The afternoon New Year’s eve record-setting rally looks to extend this morning as the bulls step on the gas on this first trading day of 2021. Trends remain bullish as vaccine results will produce a much better year for business. That said, hospitalizations hit new records as well over the holiday shutdown. One has to wonder what kind of restrictions will businesses have to face under a new administration should the surge continue. Long story short, have a plan of action to protect your capital should the market stumble.
Asian markets closed mixed but mostly higher overnight, and European markets are decidedly bullish this morning. U.S. futures point to bullish open ahead of PMI Mfg. and Construction Spending numbers with a very light day on the earnings calendar. Expect possible political news sensitivity as the tenuous transition of power begins.
Economic Calendar
Earnings Calendar
Although we have several small-cap stocks listed on the earnings calendar, their reports are unconfirmed, and thus no notable earnings.
News & Technicals’
On the first trading day of 2021, the U.S. Futures look to extend the late New Year’s eve record-setting rally. With an accommodative Fed, more Governmental stimulus rolling out, and high hopes that vaccines will put the pandemic behind us, there is a reason for all the bullishness. However, with indexes already at record highs, high unemployment, and substantial economic damage to businesses, traders will have to remain focused and ready to act should the market stumble. Market P/E valuations are very high as we enter the new year, and with economic restrictions still in place, will companies be able to produce healthy enough earnings to sustain current prices? Hospitalizations hit new records highs over the holiday and did post-pandemic travel. How will the new administration respond if infection rates continue to surge? A lot to ponder as we kick-off the new year.
One thing for sure at the moment is that the index trends remain bullish, and there seems to be a relentless willingness to buy up stocks no matter the valuation. Some suggest we are in a growing bubble, and while that may be true, bubbles can continue to extend for months. As traders, all we can do is stay with the trend as long as it lasts, follow our rules, and avoid overtrading. Always have a prepared plan should the bears suddenly have reason to come back to work. Trust me, they will, and it will likely occur very suddenly. With this morning gap up to new records, the T2122 indicator will once again show a short-term extended condition. The Absolute Breadth Index remains in a concerning decline, and keep in mind the VIX-X remains above a 20 handle as we set new records in the indexes.
The bears decided to make an appearance yesterday, raising some concern in the IWM as it slipped below its uptrend. Although printing some bearish candles, the DIA, SPY, and QQQ uptrend remain intact as the bulls fight back in the premarket, suggesting a bullish open. Consider your risk carefully, as the volume could quickly diminish today, making it difficult for the bulls to sustain the opening pop. Plan your risk carefully as we slide into the holiday shutdown.
Overnight Asian markets traded mostly lower as China revised 2019 GDP growth lower. European markets trade flat to modestly lower this morning despite the positive vaccine news with stocks lacking momentum. The U.S futures bucking the trend point to a higher open as the bulls fight to regain record territory once again. Momentum could be a problem today, so stay focused and be careful not to get caught up in fear of missing out.
Economic Calendar
Earnings Calendar
There are no confirmed earnings reports today.
News & Technicals’
Vaccine is back in the news today, with the Oxford-AstraZeneca gaining approval in the U.K. McConnell blocks the $2000 direct payments approved just yesterday by the U.S. House. Then tied the bill to other legislation that includes election security as well as tech. McConnell also asked the Senate to approve the military spending bill that was vetoed by the President. Colorado has confirmed the first case of the new, more infectious strain of COVID discovered in the U.K. One of the newly elected Congress died yesterday in a Louisiana hospital from COVID-19 just days before being sworn in and taking his seat. He was only in his 40’s.
Although the bears came out to play yesterday, leaving behind some concerning daily candle patterns, yet three indexes remain in bullish trends. The very extended IWM index is of most concern following the Tuesday bearish engulfing candle to slip below its current uptrend. However, we once again see the futures pointing to a bullish open as the familiar morning pump begins. Yesterday’s selling relieved the pressure of overextended condition in the T2122 indicator, but the Absolute Breadth Index continues to decline, providing a reason for caution. Keep in mind volume is likely to drop quickly today, and the early pop higher may have trouble finding the momentum to sustain.
