As the bears rode roughshod over the market to end the trading week, some significant technical damage was created in the index charts. With more economists warning of a possible 10 to 20 percent correction, price volatility can become quite extreme as emotions run high between those wanting to rush in and buy the dip and those welcoming the correction in prices. If this is the beginning of a correction, big daily price swings are possible with overnight reversals and intraday whipsaws to challenge trader skills. Observe price resistance levels as possible areas of bear attacks.
Asian markets had a rather rough night of trading with the Nikkei, leading the selling down 3.29%. However, European markets are trying to bounce off last week’s lows this morning, showing green across the board but modest gains thus far. Here in the U.S., we don’t do modest much anymore. We either rush in or run for the door, and this morning is no exception, with futures surging higher off of overnight lows. Watch for violent price action and big price swings as the bull and bears duke it out in early trading.
Economic Calendar
Earnings Calendar
We have another light day on the earnings calendar to begin a new week of trading with just five companies listed with the report from NPSNY as only one verified.
News & Technicals’
Bitcoin fell 7% Monday morning as the China crackdown on cryptocurrency mining extended to the southwestern provinces of Sichuan. Another economist Mark Zandi has joined the chorus of economists warning that inflation headwinds could create a 10 to 20 percent correction. Adding it may take a year to recover to just the break-even level. Staffing issues that are in turn creating maintenance issues have caused American Airlines to cancel hundreds of flights. According to the report, about half the cancellations were because of unavailable flight crews. Supply chain issues are likely to affect the Amazon Prime Day sales that began at midnight Monday. Businesses reported they are being hit hard by global shortages of shipping and semiconductors, while some worry they may run out of stock during the massive sales event. Treasury yields have fallen to a two-month low, with the 10-year trading at 1.438% this morning as the 30-year rose slightly to 2.043%.
A rough week of selling left some significant technical damage in the index charts. The SPY, DIA, and IWM closed below their 50-day averages. The QQQ fends off the bears as the tech giants resisted the selling pressure holding onto price support levels as well as the current bullish trend. Fear spiked, closing the VIX above a 20 handle and well above its 50-day average while the Absolute Breadth Index registered a rise in momentum on the selling wave. If this is the beginning of a correction, we can expect the price action to become very volatile, with overnight reversals and intraday whipsaws becoming commonplace. This morning a short squeeze may be possible but be careful with rushing in to buy the dip if prices remain under resistance levels where the bears might be digging in defenses. Big daily price swings are possible, so plan your risk carefully and avoid complacency.
The tech giants almost single handily lifted the QQQ to new record highs while China’s plan to release reserves toppled trends in inflationary stocks and commodities. At the same time, the DIA suffered technical damage in a wild price action day with a substantial whipsaw intraday. With price volatility so high, day traders likely have the upper hand, while swing and position traders may find the whips in price action challenging to downright unsavory.
While we slept, Asian markets closed mixed through the HIS rallied 0.85%. European markets are decidedly bearish this morning as the tumble in commodities continues. The U.S. futures currently point to a lower open with a very light day of earnings and economic data to provide inspiration as we slide into the weekend. Should the tech titans happen to turn south, it could be a painful day.
Economic Calendar
Earnings Calendar
We have a very light day on the Friday earnings calendar with just 3-companies listed and only one verified report coming from GLBS, which is not particularly notable.
News & Technicals’
Commodities plunged yesterday as China announced a plan to release reserves of metals that included Copper, Aluminum, palladium, and platinum. The move caused a spike in the U.S. dollar, also affecting Gold and Silver, as well as oil and grain futures. That said, we can expect most of the prices to recover due to the rising inflation. Morgan Stanley has upgraded Occidental due to higher prices suggesting a 40% increase in the stock. Exon Mobil received a similar upgrade earlier this week. Remarkably with inflation on the rise, the 10-year Treasury note fell this morning to 1.477%, and the 30-year dipped to 2.067%, likely giving the Fed a sigh of relief. The Covid-19 delta variant initially discovered in India is now spreading around the world, becoming the dominant strain in some countries, such as the U.K., and likely to become so in others, like the U.S. The variant now makes up 10% of all new cases in the United States, up from 6% last week. Studies have shown the variant is even more transmissible than other variants.
Yesterday’s price action saw traders rushing into the tech giants lifting the QQQ to new record highs. At the same time, the DIA suffered some technical damage following through to the downside after failing its 50-day average on Wednesday. With 40% of the SPY weighted by the tech giants held its ground but fell just short of breaking back above price resistance, and though the IWM recovered substantially, it has the uncertainty of a lower high followed by a lower low. China’s action tossed a monkey wrench into inflation-related stocks breaking established trends adding another layer of uncertainty as to what happens next. One thing for sure is that price volatility and huge intraday whipsaw will keep us all guessing. Stay focused and flexible as we slide into the weekend. Happy Father’s day!
