Although health officials are very concerned about the rapid resurgence of coronavirus, the bulls appear ready to continue buying despite the possible impacts. They will have to overcome some bearish engulfing candles printed on Friday and an elevated VIX suggesting that price action will remain quite volatile. Though putting on a brave face this morning, I suspect the market will be quite sensitive to virus news so focused and ready for possible whipsaws and reversals.
Asian markets closed modestly lower overnight, and European markets are whipsawing this morning and currently red across the board as they monitor the coronavirus surge in the US. Here in the US Future point to a bullish open but have pulled back from morning highs as the bulls trying to say; virus, we don’t care about no stinking virus! I guess if can beat it will just try to ignore it, as we hope for more government stimulus.
Economic Calendar
Earnings Calendar
On Monday’s earnings calendar, we have just 11 companies fessing up to quarterly results. Notable reports include JKS and TTM.
Technically Speaking
During the weekend, the US saw surging coronavirus infections topping more than 30,000 on Saturday and Sunday. Health officials are concerned that some states could see a sharp rise this week, but as of now, the market appears completely unconcerned as US Futures rise. China announced it would suspend imports of poultry as a result of the Tyson plant coronavirus concerns. Airlines that have been bleeding money due to the pandemic have plans to expand flights in June and July and say they believe they will back to normal by the end of the year. There is concern spreading that it may be challenging to have a college football season this year as more and more players are becoming infected. On Friday, AAPL touched new record highs but triggered an afternoon selloff when they announced the closure of several stores in states where the virus is rapidly spreading.
The DIA left behind a bearish engulfing candle by Friday’s close, failing once again at the 200-day average. IWM also seems to be struggling near its 200-average but managed to hold above Thursday’s low. The SPY printed a bearish engulfing pattern while maintaining a stronger technical pattern, and the QQQ continues to lead the markets holding near record highs. I must admit to a bit of surprise that bulls seem oblivious to the spreading virus as they once again point to a gap up at the open. The VIX remains quite elevated, closing above a 35 handle on Friday, so expect the volatile price action to continue and sensitivity to virus-related news.
Yesterday saw very choppy price action as the market grappled with concerns of rising coronavirus infections and hospitalizations. However, with central banks continuing to inject trillions of dollars into the markets, the bears struggle to find traction. While some are beginning to call the current rally, a bubble others continue with the mantra, don’t fight the fed! With the VIX holding above a 30 handle, we should continue to expect the challenging price volatility to continue as we wait for the next round of jobless numbers.
Asian markets closed mixed but mostly lower overnight as outbreak concerns weigh on investors. European markets are trading modestly lower across the board this morning. Ahead of the light day of earnings reports and jobless claims, US Futures point to modest declines at the open.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have just 11 companies reporting quarterly results as the 2nd quarter season winds down. Looking through the list, I can only find one marginally notable report today coming from SWBI.
Technically Speaking
Buyers and sellers seemed to be somewhat in agreement yesterday as market largely chopped sideways. The internet giants rose while the vast majority of companies struggled with the Absolute Breadth Index declining. Futures saw some modest selling during the evening but have since rallied after a report our of China saying they have new the coronavirus outbreak under control. The shutting down of about half the flights in and out of Beijing would seem to be in contradiction. US virus infections continued to rise yesterday, with more than 26,000 new cases reported. Hot spots include Texas, Arizona, Florida & California. The Bank of England voted to add another 100 billion to its bond-buying program as central banks continue unprecedented operations to combat the impacts of the coronavirus.
Although the DIA and IWM remain above there 50-day averages and longer-term trends, yesterday’s price action left behind the potential of a lower high price pattern. The IWM pattern failed at the daily-200 average, leaving behind the possibility of a short-term head and shoulders pattern. With the SPY closing the day well above its 200-day averages and the QQQ eking out another bullish day, both hold much stronger technical patterns. That said, shorting amid all the central bank operations around the world is a bit like trying to swim up a fast-flowing river! Today we will get another reading on jobless claims, but the market seems to have clearly demonstrated that unemployment will not get in the way of this bullish optimism. Expect another day of price volatility at the VIX remains quite elevated closing yesterday just above a 33 handle.