Another record-setting day as the market celebrates the passage of the stimulus bill. With a very light day of earnings and economic news, you might want to keep an eye on the Senate today as they deliberate on the $2000 direct payments bill passed by the House yesterday. It could make for some interesting political drama, and their decision could have significant market ramifications.
Overnight Asian markets were mixed but mostly higher as the NIKKEI surged to price levels not seen since the early 1990s. European markets are green across the board this morning, and the U.S. futures point to more new record highs as the bulls continue to march higher. Remember, volume and momentum can quickly diminish as we approach the holiday shutdown plan your risk accordingly.
Economic Calendar
Earnings Calendar
On the last trading Tuesday of 2020, we have a light day of earnings with just one verified report coming from JRJC.
News & Technicals’
After a record-setting day, futures continue to push higher in reaction to the stimulus bill’s passage. Yesterday the U.S. House passed a bill to raise direct payments to $2000, and they easily gained the 2/3 vote required to override the President’s veto of the defense bill. The focus will now turn to the Senate as the legislative year draws to a close. Treasury yields continue to rise this morning and may well react depending on the Senate vote on stimulus checks. The Boeing 737 Max returns to the air here in the U.S., which may be good timing with investors seeing a bright near-term future for airlines anticipating a significant return to air travel post-pandemic environment.
Although the market remains in rally mode, it’s a bit difficult for me to be excited about the rally, with volume likely to shrink heading toward the New Year’s shutdown. The Absolute Breadth Index continued to decline yesterday, indicating fewer and fewer stocks are holding the market up. The T2122 indicator also supports that thought showing a modest decline yesterday as the market rallied. The tech giants AAPL, AMZN, GOOG, MSFT, did most of the work yesterday, enjoying strong buy-side pressure. Plan your trading carefully as volume and momentum can quickly fade as we approach the holiday.
With the signing of the stimulus bill, the bulls are bidding up the futures market this morning, suggesting a gap up open with the possibility of some new record highs as a result. However, there is a reason for some caution, with a significantly elevated T2122 indicator and the Absolute Breadth Index remaining in decline. Plan carefully and stay alert for the traditionally low volume that often accompanies the days between Christmas and New Year’s.
Asian markets closed mixed but mostly higher, with Hong Kong declining as Alibaba shares plunge nearly 8%. European markets are green across the board this morning, celebrating a Brexit trade deal and, in reaction, the $900 Billion stimulus spending. Here in the U.S., futures point to a bullish open and possible index records as we kick off the last 4-trading days of 2020.
Economic Calendar
Earnings Calendar
We have only four verified earnings this Monday. Notable reports include FDS and HEI.
News & Technicals’
After hinting that he may not sign the stimulus bill, President Trump finally signed it into law while still supporting the idea of $2000 direct payments rather than the $600 the bill provides. That news is inspiring European markets and U.S. futures markets higher at the open. Treasury yields trade higher this morning as well relieved by the avoidance of a government shutdown heading into the end of the year. With air travel hitting new post-pandemic highs over the Christmas Holiday, Whitehouse advisor Dr. Fauci warns of a likely surge in infection rates coming in the weeks ahead.
With the overnight surge of bullishness after news of the stimulus bill came out, the indexes point to gap up open and possible new record highs. However, traders will have to stay on their toes as the trading days between Christmas and New Year’s traditionally suffer from a lack of volume, meaning momentum may quickly fade. With a light day on the economic calendar and very little in the way of earnings, the market could be quite sensitive to political news. Stay focused and plan your risk carefully, as price action could quickly become light and choppy.
The bill is now on the president’s desk, but he calls the stimulus bill unacceptable. He calls on Congress to raise the direct payments to $2000 from the approved $600 and cut the laundry list of wasteful pork belly spending. An interesting turn of events is likely to keep the media hopping and the market unsettled with the uncertainty. The NASDAQ printed its 54th new record high in 2020 yesterday, a remarkable feat considering the economy’s actual state. Keep in mind volume typically declines as we head into the holiday shutdown. Plan your risk accordingly.
