Yesterday’s dramatic rally is once again leaping higher this morning as health officials report that infection rates are showing signs of improving.  That is indeed excellent news, but with 2^nd quarter earnings just around the corner and infection number nearing 375K, recovery may still be a long way off.  Stay disciplined to your trading plan and avoid chasing already very extended prices as profit-taking could begin at any time.  Trading with the fear of missing out can quickly add insult to already injured trading accounts.

Asian markets followed the lead of the US rally closing in the green across the board.  European markets are decidedly green this morning, with the DAX advancing 4%.  US futures point to another huge gap up ahead of earnings and the JOLTS report at 10:00 AM Eastern.  Watch price action closely for the possibility of profit-taking with the Dow having gains nearly 3000 points in just 2-days.

Economic Calendar

Earnings Calendar

We have 20 companies stepping up to report quarterly results this Tuesday.  Notable reports include CONN and LEVI.

Top Stories

There is more hope this morning with health officials saying we have begun to flatten the curve virus growth.  Unfortunately, the US infections could reach 375,000 soon, and the death toll is nearly 11,000.  Around the world, Japan has now declared a national emergency, Spain’s death rate is once again on the rise, and Russia reports a sharp increase in infections.  With a potential vaccine, still, a long way off the COVID-19 pandemic will continue to impact our way of life for months to come.

As the market sharply rebounds, a new poll indicates that more and more Americans worry about the loss of wages and covering the cost of health care.  Within a consumer-based economy, that could have long-term business impacts should consumer sentiment continue to contract.

The Government and 3M agree on a deal that will get 166.5 million medical masks to the US over the next 3-months to help with the virus response.

After checking into the hospital just one day ago due to complications from the coronavirus, UK’s Prime Minister entered the intensive care yesterday afternoon and remained there as of this morning.

Technically Speaking

Yesterday’s sharp rally looks to continue this morning on hopes that the infection rate is starting to flatten.  The relief is sweet, but with earnings, just around the corner, traders will have to stay on their toes as the worst of the impacts may still lie ahead.  Unfortunately, in this all or nothing market, the massive morning gaps continue to make the risk of trading very high.  Option prices remain very high with wide bid/ask spreads, and the extreme price volatility makes holding positions overnight unpalatable for most retail traders.

As the futures point to another 800 point gap, the fear of missing out can be very dangerous if traders rush in chasing prices.  With a 2-day Dow rally of nearly 3000 points, those holding positions may be more inclined to take profits, so observe price action for clues of reversal.  The market remains very emotional, and though infection rates may be cresting, we are still a long way from recovery.  Matain, your discipline, sticking to your trading plan and rules, avoiding emotional decision making as the market dramatically gyrates.

Trade Wisely,

Doug

Hopeful improvements in Europe have the bulls gaping the market up to challenge the highs of last week.  The President also issued a statement of hopefulness with the first decline in the daily number of deaths for New York. That’s good news to be sure, but health officials warn the next couple weeks will be worst we have seen to date.  With infection numbers nearing 350,000 and the death toll headed to 10,000, expect a lot more news-driven volatility in the week ahead.

Asian markets opened the trading week mostly bullishly, with Japan rallying nearly 4.25% by the close.  European markets are celebrating a gradual slowdown of new virus infections with the DAX up more than 4% this morning.  The US futures point to a gap up that may regain last week’s market highs at the open ahead of a light day of earnings and economic data.

Earnings Calendar

3-Month Bill Auction 11:30 AM ET

6-Month Bill Auction 11:30 AM ET

TD Ameritrade MX 12:30 PM ET

Earnings Calendar

On the Monday earnings calendar, we have 37 companies fessing up to results.  With mostly small, very small-cap and penny stocks today there are no particularly notable reports today.

Top Stories

With some hopeful viral improvements in Europe, the bulls are feeling the desire to run.  The British Prime Minister is now in the hospital due to a worsening case of the virus with the euro-zone reporting the cases and deaths are appearing to slow.

The oil price has once again turned lower, with the deal between Russia and Saudi Arabia delayed.  However, reports suggest they are close to an agreement to cut production, putting a floor in the price of the commodity.