As stats reopen their economies, consumers were out in force shopping according to the retail sales number. Although they remain sharply lower year over year, the bulls produced a massive gap at the open that proved to be very volatile are the coronavirus brings new China restrictions. Here in the US, governor’s remove restrictions on restaurants and health clubs, several states reported a record number of infections yesterday. The VIX remains elevated as the market continues to rally, creating extreme price volatility intraday to challenge even the most adept day trader skills.
Asian markets closed mixed but mostly higher as the IMF warns of an unprecedented crisis. European markets have fluctuated this morning but currently point to modest gains across the board as US Futures once again suggest a substantial gap up open. Stay focused on price action and remain very flexible with such high price action volatility.
Economic Calendar
Earnings Calendar
On the Hump Day earnings calendar, we have a light day with 12 companies stepping up to report quarterly reports. Looking through the list, I only see one marginally notable report from ABM.
Technically Speaking
Fueled by much better than expected retail sales, the already bullish futures lept higher at the open. Though consumers returned to shopping with a vengeance raising hope of the recovery, the year over year numbers still needs a lot of improvement. News that China is implementing another round of restrictions with a resurgence of coronavirus cane close to reversing the bullish intraday, but the bulls charged back in before the close of day. Although the reopening of the economy has the bulls out in force, it is coming at a high cost, with several states reporting a record number of COVID-19 infections and hospitalizations yesterday. Should this trend continue, it will make a recovery very challenging for all struggling retail business. However, there was positive news of a treatment that, in a preliminary test, shows signs of improving the survivability of those hospitalized.
At the close yesterday, the DIA recovered and held just above its 200-day average while IWM remains challenged by this key resistance. The SPY closed well above its 200-day, attempting to test the island reversal pattern created on the June 11th gap down. The QQQ remains by far the most resilient of indexes lead by the internet giants, AAPL, AMZN, MSFT, GOOG & FB. The T2122 indicator is once again signaling a short-term extended condition with the Dow recovering more than 1400 points in just 2-days of trading. Although the VIX has pulled back the last couple of days, it remains very elevated closing above a 33 handle as the extreme price volatility continues to keep the danger level high. The enormous overnight reversal gaps and the rapid intraday price swings have made the market particularly dangerous for retail traders. They are either forced to hold and pray, suffering whatever the market hands out, stand on the sidelines, or attempt day trading the extreme volatility. Its no surprise there is another gap expected this morning, but what comes next in Coronaland is anyone’s guess.
Fear of the rising virus hospitalizations, debit, bankruptcies, and growing tensions with China & North Korea are apparently no match for an FOMC with an unlimited checkbook. From Monday open to Tuesday, a swing of 1000 points just in the morning gap after the Fed adds another 750 billion in direct company bond purchases. This morning the indexes will challenge the huge June 11th gap as the massive price volatility continues.
Asian markets roared back overnight with Japan rising nearly 5%, and European markets reverse to bullishness with the DAX up over 3% on in reaction to the Fed spending. Ahead of the Retail Sales numbers and the Chairman’s congressional testimony US Futures are decidedly bullish, suggesting a considerable gap in the indexes.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have just over 20 companies reporting their quarterly results. Notable reports include LEN, ORCL, GRPN, HRB, & MFA.
Technically Speaking
With slow and steady pressure, the bulls recovered from the substantial morning gap down as the incredible price volatility continues. Yesterday we heard the Planet Fitness declared bankruptcy, but the stock rallied during the day. Today 24 Hour Fitness joined them in declaring bankruptcy. United Airlines burrowed 5 billion against its frequent flyer program, and Hertz announced a new stock sale with the suggestion that investors will lose their money. However, none of that seems to matter these days, including rising coronavirus, unemployment, and the soaring national debt. That said, the market celebrated the news that the FOMC will add another 750 billion to buy bonds directly from companies. The President announced a plan to spend Trillion on infrastructure and will sign an executive order on police reform later today.
