Jobless Claims and Philly Fed on Tap

Markets started the day with a gap higher.  SPY gapped up 0.51%, DIA opened 0.35% higher, and QQQ gapped up 0.44%.  At that point, SPY chopped sideways for 15 minutes before starting a sell off that recrossed the gap and reached the lows of the day at 12:50 p.m.  QQQ didn’t wait at all and also sold off reaching its lows at the same time.  DIA actually followed through on its gap for 20 minutes before following the other two index ETFs South and reaching the lows or the day also at 12:50 p.m.  From there, all three bounced in a two-hour rally that regained some of the lost ground only to sell back off for 20 minutes before grinding sideways into the close.  The action gave us large, black candles that are definitely a Bearish Doji Continuation (Doji Sandwich) in the QQQ and SPY.  DIA was more of a fat Spinning Top candle in a consolidation.  None of the three really threatened a retest of the T-line and remain below.  This happened on average volume in all three major index ETFs.

On the day, five of the 10 sectors were in the red with Technology (-1.34%) way out in front leading the way lower.  Meanwhile, Utilities (+1.65%) was BY FAR (by more than 1.4%) the strongest sector.  At the same time, SPY lost 0.59%, DIA lost 0.14%, and QQQ lost 1.22%.  VXX lost almost one percent to close at 14.93 and T2122 fell even deeper into the oversold territory at 1.14.  10-year bond yields fell to 4.591% and Oil (WTI) plummeted 2.92% to close at $82.87 per barrel.  So, overall, Wednesday was a Bearish day.  DIA continued a consolidation along what might be a support area while the two leading index ETFs continued their move down.  The buzz continues to be the market resetting its timing expectations for rate cuts, with talk now of fewer and a later start to those cuts working their way through what had been an expectation of a start in March.  (At the moment, the first meeting where Fed Fund Futures show a greater than 50% chance of a rate cut is September, with only 29.1% thinking we will not have seen a rate cut by then.)

The major economic news scheduled for Wednesday included EIA Weekly Crude Oil Inventories, which showed a larger inventory build than expected at +2.735 million barrels (compared to a forecasted +1.600 million barrels but down from the prior week build of 5.841 million barrels).  Later, the February TIC Net Long-Term Transactions showed a much larger than predicted inflow of $71.5 billion (versus a forecast calling for $40.2 billion and much larger than January’s +14.0 billion).  This is quite bullish for the US Dollar.

After the close, OZK, CCI, CSX, FNB, LVS, and WTFC all reported beats on both the revenue and earnings lines.  Meanwhile, AA, DFS, and SNV all beat on revenue while missing on earnings. On the other side, EFX and KMI missed on revenue while beating on earnings.  Unfortunately, LBRT missed on both the top and bottom lines.  It is worth noting that KMI raised its forward guidance.

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In stock news, on Wednesday, TSLA asked shareholders to reapprove the $56 billion stock grant compensation package for CEO Musk.  (That package had been thrown out by a court as ridiculous earlier this year.)  Speaking of Musk, Reuters reports he will announce a new $2 billion – $3 billion investment in India during his trip there next week.  At the same time, MBLY announced it has received orders for 46 million new “assisted driving” chips over the next few years.  (The company did not disclose which auto companies placed the orders.)  Later, AMKAF (Maersk AP Moller, a huge container shipper) announced that the Port of Baltimore alternate channels are not deep enough and the company will not be able to use the port until the channels are deepened or replaced.  At the same time, LLY reported sleep apnea treatment success for its weight loss drug Zepbound.  (The hope is that if approved for the additional condition, sales would increase.)   Later, MSFT announced that it has found Russian influence operations targeting the 2024 US elections have already begun, picking up pace in the last 45 days.  At the same time, GOOGL announced it is laying off an unspecified number of employees.  GOOGL spokesmen said the affected employees can apply for other open slots inside the company and the cuts are not companywide.

Elsewhere, AMZN announced it will push “Just Walk Out” technology into third-party stores such as sports stadiums and airport retailers.  This is interesting because AMZN itself is backing off its stand-alone “Just Walk Out” stores.  In politics-related news, President Biden told a United Steel Worker rally Wednesday that he promises that X will remain a “totally American company,” despite X having agreed to a $14.9 billion buyout by Nippon Steel.  (It is worth noting that many politicians on both sides of the aisle have taken that stance.  However, Biden controls the FTC and other regulatory agencies that might actually stop the deal.)  At the same time, RIVN announced it will cut 1% of its workforce in a second round of layoffs this year.  (RIVN cut 10% of its jobs in February.)

