Government Stimulus

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Government Stimulus

New of more government stimulus provides the bullish energy to set new NASDAQ records amid rising infections, hospitalizations, and deaths.  Europe leaders reach a deal to provide another $858 billion (US Value) in stimulus, and reports suggest Congress is aiming at a total that will top 1 trillion.  There seems to no lack of desire to buy up stocks at any price as many issues hit new record highs yesterday ahead of earnings their earnings reports.  With a light day of economic news, earnings and stimulus news will take front and center as futures push for another record high open today.

Asian markets traded higher overnight, supported by hopeful vaccine news.  European markets are decidedly bullish in reaction to the stimulus deal, and the US futures all point to a bullish gap-up open fueled by more government deficit spending.  Continue to ride the wave as long as it lasts.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 43 companies stepping up to report results today.  Notable reports include CNI, COF, KO, CMA, IBKR, ISRG, IRBT, LMT, LOGI, NAVI, NVS, PM, PLD, SNAP, SYF, TER, TXN, & UBS.

News & Technical’s

Hopeful vaccine news and lots of talk about government stimulus big tech led Monday’s rally that inked another all-time high close for the NASDAQ.  At the same time, virtual infections, hospitalizations, and deaths rose.  According to reports, EU leaders reached a deal of fiscal stimulus that totals $858 billion, and the US is shooting for a plan that will add at least another trillion in US stimulus.  A new study from New York suggests that as many of 1/3 of businesses will never reopen due to pandemic impacts, but as of now, the market seems utterly unconcerned about unemployment.  UBS reported an 11% fall in second-quarter profits early this morning and warned of continued credit losses, but the stock is gapping up this morning.  KO reported a 33% decline in earnings; however, it sees demand improving as lockdowns ease, pushing the shares higher this morning.  Chicago took steps to increase COVID restrictions yesterday, and according to reports, LA County is on the cusp of another shut-down in the battle against the virus. 

DIA, SPY & IWM setup yesterday with bullish patterns with the big-5 tech giants doing the majority of the lifting.  The QQQ hit new record highs, and the US futures point to more records at the open as the race to buy stocks at all-time highs continues.  With a very light day on the economic calendar, earnings reports and government stimulus news will take front and center.  Somehow COVID, unemployment, and year over year, declining company revenues no longer matter.  Stay with the bullish trend but remain focused and flexible because this sensitive news market has proven several times how quickly it can reverse.

Trade Wisely,

Doug

Economic Uncertainty

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Economic Uncertainty

As we begin a new week, an economic uncertainty continues to grow as the fast-spreading virus threatens shutdowns and fills hospitals ICU units to capacity.  However, the market seems relatively undeterred with visions of enormous government stimulus spending hopes on the horizon in Europe and the United States.  The big question yet to be answered is, can we deficit spend enough to cover the business impacts of the pandemic?  With a light economic calendar, a busy earnings calendar, and pandemic uncertainty rising expect price action to remain volatile and challenging.

Asian markets closed the overnight mixed but mostly higher as the SHANGHAI rallied more than 3%.  European markets trade mixed with EU leaders deadlocked on a massive stimulus coronavirus recovery fund.  US futures have rallied off overnight lows ahead of earnings reports indicating a flat to slightly bearish open with NASDAQ futures bank in the green.  Buckle-up and stay focused and flexible.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have 22 companies reporting quarterly results.  Notable reports include PEP, HAL, MAN, PETS, CCK, IBM, LOGI & STLD.

News and Technical’s

Concern is rising as US infection rates top 3.7 million with a death toll moving over 140,000 this weekend.  Florida has reported more than 10,000 new infections in the last 5-days as space in ICU units in several hot spot states are reportedly at capacity.  As the healthcare system strains to keep up, the market seems transfixed on hopes of massive government stimulus in the pipeline in Europe and the United States.  I guess the question yet to be answered is, can the government actually buy our way out of this pandemic without a massive debt crisis as the after effect?  I guess only time will tell.  I think one of the most honest answers I’ve heard came from Jamie Dimon’s warning for the US economy this weekend, “nobody knows what comes next.” 

