Transition Begins

November 24, 2020 by Doug Campbell

The transition begins, and the U.S futures celebrate the decision surging higher this morning even as states add a blizzard of new restrictions to battle the pandemic.  With a holiday shutdown just around the corner, it may be wise to consider the big gap up this morning as a gift and opportunity to profit and reduce heading into the holiday.  Remember, volume typically begins to decline as traders head out for vacation plans. 

Asian markets were mostly bullish overnight, with the NIKKEI surging a whopping 2.5% amid vaccine hopes.  European indexes trade decidedly bullish this morning, and the U.S. futures point to a substantial gap up with a Dow 30,000 target within striking distance.  Please keep in mind volume typically declines quickly, heading onto a holiday.  That said, it may be challenging to maintain the bullish momentum.

Economic Calendar

Earnings Calendar

We have a busy day on the earnings calendar, with retail reports a significant focus on Tuesday.  The notable reports include ANF, BBY, DKS, GPS, DLTR, JWM, AEO, ADI, ADSK, BURL, EV, HRL, HPQ, SJM, J, MDT, MOV, TIF, & VMW.

News & Technicals’

I must admit this wild bullishness continues to surprise me even as more restrictions go into place around the country trying to curb the pandemic.  That said, I also have to say I am enjoying the profits the relentless push toward higher.  The moral of the story, read the price action, follow the trends, and most importantly, gratefully take the gains the market provides in time like this.  Futures are pointing to a gap up open, apparently celebrating that President Trump has begun the process to ensure a smooth transition.  Though he vows to continue the legal challenges, the market seems to have voted this was the right thing to do.  Biden’s choice, Janet Yellen, to lead the Treasury also boosted the market higher yesterday afternoon, supporting the decision.  Though all the warm and fuzzy bullish is fantastic, let’s forget we have a holiday shutdown just around the corner and blizzard pandemic restrictions likely to impact businesses.  As a result, it may be wise to take advantage of the morning gap by taking profits and reducing risk heading into the holiday.  Remember, gaps are gifts, but the money is not yours until you take the gain and tuck it safely away in your account.

On the technical front, the indexes remain in bullish trends but keep in mind the current rally will have to deal with the price resistance created in the last three weeks.  Only the IWM has thus far been able to enjoy the blue sky breakout, so watch closely for the possibility of profit-taking near resistance on the DIA, SPY, and QQQ.  The T2122 indicator will show an extreme short-term overbought condition at the open as well.  Don’t let greed prevent you from making a profit!

Trade Wisely,

Doug

Futures Point to a Bullish Open

November 23, 2020 by Doug Campbell

Futures point to a bullish open shrugging off 20-straight days of more than 100,000 pandemic infections,  focused on the latest vaccine news and hopes of more deficit spending.  The big round number of a 30,000 Dow just around the corner will have the institutions working hard to get that headline.  The only thing that stands in their way is pandemic news and some emerging evidence of a slowing economy as a result.  Volume typically begins to decline sharply, heading into the Thanksgiving shutdown as traders head out for travel plans.  This year could be very different with considerable sensitivity to news events.

Asian markets traded mostly higher overnight, with airline shares declining sharply due to virus concerns.  European markets point to modest gains this morning on hopes of that vaccines will soon become available.  U.S. Futures once again point to a bullish open ahead of earnings and the PMI Composite at 9:45 eastern time.  Buckle up it could be a wild week.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have under 25 companies reporting quarterly results.  Notable reports include A, AMBA, DQ, KFY, NTNX, URBN, & WMG.

