2.102%.
The index technicals improved substantially, with the tech giants doing the vast majority of the heavy lifting. The NASDAQ closed at a new record high, and the SPY is within striking distance of new records though the index has more stocks moving sideways to down than those moving up. The DOW remains the weakest of the indexes, still below its 50-day average though it has surged 670 points off Friday’s low in just two trading days. The VIX has calmed substantially but has not made a new low as one would expect, with new index records being set. That said, traders should remain vigilant as huge price volatility is possible with the DIA, SPY, and IWM still facing overhead resistance. Remember, when the market moves big, it’s a good idea to take some profits along the way.
After Friday’s ugly selloff, the relief rally to fill the bearish gap was a nice reprieve. The SPY and IWM recovered nicely, closing above their 50-day averages, while the DIA remains the weakest index with substantial overhead resistance yet to overcome. Speculation and emotion are running high, as evidenced by the back-to-back 600 point swings. The wild price action favors day traders but makes it near to impossible to have an edge as a swing or position trader. Be very careful chasing buys as we test overhead price resistance levels that may have entrenched bears willing to defend.
Overnight Asian mostly rallied, with the NIKKEI leading the way, surging 3.12% through the HSI continued to drift south. European market trade mixed this morning with modest gains and losses as trade inflation and interest rate fluctuations. Ahead of a light earnings calendar and Housing numbers around the corner, U.S. futures have bounced off overnight lows but currently point to a flat open. After yesterday’s big relief rally, a little rest is not out of the question.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have just eight companies listed, with only half verified. Notable reports include KFY and PLUG.
News & Technical’s
The assault on the big tech’s continue with European Commission opened an antitrust investigation into Google. According to the report, the probe is looking into the advertising unit that has made it harder for rival online advertising services to compete. China’s illegalization of nongovernmental sanctioned cryptocurrencies has taken a toll on Bitcoin that has lost $300 billion in value since last Friday. Chinese authorities in the Sichuan province ordered crypto miners to shut down operations, and the Bank of China urged financial institutions not to provide crypto services. Fed Chairman Jerome Powell said in testimony prepared for delivery to Congress that the economy is growing, but faces continued threats from the Covid pandemic. He said inflation has risen “notably” but repeated his position that the price pressures are transitory. He has a story, and he’s sticking to it! The 10-year treasuries yields increased slightly this morning to 1.501%, and the 30-year advanced to 2.115%.
Yesterday’s relief rally filled the bearish gap left behind in Friday’s price action in the DIA, SPY, and IWM. The DIA remains the worst technical condition remaining below its 50-average with substantial overhead price resistance yet to overcome. However, the SPY and IWM recovered their 50-day averages but still have to price resistance levels above to yet to overcome. The SPY remains in a bullish trend even as semiconductor stocks suffered a pullback due to the China crypto mining crackdown. I wouldn’t call the 600 point swings in the last two days trading days healthy price action. In fact, it’s difficult to impossible for swing and position traders to have an edge in this kind of trading environment. Big price swings and high volatility favor the day trader. As the index charts approach price resistance levels, be prepared for the possibility of bearish pushback. Expect price volatility to remain high, with large intraday whipsaws and overnight reversals possible.