Overnight Asian markets rallied in response to the Congressional passage of the stimulus bill. Across the pond, European are mostly higher on hopes that a Brexit trade deal is on the verge of completion. U.S. Futures recovered overnight loss and currently point to a bullish open ahead of a busy economic calendar with potentially market-moving effects. Right Way Options will be closed on Christmas Eve and Christmas day, so there will be no blog or Morning Prep Video. On behalf of my family, I want to wish you and yours a safe, Very Merry Christmas.
Economic Calendar
Earnings Calendar
It should not be a big surprise that there are very few earnings as we head toward the Christmas shut down. There is only one notable report, PAYX. We have no notable reports on Thursday and, of course, Friday.
News and Technicals’
After weeks of wrangling, both Congress bodies finally passed the stimulus bill, but now that’s it’s on the President’s desk, he says it’s unacceptable. Although he has not said he will veto the bill, he has asked Congress to increase the direct payments to $2000 per citizen and up to $4000 per couple. He also listed a disgraceful laundry list of wasteful pork belly spending in the bill he wants cut before signing the spending plan. A movie script on the last few week’s politicals in the U.S. would have been trashed as too unbelievable just a few years ago. According to reports, the U.K. and E.U. may be near a Brexit trade deal, good news, as they quickly approach the deadline. With the new virus, strain brings up worries of more business restrictions; the Dow lost ground yesterday, but the resilient NASDAQ inked its 54th new record of 2020. A remarkable and honestly unbelievable feat considering the state of the economy and rapidly pandemic having many hospitals near capacity.
We have a very bid day on the Economic Calendar today, and the bulls remain very feisty, recovering from overnight losses pointing to a bullish open. Index trends remain bullish, but with the Absolute Breadth Index continuing to decline and the holidays just around the corner, there is a reason for caution. Plan your risk carefully. Right Way Options will be closed on Christmas Eve and Christmas day, so there will be no blog or Morning Prep Video. On behalf of my family, I want to wish you and yours a safe, Very Merry Christmas.
The bulls stampeded back into stocks after gaping substantially lower yesterday, choosing to hear no evil or see no evil in the new, more infectious strain of the virus impacting Europe. In a late-night session, the U.S. House passed the stimulus bill and spending bill, avoiding a government shutdown. Now traders will have to answer the question, is the stimulus already priced into the market? Currently, futures are flat, while yesterday’s bullish price action raises hope of a Santa Claus rally.
Overnight Asian markets dipped in reaction to the new economic restrictions weighing on investors. After a rough day of selling yesterday, European markets trade modestly higher this morning despite the new virus strain’s economic impacts. After receiving the government go-ahead for the 2nd largest stimulus bill in government history, U. S. futures are taking a wait and see approach ahead economic reports.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have just 4-verified reports. Notable reports include KMX, CTAS, & NEOG.
News & Technicals’
After weeks of political gamesmanship, the U.S. House passed the 2nd largest stimulus bill in government history. Americans could get the $600 direct payments as soon as next week and extend a lending program for business and up to 15 billion in aid to airlines. Google and Facebook are reportedly teaming up to battle antitrust lawsuits that have raised the possible collusion between the companies to price fix advertising prices. The SEC has been very busy of late and, according to reports, will soon sue the cryptocurrency firm Ripple for selling unregistered securities. The new strain highly contagious strain of the virus is already suspected to be here in the U.S., according to Whitehouse health officials. Scientists from the U.K. suggest the new strain is up to 70% more contagious. However, the market chose to ignore the new threat to the economy in favor of the new deficit spending bill in a highly volatile trading session yesterday. According to Johns Hopkins data, the U.S. is recording at least 215,700 new infections and at least 2600 deaths each day based on a seven-day average.
After some wild price action whipsaws, the bulls rushed back in yesterday as if they have zero concern about the overall economy’s state. However, after passing the $900 billion stimulus plan, the U.S. Futures seem to have stalled this morning. Printing bullish candle patterns on the index charts suggest there is still hope for a Santa Claus rally as we head toward the Christmas shutdown. We have many potentially market-moving data coming our way on the economic calendar today and tomorrow, so stay focused and expect price sensitivity to the news cycle. Will we continue to hear no evil and see no evil as economic impacts continue to grow?
