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 2nd 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.
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 2nd 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 2nd 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.
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 2nd 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 2nd 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.
Chip shortages are forcing General Motors and Ford to temporarily shut down some American production plants ranging from weeks to several additional weeks in already idle facilities. The Amazon union vote at an Alabama warehouse looks as if it is failing as the vote count widened to deny unionization. Keep an eye on those Treasury yields that are once again pushing higher this morning as inflation worries linger.
Overnight Asian closed the week mixed but mostly lower as the volatile whips continue in Hong Kong slipping more than 1%. European markets trade mixed with modest gains and loss with German health minister calling for a nationwide lockdown due to the third wave surge in infections. However, after a few days of choppy consolidation, U.S. futures currently point toward a bullish open and more record highs ahead of PPI numbers.
Economic Calendar
Earnings Calendar
We have a very light day as we wrap up the 1st quarter earnings with just 12-companies listed on the calendar with most unconfirmed. The only notable report I see is JKS.
News & Technicals’
Due to chip shortages, GM and F are cutting production at several American plants. The temporary plant closures range from a week to several additional weeks for plants currently idled. In Germany, the health minister is calling for a nationwide lockdown after reporting over 30,000 new infections on Wednesday and 26,000 on Thursday. According to reports, Biden’s China policy is tougher on financial firms than President Trump’s policies. The Cowen Washington Research Group analyst Haret Seiberg says delisting of Chinese companies will happen because Beijing is unwilling to allow the U.S. to inspect company audits. Treasury Yields are bumping higher this morning to 1.666% on the 10-year, with the 30-year rising to 2.343 as inflation concerns linger.
The index charts remain very bullish with no clues in the price action that the bears have any teeth at all. However, traders should note the very extended condition of the current rally and the possible danger if the market were to stumble. That said, it seems every big institution is singing in a chorus that the market boom will continue despite the incredibly high P/E ratios. As for me, I will stay with the trend, but I will also guard myself against complacency and avoid the urge to overtrade due to this very extended market condition. Let’s enjoy the ride while it lasts, but always remember what goes up will eventually come down and likely in a swift and very painful correction. Have a fantastic weekend, everyone!
According to President Biden, he is now willing to negotiate the corporate tax increase that funds the $2.3 trillion infrastructure bill as the battle in Congress heats up. The IMF is at the same time trying to praise the U.S. for the stimulus spending while also warning the massive debit overhang threatens economic recovery. However, the FED appears unconcerned as they stand fast on their extremely dovish QE policies. As the market searches for inspiration, keep in mind we might have to wait until the kickoff of earnings next Wednesday to break this resting consolidation.
Asian markets mostly rallied overnight, with Hong Kong continuing its volatile swings, closing up more than 1% reversing the day before. European markets are mostly higher this morning, but the gains are pretty modest. Ahead of earnings, Jobless Claims, and another Jerome Powell speech, the U.S. futures currently suggest a flat to modestly bullish open.
Economic Calendar
Earnings Calendar
The Thursday earnings calendar has just ten companies stepping up to report quarterly results. Notable reports include CAG, STZ, LEVI, PSMT, & WDFC.
News & Technicals’
As the battle for the $2.3 trillion infrastructure bill, President Biden says he is now willing to negotiate on the corporate tax increase. The CDC is tracking a Covid variant that is spiking severe cases in younger adults. There are now 52 jurisdictions across the country with and more than 16,000 of the B1.1.7 variant. Fed officials are willing to stand fast on their extremely dovish policies, according to the minutes of the last FOMC committee meeting. Officials indicated that the unemployment rate could fall to 2.2% by year-end, and inflation could run to 2.2% in the process. That said, the ECB says it may begin to reduce its bond-buying in the third quarter of this year. The IMF is now warning the U.S. that the debit overhang and financial vulnerabilities pose a significant threat to the economic recovery while at the same time trying to praise the stimulus efforts. Hmm?
