Retail numbers disappoint.

November 18, 2020 by Doug Campbell

The disappointing retail number energized the bears just enough to fill Monday’s vaccine news-driven gap.  However, the bulls quickly went back to work as the push for the 30,000 Dow target resumes. We’re not going to allow the details of a suffering economy, unemployment, or a new record daily pandemic death rate deter the bulls from this mission.  With the holiday shutdown just around the corner, they will have to work quickly; as volume begins to decline and trading floors start to clear.

Asian markets closed the day mixed but mostly higher as Japan’s autos slip and the dollar weakens.  European markets trade with modest gains across the board this morning, extending the vaccine rally.  The U.S. futures point to a bullish open ahead of earnings and a possible market-moving housing starts number.

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have over 30 companies reporting quarterly results.  Notable reports include BILI, CPRT, JACK, LB, LOW, NUAN, NVDA, SCVL, TGT, TJX, & ZTO.

News & Technical’s

It would appear that the surge in pandemic infections has already started to affect retail sales rising just .3% last month vs. the 1.6% gain last month.  However, after a sharp but brief selloff to fill the Monday gap, bulls went back to work defending the lows trying to get back on track toward a 30,000 Dow.  According to Johns Hopkins numbers, the U.S. set a new national record daily for pandemic deaths toping 1700.  Emergency approval of the first home-based Covid test costing $50 will now be made available, a good sign considering the new public restrictions states have begun to enforce.  You may soon see the Boeing 737 Max that has been grounded for nearly 2-years back in the sky with the expected approval by the FAA later today.  ON the earings retail front, LOW earnings fall short of expectations, and the stock is indicated to decline more than 7% at the open.  On the other have TGT topped expectations surging nearly 2.5% in premarket trading. 

Filling the Monday gap and seeing the bulls work hard to defend its price support is a sign institutions will continue to push for the 30,000 Dow target.  I suspect we will see this target reached before we take a break for Thanksgiving, even though indicators continue to suggest an extreme short-term overbought condition.  Pandemic numbers don’t seem to matter, and disappointing retail results won’t stand in the way.  Remember to consider your risk as we quickly approach the holiday when volume typically declines sharply.

Trade Wisely,

Doug

Vaccine News-Driven Rally

November 17, 2020 by Doug Campbell

The vaccine news-driven rally pushed the DJ-30 to a new record high and finished the day within striking distance of 30,000.  As the bulls try to price in a pandemic recovery, 22 states have added restrictions that could have significant business impacts ahead, as infection rates continue to surge throughout the country.  While I believe the institutions will not miss out on achieving a Dow 30,000 headline, the path may be challenging in this very news-driven extended market environment.  Plan carefully.

Asian markets closed overnight with modest gains after an initial jump higher in reaction to vaccine news.  European markets are currently edging lower this morning, and the U.S futures point to a lower open ahead of several potentially market-moving economic reports.  The wild price volatility is likely to continue as investors grapple with holiday restrictions and shutdowns.

Economic Calendar

Earnings Calendar

We have more than 30 companies stepping up to report quarterly results this Tuesday.  Notable reports include NIO, HD, WMT, KSS, LZB & SE.

News & Technicals’

The Dow hit new record highs yesterday, rallying 470 points hopeful vaccine news closing the day just 50 points below 30,000.  Unfortunately, at the same time, the pandemic surge has inspired 22 to add new restrictions likely to impact the overall economy.  While the bulls try to price the market for the hopeful better days ahead, the short-term impacts could be challenging to grapple with, keeping the price action volatile.  Tesla shares jump in aftermarket trading after its addition to the S&P 500 average.  Shared of Home Depot are dipping this morning despite a strong earnings report.  Amason Pharmacy has launched, allowing its customers to order prescriptions online.  Shares of AMZN are modestly higher on the news.  Futures currently indicate a lower open ahead of several potential market-moving economic reports.  With the Dow so close to 30,000, it hard to imagine the institutions will miss the opportunity to claim that headline.  I’m guessing the hats are already on the floor of the exchanges, just waiting for the photo opportunity.  Of course, pandemic, political, and economic news could make it a challenging and choppy process.

