Although the bulls had a slow start, they finally overwhelmed the bears triggering a short squeeze relief rally. However, with a round of tech giant earnings after the bell that discontinued investors, the bulls will have their work cut out for them if they intend to follow through to the upside on Friday. As we slide into May with rate increases on the horizon, expect price action to remain challenging and an active group of bears heading into the summer.
Asian markets close green across the board overnight with the hope of more policy support from China as their economy continues to contract. European markets are green across the board this morning, boosted by earnings even as their inflation hits their 6th straight record inflation reading. Facing another round of earnings and economic data, U.S. futures point to a bearish open, with the Nasdaq leading the way.
Economic Calendar
Earnings Calendar
We have less drama on the Friday earnings calendar, with about 100 companies fessing up to results. Notable reports include ABBV, AON, AZN, B, BLMN, BMY, CBOE, CHTR, CVX, CL, COWN, XOM, HON, IMO, LHX, LYB, NWL, NMRK, PSX, SLCA, WPC, WY & WETF.
News & Technicals’
According to filings with the Securities and Exchange Commission, Elon Musk sold roughly $4 billion worth of Tesla shares in the days following his bid to take Twitter private. The bulk of the CEO’s sales were made on Tuesday, the filings showed. As a result, Tesla shares fell 12% that day but edged higher on Wednesday by less than one percentage point. As the filings became public Thursday evening, Musk wrote on Twitter, “No further TSLA sales planned after today.” Apple’s revenue grew nearly 9% year over year during the quarter ended in March. But shares fell nearly 4% in extended trading after Apple CFO Luca Maestri warned of challenges in the current quarter, including supply constraints that could hurt sales by up to $8 billion. In addition, the tech giant authorized $90 billion in share buybacks. Amazon on Thursday gave a revenue forecast that trailed analysts’ estimates. Growth rates are at their slowest since the dot-com bust in 2001. In addition, the company recorded a $7.6 billion loss on its investment in electric vehicle maker Rivian. Tensions between Russia and the West appear to have risen dramatically over the last week. In the last few days alone, Russia stopped gas supplies to two European countries and has warned the West several times that the risk of a nuclear war is very “real.” Russian President Vladimir Putin said that any foreign intervention in Ukraine would provoke what he called a “lightning-fast” response from Moscow. Treasury yields fell slightly in early Friday trading, with the 10-year dipping to 2.8386% and the 30-year slipping to 2.9145%.
The bulls had a slow start yesterday, but they ultimately overcame those feisty bears to trigger a short-covering relief rally. At the end of the day, the question on everyone’s mind is, can we get at least one more day of follow-through to the upside? Sadly after a round of disappointing big tech earnings, the bulls may find that very challenging on the last trading day of April. With the Fed planning rate increases beginning next month and the sharply contracting GDP to a negative 1.4, thoughts of a coming recession could make the bears very active this summer. Expect volatility to remain high in the weeks ahead as investors grapple with all the uncertainty.
Trade Wisely,
Doug
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