Although there more than 700 deaths in New York this weekend, the numbers declined for the first time.  The President issued a hopeful statement that things are getting better, but health officials warned that this week things would likely get much worse comparing it to Peral Harbor.  With infection numbers nearing 350,000 and 9600 deaths and airlines cutting more than 90% of the flights in and out of New York, suggests we still have a long road to recovery in the US.

Technically Speaking

What we hear in the news is the Dow is leaping higher as numbers in Europe improve.  While that is true, let’s keep in mind that even with this morning’s rally, the Dow has only recovered to last week’s highs that could serve as price resistance.  I welcome any bullishness, but an 800 point opening gap into price resistance is not a reason to get all caught up in fear of missing out and chasing the open.  Remember your rules and the patterns that you trade.  Plan your trades carefully with careful consideration of your tolerance to risk.

Should the Dow recover and hold the 2018 market low of support and the QQQ recover and hold its 500-day average, we may well have some technicals and price patterns to build a bullish case upon, but let’s assume nothing and wait for the proof.  Health officials suggest this could be a dreadful week for the US.  Should that prove true, expect news-driven price action that can produce whipsaws and full-on reversals.  Long story short, let’s hope for the best but prepare for the possibility that the road ahead is likely to be extremely challenging.

Trade Wisely,

Doug

After a nasty day of selling and ahead of what is likely to be a historic jobless number, US futures are trying to put on a brave face pointing to a substantial overnight gap up.  Perhaps its, because the number has been baked into the current prices or maybe, we’re just trying to bury our head in the sand a pretend it doesn’t matter.  I could be wrong, but having 4 to 5 million unemployed in a consumer-based economy is an impact that will eventually be impossible to ignore.

Asian markets closed mixed, but mostly higher overnight and European markets indicate modest gains across the board this morning.  Ahead of the earnings and economic data oil prices are up 10%, and futures suggest a recovery of about 1/3 of yesterday’s selloff.  Think and plan carefully if you decide to risk your hard-earned money in this wild and emotionally irrational market.

Economic Calendar

Earnings Calendar

We have 44 companies reporting earnings today.  Notable reports include WBA, CHWY, KMX & PLAY.

Top Stories

US Treasury yields are falling this morning in reaction to the pending jobless claims number that some predict could top 4 million.  Sadly economists expect millions more soon as the virus wreaks havoc on business.  There are, however, some bright spots on the jobs front with grocery stores and essential supply outlets continuing to hire to keep up with demand.

The President is considering halting domestic flights between coronavirus hot spots in an attempt to slow the spread of the virus. 

It could be a very challenging 2^nd earnings season with companies delaying reports and analysts withdrawing forecasts amid the virus chaos. 

Technically Speaking

After an ugly day of selling on Wednesday, US futures put on a brave face pointing to a considerable gap up as the irrational volatility of this market continues.  For some reason, the futures are trying to convince everyone that historic unemployment isn’t a big deal.  However, with infection numbers surpassing 215,000 and continuing to rise, economists expect this number to continue to increase dramatically.  Attempting to ignore the massive impacts of unemployment in a consumer-based economy shows how dangerously irrational and manipulated the market can be.  Think carefully before reacting emotionally and chasing these wild morning reversals.

Sadly the QQQ was unable to hold its 500-day average during yesterday’s selloff, but this morning’s bullishness ahead of the jobless number suggests it could recover it at the open.  The DIA daily 50-average has now crossed down both the 200 & 500-day averages as this outbreak continues to create technically damage to the index charts.  With a big data dump this morning and the Friday Employment Stiucation number ahead, traders should prepare for just about anything.  Big intra-day news-driven reversal and whipsaws are possible to plan your risk carefully should you choose to risk your hard-earned capital amidst such market uncertainty.

Trade Wisely,

Doug

The health officials grim death toll predictions and the President’s warning of difficult days ahead brought out the bears in the overnight futures session.  As I write this report, mortgage applications reported a decline of 24% once again, suggesting the FOMC and the Federal government can not buy our way out of a pandemic.  The economic data dump over the next several days is likely to create highly volatile price action and produce historically shocking results.  Protect your capital!

Asian markets closed mostly lower overnight, but Australia bucked the trend closing in the green.  European markets are decidedly bearish this morning with the CAC down more than 4% and the other indexes not far behind.  US Futures after a volatile overnight session point to an ugly gap down ahead of the big day of economic data, including the ADP Jobs report.  Hold on to your seat; the day ahead is shaping up as wild one.