The Fed decided to stay the course, continuing to buy $120 Billion in debt per month as the FOMC acknowledged rising inflation is more substantial than expected. Though the initial reaction to the statement brought out the bears, the bulls charged back in a late afternoon rally. The only index suffering some technical damage was the DIA which closed below its 50-day average. Long story short, stay with the trend because the market no longer cares about debt or inflation.
Asian markets traded mixed overnight, with the Nikkei slipping nearly 1% while the HIS rallied. European markets are pulling back modestly this morning across the board. Ahead of earnings, Jobless claims, and manufacturing data, U.S. futures point to a modestly bearish open after rallying well off the overnight lows. Stay focused and watch for whipsaw moves as the bulls and bears sort out dominance issues with overhead resistance levels as the battleground.
Economic Calendar
Earnings Calendar
We have a slightly busier day on the Thursday earnings calendar, with eight companies reporting. Notable reports include ADBE, JBL, KR, & SWBI.
News & Technicals’
Eleven Republican senators now support a bipartisan infrastructure framework, which would give a bill enough votes to pass the Senate if all Democrats get on board. However, several liberal senators have signaled they could oppose the bipartisan plan, saying it does not go far enough to fight climate change or income inequality. China launched the first astronauts into space on Thursday as China challenges the U.S. in several technology areas. The bill to make Juneteenth the 12th federal holiday sailed through Congress, passing the Senate by unanimous consent with the House passing the bill just one day later sending it on to the President to sign into law. After spiking yesterday, U.S. Treasury yields drifted lower Thursday morning, with the 10-year coming in a 1.56% and the 30-year dipping to 2.179%.
The FOMC acknowledged rising inflation suggesting a rate increase is possible sometime in 2023 while at the same time continuing to buy debt at $120 billion per month. The initial negative reaction whipsawed yesterday afternoon as buyers rushed back in after the press conference. Though the SPY, QQQ, and IWM recovered substantially, the DIA suffered some technical damage closing below its 50-day average. If the highest PPI on record is of no consequence to the market and the Fed continues to grow their more than 7 Trillion balance sheet, I guess the new normal is no financial metric matters anymore! Stay focused on price action and stay with the trend as long as it lasts.
Ahead of the FOMC meeting, the tech giants lifted the SPY and QQQ to new record levels almost entirely on their own as the vast majority of the stocks slid sideways or south yesterday. At the same time, new records were made, the VIX rallied slightly, and the absolute breadth index continued to decline with the lack of momentum. Hedge fund manager Tudor Jones says go all-in on inflation trades if the Fed stays the course or expect a “taper tantrum,” should they make a course correction. We will find out Wednesday afternoon what their decision will be, so plan your risk accordingly.
While we slept, Asian markets traded mixed with the Nikkei surging up 0.96% while the Shanghai fell 0.91%. However, European markets this morning work for modest gains and new records cautiously waiting on the FOMC. With a significant economic data dump, futures in the U.S. trade mixed, and flat as the Fed beings its 2-day meeting. Will they or will they not react to inflation? Market direction may well be determined by the answer at 2 PM Eastern tomorrow.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have 18 companies listed, but a large number of them are unconfirmed. Notable reports include HRB, ORCL, & LZB.
News and Technicals’
New closing records in the QQQ and SPY supported almost entirely by the tech giants, with the rest of the market largely sliping sideways or south. According to Jamie Dimon, JPMorgan is hoarding cash rather than buying Treasuries or other investments due to the possibility of higher inflation that’s here to say. He is one of the first investment banks to break ranks with the idea that the spike in inflation is transitory. Hedge fun manage Paul Tudor Jones suggested to “go all-in on inflation trades” if the Fed stays the course and ignores the spike in inflation. Tudor says the market will experience a “Taper Tantrum if they do make a course correction.” Interestingly trade doesn’t seem to share the same inflation concerns, with the 10-year treasury notes falling to 1.484 this morning and the 30-year dipping to 2.176%. Could it be complacency has raised its ugly head?
Today begins the 2-day FOMC meeting and a substantial economic calendar data dump that could inspire and bring in some early price volatility. As the QQQ and SPY set new records, the T2122 indicator slid south, and the absolute breadth index declined, with just a select few tech stocks doing the heavy lifting. That said, the SPY and QQQ index charts hold fast to bullish trends. IWM remains below overhead resistance while the DIA looks tired and the most at risk if the bears find some inspiration. As we wait on the FOMC decision, choppy price action would not be a surprise. However, with PPI, Retail Sales, Industrial Production, Housing, and Manufacturing numbers just around the corner, prepare for some early session volatility. Who knows, with so much data, the bulls or bears could find some inspiration to end this chop ahead of the Fed.
