Bulls Surge

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The bulls surge at the end of the day with the financial and retail sectors sharply gaining ground as wall street hopes grow as business across the country begins to reopen.  Sadly the Beige Book report cited a different story with business leaders pessimistic about recovery and workers reluctant to return to their jobs.  Before the open today, we have a big data dump, including jobless claims with consensus suggesting more than two million joined the historic number of unemployed.

Asian markets closed mixed with Hong Kong moving lower after China pass new security measures cracking down on the country.  European markets see green across the board as the monitor escalating tensions between the US and China.  US Futures point to another bullish gap up open ahead of a busy day of earnings and economic data.  An extra dose of price volatility is likely this morning as we react to data.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 87 companies reporting quarterly results.  Notable reports include DG, COST, ULTA, ANF, BURL, CM, CSIQ, DLTR, MOMO, NIO, JWN, OLLI, CRM, SAFM, SHOO, TD, & VMW.

Technically Speaking

For the 3rd day this week, the bulls charged forward on hopes of the country reopening its economy.  Interestingly, the Fed Beige Book said economic activity declined across the country, falling sharply in most regions.  It also cited that workers are reluctant to go back to their jobs due to safety concerns, child care, and the very generous unemployment benefits provided by the government.  The report also stated that business leaders were pessimistic about the potential pace of the recovery.  Tensions between the US and China are growing.  Last night Chana approved the new security measures for Hong Kong, although many countries have come out against the law as limiting free speech.  The US House yesterday sent a bill to the president’s desk to sanction China for human rights violations.  Hong Kong may lose its special status with the US, which could have ramifications for investors in the coming weeks.  Today we have big data dump on the economic calendar with Durable Goods, GDP, Jobless Claims, Home Sales & Petroleum Status.  Consensus suggests that more than 2-million Americans applied for unemployment last week even as the business tries to reopen across the country.   Boeing announced layoffs for nearly 7000 employees yesterday, and American Airlines plans a 30% reduction of management and administrative staff as the industry continues to struggle.

The Financial and Retail sectors had a very good day yesterday, pushing the indexes higher will in a late-day surge of buying.  The Dow has rallied more than 1000 points in just two trading days, and the SP-500 closed above its 200-day average for the first time since early March.  US Futures once again indicate a bullish open the suggesting a Dow gap up of more than 100 points ahead a big day of economic data.  I would not be surprised to see an extra dose of price volatility ahead of the market open.  The T2122 indicator continues to warn of an extreme overextended condition in the indexes. Still, the bulls seem to be in a relentless buying mood no matter what the numbers suggest about the economy.  Hang on tight anything is possible and be prepared for the possibility of profit-taking that could begin at any time.

Trade Wisely,

Doug

Breached Benchmarks

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Breached Benchmarks

In Tuesday’s session, the SP-500 briefly breached the 3000 benchmark and the Dow topped 25,000.  However, at the close of the day, there was a bit of uncertainty as to the bears defend these levels, and the tech sector left behind a bearish dark cloud cover pattern.  The bulls squelched those closing concerns suggesting yet another overnight gap bringing the 2-day rally in Dow of more than 850 points just in the morning gaps!  The question now is will there be follow-through buying or will it attract profit-takers and bears?

Asian markets closed mixed as US/China tensions grow.  European markets, however, don’t seem at all concerned this morning with their indexes approaching 2% increases this morning.  US futures point another substantial gap up open reaching well above yesterday’s high prints ahead of a light day on the economic calendar and earnings reports.  Buckle up for another wild day in the market.

Economic Calendar

Earnings Calendar

On the Hump Day earnings calendar, we have 64 companies fessing up to quarterly results.  Notable reports include UHAL, ADSK, BMO, BGFV, BOX, HPQ, NTAP, NTNX, RL, RY, TOL, VIPS & WDAY.

Technically Speaking

Yesterday’s gap up and run pulled back, leaving behind some concerning candle patterns; however, the futures once again point to a substantial gap up.  The bullishness pushed the indexes through 3000, and the Dow breached 25,000 during the day.  Although they failed to hold these levels into the close, today’s morning gap will recover the benchmark levels with a substantial cushion.  According to the news reports, the bullishness is due to optimism about the economy reopening.  Once again, it would seem possible the largest price move of the day may occur in the overnight session.  Reports that COVID-19 related hospitalizations on the rise in several states continue to raise concerns about the second wave of infections.  Yesterday’ the US death toll topped 100,000, but the only thing the market seems to be in infected with is a ravenous desire to buy risk overnight.  Hum?  The T2122 indicator continues to signal an over-extended condition, but on a positive, the Absolute Breadth Index finally broke through the downtrend.  That would suggest we finally see a broader-based rally.

