Bears are once again on the prowl!

July 18, 2019 by Doug Campbell

With the smell of fresh blood in the air after the disappointing results, NFLX reported yesterday the nearly forgotten bears are once again on the prowl.  NFLX has warned they would miss expectations and it makes you wonder what might lay ahead with the many other company warnings that were issued.  Technically speaking the bullish trends in the DIA, SPY and QQQ remain intact, but we should expect price action to become much more volatile as earnings reports increase over the next couple weeks.

Asian markets closed lower across the board overnight, reacting to earnings and growing trade war tensions.  European markets are currently mixed but mostly lower, citing trade uncertainty and tech earnings concerns.  US Futures have recovered significantly from overnight lows ahead of the 8:30 AM eastern Jobless Claims report and the Philly Fed Business Outlook Survey which both have the potential of moving the market.  I would expect challenging price action in weeks ahead, so plan your risk carefully.

On the Calendar

On the Thursday Earnings calendar, we have 90 companies stepping up to report quarterly results.  Among the notable reports ALLY, BBT, COF, CHWY, DHR, DOV, ETFC, GPC, HON, ISRG, MTB, MS, MSFT, NVS, NUE, PM, PPG, SKX, SWKS, STI, TSM, UNP, and UNH.

Action Plan

NFLX earnings disappointed traders after the bell yesterday reporting a significant decline in domestic subscribers.  Shares of the streaming service are indicated to open nearly 40 points lower this morning pulling the QQQ down to test breakout support levels.  It may also elevate the concerns of all the other tech companies that have warned about missing expectations this season.  Perhaps an even more damaging report came for CSX yesterday sending the railroad sharply lower raising significant concerns for the overall transport sector.

With another big round of earnings reports this morning and the tech giant MSFT reporting after the bell, we should expect an increase in volatility.  As of the close of yesterday overall trends of the DIA, SPY and QQQ remain bullish, but with the scent of blood in the air, hungry bears will be on the prowl.  As I write this, the bulls are trying to put on a brave face with the futures recovering significantly from overnight lows and currently suggesting modestly bearish open.  I would not be at all surprised to see a retest of the overnight lows depending on the morning earnings results and the 8:30 AM Economic Calendar reports. 

Trade Wisely,

Doug

US/China Negotiations back in the news.

July 17, 2019 by Doug Campbell

Presidential remarks that trade negotiations with China have a long way go and his willingness to raise another 325 billion in tariffs did little to dissuade the bulls after Powell’s dovish speech in Paris raising hopes of a rate cut.  Although choppy consolidation over the last couple days has maintained bullish trends, it seems to have also seemed to signal a wait and see attitude as earnings season continues to ramp up.  Big tech will begin to join the earnings stage this afternoon with reports from EBAY, NFLX, and IBM.  Keep in mind that NFLX has already warned it will miss analysts estimates.

Asian markets reacted negatively to the tough trade talk closing modestly lower across the board overnight.  Currently, European markets are mixed but by and large slightly lower as they also ponder the difficulties ahead with Chinese trade negotiations.  Despite that US Futures continue to put on a brave face indicating a very slightly bullish open fulled by hopes of a rate cut ahead of the Housing Starts report at 8:30 AM Eastern.   Anything is possible, so plan your day very carefully and stay focused on price clues as they develop.

On the Calendar

On the Wednesday Earnings Calendar, we have 55 companies reporting quarterly results.  Among the notable reports are AA, BAC, BK, CCI, EBAY, IBM, NFLX, KMI, NDLS, PNC, PGR, USB & WIT.

Action Plan

We have an interesting setup for this mornings market.  The President yesterday remarked that the US/ China negotiations have a long way to go and went on to say he could impose an additional 325 billion in tariffs.  However in a speech in Paris yesterday the Fed Chairman Powell reiterated a weakening global economy once again raising hopes of a rate cut.  While Asian and European markets reacted negatively to the long road ahead on trade, the US futures choose to rally during the night on rate cuts.  It would seem our priorities are very misplaced!

After 2-days of sideways chop, perhaps today with a big round of notable earnings reports the market can find the inspiration it needs to break the log jam.  BAC has already topped estimates, but as of writing this report, investors appear unimpressed, and the stock is indicated lower.  This afternoon  EBAY, NFLX, and IBM will set the stage for the beginning of big tech earnings.  Also, keep in mind, we have Housing Starts and the Petroleum reports on the economic calendar that may have a say in market direction. 

Trade Wisely,

Doug

De facto Holiday?

July 16, 2019 by Doug Campbell

Based on yesterdays anemic price action, it might be fair to say that the Amazon Prime sales event has become a de facto holiday much like Black Friday.  Although the sales event has been extended another day this year, the bigger round of earnings coming out this morning could inspire more attention from the trading community and shaking up the price action for today.  As with every earnings season, we must prepare for the possibility of higher volatility and have a well-thought plan to protect our current positions and overall capital from the extreme moves stocks can make after reporting.