Though inflation came in very hot, the bulls and bears stayed evenly matched, producing choppy uncertain price action while clinging to trends yet challenged by overhead resistance. So now we likely hurry up and wait for the FOMC decision on Wednesday afternoon to see if they will be the tiebreaker of this momentum-less consolidation. Will they or won’t they begin to taper the easy money policies in response to inflation? That is the question to be answered!
During the night, Asian markets saw bullishness though some were closed due to holidays. European markets continue to push higher, setting new records this morning. With a light day of earnings and economic data, the U.S. point to a flat yet slightly bullish open, with the Nasdaq leading the way to test resistance highs. Watch for the pop the possibility of more pop and drops as we wait on the Fed.
Economic Calendar
Earnings Calendar
We have 12 companies listed on the earnings calendar with many unconfirmed earnings to kick off the week. The only somewhat notable report I can come up with today is HEXO.
News & Technicals’
Bitcoin is surging again this morning after Musk suggests Tesla may again accept cryptocurrency as payment. However, Sygnia CEO Magda Wierzycka lambasted him saying, “What we have seen with Bitcoin is price manipulation by one very powerful and influential individual.” Regulators may block Nvidia’s attempt to buy the chip designer Arm, whose energy-efficient chip architectures are used in 95% of the world’s smartphones. According to reports, Qualcomm is now interested in investing if NVDA is blocked. The biotech firm Novavas plans to file for authorization with the FDA in the third quarter after testing their Covid vaccine is safe and 90.4% effective overall. With the FOMC just ahead, the U.S. treasury notes rose slightly this morning, with the 10-year coming in at 1.464% and the 30-year climbing to 21.52%.
Though the bullish trends continue, the choppy uncertain price action and both the bulls and bears wondering what comes next. Floating on a river of newly printed money, the bulls want to keep the party going. However, the high inflation reading in last week’s CPI has the bears concerned, keeping them in play as well. So perhaps the FOMC will be the tiebreaker when they reveal their decision Wednesday afternoon. Will they begin to taper easy money policies or keep the pedal to the metal, pumping money into the system? We will know more Wednesday after the statement and the chairman’s press conference. Until then, the choppy uncertain price action is likely to continue, with various meme stocks surging here and there as they gamify stock trading. So maybe the best description of the first part of this week is, hurry up and wait!
As the consumer prices jumped 5%, the largest gain in nearly 30-years, the market seemed to have little to no concern. The moral of the story stay with the trend and let’s continue to party like it’s 1999 as long as it lasts. Although we ended the day respecting overhead resistance levels and leaving behind some uncertain price patterns, the VIX squeaked out a new closing low, suggesting inflation is nothing to worry about, at least for now. Now we wait to find out if the FOMC will begin to shift policies next week.
Asian markets traded mixed overnight with modest gains and losses. Across the pond, European markets trade in the green across the board as investors shrug off inflation. With a light day of earnings and economic reports, U.S. futures once again are pumping the premarket, trying to inspire buyers to break overhead resistance to set new record highs. Trade wisely, and have a fantastic weekend, everyone.
Economic Calendar
Earnings Calendar
We have a slow day of reports on the Friday earnings calendar with 14 companies listed but only two confirmed. Though they are not particularly notable, the verified reports are CMCM & NATH.
News & Technicals’
Although the consumer prices jumped 5% in May, the most in nearly 30-years, the overall market seemed to not really care. Will the FOMC respond to the rising costs? Some are suggesting Fed will stay the course, at least for now. Remarkably, to me, Treasury yields are pulling back this morning, with the 10-year trading at 1.443% and the 30-year dipping to 2.14%, shrugging off the surging inflation. President Biden has endorsed the 15% global minimum corporate tax and a new tax linked to the places where companies make money. Amazon faces another antitrust probe from the European Union as the country steps up its pressure on the tech giants. On Friday, the G-7 nations gathering in Cornwall, England, plan to pledge 1 billion doses of the Covid vaccines to low-income nations.