Technically the indexes continue in bullish trends even with the palpable uncertainty that lies ahead.  This week we have a relatively light economic calendar, but traders will have to navigate a minefield of earnings reports the could create some significant price volatility.  Futures opened on a positive note last night but quickly slipped negative, suggesting that Florida may have to shut down once again.  However, in the normal fashion of late, the morning pump has rallied the futures well of the lows currently indicating a flat to everso slight bearish open as we wait on morning earnings.  Stay flexible with an ear to the news that could quickly create reversals both up and down.

Trade Wisely,

Doug

Grinding Day

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Grinding Day

Yesterday a slow and grinding day of price action with a little profit-taking after a mixed bag of earnings reports and higher than expected jobless numbers.  That said, the indexes suffered little to no technical damage with the bulls fighting hard to defend against any attempt by the bears to start a selloff.  The tech sector may experience some pressure today after NFLX disappointed investors after the bell yesterday.  Infection numbers continue to set new records, but the market is unconcerned as they wait for the next round of stimulus spending.

Asian markets closed the trading week mixed but mostly higher amidst rising US-China tensions.  European markets trade mixed this morning with an ever so slight advantage to the bulls.  Here in the US, after smashing the new infection record and disappointing NFLX report, futures point to modestly bullish open ahead of earnings and economic data.

Economic Calendar

Earnings Calendar

On the Friday Earnings Calendar, we have 28 companies fessing up to their quarterly results.  Notable reports include ALLY, BLK, CFG, KSU, FR, & STT.

News and Technical’s

Indexes found a few profit-takers yesterday after a mixed bag of earnings reports and Jobless Claims numbers higher than expected.  The market was also dealing with a new record high in pandemic infections, but just one day later, that record was smashed with the number topping 77,000 yesterday.  According to reports, the next congressional stimulus bill will cost 1.3 Trillion as written with several elected officials suggesting it needs to be substantially more.  Netflix reported a miss after the bell yesterday with and expectation that subscribers will decline in the coming quarter.  Share of Netflix fell as much as 10% in extended trading, which may add some pressure today on the high flying tech sector.  This morning analysts expect a significant increase in housing starts as the 30-year mortgage fell briefly below 3% for the first time in history yesterday.  We will also get a reading on Consumer Sentiment as well as several notable earnings reports that could move the market.

Yesterday mild round of profit-taking made for a slow grinding day of price action but little to no technical damage to the index charts.  The tech sector has seen a bit of weakness this week, and it will be interesting to see if the miss from Netflix yesterday will continue that pressure today.  There has been a notable increase in the consumer defensive and consumer staples stocks in the last few days.  It would seem we are witnessing a rotation into better value dividend-paying issues as the interest in the high flying tech sector wains.  There may be some concern that some of the current market leaders will have a difficult time supporting these high prices in their upcoming earnings reports.  As we approach the weekend, consider carefully consider the risk as the pandemic infections surge and an uncertain earnings season ramps up to a fevered pitch.

Trade Wisely,

Doug

Big Day of Data

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Big Day of Data

Facing a big day of earnings and economic data while digesting more new records in daily infections and deaths, the US Futures point to the gap down open.  While it was nice to see some follow-through bullishness yesterday, the elevated VIX continues to show the market uncertainty and adds significant complexity for traders as they try to navigate the wild price swings.  Today is likely to be no different with gaps and intraday reversals as the market attempts to digest all the data.

Asian markets close the day seeing only red across the board as the tensions between the US and China rise.  European markets are also trading lower this morning as virus concerns weigh heavily on investors.  US Futures point to a lower open this morning, reacting to early earnings data and rising pandemic impacts.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 37 companies reporting their quarterly results.  Notable reports include JNJ, NFLX, ABT, BAC, SCHW, DPZ, JBHT, MS, PPG, TSM, & TFC.