Asian markets closed mixed, but mostly lower overnight and European markets seem somewhat subdued this morning with modest mixed results as they also wait for earnings results.  Consequently, US Futures are at this moment almost flat hoping to find inspiration in the coming reports.  JPM has already reported an earnings beat, but currently, traders appear dissatisfied with the result as the stock is currently indicated to gap lower at the open.  Trends remain very bullish, although it appears a bit extended as the uncertainty of earnings begins to ramp up. 

On the Calendar

On the Tuesday Earnings Calendar, we have 43 companies fessing up to results as 3 quarter earnings begin ramping up.  Some of the notable reports today include CSX, CTAS, DPZ, GS, JNJ, JPM, SCHW, UAL & WFC.

Action Plan

Price action was light and choppy as if it was a holiday market.  My guess is the Amazon Prime day and the huge sales events other retailers put on to compete distracted traders and investors out searching for a deal.  With the Prime event now extended another day if possible today could be much of the same.  However, today, we have a bigger round of earnings that could shake up the market can get things going.

We also have a parade of Fed speakers on the Economic Calendar today including Jerome Powell, but it’s unlikely we will learn any new details as to if or how much of a rate cut is on the way.  Chart technicals continue to be very bullish, and the trends remain strong all-be-it a bit extended.  With so many earnings reports for traders to digest anything and everything is possible and we should prepare for the possibility of heightened volatility.  Remember to check all your current positions against the earnings calendar as well as any new positions you are considering to add.  I know it’s a pain to do, but the market rarely rewards laziness, and as the CEO of your trading business, the buck stops with you! 

Trade Wisely,

Doug

The rubber meets the road.

July 15, 2019 by Doug Campbell

Hopes of an FOMC rate cut has set new record levels in the DIA, SPY, and QQQ, but now we will see how the rubber meets the road as earnings session begins.  Can companies produce the traction that supports these lofty prices is the question?  The big banks will dominate this week, but the bigger concern is how the big techs will fair amid the lingering trade war with China.

Overnight Asian markets managed to close with modest gains across the board even as the reviled the lowest quarterly growth figures in 27 years.  European markets are also trading in the green this morning with modest gains across the board.  As a result, the US Futures are pointing to a bullish open ahead of the Citigroup earnings report.  Expect higher volatility in the days and weeks ahead with the possibility of large overnight gaps as markets react to actual earnings results.

On the Calendar

The Earnings Calendar this week will be dominated by the big bank reports that kickoff the 3^rd quarter earnings season today.  Among the notable reports are C, JBHT & WTFC.

Action Plan

As third-quarter earnings season start rolling out today, we will find out if company results can support the dramatic increases in prices over the last couple months.  An FOMC rate is one thing, but as China witnessed overnight, the trade war may have something say about earnings growth.  China numbers revealed the slowest quarterly rate of growth in 27 years.  US Economic indicators have continued to show strength however, many companies have already issued warnings that they will miss the analyst’s estimates. 

With so many prices at new record highs, the pressure is on for earnings performance.  We should expect significant volatility in the days and weeks as the market reacts to the actual results.  The bigs banks are on deck this week with some of the big techs starting next week where most of the concern lies.  The technicals of the DIA, SPT, and QQQ remain very bullish with the bulls firmly in control.  Let’s hope their energic anticipation of a rate cut holds up as earnings begin to roll out beginning with Citigroup this morning before the bell.

Trade Wisely,

Doug

Tightrope Walk Complete.

July 12, 2019 by Doug Campbell

With Jerome Powell’s congressional tightrope walk complete the market couldn’t be happier with his dovish comments pointing to an interest rate cut later this month.  Now the question to be asked is the potential rate cut already priced into the market?  The just 28 trading days the Dow has gained 2400 points topping 27,000 for the first time in history.  Could this become a buy the rumor sell the news kind of event?  It might be wise to consider that as you plan your risk into the weekend.

Earnings session kicks off on Monday with many of the big banks reporting next week so buckle up for increased volatility.  Overnight Asian markets closed with modest gains across the board after the release of trade data.  European markets are also showing gains this morning, which is helping to lift the US futures that are pointing to another bullish open and likely more new record highs.

On the Calendar

On the Friday Earnings Calendar, we have 17 companies stepping up to report.  Notable reports include INFY & HIFS.

Action Plan

With Jerome Powell’s congressional tour complete and his dovish comments suggesting an interest rate cut is forthcoming new market records highs continue.  The power of an assumed rate cut is truly amazing with the Dow having gained 2400 points in just 28 trading days.  That exuberance looks to continue this morning the futures pointing to another gap up open today.  As we head into the weekend after such an impressive run, it may be wise to ring the register taking some profits to the bank with earnings season kicking off on Monday.

