Whipsaw

April 23, 2021 by Doug Campbell

Another day, and another news-driven whipsaw, revealing that President Biden will propose doubling the capital gains tax.  Proposal or not, the fact remains that the wild price swings this week have elevated the risk and uncertainty for retail traders.  Next week we ramp up earnings reports that include several tech giants, so it’s likely the rollercoaster ride of whipsaws and morning gaps will continue for the near future.

Asian markets had mixed results as the HIS surged 1.12% and NIKKEI fell 0.57% in a volatile session to close the trading week.  European markets see modest declines across the board this morning even as data suggests their recovery gains strength.  Trying to shake off tax-raising proposals, U.S. futures point to a modestly bullish open ahead of earnings, PMI, and New Home Sales numbers. 

Economic Calendar

Earnings Calendar

Today, we get a little break on the earnings calendar with just over 30 companies planning to reveal quarterly results.  Notable reports include AXP, HON, KMB, RF,& SLB.

News & Technicals’

Yesterday’s turbulent whipsaw came after a Bloomberg story revealing that President Biden will propose doubling the capital gains tax to fund education and child care.  Not surprisingly, the market quickly reacted negatively.  Treasury yields are creeping up this morning to 1.558% on the 10-year, with the 30-year rising to 2.245%.  Sadly the pandemic issues in India continue to grow, setting a new world record daily infection rate of more than 332,000, topping yesterday’s record.  There are also growing concerns around new strains of the virus that are potentially more contagious.  Tesla faces pressure in China after customer protests, and the Chinese state media branded the company’s response as arrogant, with regulators increasing their scrutiny of the company.

It’s been a wild week of emotional whipsaws fueled by data and news with another daily reversal as investors try and sort out all the implications.  The question to answer is which way will the wind blow today?  Will it be a rush back in to chase moving issues, or will there be a run for the day as we head into the weekend?  One thing for sure the price action risks have grown due to the large daily price swings.  Though we have a lighter day on the earnings calendar, keep in mind next week’s reports ramp up dramatically with big tech in focus. Consequently, the wild ride is likely to continue so plan your risk carefully.

Trade Wisely,

Doug

Greenhouse Gas

April 22, 2021 by Doug Campbell

In a morning statement, the President pledged to more than double the commitment of the Paris accord, saying he will reduce greenhouse gas by at least 50% in just nine years.  This bold stamen comes just before he hosts today’s climate summit with world leaders.  What began as a relief rally turning into a full-fledged reversal as traders rush back into stocks.  Big point moves like this make a dangerous trading environment.  Plan your risk carefully, follow your rules, and remember sharp reversals can go both directions, so avoid chasing with the fear of missing out.

Asian markets traded mixed but mostly higher overnight as the Nikkei rebounded 2.38%.  European markets rally this morning with modest bullishness as they wait on an ECB decision.  After a booming reversal and ahead of jobless numbers, the U.S. futures seem to be taking a wait-and-see approach, currently pointing to modestly lower open.  Fasten your seatbelt because anything is possible in this emotionally charged market.

Economic Calendar

Earnings Calendar

We have the biggest day of earnings reports this quarter, with nearly 100 companies listed on the calendar.  Notable reports include INTC, ALK, AAL, LUV, AEP, ARI, T, BIIB, BJRI, BX, SAM, CLF, DHI, DOW, FE, FCX, GPC, HBAN, MKTX, MAT, NUE, ODFL, ORI, PNR, POOL, STX, SKK, SNAP, SNA, TSCO, TPH, UNP, VLO, VRSN, & WWE.

News & Technicals’

The President is hosting a climate summit today, but before it begins, pledges to reduce greenhouse gas emissions by at least 50% by 2030.  His target is more than double the commitment under the 2015 Paris climate agreement.  Treasury yields are declining slightly this morning ahead of today’s Jobless numbers dipping to 1.552%.  The forecast is for 603,000 new jobless claims last week.  India reports a single-day jump in pandemic infections, with more than 314,000 cases confirmed in 24 hours.  That number surpassed the world’s previous highest daily record.  Hospitals are said to be overwhelmed and turning away patients due to a shortage of beds, including critically ill patients. 