News and Technical’s

With daily reversals and big point moves as this morning begins, it looks like the market is shaping up to give us more of the same.  Sadly we seem to be losing the battle on the virus front hit a new national record of daily infections as well as a new daily record death toll.  Several state now requiring the wearing of masks in public while some profoundly affected states want to soldier on without additional measures.  The pandemic is putting a strain on the healthcare system in several states filling their hospitals to near capacity.  Today we will get earnings reports BAC and MS and NFLX.  Although very early in the season, the results have been a mixed bag.  We also have our biggest day of the week on the economic calendar, which includes Jobless Claims and Retail Sales numbers as if there is not already a lot for the market to digest. 

Yesterday’s big gap up was an excellent follow-through to Tuesday’s rally but ended the day rather unconfidently.  The DIA tested the resistance of the Island Reversal pattern established in early June, but the bears held their ground by the close.  The SPY easily broke above its island reversal pattern holding it solidly into the close while the QQQ struggled with a lackluster performance with several of the big tech giants finding some profit-takers.  IWM benefited from the rally in the financials after the GS earnings report finally breaking above and holding its 200-day moving average by the close.  With a big day of data, the US Futures currently point to a gap down open.  The VIX, although pulling back yesterday, continues to hold above its 200-day average holding on to an elevated close above 27 handles.  With so much data coming our way, anything is possible, so plan carefully and remain flexible.

Trade Wisely,

Doug

Another Price Action Reversal

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Another Price Action Reversal

Monday’s price action delivers bearish reversal patterns but fails to follow-though, so on Tuesday, the market is dealt another full price action reversal by the bulls.  The VIX continues to remain very elevated, and the Absolute Breadth Index continues to decline as infection rates rise in 39 states.  Interestingly so-called safe-haven issues in the consumer defensive sector had a very good day yesterday, and gold and silver values continue to climb.  Indeed an interesting dichotomy for traders to navigate.

Asian markets trade mixed but mostly higher overnight, with the NIKKEI closing up 1.59%.  European markets are in the full-on bullish mode this morning, reacting to the hopeful vaccine news.  US futures are leaping higher this morning on the same vaccine news and in reaction to the GS earnings.  At the moment, the Dow futures suggest a gap up open of nearly 450 points.

Economic Calendar

Earnings Calendar

On the hump day earings calendar, we have 27 companies reporting with our second round of big bank reports.  Notable reports include AA, BK, GS, INFY, PNC, SNBR, USB, & UNH.

News and Technical’s

The game is on with 3rd quarter earnings with JPM reporting declining earnings results but, they beat the analyst’s estimates, so the stocks rallied.  I suspect this will continue today as we progress through several significant bank reports this morning.  A strong late-day rally pushed the Dow up 556 points reversing Mondays bearish reversal pattern that failed to follow through.  Interestingly, Gold, Silver, and bonds rallied with the market as the Absolute Breadth Index continues to decline.  The VIX pulled back below its 50-day average but remained elevated, closing the day above 29 handles and suggesting the wild price volatility is far from over.  This morning futures point to a bullish follow-through in anticipation of earnings and a hopeful report from Moderna on a vaccine trial that produced a COVID-19 immune response. 

Thirty-nine states now report rising infection rates with more than 65,000 new cases reported yesterday with more than 900 deaths.  Adding to the tensions with China, the President yesterday signed a bill sanctioning them and ending Hong Kong’s preferential treatment status.  China has, of course, already vowed retaliation but, as of now, has given no details as to what that might entail.  Apple has won in EU courts, saying the company doesn’t have to pay nearly 15 billion in Irish taxes.  Texas approves tax breaks for Tesla if they build the proposed 1.1 billion car plant near Austin.  I suspect other states will soon join the bidding war for the construction.  With less than 4-months to the presidential election, Joe Biden seems to be gaining momentum according to the latest poll.  We can expect some market volatility as the race heats up, and the political rhetoric reaches a fevered pitch over the months ahead.