Technically speaking, there really is not much to say except the bulls are in control, and the indexes appear extremely extended in the short-term.  While I believe the institutions will not miss the opportunity to test 30,000 the path, there may not be a straight one.  Odds of fast intraday whipsaw and full overnight reversals remain high in this very emotionally charged market.  Plan your risk carefully and guard yourself against chasing into already extended stocks.

Trade Wisely,

Doug

Bulls undoubtedly in charge.

November 16, 2020 by Doug Campbell

The bulls are undoubtedly in charge, or could this be irrational exuberance as the DIA and IWM leap to new record highs and states impose economic restrictions on the holidays just around the corner.  One thing for sure, there seems to be no shortage of traders willing to chase prices higher with little regard to risk.  The T2122 indicator indicates an extreme short-term overbought condition, so stay focused on price action for any signs of a pullback.  Also, keep in the possibility of overnight reversals as you plan your risk and avoid chasing stocks already extended with the fear of missing out.

Asian markets were sharply higher overnight in reaction to signing a massive trade deal with 14 Asian countries.  European markets are decidedly bullish this morning as vaccine hopes continue to inspire hopes of recovery.  U. S. futures continue to leap higher as the DIA and IWM look to open at new record highs while infection rates and hospitalizations notch new records as well.

Economic Calendar

Earnings Calendar

We have a rather large week of earnings kicking it off with more than 70 companies fessing up to results this Monday.  Notable reports include JD, ACM, FUV, BIDU, CSPR, GAN, KRUS, PANW, SDC, SOHU, & TSN.

News & Technicals’

China and 14 other Asian-Pacific countries signed the world’s largest trade agreement over the weekend.  According to analysts, economic benefits are modest and would take years to materialize.  Texas and Washington set new Covid records this weekend as Midwest states as the Dakota’s and Nebraska set the largest daily increases per capita.  As states across the country implement restrictions with severe potential economic impacts, the market continues to surge focused on the hopeful vaccines.  Though some point to a possible bubble forming, it has done nothing to dissuade traders from buying up stocks even as P/E ratio’s swell and prices leap toward new record highs.  How much longer that can continue is anyone’s guess but, it would be wise for traders to be mindful of the substantial risks with just a pullback to support. 

Technically speaking, the indexes appear very extended, and the T2122 indicator is registering an extreme short-term overbought condition even as the futures point to another gap higher this morning.  The DIA and IWM will break out to new record highs at the open today, with the SPY not far behind, assuming the futures hold on to the overnight bullishness.  Plan your risk carefully as price volatility remains high in this wildly energetic and emotionally charged news-driven environment.

Trade Wisely,

Doug

Pandemic numbers rise

November 13, 2020 by Doug Campbell

The bears came out to play yesterday, but fear seemed to remain in check as the selling appeared to be measured and controlled.  It is very surprising with pandemic numbers on the rise and hospitalizations beginning to strain the country’s healthcare system.  Jerome Powell once again called for more stimulus to combat the economic impacts, but Mitch McConnell stated and unwillingness to negotiate and larger spending plan.  That said, the tenacious bulls are fighting back this morning with the futures pointing to a gap up open.

Asian markets closed the day seeing read across the board in reaction to rising infection rates.  European markets opened the day lower but have rallied, holding very modest gains at the time of this report.  However, here in the U.S, futures point to a 200 point Dow gap up ahead of a lighter earrings day and the pending PPI Report.  The question is, will we see follow-through buyers at the open, or might this setup a pop and drop pattern heading into the uncertainty of the weekend?

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a lighter day of reports dominated by small-cap companies.  Notable reports include DKNG, MANU, SPB, & VIPS.