Another day of choppy price action as the market seems to be waiting for some inspiration. I suspect we could have to wait until next Wednesday and the official kickoff of 2nd quarter earnings. However, with Jermone Powell speaking today, it is possible he could get things moving. The question is in which direction? The index trends remain bullish, and there is the apparent desire of the FED and the federal government to keep the new record highs coming. The problem traders face is the challenging price volatility that accompanies these all-or-nothing price swings. Remain vigilant to your trading rules, don’t chase or overtrade but stay with the bullish trend as long as it continues.
After Monday’s big jobs pop and waiting on the FOMC minutes, the bulls took a siesta yesterday, largely chopping sideways. Though we are likely not learn anything new in the minutes of the last Fed meeting, all eyes will be looking for clues for changes in their extremely dovish stance coming under fire due to inflation worries. With the 2nd quarter earnings season set to begin next week, don’t be surprised to see the choppy price action continue.
Asian markets closed mixed overnight, with the HIS slipping nearly 1%. European markets trade mixed with mostly modest price action across the board. After a decline of 20% in mortgage refinance demand, the U.S. has softened from early morning highs, currently suggesting a flat to modestly bullish open as we wait for the Fed minutes.
Economic Calendar
Earnings Calendar
On the Wednesday earnings calendar, we have just ten companies listed, though several are unconfirmed. Notable reports include LW, MSM, & SCHN.
News & Technicals’
Markets took a siesta yesterday, waiting on the FOMC minutes. According to reports, second-quarter numbers will likely surge, and many believe the Fed will come under considerable pressure for maintaining its extremely dovish stance. Economists expect a 9% growth in the second quarter that could trigger strong inflation concerns. Though I doubt we learn much more than we already know, all eyes will be on the FOMC minutes looking for clues later this afternoon. Jamie Dimon chimed in to let us know that the expected economic boom is fueled by deficit spending. Thank you very much, captain obvious! Jeff Besos says he supports a hike to the corporate tax rate even though Amazon has come under fire for paying very little in taxes over the past years.
Technically speaking, the indexes are in good shape though perhaps a bit dangerous because of the overstretched condition. The QQQ has rallied sharply up more than 8% in just 9-trading days yet still has overhead resistance to overcome. With the softness experienced in the financial sector and energy sector yesterday, the IWM seemed to struggle and now shows us a possible head and shoulder pattern to keep an eye on. Ahead of the FOMC minutes, the 10-year treasuries continue to moderate, but this could be a temporary situation should the second-quarter numbers confirm inflation concerns. Keep in mind with the kick-off of earnings season just a week away, it could be possible to see choppy consolidation price action in the indexes as we wait for the inspiration.
Credit Suisse reported a $4.7 billion hit as the Archegos fallout continues. However, Treasuries show a little softness this morning, a day after the DIA and SPY leap to new record highs. Oddly, as the markets buzzed with bullish energy, the oil stocks suffered declines as rising pandemic infection rates raised futures demand worries. Another puzzling contradiction is seeing the VIX move up with the indexes. The moral of the story, stay with the bullish trends but don’t become complacent.
Asian markets displayed some wild contradictions last night as the NIKKEI declined 1.30%, and the HSI surged up 1.97%. European indexes are in rally modes on recovery hopes across the pond even as Credit Suisse cuts dividends to the hedge fund losses. U.S. futures seem to be taking a hiatus this morning point to modest declines ahead of the JOLTS report and light day of earnings. Let’s get ready to rumble!
Economic Calendar
Earnings Calendar
In a light day on the earnings calendar with only eight verfied companies fessing up to quarterly results. I made a mistake looking at Tuesday’s notable reports thinking I was going over those on Monday. As a result, I will have to repeat yesterday’s stocks, LNN, MAXN,& PAYX.