Markets zoomed during yesterday’s rally as this emotional all-or-nothing market condition whips.  We’re either rushing to buy anything moving or running for the doors with substantial risk due to the significant point moves.  With a big day of data ahead, we should expect more of the same today.  Though yesterday was a very bullish day, keep in mind we still have resistance highs to deal with, and that index chart remains in a very extended condition.  Stay with the bullish trend but guard yourself against getting caught up with the fear of missing out, chasing into already very extended stocks.  When running fast, a market stumble can create very painful reversals.  Stay focused and avoid overtrading. 

Trade Wisely,

Doug

Netflix disappointed investors

April 21, 2021 by Doug Campbell

The substantial point decline yesterday added insult to injury after the bell as Netflix disappointed investors with the substantial decline in subscriber growth.  However, consumer staples, utilities, and packaged food-related stocks surged as investors moved to more defensive positions.  Technically the QQQ suffered the most damage falling below the price support of the February high.  With the sharp NFLX decline, the NASDAQ is vulnerable to more selling as the index seeks price support. 

Asian markets had a rough night, with Japan declining another 2%, with Hong Kong not far behind, falling 1.76%.  Despite that, the European indexes see green across the board this morning with modest gains.  With a big day of earnings and a petroleum number later this morning, U.S. futures have recovered from overnight lows, currently pointing to a flat to a slightly positive open.  Prepare for more price volatility as the market reacts to earnings data.

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have 66 companies listed to report, but many are unconfirmed.  Notable reports include CMG, ANTM, BKR, CP, CHDN, DFS, EFX, GL, HAL, KMI, LRCX, LVS, LAD, NDAQ, NEE, NEP, RHI, RCI, SNBR, VZ, & WHR.

News & Technicals’

After the bell yesterday, Netflix disappointed investors as subscriber growth declined sharply, and adding insult to injury, the company projects that next quarter the trend is likely to continue.  A challenging beginning to the big tech reports.  After a record of 109 SPAC (Special Purpose Acquisition Company) deals in March, the SEC shut off the pipeline with new accounting guidance.  SPAC’s warrants will now receive the classification of liabilities instead of equity instruments.  Amazon plans to connect your credit card to a palm print scan payment system in their Whole Foods stores.  According to the company, they have already signed up thousands of users to the new technology.  The debut of new Apple tech upgrades unimpressed investors yesterday, leaving behind a bearish engulfing pattern on the chart.

Although yesterday’s selling looks relatively benign on the index charts, I suspect it was painful for those not prepared for the substantial point decline.  However, as we head into another big day of earnings data, the premarket futures try to put on a brave face recovering from overnight lows despite the big NFLX disappointment.  Energy and financial sectors continued to show weakness yesterday as consumer staple and utilities sector stocks surged higher.  Also, keep an eye on packaged food and farm-related commodities as California drought concerns and inflation worries push the stocks upward.  With only petroleum numbers later this morning on the economic calendar, be prepared for the typically wild earnings price volatility as the market reacts.

Trade Wisely,

Doug

Big Tech News Events

April 20, 2021 by Doug Campbell

It’s time to buckle up and get ready for the volatility that big tech news events can inspire.  Apple will reveal its new products later today, and after the bell, Netflix will be the first tech giant to report quarterly results.  With indexes so elevated, they will need to report near perfection to support current valuations.  With lowered analyst expectations, it’s certainly possible, but traders should prepare for the possibility of substantial morning gaps as the market reacts.  Market emotion is high, so plan your risk carefully.

Overnight Asian markets struggled as Japan dropped nearly 2% as China leaves lending rates unchanged.  European markets display red across the board this morning, with global markets showing weakening sentiment.  Ahead of earnings and the kick-off to big tech reports later today, U.S. futures currently point to a lower open as treasury yields rise. 

