The stock markets are still trading like they don’t want to go home short. Nasdaq erased -2.25% decline and closed marginally higher by 6.72 points or 0.06%. The Dow industrial average was down -605.89 points or -1.9% at its session lows and closed -103.83 points or -0.33% at 31730.29. S&P was down -76.38 points or -1.94% at its lows and closed -0.13% at 3930.09.
From the all-time highs the Dow closed down -14.13% after trading as low as -15.49%, S&P index closed down 18.44% after trading as low as -19.92% and the NASDAQ index closed down -29.86% after trading as low as -31.48%. Crude oil again closed above its 50-day moving average (105.23). Rising interest rates, Russia’s war in Ukraine, and China’s COVID-related lockdowns all remain. DDD holdings Upstart and Palantir destruction continued, both proud members of the Dribbler Dirty Dozen and symbolic of the overvalued tech market.
We look at the indices, $AAPL $AFRM $HOOD $TSLA Gold, Copper, BTC, ETH, Natgas and oil in the podcast. We talk through to today’s action and where to now …
We talk through to today’s action and where to now …
Enjoy live commentary from Our Trading Room at YouTube as the day wraps up – feel free to like and share
In today’s post market wrap live from the trading room traders discuss the patterns through the options and futures markets that have played out perfectly from last week to today. We discuss trading psychology, risk management and trader development in today’s markets. Listen to our technical and market psychology read on the day. Join the Traders Community Podcast crew @traderscom @knovawave @Mahdavi4 @MetaJohnny1 plot out 2022.
Around the table today was packed with the Fed, geopolitics, domestic political influence and distortions, reading sentiment, patterns and order flow. After hours earnings and chart pattern review. This is a high-risk market.
- Crude Oil Futures settled at $106.13 Up $0.42 or 0.40%
- The high price $107.37. The low price $102.66.
- WTI off the high price of $129.44. The highest in 2008 was $147.27.
- Brent Crude Futures 107.87 0.42 0.39
- Natural Gas Futures 7.754 0.027 0.35
- Unleaded Gasoline Futures 3.7995 0.1140 3.09
- Rystad Energy said the war-induced uncertainty is likely to continue to impact gas prices.
- “The gas market remains highly volatile, and news driven,” said Rystad analyst Fabian Rønningen. This week, in particular, “the market remains anxious for clarity on rules governing ruble payments for Russian gas supplies.”
- BNEF data showed gas flows to U.S. export terminals Tuesday rose by +10.7% w/w to 12.8 bcf. In March gas flows to U.S. export terminals rose to a record 13.77 bcf.
Commodities and FX
- The U.S. Dollar Index increased 0.9% to 104.80 setting a fresh 20-year high.
- Gold futures settled $29.10 lower (-1.6%) to $1,824.60/oz, pressured by a decent rise in the dollar.
- Silver Futures 20.655 -0.920 -4.26
- Copper Futures 4.0885 -0.1205 -2.86
- Corn Futures 791.00 2.50 0.32
- Wheat Futures 1170.00 57.00 5.12
- Bloomberg Commodity Index 127.15 -0.26 -0.21
- Bitcoin USD 28233 -339 -1.19
- Ethereum USD 1898.79 -26.22 -1.36
US Indices & S&P 500 sector watch:
- Dow industrial average -103.83 points or -0.33% at 31730.29
- S&P index -5.10 points or -0.13% at 3930.09
- NASDAQ index up 6.72 points or 0.06% at 11370.95
- Russell 2000+21.23 points or 1.24% at 1739.38
- NYSE Composite 14931.10 28.95 0.19
- CBOE Volatility 31.77 -0.79 -2.43
- NYSE Adv 1601 Dec 1508 Vol 1.3 bln
- Nasdaq Adv 2322 Dec 1962 Vol 6.6 bln
- Of the S&P 500 sectors six of the 11 S&P 500 sectors positive with the health care (+0.9%), consumer discretionary (+0.8%), and real estate (+0.7%) sectors outperformed in positive territory.
- The information technology sector (-1.1%) was a heavy drag on the market and for sentiment, too, considering Apple (AAPL 142.56, -3.94, -2.7%) continued to struggle after losing its spot as the largest company in the world by market cap yesterday to Aramaco. The utilities sector (-1.2%) was the weakest link.