As of now, the bulls are in full control, and the technicals of the charts continue to look strong but be very careful chasing stocks so late in a rally.  At some point, the low rate euphoria will begin to diminish, and the market will remember we still don’t have a trade deal with China.  With punishing tariffs still in place, many companies continue to warn that they will miss analysts estimates this quarter.  Something to at least consider as you plan your risk into the weekend and the beginning of earnings season.  Have a great weekend!

Trade Wisley,

Doug

Dovish Comments

July 11, 2019 by Doug Campbell

New record highs printed in the Dow, SP-500 with the NASDAQ managing to close at historic highs as the market reacted to yesterday’s dovish comments from the Fed Chairman.  Today Powell has a repeat performance on Capitol Hill, but today his hot seat is in front of the Senate Banking Committee.  Although I think it’s unlikely we will learn any more during today testimony, we should still prepare for the possibility of volatility.

Overnight, Asian markets reacted bullishly to Powell’s comments closing up across the board.  However, as I write this, European indexes are mixed and nearly flat, but that is not affecting the US Futures that point to another bullish open.  The CPI and Jobless Claims report at 8:30 AM Eastern will, however, have the final say on the market open this morning.  The trends are bullish, and the bulls are clearly in control with the market fueled up on likely interest rate cuts.

On the Calendar

On the Thursday Earnings Calendar, we have just nine companies reporting quarterly results.  Notable reports include DAL and FAST.

Action Plan

The Fed Chairmans testimony in Congress yesterday all but confirmed a rate cut of at least 25 basis points is on the way.  Today he must do it all over again at the Senate Banking Committee, but I would be surprised if we learned any new details today.  The market reaction was initially very strong, pushing the SP-500 briefly over 3000 for the first time in history.  The Dow printed a new record high but was also unable to hold it by the close leaving shooting star pattern on SPY and DIA charts.  However, bulls carried the day in the QQQ closing firmly in new record territory with tech now leading the way.

A shooting star pattern is considered a bearish pattern, but that is only true if prices follow-through with a downside move.  Without a follow-through, it may signal a little caution and possibly not even that if the bulls find the energy to move the indexes higher.  We have the CPI and Jobless Claims at 8:30 AM Eastern that have the potential to move the market before the open.  Currently, the futures point to a modestly bullish open with trends remaining very strong.

Trade Wisely,

Doug

Walking a Tightrope

July 10, 2019 by Doug Campbell

Jerome Powell will be walking a tightrope as he testifies on Capitol Hill today and tomorrow.  The world is hoping he will bring some clarity to the FOMC’s next move but don’t be surprised if he keeps us in the dark.  At times he will likely sound dovish as he shares his concerns for a weakening global economy.  However, don’t be surprised if he also comes of hawkish as he holds to his mandate of jobs growth that is currently exceeding expectations.

Consequently, we could experience some price volatility as the market reacts to his comments.  Remember we also have the release of the FOMC minutes at 2:00 PM Eastern today that can also create some market turbulence.  Asian markets closed mixed, but mostly modestly lower and European markets are currently seeing modest declines across the board as the world waits for the Fed Chairman to speak.  As a result, US Futures are also suggesting a bit of pensiveness pointing to a modestly lower open.  Plan your risk carefully.

On the Calendar

On the hump day Earnings Calendar, we have 12 companies stepping up to report results.  Amon the notable reports will be BBBY and MSM.

Action Plan

Today will be a very big day for Fed Chairman Jerome Powell as he testifies in Congress.  He will be walking a slippery tight rope between Washington D.C. and Wall Street trying to uphold his mandate while trying to appease both worlds.  Certainly, a tough task that is likely to create some market volatility today and tomorrow.  I expect him to lay out a case for possible rate cuts due to a weakening global economy.  However, I also expect him not to provide us the certainty of a cut or how deep that cut might be if the data moves them to that decision.

If that’s not enough to give the market a case of indigestion then lest toss in the release of the FOMC minutes at 2:00 PM Eastern to keep everyone guessing.  As I write this futures are a bit pensive suggesting a modest pullback at the open as we wait for the Capital Hill drama to unfold.  Trends in the DIA, SPY & QQQ remain bullish while IWM continues to struggle with an overall downtrend.  Plan your risk carefully and remember Earnings season kicks off next Monday.

Trade Wisely,

Doug

Powell front and center.

July 9, 2019 by Doug Campbell

Fed chairman Jerome Powell will be front and center as he makes his rounds testifying on Capitol Hill.  Most expect him to defend the Fed’s independence from the administration and of course many are hoping he will clarify the possibility of a rate cut.  With such a strong Job number last week expectation of a 50 basis point cut has dropped significantly.  Also, remember we could learn a bit more about the Fed’s thinking Wednesday afternoon with the release of last meetings minutes.

