All the uncertainty about the pandemic business impacts will begin to come to light with the kickoff of 2^nd quarter earnings.  With there will be companies that have benefited from the pandemic, most will likely suffer profound impacts.  Expect significant volatility, stick to your rules, and stay focused on price action.  Trying to predict and biased trading with so much uncertainty will be very dangerous.

Asian markets closed in the green across the board last night as Chinese exports fall less than expected.  European markets are flat to slightly positive this morning as they mull a lock-down exit strategy.  US Futures put on a brave face ahead of the earnings kickoff, pointing to a substantial gap up open.  Tighten your seat-belt; this could be a wild ride!

Economic Calendar

Earnings Calendar

Today we begin the 2^nd quarter earnings calendar with more than 70 companies reporting.  Notable reports include JNJ, JPM, FAST, INFY, JBHT, and WFC.

Top Stories

While US officials talk about reopening the country, the UK is likely to extend the lockdown.  Cases in Germany jump by more than 2000, Singapore reported 386 new cases.  India continued its lockdown until May 3^rd, with Russia hitting a new record in daily infections of 2774.  There are now nearly 2 million cases worldwide with the virus as the US quickly approaches 600,000 infections.

JPM reports this morning, but one has to wonder with such uncertainty looking forward, how the numbers can be meaningful.  The SEC has told companies not to be too concerned if their guidance changes rapidly, and some have suggested that may companies will suspend guidance altogether.

Technically Speaking

After an uncertain and choppy day of price action, the overnight futures market surges upward ahead of the 2^nd quarter earnings season kickoff.  With the Fed seemingly buying up everything in sight, including junk bonds to bolster the market, it would appear they are worried about the earnings season.  While fighting the Fed is a bad idea, it’s hard to imagine that company earnings could be anything other than dismal.  With there will be companies such as AMZN, WMT, KR & COST that may well benefit from the lockdown, the vast majority have suffered devastating impacts.  Expect this earnings season to be extremely volatile.  One thing for sure it won’t be boring!

The current bullish short-trends are holding support levels, but the potential for big price moves add significant risk to an already very challenging market condition.  While there is tremendous hope we have seen the worst of this crisis, we can not rule out the possibility of another test lower as the real business impacts are finally revealed.  What we want to happen or what we might think will happen doesn’t matter.  What matters is that we set aside our bias, focus on the price action remaining disciplined to our trading plan and rules to ride out this earnings season with success. 

Trade Wisely,

Doug

Traders shrugged off historic unemployment, choosing to bet on the massive FOMC and Federal Government stimulus programs and staging the biggest weekly Rally since the late 1970s.  The question now is, can the bulls maintain control as we enter the 2^nd quarter earnings season and witness the staggering impacts to business.  Analysts estimates suggest earnings declines of 20 to 30 percent with expectations that recovery may not occur until 2021.  In actuality, the numbers won’t matter nearly as much as how the market reacts to them.  Anything is possible as there is no benchmark for reference to this health crisis.

Asian markets closed mixed but mostly lower as China reported more than 100 new infections attributed to foreign travelers.  European markets are higher across the board this morning in reaction to the FOMC’s new 2.3 Trillion stimulus plan.  After sliding more than 300 points in the overnight session, US Futures have bounced, trying hard to rally and shake off the worry of the pending earnings season.  Expect the extreme volatility to continue.

Economic Calendar

Earnings Calendar

This week we have the official beginning of the 2^nd quarter earnings.  We start this Monday with 46 companies reporting results. 

Top Stories

Despite the rising virus infections, US Markets choose to focus on hope with the largest weekly Rally since the late 1970s.  As US infections top 550,000, the President is hoping to begin reopening the economy in May, but health officials are concerned that it is too soon with a possible vaccine still more than a year away. 

OPEC reached an agreement over the weekend to cut oil production by nearly 10 million barrels per day, which is the single largest output cut in history.  The deal could save as many as 2 million jobs in the United States. 

JPMorgan Chase said it would raise mortgage borrowing standards as the economic outlook continues to diminish due to virus impacts.  New applicants will need credit scores of at least 700 and will be required to make a 20% down payment of the home’s value.

Technically Speaking

According to the T2122 indicator, we swung from extremely oversold to overbought in last week’s optimistic relief rally.  As officials proclaim that the spread of the virus in the US has slowed the infections numbers swelled to more than 550,000 over the weekend with a death toll of topping more than 22,000.  The big question on everyone’s mind this week, can we keep the optimistic Rally going as we begin the 2^nd quarter earnings season?  To this point, the market has been able to ignore the historic unemployment numbers, but as companies start to report, it will be hard to ignore the massive economic impacts of the outbreak.  Only time will tell how the market will react, but we should prepare for a rough road ahead and the likelihood of a long, tough road to recovery.