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 35 companies listed, ready to report quarterly results.  Notable reports include ABT, AN, CMA, CSX, DOW, EW, FITB, HOG, IBKR, ISRG, JNJ, KEY, LMT, MAN, NFLX, PM, PG, TRV, & XRX.

News & Technicals’

Later today, we have a couple of big tech news events that could have a market effect.  First, Apple will roll out new versions of their high-end iPads and maybe even some new tech devices.  After the bell, we will get our first tech giant earnings report when Netflix reveals its results.  Keep in mind this sets the stage for possible market gaps on Wednesday’s open, which will likely continue as we progress through the tech titan reports.  This morning the 10-year Treasury yields perked up to 1.619%, and the 30-year climbed to 2.315%, reacting to the latest earnings results that hint of rising inflation.   India reports over 200,000 daily Covid cases for the 6^th consecutive day topping over 15 million as hospitals struggle under the increasing pressure.  According to the IEA, energy-related carbon emissions will surge by nearly 5% this year as the world Covid recovery begins.  The organization is sounding a warning that this surge is unstainable for our climate. 

Futures attempted a bounce in overnight trading, but we see a bit of bearishness as we begin another day of potential market-moving earnings reports so far this morning.  The SPY and the QQQ look to be the most vulnerable, leaving behind evening star-type candle patterns in very extended market conditions.  With price and moving average supports significantly lower, it could be a painful pullback should the bears find inspiration to attack.  Thus far, earnings reports have come in glowing positive, but that could negatively affect inflation hawks watch rising treasury yields this morning.  Expect the challenging price volatility to continue and even intensify as the risk of significant morning gaps increase as the tech giants begin to report.  Stay focused and flexible as anything is possible during earnings season. 

Trade Wisely,

Doug

SP-500 P-E ratio hit 37.5

April 19, 2021 by Doug Campbell

With last week’s bullish run, the SP-500 P-E ratio hit 37.5 as earnings top analysts lowered expectations by as much as 22%.  Coca-Cola reported this morning topping analysts’ targets as the futures try to rise off of overnight lows.  Keep in mind if the bears were to find inspiration, the price support levels in the SPY and QQQ are painfully lower due to their extended condition.  Plan your risk carefully and avoid complacency remembering anything is possible as 2^nd quarter earnings ramp up over the next couple of weeks. Significant morning gaps are possible.

Asian markets mostly rallied through the India markets plunged as pandemic infection rates continue to surge to severe levels.   European markets trade mixed around the flatline as they monitor earnings and global sentiment.  As the premarket earnings roll out, the U.S. futures rise off overnight lows but still point to a modestly lower open.  Prepare for price volatility to remain challenging in this elevated market condition.

Economic Calendar

Earnings Calendar

We will have a busy week on the earnings calendar as the 2^nd quarter earnings season ramps up.  Notable reports include ACC, KO, HXL, Ibm, MTB, PLC, STLD, UAL, & ZION.

News and Technicals’

After another very bullish week in trading, the SP-500 P-E ratio hit 37.5, 89% above the historical 10-year average.  However, there seems to very little concern about inflation, with the 10-year Treasury yields start the week modestly lower.  Trip.com surged more than 4% from their issue price in its Hong Kong debut.  According to reports, we reached a pandemic milestone with half of U.S. adults vaccinated with at least one shot.  It occurred just one day after the U.S. reported the Covid death toll topping 3 million Americans.  China’s CanSino Bilogicis will start clinical trials for a Covid vaccine administered through inhalation though the efficiency rates of China vaccines have much lower effective rates. 

The DIA, SPY, and QQQ charts appear highly extended on the technical front, and though the futures indicate a lower open, they are well off of overnight lows as earings roll out.  Logically one would expect a significant pullback to begin, but with the lowered analyst expectations, companies thus far have been able to top these targets by nearly 22%.  Though many companies are not earning more than they were one year ago, the low expectations and the frenzy of buying something no matter the price could easily continue.  However, should the market find a reason to stumble, the pullback could be very painful, so at the risk of sounding like a broken record, avoid overtrading but stay with the bullish trends as long as this party continues to rage. 