This morning ahead of the Jerome Powell’s testimony on the hill and several economic reports, we are once again expecting a 500 point gap at the open. Yesterday, bearish, today bullish. Count it up; that’s a 1000 point swing in just the morning gap! Amazingly that seems to have become the new normal. Today’s gap will test the 200-day average on the DIA and IWM as resistance and move us to back up into the vast gap down created on June 11th. The SPY quickly recovered its 200-day average yesterday, and the QQQ rally regained the breakout high of last February with the big internet tech companies leading the way. With the market tossing around 500 point gaps, what happens next is anyone’s guess, so prepare for another wildly volatile day.
News that Beijing is once again instituting coronavirus isolation measures and the resurgence of hospitalizations here in the US have the bears on the prowl this morning. As of Friday, longer-term trends and major price support areas, as well as 50-day averages, remain bullish. However, the substantial spike in the VIX could make the days ahead very challenging for traders, and those bullish technical s could quickly turn bearish. With the Fed step up their operations, will the Congress approve more stimulus, will it be enough to keep the economy afloat if the feared second wave of infections begins to inflate? Tough questions to answer, making the path forward very uncertain.
Asian markets closed lower across the board, with the NIKKEI falling nearly 3.5% overnight. European indexes are decidedly bearish this morning as the threat of virus rebounds. US futures point to a rather grim gap down with the Dow expected to fall more than 500 at the open. It would appear the wild ride of 2020 is far from over, and the complexity of the recovery will be far more challenging than the recent rally would suggest.
Economic Calendar
Earnings Calendar
On the Monday earnings calendar, we have a relatively light day. Notable reports included JKS & TTM.
Technically Speaking
The Friday’s bounce after the Thursday rout was a nice break in the selling, but the news over the weekend has the bears charging again this morning. We learned during the night that Beijing as reinstated isolation measures in some areas, established checkpoints and closed some schools due to a resurgence of the Coronavirus. Here in the US, even as the States try to reopen their economy’s infection rates and hospitalizations are accelerating. Planet Fitness has filed for bankruptcy and said they would close about 1000 locations as it attempts to reorganize. I suspect we will begin to hear of many more bankruptcies in the coming months as the full measure of business impacts is realized. According to reports, protesters have taken over a small area of Capitol Hill in Seattle, forcing a police station to close for the safety of the officers. The President has theathend to mobilize the national guard to restore order, but the idea does not have support by the governor.
As bad as the Thursday sell was, the longer-term bullish trends and major price supports have so far held in the DIA, SPY, and QQQ. They all remain above their respective 50-averages, and the QQQ thus now is merely testing the breakout as support. Unfortunately, the spike volatility could quickly shift those bullish technicals as the uncertainty about the path ahead with the resurgence of the virus. There are those once again predicting a market calamity, and those that believe the virus news has blown everything out of proportion, and the recovery will resume. The fact is no one knows the futures and the best we can do as traders; avoid the prediction and stay focused on price action for our trade queues or stand aside if you fell the risk of uncertainty is too high. Remember, there is no shame in protecting your trading capital; in fact, that is one of the primary jobs in this wild business of trading.
Yesterday we were reminded that no matter how much the government spends in stimulus or the trillions injected by the Central Banks, traders must always respect the bears! In this incredibly emotional feast or famine market, the daily overnight institutional overnight gaps have become very wearisome. Unfortunitually it appears to be the new normal, and we should expect the wild volatility to continue as we head toward the uncertainty of the weekend.
Asian markets closed the week lower across the board but managed to recover a substantial amount of the early losses. European markets are bullish across the board this morning but continue to fluctuate as the attempt to recover from another round of pandemic worries. US Futures have also seen substantial volatility this morning but continue to point to a sizeable overnight gap up as we grapple with a resurgence of coronavirus infections and hospitalizations. Buckle up, as it could be another wild rise as we slide into a weekend of unknowns.
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have 30 companies reporting quarterly results. Looking through the list, I can only find one particularly notable report, that being PRTY.
