Mixed Bag of Results

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Mixed Bag

The after the bell reports resulted in a mixed bag of price action results.  GOOGL soared, but MSFT seemed to miss a step indicating a lower open this morning.  After the morning rush in reaction before the bell reports, there is a good chance the market slips into a light and choppy pattern as we wait for the FOMC decision.  If that not enough, FB and AAPL report after the bell setting the stage for a Thursday morning gap.  Your guess on direction is as good as mine!  Then later tonight, the President will unveil another massive spending plan in a joint session of Congress.  Indeed a busy week of data!

Overnight Asian markets saw modest gains by the close in a choppy session at investors grappled with economic data.  European markets trade with modest gains this morning with the Fed meeting in focus.  The U.S. displays a mixed bag this morning as the investors try to digest an overflowing plate of data headed in our direction.  Anything is possible, so plan your risk carefully.

Economic Calendar

Earnings Calendar

The Hump day earnings calendar has 190 companies listed, ready to report quarterly results.  Notable reports include AAPL, FB, AFL, ARCC, ADP, AVB, BA, BSX, EAT, CAKE, CME, CDE, DB, EBAY, EQIX, F, GRMN, GD, GSX, GRUB, HUM, LC, MGM, MAA, MCO, NSC, ORLY, PSA, QCOM, ROK, R, SNY, NOW, SHOP, SIRI, SIX, SPOT, TDOC, TEVA, VVV, WELL, WING, WH, YNDX, & YUM.

News & Technicals’

We had a mixed bag of results after the bell earnings reports, with GOOG soaring and MSFT, AMGN, and TXN looking to gap lower this morning.  Today the report ramp-up, including the giants FB and AAPL stepping up after the bell.  Suppose that’s not enough to we also have the FOMC Announcement at 2 PM Eastern with the press conference to follow.  Tonight the President will address a joint session of Congress to unveil another massive spending plan of nearly $2 Trillion.  India once again reports record new cases and fatalities, and according to some reports, the numbers could be underreported by nearly half as overfull hospitals turn people away.  Ahead of the Fed decision, the 10-Year Treasury rallied above 1.65% this morning, and the 30-year climbed to 2.321% as inflation concerns grow.

On the Techincal front, the bulls remain in control of the trends, though they have experienced a choppy consolidation over the last couple of weeks.  The T2122 indicator continues to display a short-term overbought condition, but as the market reacts to a tidal wave of data, anything is possible.  While the market tries to climb a wall of worry, the VIX is also consolidating above recent lows.  That said, the best we can do as retail traders is stay with the trend, avoid overtrading and complacency, ready to react if the market suddenly reveres.  Expect the market to become light and choppy after the morning rush as we wait on the FOMC.  Then anything is possible.  Remember, with FB and AAPL, reporting after the bell tomorrow’s open could easily begin with a gap.  The question to be answered is up or down?

Trade Wisley,

Doug

Big week of data

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Big week of data

Earnings reports move into high gear today with a big week of data that could easily create significant price volatility in the days ahead.  With more than 100 company’s reporting, the beginning of the FOMC meeting, and the latest reading on Consumer Confidence, investors will have a lot to digest as we head into GOOGL and MSFT reports after the bell.  A Wednesday morning gap is possible, but the question to be answered is up or down?  Consider your risk carefully.

Asian markets traded mixed but mostly lower overnight though HSBC shares surged on earnings results.  European markets currently see modest losses across the board as they monitor company reports and wait on the Fed.  However, U.S. futures continue to move bullishly, suggesting a modestly higher open at the time of writing this report.  Get ready for all the pops and drops earnings can create!

Economic Calendar

Earnings Calendar

The 2nd quarter earnings season kicks into high gear today, with more than 100 companies listed on the calendar.  Notable reports include GOOGL, MSFT, MMM, ABB, AMD, AMGN, ADM, BP, COF, CNC, DB, GLW, CROX, ECL, LLY, EXX, FFIV, FEYE, FISV, GE, HAS, ILMN, IVZ, JBLU, JNPR, MDLZ, PINS, PHM, RTX, ROP, SHW, SBUX, SYK, TXN, UBS, UPS, V, WM, & YUMC.

