More Records

December 7, 2020 by Doug Campbell

A slowing job growth proved to be no concern for the market on Friday, pushing all four indexes into new record territory.  The rapidly rising pandemic infection rate, the death toll is, however, forcing states to increase restrictions as hospitalizations strain the capacity limits of the health care system.  That said, no price seems too high as investors rush into stocks focused on stimulus hopes, vaccine news that points to 2021 recovery.  However, at this elevation, if the market stumbles, the resulting pullback could be very painful if the market does suddenly decides we have pushed too high too quickly in anticipation.

Asian markets closed in red across the board overnight.  European markets trade mixed as they push forward with last-ditch Brexit efforts.  U.S. futures trade lower this morning but are will off the overnight lows as the morning lows as institutions try to keep investors buying, predicting a 2021 spring economic restart. 

Economic Calendar

Earnings Calendar

We have several notable companies fessing up to quarterly results on the Monday earnings calendar.  Notable reports include CASY, HQY, JKS, SFIX, SUMO & TOL.

News & Technicals’

Even with a sizable miss on the jobs front, the market continued to surge higher, setting new record highs on all four indexes.  Futures markets are currently looking a bit lower this morning but have already bounced off the morning lows with the morning pump-up underway.  As investors work the price, the market for a hopeful spring recovery of the pandemic rising oil prices becomes noticed at the gas pumps, with the national average price rising $0.04 a gallon.  Simultaneously, the White House health advisor says this winter will be the worst event that this country has faced.  California has issued a statewide stay at home order, and states around the country continue to ramp up restrictions measure to combat the spread. 

Trends remain very bullish, and there seems to be a non-stop barrage from institution headlines predicting a massive restart to the economy in 2021.  I certainly hope they are correct, but that has created a potentially dangerous short-term overbought condition.  The T2122 indicator continues to warn that a pullback could begin at any time; however, stimulus hopes, vaccine news, record holiday salse, and 2021 predictions have investors willing to ignore the current pandemic economic impacts.  How long this can continue is anyone’s guess but be careful not to overtrade because one day, the market may suddenly decide to care about the impacts, and the technical supports are a long way from current prices.

Trade Wisely,

Doug

Employment Situation in Focus

December 4, 2020 by Doug Campbell

Ahead of the Employment Situation report, U.S. futures see nothing but bullishness, pushing for more record highs at the open.  Let’s keep our fingers crossed that the pandemic, which is shutting down business all over the country, has not yet trickled into employment.  The NASDAQ set its 47^th new high record for the year in yesterday’s bull run even as hospitalizations reach critical capacity issues and the death toll surges.  Have a plan just in case the market suddenly decides to care because it’s a long way to the daily 50-moving average.

Asian markets closed Friday trading mixed as SMIC shares plunge in Hong Kong after the Pentagon blacklisting.  European market trade cautiously higher focused on U.S. stimulus efforts and Brexit issues.  With a light day on the earnings calendar, the U.S. futures point to more recording highs ahead of the government’s reading on employment. 

Economic Calendar

Economic Calendar

We have a light day on the Friday earnings calendar.  Notable reports include BIG & GCO.

News and Technicals’

Bulls remain large and in charge, with the Nasdaq making it 47^th new record high this year.  News that suggested distribution issues with the new Phizer vaccine created a wild whipsaw near the end of the day.  That said, the current market shakes off any concerning news, and the bulls rush back, bidding up already stretched and high priced stocks.  Biden is endorsing the latest Covid stimulus deal saying it’s a good start, which would suggest even more deficit spending is on the way in his administration.  A lot is riding on the 900 billion stimulus package success as Congress rushes to avoid a government shutdown on December 11^th.  In a surprising move, Warner Media announced that all scheduled 2021 new movies would simultaneously release to movie theaters and the HboMax.com streaming service.  A massive blow to the theater business and a reminder of how the pandemic is reshaping the business landscape.  Not that market cares, but there were more than 210,000 new infections reported yesterday and nearly 3000 deaths as hospitalizations soar, straining healthcare capacity.  Also, in the news, the Pentagon blacklists China chipmaker SMIC and oil producer CNOOC in a reaction to a long history of Chinese espionage complaints.

Trends are most certainly bullish, and although all my trades are long positions, I’m becoming more and more concerned about the overextension I see so many stocks.  Trade with the trend but guard yourself against overtrading and chasing already extend stocks.  As yesterday’s vaccine news triggered the end of the day, whipsaw reminds us just how sensitive this market is and how quickly significant profits can disappear. 