After the CPI number came in hotter than expected, the futures gapped the market higher buyers seemed to rush in for a brief period, with the Dow surging more than 200 points. However, as prices ran into overhead resistance, the bears pushed back with a nasty whipsaw that filled the gap. Buy the close the Dow left behind a shooting star pattern while the QQQ held firmly to gains through the SPY and IWM retreated. The VIX held a new closing low, suggesting the hot inflation number is of little to no concern though the Absolute Market Breadth Index remained notable weak. Long story short, stay with the trend and continue to party like it’s 1999 but don’t become complacent because someday I suspect the market will someday suddenly care.
Perhaps we can break the tight range chop today with all eyes focused on the critical CPI numbers, inflation data revealed before the open. Some suggest the number could come at its highest level in nearly 30-years! Will it inspire the bulls pushing the indexes to new record highs? Or will the number engage the bears, creating some technical issues with the possible topping patterns in the charts? Your guess is as good as mine, so stay focused and buckle up for some price volatility.
Overnight markets traded mixed but mostly higher with modest gains and losses. European markets hover around the flatline as they wait on the U.S. inflation data. Ahead of the CPI, U.S. futures are trying to put on a brave face, but anything is possible by the open, depending on the market reaction. A substantial gap is likely, so plan your risk accordingly.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have 20 companies listed with several unconfirmed. Notable reports include XAIR, CHWY, PLAY, PLUG, FSLR, & SIG.
News and Technicals’
The owner of the Keystone XL pipeline, TC Energy, has now offically canceled the project after President Biden revoked an essential permit earlier this year. It would have carried 839,000 barrels per day and employed 1000’s. India reports more than 6,100 daily Covid death in a single day though infection rates have been in decline. According to a government announcement on Wednesday, a new 2.3 million stimulus checks for up to $1400 per person were just sent out. In total, another 4.2 billion in payments. Treasury yields rise slightly this morning ahead of the CPI number, with the 10-year coming in at 1.498% and the 30-year edging higher to 2.173%. More pressure is coming to the tech Giants as the Democrats circulate draft antitrust bills aimed at Apple, Amazon, Facebook, and Google. If passed, it could fundamentally reshape the businesses.
All eyes this morning will be on the CPI numbers revealed an hour before the market open. Some are suggesting the number will come with the highest reading in nearly 30-years. The market has traded in the tight range all week, challenged by overhead price resistance levels yet holding above price supports. What happens next is anyone’s guess, but it will be nice to get enough movement to break the logjam. With the next FOMC meeting just around the corner, today’s number could play a pivotal role in their decisions on dovish, easy money policies. Though U.S. futures are trying to pump up the premarket, the actual open could be much better or worse depending on the reaction. Stay flexible because new market highs could be on the cards or critical technical failures in the index charts if the bears find inspiration. Buckle up for some volatility.
Choppy range-bound price action continues as the market waits on critical inflation data on Thursday morning. Indexes continue to hold price supports but remain stuck under overhead resistance levels. Economists expect a CPI increase of 4.7% over last year, but some worry the number may come in hot. China’s producer prices soared 9% from last year, and inflation seems to be surging worldwide. With all eyes on tomorrow’s number and perhaps the market will break the logjam but the question remains, which way?
Asian markets closed mostly lower overnight in reaction to surging producer prices. European markets are lower across the board this morning though some just modestly lower, waiting on U.S. inflation data. U.S. futures point to a mixed but essentially flat open as we gear up for the CPI number Thursday before the bell. Expect choppy price action to continue until the release and then be ready for significant volatility at the market open Thursday. Plan your risk carefully.
Economic Calendar
Earnings Calendar
We have just 14 companies listed, with a few still unconfirmed. Notable reports include CPB, GME, LOVE, RH, UNFI, VRA, & VRNT.
News and Technicals’
Yesterday the Senate passed U.S. Innovation and Competition bill to counter China’s technology ambitions. The vote was nearly unanimous, with one provision providing $52 billion for semiconductor research, design, and manufacturing initiatives. China’s producer price soared in May up 9% from just one year ago. The increase is the most on record, and businesses expect the price increases will last until the end of the year as raw material inflation grows. However, in the U.S., Treasury yields are moving lower, with the 10-year note falling to 1.513% this morning and the 30-year dipping to 2.194%. Economists forecast the CPI to rise 4.7% from last year.
The indexes remain range-bound, holding price supports, and still challenged by overhead resistance. I had suggested in the Monday blog of the possibility of a choppy market as we wait for the inflation day Thursday morning. That guess could be correct with one more day to wait as the market struggles to find direction. The T2122 indicator indicates we are in a short-term overbought condition, and the Absolute Breadth Index continues to point to a lack of momentum. The VIX suggests fear continues to subside, but one has to wonder if that could be complacency. Perhaps at 8:30 AM tomorrow, the logjam clear with the release of the CPI. The question is, which way? Plan your risk accordingly.
