Fed Watch Begins Amidst More Earnings

Markets opened the week essentially flat Monday.  Then an early rally lasted only the first hour before a reversal into a strong sustained selloff took us to the lows at about 3 pm. This gave way to another reversal with a strong rally in the last hour taking all 3 major indices out on or near the highs of the day.  The QQQ led the afternoon rally and was the strongest of the three. This left us with indecisive candles in the large caps and a white candle with a long lower wick in the QQQ.  On the day, SPY gained 0.64%, DIA gained 0.35%, and QQQ gained 1.67%.  The VXX fell about three-quarters of a percent to 27.50 and T2122 rose but remains deeply oversold at 6.36.  10-year bond yields spiked up to 2.983% and Oil (WTI) rose over 1% to $105.70/barrel.

During the say, it was announced that the vote by a NY AMZN warehouse came down against unionizing by a huge margin.  The warehouse, which is near the one that unionized earlier this year, voted 618 opposed to 380 for unionization.  Elsewhere, AAPL was hit with another antitrust charge by the EU.  This time the charge is over the “Apple Pay” monopoly where AAPL prevents competitors of Apple Pay from accessing the iPhone hardware required to implement “contactless payments” that AAPL itself enjoys.

Europe suffered its own “flash crash” Monday with many European exchanges momentarily dropping sharply. The worst-hit exchange was in Sweden, where the trouble started. The Swedish exchange dropped as much as 25% when a trader from C entered a “fat finger” trade that caused the crash and started a cascade of exchanges halting trade momentarily. There is no word as to whether this was a “spoofing” trade, which was the cause of the most recent US flash crash and is now outlawed in the US.

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After the close, DVN, SANM, MGM, CC, CAR, FMC, FANG, LEG, CBT, ANET, KMT, TA, WEC, LOGI, and CACC all reported beats on both revenue and earnings.  Meanwhile, WMB, CLX, and ARGO missed on revenue while beating on earnings.  On the other side, NXPI, KMPR, CNO, OGS, and SEDG reported beating the estimates on revenue but missed on the bottom line.  Finally, MOS, EXPE, FLS, WWD, and FN reported misses on both lines.

On the Russian invasion story, the EU has begun debating a ban on Russian oil.  It appears that Hungary’s Pro-Putin regime may be a stumbling block.  Analysts are expecting a specific exception for Hungary and perhaps Slovenia with the rest of the EU banning the import of Russian oil.  The ban may be announced as part of the 6th round of sanctions as early as this week.  C also announced it is in active discussions to sell its Russian operations (which have been closed since the start of the Russian invasion of Ukraine.  Overnight, some US analysts began telling the press that they now expect Russian President Putin to actually declare war on Ukraine (so that he can institute a nationwide mobilization and draft more conscripts) very soon. Finally, it appears that Russia has dodged default again as at least some investors received dollar payments for their maturing bonds overnight in payments funneled through the London offices of C bank.

Overnight, the Asian markets were mostly in the red on modest moves with mainland Chinese exchanges still closed.  New Zealand (-0.92%), Taiwan (-0.56%), and Australia (-0.42%) paced the losses.  In Europe, stocks are mixed but leaning to the upside on modest moves at mid-day.  The FTSE (-0.82%) lags while the DAX (unch.) and CAC (+0.13%) are typical with a few of the minor exchanges up as much as three-quarters of a percent in early afternoon trading.  As of 7:30 am, US Futures point to a down start to the market day.  The DIA implies a -0.45% open, the SPY is implying a -0.44% open, and the QQQ implies a -0.43% open at this hour.  10-year bond yields are down slightly to 2.967% and Oil (WTI) is off 1.5% to $103.66/barrel in early trading.

The major economic news scheduled for release on Tuesday is limited to Mar. Factory Orders and Mar. JOLTs Job Openings (both at 10 am).  The FOMC Meeting also begins.  Major earnings reports scheduled for the day include AGCO, AME, ARNC, BIIB, BP, BR, CTLT, CNP, CMS, CNHI, CIGI, CMI, DK, DD, ETN, EL, EXPD, FIS, BEN, IT, GEO, HSIC, HLT, HWM, ITW, INCY, ITT, J, KKR, LEA, LDOS, LGIH, LPX, MPC, MLM, MTOR, TAP, MPLX, PARA, PFE, PGR, PEG, QSR, ROK, SPGI, SMG, SEE, SGRY, TEVA, TRI, TWI, VSH, WAT, WLK, ZBRA, and ZBH before the open.  Then after the close, ACHC, AMD, ABNB, AKAM, AMCR, AIG, ANDE, AIZ, BFAM, CZR, CWH, CDNT, EIX, THG, PEAK, KAR, LFUS, LYFT, DOOR, MTCH, MATX, MCY, MUSA, OSH, OKE, OMI, PKI, PRU, PSA, RNR, REZI, SCI, SWKS, SBUX, SMCI, VRSK, WCN, WERN, and YUMC report.

So far this morning, PFE, BNPQY, FIS, ETN, DPSGY, CHT, DD, AME, ZBH, IT, J, WLK, HWM, HSIC, SEE, ITT, MPLX, ZBRA, WAT, LPX and ATKR have all reported beats on both revenue and earnings.  Meanwhile, BP, KKR, HLT, INCY, NHYDY, TEVA, TRTN, EL, BR, and LEA missed on revenue while beating on earnings.  On the other side, BIIB, MLM, CNP, CTLT, PINC, WLKP, LDOS, and HLF have reported beating the estimates on revenue but missed on the bottom line.  Finally, SPGI, ROK, ARNC, and ETRN reported misses on both lines.

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This week we will see almost 1,500 earnings reports.  The major reports coming later in the week include BKNG, CTSH, CTVA, CVS, EMR, FTNT, IDXX, JCI, MAR, MET, MRNA, PXD, O, REGN, and UBER on Wednesday.  Then on Thursday, we see APD, APO, BDX, COP, D, EOG, ILMN, ICE, MCK, MNST, MSI, PH, RSG, SRE, SQ, VRTX, WELL, and ZTS.  Finally, on Friday we get CI.

As the FOMC Meeting starts, most eyes are on that conference waiting for the outcome. While it is very widely expected that we will see a half percent rate increase from the Fed tomorrow, just as much focus will be placed on exactly what the statement says and how Chairman Powell responds to questions at the presser. So, tone matters to markets. With that said, we got a lot of mostly positive earnings last night and this morning. This might help the bulls a bit, but the premarkets have not shown this yet. Remember that the trend is still very clearly bearish, but that we have seen choppy moves (white candles, intraday reversals, and plenty of wicks in the bearish trend). Caution is still the smart play. Don’t get caught chasing a gap only to be caught in a whipsaw you are not prepared to weather.

Remember that the first rule of making big money in the market is to not lose big money in the market. Staying hedged, nimble, and measured are good things…not bad. So, don’t be stubborn, and protect yourself from yourself. Nobody is right all the time. If you’re wrong, just admit it and take your loss. Just focus on your process and enjoy yourself. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor.

Ed

Swing Trade Ideas for your consideration and watchlist: UPWK, CAR, ORCL, INTC, GT, GLW, QCOM, ROKU, FB, PINS, AA, PFE, FCX, CVE, MVIS, DOCU, EL. 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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