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

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

Economic Calendar

Earnings Calendar

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

News and Technicals’

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

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

Trade Wisely,

Doug

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisely,

Doug

The Amazon antitrust action by the Washington D.C. attorney general quickly dampened the bullish energy yesterday.  Indexes took a little break resting at or near price resistance levels in the charts.  The IWM is the only index that suffered some technical damage as it once again failed at its 50-day average.  Keep in mind after the Thursday morning economic reports, don’t be surprised if volumes begin to decline as traders escape early to extend Memorial day vacations.  Plan carefully as we slide into a 3-day weekend and begin summer trading.

During the night, Asian markets closed with modest gains led by the HIS gaining 0.88%. However, European markets are trading very cautiously this morning near the flatline but mostly lower when writing this report.  As earnings roll out this morning, the U.S. futures point to a bullish open ahead of the Petroleum numbers as they test overhead resistance levels.

Economic Calendar

Earnings Calendar

We have just over 30 companies listed on the earnings calendar this morning, but several are unconfirmed reports.  Notable reports include NVDA, ANF, AEO, BBW, CPRI, DKS, APPS, ELF, NXGN, PDD, PSTG, SNOW, & WDAY.

News & Technicals’

Washington D.C. attorney general Karl Racine began an Amazon antitrust action claiming the company is unfairly raising consumer prices.  The lawsuit alleges the company utilizes monopoly pricing power contracts with third-party sellers.  An ad was running in the UK stating, “time to buy,” Bitcoin was banned by the Advertising Standards Authority.  Treasury yields traded mixed this morning, with the 10-year rising slightly to 1.567%  while the 30-year declined slightly to 2.256%.  China is once again failing to live up to its trade commitments in the phase one trade deal.  Chinese purchase of U.S. goods through April is 73% of what they should be according to the agreement.  China is also in the news for cracking down on cryptocurrency mining activities proposing punishments for companies or individuals involved.  Being a central hub of crypto mining activity could create more price volatility in the digital currency.

Technically speaking, the DIA and SPY are in pretty good shape though still challenged by overhead resistance.  The QQQ and the IWM have the biggest hurdles to overcome with significant price resistance levels above.  That said, the bulls are once again pumping the premarket, trying to inspire buyers as the morning earings rollout.  Later this morning, we will get a reading on the Petroleum Status that could be very important for the IWM that once again failed at its 50-day average yesterday.  Remember, as we slide into a 3-day weekend, the volumes could become light as traders head out early to extend their vacations.  Plan your risk accordingly.

Trade Wisely,

Doug

As inflation fears subsided, the index chart technicals continued to improve yesterday.  That said, price action remains challenging, and it’s worth noting that this all-or-nothing market environment has swung up and down nearly 2000 points in the last 7-days.  Challenging may be an understatement!  We still have overhead resistance levels to overcome, so be careful chasing stocks well above support and near resistance.  New records may be just around the corner, but we still can’t rule out bear attacks near resistance highs.  Stay focused on price action for clues.

Overnight Asian markets rallied strongly, led by SHANGHAI surging 2.40% by the close of trading.  Across the pond, the DAX hits an all-time high while the FTSE and CAC trade oddly near the flatline.  Ahead of earnings, Case-Shiller, Housing data, and Consumer Confidence numbers, the U.S futures push for another bullish gap up open. 

Economic Calendar

Earnings Calendar

We have under 25 companies reporting today, but we have several potential market movers on the list.  Notable reports include A, AZO, CBRL, INTU, NAT, JWN, RRGB, SOL, TOL, URBN, & ZS. 