Trade Wisley,

Doug

A Nasty Reversal

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A Nasty Reversal

A sharp rally followed by a nasty reversal selloff leaving behind bearish candle patterns and more questions than answers heading into 3rd quarter earnings.   The VIX closed above a 32 handle showing a level of uncertainty not generally associated with new record highs.  I suspect the volatility will remain quite high, making the navigation through earnings season quite challenging even for very experienced traders.  Stay sharp and plan for just about anything in the days ahead.

Asian markets saw modest losses across the board even as their June trade data beat expectations.  European markets are trading lower this morning as concerns of the spiking pandemic infections weigh on investor sentiment.  US Futures again find the energy to pump up in the premarket trying to ignore yesterdays selling damage as earnings season begins.  Anything is possible, so stay focused and flexible.

Economic Calendar

Earnings Calendar

Today we officially kick-off 3rd Quarter earnings with 14 companies fessing up to quarterly results.  Notable reports include JPM, AMX, C, DAL, FAST, & WFC.

News and Technical’s

I’m guessing yesterday turned out to be a bit painful after the significant index gains quickly reversed after the Governor of California announced a sweeping roll-backs due to a 28% increase in infections.  Two of the largest California school districts will not reopen favoring distance learning in an attempt to protect students and teachers from the virus.  I had mentioned the possibility of a pop and drop pattern, but the way this reversal played out was strickly the sensitivity of the market to the news.  Interestingly as the market rallied yesterday, the Absolute Breadth Index continued to decline.  However, as soon as the selling began, the Breadth Index rallied with the selloff.  I believe that a large portion of that problem is that just 5-companies now command a full 25% of the entire SP-500 weight.  An imbalance that could become a significant problem should profit-taking take hold in the five heavyweights.  Yesterday may have been a preview of what could happen if that should come to pass.

Technically speaking, the flash selloff yesterday adds a bit of complication to the look of all the index charts as we begin 3rd quarter earnings.  The DIA left behind a nasty shooting star pattern that once again failed the 200-day average.  It would appear ahead of earnings they bulls are pushing to test the 200 once again as resistance at the open.  The SPY left behind a bearish dark cloud cover pattern failing to hold the break of the early June island reversal pattern.  The NASDAQ was the first index to have reversed yesterday from a very extended run leaving behind a bearish engulfing pattern on the QQQ.  IWM finished the day with a dark cloud cover pattern, and the VIX ended the day printing a reversal that broke above its 50-day average closing above a 32 handle.  With the VIX so elevated and facing an uncertain earnings season traders should expect challenging price volatility.  Stay focused, and flexible as anything is possible in the days ahead.

Trade Wisely,

Doug

Bulls Push for New Records

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Bulls Push for New Records

As the bulls push for new record market highs this morning, it seems there is no price too high for some stocks with 3rd quarter earnings set to begin this week.  With Covid-19 infections rising, some areas have reported hospitals are at capacity. Still, the market seems confident that no matter the impacts, the Fed and the Congress will cover the costs with more debt to keep the market going up.  Expect the wild volatility to continue in the week ahead.

Asian markets rose sharply overnight, with the NIKKEI closing up nearly 2.25%.  European markets are full-on bullish across the board this morning up more than 1.3%.  US futures opened positive and continue to push higher this morning with a gap up open that will set new NASDAQ record highs at the open.  Go bulls!

Economic Calendar

Earnings Calendar

This week we begin the 3rd quarter earnings season with the big bank beginning to report on Tuesday.  We start the week with a light day with just 9-companies reporting with only one notable report coming from PEP this morning.

News and Technical s

I’m not sure it makes any difference to write about the impacts of coronavirus as the country continues to soar in new infections.  As states require the wearing of masks such as Florida after reporting more than 15,000 new infections, protests broke out from groups saying that infringes on their rights.  You can’t make this stuff up!  If I were writing a novel, it would be so unbelievable it would not sell.  Several areas in the country reporting that hospitals are at capacity treating Covid-19 patients, and the death toll in the US is back on the rise.  Approaching earings, the market appears to have little to no concern about the pandemic with the expectation that the Fed and Congress will continue to escalate the deficit to keep the market going higher.  With the national debt over 26.5 Trillion, the consequences of such spending are apparently irrelevant in today’s society. 