News & Technicals’

The pandemic numbers brought out the bears yesterday, but the selling appeared controlled, with the VIX rising only slightly.  Chicago issued a stay at home order begins on Monday except for essential needs.  Mitch McConnell added pressure to the market, saying he had no interest in negotiating a larger stimulus plan.  That comment came on the heals of Jerome Powell’s speech, where he said more stimulus is needed to battle the impacts of the rising pandemic numbers.  The U.S. set another new record as infection numbers jumped to over 150,000, with hospitalizations up by at least 5% in 47 states.  Treasury yields slumped yesterday in reaction to the rising numbers, with gold and silver rebounding slightly as a result. 

After reading the paragraph above, one would expect the market would be following through with the selling that began yesterday but no, the relentless bulls are fighting back this morning.  Perhaps traders are responding to the positive earnings after the bell yesterday, where DIS, AMAT, and CSCO rallied after better than expected results.  This morning’s question yet to be answered, will the gap find buyers after the open, or will we see a pop and drop heading into the uncertainty of the weekend?  Remain focused and flexible, weighing the risk you carry into the weekend carefully.

Trade Wisely,

Doug

A big day of data.

November 12, 2020 by Doug Campbell

Though considerably overextended in the short-term, the vaccine news and hopes of recovery continued to encourage the bulls as the tech sector bounced off support.  Sadly, news of 144,000 new infections and possible business restrictions or lockdowns weigh heavy on this morning market. Facing a big day of data, the gap down in the Dow will challenge the support of Monday’s massive rally.  Buckle up for another day of new-driven volatility.

Asian markets closed mixed but mostly lower in a relatively muted day of trading.  European markets have a bearish attitude this morning, with the DAX and CAC trading more than 1% lower at the time of this report.  As we wait on Jobless Claims, GDP, a Powell speech, and a big round of earnings reports, futures currently point to bearish open.  Of course, the news events could quickly improve or worsen the current sentiment.  Stay focused.

Economic Calendar

Earnings Calendar

We have our most important day of earnings this week, with more than 150 companies fessing up to quarterly results.  Notable reports include DIS, AQN, AMAT, BZH, CSCO, DGLY, DLB, ENR, FTCH, GLOB, DGRX, HIMX, JAMF, MFG, PLTR, PDD, SBH, TK, TDG, U, & WIX.

News & Technicals’

A tech bounce led the market yesterday, with the SPY and IWM struggling to find direction, while the DIA ran into a little profit-taking.  As the Presidential election saga drags on, the U.S. experienced another new record in COVID infections topping 144,000.  That is the 9^th straight day of more than 100k new infections, Ugg.  Yew York has imposed a curfew on restaurants, bars, gyms and limited home gatherings to ten.  The Biden Covid advisor is suggesting a lockdown of 4 to 6 weeks to control the surging pandemic.  It looks like we’re in for a long winter and a tough holiday season.  President Trump continues to allege fraudulent election activity, filing multiple lawsuits and appeals even as Biden moves forward with the transition appointing his close friend as Chief of Staff.  The Republican state AG says it’s highly unlikely that Trump will win in Arizona, citing no fraud evidence.  Georgia will do a hand recount of election ballots, but the Biden lead continues to grow, according to reports. 

Though the T2122 indicator continues to warn of an overbought condition, the tenacious bulls hold firm fending off any attempt by the bears.  Unfortunately, worry over pandemic numbers, and the threat of more lockdowns have the futures pointing to a gap down open this morning will test the support of Monday’s massive rally.  With a big day of earnings and economic reports, price volatility could be high, and news-driven whipsaws and reversals are possible.  Stay focused, and flexible.

Trade Wisley,

Doug

Rotation

November 11, 2020 by Doug Campbell

A rotation out of the high-flying tech sector into value and dividend-paying stocks seems to underway as we wait for the courts to weigh in the election.  The pandemic numbers once again surged to new record hospitalizations and infection rates, raising concerns about possible negative economic impacts.  With the indexes so extended from critical averages,  traders have to take a considerable risk when entering new positions.  Plan your risk carefully in be careful chasing with the fear of missing out.

Asian markets closed mixed but mostly lower, and concerns over new regulations push tech shares down 10%.   European markets are edging higher again today, riding the wave of vaccine-related recovery hope.  U.S. future point higher with yet another Dow gap even as pandemic numbers surge.