Economic Calendar

Earnings Calendar

On the Hump Day earings calendar, we have a rather light day of earnings with just 19 companies reporting.  Notable earnings include LW & PVH.

Top Stories

The President yesterday said that American needs to get ready for a very painful 2 to 3 weeks.  Officials now predict 100,000 to 240,000 US deaths.  Currently, we have more than 188,000 infections with the death toll now over the 9/11 attacks crossing over 4000.

With an outbreak happening in prisons, inmates are now confined to their cells for a minimum of 2-weeks in an attempt to stop the spread.  One US Naval ship has moved more than 4000 sailors into quartene after several tested positive for the virus. 

As the demand for food and supplies comes under pressure, Walmart has implemented daily health screenings of employees and created one-way isles in the store to aid in social distancing. 

Technically Speaking

If the pending employment numbers were not enough to spook the market, the President’s grim projections for the next few weeks brought out the bears overnight.  Historically low-interest rates seems no match for the virus as applications to buy new homes fell 24% last month.  I suspect the economic data dump we will get over the rest of this week will not be favorable to those hoping for a V-bottom recovery.  Although we are all hoping for the best, the next couple of weeks will weigh heavily on the minds of traders and investors as the infection expands, and the death toll rises.  Directly after, we will begin 2^nd quarter earings that could easily add insult to injury.

Protect yourself and your capital as we can expect highly volatile price action.  There are no medals for bravery for running into dangerous markets.

Trade Wisley,

Doug

News of 5-minute test kits, hopeful vaccine possibilities, and new clinical trials helped to lift the spirits of the market, keeping the bullish rally alive another day.  However, traders should guard against getting caught up in Fear of Missing Out, chasing a rally already up nearly 20%.  With infections, numbers continuing to rise rapidly, and more states going into lockdown, we still have a long road to recovery.  Consider your risk very carefully as we head in a big week of data that includes jobs’ data.

Asian markets were mixed but mostly modestly higher as China reported better than expected manufacturing data.  European markets are following suit with mixed but mostly modest increases this morning.  US Futures after a volatile evening currently point to flat open ahead of earnings and economic reports. 

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have just 33 companies reporting.  Notable releases include MKC, BB, CAG, & FLR. 

Top Stories

The US Navy ship Comfort arrived in New York Harbor to help their overwhelmed hospitals.  Yesterday the Major said they would need triple the hospital capacity by May as the outbreak continues to ravage the city.  As the infection numbers continue to rise, more and more states are ordering lockdowns, and the CDC is considering a rule that everyone wears a mask when out in public.

There were some bright spots on the virus front yesterday with testing kits that can provide results in just 5 minutes and news of vaccine tests and clinical trials beginning for hopeful treatments lifting the spirits of investors yesterday. 

China says manufacturing activity expanded in March.  That seems very hard to believe, but the Asian markets were able to make modest gains on the back of the data.

While the market rallies, investors are bracing for employment numbers later this week that could reach historic levels as some of the nation’s cities continue to shutdown.  Some estimates indicate an unemployment rate as high as 32%, with more than 45% of companies considering layoffs.

Technically Speaking

Investors found hope in the news vaccine tests, clinical trials, and test kits that can deliver results in just 5-minutes!  While encouraging the US infections, top 160,000 with more than 3,100 deaths as the Mayor of New York calls for a tripling of hospital capacity by May to deal with the sick.  The DIA recovered the 2018 lows, the QQQ held onto its 500-day average as support the SPY recovered and held critical support at 255.  With DIA, SPY, and QQQ nearly 20% off recent lows and facing a huge week of economic data, one has to wonder if the rally is getting a bit ahead of itself.  With the likelihood of shocking and historic unemployment numbers just around the corner, another round of selling is not out of the question.  As infection numbers continue to rise, more and more state is shutting down effecting some of our nations largest cities.

Guard yourself against the Fear of Missing Out and disregarding the risk, the massive price volatility and fast we are far from curbing the first wave of the outbreak.  With the 2^nd quarter earings beginning in a couple of weeks and the high probability of recession, a V-bottom recovery seems very unlikely.  Stay focused on price action and plan your risk carefully because the path forward remains very uncertain.