Futures began trading last night seeing only bullishness, and that sentiment has only grown as we near the open of the day.  The NASDAQ is poised to set another new all-time high at the open, and the SPY will gap above the island reversal that has recently served as resistance.  The DIA, which has struggled with the resistance its 200-day average, will gap above it this morning at the open.  Gaping to new record highs always carries with it the risk of a potential pop and drop, but with the bulls relentlessly willing to pay any price for stocks ahead of earnings, I would not rule out a big short squeeze sending indexes even higher.  Expect wild price action to continue in the week ahead.  Stay focused and flexible.

Trade Wisely,

Doug

Tech Giants Continue Leadership

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Tech Giants Continue Leadership

As we head into the weekend, the tech giants continue to lead the way setting new records while DIA, SPY, and IWM experience some selling pressure.  At the same time, 18 million Americans remain unemployed as more than 1.3 million files for benefits.  That nearly doubles the number we experienced in the depths of the 2008 and 2009 depression.  The VIX continues to display the uncertainty the market faces as a select few stocks continue to rise to new price highs.

Asian markets closed the day lower across the board as virus infections weigh on recovery hopes.  However, European markets are bullish this morning in reaction to hopeful Italian data.  US Futures have recovered from overnight lows suggesting modest declines at the open ahead of a very light day of earnings reports and pending PPI data. 

Economic Calendar

Earnings Calendar

On Friday’s earnings calendar, we have a light day with just 11 companies stepping up to quarterly results.  The report from SJR is the only particularly notable report I see.  Remember, the official kick-off to the 3rd quarter earnings season begins next week.

News and Technical’s

Another day of records with the NASDAQ reaching out to new highs while at the same time coronavirus infections in the US topped 63,000 for the first time.  More than 1.3 million filed for unemployment last week, and the concern is that the numbers may now start to grow as states struggle in their efforts to recover with the recent surge in the pandemic infections.  It’s interesting to note that even at 1.3 million, the number is double the worst numbers we experienced in the depression of 2008 and 2009.  A day after the Supreme Court rules against the President, his competitor calls for an end of the era of shareholder capitalism, suggesting higher corporate taxes.  Tensions continue to grow as following the impositions of sanctions of three local Chinese officials of China’s ruling Communist party over human rights abuses.  China vows to retaliate.

As we head toward the weekend, the imbalance between the tech giants continues with the QQQ holding on to a strong uptrend while the DIA, SPY, and IWM experience selling pressure.  I have to wonder what happens to the market if or when profit taking begins in the tech sector.  The VIX continues to suggest a considerable uncertainty exists as it seesawed between a low of 26 and a high of 31 handles yesterday.  Facing a light day on both the economic and earnings calendar, the market could be sensitive to the news cycle, and price action is likely to remain volatile.  Next week begins the 3rd quarter earnings season, which is likely to keep the wild price action going into the near future.  Stay focused and flexible, carefully considering the risk you carry into the weekend.

Trade Wisely,

Doug

Good and Bad Record High

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Record High

As the Nasdaq prints, another record high the US also sets a new national record of Covid-19 infections and health officials as calling for a federal policy to curb the spread.  While on the surface, the market appears to have absolutely no concerns, yet the VIX remains quite elevated, and the Absolute Breadth Index continues to decline.  An interesting dichotomy that could produce a bullish short squeeze or an attack by the bears as recovery concerns mount.  Stay focused and flexible as the market grapples with what comes next.

Asian markets continue their bullish run with week lead by China, which rose 1.39%.  European markets have seesawed between gains and loss this morning as they cautiously monitor pandemic numbers and the challenging recovery.  Ahead of a light day of earnings and another round of jobless claims US futures point to a slightly lower open.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have just 11 companies reporting quarterly results.  Notable reports include WBA, BNED, FC, HELE, PSMT, & WDFC.