The U.K. reported a new, more contagious strain of the virus on Sunday, overshadowing the 900 billion stimulus bill agreement sending the futures sharply lower. If this morning’s gap-down reversal gains momentum, it could be a painful day with price and technical supports substantially lower. Though cooler heads may prevail, make sure you have a plan to protect your capital. Expect extreme sensitivity to the news as countries extend and strengthen restrictions in reaction to the new strain.
Asian markets closed mixed but mostly lower overnight. European markets trade decidedly bearish this morning as new travel restrictions go into place. U.S. futures have bounced off overnight lows but still point to a substantial gap down ahead of a light earnings and economic calendar day. Buckle up volatility and with an extreme sensitivity to news surrounding the new strain.
Economic Calendar
Earnings Calendar
As we kick off the Holiday week, we have a light earnings calendar. Notable reports include FDS & HEI.
News and Technicals’
The second vaccine from Moderna reaches hospitals today after emergency approval last week, with infection and death rates remaining very elevated. Late Sunday afternoon, Congress agreed on a 900 billion dollar stimulus bill, the 2nd largest in history. The House will vote on the bill later today, sending to on to the Senate for approval. Airlines are on track to receive another 15 billion in government support but must call back furloughed workers to receive the payments. Yesterday the U.K. scientists identified a new, more aggressively infectious strain of COVID. In reaction, several countries have already banned travel, and instead of the planned easing of restrictions ahead of Christmas, Parlement may add to lockdown restrictions in an emergency Parliament meeting. After hearing about the stimulus agreement, U.S. futures surged 200 points but have turned sharply bearish as new restrictions in reaction to the new strain worry investors.
After a very volatile overnight futures market fueled on the mixed emotions of stimulus and a more infectious strain of the virus, the market points a substantial gap down at the open. Dow futures more than 600 points but has thus far rallied off the overnight lows. That said, those that were buying up positions before the weekend will likely experience a painful reversal this morning. Perhaps cooler heads will prevail, but this is the kind of event that could easily trigger a swift and significant selloff. Try not to panic and stay focused on the price action but plan to protect your capital if the run for the door gains momentum.
The bulls and bears stood toe to toe yesterday, duking it out with either side unable to gain any momentum as we wait on Congress. Evidence continues to show that pandemic restrictions are slowing the economy, and with infection rates exploding to about 1 million every 4-days, I suspect that will only get worse. Has this rally already priced in the stimulus bill? Maybe, so be careful overtrading and consider your risk carefully heading into the weekend and the holiday week ahead.
Asian markets closed the week red across the board in reaction to the Bank of Japan rate decision. European markets this morning show modest gains even as a no-deal Brexit weighs on investor minds. U.S. Futures are trying to shake off overnight lows during the morning pump up that has become all too familiar of late. With a light earnings and economic calendar day, expect an extra dose of news sensitivity as we head into the weekend.
Economic Calendar
Earnings Calendar
We have a light day on the Friday earnings calendar, but we still have a few meaningful reports. Notable reports include APOG, DRI, NKE, & WGO.
News & Technicals’
With an afternoon vote, the FDA endorses the second vaccine choice, with Moderna gains approval for emergency use. A good thing as the infection rate explodes around the country, adding about 1 Million new positive tets in just 4-days. According to reports, the widespread hack included a breach at Microsoft. They are not suggesting millions of Americans may have been affected by the attack. The deadline for a Brexit trade deal is drawing near with several key disputes yet to resolve. A no-deal Brexit could create some stock market and currency market fluctuations. Keep an eye on this developing story.
After gapping higher on high hopes of a stimulus bill, the market seemed to lose momentum quickly and chopped in a narrow range the rest of the day. The Absolute Market Breadth Indicator continues to decline, and the T2122 indicator suggests a very extended condition in the indexes. That said, the bears don’t appear to have any teeth, and the trends remain bullish as we wait for a congressional decision. The indexes appear pensive and wound pretty tight, waiting on a news event that can create an explosive move in either direction. As you plan your risk into this weekend, keep in mind volume tends to decline quite sharply, heading into the Christmas holiday shutdown.