Trade Wisely,

Doug

Dow Topped 34,000

April 16, 2021 by Doug Campbell

The Dow topped 34,000 for the first time, and the SPY and QQQ followed with new record highs, and the indexes continue to stretch out.  Though 10-year treasuries fell yesterday, they have rebounded slightly this morning, but with no bond auctions until next week, we will have to wait to see the direction of follow-through.  Index trends are extraordinarily bullish, but as we extend, the danger of reversal grows, so don’t become complacent or overtrade because the pullback could be rather punishing.

Asian markets closed the day green across the board as China reported economic growth of 18.3% last quarter.  European markets are also bullish across the board this morning as earnings inspire the bulls.  U.S. futures have recovered from overnight lows, pointing to a modestly bullish open ahead of earnings and housing data.  Expect price volatility to remain high, and keep an eye out for possible intraday whipsaws or even reversals if profit-taking picks up heading into the weekend.

Economic Calendar

Earnings Calendar

We have 20 companies listed on the Friday Earnings calendar, but several are unconfirmed.  Notable reports include ALLY, BK, CFG, KSU, MS, PNC, & STT.

News & Technicals’

According to the WHO, the Covid infection rate is approaching the highest level so far worldwide.  The agency says they will continue to assess the crisis and adjust advice accordingly.  Pfizer’s CEO said yesterday that a third Covid vaccine dose within 12 months is likely needed and went on to say it’s possible people will need to get vaccinated annually.  Daily U.S. Covid cases remain above 70,000 new infections daily.  China says its economy grew 18.3% but was below an expectation of 19%, and their GDP numbers suggest the recovery has already begun to slow down.  The 10-year treasury help yesterday’s sharp rally as it pulled back but is slightly rebounding this morning.  With on bond auctions today, we will have to wait until next week to see if the slide and follow through.

It has become an almost monotonous phrase in the last year of the U.S. Stock market, but we made new record highs in the DIA, SPY & QQQ yesterday while the IWM lagged.  The Dow topped 34,000 for the first time as the indexes continue to stretch in nearly parabolic chart patterns.  The bulls found energy as companies blew past expectations and economic data came in much more robust than expected.  Analysts have lowered expectations so much that so far this season, reports have topped them by more than 20%.  Some might call that manipulation!  That said, the trends remain extraordinarily bullish, and there is no reason to believe it can’t continue, so don’t fight the tape.  However, traders should avoid overtrading and remain vigilant because as this market continues to extend, the danger of a punishing reversal grows.

Trade Wisely,

Doug

New Record Highs

April 15, 2021 by Doug Campbell

Big bank earnings lifted indexes to new record highs, but the intraday whipsaw left behind some concerning candle patterns as the news-driven price volatility challenges traders.  Emotions are very high, and with the flood of inexperienced money that entered the market over the last several months, that is likely to continue.  Institutions say this the economic growth in this quarter could rival that of 1984 as we ride the tidal wave deficit fueled stimulus spending.  Stay with the trend and enjoy the party as long as it lasts but be warned, the risk is high as the indexes continue to stretch beyond logical limits.

Asian markets traded mixed but mostly lower, struggling for direction.  European markets surge to new records as they monitor earnings this morning.  U.S. futures point to a substantial gap higher after yesterday’s volatile whipsaw, likely setting new records at the open.  I suspect wild price volatility will be with us for several weeks, so plan your risk wisely.

Economic Calendar

Earnings Calendar

We ramp up slightly today on the earnings calendar, with more than 50 companies stepping up to report quarterly results.  Notable reports include TSM, AA, BAC, BLK, SCHW, C, DAL, JBHT, PEP, PPG, RAD, USB, UNH, & WIT.

