The U.S. embargo of Russian oil spiked prices, pushing the national average of gasoline to $4.17 a gallon.  However, with the CPI just around the corner, U.S. futures suggest a considerable gap up pressing short traders and likely inspiring the fear of missing out in retail traders.  So before you jump emotionally, consider the risk carefully and remember the big point whipsaws of late.  There is no doubt we all want some relief in the selling but chasing a big gap at the open only adds tremendous risk.  So plan your next move bucause carefully; in truth, nothing has changed, and the uncertainty of the path forward continues.

Overnight Asian markets traded mostly lower as the threat of global recession raises its ugly head.   However, European markets are green across the board this morning, with the DAX and CAC spiking up more than 4%.  U.S. futures also point to a significant gap up at the open, trying to shake off the consumer demand destruction, high energy prices, and inflation uncertainties. 

Economic Calendar

Earnings Calendar

We have nearly 150 companies listed on the earnings calendar, but there is a good number of unconfirmed.  Notable reports include ACOR, ADDYY, AMPY, BGSF, CVGW, CPB, PLCE, EXPR, FOSL, KFY, MQ, LCUT, NGMS, OTLY, REVG, THO, VRA, VERX, VIVHY, & ZIM.

News & Technicals’

If Russia retaliates by refusing to supply Europe with oil, that could “easily” send oil prices another $20 to $30 per barrel, said Andy Lipow, president of Lipow Oil Associates president.  “My greatest fear is that these prices have risen so fast that you cause a recession in Europe and Latin America that rolls on into the United States that ultimately affects China’s ability to sell consumer goods to the rest of the world,” he told CNBC’s “Squawk Box Asia” on Wednesday.  A complete ban on Russian energy imports in all significant consuming countries would “severely reduce and disrupt energy supply” and prices could soar further into “uncharted territory,” wrote Caroline Bain, chief commodities economist at Capital Economics.  A Chinese state-sponsored hacking group successfully compromised the computer networks of at least six U.S. state governments, according to research published by Mandiant.  APT41, which Mandiant claims carries out state-sponsored espionage on behalf of China, took advantage of software flaws and quickly exploited security vulnerabilities made public by researchers.  Mandiant said Tuesday that APT41 appeared to be “undeterred” by the indictment and its goals remain “unknown.”  For China, the speed and severity with which the U.S. and its allies sanctioned Russia is a warning sign that could guide future economic and foreign policy.  “This is a very multilateral moment,” said Reva Goujon, senior manager for the China corporate advisory team at Rhodium Group.  Beijing has refused to call Russia’s attack on Ukraine an invasion.  Instead, China has focused on promoting negotiations between Russia and Ukraine, and it opposes the economic measures that have been taken against Russia.  Treasury yields moved slightly higher in early Wednesday trading, with the 10-year up to 1.8992% and the 30-year pricing at 2.2622%.

Yesterday proved to be another rough day, with oil prices rising sharply after the U.S. embargo of Russian oil.  As a result, the National average gas prices spiked to $4.17 per gallon, pressuring an already stretched consumer and fanning the flames of inflation.  However, with a worrisome CPI number just around the corner, the U.S. futures point to a substantial overnight gap up, with Brent crude prices pulling back to $123.00 a barrel at the time of this report.  That said, the U.S. consumer can expect much higher energy prices going forward unless the administration restores domestic production.  Sadly this big gap puts the retail trader at high risk of an intraday whipsaw if they chase the gap while also being left behind if this is the beginning of a relief rally.  So pay close attention to overhead resistance for entrenched bears and keep in mind that nothing has changed.  The war is still in progress, inflation is impacting consumer habits, inflation is rising with the rapidly increasing food and energy prices, and the indexes remain in a downtrend.  Don’t allow the emotion of the day or the fear of missing out to dictate your trading decisions, as that will often take money right out of your accounts!

Trade Wisely,

Doug