Technically Speaking
Yesterday we were reminded that we must never forget that the bears and always have a plan to protect our capital if they launch an attack. For some time, there have been clues that the market was extraordinarily overextended, but if you are like me, you’ve grown weary of the overnight institutional gaps. However, it has become the new normal in this all or nothing, feast or famine market. Today looks to begin similarly, but this time a substantial overnight gap up. With coronavirus cases continuing to rise, Arizona announced their hospitals are near capacity. Yesterday’s jobless claims added another 1.5 million unemployed, which is a modest improvement of the prior week but indeed demonstrated just how challenging this economic recovery has become.
Considerable technical damage occurred in the DIA and IWM yesterday as the indexes failed their 200-averages. The Dow is now less than 850 points away from testing its 50-day morning average, and even with today’s big gap up, we should not ignore the possibility that it might see a test in the near future. The SPY is in a much better technical situation having closed at it’s 200-average with the big tech firms providing the majority of the price support. Of course, the QQQ is in the best technical, having only suffered a pullback to test its bullish trend. As we slide into the weekend, expect a considerable amount of price volatility as traders and investors grapple with the uncertainty of the weekend.
Gaping up and running ahead of the FOMC announcement, the NASDAQ set new record highs once again. The committee suggested interest rates would remain near zero until sometime in 2022. Still, after the Chairman’s press conference, the bears made an appearance moving the index’s lower with only the QQQ closing the day with gains. Sadly, this morning rug is pulling out with the market suddenly concerned with the rising coronavirus infections and hospitalizations around the country.
Asian markets closed lower across the board in reaction to the FOMC forecast. European markets are also tumbling this morning by as much as 2.50%. US Futures are plunging this morning and have worsened in the pre-market, suggesting a substantial decline at the open with more jobless data on the way. Expect significant price volatility.
Economic Calendar
Earnings Calendar
On the Thursday economic calendar, we have short of 30 companies stepping up the earnings reporting podium. Notable reports include LULU, ADBE, PLCE, PLAY, & PVH.
Technically Speaking
After a choppy beginning to the week as we waited for the FOMC committee decision, it pretty much turned out to be a non-event. The decided that interest rates would likely remain near 0 until sometime in 2022 and that they will continue appropriate operations to support the economy. The initial market reaction was bullish, but after the Chairman’s press conference, the bears pushed back, closing the index’s modestly lower. This morning according to reports, the market is once again suddenly concerned about the second wave of coronavirus with infection rates that have risen the last couple weeks. There are 9- California counties reporting a spike in new coronavirus cases and hospitalizations. Airlines and cruise lines are sharply lower this morning, and not surprisingly, some retailers also see bear activity.
This morning US Futures point to an ugly gap down of 500 points or more in the Dow. The big question will be the activity in the NASDAQ giants that have seen remarkable bullishness of late and supplied most of the index’s levity. Should stocks like AAPL, AMZN, GOOG, MSFT turn lower, it could a rather harsh pullback could ensue. However, if the bulls can continue to show their tenacity of last couple weeks, the selling could be quickly absorbed, and price support levels defended. Hold on tight; it may be a wild morning with a considerable dose of price volatility.
After a late-session bullish run, the US Futures began to sell off, and the news cycle headlines shifted to something a bit more bearish. A new record daily high in worldwide virus infections, Texas with a record number of COVID-19 hospitalizations, the US officially in recession and headlines of a cold war with China. Things that make you say, hmmm? Those the entered late into the run could feel a bit of pain this morning with yet another morning institutional gap.
Asian markets closed mixed but mostly higher overnight, but European markets are decidedly bearish this morning. US Futures point to a Dow gap down around 300 points ahead of earnings and the kickoff to the 2-FOMC meeting. Expect an extra dose of price volatility at the open.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have 39 companies fessing up to quarterly results. Notable reports include AMC, CHWY, CONN, FIVE, GME, HDS, MOV, SIG, VRNT.