The market seems solely focused on stimulus, rallying the NASDAQ to new record highs. Little details such as declining retail sales, new record hospitalizations, and the highest daily death toll over 3600 Americans won’t stand in its way. Sorry for the sarcasm, but ignoring the economy’s actual state can make for a hazardous situation if the market sentiment suddenly decides to shift. Stay with the bullish trend but stay focused and have a plan to capture gains and protect your capital because a shift south could be swift and punishing.
Overnight Asian markets recovered from early losses to close with modest gains across the board. Across the pond, European markets advance with stimulus talks in focus. Ahead of Housing Starts, Jobless Claims, and the Philly Fed MFG Index, futures currently point to a bullish open fueled up on hopes of more federal deficit stimulus spending. Stay focused as we continue to extend.
Economic Calendar
Earnings Calendar
As usual, the Thursday earnings calendar is one of your busiest days of reports. Notable reports include CAN, BB, FDX, GIS, JBL, NAV, RAD, & WOR.
News & Technicals’
Focused only on stimulus hopes and seemingly ignoring any other economic details, the futures are rising this morning. A miss on Retails Sales, a decline in PMI, with new records of more than 3600 deaths and hospitalizations while on the same day printing new a record on the NASDAQ. Jerome Powell left rates near zero and reintegrated the FOMC commitment to keep them low as long as necessary for the economy to recover. The FDA expects to vote on Moderna’s Covid vaccine later today, and Congress is making progress on the stimulus bill. Several states joined Texas in an antitrust lawsuit against Google, claiming collusion with Facebook fixing advertising prices. Antitrust against the tech giants seem to be shaping up as a theme for 2021.
At the risk of sounding like a broken record, stay with the bullish trend but have a plan to capture gains and protect capital if the market suddenly decides to care about the actual economy’s condition. Before the open, today will get readings on Housing Starts, Jobless Claims, and the Philly Fed MFG Index. The most likely to move the market would typically be the Jobless Claims, but with high hopes of newly printed stimulus debit, even a negative number could inspire new record index highs. I will reiterate that both T2122 and T2101 are both flashing clues to be cautious, so be careful not to overtrade or chase already extended stocks.
Just 2-weeks before Christmas, Senate leader McConnell congratulates Biden as the president-elect, and he and Schumer say a stimulus funding deal is on the way. That has the futures pointing to new record highs at the open, assuming the data deluge on the economic calendar doesn’t trip up the bulls. Keep in mind that shortly after the open price, action could become light and choppy as we wait for the FOMC decision and press conference beginning a 2 PM Eastern time. Stay on your toes and prepare for the possibility of some price volatility.
During the night, Asian markets closed the day mixed but mostly higher following the U.S. rebound on Tuesday. European indexes are advancing across the board following a positive global growth trend. Here in the U.S., the bulls are fueled up on stimulus hopes ahead of a big day of economic reports. Buckle up it could prove to be a wild ride.
Economic Calendar
Earnings Calendar
The hump day earnings calendar is a light one, but we have a couple of reports worth a look. Notable reports include LEN & TTC.
News & Technicals’
After meeting yesterday on the stimulus bill, Senators McConnell and Schumer hope to soon progress on the funding deal. Hopefulness that the spending bill will soon be on the way is inspiring the bulls once again this morning, likely setting new record highs at the open today. However, attention will quickly turn to the busy economic calendar with Retail Sales, PMI Composite, Business Inventories, Housing Market Index, and EIA Petroleum Status. If that’s not enough to keep traders guessing, we have the FOMC Announcement and the Chairman’s press conference to keep the price volatility alive. In a move that seems to put the presidential election to rest, Senate Leader McConnell congratulates Biden on his win and urges Republicans not to reject the president-elect’s victory.
The bullish trends remain, and with hopes of more stimulus futures point to more record highs this morning. That said, clues are warning that a little caution is warranted. The Absolute Market Breadth indicator continues to downtrend even as the market rallies, suggesting fewer and fewer stocks keep the rally alive. Also, the T2122 indicator is once again suggesting a short-term over-extension. Stay with the trend but have a plan to protect your profits and capital if sentiment begins to shift quickly. Monday’s big rehearsal should serve as a reminder that bears still exist and how quickly the bullish tide can recede from this elevation.