New & Technicals’

Elon Musk said he spoke to bitcoin miners, and after doing so, the price surged to near $40,000.  Make you wonder how much longer the SEC will allow him to get away with this manipulation and why would anyone want to own something that one person can move the price so dramatically.  What’s the next move, Elon?  Amazon could announce a deal as early as today to buy MGM Studios.  The $9 billion deal would be AMZN’s biggest acquisition since the Whole Foods purchase in 2017.  Ahead of Case-Shiller numbers and the New Home Sale figures, Treasuries are drifting lower this morning.  The 10-year fell to 1.591%, and the 30-year dipped to 2.283%.  After one denial after another, the evidence begins to mount that Covid-19 came from a Wuhan Lab.  The WHO has repeatedly said the virus jumped from bast to humans, but there is no evidence that the virus exists in bat populations after extensive testing. 

Chart technicals continued to improve yesterday as inflation fears subsided.  The tech giants enjoyed substantial rallies pushing indexes toward resistance levels.  In this all-or-nothing market environment, I would not rule out the possibility of new record highs in the DIA or SPY by the end of the week.  However, with the recent volatility, we should also not rule out the possibility of another bear attack near market highs.  Keep in mind the Dow has covered nearly 2000 points in just the last 7-day of trading.

Interestingly the Absolute Market Breadth indicator continues to decline as we surge higher.  It is, however, encouraging that the VIX suggests market fear is subsiding.  Stay focused and flexible as volatile price action is likely to remain challenging.

Trade Wisely,

Doug

Last week’s bounce substantially improved the technical picture in the DIA and SPY.  However, the bulls still have a lot of work to clear overhead resistance levels in the QQQ and IWM.  With a busy week of earnings and economic data, anything is possible, but possible traders will have to stay focused and flexible with big price swings.  Buying the dip works only if the market moves higher.  Remember, the market will top at some point in time, and buying the dip will prove painful.  Plan your risk carefully and keep in mind gap up opens near resistance levels can run into entrenched bears.  Be careful not to chase.

Asian markets opened the week mixed with modest gains and losses by the close of the session.  European markets trade with modest gains this morning, starting the week with a modicum of caution., The U.S. futures point to bullish open with a light day of earnings and economic data as bulls try to inspire enough buying to break through resistance levels.  Volatility is likely to remain high and watch for the possible a pop and drop near resistance.

Economic Calendar

Earnings Calendar

We start the week off with 38 companies listed on the earnings calendar with several unconfirmed.  Notable reports include API, CRMT, XOG, & NDSN.

News & Technicals’

We have a pretty busy week on the earnings calendar this week, along with housing numbers, durable goods, GDP, and Personal Income to keep traders busy as we wrap up May.  As you plan forward, remember that following Monday, the market is closed for Memorial Day.  Bitcoin continues its wild fluctuations dropping to 32,000 but trying to start the week positive this morning.  Treasury yields are drifting lower this morning, with the 10-year slipping to 1.617% and the 30-year dipping to 2.315%.  The Nobel prize-winning economist Robert Shiller believes there is a bubble forming.  He says he’s most worried about housing, crypto’s, and stocks calling it a “wild west” mentality among investors. 

Last week’s relief rally substantially improved the indexes’ technical picture, but there are still questions to be answered.  Rallying to reclaim support levels and break downtrends is the first step, and now we need some proof the bulls can hold them as support.  Substantial overhead resistance still exists in the QQQ and IWM.  In last week’s bounce, the T2122 indicator moved near overbought levels, and with the futures pointing to a bullish open, we should watch for the potential of a pop and drop pattern.  The VIX closed on Friday just above a 20 handle, holding above its 50-day average and price support.  So though the technical picture has improved, there are still questions to be answered.  I would not rule out the possibility of a rally to end the week that could even make new record highs.  However, we can also not rule out the possibility that the bears could defend resistance highs.  Stay focused and avoid chasing with the fear of missing out.

Trade Wisely,

Doug

We all enjoy a nice relief rally but keep your eyes focused on the overhead price resistance levels because that will reveal if the bulls have what it takes to plow through bearish defenses.  I wouldn’t expect smooth price action with the VIX holding a 20-handle and still above its 50-day average.  Though the DIA and SPY hold bullish trends, the QQQ and IWM remain uncomfortably below significant resistance levels.  Plan your risk carefully as we slide into the weekend.