At the close yesterday, the QQQ left behind a bearish dark cloud cover pattern creating a little uncertainty as the trading day wound down.  However, this morning the morning gap suggests a test of all-time highs in the tech sector remains viable.  The SPY found itself unable to hold the 200-day moving average at the close yesterday, yet this morning we are gapping above yesterday’s high.  Once again, traders could easily find themselves influenced to chase into the morning gap with the fear of missing out.  Remember, big gaps can, at times, attract profit-takers and bring out the bears.  Watch the price action closely after the open to make sure you see follow-though buying before jumping.  Look before you leap, so to speak.  If you have long positions with nice gains as I currently hold, it may be wise to bank some of the gains consider the Dow 2-day rally of about 850 points at the open today. 

Trade Wisely,

Doug

Hopeful Vaccine

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Hopeful Vaccine

The majority of price action over the last week of trading occurred in the overnight gap, and it appears that it will continue this morning as the market reacts to a hopeful vaccine beginning a Phase 1 clinical trial.  The Covid-19 death toll here in the US is likely to top 100,000 today, and health officials continue to warn of fall resurgence.  Be careful chasing such a huge gap and remember tensions continue to grow between the US and China.

Asian markets closed the day higher across the board on vaccine hopes, and European markets are bullish this morning with travel stock surging over 5%.  Ahead of earnings and several economic reports, the price resistance that has held the indexes down for more than a month looks to break with the overnight futures gap.  The question remains, will there be follow-through buying at the open?

Economic Calendar

Earnings Calendar

As we begin a short trading week, the Tuesday earnings calendar has 69 companies reporting results today.  Notable reports include BNS, BAH, HEI. HIBB, OOMA, STNE, & VSAT.

Technically Speaking

The overall market closed little changed on Friday with very light volume as we moved into the long weekend.  There was, however, some slight selling pressure as China issues new crackdown rules on Hong Kong restricting freedoms.  Not surprisingly, tensions between the US and China continue to grow a may present more of a market threat than the coronavirus in the long-term.  This morning US Futures are leaping higher on hopes of a vaccine from Novavax that is beginning a Phase 1 Trial with plans to begin Phase 2 as early as July depending on results.  Today the US is likely to reach a grim milestone with Covid-19 related deaths topping 100,000.  As the country tries getting back to normal health officials, warn of a possible resurgence of the virus this fall.

The big push in the overnight futures will finally breach the resistance that has held the indexes.  Amazingly the biggest part of price movement over the last week of trading has occurred in the overnight session with little to no price action during the typical retail session.  If you have ever needed proof that its institutions that move the market, take note of the 500 point gap this morning with rental unable to participate.   As always, be careful, chasing a vast opening gap.  Moves such as this easily create the fear of missing out, but let us make sure we see some follow-through buying remembering the possibility of a pop and drop if profit-takers take advantage of the price surge.  Although earnings season is winding down, there are still notable reports to be aware of this week as well as a busy economic calendar.

Trade Wisely,

Doug

China cracks down!

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China cracks down

China cracks down on Hong Kong with new security laws causing a nasty selloff of more than 5.5% overnight.  Tensions between the US and China appear to be growing with the US Senate passing legislation the could restrict Chinese companies from listing and raising money in the US.  As we slide into a 3-day weekend, plan your risk carefully and expect lighter volume as investors pack up early to take advantage of the time off.

Asian markets close in the red across the board as they reacted to a sharp selloff in Hong Kong due to a China crackdown.  European markets are also seeing red this morning as they monitor the rising US-China tensions.  US Futures point to modest declines this morning with ahead of light earnings and an economic calendar.  Plan your risk carefully as we slide into what could be a news-driven weekend.

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a light day with just 29 companies reporting.  Notable reports include BKE, DE, and FL.

Technically Speaking

Yesterday turned out to be just another day of choppy price action near price resistance levels with a slightly bearish lean.  Tensions appear to be once again in the rise between the US and China.  The Senate passed legislation on Wednesday to could restrict Chinese companies from listing on US exchanges.  They will also find themselves restricted in raising money from US investors unless they conform to regulatory and audit standards.  Hong Kong had big selloff overnight falling more than 5.5% because Beijing is planning a crackdown that many say take away freedoms, personal safety, and the rule of law.  China calls the new security law “highly necessary” to prohibit secession, subversion of state power, terrorism activities, and foreign interference. 