News & Technicals’

As this big week of data rolls out, we had a bit of a mixed bag of results with the SPY and QQQ squeaked out new records, the DIA moved slightly lower in an essentially choppy price action day.   Today begins the 2-day FOMC meeting with their decision announcement at 2 PM Eastern Wednesday.  BP beats quarterly estimates and commits to a $500 million stock buyback in the second quarter.  After the bell, TSLA reported better than expected results; however, the stock is indicated modestly lower this morning.  Rep. Richard Neal will introduce legislation that would provide Universal paid family and medical leave of up to 12 weeks and make permanent the tax credits provided in Biden’s Covid relief package.  The President issued yet another executive order raising the federal contractor minimum wage to $15 an hour.  Treasury yields pushed higher this morning, with the 10-year advancing to 1.581% and the 30-year rising to 2.258%.

Bullish trends remain strong earnings ramp-up to a fevered pitch, and we wait on the FOMC decision.  All eyes will be on the tech giants GOOGL and MSFT after the bell today.  Can they produce results to support current prices with P/E Ratios already near 30 and above?  We will find out later today!  Until then, we have a significant day of company reports and economic data to digest.  However, after the burst of morning activity, don’t be too surprised if price action becomes light and choppy as we wait in anticipation of the tech reports.  Plan for the possibility of a substantial gap up or down Wednesday morning, depending on the tech results, and plan your risk accordingly heading into the close of the day.  Interestingly, as the SPY and QQQ crept higher, so did the VIX, with a very unimpressive performance in the market breadth indicator. 

Trade Wisely,

Doug

Tech Titan’s Earnings

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Tech Titan’s Earnings

If the tech titan’s earnings results are not enough, how about we toss in a big week of economic data and an FOMC decision for good measure!  The daily reversals of last week left us guessing as the price support held, as did the price resistance setting the stage for another week of possible volatile big point moves.  Prepare for the possibility of big gap opens, overnight reversals, and intraday whipsaws as we react to all the data.  Will the week produce the thrill of victory or the agony of defeat? 

Asian markets closed the day mixed but mostly lower as they monitor the terrible pandemic conditions in India.  European markets trade flat this morning, with Germany set for a third wave lockdown that could last until June.  Ahead of earnings and the latest reading on Durable Goods, U.S. Futures seem to be taking a wait-and-see approach pointing to a flat and mixed open.

Economic Calendar

Earnings Calendar

This week is an enormous week of earnings reports highlighted by the tech giants.  Today with begin with 72 companies listed on the calendar stepping up to report.  Notable reports include AGNC, ACI, CNI, CAJ, CHKP, HMST, LII, OMF, OTIS, PKG, SBAC, SUI, & VALE.

New & Technicals’

Results from the tech titan’s earnings will likely be the driver for price movement for this week.  It begins after the bell with TSLA today, GOOG and MSFT on Tuesday, FB on Wednesday with AMZN hitting the tape on Thursday.  Inda reported its 5th straight day of more than 350,000 new infections.  The U.S. said it would send the raw materials needed for India to ramp up the manufacturing of the vaccine and other necessary medical equipment.  Germany has implemented tough new lockdown rules to curb the third wave of infections with measures that could last until June.  Treasury yields are creeping up this morning ahead of the busy week of data, with the 10-year coming in at 1.579% and the 30-year climbing to 2.254%. Wells Fargo is now predicting that the recent slump in yields will soon end with bonds breaking higher as inflation worries increase.

Not only do we have a busy week of earnings, but we will also have a big week of economic data highlighted by the FOMC decision Wednesday afternoon.  Friday proved to be another reversal day with a significant point recovery, but it fell short of breaking above the highs.  With a week of daily reversals behind us and facing a week of market-moving data, we could have about anything happen.  Technically the indexes are in good shape, but last week’s wild daily reversals provided clear evidence of just how dangerous this market can be with all the emotion it has generated with the big point moves.  Good reports, and we could easily see considerable gaps in the market open.  Should something stumble, be ready for the exact opposite as possible. Put on your big-boy pants and lace up some flexible shoes, because anything is possible!

Trade Wisely,

Doug

Whipsaw

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whipsaw

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

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Greenhouse Gas

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

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Netflix disappointed investors

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

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Big Tech News Events

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 6th 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

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SP-500 P-E ratio hit 37.5

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 2nd 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 2nd 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

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Dow Topped 34,000

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

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Record highs

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 11th 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