On Friday, markets breathed a sigh of relief, finding some willing bullish buyers encouraging those holding short positions to take some profits heading into the weekend.  Sadly the bullish move left more questions than answers, unable to breach overhead price resistance levels.  Additionally, with the national average gas prices hitting a new record high, possible recession talk increased over the weekend.  We will kick off the week with a reading on Empire State MFG.  Data with a retail earnings focus throughout the week.  Keep a close eye on overhead resistance levels for entrenched bears and expect price volatility to remain challenging in the week ahead.

Asian markets traded mixed overnight as China’s economic numbers disappointed as lockdowns continue to weigh on the economy.  European markets trade with modest declines this morning as inflation impacts weigh on investor confidence.  U.S. futures also point to modest declines at the open, struggling to find momentum amidst the uncertainties of the path forward.

Economic Calendar

Earnings Calendar

As we kick off a new trading week, the earnings calendar has a theme of retail reports.  Notable reports Monday include ACRX, BZFD, CCSI, DAC, FTK, GAN, IPW, KALA, NU, PASG, PTE, RYAAY, SSYS, TTWO, TME, TSEM, WRBY, WEBR & WIX.

News & Technicals’

Ukraine has been unable to export grains, fertilizers, and vegetable oil, while the conflict also destroys crop fields and prevents a typical planting season.  In addition, some nations have imposed restrictions on exports.  This is the case in India, for example, which announced Saturday a ban on wheat sales “to manage the country’s overall food security.”  On Sunday, Amazon’s Jeff Bezos tweeted that inflation is most hurtful to the least affluent in the United States.  The comments from Bezos were in response to a thread in which President Joe Biden claimed the U.S. was on track to see its largest yearly deficit decline.  Bezos on Friday called out President Biden over a tweet that said taxing wealthy corporations could help lower inflation.  Former Goldman Sachs CEO Lloyd Blankfein said he believes the economy is at risk of recession.  Speaking on “Face the Nation” on CBS, Blankfein said a recession is “a very high-risk factor.”  There’s a path.  It’s a narrow path,” said Blankfein, who retired from Goldman Sachs several years ago and now holds the title of senior chairman.  The pandemic exacerbated a pilot shortage by slowing down training, hiring and creating a wave of early retirements.  Airlines offered pilots early retirements to cut labor bills during the depths of the pandemic.  The process to become airline-qualified in the U.S. is lengthy and expensive, making entry barriers high.  After disagreeing on pricing, the Irish low-cost airline terminated talks over a substantial order of Boeing 737 Max 10 jets worth tens of billions of dollars in September 2021.  O’Leary told CNBC following Ryanair’s full-year results that the company had been “very disappointed with the performance” of Boeing from a commercial perspective over the last 12 months.  Treasury yields eased slightly in early Monday trading, with the 10-year slipping to 2.91% and the 30-year dipping to 3.08%.

We finished the week with a sigh of relief as the market found a few willing buyers giving short some traders a good reason to take profits heading into the weekend.  But unfortunately, the technical picture of the index charts remains strongly bearish, with substantial resistance levels blocking the path to recovery.  Moreover, during the weekend, the talk of a likely recession increased as the insidious inflation tax continues to impact consumer spending.  The national average gas price set another new record this weekend at $4.48 per gallon, with diesel rising to $5.57, adding pressure to everything we buy, sell or do.  It will be interesting to see how this might impact the earnings performance of the retailers scheduled to report this week.  As for me, I will plan for the wild volatility to continue watching for bear attacks at or near price resistance levels.

Trade Wisley,

Doug