News & Technicals’

After 20 straight days of more than 100,000 pandemic infections, U.S futures are once again in rally mode this morning, focused on new vaccine news and hopeful stimulus deal by the end of the year.  President Trump’s flurry of lawsuits appears to have not been effective in turning over evidence of fraud.  However, he has yet to concede as Biden moves forward to announce some Cabinet selections as early as this week.  With mounting economic restrictions, evidence of a slowing economy, and a holiday shutdown, anything is possible this week.  I fully expect the institutions to continue their push for a Dow 30,000 headline, but with pandemics weighing on investors’ minds, it could be a choppy process with whipsaws and large morning gaps. We usually see a sharp decline in volume beginning Tuesday afternoon as traders head out for holiday destinations.  However, nothing about this year is normal, so stay focused and flexible.

Though we saw a little bearish activity toward the end of last week, the index trends remain bullish.  We may still need more consolidation to digest the colossal vaccine move, but as long key price supports hold, the bulls have the upper hand.  Expect price volatility to continue and news-driven sensitivity as we slide toward the holiday.  Remember there will be a lot of focus on Black Friday and Cyber Monday shopping, so it’s possible we could see low volume choppy price action for a few days, so plan your risk accordingly.

Trade Wisely,

Doug

The tug-of-war continues.

November 20, 2020 by Doug Campbell

The tug-of-war continues between the bulls hoping for a spring recovery and the bear’s concerns of the business impacts getting through a severe pandemic winter.  Infection rates hit a new record yesterday, and at the same time, the Treasury has decided to end some programs in the CARES act by the end of the year, drawing criticism from the FED.  Treasury yields are falling this morning in reaction.  As the weekend and a short trading week due to the holiday, traders will have some tough decisions to make as they plan their risk forward.

Asian markets closed on Friday mixed but with The SHANGHAI and HIS modest posting gains.  European markets are trying to shake off virus concerns this morning, showing modest gains across the board.  The U.S. trade mixed but are well off the overnight lows as they try to look past the Treasury decision, infection numbers, and more state restrictions ahead of the holiday.  Expect the news-driven sensitivity to continue.

Economic Calendar

Earnings Calendar

We have a lighter day this Friday with less than 20 companies fessing up to quarterly results.  Notable reports include BKE, DXLG, FL, HP, HIBB, & JKS.

News & Technicals’

The Treasury Dept. is looking to extend a handful of the Federal Reserve programs used to get the markets through the pandemic’s early days.  However, they have also decided to end several other programs that expire at the end of the year.  The action has drawn some negative feedback from the Fed, which believes the programs should continue.  A decision coming on the same day that the U.S set a new record infection rate of more than 185,000 new cases reported.  Treasury yields are falling this morning in reaction.  Another disagreement is raising eyebrows in treating the infection as the WHO urges doctors not to use Gilead’s remdesivir, breaking ranks with the FDA, stating “no evidence” it improves survival rates.  In other news, both Pfizer and BioNTech have requested emergency authorization from the FDA for their vaccines.  I suspect the tug-of-war will continue between the bulls hoping for a spring recovery and the bears looking at the impacts of rough winter. 

Yesterday’s early selloff found enough bulls to defend the morning lows but fell a bit short of inspiring confidence.  The bullish index trends still exist, as does the short-term extended appearance of the charts.  With a very light day on the economic calendar and just a handful of notable earnings reports, we can expect the market to be highly sensitive to the news cycle today.  As this tug-of-war continues, plan your risk carefully as we slide into the weekend ahead of the Thanksgiving shutdown. 

Trade Wisely,

Doug

Tug-of-War

November 19, 2020 by Doug Campbell

Hopes of a vaccine spurred recovery as infection and death rates surge across the country, creating a challenging price action tug-of-war between the bulls and bears.  Indexes remain in bullish trends, but the bearish engulfing candle patterns left behind in yesterday’s news-driven whipsaw raise considerable uncertainty.  On the one hand, traders don’t want to miss out on a recovery rally, while on the other hand, the risk to price support and key moving averages is considerable.  Adept day-traders seem to have the upper hand in this environment as each news report can quickly shift sentiment. 

