With the hope of a relief rally, the Dow surged in the morning session only to produce a punishing intraday whipsaw that erased more than 750 points by the close.  In addition, both the DIA and QQQ failed through their 200-day averages, adding to the technical damage of this selloff.  Finally, the disappointing NFLX earnings could create more downside pressure adding insult to injury.  Although we are oversold in the short term, the SPY could easily visit its 200-day average today.  Next week, a Fed decision is likely to keep uncertainty and price volatility high as we head into the weekend.

Asian markets traded mainly lower overnight tracking U.S. markets.  European markets trade decidedly bearish this morning, seeing red across the board.  Although U.S. futures bounced from overnight lows, they currently suggest a lower open, with the tech sector leading the way.  Expect another challenging day of price action as we wait on next week’s Fed decision.

Economic Calendar

Earnings Calendar

We get a little break on the Friday Earnings calendar with just five verified reports.  Notable reports include ALLY, FHB, HBAN, INFO, & SLB.

News & Technicals’

Netflix rarely says streaming competition is a concern for the company but did so in its Q4 2021 earnings report on Thursday.  After hours, Netflix shares fell more than 18% after forecasting just 2.5 million new net global subscribers for its first quarter.  In addition, Netflix last week announced it was raising prices in the U.S. and Canada, potentially exacerbating competitive pressures.  Peloton said its fiscal second-quarter revenue would be within its previously forecasted range, as it takes actions to slash costs and improve profitability.  However, the company added fewer subscribers in the latest period than expected.  CEO John Foley said the company is focused on “identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”  Shares of Peloton closed down 23.9% at $24.22 on Thursday, wiping roughly $2.5 billion off of its market value.  Last month, Russia set out several main demands on Ukraine, among other security matters, in a draft security pact.  The document demanded that the U.S. must prevent the further eastward expansion of NATO and must not allow former Soviet states to join the alliance.  U.S. intelligence agencies are warning that Russia could be weighing a potential invasion of Ukraine, with the Kremlin moving 100,000 troops close to the border.  Treasury yields pulled back in early Friday trading, with the 10-year dipping to 1.7919% and the 30-year falling to 2.1103%.

After a morning rally that at one point pushed the Dow up 450 points, we experienced a punishing intraday whipsaw, closing more than 300 down and failing its 200-day average.  The QQQ also failed below its 200-day average and may follow-through lower this morning after the very disappointing NFLX report that sold off nearly 20% in after-hours trading.  Futures traded sharply lower in overnight trading but have recovered substantially this morning.  With a light day of earnings and economic reports, it could be a challenging day of price action as we slide into the weekend worries about the Fed decision next week.  Although indicators show we are in a short-term oversold condition, we can’t rule out the possibility that futures might retest the overnight low in the futures.  One thing is for sure the price volatility will likely continue to be highly frustrating and challenging in the days ahead.

Trade Wisely,

Doug