Economic Calendar

Earnings Calendar

We have just over 50 companies stepping up to report quarterly results on this hump day.  Notable reports include APD, ATO, FOSL, LMND, REYN, SB, SPTN, SLGG, TTEK, VRM, & YPF.

News & Technicals’

Another day and more new records set on the pandemic, with national hospitalizations topping more than 61,000 and over 131,000 new infections.  However, market futures continue to rise even as new rolls out of new city lockdowns going into place.  The Supreme Court asked to weigh in on Obamacare yesterday and, according to reports, appears willing to leave the act in place.  A decision from the high court is not scheduled until June of 2021.  Although the election has yet to be certified, Joe Biden is calling for an expansion of Obamacare. Alibaba’s Singles Day event shattered records with sales topping $56 billion, but tech shares in China plunged 10% as new regulatory concerns mount.  Here in the U.S., the tech sector is also showing some weakness as investors seem to be rotating toward value plays and dividend-paying stocks.  Perhaps concerns over potential Covid impacts have traders seeking safety due to the likely difficult winter ahead.

Technically speaking, the DIA, SPY, and IWM remain quite extended from their 50-day averages.  The fear of missing out is driving traders to take a considerable risk as they rush to buy stocks so far from key support levels.  They may be right to do so, but this is not for the faint of heart.  With such a new-driven market, the possibility of a sharp pullback remains high, or we could see a very choppy consolidation while we wait for the key averages to catch up.  It’s easy to overtrade in this kind of environment, so make sure you follow your rules and carefully understand each position’s risk.  The T2122 indicator remains in a short-term overbought condition, and the VIX above 24 handles as the indexes reach out to new records is extremely abnormal when compared to historical price action. 

Trade Wisely,

Doug

Historic Market Gap

November 10, 2020 by Doug Campbell

A historic market gap on a piece of hopeful vaccine news making new record highs in the DIA and SPY as recovery sentiment surged.  Unfortunately, after the pop, profit-takers left behind a negative candle pattern raising the possibility of price pulling back to fill the massive gap.  Big tech seemed to struggle while small-caps enjoyed a solid performance as traders looked for value and small businesses to begin recovering.  With a very news-driven market and massive price fluctuations possible in the next story, plan your risk very carefully.

Asian markets traded mixed but mostly higher overnight, led by Hong Kong that surged more than 1%.  European markets trade green across the board this morning in a choppy session as they grapple with the contradictions of shutdowns and hopeful virus news.  U.S. futures have recovered from overnight lows; however, they still suggest a mixed open ahead of earnings and a very light economic calendar.

Economic Calendar

Earnings Calendar

We have more than 70 companies reporting 4^th quarter results today.  Notable reports include AAP, DOX, BRKS, DHI, DDOG, FUBO, LYFT, RXT, RKT,& ROK.

News & Technicals’

As virus numbers continue to rise across the country, there have been several stories about hopeful vaccines providing market confidence.  Joe Biden talks about the possibility of a mandatory national mask policy to combat the virus should he be certified as the President-elect.  However, President Trump refuses to concede, and the attorney general has started election investigations, which prevents funds from being made available for a transition team.  The so-called Obamacare act faces a Supreme Court challenge today, but a decision is not expected until June.  The EU launched antitrust charges against Amazon, suggesting they are distorting competition with online retail markets.  AMZN shares are suggesting more than 2% lower this morning. 

A day after a historic market gap, futures trade mixed but well off of overnight lows.  The big pop and drop price action left behind some negative candle patterns, but they held above price support levels by the end of the day.  The QQQ had the weakest performance, with many tech giants struggling to find buyers while the small-cap stocks in the IWM gained favor as vaccine hopes drove recovery sentiment.  Oil prices surged about 8%, and the financial sector recovered substantially yesterday while stay at home stocks saw strong bearish attacks.  The risk remains high in this very news-driven market, so plan your plan carefully because the next big gap or full reversal could be just one story away.