Asian markets traded mixed but mostly lower overnight in reaction to the U.S. selloff.  European markets are moving lower across the board this morning.  The U.S. futures currently suggest a modestly bearish open ahead of Jobless Claim, Philly Fed MFG., and Existing-Home Sales numbers.  Toss in earnings reports, vaccine and shutdown news, and anything is possible by the open.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have just over 50 companies reporting quarterly results.  Notable reports include BJ, CSIQ, INTU, M, NTES, OPRA, POST, QIWI, ROST, WSM, & WDAY.

News & Technicals’

The bulls tried hard to break above the high of the big gap candle, but concerning pandemic, news energized the bears during the afternoon session reversing the early bullishness.  With more than 170,000 new infections reported yesterday and the U.S. death toll topping 250,000, the concern is understandable.  New York and Boston announced yesterday they schools will go back into shutdown as states across the nation impose restrictions in an effort the combat this invisible enemy.  All the deficit spending to keep the economy going has pushed the global debt to new record levels.  According to the IIF, the global debt will reach 277 trillion by year-end, and among advanced nations, debt has surged above 432% of GDP.  I suspect the massive deficit spending is far from over, with the pandemic surging into the winter months.  After the bell yesterday, NVDA reported better than expected results, but the stock moved lower after the CEO guided lower in the coming quarters.

With good vaccine news simultaneously as rising infections, there is a challenging tug-of-war amongst the bulls and bears.  In this news-driven environment, day traders seem to have the upper hand while swing traders find it difficult dealing with the wild overnight reversals.  During such uncertain price action, trader’s accounts can and will get chopped to pieces if you overtrade in this environment.  Technically speaking, the indexes remain in bullish trends, but the bearish engulfing candles left behind yesterday and substantial distance to price support levels will require a substantial tolerance to risk.  Of course, another approach is to remember that cash is a position that protects your capital should you deem the risk too high.

Trade Wisley,

Doug

Retail numbers disappoint.

November 18, 2020 by Doug Campbell

The disappointing retail number energized the bears just enough to fill Monday’s vaccine news-driven gap.  However, the bulls quickly went back to work as the push for the 30,000 Dow target resumes. We’re not going to allow the details of a suffering economy, unemployment, or a new record daily pandemic death rate deter the bulls from this mission.  With the holiday shutdown just around the corner, they will have to work quickly; as volume begins to decline and trading floors start to clear.

Asian markets closed the day mixed but mostly higher as Japan’s autos slip and the dollar weakens.  European markets trade with modest gains across the board this morning, extending the vaccine rally.  The U.S. futures point to a bullish open ahead of earnings and a possible market-moving housing starts number.

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have over 30 companies reporting quarterly results.  Notable reports include BILI, CPRT, JACK, LB, LOW, NUAN, NVDA, SCVL, TGT, TJX, & ZTO.

News & Technical’s

It would appear that the surge in pandemic infections has already started to affect retail sales rising just .3% last month vs. the 1.6% gain last month.  However, after a sharp but brief selloff to fill the Monday gap, bulls went back to work defending the lows trying to get back on track toward a 30,000 Dow.  According to Johns Hopkins numbers, the U.S. set a new national record daily for pandemic deaths toping 1700.  Emergency approval of the first home-based Covid test costing $50 will now be made available, a good sign considering the new public restrictions states have begun to enforce.  You may soon see the Boeing 737 Max that has been grounded for nearly 2-years back in the sky with the expected approval by the FAA later today.  ON the earings retail front, LOW earnings fall short of expectations, and the stock is indicated to decline more than 7% at the open.  On the other have TGT topped expectations surging nearly 2.5% in premarket trading. 

Filling the Monday gap and seeing the bulls work hard to defend its price support is a sign institutions will continue to push for the 30,000 Dow target.  I suspect we will see this target reached before we take a break for Thanksgiving, even though indicators continue to suggest an extreme short-term overbought condition.  Pandemic numbers don’t seem to matter, and disappointing retail results won’t stand in the way.  Remember to consider your risk as we quickly approach the holiday when volume typically declines sharply.

