Though we began the day with a bullish gap up, we spent the rest of the day in an uncertain chop zone that finally came to rest at the close, mostly lower. When we pair the typical end-of-quarter window dressing possibility, a GDP number that could show us in recession with index downtrends and significant overhead resistance, it’s easy to understand the uncertainty of what comes next. So, expect price volatility as we wait for the GDP reading and another dose of Jerome Powell’s tough talk on inflation. Plan your risk carefully as anything is possible.
Asian markets continued the bear market rally overnight, closing Tuesday trading with modest gains. European markets trade green across the board this morning as the ECB downplays inflation. U.S. futures point to another gap up open toward overhead resistance levels ahead of trade and consumer confidence reports. Avoid the fear of missing out as we stretch higher and near technical resistance levels as we wait on the GDP report.
Economic Calendar
Earnings Calendar
With just three days left until the end of the quarter, we have light days on the earnings calendar. Notable reports include AVAV, CGNT, EPAC, SNX, AMED & PRGS.
News & Technicals’
JPMorgan Chase and Citigroup said Monday that increasingly stringent capital requirements forced the firms to keep their dividend unchanged while rivals announced bumps to their quarterly payouts. Bank of America said that it was raising its quarterly dividend by 5% to 22 cents per share. Morgan Stanley said it raised the payout 11% to 77.5 cents per share. Wells Fargo boosted its dividend by 20% to 30 cents a share. Goldman Sachs appeared to have one of the larger dividend increases, a 25% bump to $2.50 per share. Investors are concerned about high inflation and have been closely tracking what the ECB is saying, but Lagard plays down recession risks. They are also wary of the high levels of debt in Europe, particularly Italy, and how a return to tighter monetary policy could become a financial constraint for these economies. However, Legard says the ECB is ready to move faster on rates if needed. Overseas travelers will only need to quarantine at a centralized facility, such as a hotel, for seven days upon arrival in mainland China, the National Health Commission announced Tuesday. Previously, overseas arrivals in China typically had to spend 14 to 21 days in centralized quarantine, depending on the country’s city of entry and destination. Tuesday’s announcement also said that within China, close contacts of confirmed Covid cases would likewise only need to spend seven days in centralized quarantine, followed by three days of health monitoring at home. Credit Suisse vows to forge ahead with its risk management overhaul, despite what its CEO called a “challenging” environment. The embattled Swiss lender will hold an Investor Deep Dive event Tuesday, setting out reforms across its risk, compliance, technology, and operations functions, along with the wealth management business. The embattled Swiss lender will hold an Investor Deep Dive event Tuesday, setting out reforms across its risk, compliance, technology, and operations functions, along with the wealth management business. Treasury yields moved slightly higher in early Tuesday trading, with the 10-year rising to 2.23% and the 30-year increase to 3.34%.
After gaping up, the market price action spent the day in an uncertain chop, ultimately ending the day moslty lower. While we can’t rule out the possibility of some end-of-quarter window dressing, the pending GDP could show us we are already in a recession and adds a significant dose of uncertainty. We should also consider the possibility of a choppy consolidation as we wait on 3rd quarter earnings to begin, which could prove challenging due to the state of the economy and the inflationary pressures. Finally, we will get the latest reading on the International Trade in Good numbers before the bell, followed by Case-Shiller and Consumer Confidence to keep us guessing what comes next. Plan your risk carefully, remembering Wednesday morning before the open, and we get the GDP report and more Fed from Jerome Powell.
Trade Wisley,
Doug
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