Perfect Storm of Market Uncertainty

October 26, 2020 by Doug Campbell

Could this be the perfect storm of market uncertainty? Election, new record infection rates, an earnings deluge, and a big week of economic data lining up to provide the potential for incredible price volatility.  An environment best suited for very adept day traders that quickly react to morning gaps, whipsaw, and news-driven intra-day reversals.  All other traders will find it difficult to impossible trade with an edge as the market reacts.  Consider the risk carefully, and always remember protecting your capital is one of a trader’s primary jobs.

Asian markets traded mixed overnight as virus infections surge, and oil prices fall.  European markets trade in the red this morning, with the DAX down more than 2%.  U.S. futures point to a nasty gap down at the open ahead of earnings data and the latest reading on New Home Sales.  Prepare for a wild week of uncertainty.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have 30 verified companies stepping up to report quarterly results.  Notable reports include AGNC, ACC, BYD, CAJ, CINF, FFIV, HAS, NOV, OMF, PKG, & TWLO.

News & Technicals

With the election just one week away and a severe rise in pandemic infections, U.S. futures reflect the incredible uncertainty.  With infection rates hitting a new record high, hospitalizations are rapidly increasing, and the death rates rise once again, determining any company’s market value amid all the impacts is near to impossible.  That said, traders should expect wild price volatility to continue with extreme sensitivity to the news cycle.  One bright light is the hope for a vaccine to combat the virus that could be available by early December but for small businesses, just barely holding that is little solace.  Current market conditions favor the experienced day trader, and swing traders will find it very difficult to trade with an edge.  Remember that just because the market is open does not mean you have to risk your hard-earned capital.  One of the trader’s primary jobs, forgotten during uncertain markets, is to protect your money.  Keep that in mind as you plan your risk forward.

Besides the election and pandemic, the market faces an earnings deluge and a big week of market-moving economic reports pouring rocket fuel to potential volatility.  Expect large moring gaps, news-driven whipsaws, and intra-day reversals as the market tries to price such incredible uncertainty.  Of course, we can’t forget the possibility that Congress could at any time announce a stimulus package.  Plan your risk wisely.

Trade Wisely,

Doug

Big Day of Earnings

October 22, 2020 by Doug Campbell

Today we face a big day of earnings news that has been a mixed bag of results so far this quarter.  Couple that with the uncertainty of stimulus, rising virus impacts, election meddling by Iran, and Russia expect extreme sensitivity to the news cycle and the significant price volatility to continue.  The DIA, SPY, and QQQ are quickly approaching their 50-day averages, and one has to wonder if they can hold as support without a stimulus deal.  If we head into the weekend still waiting on a deal, don’t be too surprised to see the bears become more aggressive. 

Asian markets closed mixed but mostly lower overnight as the IMF downgrades economic growth forecasts amid rapidly rising infection rates worldwide.  European markets are flat this morning as they continue to monitor U.S. stimulus talks and earnings results.  U.S. futures point to a slightly bearish open at this time, but with a big day of earrings and Jobless Claims numbers, anything is possible by the open.  Plan your risk carefully and be prepared for news-driven whipsaws and full reversals.

Economic Calendar

Earnings Calendar

We have our busiest day of the week on the Thursday earnings calendar, with 80 verified quarterly reports.  Notable reports include ALK, AB, AAL, AEP, T, BJRI, SAM, CTXS, KO, DOW, EHTH, FITB, FCX, GPC, HBAN, INTC, KMB, LLNW, MTB, MAT, NOC, NUE, PBCT, PHM, DGX, RHI, STX, SIRI, LUV, TSCO, UNP, VLO, VRSN, GWW, & WST.

News & Technicals’

Wednesday was another day of struggle as the market waits for a decision on stimulus negotiations.  The bulls controlled the positive morning gaps that quickly ran out of steam allowing the bears access and leaving behind tremendous uncertainty in the candle patterns.  With the DOW, SPY, and QQQ drawing near their 50-day averages, a test of this key technical levels seems likely unless news of a stimulus deal occurs soon.  Although there is a palpable uncertainty in the market, the index charts’ technical damage is minimal, with lower highs as the primary concern.  However, that damage could become critical if the 50-day moving averages are unable to hold as support.  Earnings thus far have shown a mixed bag of results, and with today being the biggest round of reports so far this season, we should expect an extra dose of price volatility as a result.  As the election draws near, the FBI says both Iran and Russia have obtained U.S. voter registration data to influence the outcome.  A cybersecurity firm confirmed that a hacker is trying to sell info on 148 million U.S. voters.  Despite the issues, please get out and vote!  The oil industry is now warning of significant layoffs in the coming weeks as rising virus infection rates substantially impact the sector.  I can only imagine the damage and helplessness business must feel as the infection and death rate numbers increase and the worry of more restrictions on the horizon. 