Asian markets closed mixed, but mostly lower overnight and European markets are currently seeing red across the board this morning.  US futures are under some pressure this morning suggesting a lower open though recovering slightly from overnight lows.  Of course, anything that might clarify a rate decision could move the market short of that I expect choppy price action to continue as we wait for the kickoff of 3^rd quarter earnings season. 

On the Calendar

We have just over 20 companies reporting on Tuesday’s Economic Calendar.  Among the notable reports are AYI, JEF & SMPL.

Action Plan

Yesterday proved to be about as expected with the market taking a little break with choppy consolidation price action.  Today Powell will begin a 3-day round of testimony in Congress where he is likely to defend the Fed’s independence from administrative meddling.  All eye are on the Fed these days with the hope of a pending rate cut.  There seems to be a revolving door on the news agencies with talking heads both for and against a cut.  Even Cramer chimed in on the subject to say he is not sure there will be a cut.  Perhaps we will learn more from the testimony and the release of the FOMC minutes Wednesday afternoon.

Futures are slightly under pressure this morning as tech’s slide south amid some downgrades.  However, current trends remain bullish even though there are reasons to have a little concern with price patterns in the QQQ and IWM.  I continue to expect mostly choppy price action that holds support levels as we wait for clarification on rate cuts and the kick off to earnings season.

Trade Wisely,

Doug

Disappointment

July 8, 2019 by Doug Campbell

The market is showing a face of disappointment this morning as it would appear to favor an accommodating FOMC rather than strong jobs growth.  Asian markets closed lower across the board overnight in reaction the better than expected US Jobs growth.  European markets are currently mixed but mostly lower as Deutsche Bank announces huge job losses as it restructures the business.

US futures point to a modestly lower open this morning recovering significantly from overnight lows as we approach the days open.  Light economic and earnings calendars will provide very little for the market to react to this morning.  Considering the kick off the earnings season is just one week away, and the current rally appears a bit stretched, a little consolidating price action might be in order.  I would also not rule out a test of the overnight futures low.

On the Calendar

We begin the new trading week with a light day on the Earnings Calendar that includes only six reports.  Of those reporting, none are notable and likely to move the market.

Action Plan

Markets appear a little disappointed this morning that the US economy is strong, jobs growth is better than expected and the chance that an FOMC rate cut has diminished.  Although the strong jobs number initially triggered some selling on Friday, the Bulls still found the energy to fight back closing just below record highs.  The question is, can the Bulls do it again today or will the Bears show some teeth?

With earnings season set to begin in next week, it could be rather quiet and choppy, consolidating the rally as we wait for the big banks to start the festivities.  Speaking of big banks, Deutsche Bank (DB) announced a major restructuring Sunday that will cut between 18 to 20 thousand jobs in an effort to return to profitability.  Shares are looking only slightly lower this morning.   Strong trends remain in place for the DIA, SPY, and QQQ and though the rally may be a bit extended don’t expect the Bulls to give up easily.

Trade Wisely,

Doug

All about the Jobs Number.

July 5, 2019 by Doug Campbell

At 8:30 AM Eastern we will get a very importing reading of the condition on the strength of our economy and the number of jobs it did or didn’t create.  If the Employment Situation number comes in weak it could provide the FOMC hammer to drive down interest rates in July.  A strong number could make an interest rate cut difficult if the US Economy continues to show resiliency in the face of a slowing global economy.  One thing for sure is that the number is likely to receive a significant price action response upon its release and may well set the direction to today’s market.

Asian markets were a bit subdued last night closing mixed up mostly higher.   European markets are currently lower across the board and US Futures point to a modestly lower open ahead of the jobs number.  The trends are bullish with DIA, SPY and QQQ breaking out to new all-time highs on Wednesday.  The task ahead for the bulls is now to prove they defend this new price level with a worrisome earnings season beginning in 10-days.

On the Calendar

On the Friday Earnings Calendar we have 16 companies stepping up to report quarterly results.  None of the reports today are particularly notable unless you happen to own them.

Action Plan

The key focus this morning will be the Employment Situation number at 8:30 AM Eastern.  If the number comes in weak it would seemingly provide the FOMC with the cover needed to lower the interest rate next month.  However, the consensus estimate is suggesting that the number could come in strong with nearly double the jobs creation from last month.  No matter how the number comes in it’s how the market reacts to the data that important.

At the close on Wednesday the bulls were in full control setting new all-time high records in the DIA, SPY and QQQ in a show of force rather remarkable considering the holiday-shortened trading day.  Now that we have the breakout it will be important for the bulls to hold these new levels as price support.  That may be a difficult task with so many companies warning they will miss analysts estimates when earnings season kicks off in about 10-days. 

Trade Wisely,

Doug