Trade Wisely,

Doug

As we wind down the worst March in stock market history, tough decisions lie ahead ahead for investors with the national lock-down extended to April 30^th with rapidly increasing infection counts.  Although April has proven to be a bullish month for the market since 2005, this year, we face a very volatile and uncertain path forward.  With the VIX holding above a 65 handle even as the market found the willingness to rally, traders should prepare for very challenging price action to continue.

Asian markets closed modestly lower on Monday while Australia broke ranks to surge 7% higher.  European markets are trading cautiously around the flat-line in a choppy session.  US Futures having recovered from sharp declines overnight currently point to flat to ever so slightly bullish open ahead of a big week of uncertain economic data.

Economic Calendar

Earnings Calendar

Although we have a big day a earnings reports, I can only find RH and CALM as notable because most are tiny companies.

Top Stories

This weekend the President extended the country lockdown until April 30^th as the spread of the virus continues to spread rapidly.  As of this morning, infections top 142,000, with 2,489 deaths.

According to Traders Alminic, the market has not experienced a bearish April since 2005, but Goldman is predicting that the market will turn lower as oil continues to fall due to lack of demand with the growing expectation of a worldwide recession. 

The FOMC has said that nothing is out of the question as far as their possible operation.  Some are now beginning to speculate that the Fed might consider direct stock purchases to stabilize the market.  Such an extreme course of action would require Congressional approval adding to the already historically aggressive use of its fiscal powers.

Technically Speaking

Although the Dow closed Friday down more than 900 points, I have to admit it was much better than I would have expected heading into a weekend of sharply rising infections.  Though leaving behind a rather bearish candle pattern, there was a small silver-lining as QQQ managed to hold onto its 500-day moving average by the close.  Unforutunitally, that’s about all the technical positives in the daily index charts as we come to the end of the worst March in market history.  Historically April has proved to be a bullish month since 2005. Still, with an extended lockdown and health officials talking about more than 100,000 possible deaths, April 2020 is likely going to be very challenging.

As oil demand continues to decline, with OPEC and Russia continuing to lock horns, many are now suggesting that prices could fall below $20 per barrel.  Even as the market rallied last week, the VIX defiantly held up closing the week at a 65 handle, indicating the extreme fear still felt by investors trying to sort out what comes next.  While many say its time to begin buying up value stocks, Goldman is now suggesting they expect prices to turn lower.  One thing for sure is that traders and investors have tough decisions ahead amidst such volatility and uncertainty.

Trade Wisely,

Doug

After receiving the worst unemployment number in history, the market chose to focus on the coming 2-trillion stimulus bill extending the bullishness for a 3^rd day.  The rally recovered some important price levels of support, but not the question is, will they hold heading into an uncertain weekend.  With the US now with the highest number of confirmed infections and the 2^nd quarter earnings season just around the corner, there is still a lot of fear in the market.

Asian markets follow the lead of the US rallying to close out the week in the green.  European indexes, however, are red across the board this morning but only down about 2% at the time of this report.  US Futures point to an overnight gap down at the open ahead of personal income and consumer sentiment reports.  Consider your risk carefully as we head into the weekend because anything is possible by Monday morning.

Economic Calendar

Earnings Calendar

We have a light day on the economic calendar with just over 40 companies reporting.  However, the majority are small-cap companies, and I can find no particularly notable reports today.

Top Stories

Hopes are high that the House will move forward with a vote today on the 2-trillion stimulus bill.  There is, however, still a chance that one or more representatives reaching for the spotlight could delay the vote into the weekend.

The US now has the grim title as the highest number of infections that will, too, continue to rise exponentially through the weekend.  As of this morning, 85,625 American infections and more than 1300 have died.

The market shrugged off the record-breaking 3.2 million unemployment number to record the biggest bounce 3-day bounce off in history.  To put this into perspective, unemployment topped out around 780,000 during the 2008 banking crisis.