As we slide into a 3-day weekend, the bulls may find it challenging to continue to press for a resistance breakout as traders are likely packing up to head out early to enjoy the holiday.  We may, in fact, experience a bit of profit-taking to reduce risk and avoid the uncertainty of the long weekend.  I, for one, will we heading out to start my weekend early shortly after today’s open.  I wish you all a great day of trading and a wonderful weekend.  Stay safe, my friends.

Trade Wisely,

Doug

Overnight Gaps & Chop

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Overnight Gaps & Chop

The market price action this week has been mostly contained in the overnight gaps with choppy, directionless chop throughout the day as we continue to test price resistance.  This morning the futures suggest another gap, but this morning it’s the bears doing the pushing as we head into a busy morning of economic data.  Jobless estimates expect another 2.5 million Americans applied for unemployment, but with nearly 35 million already without work, the market has mostly ignored these historic numbers.  Perhaps they will do the same today.

Asian markets closed the day with modest declines across the board, and European markets are lower by about 1% reacting to Euro Zone economic data.  US Futures are choppy this morning but point to a lower open ahead of earnings and financial data as we slide toward a 3-day weekend.  Stay focused on price as anything is possible as markets react to news and challenged by overhead price resistance.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 77 companies fessing up to quarterly results.  Notable reports include A, AINV, BBY, BJ, DECK, HPE, HRL, INTU, NVDA, PANW, ROST, SDRL, SPLK, TK, and TJX.

Technically Speaking

So far, the majority of the index price action has occurred on the morning gap, with the remainder of the day filled in choppy sideways trading.  Keeping with the tradition, the futures point to another substantial gap heading into a big day of earnings and economic data.  Global virus cases reached 5-million, with the US sadly holding the record of the largest number of infections and a death toll of nearly 95,000.  However, according to the news, all 50 states are in the process of reopening the least part of their economies.  Let’s hope we don’t see another surge of infections as a result, and we can on with the business of recovery. 

As of the close Wednesday the all the major indexes continued to struggle with price resistance levels.  Both bulls and bears seem equally matched after yesterday’s morning gap.  Interestingly, the Absolute Breadth Index rose yesterday during the chop, although it remains in an overall downtrend.  T2122 continues to signal in the bearish reversal zone suggesting a short-term overbought condition.  As we head into a busy morning of economic data and wait for reports from tech giants like NVDA and INTU, the futures point to a gap down open.  Keep in mind volumes could begin to drop off quickly if traders wind down their week early heading into the 3-day Memorial Day holiday.  Plan your risk carefully heading into the long weekend and continue to expect overnight price volatility to remain challenging.

Trade Wisely,

Doug

Whipsaw

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Whipsaw

Very volatile price action at yesterday’s close and on overnight whipsaw that’s once again challenging price resistance levels is likely has traders scratching their heads wondering what comes next?  I suspect there were many traders stopped out by the selloff at the end of the day, and there will short traders also seeing losses this morning with the overnight reversal.  Could we see a short squeeze this morning big enough to break through resistance, or will the bears continue to hold the line?  Your guess is as good as mine.

Asian markets closed mixed but mostly flat on the day.  European markets are dancing around the flat-line this morning cautiously, monitoring economic recovery efforts.  US Futures are boldly gaping up once again ahead of earnings and economic reports that include the FOMC minutes at 2 PM eastern today.  Buckle up for another bull/bear battle at price resistance and plan for price volatility to remain challenging.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have 65 companies stepping up to report.  Notable reports include ADI, RDY, EXPE, HUYA, LB, LOW, MCK, SCVL, TTWO, TGT, VER & ZTO.

Technically Speaking

After yet another overnight gap, the market spent the rest of the day chopping sideways struggling to find the energy to break through resistance.  Then at the end of the day, a report suggesting the release of a virus treatment way too soon as critical testing metrics were still missing created a sharp market selloff.  The volatile price action continued through the evening as overnight futures rebounded, adding insult to injury for those stopped out in yesterday’s whipsaw.   Those putting on short positions will also fell the pain this morning as futures push for another gap up opening that may create a bit of short squeeze this morning. 

The DIA, SPY, and IWM left behind bearish engulfing patterns at price resistance levels yesterday with the SPY showing the 3rd failure at price resistance.  However, the overnight whipsaw is once again challenging price resistance, and the possibility of a short morning squeeze may be just enough to push prices through this level.   Of course, a lot will depend on today’s earnings and economic reports that include the FOMC minutes.  Even with the late day selling, T2122 suggests a short-term extended condition, and the Absolute Breadth Indicator continues to downtrend, making for a very confusing market condition.  Coupled with chart resistance and wild price volatility, what comes next is anyone’s guess!  Be careful not to chase the morning gap, getting caught up in fear of missing out.  Stay focused on price waiting for proof that gap up can find buyers this morning.