Trade Wisely,

Doug

Vaccine News-Driven Rally

November 17, 2020 by Doug Campbell

The vaccine news-driven rally pushed the DJ-30 to a new record high and finished the day within striking distance of 30,000.  As the bulls try to price in a pandemic recovery, 22 states have added restrictions that could have significant business impacts ahead, as infection rates continue to surge throughout the country.  While I believe the institutions will not miss out on achieving a Dow 30,000 headline, the path may be challenging in this very news-driven extended market environment.  Plan carefully.

Asian markets closed overnight with modest gains after an initial jump higher in reaction to vaccine news.  European markets are currently edging lower this morning, and the U.S futures point to a lower open ahead of several potentially market-moving economic reports.  The wild price volatility is likely to continue as investors grapple with holiday restrictions and shutdowns.

Economic Calendar

Earnings Calendar

We have more than 30 companies stepping up to report quarterly results this Tuesday.  Notable reports include NIO, HD, WMT, KSS, LZB & SE.

News & Technicals’

The Dow hit new record highs yesterday, rallying 470 points hopeful vaccine news closing the day just 50 points below 30,000.  Unfortunately, at the same time, the pandemic surge has inspired 22 to add new restrictions likely to impact the overall economy.  While the bulls try to price the market for the hopeful better days ahead, the short-term impacts could be challenging to grapple with, keeping the price action volatile.  Tesla shares jump in aftermarket trading after its addition to the S&P 500 average.  Shared of Home Depot are dipping this morning despite a strong earnings report.  Amason Pharmacy has launched, allowing its customers to order prescriptions online.  Shares of AMZN are modestly higher on the news.  Futures currently indicate a lower open ahead of several potential market-moving economic reports.  With the Dow so close to 30,000, it hard to imagine the institutions will miss the opportunity to claim that headline.  I’m guessing the hats are already on the floor of the exchanges, just waiting for the photo opportunity.  Of course, pandemic, political, and economic news could make it a challenging and choppy process.

Technically speaking, there really is not much to say except the bulls are in control, and the indexes appear extremely extended in the short-term.  While I believe the institutions will not miss the opportunity to test 30,000 the path, there may not be a straight one.  Odds of fast intraday whipsaw and full overnight reversals remain high in this very emotionally charged market.  Plan your risk carefully and guard yourself against chasing into already extended stocks.

Trade Wisely,

Doug

Bulls undoubtedly in charge.

November 16, 2020 by Doug Campbell

The bulls are undoubtedly in charge, or could this be irrational exuberance as the DIA and IWM leap to new record highs and states impose economic restrictions on the holidays just around the corner.  One thing for sure, there seems to be no shortage of traders willing to chase prices higher with little regard to risk.  The T2122 indicator indicates an extreme short-term overbought condition, so stay focused on price action for any signs of a pullback.  Also, keep in the possibility of overnight reversals as you plan your risk and avoid chasing stocks already extended with the fear of missing out.

Asian markets were sharply higher overnight in reaction to signing a massive trade deal with 14 Asian countries.  European markets are decidedly bullish this morning as vaccine hopes continue to inspire hopes of recovery.  U. S. futures continue to leap higher as the DIA and IWM look to open at new record highs while infection rates and hospitalizations notch new records as well.

Economic Calendar

Earnings Calendar

We have a rather large week of earnings kicking it off with more than 70 companies fessing up to results this Monday.  Notable reports include JD, ACM, FUV, BIDU, CSPR, GAN, KRUS, PANW, SDC, SOHU, & TSN.

News & Technicals’

China and 14 other Asian-Pacific countries signed the world’s largest trade agreement over the weekend.  According to analysts, economic benefits are modest and would take years to materialize.  Texas and Washington set new Covid records this weekend as Midwest states as the Dakota’s and Nebraska set the largest daily increases per capita.  As states across the country implement restrictions with severe potential economic impacts, the market continues to surge focused on the hopeful vaccines.  Though some point to a possible bubble forming, it has done nothing to dissuade traders from buying up stocks even as P/E ratio’s swell and prices leap toward new record highs.  How much longer that can continue is anyone’s guess but, it would be wise for traders to be mindful of the substantial risks with just a pullback to support. 

