Yesterday’s selling created considerable technical damage, with the indexes failing at or below critical averages while setting more lower highs in the current downtrend.  We could see some of that damage quickly repaired in the QQQ with bullish results from AMZN.  However, the bulls will require a significant and sustained effort to repair the overall downtrend.  Today the attention will not turn to the Employment numbers that, unfortunately, could show substantial job losses in January due to the pandemic surge. 

Asian markets closed mostly higher overnight, led by the Hang Seng surging upward 3.24%.  Sadly, that sentiment is not shared by the European indexes seeing a lot of red this morning after bank rate hikes.  Finally, with jobs numbers around the corner, U.S. futures point to a mixed open with Ukraine uncertainty growing as we head into the weekend.  So buckle up; it could be a wild morning session of volatility as traders and investors sort through the data.

Economic Calendar

Earnings Calendar

We get a little break on the Friday earnings calendar with less than 40 confirmed reports.  Notable reports include ADP, AON, BMY, CBOE, ETN, REGN, SNY, & SPB.

News & Technicals’

Amazon shares rallied in extended trading Thursday after the company posted a big earnings beat for the fourth quarter, helped by a gain on its investment in electric vehicle company Rivian.  The company also disclosed revenue from its fast-growing advertising business for the first time.  Conversely, Ford shares slid after reporting fourth-quarter earnings Thursday, which significantly missed Wall Street’s earnings expectations and slightly missed revenue.  By 2022, Ford estimates it will earn between $11.5 billion and $12.5 billion in adjusted pretax profits and generate between $5.5 billion to $6.5 billion in adjusted free cash flow.  Snap reported earnings for the fourth quarter Thursday that beat analyst estimates on earnings, revenue, and user growth.  The report marks Snap’s first profitable quarter on a net income basis as a public company.  The report comes a day after Facebook parent Meta delivered disappointing guidance for the first quarter that dragged down several social media stocks, including its own.  The world’s largest contract chipmaker, TSMC, has committed to investing $100 billion over three years to ramp up production.  Rival Intel announced last March that it plans to spend $20 billion on two new chip plants in Arizona.  In the short term, semiconductor analyst Peter Hanbury expects the recovery from the chip shortage to be “choppy.”  Several other companies in the semiconductor supply chain will benefit from investments made by the chipmakers.  Treasury yields rose in early Friday trading, with the 10-year edging higher to 1.838% and the 30-year slightly higher at 2.157%.

The Thursday selloff left behind considerable technical damage in the index charts.  The DIA not only failed its 50-day average, and the SPY reversed while still below this critical psychological level.  At the same time, the QQQ failed its 200-day average, with Facebook losing $237.6 billion with a record stock market single-day loss.  That said, the selling seemed relatively controlled without a significant spike in fear showing up on the VIX.  With the positive results from AMZN after the bell, some of yesterday’s damage may quickly repair, but it will likely take much more to improve the bearish look of the index charts.  This morning the focus will be the Employment Situation number that the government suggests could be a shocking disappointment.  Not surprisingly, the overnight price action in the futures remains volatile as we wait on the data.  Keep in mind with the tensions continuing to grow at the Ukraine border, the uncertainty of what happens next may prove difficult for the bulls to overcome as we head into the weekend. 

Trade Wisley,

Doug