Trade Wisely,

Doug

Hopeful Clinical Trial

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After learning of a small but hopeful clinical trial of a Covid-19 treatment, the market lept higher yesterday to challenge the upper range of resistance of the DIA, SPY, and IWM.  The big move left a big gap below, and unfortunately, the Absolute Breadth Index declined as the big-4, AAPL, AMZN, MSFT, and GOOG continue to dominate the indexes.  Perhaps today the bulls will find the energy to push through the resistance, but it would not be out of the question to see some profit-takers come in after a one day move of more than 900 Dow points.

Asian markets rallied overnight on hopes of a virus treatment.  European markets are trading cautiously flat this morning, and the US futures have recovered early losses to indicate a flat open ahead of earnings and the congressional testimony of Jerome Powell. 

Economic Calendar

Earnings Calendar

Retail in focusing the Tuesday earnings calendar with less than 50 companies reporting results today.  Notable reports include HD, WMT, AAP, NTES, SINA, URNB & WB.

Technically Speaking

The day after a massive surge in the indexes on the back of warm and fuzzy Powell comments as well hopeful virus treatment news.  President Trump reviled yesterday that he has been taking hydroxychloroquine as a preventative virus treatment for the last couple of weeks.  Health officials quickly discouraged that course of action, suggesting possible harmful side effects.  After an investigation of the WHO, the President is threatening to cut off funding the organization permanently.  He has given the WHO 30 days to make substantive improvements accusing them of being China-centric.  Home Depot, HD reported sales jumped 7% last quarter, but costs associated with the coronavirus weighed down profits for the quarter, sending the stock down by 3% early this morning.  WMT will also report before the bell this morning, shedding light on pandemic impacts on retail.

The DIA, SPY, and IWM tested the upper range of the consolidation yesterday as the bulls raced in reacting to hopeful news.  The SPY briefly popped above recent resistance but by the close slid back just enough to leave questions in trader’s minds.  Early this morning, futures were pointing to a pullback of more than 100 points, but as the morning progresses, the tenacious bulls have clawed back the decline.  The T2122 indicator jumped into the bearish reversal zone on the big rally; sadly, the Absolute Breadth Index declined to suggest fewer and fewer stocks are responsible for lifting the indexes. Will the bulls find the inspiration to break the current resistance, or will the bears find the energy to continue their defense?  Perhaps, we will find out today.  Plan your risk carefully, staying focused on price action as the battle begins. 

Trade Wisely,

Doug

More Stimulus?

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Stimulus

Friday evening, the House passed a 3-trillion dollar stimulus bill, but it’s unlikely to pass the Senate and if it should the President has vowed to veto.  Jerome Powell sees the possibility that the US GDP could shrink by as much as 30% in comments made this weekend.  However, as states begin to reopen the US Futures only see bullishness this morning even as the Covid-19 death toll tops 90,000 with more than 1000 American dying almost every day of the last 2-weeks.

Asian markets closed in the green overnight even as Japan slips into recession.  European markets are bullish this morning as Euro-zone continues to lift lock-down restrictions.  US Futures point to a gap up of nearly 400-points ahead of earnings and a light day of economic news. Let’s party with the bulls but keep a close eye on the overhead resistance of this wide-range consolidation on the DIA, SPY, and IWM.

Economic Calendar

Economic Calendar

On the Monday earnings calendar, we have 120 companies reporting their quarterly results.  Notable reports include BIDU, APLE, BILI, IQ, SFTBY, TRVG.

Technically Speaking

US Futures are surging this morning as investors weighed comment by Chairman Jerome Powell suggesting the GDP could shrink more than 30%.  He said, struggling retail will continue to struggle even as the country reopens, suggesting that businesses will have to deal with sales volumes 25 to 50 percent of normal.  Rather grim statements, but the bulls don’t seem to care, choosing instead to rally hard in the pre-market action.  Apple has plans on reopening 25 stores this week, requiring mandatory masks and temperature checks.  Several states are opening health clubs and restaurants with new social distancing requirements.  New US rules requiring special licensing to sell chips to Huawei will be a big blow to the Chinese 5G tech giant and may also stir trade tensions between the US and China.  Friday evening, the US House passed a 3 Trillion dollar stimulus package that would send another $1200 to American taxpayers.  However, the package has little chance of passage I the Senate, and the President has vowed to veto the bill should it reach his desk. 