Technically speaking, the indexes appear very extended, and the T2122 indicator is registering an extreme short-term overbought condition even as the futures point to another gap higher this morning.  The DIA and IWM will break out to new record highs at the open today, with the SPY not far behind, assuming the futures hold on to the overnight bullishness.  Plan your risk carefully as price volatility remains high in this wildly energetic and emotionally charged news-driven environment.

Trade Wisely,

Doug

Pandemic numbers rise

November 13, 2020 by Doug Campbell

The bears came out to play yesterday, but fear seemed to remain in check as the selling appeared to be measured and controlled.  It is very surprising with pandemic numbers on the rise and hospitalizations beginning to strain the country’s healthcare system.  Jerome Powell once again called for more stimulus to combat the economic impacts, but Mitch McConnell stated and unwillingness to negotiate and larger spending plan.  That said, the tenacious bulls are fighting back this morning with the futures pointing to a gap up open.

Asian markets closed the day seeing read across the board in reaction to rising infection rates.  European markets opened the day lower but have rallied, holding very modest gains at the time of this report.  However, here in the U.S, futures point to a 200 point Dow gap up ahead of a lighter earrings day and the pending PPI Report.  The question is, will we see follow-through buyers at the open, or might this setup a pop and drop pattern heading into the uncertainty of the weekend?

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a lighter day of reports dominated by small-cap companies.  Notable reports include DKNG, MANU, SPB, & VIPS.

News & Technicals’

The pandemic numbers brought out the bears yesterday, but the selling appeared controlled, with the VIX rising only slightly.  Chicago issued a stay at home order begins on Monday except for essential needs.  Mitch McConnell added pressure to the market, saying he had no interest in negotiating a larger stimulus plan.  That comment came on the heals of Jerome Powell’s speech, where he said more stimulus is needed to battle the impacts of the rising pandemic numbers.  The U.S. set another new record as infection numbers jumped to over 150,000, with hospitalizations up by at least 5% in 47 states.  Treasury yields slumped yesterday in reaction to the rising numbers, with gold and silver rebounding slightly as a result. 

After reading the paragraph above, one would expect the market would be following through with the selling that began yesterday but no, the relentless bulls are fighting back this morning.  Perhaps traders are responding to the positive earnings after the bell yesterday, where DIS, AMAT, and CSCO rallied after better than expected results.  This morning’s question yet to be answered, will the gap find buyers after the open, or will we see a pop and drop heading into the uncertainty of the weekend?  Remain focused and flexible, weighing the risk you carry into the weekend carefully.

Trade Wisely,

Doug

A big day of data.

November 12, 2020 by Doug Campbell

Though considerably overextended in the short-term, the vaccine news and hopes of recovery continued to encourage the bulls as the tech sector bounced off support.  Sadly, news of 144,000 new infections and possible business restrictions or lockdowns weigh heavy on this morning market. Facing a big day of data, the gap down in the Dow will challenge the support of Monday’s massive rally.  Buckle up for another day of new-driven volatility.

Asian markets closed mixed but mostly lower in a relatively muted day of trading.  European markets have a bearish attitude this morning, with the DAX and CAC trading more than 1% lower at the time of this report.  As we wait on Jobless Claims, GDP, a Powell speech, and a big round of earnings reports, futures currently point to bearish open.  Of course, the news events could quickly improve or worsen the current sentiment.  Stay focused.

Economic Calendar

Earnings Calendar

We have our most important day of earnings this week, with more than 150 companies fessing up to quarterly results.  Notable reports include DIS, AQN, AMAT, BZH, CSCO, DGLY, DLB, ENR, FTCH, GLOB, DGRX, HIMX, JAMF, MFG, PLTR, PDD, SBH, TK, TDG, U, & WIX.

