With Putin seemingly pushing for a regime change in Ukraine, the indexes charts are at or near a short-term oversold yet fragile condition. As a result, a relief rally of significance may be challenging for the bulls with the market surrounded by uncertainty. Likely sensitive to any new developments in the conflict, overnight reversal and substantial intraday whipsaws seem likely giving day traders the upper hand and keeping swing and positions traders off balance with little to no edge. Expect volatility to remain high with GDP and Durable Goods reports later this week.
Overnight Asian markets closed mixed with the Nikkei falling 1.71%, while Hong Kong saw some relief rising 0.60%. European markets trade with modest gains, with pensive investors waiting on Ukrainian invasion developments. U.S. futures are also pricing in a bullish open amid the uncertainty with a big earnings day and a light economic calendar.
Economic Calendar
Earnings Calendar
We have a busy day with more than 250 companies listed on the Wednesday earnings calendar. Notable reports include LOW, AEM, ANSS, AVA, BBWI, BCO, BCS, BHC, BIRD, BKNG, BRMN, CHDN, CLH, CPK, DOC, EBAY, EXR, GBT, HEI, HFC, HLF, HTZ, IHRT, IR, JACK, JMIA, LL, LMND, NDLS, NTAP, OLED, OSTK, PAAS, PBR, RCII, RGR, SBGI, SSYS, STLA, STOR, TAP, TJX, VICI, VIPS, & WWW.
News & Technicals’
New omicron infections in the U.S. have plummeted 90% from a pandemic high in a little over a month. The U.S. is reporting about 84,000 new cases per day on average, according to data compiled by Johns Hopkins University, down from a pandemic high of more than 800,000 daily cases on Jan. 15th. As the nation emerges from the omicron wave, the states and the federal government are trying to move past the crisis mentality that gripped the nation two years ago. Russia is also the world’s top wheat exporter. Together with Ukraine, both account for roughly 29% of the global wheat export market. “China is also a big recipient of Ukrainian corn — in fact, Ukraine replaced the U.S. as China’s top corn supplier in 2021,” said Dawn Tiura, president at Sourcing Industry Group. Analysts said that Russia and Ukraine are also big suppliers of metals and other commodities. While the European Union would be affected by the escalating crisis, Germany would be especially hit. The outcome of Russia’s incursion into two breakaway regions of Ukraine is uncertain, but it has already caused commodities prices to shoot higher. Economists say the price of oil matters most because crude prices can drive up inflation and slow down the global economy. What happens to oil could also determine whether the Fed continues a brisk hiking pace after it raises interest rates in March or ultimately slows the pace due to growth concerns. Russian President Vladimir Putin is seeking “regime change” and will likely go all the way and invade the rest of Ukraine, according to Jeffrey Edmonds, a former director for Russia at the National Security Council. On Tuesday, the U.S. and U.K. announced fresh sanctions targeting Russian financial institutions, individuals, and sovereign debt after Putin ordered troops into two pro-Moscow regions in eastern Ukraine. It doesn’t make sense for Putin to just hold on to the separatist territories, Edmonds said. “He’s had these territories since 2014, so just moving more troops in there, I don’t think it gets him what he wants.” Treasury yields were back on in Wednesday trading, with the 10-year rising to 1.9807% and the 30-year slightly higher at 2.2716%.
Technically speaking, the indexes are at or near a short-term oversold yet fragile condition. However, the market’s uncertainty could make it difficult for the bulls to mount a substantial relief rally. If you listened to the Putin speech yesterday, it seemed pretty clear he is pushing for regime change in Ukraine, and the conflict seems likely to intensify. Oil continues to be the pressure inflation, and as we saw in the Case-Shiller number yesterday, home prices continue to rise. Although we have a big day on the earnings calendar, we don’t have much for significant market-moving reports. The economic calendar has a lull before the GDP and Durable Goods, Thursday and Friday, respectively. No matter what happens in the price action today, traders will have to keep in mind that the market will remain sensitive to Ukrainian developments. Anything is possible, so plan carefully and be prepared for overnight reversal and intraday whipsaws to continue as the conflict rolls out. Day traders will likely continue to have the upper hand, so taking gains faster than usual may be wise considering the volatility.
Trade Wisely,
Doug
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