Trade Wisely,

Doug

Infection Rate Surging

November 6, 2020 by Doug Campbell

As we wait on an election decision, the pandemic infection rate surged over 120,000 new cases on Thursday.  One has to wonder, with job growth beginning to slow and more than 21 million Americans still requiring unemployment assistance, can this massive rally be sustained? That’s something to ponder as we head into the weekend, and you plan risk forward.  With the Dow having gained more than 2200 points since last Friday’s low, a little profit-taking would not be out of the question.

Asian markets closed the week mixed but mostly higher.  European markets are trading lower this morning as they continue to monitor the U.S. election uncertainty.  U.S futures currently point to lower open, but as earnings results roll in and the Employment Situation number in focus, anything is possible as we slide toward the weekend.

Economic Calendar

Earnings Calendar

On this Friday, we have more than 100 companies stepping up to report.  Notable reports include LNG, COTY, CVS, ENS, HSY, HMC, MAR, MYL, TU, TM & VIAC.

News & Technicals’

As counting votes continues to drag, and all the lawyers involved, it feels like we’re waiting on the judge decide who gets custody of us in the divorce.  While our focus remains on the election results, the pandemic continues to spread rapidly, with more than 120,000 new cases reported yesterday.  Even without government-mandated shutdowns, the concern is growing that business impacts could be severe throughout the winter months.  Numbers show that job growth is slowing and more than 21 million Americans still requiring unemployment assistance.  According to Moody’s report, the U.S.  economy is at a high risk of backtracking due to the surge in pandemic numbers.  Whoever wins the election will face the formidable challenge of avoiding a double-dip recession. 

After rising more than 2200 points from last Friday’s low, the bulls recovered and held the 50-day average, vastly improving the technical picture of all the index charts.  That said, the T2122 indicator shows an extreme short-term overbought condition making new long positions very high risk should profit-takers step in to capture gains ahead of the weekend.  Currently, futures markets point to a lower open, but as earrings roll in and markets wait on the Employment Situation number, anything is possible.

Trade Wisely,

Doug

Extraordinary Bullishness

November 5, 2020 by Doug Campbell

Extraordinary bullishness pushed indexes above their respective 50-day averages yesterday, vastly improving the index charts’ technical picture.  However, the extreme price move comes with the significant risk of a dramatic pullback as the pandemic infection rates surge to a new daily record, and hospitalizations reach critical levels in several states.  As Italy enters a shutdown, the ECB announced another 150 billion in bond buying, helping boost market around the world this morning.

Asian markets surged overnight following the massive Wall Street rally on Wednesday.  European markets are green across the board despite the rising economics of more lockdowns going into effect.  The U.S. futures are once again flying high this morning ahead of a massive day of earnings reports and an FOMC rate decision at 2 PM Eastern.

Economic Calendar

Earnings Calendar

We have a massive day of earnings reports today, with more than 300 companies confessing quarterly results.  Notable reports include DDD, ADT, ALRM, BABA, AMCR, ABC, AINV, MT, ARNC, AZN, BGS, BLL, GOLD, BDX, BKNG, BMY, CZR, CNQ, CAH, CI, CNK, ED, CLR, CUBE, DISCA, D, DBX, DUK, EA, FLO, GM, GLUU, GPRO, GRPN, HLF, HFC, TWNK, HUBS, IAC, IRM, TREE, LSI, LIN, LYV, MAC, MAIN, MLCO, MCHP, MNST, MUR, NYT, NWSA, NLSN, NLOK, PZZA, PK, PTON, PLNT, PBPB, PLL, RMAX, RRGB, RDFN, REG, REGN, ROKU, SRE, SQ, STAG, STMP, STOR, SWTH, TMUS, TTWO, SKT, TRIP, UBER, VER, YELP, YETI, ZG, & ZTS.

