The bulls defied the IMF global growth downgrade, the worsening situation in Ukraine squeezing out short traders as they rushed in stocks.  However, one day does not make a trend, and it will be interesting to see if they have the energy to follow through today after the disappointing NFLX report.  Next, we will turn our attention to mortgage data, existing-home sales, and a busy day of earnings and Fed speakers.  Expect price volatility to remain high as the earnings drama continues.

Asian markets closed mixed overnight as China keeps its benchmark lending rate unchanged amid its struggling real estate sector.  European markets had a shaky start to the day but have since turned positive as they watch Ukraine developments.  U.S. futures trade modest and mixed this morning, with the Nasdaq under some pressure with NFLX indicated to open more than 25% lower.

Economic Calendar

Earnings Calendar

We have a busy day with more than 90 companies listed on the Wednesday earnings calendar, though several are unconfirmed.  Notable reports include TSLA, ABT, AA, ANTM, ASML, BKR, BDN, CNS, CMA, CCI, CSX, EFX, GL, KMI, LRCX, LAD, MMLP, NDAQ, PG, SLG, STLD, THC & UAL.

News & Technicals’

Shares of Netflix cratered more than 25% on Tuesday after the company reported a loss of 200,000 subscribers during the first quarter.  It’s the first time the streamer has reported a subscriber loss in more than a decade.  Netflix blamed increased competition, password sharing, inflation, and the ongoing Russian invasion of Ukraine for the stagnant subscriber growth.  Netflix said more than 100 million global households use a shared password, with more than 30 million in the U.S. and Canada.  As a result, Netflix suggested it will begin to make accounts that share passwords pay up.  Netflix has long ignored password sharing because it has been growing without cracking down on it, but it announced it lost subscribers in the first quarter for the first time in more than a decade.  IBM beat consensus on the top and bottom lines.  The technology services company offloaded Watson’s healthcare assets to a private-equity firm in the quarter.  The stock has outperformed the S&P 500 so far this year.  Russia’s war with Ukraine entered a new phase this week, with Moscow focusing its war machine on eastern Ukraine.  The move is seen as a bid for Russia to cement its grip on the Donbas — an area that includes two breakaway, pro-Russian self-proclaimed “republics” — and try to annex it.  Analysts warn how Russia’s latest offensive goes in the Donbas region could prove extraordinarily significant and decisive in the war against Ukraine.  It could determine how Ukraine’s territorial boundaries look in weeks and years.  Treasury yields dipped slightly early Wednesday, with the 10-year one basis point to 2.9034% and the 30-year down two basis points to trade at 2.9643%.

Bulls rushed into stocks yesterday, squeezing out short traders defying the IMF global growth downgrade and mixed earnings results.  Now the question is can they follow through on that rally after the very disappointing results from NFLX after the bell.  Surprisingly, the market seems to have chosen to ignore the rising commodities and inflation or that the Fed will begin to act more aggressively next month.  Add to that list the war in Ukraine, the weakening economy in China, and lockdowns that will likley create supply chain challenges.  Today, we will have another big round of earnings to supply price volatility, Mortage App data, Existing Home Sales, Petroleum Status, Fed Speakers, and a 20-year bond auction.  Remember that one day does not make a trend that we still have significant resistance levels above in the index charts.  So, plan your risk carefully and watch whipsaws and overnight reversals as earnings events continue to ramp up. 

Trade Wisley,

Doug