Though this week’s uncertainty created some profit-taking in Friday’s market, the substantial earnings speculation continued despite the lowered expectations as the talking heads hyped the possibilities.  Trader’s have one more day before the FOMC meeting begins; the fireworks show ignites with MSFT reporting after Tuesday’s bell.  Plan for wild price gyrations and prepare for substantial morning gaps as the market reacts to the data.  This week could be the make-or-break point for a bullish rally, so plan carefully and avoid overtrading due to the massive risks.

Asian markets closed mostly lower overnight as tech stocks slipped, and the China banking and real estate pressures created downgrades.  However, European markets see nothing but green this morning as they wait on the big week of data.  U.S. futures reversed early selling, pointing to a bullish gap open with high hopes of good giant tech earnings results and a less aggressive FOMC rate increase.  Be careful to ingest too much hoipum while we wait!

Economic Calendar

Earnings Calendar

We have a very busy earnings week highlighted by market-moving tech giant reports.  Notable reports include AGNC, BOH, BRO, CDNS, CVLG, CR, DX, WIRE, FFIV, PHG, NEM, NXPI, PKG, PETS, PCH, SMBK, SCCO, SQSP, SUI, &  WHR.

News & Technicals’

According to a report published late Thursday, Goldman Sachs slashed its earnings outlook for the MSCI China stock index to zero growth for the year, down from 4%.  China’s property market has come under renewed pressure in the last several weeks as many homebuyers stopped mortgage payments.  The property market might take five years to recover from oversupply in China’s smaller cities, according to Henry Chin, head of research for Asia-Pacific at CBRE.  China’s securities regulator told CNBC in a statement it has not researched a plan for a three-tiered system to help Chinese companies avoid U.S. delisting.  The China Securities Regulatory Commission added that companies should comply with data security and listing rules, regardless of whether they were going public on the mainland or abroad.  The regulator said other information about ongoing discussions with U.S. regulators should come from official announcements.  For example, the WHO declared monkeypox a global health emergency.  The rare designation means the WHO now views the outbreak as a significant enough threat to global health that a coordinated international response is needed.  The WHO last issued a global health emergency in January 2020 in response to the Covid-19 outbreak.  Europe is the epicenter of the outbreak.  Right now, men who have sex with men are the community at the highest risk.  The WHO chief said the global risk is moderate, but the threat is high in Europe.  The WHO chief said that monkeypox is unlikely to disrupt international trade or travel right now.  World leaders swiftly condemned Russian missile strikes on a Ukrainian port.  The dramatic revelation comes from a U.N.-brokered deal that secured a sea corridor for grains and other foodstuff exports.  The strike on Odesa, Ukraine’s largest port, illustrates yet another anxious turn in fruitless efforts to mitigate a mounting global food crisis.  Treasury yields moved slightly higher in early Monday trading, with the 2-year trading at 2.99%, the 5-year at 2.88%, the 10-year at 2.80%, and the 30-year trading at 3.04%.

The miss on the PMI and the uncertainty of tech giant earnings ahead created some profit taking on Friday though substantial earnings speculation remained high.  Overnight futures traded negative as Asian markets sold off, but the premarket pump recovered loss despite the uncertainty of all the market-moving data coming our way this week.  However, today we have one more day for the talking heads, analysts, and traders to pontificate, predict, and gamble on what comes next.  It all begins on Tuesday with the beginning of the FOMC meeting and the MSFT report after the bell.  We should expect wild price volatility and the potential of significant morning gaps as the market gaps.  Anything is possible, so plan your risk carefully and remember one of the primary jobs of a trader is to protect your capital! 

Trade Wisely,

Doug