Jobs creation came in less than expected, easing inflationary worries, and closed the week with the SPY just below record highs. Between now and the next FOMC meeting will be the Thursday CPI number that may come in hot according to consensus estimates. All four indexes still have overhead resistance to deal with, but it seems unlikely getting this close to a new record, the institutions will miss that mark if only for the headline. However, don’t be surprised to see choppy price action amid all the meme-stock frenzy as we wait for the CPI reading.
During the night, Asian markets traded mixed as China’s exports missed forecasts. European markets trade modestly bullish across the board this morning. With a light day of earnings and economic data, U.S. futures point to a flat open after bouncing off overnight lows. Be careful overtrading as we test overhead resistance levels in a market struggling with momentum.
Economic Calendar
Earnings Calendar
As we kick off a new week of trading, we have a light day as 2nd quarter reports wind down with just companies listed on the calendar. Notable reports include GIII, MRVL, SFIX, & MTN.
News & Technicals’
The French Competition Authority fines Google $267 million for abusing its dominant position in online advertising. Google has agreed to end some of its self-preferencing practices as regulators across Europe clamp down on the tech giants. According to Musk’s tweet on Sunday, Tesla canceled the most expensive Model S Plaid Plus that claimed to deliver 520 miles on a full charge. However, the Buffett-supported BYD electric car maker has shipped to Norway with a price tag of $72,418 each. The city of Guangdong, China, is carrying out mass testing and has locked down areas that have reported more than 100 cases in the fast-spreading Delta strain of Covid. Treasury yields are in a wait-and-see mode this morning, waiting on the Thursday CPI number; some worry may come hot. The 10-year ticked slightly higher to 1.578%, while the 30-year drifted slightly south to 2.258%.
The bulls put in a strong performance on Friday but closed the day with the SPY just below record highs. As a result, we begin a new week with all four indexes challenged by overhead resistance. As the 2nd quarter earings wind down and a light economic calendar begins the week, traders will have to look elsewhere to find inspiration. The meme-stock frenzy could quickly help or hurt the overall market with its wild volatility reminiscent of the 1999 tech frenzy. Tread lightly where company valuations are pushed well beyond reasonable valuations because when it’s over, prices can fall very fast and be fundamentally different overnight. The big news of the week will be the next reading of the CPI on Thursday. Don’t be surprised if we see choppy price action as we wait to find out if this crucial inflation marker comes in as hot as expected.
Trade Wisely,
Doug
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