As the county reopens, only 3% of the population has been tested, with 1.4 million cases recorded thus far.  More than 1000 Americans have died from Covid-19 almost every day this past week, as the death toll tops 90,000.  To say the reopening will be challenging my be the understatement of the year.  Last week’s hold of the 50-day moving averages is a technically positive signal.  However, traders should also note that we remain in a large consolidation range in the DIA, SPY, and IWM.  At the end of the last week, the absolute breadth of the overall market continues in a downtrend as the big-4 does most of the heavy lifting.  With the futures pointing to a considerable gap up open this morning, keep an eye on overhead resistance levels as the T2122 indicator is likely to reach an overextended condition.

Trade Wisely,

Doug

Impressive Hold of Support

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Impressive Hold

Yesterday the bulls pulled off an impressive hold of price support and the 50-day averages of the DIA, SPY, and IWM with the oil and financial sectors leading the way.  The question today is will that rally continue heading into the weekend after a big morning of economic reports that set shockingly bad market records.  This morning futures are quite volatile as they wait for the big data drop.  Buckle up for the possibility of a wild ride.

Asian markets close overnight little changed even after reporting there industrial output number came in better than expected.  European markets trade mixed its eye on economic reports and uncertain economic reopening.  US futures indicate anything is possible by the time the market opens as they grapple with a substantial economic data drop.

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have more than 170 companies reporting quarterly results.  Notable reports include DKNG, JD, MFG, PBF, & VFC.

Technically Speaking

After a very rocky start on Thursday morning, the bulls stepped up, putting in a solid defense of critical price support levels.  Oil and financial stocks led the rally with JPM recovering 4% and AXP lifting more than 7%.  Follow the Jerome Powells call for additional Congressional stimulus the President appears likely to support another round of direct payments to citizens.  The House plans to vote on a 3 trillion dollar plan as early as today, but Senate leadership continues to say it will not support the current bill.  What comes next is unclear, but it seems the pressure for policymakers to continue to rack more up historic deficit spending measures soon. 

Yesterday’s rally created an impressive hold of the 50-day average on the DOW, SPY, and IWM indexes.  The market-leading QQQ maintained a comfortable cushion between its price and critical averages.  Futures this morning are showing a considerable amount of volatility ahead of a big day of economic data.  Topping that list is Retail Sales with estimates suggesting a historic decline in consumer spending is likely.  In just the last hour, futures have gone from pointing to a bullish open to now suggesting a substantial gap down.  Plan for considerable volatility as we head into a weekend of uncertainty as more and more states try to reopen their economy.

Trade Wisely,

Doug

Jerome Powell Warns

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The FOMC Chairman Jerome Powell said they stand ready to do whatever is necessary to support the economy but also warned that the recovery is likely long-lasting impacts for business and employment.  He also called on Congress and the Whitehouse, suggesting more will be required to stimulate the economy.  According to reports, China has launched cyberattacks against virus research firms attempting to steal possible treatment options.  With friends like this who needs enemies!

Asian markets closed the day lower across the board, with Japan falling nearly 2%.  European markets are trading lower this morning with the FTSE down more than 2% this morning.  US Futures have flirted with a flat to slightly bearish open as we wait on earnings and, of course, another jobless report that may add 2.5 million to the 33 million already unemployed.  Expect higher price volatility as we head toward the weekend.

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have our biggest day this week, with 300 companies reporting.  Notable reports include AMAT, ACB, BAM, DENN, NOLK, PBR, SSYS, & WIX. 

Technically Speaking

The futures tried to get a rally going in yesterday’s pre-market but was unable to hold onto gains gaping lower after a disappointing PPI number.  Jerome Powell delivered a word of warning that the recovery is likely to be difficult and may have lingering impacts for several years.  He reassured that the FOMC would continue aggressive operations as long as necessary and but said they would need more help from Congress to stimulate the economy.  Long story short, this will be a costly, challenging, and likely very volatile economic recovery.  In other news, the US is reporting that the Chinese government has launched cyber-attacks against virus research facilities attempting to steal research on treatments and possible vaccines.  Companies are encouraged to strengthen their security and report any attacks or breaches to the FBI. 

At the close yesterday, the DIA was less than 3 points away from it’s 50-day moving average and near a critical level of price support.  The IWM missed testing it’s 50-day by only a few ticks before bouncing in the last few minutes of the day.  The SPY held at the price support to 5/4/20 clinging to the 34 EMA, but looking at the QQQ, the selloff of the last couple days is nothing more than an overextended pullback.  We have a somewhat volatile overnight future session that currently suggests a flat to moderately bearish open.  However, with 300 earnings reports and another jobless number where another 2.5 million people will be added, the 33 million already unemployed, anything is possible by the open.  With a big day of economic data on Friday, we should expect an extra dose of price volatility as we slide into the weekend.

Trade Wisely,

Doug