Trade Wisely,

Doug

New Records

December 3, 2020 by Doug Campbell

New records were set yesterday as the bulls continue their relentless drive higher.  The SP-500 inked a new all-time high at the same time pandemic hospitalizations topped 100,000, and the daily death toll set a new record of more than 3100.  However, the hopefulness of another $900 billion stimulus and record-setting holiday consumer spending continues to inspire higher and higher stock valuations even as the Beige Book suggests the economy is slowing.  Let’s party like it’s 1999 but stay focused because a pullback could begin at any time.

Asian markets traded mixed but mostly higher overnight as they reported growing services activity.  European markets trade cautiously this morning, currently showing mixed results.  U.S futures also appear a bit cautious this morning ahead of earnings reports and Jobless Claims. 

Economic Calendar

Earnings Calendar

We have a busy day on the Thursday earnings calendar.  Notable reports include DG, KR, CM, COO, CVRL, DLTH, EXPR, KIRK, LE, MRVL, MIK, OLLI, SIG, SWBI, TLYS, TD, ZUMZ.

News & Technicals’

While we have a growing hopefulness of a bipartisan toned-down stimulus bill, the pandemic’s impacts continue to hit new records.   Pelosi and Schumer have made concessions backing a $900 billion stimulus plan rather than the $2.2 Trillion plan that failed to gain traction.  With a government threat of a government shutdown on December 11^th and a Congressional recess just around the corner, there is not much time to get a deal passed.  Yesterday, Congress unanimously passed a bill requiring Chinese companies to adhere to U.S accounting practices or face delisting from U.S. indexes.  I suspect it will quickly be signed into law by the president.  There may be some tough decisions for investors holding Chinese stocks and could easily create considerable volatility in their price action.  Los Angeles issued a stay at home order yesterday as hospitalizations continue to spike around the country and the daily death toll hit a new daily record of more than 3100.  The Chief of the CDC says the next few months could be the most difficult in U.S. history, and yesterday Beige Book hinted that the economy is slowing as a result.  Keep that in mind as we continue to ignore impacts stretching the indexes higher, setting new record highs.

Technically speaking, the index trends remain incredibly bullish, and the ravenous appetite for high priced stocks continues unabated. Indeed, the record-setting holiday spending and the hopefulness of another stimulus deal could trigger a Santa Claus rally but be careful not to chase or overtrade should we suddenly decide to acknowledge the economic impacts of debit and the pandemic.

Trade Wisely,

Doug

Bulls are Back

December 1, 2020 by Doug Campbell

After a brief rest, the bulls are back in a big way, reversing price action overnight to challenge recent record highs.  Jerome Powell says the economy is ‘extraordinarily uncertain,’ but looking at the charts’ price action, it would seem there is no price too high for investors.  So let the party continue but be very aware of the risk should the markets decide to test price support levels.  Remain diligent in your trade planning and avoid the chase with a fear of missing out.

Overnight Asian markets were higher across the board after reporting that China’s manufacturing hit a 10-year high.  European markets are surging higher this morning as Pfizer and BioTech both apply for vaccine approvals.  Ahead of earnings, ISM, and Powell comments the bulls are stampeding higher this morning, suggesting a Dow reversal of 300 points when writing this report.

Economic Calendar

Earnings Calendar

We a busier day on the Tuesday economic calendar. Notable reports include CRM, BMO, VNS, BOX, HEP, NTAP, & TCOM.

News and Technicals’

This morning, there is not much to say except that after a brief Cyber Monday rest, the bulls are back on the gas with a significant overnight reversal to test recent market highs.  Pfizer and BioTech both apply for vaccine approval in Europe, and it seems as long as we can matain vaccine headlines, the market reacts bullishly.  Powell will be speaking again today, defending the Cares Act provisions and calling the economic outlook ‘extraordinarily uncertain.’  However, after a historic November, the bulls appear unconcerned, and no price seems too high as P/E ratios continue to stretch out.  Perhaps with Amazon reporting that holiday shopping this year was the biggest in history suggests we move right into the Santa Claus rally.

I  mentioned a couple of times yesterday the there was no fear in yesterday’s selloff and the technical patterns in the indexes remained bullish.  However, when a 400 point selloff in the Dow is insignificant, it’s also a warning of just dangerous it could quickly become to traders that chase already extended stock prices.  Let the party continue but be diligent in your trade planning, taking trades with acceptable risk to a stop and avoiding the chase with a fear of missing out.