News & Technicals’

The beginning of earings fueled new record highs as the big banks topped expectations, and that trend continues today, with BAC already beating estimates.  Besides a busy earnings day, we have an economic calendar chalked full of potential market-moving reports to keep traders and investors busy.  Instructions say this could be the strongest quarter of economic growth since 1984, and it would seem that no price is too high as in this stimulus-fueled buying frenzy.  President Biden announced that U.S. troops will leave Afghanistan by September 11^th though some suggest this action will only worsen the situation. 

After a nasty whipsaw yesterday that left behind some concerning daily candle patterns, the bulls are back on the job this morning.  Traders will have many data points to track this morning with earnings and a jam-packed economic calendar.  I think it would be wise to plan for significant price volatility in the weeks ahead as the index charts continue to extend.  Logic would suggest a market pullback could begin at any time, but there is little logic in this buying frenzy pushed by a tidal wave of deficit spending.  Although market conditions like this typically end in a punishing selloff trying to fight it is unwise.  Remember, a market can remain irrational much longer than we can remain liquid.  Don’t chase; avoid overtrading, resist complacency but stay with the trend riding this wave as long as it lasts. 

Trade Wisely,

Doug

Big bank reports and Coinbase IPO

April 14, 2021 by Doug Campbell

The choppy dull days of the last couple of weeks could be over as the market reacts to big bank reports and Coinbase IPO.  I worry that we have pushed prices so high that companies will have to report near perfection to support their current valuations.  I wonder if the massively hyped Coinbase IPO will disrupt the market as traders pull funds from other stocks as they rush to fund their IPO purchase, fearing they will miss out.  Fasten those seatbelts it may prove to be a very wild ride in the days and weeks ahead.

Asian markets traded mixed but mostly higher overnight, with Hong Kong surging 1.44%.  European markets seem to be taking a wait-and-see approach this morning, trading hovering near the flatline.  As earnings roll out, U.S. futures are trying to hold on to a positive open, but gains at this point look to be very modest.  However, anything is possible, so stay on your toes as we react to the news.

Economic Calendar

Earnings Calendar

We officially kick off the 2^nd quarter earnings today with 17 companies listed on the calendar ready to fess up to quarterly results.  Notable reports include BBBY, JPM, GS, HOFT, INFY, LOVE, SJR, & WFC.

News & Technicals’

Today we have the potential for wild price volatility with big bank reports and the IPO of Coinbase.  On the earnings front the due to the substantial rally we have experienced in anticipation, companies will need to report very near perfection to support current prices.  With so much hype surrounding the Coinbase IPO, it could prove a significant market distraction disrupting stock prices as traders pull money out of other stocks to fund their purchase of this record-setting new issue.  I obviously don’t know what happens next, but we may soon long for the dull choppy days of the last week as price volatility ramps up in news-driven reports. 

With the SPY and QQQ setting new record highs, their charts appear significantly extended and almost parabolic over the last three weeks of trading.  Clearly, the rising infection rate and the pulling of the JNJ vaccine are of no concern to this market.  The hotter than expected CPI also proved to be of no consequence as traders chase into stocks with no price too high apparently.  I have to admit this makes me very nervous that the market could be running at full speed toward a very steep cliff.  However, I have seen many times in my trading career that an overly exuberant market can last much longer than anyone would expect.  That said, as retail traders, the best we can do is stay with the trend being careful not to chase already extended stocks and guard against overtrading and complacency. 

Trade Wisely,

Doug

CPI in Focus

April 13, 2021 by Doug Campbell

All eyes will be on the CPI report coming out before the bell.  Will it continue to inspire the bulls, or will it inspire the bears with worries of inflation?  Ahead of the number, the 10-year treasuries rose to 1.69%, suggesting how critical this number could be in defining the path forward.  The FDA came out this morning with a recommendation to pause the use of the J&J vaccine due to blood clotting worries.  The futures markets have taken a turn for the worse as a result.