The DIA, SPY, and QQQ struggled to find momentum yesterday, while the technicals’ of the charts remained little changed. The VIX registered no increase while small-cap and higher speculation stocks enjoyed considerable buying in possible bottoming patterns. According to reports, the Fed will begin to condition the market to reduce debt asset purchasing with the next FOMC meeting just around the corner. The CPI reading on Thursday could be crucial in that decision. Plan your risk accordingly.
Asian markets closed modestly lower overnight in a choppy session. European markets trade in the green this morning but seem to be hovering near the flatline. Ahead of a light day of earnings results, trade, and the job opening numbers, the U.S. futures point to a flat to somewhat mixed open.
Economic Calendar
Earnings Calendar
We have 19 companies listed on the Tuesday earnings calendar, with several that are unconfirmed. Notable reports include CASY, CHS, FTCI, JILL, MOMO, NAV, & THO.
News & Technicals’
U.S. officials said Monday they have seized $2.3 million in bitcoin paid to hacker group DarkSide. The FBI was able to access the “private key” or password for one of the hackers’ bitcoin wallets. The realization that Bitcoin may not be as anonymous or infallible as proclaimed has the world’s largest cryptocurrency down 7% this morning. Ford has unveiled a new line of smaller hybrid pickups with a price tag of $20,000 and a 40 MPG in the city rating. Treasury yields trade falt this morning with the benchmark 10-year at 1.562% and the 30-year tracing at 2.238%. This comes on the heels of a story that suggests the Fed is in the early stages to prepare the market for reducing their debit asset purchases. The CPI number on Thursday may be a pivotal factor in that decision.
Yesterday was a bit odd as the DIA, SPY, and QQQ struggled to find momentum while small-cap and very speculative stocks surged in the IWM. An interesting change that makes one wonder if a rotation is beginning. Though momentum was lacking in the big-three indexes, there was really no change technically as they largely chopped sideways with little to no fear indicated in the VIX. Once again, being this close to new record highs, it seems unlikely that the institutions will miss the opportunity for the headlines. That said, we have to be careful not to overtrade as we hover just blow new records levels should the bears find a reason to defend that could initiate market-topping patterns. Stay focused on price and plan your risk carefully.
Jobs creation came in less than expected, easing inflationary worries, and closed the week with the SPY just below record highs. Between now and the next FOMC meeting will be the Thursday CPI number that may come in hot according to consensus estimates. All four indexes still have overhead resistance to deal with, but it seems unlikely getting this close to a new record, the institutions will miss that mark if only for the headline. However, don’t be surprised to see choppy price action amid all the meme-stock frenzy as we wait for the CPI reading.
During the night, Asian markets traded mixed as China’s exports missed forecasts. European markets trade modestly bullish across the board this morning. With a light day of earnings and economic data, U.S. futures point to a flat open after bouncing off overnight lows. Be careful overtrading as we test overhead resistance levels in a market struggling with momentum.
Economic Calendar
Earnings Calendar
As we kick off a new week of trading, we have a light day as 2nd quarter reports wind down with just companies listed on the calendar. Notable reports include GIII, MRVL, SFIX, & MTN.
News & Technicals’
The French Competition Authority fines Google $267 million for abusing its dominant position in online advertising. Google has agreed to end some of its self-preferencing practices as regulators across Europe clamp down on the tech giants. According to Musk’s tweet on Sunday, Tesla canceled the most expensive Model S Plaid Plus that claimed to deliver 520 miles on a full charge. However, the Buffett-supported BYD electric car maker has shipped to Norway with a price tag of $72,418 each. The city of Guangdong, China, is carrying out mass testing and has locked down areas that have reported more than 100 cases in the fast-spreading Delta strain of Covid. Treasury yields are in a wait-and-see mode this morning, waiting on the Thursday CPI number; some worry may come hot. The 10-year ticked slightly higher to 1.578%, while the 30-year drifted slightly south to 2.258%.
The bulls put in a strong performance on Friday but closed the day with the SPY just below record highs. As a result, we begin a new week with all four indexes challenged by overhead resistance. As the 2nd quarter earings wind down and a light economic calendar begins the week, traders will have to look elsewhere to find inspiration. The meme-stock frenzy could quickly help or hurt the overall market with its wild volatility reminiscent of the 1999 tech frenzy. Tread lightly where company valuations are pushed well beyond reasonable valuations because when it’s over, prices can fall very fast and be fundamentally different overnight. The big news of the week will be the next reading of the CPI on Thursday. Don’t be surprised if we see choppy price action as we wait to find out if this crucial inflation marker comes in as hot as expected.
