Market worries about declining economic conditions left behind bearish reversal candle patterns on the index charts as the bears halted the recent relief rally.  Today the question of whether the U.S. economy is or is not in recession will be answered before the bell with the release of the GDP report.  What happens next is anyone’s guess, so plan your risk carefully as we will then wait for yet another Jerome Powell speech reaction.  Adding in the end of the quarter price jockeying, expect the uncertainty and challenging price action to extend into the possible market-moving economic reports Thursday morning.

The Asia market’s wild price swings continued overnight as sellers regained control, with the Hong Kong’s tech-laden index falling 1.88%, leading all indexes lower by the close of trading.  European markets focused on economic conditions trade in the red across the board this morning.  As we wait on the GDP report, a Jerome Powell speech, U.S. futures point to bearish open.  Recession or no recession, that is the question!

Economic Calendar

Earnings Calendar

Wednesday brings us a few more earnings events on the earnings calendar to add to the day’s price uncertainty.  Notable reports include BEND, BBBY, CULP, DCT, GIS, MKC, NG, PDCO, PAYX, SCHN, SGH & UNF.

News & Technicals’

The Fed opted for a 75 basis point hike to its benchmark rate earlier this month, the most significant increase since 1994, with inflation running at a 40-year high.  Mester — a voting member of the Federal Open Market Committee — said July’s meeting would likely involve a debate among FOMC policymakers over whether to opt for 50 or 75 basis points.  Brendan Carr, one of the FCC’s commissioners, shared Tuesday via Twitter a letter to Apple CEO Tim Cook and Alphabet CEO Sundar Pichai that pointed to reports and other developments that made TikTok non-compliant with the two companies’ app store policies.  Alphabet, Apple, and TikTok did not immediately respond to CNBC requests for comment.  Carr’s letter, dated June 24 on FCC letterhead, said if Apple and Alphabet do not remove TikTok from their app stores, they should provide statements to him by July 8.  Tesla is closing its office in San Mateo, California, where employees worked on improving the company’s driver assistance systems.  The company is eliminating about 200 jobs along with the closure.  Omicron is continuing to evolve into more contagious subvariants.  Dr. Peter Marks, who heads the FDA’s vaccine division, said the U.S. faces a Covid outbreak this fall as vaccine immunity wanes and people spend more time indoors.  Updating the shots to target omicron could provide more durable protection against the virus, though current supporting data is limited.  Economists fear that “forever sanctions” on Russia, and Europe’s reliance on the country’s gas, mean the continent is suffering disproportionately.  Reduced flows of Russian gas, and the lingering threat of a full supply disruption, have driven some European governments toward a reluctant return to coal.  A European Commission energy spokesperson told CNBC that Gazprom and Moscow were using energy supplies as an “instrument of blackmail.”  Treasury yields relaxed slightly in early Wednesday trading, with the 10-year dipping to 3.17% and the 30-year slipping to 3.29%.

Worries about the economic outlook brought the bears back to work yesterday after the morning gap and a brief surge higher.  The pop and drop pattern left behind bearish reversal patterns near downtrends and price resistance levels punishing those that rushed in with a fear of missing out.   The GDP number will finally settle the debate if the U.S economy has escaped recession or has already entered recession.  How the market reacts to the data is anyone’s guess.  However, the manufacturing numbers earlier this week indeed suggest a slowing economy that could soon produce an increase in jobless numbers this summer.  Traders should also brace for the possible price volatility created by another Jerome Powell speech that has already been foreshowed by Mester’s 75 basis point increase in July.  Buckle up for another day of uncertainty as the drama unfolds. 

Trade Wisely,

Doug