Overnight Asian markets ended the week with a mixed and choppy session, with Taiwan surging 1.6%. European markets trade mixed with modest gains or losses as they wait on economic data.  Ahead of PMI and Housing data, U.S. futures point to bullish open as bonds pull back slightly. 

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a lighter day of reports with just 14 companies listed.  Notable reports include BAH, BKE, DE, DSX, FL, & VHC.

News & Technicals’

A nice relief rally began yesterday as the buy the dip traders satisfied their appetite, lifting tech and crypto.  The U.S Treasury calls for stricter cryptocurrency compliance with IRS suggesting it poses tax evasion risk.  Janet Yellen proposes a global minimum corporate tax rate of 15% and says discussions should continue to be ambitious to push the rate even higher.  Israel and Hamas agree to a cease-fire; however, both sides seem very skeptical about it holding as they sling insults back and forth at each other.  Treasury yields are drifting slightly lower this morning, with the 10-year dropping to 1.618% and the 30-year coming in at 2.323% ahead of PMI and housing data.

Though we experienced a nice relief rally, the bulls still need to show the willingness to follow through, clearing overhead price resistance levels.  The tech giants provided a significant portion of the rally, but a quick look at the charts shows they are still in downtrends.  The QQQ was able to get above its 50-day average, so the test now is, can it hold it as support?  This morning bond rates are softening slightly, which could be very helpful to the struggling tech sector.  The VIX closed the day above its 50-day average and a 20 handle.  We should continue to expect significant price volatility and should not rule out the possibility of reversals as we approach price resistance levels.  Be careful not to chase as you plan your risk heading into the weekend.

Trade Wisely,

Doug

Though the index charts have taken some technical damage, the DIA and SPY finding the energy to hold at their respective 50-day averages provide hope that a relief rally may soon follow.  However, the damage in the QQQ and IWM is much more significant and will require substantial effort by the bulls to reverse the current downtrends and overhead price resistance levels.  The elevated VIX suggests we should expect challenging price volatility as the bulls and bears battle for control.  Inexperienced traders will likely find this environment very costly due to the speed and range of the point moves, overnight reversals, and whipsaws that are likely to occur.

Asin markets traded mixed but mostly lower overnight though Japan’s exports surged in April.  European markets are currently green across the board this morning after the Fed talks of tapering.  On the other hand, U.S. futures point to a bearish open though will off the overnight lows ahead of Jobless Claims and the Philly Fed numbers.

Economic Calendar

Earnings Calendar

Today we have just 39 companies listed on the calendar, but several of them have not confirmed their reports.  Notable reports include AMAT, BJ, CSIQ, DECK, HRL, KSS, RL, PANW, & ROST.

News & Technicals’

Facebook is facing some court challenges that could lead to a ban on its EU-U.S. data transfers.  Blocking their transatlantic data flow will have profound implications for other U.S. tech giants.  Bitcoin plunges 30% and at one point touched 30,000 yesterday, which constitutes a 50% haircut from recent highs.  Hamas says it sees a cease-fire possible in the coming days, but this fight has gone on for decades and is unlikely to find a resolution anytime soon.  The 10-year Treasury yield dipped this morning to 1.663%, and the 30-year fell to 2.371% after investors digested the FOMC minutes, where there were hints that the committee might begin pulling back on debit purchases. 

Yesterday’s sell-off created some technical damage in the index charts, but there was also a few rays of hope, with the DIA and SPY finding at least some temporary support at their 50-day moving averages.  Unfortunately, the QQQ and IWM are under this critical psychological level but managed to hold the price supports of last week’s selling.  Recovery, however, could be challenging with both technical and price action resistance levels overhead blocking the potential relief rallies.  The VIX closed well below its high of the day but remained quite elevated above a 22 handle so expect considerable price action volatility to continue.  Experienced day-traders will likely have the upper hand in this environment, while swing traders may find the quick whipsaws and complete overnight reversals very challenging. 