Overnight futures were quite bearish, but this morning they have bounced off the lows, trying to put on a brave face ahead of a slew of earnings and economic news that includes the latest reading on Jobless Claims.  With so much uncertainty swirling about, expect a considerable price sensitivity to stimulus and virus news.  If there is still no deal as we head into the weekend, I would not be surprised to see the bears become more aggressive.  Plan your risk carefully.

Trade Wisely,

Doug

Will They or Won’t They Agree

October 21, 2020 by Doug Campbell

Will they or won’t they agree on a stimulus deal remains the big question of the day?  Emotions are high on the subject that could have dramatic effects on the short-term market direction.  If Pelosi and the White House finally agree, there is still the uncertainty if the Senate has the votes to pass a spending plan over 2 Trillion.  That said, news of a deal expect the bulls to celebrate.  A failure to reach an agreement and expect a market temper tantrum, creating technical damage in the index charts.  Hold on for another uncertain day as we wait.

Asian markets closed mixed but mostly higher overnight, but European markets trade in the red across the board this morning.  US Futures point to flat open as we wait on stimulus news, earnings, and economic data.  Expect volatility and remain focused and flexible as anything is possible.

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have 35 verified companies stepping up to report quarterly results.  Notable reports include TSLA, ABT, AN, BKR, BIIB, CMG, CCI, CSX, DFS, EW, DFX, GL, KEY, KMI, LRCX, LVS, LAD, MANU, NDAQ, NEE, SUI, TMO, VX, WHR, & WGO.

News & Technicals’

Apparently, the Pelosi imposed deadline has passed and was nothing more than a negotiation tactic as talks continue today. Yesterdays’ price action reflected the high market emotion chopping rather violently as hope rose and fell throughout the day.  The good news is we do not have to deal with a considerable gap this morning but, we will have to prepare for another day of uncertainty with high volatility on a deal or no deal news event.  After the bell, NFLX disappointed investors by missing earnings estimates.  Shares of the streaming behemoth indicate more than a 25 dollar per share drop at today open.  According to reports, next week’s GDP report will likely show record-breaking economic growth if estimates are correct.  Across the pond, the top Brexit negotiator says that a trade deal is now in reach, boosting the British pound overnight.  That could have ripple effects in the currency markets today, lowering the US Dollar and proving the energy for Gold to break above price resistance. 

Technically speaking, the bulls have defended critical price supports in the index charts, but the palpable uncertainty has them teetering on the edge.  A lot is riding on the stimulus deal’s outcome, and traders should prepare for a substantial and volatile price move as news spin on the subject tugs on market emotion.  The bulls will likely celebrate with a strong rally should they hammer out a deal, but we should also prepare for a market temper tantrum and a bear attack should they fail.  Keep an eye on the news and stay focused on price action as we wait.

Trade Wisely,

Doug

Pop and Drop

October 20, 2020 by Doug Campbell

Yesterday’s pop and drop price action left behind some bearish candle patterns but fell short of creating technical damage in the index charts.  While that’s true, the damage to trading accounts being chopped up in the politically created volatility was likely substantial.  Unfortunately, as we wait on stimulus negotiations, more whipsaws and reversals are likely.  If you love to gamble on a political outcome, then this market is a dream come true.  Place your bets the marble is rolling, and in the next 24 hours, we will find out if the outcome is red or black.

Overnight Asian markets were mixed as China keep lending rates unchanged.  European markets trade mixed this morning as well, as they monitor the growing virus concerns and stimulus hopes.  US futures, on the other hand, once again point to a significant gap up open ahead of earnings, economic data, and the quickly approaching Pelosi deadline for stimulus. 

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 44 verified companies fessing up to quarterly results.  Notable reports include PG, NFLX, ACI, AMX, CNI, CP, CIT, CMA, DOV, IBKR, IQV, IRBT, LOGI, MAN, NAVI, PNR, PM, PLC, RF, SNAP SYF, THC, TXN, TRV, & USB.