Last week’s Rally significantly improved the technical appearance of the index charts, holding higher lows and establishing at least a short-term uptrend.  Several price support levels were reclaimed with the QQQ leading the way managing to close the week just above its 200-day average.  Even with the historic oil deal, the US futures point to a substantial gap down this morning as traders and investors attempt to price stocks.  A difficult task considering there is no benchmark of reference, and no one knows how much longer this crisis could extend, making any company guidance issued nothing more than a hopeful guess.  Hold on tightly, the bumpy ride of uncertainty is likely to continue.

Trade Wisely,

Doug

Futures are flat this morning as we wait on the next Jobless number as the virus impacts create the worst unemployment situation in the nation’s history.  Heading into a 3-day Easter weekend with a CPI report, possible oil production cuts on Friday, and infection rates continuing to grow, anything is possible by Monday morning.  Plan your risk carefully as we head into the weekend.

Asian markets closed mixed but mostly modestly higher overnight.  European markets are trading slightly higher this morning, and the US Futures point to flat open ahead of the weekly jobless claims with estimates that another 5 million Americans are out of work.  We will also hear from Jerome Powell and get a reading on Consumer Sentiment, which may see a sharp decline. 

Economic Calendar

Earnings Calendar

On the Thursday earnings calendar, we have 41 companies reporting quarterly earnings.  Notable reports include SJR.

Top Stories

All 11 sectors of the US market rose yesterday, with traders reacting to an ever so slight improvement in virus infections in New York.  However, New York now holds the title of the highest number of diseases in the entire world!  Health officials now suggest the actual death tools are 100 to 200 higher each day due to undercounts of those that died at home. 

Bernie Sanders dropped out of the Presidential race yesterday, making Joe Biden the presumptive Democratic candidate.

OPEC and allies will meet on Friday with the hope of an agreement to cut oil production as supplies continue to historic levels.  There is a possibility that some states may see gas prices fall to near $1.00 per gallon in the coming weeks.

What just a little planning can do in just one week.

Technically Speaking

 Yesterday’s rally was broad-based with all 11 sectors of the market seeing gains with the oil and energy sectors leading the way.  All the major indexes challenged the resistance of Tuesday’s high, but at the close, all fell just short of breaking out to new weekly highs.  The QQQ is in the best technical position of the indexes, having recovered its 200-day average with the IWM continuing to suffer the most substantial damage. 

This morning futures point to flat open with all eye focused on the jobless claims number at 8:30 AM Eastern.  Consensus estimates suggest an additional 5 million people are out of work this week but keep in mind the forecasts have missed the actual number substantially in the last 2-weeks. That’s understandable because this country has never experienced this level of unemployment.  How that translates into company earnings that begin next week is anyone’s guess.  Friday, we will get the latest reading on CPI, but the market will have to wait to react because of the Good Friday closure.  I wish you all a 3-day happy Easter weekend.  Stay safe, my friends.

Trade Wisely,

Doug

Yesterday a considerable gap and selloff displayed the schizophrenic nature of the current price action as the market attempts to price stocks ahead of a likely turbulent 2^nd quarter earnings season.  With analysts suggesting a 2020 earnings decline from 20 to 30 percent and the US outbreak numbers hitting new highs, the uncertainty of the path forward is understandable.  Expect the volatility to continue as the administration rushes to put out another stimulus package hoping to curb the rising unemployment.

Asian markets closed flat to mostly lower overnight while European decline as hopes of the pandemic recovery fade.  US Futures continued to display volatility overnight but currently point higher open ahead of petroleum numbers and the FOMC minute release.  

Economic Calendar

Earnings Calendar

We have about 20 companies reporting quarterly earnings on this hump day.  Looking through the list, the only notable report today is PSMT.

Top Stories

A new spike in infections and the highest day of deaths the US has seen to date.  New York led the way with more than 730 deaths.  With now more than 400,000 infections and 12,800 deaths, the market gave up early gains.

The administration is moving forward as quickly with another business stimulus spending bill as we continue to hear about more and companies forced to layoff or furlough 10’s of thousands of employees. 

The Euro zone failed to reach a deal on a new stimulus plan after 16 hours of negotiations.

Technically Speaking

After a wild 2-day rally, markets sold off, giving back all of the gains huge early morning gains.  The DIA, SPY, and QQQ failed at resistance levels in the daily chart leaving behind dark cloud cover candle patterns adding more technical confusion an already messy set of charts.  Yesterday’s virus numbers hit a new daily high disappointing a market that was trying to shrug off the outbreak impacts.  The volatility of this market is not only very challenging but reflects the complete uncertainty of the earnings season set to kick off next week. 

Today we will get a reading on Petroleum supplies, and we get a glimpse at what the FOMC is thinking with the release of the minutes at 2:00 PM Eastern.  Mortgage applications reported a drop of 18% this morning, which is not all that surprising with most of the country concerned about the future of the jobs.  During the night, futures remained volatile, and what happens next is anyone’s guess. We will get another round of jobless numbers Thursday morning and will hear from Jerome Powell.  Plan your trading very carefully.

Trade Wisely,

Doug

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