Prices struggled for direction on Thursday as the indexes seesawed, trying to overcome the shellshock of the punishing Wednesday reversal.  Today we get a break on the earnings and economic calendar, perhaps giving the bulls some breathing room to relieve some of the selling pressure, but traders will have to stay focused on overhead resistance.  With food, housing & energy prices continuing to rise, consumers have some tough choices ahead as the Fed works to slow the economy. 

Asian market rebounded sharply overnight, with Hong Kong leading the way, up 2.96% to close the trading week.  European markets are taking that lead, trading decidedly bullish and green across the board.  The U.S. is also looking for some selling relief, with futures pointing to a substantial gap up getting a break from earnings and economic data.  Respect overhead resistance levels and watch for whipsaws and, of course, the possible pop and drop.

Economic Calendar

Earnings Calendar

We have a very light day with less than ten confirmed reports on the Friday earnings calendar.  Notable reports include BAH, DE & FL.

News & Technicals’

After a three-day visit to South Korea beginning on Friday, Biden will travel to Tokyo on Sunday to attend a summit of the leaders of the four-nation Quadrilateral Security Dialogue, being hosted by Japan.  North Korea conducted two ICBM tests earlier this year, and an expert says tunneling activity indicates preparation for a nuclear test.  Consumers are grappling with record-high gas prices, but the surge also hurts businesses.  The national average for a gallon of gas hit a new high Thursday.  California’s statewide average is now above $6.  Russia’s invasion of Ukraine sent an already tight energy market reeling.  “We did not anticipate that transportation and freight costs would soar the way they have as fuel prices have risen to all-time highs,” Target CEO Brian Cornell said Wednesday.  According to the National Association of Realtors, sales of previously owned homes in April fell to the lowest pace since the Covid pandemic started.  We are moving back to pre-pandemic sales activity, but I expect further declines,” said Lawrence Yun, chief economist for the group.  Tight supply kept home prices higher, despite rising interest rates.  The median price of an existing home sold in April was $391,200, the highest on record and an increase of 14.8% from a year ago.  Treasury yields moved slightly higher in early Friday trading, with the 10-year rising to 2.86% and the 30-year slightly higher at  3.07%.

The Thursday price action left more questions than answers as the indexes seesawed in a choppy range, as shell-shocked investors rested after the punishing selloff on Wednesday.  However, the T2122 indicator suggests, and short-term oversold condition that a relief rally could be near, and the VIX registered a slight decline in fear.  Thankfully we have muted earnings and economic calendars today, providing some calm in what has been a week filled with bearish data.  Though we hit another national gas price record, the light news day can provide the bulls breathing room to relive some of the selling pressure as we wrap up another challenging week.

Trade Wisely,

Doug