News and Technicals’

Yesterday’s nasty pop and drop reversal left behind some concerning candle patterns, but with news, progress on the stimulus, futures point to a bounce.  In other words, more of the same news-driven political spin volatility for a very uncertain market.  The Pelosi imposed deadline to get a bill passed before the election is upon us.  The result of the negotiations is likely to have dramatic market consequences over the next 24 hours.  If the news occurs during the market day, quick traders may be able to take advantage of the move.  However, should the story come out after the close, expect a significant gap in either direction.  Guess right, and you could be a big winner!  Guess wrong, and money could quickly disappear from your accounts.  No available trading edge; place your bets on the roulette wheel and hope your gamble pays off.  I can’t speak for you, but I didn’t become a technical analyst to gamble on a coin flip.  Rapidly rising virus cases also weigh heavily on investors’ minds, with 37 states reporting increased hospitalizations that seem likely to accelerate in the coming weeks.  The economic impacts continue to mount as some states ramp up restrictions in response.

On the technical front, the indexes printed bearish candle patterns yesterday, confirming lower highs and adding some overhead resistance.  That said, there was no significant technical damage created, and we all know another reversal is possible depending on the political news.  What happens next is anyone’s guess, but once again, I will caution you about the dangers of chaising a morning gap with so much uncertainty ahead.  Get ready; this wild ride is far from over.

Trade Wisely,

Doug

Wild-eyed Speculation

October 19, 2020 by Doug Campbell

As coronavirus numbers surge, wild-eyed speculation of stimulus continues to drive indexes toward record territory.  With Speaker Pelosi issuing a 48-hour deadline to get a deal passed before the election, expect extreme price sensitivity on the stimulus news cycle.  Substantial whipsaws and full intraday reversals are possible as both sides of the aisle battle for position through the news.  There is a lot at stake as we push company valuations to perfection and beyond, even as our economy faces rising joblessness and new business impacts due to the rising infection rates.

Asian markets surged during the night as China reports their economy grew by 4.9%.  European markets are flat cautiously monitoring US Stimulus talks and Brexit uncertainty.  US Futures point to a Dow gap of nearly 200 points ahead of earnings, Jerome Powell comments, and the latest reading on the Housing Market Index.  Buckle up for another week of challenging price volatility.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have 20 verified reports as the 4^th quarter earnings volatility begins to ramp up.  Notable reports include ADC, FNB, HAL, IBM, LLI, PPG, STLD, & ZION.

News & Technicals’

Speaker Pelosi drew a line in the sand this weekend, giving the White House just 48 hours to reach an agreement on a stimulus package so that it can be passed before the election.  Reports suggest the Pelosi and Munchin will continue negotiations today, but it’s still unclear if the Senate has the willingness to give the deficit spending bill nearing a 2 trillion dollars.  China released numbers saying its economy grew 4.9% in the third quarter lifting Asian markets overnight.  Unfortunately, as coronavirus infections accelerate, new restrictions and lockdown measures increase the economic uncertainty looking forward.  Worldwide cases of the virus topped 40 million, with more than 90K new cases reported in the US over the weekend.  The IMF downgraded the outlook for the Middle East and Central Asian economic recovery, with oil prices expected to suffer next year due to virus-driven demand impacts.

That said, US Futures are surging this morning as hopefulness of a stimulus deal outweighs virus concerns.  The T2122 is once again suggesting that we are in an extremely overbought condition as wild-eyed speculation pushes the indexes toward record territory.  As we gap up once again in anticipation, remember to watch for the possibility of a pop and drop pattern.  Traders will have to stay on their toes as news sensitivity around stimulus could be extreme should negotiations fail.  With the VIX continuing to hold above 25 handles, anything is possible, so plan your risk carefully.

Trade Wisely,

Doug

Whip it

October 16, 2020 by Doug Campbell

Gap it down, whip it hard, chopping up traders accounts in the process as politicians continue to kick around the stimulus football.  Almost lost in the background noise of this political silliness, joblessness is rising, and new virus infections top 60k in a single day.  Toss in earnings season, and we have the perfect climate for continued wild price volatility as an emotional market awaits the next news report to fuel the next whipsaw.

Asian markets closed mixed but mostly higher amid rising virus fears.  European markets are currently rebounding from early losses now green across the board.  Recovering from overnight lows, the US Futures point to modest opening gains ahead of earnings and economic reports that include Retail Sales numbers.  What comes next is anyone’s guess.

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have 20 companies reporting quarterly results.  Notable reports include ALLY, BK, CFG, JBHT, KSU, SLB, STT, & VFC.

News & Technicals’

Stimulus uncertainty and rising infection concerns brought out the bears Thursday morning, punishing those holding long positions.  With news reports, the President was willing to increase his 1.8 Trillion offer spurred a rally to punish any short traders.  This morning, we hear that even though the White House is ready to support a bigger package, the Senate may not be willing to pass such a massive spending package.  Can we get off this political merry-go-round? Please!  While stimulus wrangling continues to whip the market around jobless claims, increased substantially, and new coronavirus infections topped 60,000 yesterday.   Stimulus or not, the economic damage to the economy is real and makes me wonder how much longer we can ignore its impacts. 