Technically Speaking
Almost immediately after the market closed on Monday, the US Futures began to a selloff, and the news shifted to bearish headlines. We learned we are officially in a recession, that Texas now has a record number of COVID-19 hospitalizations, and the world infections hit a new all-time high. According to reports, the US and China entered an economic cold war. China has also invoked the anger of Australia, Canada, Germany, Netherlands, and Sweden in what’s being called “Wolf Warrior diplomacy.” Dow Futures were down about 350 points overnight, but the typical morning pump has begun lifting them well off the lows. I suspect we will see a bit more 2-sided price action increasing the price volatility this morning. The wild card in the mix is the beginning of the FOMC meeting and what we might learn on Wednesday about the committee’s historic buying programs.
In the last 7-market sessions, the Dow has run up nearly 2500, the SP-500 more than 225 and NASDAQ in a 9-day bull run is up a whopping 850 points. Such an enthusiastic bulls run can sometimes lead to a painful pullback as if the carpet is pulled out from underneath, especially for those that entered trades late in the rally. The indexes are so extended that a 50% pullback in the Dow, about 1250 points, would remain in a bullish trend. I am in no way suggesting that will occur! I am only pointing out the potential danger that may exist in such an extended condition. Of course, the new normal is the institutional overnight gap that may leave many retail traders squealing from the feeling.
Even after last week’s run that lifted the Dow more than 2000 points, the US Futures point to a gap up open led by rallies oil, airlines, and cruise lines. Even as US cases of the virus topped 2 million, the death toll passed 110,000 and, protests keep business shuttered; the NASDAQ set new record highs with a surprise jobs number. As there is no president for such a strong rally, what comes next is anyone’s guess. Just stay focused on price action watching for the clues of profit-taking if a pullback begins.
Asian markets closed up across the board in reaction to rising oil prices. European markets traded mixed this morning with worries about pandemic restrictions and protests that grew violent over the weekend. The US markets are by far the most bullish of current world markets, pointing to a substantial gap up once again.
Economic Calendar
Earnings Calendar
On the Monday earnings calendar, we have a light day with just 24 companies reporting. Notable reports include CASY & SFIX.
Technically Speaking
After last week’s remarkable rally, it would be reasonable to expect a little rest or pullback in the market considering the Dow increased by more than 2000 points. In reaction to the better than expected jobs report, the DIA and the IWM lept well above its 200-day moving averages for the first time since February while the QQQ set new record highs. As world economies begin to reopen Coronavirus cases top 7 million with US cases now over 2 million and a death toll of over 112,000. The UK has implemented a mandatory 14-day quarantine on all that travel into the area; however, British Airways is threatening lawsuits. In reaction to the widespread protesting, the Democrats plan to propose new police procedures and accountability rules. The majority fo the Minneapolis city council has is backing the idea of disbanding the police force entirely.
There is no president in history for this remarkable market rally. The T2122 indicator appears pinned against the ceiling suggesting an extreme short-term overextension. That said, the US futures point to another gap up open with airlines and curse lines leading the way. Oil is surging this morning after OPEC decided to extend the historic production cuts through the summer, which is also helping to boost the futures this morning. What comes next is anyone’s guess, so stay focused on price action and be prepared for the possibility of profit-taking if the bears finally decide to make an appearance.
With the Employment Situation pending with an expectation one of the worst reports in history, the bulls remain relentlessly bullish. Futures suggest yet another overnight gap after a day sluggish price action that struggled to find buyers until the last minutes of the day. Don’t fight the bull party be have a plan when the music stops because it could bring out a wave of profit-takers at any time. The bears are nowhere to be seen, as they have been lulled to sleep with piles and piles of Central Bank spending government stimulus.
Asian markets closed the week higher across the board, and European markets are all green this morning. Ahead of job numbers, the US Futures can see only bullishness expecting another big gap before the release.
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have just nine companies reporting today, with the only particularly notable being TIF.
Technically Speaking
What is there to say about this market except for relentless bullishness that occurs mostly in the overnight futures session. After a day of very lethargic and slightly bearish price action, another surge in minutes of the day the Dow rose more than 80 points to close day green. This heading into the Employment Situation report, we have yet another institutional overnight gap suggesting the Dow will open up more than 300 points.
There is nothing left to but hold on tight and enjoy the ride and stay vigilant because it could end with the same extreme price action. Have a wonderful weekend everyone!