Trade Wisely,

Doug

With the DIA and SPY cling to bullish trends, worrisome cracks have developed in the index charts.  I use charts because I believe they me clues.  However, to read those clues, we have to see the charts for what they are, not for what we want them to be.  The QQQ and IWM are in failure patterns below their 50-day averages, and both the DIA and SPY show possible lower highs that are in striking distance of new lower lows.  For years and market, sell-off offered an opportunity to buy the dip, and perhaps this one is no different, but I think it time to consider the possibility the market top is near.

Asian markets traded mostly lower overnight, with Australia falling a full 2%.  European markets trade decidedly bearish this morning, and the U.S. futures, despite solid earnings results, point to bearish open as we wait for the FOMC minutes.

Economic Calendar

Earnings Calendar

On the Hump day earnings calendar, we have 31 companies fessing up to quarterly results.  Notable reports include CSCO, ADI, JD, LB, LOW, SCVL, TGT, & TJX.

News & Technicals’

Though we saw solid earnings results yesterday, the market yawned and spent the day chopping in a very tight range intraday consolidation.  This morning we have already heard from TGT and LOW with massive beats on expectations, but the bears seem to be making another attempt at control this morning.  According to reports, about $270 billion has disappeared from the crypto markets, and bitcoin continues to slide south after the Musk tweet.  One has to wonder at the validity of a currency that collapses after a company chooses not to use it to sell cars.  Ahead of the FOMC minutes, the 10-year treasuries lifted to 1.66% this morning, and the 30-year rose to 2.385% as inflation worries persist.  President Biden extended the grace period for Chinese companies to comply with new restrictions to June 11^th versus the prior date of May 27^th.

Some worrisome cracks are starting to show in the primary index charts.  Both the QQQ and IWM show possible failures at their 50-day moving averages.  The VIX, as of yesterday, is trying to hold a higher low, and the Absolute Breadth Indicator has trended lower since March of last year.  Despite consistent reassurance from the Fed that the current inflation is transitory, worries persist that the market is overheating and may soon force the hand of the FOMC.  Though the DIA and SPY continue to cling to bullish trends, price patterns in the charts are raising some concern.  The DIA now shows a lower high and is within striking distance of last week’s low.  The SPY is in a similar pattern and has a stronger overhead resistance than that of the DIA.  Futures trade decided bearish this morning ahead of the Petroleum numbers, a 20-year bond auction, and the release of FOMC minutes.  Caution flags are waving, so plan accordingly.

Trade Wisely,

Doug

Futures perked up overnight, trying to shake off inflation jitters, but those pesky bonds are moving slightly higher this morning, mixing in some uncertainty.  As solid earnings results from HD and WMT try to inspire the premarket bulls, we still have new permits, and housing starts to digest before the open.  Though the DIA and SPY continue to cling to a bullish trend, the QQQ and IWM remain challenged by the overhead resistance of their 50-day averages.  Keep in mind intraday whipsaw and pop and drop patterns are still possible as we attempt to challenge price resistance levels.  Stay focused.

Overnight Asian markets enjoyed a bounce back with the NIKKEI, leading the up closing up more than 2%.  European markets have also turned positive this morning. However, the concern is growing about a quickly spreading virus variant in the U.K.  Fueled on the blowout earnings results, U.S. futures point to a bullish open ahead of new construction housing data.  Remember, choppy price action is still possible ahead of the Wednesday release of the FOMC minutes. Be careful not to chase the open.

Economic Calendar

Earnings Calendar

On the earnings calendar, we have a focus on big retail, with more than 40 companies reporting.  Notable reports include HD, WMT, BIDU, DQ, IQ, M, NTES, SE, TTWO, TTM, & TCOM.

