Markets gapped lower at the open, after a higher-than-expected CPI number (4.6% vs 4.3% est.), but then rallied to fade the gap the first half-hour of the day. However, that was the last sighting of the bulls as stocks sold off from 10 am all the way into the close. This left us with black Spinning Top type candles that closed below the T-line (8ema) in all 3 major indices. On the day, SPY lost 0.80%, DIA lost 0.61%, and QQQ lost 1.47%. The VXX rose just under 2% to 21.58 and T2122 dropped back to mid-range at 54.08. 10-year bond yields spiked to 1.565% and Oil (WTI) fell almost 3.5% to $81.28/barrel.
In addition to the CPI number, new Jobless claims came in slightly higher than expected, but still down 4,000 below the prior week. Interestingly, oil inventories came in far, far lower than expected (less than half of expected and less than one-third of the prior week’s inventory at 1 million barrels vs 2.13 million barrels expected).
After the close DIS reported a miss on both lines. In particular, it was a bad miss on earnings. In addition, the company reported on Disney+ subscriber estimates and overall reduced streaming demand across all of its properties (Disney+, ESPN+, Hulu+, etc.). What makes the Disney+ subscriber miss worse is that the company had previously lowered the forecast before missing their own estimate.
In a follow-up to his “Twitter poll” self-promotion on Saturday (where almost 58% said he should sell 10% of his TSLA stock), Elon Musk sold $4.98 billion of TSLA stock on Tuesday and Wednesday. The SEC filing indicates these were not planned sales. Despite his “poll”, it turns out Musk made the sale so he could satisfy tax obligations after exercising a large block of stock options. TSLA fell more than 15% on Tuesday before rebounding 4% on Wednesday.
Overnight, Asian markets were mixed, but the real movers were on the green side. Shenzhen (+1.27%), Shanghai (+1.15%), and Hong Kong (+1.01%) led the way as China rebounded. In Europe, markets are also mixed at mid-day. The big exchanges are all green (barely in cases), but there are more than a half of a percent losses across many of the smaller countries. The FTSE (+0.42%) leads with the DAX (+0.07%) and CAC (+0.08%) staying barely above water in early afternoon trading. As of 7:30 am, US Futures are pointing toward a green open. The DIA is implying a +0.13% open, the SPY implies a +0.36% open, and the QQQ implies a robust +0.61% open at this hour.
Due to the Veterans Day holiday, there is no US economic news scheduled for release, but OPEC releases its monthly report at 7 am. Major earnings reports scheduled for the day include MT, AZUL, BHG, BAM, CAE, CRC, EPC, OGN, SBH, TPR, and WB before the open. Then after the close, FLO and PAGS report.
With no economic news on the agenda as well as government offices and banks closed for the holiday, do not be surprised if markets drift on light volume. One story that is likely to gain some traction is another surge in cases in Germany (more than 50,000 new cases per day on a population of 83 million), which is obviously a major economy and tied to all of the EU.
The trend remains bullish and the pullback of the last few days is a healthy thing for a rally (easing over-extension). With that said, we know consolidations and pullbacks can last a lot longer than we expect. So, just as with long-term trend reversals, don't get caught trying to predict short-term reversals either. The trend is our friend.
Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Watch your current positions before looking to add any new trades. Trade carefully and think twice about holding through earnings.
Swing Trade Ideas for your consideration and watchlist: QS, FCEL, PLUG, GM, BIG, NEE, COTY. You can find Rick's review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
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