News & Technicals’
The Archegos hedge fund scandal with Credit Suisse reporting a $4.7 billion loss as the fallout continues. To pass the Biden $2.3 trillion infrastructure plan Senate Leader Schumer will use budget reconciliation to pass the legislation without Republican votes, setting up another distracting political battle. Google announced it would stop using Oracle’s finance software in favor of the SAP. ORCL is indicated slightly lower this morning. Craig Irwin, a senior analyst at Roth Capital, placed a price target of $150 for Tesla. Tesla closed at $690.57 yesterday, suggesting a 78% haircut if Irwin is correct. In a bit of good news, Treasury yields are pulling back this morning, but I think it would still be wise to keep an eye on them as Congress works to print another $2.3 trillion in deficit spending.
The DIA and SPY printed fresh new record highs as recovery hopes energized the bulls. Interestingly oil stocks suffered yesterday as worries about the rising pandemic infections rates across the country could affect demand. Seemingly a direct contradiction to the overall market bullishness. Another puzzling contradiction is that the VIX moved higher yesterday at the same time the indexes were surging with bullish enthusiasm. Things that make you say, hmm? The QQQ continued its very steep rally yesterday but keep in mind there remains overhead price resistance to be dealt with before the all-clear can be sounded. Remember that it’s not unusual for the market to become a bit light and choppy as we wait for the FOMC minutes coming out tomorrow. However, the JOLTS report could keep the fires burning through the morning session.
While traders enjoyed a three-day weekend, the jobs report blew past consensus expectations adding 916,000 in March. That has the bulls working hard in the premarket point strong bullish open to follow the light volume but record-setting Thursday close. On the bullish side, the VIX is finally breaking down, but on the bearish side, treasuries ticked higher as inflation worries continue due to the vastly stronger than expected jobs number. Though we will set new records at the open, be careful not to chase already extended stocks.
Overnight Asian markets rallied to close green across the board, with the HIS leading the way, up 1.97%. European markets are also showing modest bullish across the board this morning, with tech shares gaining favor. Ahead of a light day of earnings & economic reports, the U.S futures point to a substantial gap up of more than 200 Dow points. Buckle up; it could be a somewhat volatile price action morning.
Economic Calendar
Earnings Calendar
We have 23 companies listed on the earnings calendar to kick off this week, but there are only 3-verified. Notable reports include LNN, MAXN, & PAYX.
New & Technicals’
During the Friday Easter shut down, the monthly government jobs report blew past the expectations, with payrolls jumping 916,000 in March. As a result, the U.S. Treasury yields edge higher in reaction to the strong jobs report’s performance due to inflation worries. Senator Roy Blunt on Sunday urged President Biden to cut his $2 trillion infrastructure plan to $615 billion with a focus on rebuilding physical infrastructure. Kevin O’Leary, chairman of O’Leary ETFs, calls for the U.S. to be “extremely aggressive” to level the playing field with China. He says that could include delisting Chinese stocks and shutting Chinese companies out of the U.S. court system. I suspect we will hear a lot more about this subject in the near future as tensions between the U.S. government & businesses grow against Chinese practices.
Although a light volume day, the SP-500 found a path to a new record high, topping 4000 for the first time in history. The Dow set another new record as well as the QQQ and IWM lagged behind. With the strong jobs report and the anticipation of a bullish 2nd quarter earnings season, the bulls should have the upper hand as long as inflation worries stay in check. With the DIA and SPY working together again, the lagging QQQ is less of a concern, but it would wise to respect the overhead resistance if bonds continue to rally. With the VIX finally falling below support levels, perhaps, we can get past some of these wild whipsaws and get a bit more confidence in the price action. Unfortunitually, the T2122 indicator is already in a short-term overbought condition, with the gap up this morning suggesting an extreme extension, so be careful not to chase already extended stocks in fear of missing out.
Yesterday registered a substantial surge into big tech, but the bullishness fell short of breaking through its 50-day average and remains challenged by significant overhead resistance. With bonds remaining stubbornly bullish after the unveiling of the infrastructure proposal, the question is, can we get a day of follow-though? Keep in mind with everyone thinking about the 3-day weekend ahead, the volume could become light and price action choppy after the morning economic news reaction.