Technically Speaking

Although the third day of the rally was fantastic, it did little to improve the technicals of the index charts.  The QQQ had the best response once again, recovering its 500-day average.  The SPY broke through resistance at 255, and the Dow recovered it 2018 low.  The question now is, can they hold these important price supports heading into the uncertainty of the weekend.  Hope that passage of the stimulus bill will undoubtedly provide a little help, but the unrelenting bad news of the virus spread will continue to weigh heavily on the minds of investors.  Keep in mind it will be at least another 3-weeks before the relief checks start to reach American bank accounts.  In this market, a lot can happen over the course of just one hour; 3-weeks will feel like a lifetime!

Those that rushed to by at the end of the day yesterday will be punished this morning with a nasty overnight gap down.  As for me, I plan to go into the weekend, essentially flat.  I won’t rule out the possibility of some quick intra-day trades, but for me holding into the weekend is a straight-up gamble that I will avoid.  Be safe, my friends and have a wonderful weekend.

Trade Wisley,

Doug

Our first 2-day rally in weeks was a sweet relief, but today we face a possible history-making increase in joblessness.  Can the hope of the 2 Trillion dollar stimulus bill keep the bulls engaged in the wake of high virus-related unemployment?  We will soon find out at 8:30 AM Eastern this morning.  With the death toll and infections, rising holding positions into the uncertainty weekend will likely be difficult.

Asian markets closed lower across the board, with the NIKKEI falling 4.50%.  European indexes are seeing modest losses this morning, and the US Futures point to a Dow gap down of more than 150 points ahead of readings on GDP and Jobless Claims.  Expect considerable volatility as the market reacts to the first economic data to include the outbreak impacts on business.  It could be a wild day, so buckle up.

Economic Calendar

Earnings Calendar

We have nearly 110 companies fessing up to quarterly results on Thursday.  Notable reports include CSIQ, FDS, GME, JEF, KBH, LULU, MOV, SIG & RH.

Top Stories

Now the Senate has passed the stimulus bill it’s now time for the House to get the political spotlight.  According to reports, they plan to begin their work on Friday, and the political rhetoric is already raising concerns about how long they might delay getting the bill to the President.

The coronavirus death toll jumped over 1000 during the night with confirmed cases quickly approaching 70,000.  The New York health care system is already in a crisis and seems to be on the same escalation curve as Italy.

The entire market is sitting on the edge of its seat this morning, waiting for a reading on the jobless numbers at 8:30 AM eastern.  Consensus Estimates expects more than 700,000, but some are suggesting the number could be as high as 3.5 million.  Needless to say, the outbreak impacts on employment are significant, and it will be interesting to see if the warm and fuzzy glow of the stimulus bill will keep the bulls engaged.

Technically Speaking

Yesterday we witnessed the first day of bullish follow-through in several weeks.   At the close of trading, the DIW, SPT, and IWM managed to hold on to some gains as traders took profits ahead of the Jobless numbers.  Sadly the QQQ closed lower on the day and failed to hold it’s 500-day average.  The DIA managed to test the 2018 lows, but the resistance proved too strong backing way sharply after the test. 

Having taken some very nice gains yesterday, I now think the risks are just way too high ahead of the jobless numbers and heading into the week.  The outbreak numbers have begun to rise exponentially, and I suspect it will weigh heavily on the minds of investors.  If anything, the path forward appears even more uncertain with such a long road ahead in a battle with an enemy we can’t see. 

Trade Wisely,

Doug

Congress finally came to an agreement, and the stimulus is on the way!  The question is, will it bring stability to the market?  In a very wild overnight session, the Dow futures rallied 500 points after the news of the agreement.  Unfortunately, as I write this report, the futures have been unable to hold the news-driven gains.  With unemployment numbers due out tomorrow and New York seeing a doubling of confirmed cases every 3-days one has to wonder if there is any amount of money that can buy our way out of this terrible situation.

Asian markets closed positive across the board last night, with the Nikkei lifting over 8%.  Sadly, European markets are not feeling the love form all the stimulus spending with mixed results and the DAX down 2.25%.  Here in the US, the futures markets have seen a very turbulent evening.  They have been bullish and then swung quickly bearish, where it might be by the open is anyone’s guess!  About the only thing, I think we can count if very volatile price action in the day ahead.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have over 50 companies reporting results.  Looking through the list PAYX is only notable I can come with this morning. 

Top Stories

At about 1:30 AM the Congress cane to an agreement on the stimulus plan.  The question now, will the market be able to rally a second day on the news?  Only time will tell.

