With a considerable dose of hopium, the Russian aggression in Ukraine is ending; the bulls pushed the indexes into an extraordinary extension.  Of course, the end-of-quarter window dressing likely added to the situation as volumes remained unusually low.  Today expect an extra dose of price volatility in the morning session as we react to ADP and GDP numbers.  Traders should watch carefully for a pullback that could begin at any time, and unfortunately, due to the extreme extension, it could become painful for those buying late in the rally.

Overnight Asian markets traded mixed but mostly higher with growing concerns about the weakening yen and the 10% plunge in Evergrande’s care unit.  European markets trade primarily in the red as skepticism grows over the Russian pledges over Ukraine.  With ADP and GDP data coming before the bell, U.S. futures point to modest declines as commodities and oil prices trade higher.

Economic Calendar

Earnings Calendar

On the Wednesday calendar, we have over 70 companies listed, but again, there are many unconfirmed.   Notable reports include AER, RKDA, BNTX, CWCO, FIVE, MSGM, PAYX, PTE, UPN & VNET.

News & Technicals’

Dr. Peter Marks at the Food and Drug Administration said people might need another booster shot in the fall.  Marks also said the U.S. might need to switch to a different vaccine that targets specific variants of Covid.  The FDA on Tuesday approved the fourth dose for people age 50 and older and the fifth dose for specific younger individuals with compromised immune systems.  Wednesday, German Economic Minister Robert Habeck said that the “early warning” measure was the first of three stages and does not yet imply a state intervention to ration gas supplies.  However, Habeck called for consumers and companies to reduce consumption, telling a news conference that “every kilowatt-hour counts,” according to Reuters.  European countries’ dependence on Russian energy exports has been thrust into the spotlight since the Kremlin launched its invasion of Ukraine on Feb. 24.  In addition, investor optimism over the possibility of federal cannabis legalization has contributed to a strong rally in beaten-down pot stocks.  The Alternative Harvest ETF has gained more than 10% in March, and it’s on pace for its best month since February 2021.  On Wednesday, the House Rules Committee is set to hold a hearing on the MORE Act, decriminalizing cannabis at the federal level.  Treasury yields dipped in early Wednesday trading, with the 10-year falling to 2.3707% and the 30-year dipping to 2.4499%.

Tuesday’s market saw an extraordinary extension of the indexes even as volume remained unusually low.  The T2122 indicator closed the day at 99.35 out possible 100 showing an extreme short-term overbought condition.  With the 5-year bond rate inversion over the 10-year, the market continues to show a dangerous willingness to ignore the deteriorating market internals in favor of wild speculation. 
The current market action clears the deck for Fed to begin acting aggressively.  Today we turn our attention to the ADP and GDP economic reports, so prepare for an extra dose of price volatility in the morning session.  Traders should also stay on guard for the potential of a painful pullback beginning at any time due to the short-term extension. 

Trade Wisely,

Doug