Though the rally back yesterday was substantial, it will only look like a knee jerk reaction unless the price action can follow-though breaking the short term downtrends and recovering lost price supports.  Continue to expect extreme market sensitivity to the Washington spin cycle and the growing headwinds of rising infection rates heading into this weekend.

Trade Wisely,

Doug

Hope Fades

October 15, 2020 by Doug Campbell

As stimulus hope fades and a coronavirus resurgence here in the U.S. and Europe, overnight futures markets point to a nasty gap down ahead of market-moving earnings and economic reports.  The swirling uncertainty continues to make price action very volatile and dangerous, likely chopping up accounts of the inexperienced. Today’s news could quickly improve or worsen this morning open, so plan your risk carefully and work to avoid emotionally charged decisions.

Asian markets slip south across the board overnight, and European markets are decidedly bearish this morning after France declares a public health emergency.  Ahead of earnings and economic data that included jobless numbers futures suggest a nasty gap and more price volatility for the traders to navigate. 

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 13 verified reports rolling out today.  Notable reports include UAL, DAL, SCHW, TACO, ISRG, MS, TFC, & WBA.

News & Technicals’

The bears made some headway yesterday, pushing the indexes lower after a report suggesting the hoped-for stimulus before election day fades.  Additional reports reviled the speaker Pelosi spoke to Munchin yesterday and plans to continue the stimulus conversation later today but noted there remains a vast divide in viewpoints.  Coronavirus is once again front and center in this morning’s news, with France declaring a public health emergency and Europe scrambling to control the reemergence with new lockdown procedures.  Here in the U.S., the infection rates are also surging again, topping more than 50,000 for the second day in a row.  Sadly the death toll is also rising, weighing the market sentiment heading into today’s open and piling on to the bad news coronavirus clinical trails are pausing over safety concerns.  As the election season politics shifts into high gear, the second presidential debate is being replaced with dueling town hall meetings.  What could go wrong with that?

All this uncertainty seems to have energized the bears this morning, with the futures pointing to a substantial gap down this morning.  However, with several notable earnings and economic reports headed our way before the open, we could easily see an improvement or a worsening of this volatile overnight swing.  Buckle up; it could be a wild ride today.

Trade Wisely,

Doug

Bears Probing

October 14, 2020 by Doug Campbell

With the indexes in a short-term overextended condition and a mixed bag of earnings results, the bears began probing for weaknesses breaking the 4-day rally.  BAC disappointed this morning, reversing early futures bullishness, but with several more potential market-moving reports this morning, we could easily flip-flop several more times before the open.  Anything is possible, and keep in mind how quickly market emotion can shift on any stimulus news.

Asian markets, in reaction the Xi’s speech, closed with mixed but modestly higher results.  European markets are chopping around the flatline this morning as virus worries weigh on investor sentiments.  US Futures seem uncertain this morning, but asf earings roll out, anything is possible, so prepare for another day of price volatility as a hopeful market awaits more government deficit spending.

Economic Calendar

Earnings Calendar

On the hump day earrings calendar, we have 12 verified reports, and several are considered market-moving.  Notable reports include AA, ASML, BAC, GS, INFY, PNC, SNBR, USB, UNH, & WFC.

News & Technicals’

With a mixed bag of earnings results yesterday and the indexes significantly extended, the bears made a half-hearted appearance breaking a 4-day winning streak.  However, after spending considerable time reviewing charts last night, I feel like I saw this kind of price action before in 1999.  Instead of wild speculation on dot.com companies, this time, there seems to be a willingness to throw money at the market, betting on government stimulus.  Let’s face it the actual economy is struggling, and with coronavirus cases rising again, the economic challenges business face this winter could be substantial.  Like in 1999, the markets could continue to zoom higher, ignoring the massive national debt, but the consequences of doing also increase the risk.  Long story short, follow the price action higher but don’t drink the kool-aid.  This wild-eyed bullishness party will eventually end, and I suspect the hangover it has the potential to produce will be very painful and destroy a lot of accounts as it did in 1999.  Stay frosty and focused.

Technically speaking, the bulls remain in substantial control of the indexes, but they are short-term overextended, and the bears are beginning to probe for weaknesses in their defenses.  BAC reported disappointing results this morning, reversing futures that at one point suggested a gap up open but now indicate a slightly bearish open.  However, many more notable reports for the market to react to before the open anything is possible.  Remain flexible and remember the market is sensitive to stimulus news and could become increasingly sensitive to virus numbers once again.