They are reaching a critical situation in New York City now with more than 25,000 cases, as the cases double every three days overwhelming the healthcare system.  The President said yesterday that he would like the country to get back to work by Easter, which is just three weeks away.  However, health officials and many of the state Governors disagree, saying the risk of spread is too high. 

As business around the country continues to shut down, the next focus may be the unemployment numbers that are due out on Thursday morning.  Consensus estimates suggest more than 700,000 will be out of work, and the numbers are likely to rise in the coming weeks.

Technically Speaking

I was so nice to see a little relief from the selling yesterday, but now the question is, can it follow-though?  In the middle of the night, Congress finally came to an agreement, and the President said he would sign the stimulus bill immediately after its passage.  Futures rally nearly 500 points on the news but have already faded into the red in a very volatile overnight session.  With 2.5 trillion buy us some stability?  One would hope so because the Trillions that FOMC has spent has done nothing to curb the historic market collapse. 

Tomorrow we will get a reading on unemployment, and according to estimates, it will be shocking.  Of course, direct payments will be helpful to those out of work, and the company bailouts with the support of the medical system is much needed.  However, with all this spending translate into stock buying as the virus spreads and the path forward remains uncertain? I’ve said it before, and I will repeat once more that it seems unlikely we can buy our way out of a pandemic that continues to spread across our country.

Trade Wisely,

Doug

With Congress still trying to get it to act together on a massive stimulus bill, the US Futures point to a welcome rally.   Though it might prove to be only a monetary relief with quickly rising infection numbers and a death toll sharply rising, any reprieve in the selling that created the fastest 30% decline in history is a welcome relief.  We still face a busy week of economic reports with impacts of the outbreak starting to trickle into the numbers.  Expect price volatility to continue with lots of news-driven whipsaws and reversals as the market tries to recover.

Asian markets closed in the green across the board with the Nikkei surging more than 7% even after the postponement of the Summer Games.  European markets are also in the mood to rally this morning with gains in the DAX over 6% in reaction to the Fed Stimulus.  Ahead of earnings from NKE, CCL, and economic reports that include PPI & New Home Sales, US Futures point to a huge gap up at the open.  If Congress can pass the stimulus, expect another surge of short-term optimism that could extend the relief rally.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 72 companies stepping up to report results.  Notable reports include NKE, CCL, CONN, INFO, & SCS.

Top Stories

In the last six weeks, the Dow has lost about 11,000 points, but this morning we have a moment of relief with the US Futures pointing to a rally of more than 900 points.  We are still waiting on Congress to decide on a stimulus package that will total more than 2-trillion dollars.  The unprecedented move by the FOMC that through the doors open for unlimited asset buying was only able to inspire the bulls for a brief moment yesterday, ultimately closing lower on the day.

With pressure rising, the Olympic Committee has decided to postpone the start of the Summer Games for the first time in history.  In wartime, the games Olympic’s experienced full cancellation 3-times but never a postponement.   Just another item for the history books alongside the fastest 30% market decline ever.  The President said in comments yesterday that he expects a quick recovery for the market. However, reports suggest he like the rest of us is concerned the recovery will be a slow process due to the company level damage and unemployment. 

Technically Speaking

With the futures pointing to a substantial gap up and the hope that Congress might get its act together passing the massive stimulus bill, we could finally see a little relief from the selling.  Unfortunately, with infections approaching 45,000 and more than 525 reported deaths here in the US, it’s challenging to be in a celebratory mood.  The QQQ has the best chance of recovering its 500-day average, but even with the big up expected this morning, the bulls will have to deal with if as resistance. 

We will get the latest reading on the PPI and New Home Sales, both of which expect declines according to consensus estimates.  As the coronavirus impacts trickle into the earnings and economic reports, we could see volatile price swings that traders will have to consider when holding positions overnight.  I suspect the road to recovery will be a very bumpy one with dangerous whipsaws and flat our reversals to challenge trader skills. Don’t forget that consistent base hits win games, not the exciting home runs.  When the recovery begins, don’t allow greed to prevent you from taking those base hit trade profits.  To be a consistently profitable trader, we have to get comfortable with taking profits consistently.!

Trade Wisely,

Doug