Trade Wisely,

Doug

Consumer Spending Spree

November 30, 2020 by Doug Campbell

Although retail is celebrating a colossal holiday consumer spending spree that set new records, small business sentiment dropped to a new record low.  The consumer spending would suggest more market upside on the way in the so-call Santa Claus rally.  However, with the SP-500 more than 60% above the March low in the face of pandemic economic impacts, a rest or pullback would not be a big surprise. 

Asian markets closed the day modestly lower overnight after reporting a 7-month streak of manufacturing growth.  European markets trade mixed but mostly flat this morning, seemingly taking a rest on this last day of November.  The U.S. futures point to mixed open with a possible light volume day with traders likely extending holiday vacations and the distraction of Cyber Monday sales.

Economic Calendar

Earnings Calendar

On this last day of November, we have a light day of earnings reports.  Going through the list, I don’t see any that are particularly notable.

News and Technicals’

According to retail reports, holiday shopping hit new spending records, which is likely to continue with the Cyber Monday sales event today.  Don’t be surprised if volumes remain low as many will be distracted surfing the internet to bag a few deals.  On the bright side, such a strong showing of consumer spending could spark the so-called Santa Claus Rally into the end of the year.  Unfortunately, small business confidence seems to be going in the other direction, dropping to an all-time low according to the Q4 CNBC|SurveyMonkey Small Business Survey.  The results show that 53% of small business owners say they expect tax policy & increased government regulation will negatively impact their business.  With small businesses as one of the largest job creators, this negative sentiment could see employment numbers struggle in a post-pandemic recovery. 

Interestingly the futures don’t seem inspired by the colossal holiday buying spree pointing to a pullback in the pre-market.  However, with the SP-500 up more than 60% since the March bottom to set new records despite unemployment and a severely damaged economy, perhaps a rest is not that big of a surprise.  Bullish trends remain, but there’s a danger with index prices so elevated from their respective 50-day averages.  That said, plan carefully, and don’t be surprised if the volume is a bit light today with traders extending vacations to shop.

Trade Wisely,

Doug

Recovery Hopes

November 25, 2020 by Doug Campbell

Vaccine fueled recovery hopes helped to inspire the bulls to new record-breaking levels creating headlines around the world.  Massive rallies in energy, financials, and consumer staples have created impressive reversal patterns in the charts and suggest the move may have become a bit parabolic in the short-time.  Expect volume to decline rather sharply today after the deluge of economic data as traders head out for holiday plans.  Consider your risk carefully as we head into the shutdown and what typically is a choppy light volume market condition on Black Friday and the Cyber-Monday shopping distractions.

Asian markets closed mixed but mostly higher overnight while European markets slip slightly lower, resting after yesterday’s sharp rally.   As we wait for a massive morning of potential-market moving economic data, the futures are taking a wait and see approach indicating a modestly lower open.  Stay safe and have a Very Happy Thanksgiving, everyone!

Economic Calendar

Earnings Calendar

On the eve of the Thanksgiving shutdown, we have a relatively light day of earnings calendar.  Notable reports include DE & FRO.

News & Technicals’

A pre-holiday surge set new records lifting the Dow above 30,000, enjoying the blue sky above with IWM.  Energy, financials, and consumer staples sectors were the big winners, while some tech giants struggled to find buyers.  Focused on vaccine recovery, hopes the bulls maintain solid control of the index trends, and there seems no price too high that they are willing to pay.  Reaching the 30,000 goal was very important for the institutions.  As reported on CNBC, this new threshold could draw in new investors from the sidelines with hopes that more stocks will participate in the next leg.  However, there are those worried that the market is heating up to an unstainable level.  One thing for sure, as the pandemic continues to impact business and the expectation of higher taxes on the horizon, traders will have to remain nimble.

Today is a massive deluge of potentially market-moving data.  As of now, U.S. Futures point to a slightly lower open as if taking more of a wait and see approach this morning.  Although 2020 is far from typical, it would be wise to keep in mind that volume usually shrinks quickly ahead of the holiday as traders hit the roadways and airports.  Light volume choppy price action and be expected during the short session on Black Friday often extends into the following week with shoppers focused on Cyber-Monday deals.  No doubt this has been a challenging year, but we still have so much to be thankful for in this great country of ours.  Please take a moment during this holiday to remember those that serve in the military, our first responders as well as the health care professionals on the front lines keeping us safe.

Trade Wisely,

Doug

Transition Begins

November 24, 2020 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisely,

Doug

Futures Point to a Bullish Open

November 23, 2020 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisely,

Doug

The tug-of-war continues.

November 20, 2020 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisely,

Doug

Tug-of-War

November 19, 2020 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisley,

Doug