Trade Wisely,

Doug

Stimulus?

October 13, 2020 by Doug Campbell

Stimulus, what the market wants the most, continues to languish deadlocked and mired in political gamesmanship.  Toss in the kickoff of 4^th quarter earnings season, a supreme court hearing, and the uncertainty of the coming elections, and we have the makings for extreme price volatility.  Stimulus hopes pushed the indexes into a hyper-extended condition yesterday, so there will be a significant amount of pressure for companies to perform at these levels.  Stay focused as anything is possible.

Asian markets struggled overnight but finally managed modest gains after reporting rising exports.  European markets are lackluster this morning, currently showing modest losses across the board.  US Futures have rallied off overnight lows as earnings roll-out, indicating a possible gap down in the Dow while the NASDAQ points higher lead by APPL and the new iPhone anticipation.  Keep an eye on the latest reading on the GDP this morning that consensus suggests will decline.

Economic Calendar

Earnings Calendar

Today begins the kickoff of the 4^th quarter earnings season with 14 companies reporting.  Notable reports include JPM, JNJ, BLK, C, DAL, FAST, EDU, & WIT.

News and Technicals’

The bulls continued to the rally yesterday even with what they want is still mired in politics with no apparent progress.  The President is back on the campaign trail after testing negative for the virus and no longer contagious.  He has a lot of catching up to do having been ill with Biden leading significantly in the polls.  Senators will begin questioning the new supreme court nominee in a marathon session that will take up the entire day.  What that means for the progress of a stimulus bill before the election remains uncertain.  Today, Apple CEO Tim Cook will put on his best song and dance act as he unveils the iPhone’s next iteration.  There has been a discussion of a significant redesign and the introduction of 5G devices that they hope will trigger a substantial wave of upgrades by the end of the year.  Another major distraction will be the Amazon Price sales event that begins on Wednesday.

With JPM firs out of the gate with their earnings this morning, the Futures currently point toa gap down open.  However, with several more potential market-moving reports this morning and the latest reading on the GDP before the market opens, anything is possible.  Technically speaking, index charts are in a hyper-extended condition, so today’s events will be very critical to inspire the bulls to defend this massive anticipatory rally.  Expect price volitility to remain high with an extreme sensitivity to political news surrounding stimulus negotiations.  Buckle up for another wild earnings season with a presidential election tossed in for good measure.

Trade Wisely,

Doug

Futures Point to a Flat Open

October 12, 2020 by Doug Campbell

With bond markets closed, no earnings or economic events, the start fo the supreme court hearings, and Stimulus talks at an impasse, futures point to a flat open. That’s something we’ve not seen in quite a long time.  The bulls remain in control, but that control depends heavily on the hopes of the stimulus deal.  The President raised his offer to 1.8 Trillion, and now both sides of the aisle are unhappy with the proposal.  Traders should prepare for significant news-driven volatility amidst a week of substantial distractions.

Asian markets closed the day mixed with the HIS leaping higher by 2.2%.  European markets hold modest gains across the board this morning while U.S. Futures remain flat and choppy with the bond markets closed for Columbus Day.

Economic Calendar

Earnings Calendar

We have no confirmed earnings reports on this Columbus day Monday.

News & Technicals’

The President has upped his offer for Stimulus to 1.8 Trillion and now has opposition on both sides of the aisle.  The D’s say it’s not enough, and the R’s are upset because the cost is much higher than they are willing to pass.  With the beginning of the Amy Coney Barrett’s supreme court confirmation hearings, I suspect the distraction will take the focus off getting a stimulus bill completed.  Although the markets are open today, the bond markets are closed today due to Columbus Day’s banking holiday.  We will have a few more distractions this week with the Tuesday launch event of this year’s iPhone lineup.  A Morgan Stanley analyst wrote this fall’s launch would be the most significant iPhone event in years.  We will also have a massive focus on online shopping events with Amazon’s Prime 2-day sales event may other online competitors tagging along with sales events of their own. 

Last week was all about the bulls pushing the markets up in hopes of more Stimulus.  That created tremendous price volatility as the Congress and the President waged a political battle making headlines that would swing market emotions violently.  Unfortunately, with no progress over the weekend and Speaker Pelosi quoted saying that talks “remain at an Impasse,” we should plan for the market emotion to continue spilling out with the news cycle out of D.C.  With banks closed today, and the beginning of the supreme court hearings, it would not be a surprise to see a day of algo-driven choppiness.  Futures suggest a flat open with nothing on the earnings or economic calendar to inspire the bulls or the bears; we could have the quietest market open in weeks. 

Trade Wisley,

Doug