Overnight Asian markets closed green across the board, lead by Hong Kong surging nearly 2%. European indexes trade modestly bullish this morning as they await several data releases. On the first trading day of April U.S. points to modest gains ahead of Jobless Claims and ISM numbers as we slide toward the Good Friday shutdown. Plan your risk carefully.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have 36 companies listed, but the majority are unconfirmed. Looking through the list, I can only come up with one notable report coming from KMX.
News & Technicals’
There was a surge into big tech yesterday, but overall it was a mixed bag of results, with profit-takers coming in at the close. President Biden’s $2trillion infrastructure is getting a mixed response as worries about the significant tax increases will slow economic and job recovery. Microsoft won a $21.9 billion contract for augmented reality headsets giving the stock a boost into yesterday’s close. Although the 10-year treasuries softened a bit yesterday, they stubbornly hold above 1.71% as inflation concerns continue.
While there was a general sense of bullishness in the market yesterday, in reality, the DIA, SPY, and IWM were in a resting mode while big tech enjoyed a substantial surge of energy. However, at the end of the day, the QQQ could not break above its 50-day average and still has considerable overhead resistance. The SPY missed setting a record high by just a few ticks and then ran into some profit-takers, which honestly surprised me during the end-of-quarter window dressing. The Absolute Breadth Index continues to raise the concern that overall momentum is lacking, and the nasty whipsaw of late keeps us guessing what comes next as the VIX chops with uncertainty. Plan your risk carefully as we head into the Good Friday shutdown and the 3-day Easter weekend.
This afternoon President Biden will unveil his more than $2 trillion infrastructure proposal as the first part of his recovery plan. If approved, it will raise the Corporate Income tax to 28%. Inflation concerns continue to weigh on investors’ minds, with the 10-year treasuries holding above 1.73% and the Case-Shiller, showing that housing prices grew faster over year over year over more than 15 years. Jobs data will be in focus the rest of the week, with Private Payrolls coming in before today’s open.
Overnight Asian markets saw declines across the board after coming under criticism for withholding pandemic data in its report to the WHO. European markets trade with modest losses this morning, worried about rising inflation. Ahead of a busy day of earnings, economic data, and the unveiling of the infrastructure plan, U.S. futures point to flat and mixed open.
Economic Calendar
Earnings Calendar
On the hump day earnings calendar, we have more than 100 companies listed, but a considerable number of them are not verified. Notable reports include WBA, MU, AYI, AESE, FUV, CONN, DGLY, GES, NG, & VRNT.
News and Technicals’
President Biden will unveil his infrastructure plan with more than $2 trillion in government spending over the next 8-years. Included in the proposal is a Corporate Tax increase to 28%. The second part of his plan will include Health Care and child care spending of another $2 trillion. The Amazon-backed food delivery company, Deliveroo, had a rough beginning in its London IPO, dropping over 30%. Those pesky 10-year Treasury bonds pulled back slightly yesterday but currently holding a 1.73% keeping the pressure on inflation worries. The Fed is also under pressure after the Case-Shiller Index posted housing prices were up 11.2% year over year, which is the most significant annual increase in more than 15-years. Critics point out the Fed is responsible for the sharp inflationary spike in housing due to its commitment to near-zero rates and its continued buying of mortgages- backed securities that total more than $2.2 trillion. The Fed now owns a full 1/3rd of the mortgage-backed securities market!
On the technical front, the DIA trend remains very bullish, and SPY is in good shape holding above price supports though it still struggles to join in on the record-breaking levels. IWM had a good day with the bulls defending critical price support as the financial sector gained ground. The QQQ continues to languish under its 50-day average, weighed down by rising bond rates. Jobs data will focus on the remainder of the beginning, with the private payroll number this morning. Keep in mind as you plan your risk forward of the Good Friday market shutdown.