News & Technicals’

A tech bounce led the market yesterday, with the SPY and IWM struggling to find direction, while the DIA ran into a little profit-taking.  As the Presidential election saga drags on, the U.S. experienced another new record in COVID infections topping 144,000.  That is the 9^th straight day of more than 100k new infections, Ugg.  Yew York has imposed a curfew on restaurants, bars, gyms and limited home gatherings to ten.  The Biden Covid advisor is suggesting a lockdown of 4 to 6 weeks to control the surging pandemic.  It looks like we’re in for a long winter and a tough holiday season.  President Trump continues to allege fraudulent election activity, filing multiple lawsuits and appeals even as Biden moves forward with the transition appointing his close friend as Chief of Staff.  The Republican state AG says it’s highly unlikely that Trump will win in Arizona, citing no fraud evidence.  Georgia will do a hand recount of election ballots, but the Biden lead continues to grow, according to reports. 

Though the T2122 indicator continues to warn of an overbought condition, the tenacious bulls hold firm fending off any attempt by the bears.  Unfortunately, worry over pandemic numbers, and the threat of more lockdowns have the futures pointing to a gap down open this morning will test the support of Monday’s massive rally.  With a big day of earnings and economic reports, price volatility could be high, and news-driven whipsaws and reversals are possible.  Stay focused, and flexible.

Trade Wisley,

Doug

Rotation

November 11, 2020 by Doug Campbell

A rotation out of the high-flying tech sector into value and dividend-paying stocks seems to underway as we wait for the courts to weigh in the election.  The pandemic numbers once again surged to new record hospitalizations and infection rates, raising concerns about possible negative economic impacts.  With the indexes so extended from critical averages,  traders have to take a considerable risk when entering new positions.  Plan your risk carefully in be careful chasing with the fear of missing out.

Asian markets closed mixed but mostly lower, and concerns over new regulations push tech shares down 10%.   European markets are edging higher again today, riding the wave of vaccine-related recovery hope.  U.S. future point higher with yet another Dow gap even as pandemic numbers surge.

Economic Calendar

Earnings Calendar

We have just over 50 companies stepping up to report quarterly results on this hump day.  Notable reports include APD, ATO, FOSL, LMND, REYN, SB, SPTN, SLGG, TTEK, VRM, & YPF.

News & Technicals’

Another day and more new records set on the pandemic, with national hospitalizations topping more than 61,000 and over 131,000 new infections.  However, market futures continue to rise even as new rolls out of new city lockdowns going into place.  The Supreme Court asked to weigh in on Obamacare yesterday and, according to reports, appears willing to leave the act in place.  A decision from the high court is not scheduled until June of 2021.  Although the election has yet to be certified, Joe Biden is calling for an expansion of Obamacare. Alibaba’s Singles Day event shattered records with sales topping $56 billion, but tech shares in China plunged 10% as new regulatory concerns mount.  Here in the U.S., the tech sector is also showing some weakness as investors seem to be rotating toward value plays and dividend-paying stocks.  Perhaps concerns over potential Covid impacts have traders seeking safety due to the likely difficult winter ahead.

Technically speaking, the DIA, SPY, and IWM remain quite extended from their 50-day averages.  The fear of missing out is driving traders to take a considerable risk as they rush to buy stocks so far from key support levels.  They may be right to do so, but this is not for the faint of heart.  With such a new-driven market, the possibility of a sharp pullback remains high, or we could see a very choppy consolidation while we wait for the key averages to catch up.  It’s easy to overtrade in this kind of environment, so make sure you follow your rules and carefully understand each position’s risk.  The T2122 indicator remains in a short-term overbought condition, and the VIX above 24 handles as the indexes reach out to new records is extremely abnormal when compared to historical price action. 

Trade Wisely,

Doug