News & Technicals’

As they continue to count votes is looking more and more like a Biden win is on the way.  Still, some are saying we won’t have a definitive decision with multiple legal challenges until late November or early December.  However, it looks as if whoever becomes President, the results in the Senate and House point toward gridlock, which the market appears to like gaging by its wildly bullish response yesterday. While everyone focused on election results, the pandemic infection rates soared to a new daily record of more than 100,000.  Hospitalizations also surged at an alarming rate, reaching record levels in Missouri, Oklahoma, Iowa, Indiana, Nebraska, North Dakota, and New Mexico.  Iowa and Missouri warned the hospital bed capacity could soon become overwhelmed.  Senate Leader Mitch McConnell is now suggesting an urgency to come to a stimulus agreement by the end of the year, boosting futures markets.  Also helping to boost market sentiment this morning, the ECB injected another 150 billion in bond buying as Italy enters lockdown.

Yesterday’s market surge was extraordinary as the bulls gapped the four major indexes above their respective 50-day morning averages.  In a late-day selloff, the DIA drifted back down below it 50-day while the SPY, QQQ, and IWM held on to this key psychological support.  Facing our biggest day of earnings reports so far this quarter as well as an FOMC rate decision, we can expect significant price volatility.   With the indexes, so extended traders will have to shoulder the substantial risk of pullback to enter long positions.  That said, with hopes of a stimulus deal on the horizon, entering short positions also carries substantial risk.  Set aside emotion and plan carefully in this very news-driven market.

Trade Wisley,

Doug

The Whitehouse Battle Continues

November 4, 2020 by Doug Campbell

With the Whitehouse battle likely to extend for days and the Congressional bodies remaining in mixed party control, uncertainty and the challenging price volatility are likely here to stay.  What does this mean for the hoped-for stimulus package?  Will the Presidential election become a long drawn out market damaging court battle?  A lot for investors to ponder as we now wait on an FOMC rate decision Thursday afternoon.  Expect considerable sensitivity to news events as the market tests price and technical resistance levels in the index charts.

Asian markets closed mixed but mostly higher in a volatile session as the monitored polling results.  European markets are trading with modest gains across the board this morning.  After a night of wild price swing, U.S. Futures are trying to remain bullish ahead of earnings and the beginning of the 2-day FOMC meeting.  I think it fair to say anything is possible, so remain focused and flexible.

Economic Calendar

Earnings Calendar

On the post-election hump day, we have just under 90 companies fessing up to quarterly results.  Notable reports include ALB, ALL, AWK, APA, FUN, CXW, CRY, DCP, DK, ET, EPR, EXPE, EXR, FIT, GDDY, GDOT, HST, H, JKHY, KGC, LC, LBTYA, MRO, MTCH, MELI, MET, NUS, OUT, PAAS, PAYC, PRGO, PSA, QCOM, SGMS, UMH, UPWK, VOYA, WEN, & ZNGA.

News & Technicals’

Yesterday’s colossal rally was one of the best election day performance in stock market history.  Overnight futures have seen considerable volatility as the Presidential election is close to call, and election officials suggest it may take several more days to count up the results.  Last night was a much different result than many thought as the republicans gained seats in the House and held onto control in the Senate.  The House will remain under Democratic control setting up a challenging environment for whoever occupies 1600 Pennsylvania Avenue.  In a late-night speech, President Trump suggested a supreme court battle election battle is on the horizon.  I suspect a court contested election battle will keep the market on edge and the price volatility high in the days and possibly weeks ahead.  As we wait, the market will turn its attention toward the FOMC meeting that begins today with their rate decision scheduled for Thursday afternoon.  In other news, several states voted to legalize the recreational use of marijuana, and Florida voted to raise the minimum wage to $15 an hour. 

In just 3-trading days, the Dow has rallied more than 1300 points off the Friday lows, taking the T2122 indicator from an oversold condition that now suggests an overbought condition.  With control of the Congressional body’s mixed, there remains considerable uncertainty about the likely stimulus plan’s size that will keep the market guessing.  An uncertainty that’s likely to extend as long or longer than the battle for the WhiteHouse.  The VIX closing above a 35 handle even as the indexes lept higher price action is likely to remain challenging as the indexes challenge technical resistance levels in the charts.

Trade Wisely,

Doug