The tech sector continues to stretch higher, with talk of a new bull market ringing in the ears of traders fearful of missing out despite the short-term overbought condition.  With a scorching hot labor market keeping the Fed active and signs of a weakening consumer raising, one has to wonder how long this can continue.  The fear of missing out is a powerful emotion but guard yourself against chasing already extended stocks or indexes because a significant reversal to test support levels is not out of the question.  Plan for another week of price volatility with another busy data week ahead.

Asian markets traded mixed and mostly lower overnight as traders reacted to the hot U.S. jobs data and the likelihood of more rate increases coming.  European markets trade with a bit of bearishness to begin the week, and the U.S. futures point to gap down open with tech leading the way.  I would not expect the bulls to give up easily but don’t rule out the possibility of a substantial pullback to test support levels at any time.

Economic Calendar

Earnings Calendar

Notable earnings to kick off the new trading week, ACTVI, CHGG, CMI, FN, IDXX, LEG, ON, PINS, RMBS, SPG, SWKS, SAVE, TTWO & TSN.

News & Technicals’

China urges calm after the violation of U.S. airspace.  “What I want to emphasize regarding this unexpected accident is that both sides, especially the U.S., should remain calm,” said China’s Ministry of Foreign Affairs spokesperson Mao Ning in Mandarin, according to a CNBC translation.  She was speaking at the first of the ministry’s daily press conferences after U.S. Secretary of State Antony Blinken indefinitely postponed his trip to Beijing in light of news that a suspected Chinese surveillance balloon was flying over the United States.

In 2022, Huawei announced it signed more than 20 new or extended patent licensing agreements.  Huawei ranked fourth last year by the number of patent grants in the U.S., said IFI Claims Patent Services.  In addition, according to the China Intellectual Property Administration website, Huawei filed for a lithography technology patent late last year. 

The U.S. will transition the federal Covid vaccination program to the private market as soon as the fall.  This means Pfizer and Moderna would sell the shots directly to healthcare providers at a higher price.  However, Americans with health insurance would still get their Covid shots for free once the vaccine program goes commercial.  But the uninsured may have to pay the total price of the shots after the current federal supply runs out.  The federal vaccine program will not be affected by the end of the Covid public health emergency in May, the White House said.

As bullish confidence in tech surges with talk of a new bull market ringing in the investor’s ears, the weak manufacturing sector and the hot jobs sector fans the flames of uncertainty.  However, the capacity of this market to ignore any bad data while rushing the buy during earnings reports has been truly remarkable.  The question is, how long can it last?  Friday’s selling relieved some short-term overbought conditions, but we should not be surprised if a quick and substantial pullback begins at any time.  With another big week of reports, expect challenging price moves making for dangerous conditions for retail traders. 

Trade Wisely,

Doug