It was not only the higher oil prices that kept the bears active on Monday but the fears of higher inflation and the uncomfortable impacts to the consumer.  Though the indexes appear in a short-term oversold condition, the pending CPI number will likely keep the bears active on the uncertain path forward.  In addition, this morning, we will briefly turn our attention to the trade deficit that continues to expand.  So plan your rick carefully and continue to respect overhead resistance levels as long as the downtrend remains in effect.

Asian markets closed in the red across the board during the night, with Shanghai leading the selling down 2.35% at the close.  European markets trade mixed but mostly higher this morning as they keep a close eye on invasion developments.  Ahead of earnings and economic data, the U.S. futures point to a gap up open, hoping to trigger a little relief in the selling.

Economic Calendar

Earnings Calendar

The number of earnings events ramps on this Tuesday, with more than 130 companies listed though we have a large number of them unconfirmed.  Notable reports include DKS, ABM, AVD, CDMO, BNED, BKEP, BMBL, CASY, CIVI, FTEK, GLRE, NVEI, WOOF, PCT, SFIX, VTNR, & WTI.

News & Technicals’

“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Russian Deputy Prime Minister Alexander Novak said Monday in an address on state television.  “The surge in prices would be unpredictable.  It would be $300 per barrel if not more.”  His comments come with Russia’s onslaught of Ukraine well into its second week, with the already dire humanitarian crisis expected to worsen as the Kremlin continues its invasion.  “It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” Russian Deputy Prime Minister Alexander Novak said Monday in an address on state television.  “The surge in prices would be unpredictable.  It would be $300 per barrel if not more.”  His comments come with Russia’s onslaught of Ukraine well into its second week, with the already dire humanitarian crisis expected to worsen as the Kremlin continues its invasion.  Tensions are rising in Europe’s ex-Soviet Baltic nations that President Vladimir Putin might not stop at invading Ukraine and could have his sights set on them.  Baltic states in north-eastern Europe, which are now members of the EU and NATO, were invaded and occupied in June 1940 by the Soviet Union.  They remained within the USSR until its collapse in 1991.  “Clearly, Putin is now in some kind of aggressive war mood,” European Commission Vice President Valdis Dombrovskis said.  Treasury yields rally in early Tuesday trading as inflation worries grow.  The 10-year surged 9-basis points to 1.8421%, and the 30year rose to 2.2334%.

The rising oil prices and the fears of higher inflation reading when CPI numbers come out Thursday morning kept the bears working hard Monday.  As a result, the Nasdaq officially fell into bear territory closing down 20% from January highs.  Although the indexes appear to be in a short-term oversold condition, the rising prices will make it difficult for a consumer-based economy to find much footing.  So if a relief rally can get started, it would be wise it respects overhead resistance levels as long as the index downtrends continue.  In addition, it would appear the geopolitical fallout of the Russian invasion is far from over, so expect price volatility to remain uncomfortably high.  Finally, with earnings beginning to wind down and inflation numbers on the horizon, the path forward is uncertain.  Large intraday whipsaws and significant overnight gaps are likely to continue as the uncertainty unfolds.  So plan your risk carefully and avoid overtrading.

Trade Wisley,

Doug