In stock legal and governmental news, on Wednesday, the New York Times reported that the FTC is preparing to block the TPRI acquisition of CPRI for $8.5 billion on antitrust grounds.  At the same time, ADSK announced it will not be able to submit its annual report within the 15-day grace period that was granted to it by NASDAQ.  (The company said it will take the needed measures to regain compliance as soon as possible.)   Later, the NHTSA announced that TM had recalled 135k Prius hybrid cars and has suspended taking new orders for the model due to a problem with rear door handles.  At the same time, the European Data Protection Board (privacy watchdog) asked META to provide a free version of its online platforms without targeted ads.  This comes after the group asked national regulators in Netherlands, Norway, and Germany to demand this of META.  (This would be contrary to META’s entire ad-based business model.)  Later, the NHTSA said F is recalling 457k pickup and SUVs over the loss of drive power and hazard lights during operation.  (These are not electric vehicles.)  At the same time, Reuters reported sources tell it that MSFT’s $13 billion investment into OpenAI will skirt EU antitrust laws and will not draw an investigation.

Elsewhere, UAL said that the FAA has prohibited it from putting new planes into service due to an ongoing investigation into UAL operations.  The airline said a small number of new aircraft scheduled to come online in Q2 have had the schedule pushed back into Q3.  At the same time, UAL said BA had agreed to compensate the airline for damages incurred in Q1 due to the grounding of 737 MAX 9 jets.  Later, Reuters reported that the Biden administration will restore tariffs on solar panel products from China at the request of the US branch of South Korea’s Hanwha Qcells.  (US solar stocks such as FSLR soared on the news.) 

Overnight, Asian markets were mixed but leaned toward the green side with only four of 12 exchanges in the red.  South Korea (+1.95%), Singapore (+1.05%), and Hong Kong (+0.82%) led the region’s gainers.  In Europe, we also see mixed but leaning green bourses at midday.  Only five of the 15 bourses are red as the CAC (+0.39%), DAX (+0.07%), and FTSE (+0.25%) lead the region higher on volume.  In the US, as of 8:15 a.m., Futures are pointing toward a modestly green start to the day. The DIA implies a +0.23% open, the SPY is implying a +0.23% open, and the QQQ implies a +0.24% open at this hour.  At the same time, 10-year bond yields are at 4.592% and Oil (WTI) is off six-tenths of a percent to $82.18 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 a.m.), March Existing Home Sales and US Leading Economic Indicator Index (both at 10 a.m.), Fed Balance Sheet (4:30 p.m.), and three Fed speakers (Bowman at 9:05 a.m., Williams at 9:15 a.m., and Bostic twice at 11 a.m. and 5:45 p.m.).  The major earnings reports scheduled for before the open include ALK, AALY, BX, CMA, DHI, ELV, GPC, INFY, KEY, MAN, MMC, NOK, SNA, and TSM.  Then, after the close, ISRG, NFLX, PPG, and WAL report.

In economic news later this week, there are no major economic news scheduled for Friday.

In terms of earnings reports later this week, on Friday AXP, FITB, HBAN, PG, RF, SLB, and WIT report.

So far this morning, ALK, ALLY, BX, CMA, DHI, ELV, INFY, MMC, TSM, and TCBI all reported beats on both the revenue and earnings lines.  Meanwhile, GPC, MAN, NOK, and SNA all missed on revenue while beating on earnings.  On the other side, KEY beat on revenue while missing on earnings.  It is worth noting that DHI, GPC, and TSM all raised their forward guidance.

In miscellaneous news, the Dept. of Transportation Inspector General announced on Wednesday that his office has opened an investigation into FAA oversight of BA and its manufacturing of 737 and 787 jets.  Later, after the close, US Trade Representative Tai told the US Senate that the US must take “decisive action” to protect US electric vehicles from heavily subsidized Chinese competition.  Meanwhile, the Treasury Dept. announced it will not renew a license granted to Venezuela for oil imports into the US.  This restores the sanctions on the Maduro regime.  The current license expires today, but Treasury has issued a 45-day license to allow US companies to wind down their oil and gas business with Venezuela.  (This is in response to Maduro’s regime repeatedly declaring different leading opposition candidates ineligible to run against Maduro.)  After the close, nine GOOGL employees were arrested at the company’s NY and CA offices after conducting a sit-in protest over GOOGL’s $1.2 billion contract to provide the Israeli military cloud services.

With that background, it looks as if the market is slightly bullish but undecided in the premarket. All three major index ETFs gapped higher to start the early session, but have printed small, black-body inside day candles since then. The SPY, DIA, and QQQ all remain well below their T-line. So the short-term trend is bearish. Meanwhile, the mid-term has also turned bearish and the longer-term market remains Bullish but trend is broken and is clearly under pressure. In terms of extension, none of the major index ETFs are too far below their T-line, but the T2122 indicator is deeply in its oversold range. So, at the very least, the Bears are in need of some rest. (Just remember markets can remain oversold a lot longer than we can stay solvent predicting a reversal.) In terms of those 10 big dog tickers, seven of the 10 are in the green early but the biggest mover by far is TSLA (-2.59%) pushing to the downside. So, be careful of whipsaws, but today is looking more indecisive again.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.


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