News and Technicals’

After a day of choppy rest with modest losses, the futures perked up overnight as they try to shake off last week’s inflation jitters.  Home Depot reported blowout results early this morning as sales lept higher by 32.7%.  The new virus variant that emerged in India could become the dominant strain in the U.K. in a matter of according to health officials.  The U.K. is detecting a rapid spread of the new variant.  Though futures try to push higher this morning, the same is true of the 10-Year Treasuries as they top 1.65%, with the 30-year rising to 2.368%.  In a call with Netanyahu, Biden said the U.S. supports a ceasefire; however, the conflict between Israel and Hamas continues to escalate.  More than 300 rockets have bombarded Israeli cities. 

On the technical front, not much changed yesterday, with the SPY and IWM remaining under their 50-day averages.  The DIA and SPY ended the day with only modest losses holding on to key supports though still challenged by overhead resistance. Earnings from HD and WMT are trying to inspire the bulls as we wait on the latest reading of building permits and housing starts.  It will be interesting to see if the sharply rising materials costs have dampened new construction activity.  As the futures rise, keep in mind that bonds are also moving higher this morning.  Be careful not to chase and watch for the possible pop and drop near price resistance levels.  Keep in mind that the T2122 indicator is nearing an overbought condition already, and the VIX yesterday held at a higher low.  We should also not rule out the possibility of another day of chop as we wait on the FOMC minutes released Wednesday afternoon.

Trade Wisely,

Doug

The violence of the last weeks selling and bounce likely left traders and investors a bit shell-shocked and rightfully concerned about what comes next!  Markets hate uncertainty, and with rising inflation, the Fed’s following action certainly raises the bar on uncertainty.  Toss in the growing instability in Israel, cybersecurity threats, higher taxes as just a few of the pending concerns, the stage is set for some very challenging price action.  For now, calmer price action can be found in stocks sectors XLF, XLE, XOP, XLB & XLP. 

Overnight Asian market trade mixed with the NIKKEI lower by nearly 1%.  European markets trade lower across the board this morning with modest losses.  Ahead of manufacturing and housing numbers, the U.S. futures point to a lower open and the uncomfortable possibility that the QQQ could fail at its 50-day average.  Stay focused and flexible, ready to fast price action and intraday whipsaws.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have more than 190 companies listed on the calendar, but the vast majority listed are unconfirmed.  Notable reports include TWNK, IBIO, RIDE, RYAAY, TME.

News & Technicals’

After bouncing back from last week’s sell-off is now facing a morning with futures suggesting a lower open and price resistance levels above, leaving behind a bit of uncertainty.  According to a U.S Trade Representative and an EU Commission official, the European Union and the U.S. have started talks to end steel tariffs.   The efforts to get Iran back on track with its nuclear deal could undercut the efforts to end the conflict between Israel and Palestinian militants.  Reviving the deal means that Iran would receive Billions of dollars in sanctions relief that Tehran could use to fund Hamas.  Treasury yields are pulling back slightly this morning, with the 10-year dipping to 1.617% and the 30-year slipping to 2.336%.  I suspect today’s speech from Richard Clarida, Vice-Chair of the Fed, will have lots of eyes looking for future clues as investors try to balance an overheating market and the possibility of rising interest rates.  Investors will also closely inspect the FOMC minutes released Wednesday afternoon.

Last week’s volatility likely left traders and investors a bit shell-shocked with the speed and violence of the selling.  It also left behind some serious technical questions to be answered in the week ahead.  The NASDAQ suffered the worst of the technical damage confirming a downtrend and now having to deal with its 50-day average as price resistance.  The Russel suffered similar technical damage.  The SPY successfully held at its 50-day average, bouncing strongly to end the week but now has price resistance above that could block the path higher.  With inflation worries and the real possibility of Fed rate action, we should expect the wild price volatility to continue.  Stay focused and plan your risk carefully.

Trade Wisely,

Doug