News and Technical’s

The bulls refuse to lose continuing to buy up the big tech giants with NASDAQ setting another record high lead by AAPL, which also closed the day at a record high.  As the market continues to surge, so does the pandemic infections, hitting a new national record of 60,000 new cases reported in a single day.  Health officials are calling for a federal policy action to curb the spread of the virus, suggesting another shutdown may be necessary.  A new study warns of a potential wave of brain damage as an aftereffect of Covid-19 infections.  The research shows patients suffering from temporary brain dysfunction, strokes, nerve damage, or other serious brain effects.  A scary thought considering the US is now dealing with more than 3 million that have already been affected by the virus.   According to reports, there is already a noticeable pullback in driving activity as people choose to stay home rather than risking infection.  United Airlines warns that half of its workforce may be furloughed, suggesting up to 36,000 people could see their jobs cut as recovery hopes fade in the recent weeks.  Bed Bath & Beyond announced they would close 200 stores after reporting a sharp sales decline of nearly 50%, and the Pier One said it would not reopen retail stores in their bankruptcy reorganization moving to online sales only. 

Technically speaking, the DIA, SPY, and IWM indicate a possible higher low could be forming after yesterday’s rally, yet at the same time struggling with overhead resistance and potentially bearish candle patterns.  Adding to the confusion is the fact that the VIX remains elevated, and the Absolute Breadth Index continues to decline.  I see the potential for a bullish short squeeze and, at the same time, see the possibility that the bears could soon attack at any time due to growing recovery concerns.  It’s also odd to see indexes setting new records while at the same time precious metals continue rally sharply.  Ahead of weekly jobless numbers, the futures currently point to a slightly lower open.  Stay focused on price action and remain flexible and prepared for just about anything.

Trade Wisely,

Doug

More delays of reopening

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More delays

With coronavirus surging around in many US states, the business remains under tremendous pressure with additional closures and further delays of reopening of the economy.  The huge back to the school shopping season is also in question as school districts and parents grapple with the difficult decisions of reopening and child safety. Yesterday’s mild selloff left more questions with bearish candle patterns appearing on the index charts at possible highs or near resistance levels.  With the VIX rising in yesterday’s close expect price volatility to remain high and extreme sensitivity to news events.

Asian markets closed mixed but mostly higher, with Shanghai rising 1.74%.  European markets are seeing modest declines across the board this morning as the surge in pandemic infections worries investors.  US Futures chop around the flat-line this morning with a light day of earnings and economic news.

Economic Calendar

Earnings Calendar

On the Hump day earnings calendar, we have just 14 companies expected to report quarterly results.  Notable reports include BBBY, MSM & SMPL.

News and Technical’s

US coronavirus infections have topped 3-million cases with states reporting more than 55,000 instances yesterday and 993 deaths.  Arizona has seen a 26% increase in infections with the WHO suggesting just a 5% increase is troubling.  In response to rapidly rising cases and hospitalizations, Texas canceled the state fair while San Francisco delays reopening indoor dining.  It’s no wonder that parents have concerns about sending their children back to school this fall, and retailers worry about the back to the school shopping season.  The President is suggesting he will do all he can to pressure schools to reopen.  Tensions between the US and Chiana continue to grow after the FBI Director slammed their government for the use of espionage and cyberattacks against the United States.  He said the stakes could not be higher, and the potential economic harm to American business as a whole almost defies calculation.  These comments come on the heels of the Secretary of State threatening to ban Chinese social media apps.

After a gap down open, the bulls once again attempted a rally to test resistance levels but found resistance and ultimately selling off by the close.  Potential bearish candle patterns such as an abandoned baby pattern or evening star patterns were left behind on the DIA, SPY.  The QQQ left behind the uncertainty of a shooting star pattern, and the VIX rose above a 29 handle.  Declining issues far outpaced advancing issues after the Schwab pointed out that 90% of the current market rally is attributed to just the top 10% of companies.  This colossal imbalance raises the question, what happens to the market should these tech giants begin to selloff? An interesting question to ponder as we head for a relatively flat open with a light day of earnings and economic news.

Trade Wisely,

Doug