Overnight Asian markets traded mixed but mostly higher as Alibaba share surge for the second straight day.  European markets trade with modest results this morning, with earnings and inflation data in focus.  Ahead of the CPI report, U.S. futures point to a lower open on the eve of the 2^nd quarter earnings kickoff.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have just 14 companies stepping up to report quarterly results.  Notable reports include FAST & KRUS.

News & Technicals’

Critical economic data on the inflation front is on tap before the market opens with the CPI.  The consensus projects the number to come in at 0.5%; however, markets could inspire the bears if it tops expectations.  Conversely, should the number come in lower than the consensus, look for bullish inspiration to occur.  Directly related to our possible inflation issues is the massive stimulus spending that pushed the U.S. budget deficit to a new record of $1.7 trillion this year.  The 10-year Treasury yield moves back up this morning, topping 1.69% as we wait on the CPI numbers.  On the pandemic front, the U.S. hit a new daily vaccination record, but unfortunately, infection rates are rising, with the country reporting 70,000 cases per day. 

Yesterday proved to be a choppy sideways day for the indexes, and as we wait for the 2^nd quarter earning kickoff, it’s very likely we could see more of the same assuming the CPI comes in as expected.  Index trends remain very bullish even though the SPY and QQQ charts appear pretty extended in the short term.  Plan your risk carefully as we head into earnings season.  With all the big investment institutions singing in a chorus that a market boom is ready to begin, one has to wonder if they have factored in the possible inflation impacts that may result.  Hmm?  Stay with the trend but guard against complacency if the market should stumble for this very elevated position.

Trade Wisley,

Doug

Highly unlikely to raise rates.

April 12, 2021 by Doug Campbell

In a Sunday interview, Jerome Powell said the extremely dovish policies would continue and that it is the Fed is highly unlikely to raise rates this year.  With the last hour buying surge Friday, the DIA, SPY, and QQQ all set new closing records by the close.  Last week was overall a frustratingly choppy price action punctuated by the Monday gap and Friday late-day surge.  This week we kick off 2^nd quarter earnings with the indexes in a short-term, very extended condition adding significant danger for retail traders.  Anything is possible, so buckle up it could be a wild ride this week.

Overnight Asian markets saw red across the board even as shares of BABA rose 6.5% after being fined.  European markets trade mixed but primarily flat this morning.  With a light day of earnings and economic reports, U.S. futures have rallied well off overnight lows as the premarket pump begins.  Prices could remain light and choppy until we get the big bank reports beginning on Wednesday.  Plan your risk carefully.

Economic Calendar

Earnings Calendar

We have 12 companies listed on the Monday earnings calendar coming forward with their quarterly results.  Notable reports include APHA & MIND.

News & Technicals’

On the news program 60 Minutes, Jerome Powell reaffirmed the Fed’s commitment to loose monetary policy.  He went on to say, “it’s highly unlikely we would raise rates anything like this year.”  According to reports, MSFT could announce a deal as early as today, the acquisition of NUAN.  NUAN stock is indicated sharply higher this morning as a result.  Despite a $2.8 billion anti-monopoly fine leveled by Chinese regulators, shares of BABA are popping 6% this morning following a 6.5% rally in Hong Kong overnight.  On the pandemic front, Regeneron to request FDA clearance on an antibody-drug as a preventative treatment, Britain’s Pub drinkers return as lockdown eases, and Chinese vaccines don’t have very high protection, according to a top health official. 

Last week’s price action started with a considerable gap on Monday and ended with a buying surge in the last hour of trading on Friday.  However, the price action between those sharp moves was frustratingly light and choppy.  Although the DIA. SPY and IWM show extreme bullishness; the charts also display an extremely extended condition after nearly 2-weeks of buying, creating a parabolic move that’s a long way from good price support levels.  That said, with the Fed standing on the gas peddle and the 2^nd quarter earnings season kicking off on Wednesday, there is no reason to believe that the market will not continue to extend.  Until then, choppy price action is likely to continue.

Trade Wisely,

Doug