Key After Hours
- Affirm (AFRM) reports Q3 (Mar) results, beats on revs; guides Q4 revs in-line; guides FY22 revs above consensus; announces multi-year extension of exclusive partnership with Shopify (SHOP) in the US… AFRM up 28.3%
- Duolingo (DUOL) reports Q1 (Mar) results, beats on revs; guides Q2 revs above consensus; raises FY22 revs outlook… DUOL up 11.9%
- FIGS, Inc. (FIGS) misses by $0.01, misses on revs; guides FY22 revs below consensus… FIGS down 26.4%
- Payoneer (PAYO) beats by $0.11, beats on revs; guides FY22 revs above consensus… PAYO up 15.3%
- Robinhood Markets (HOOD) lifting after Emergent Fidelity Technologies discloses 7.6% active stake… HOOD up 25.5%
- Toast (TOST) misses by $0.08, beats on revs; guides Q2 revs above consensus; raises FY22 revs above consensus… TOST up 3.5%
US Markets YTD
- Dow Jones Industrial Average -12.7 YTD
- S&P 500 -17.5% YTD
- Russell 2000 -22.5% YTD
- Nasdaq Composite -27.3% YTD
Cboe Daily Market Ratios:
Index – Last – Chg – % Chg
European stock indexes closed near the lows of the day in relentless selling that accelerated after the US open.
- UK: FTSE 100 7233.34 -114.32 -1.56
- Germany: DAX 13739.64 -89.00 -0.64
- France: CAC 40 6206.26 -63.47 -1.01
- Italy: FTSE MIB 23566.23 -157.97 -0.67
- Spain: IBEX 35 8200.40 -112.20 -1.35
- Stoxx Europe 600 424.40 -3.19 -0.75
- Switzerland: Swiss Market 11506.13 -47.53 -0.41
- Hong Kong: Hang Seng 19380.34 -444.23 -2.24
- Japan: Nikkei 225 25748.72 -464.92 -1.77
- China: Shanghai Composite 3054.99 -3.71 -0.12
- India: S&P BSE Sensex 52930.31 -1158.08 -2.14
- Australia: S&P/ASX 6941.0 -123.7 -1.75
- S. Korea: KOSPI 2550.08 -42.19 -1.63
Recall in January: JP Morgan quant maestro Marko Kolanovic was out with a comment near lows that didn’t go unnoticed.
“Near term we recommend buying the dip on US indices given oversold conditions… though medium term we favor EM/China/Europe on a regional basis on improving activity and easing headwinds, and the UK on valuation.”Marko Kolanovic Jan 10 2022
- We stay positive on equities and expect omicron will ultimately prove a positive for risk assets, as this milder but more transmissible variant speeds the transition from pandemic to endemic with a lower human toll,
- As this wave fades, it will likely mark the end of the pandemic
- omicron’s lower severity and high transmissibility crowds out more severe variants and leads to broad natural immunity
- signs of supply constraints potentially passing their worst point
Recall back in October he said to buy the dip because fears of higher yields were overdone adding the market could absorb higher yields. “We don’t expect a broad market selloff unless yields were to rise above 250-300 bps (US 10y), which we don’t foresee in the near term,” From there the S&P 500 rose 11.5%.
Perhaps this time it’s’ different but nevertheless the algorithms liked it that day but from then ……… not so much
U.S. Treasuries 2-yr yield fell 13 basis points to 2.51%, and the 10-yr yield fell ten basis points to 2.82% (off 3.20% early this week) its lowest level in over two weeks. Today’s $22 bln 30-yr bond auction was met with solid demand, capping this week’s note and bond auction slate.
- 2-yr: -13 bps to 2.51%
- 3-yr: -11 bps to 2.71%
- 5-yr: -10 bps to 2.78%
- 10-yr: -10 bps to 2.82%
- 30-yr: -6 bps to 2.99%
Most of us are familiar with QE but what is QT? When the Fed reduces its balance sheet it is known as quantitative tightening, the flipside of quantitative easing. The US Federal Reserve at its December FOMC put the world on notice that tighter financial conditions are ahead. What does it mean? The possible Bifurcations would make Mandelbrot wince.
Where did it all start?
The Federal Reserve System Chairman Jerome Powell took a decidedly hawkish tone today at last month’s FOMC and the release of Minutes which sent US stock markets sharply lower. That day in the Treasury market the 2-yr yield, which tracks expectations for the fed funds rate, rose seven basis points to 0.83%. The 10-yr yield settled the session four basis points higher at 1.71%, with growing expectations for a run-up to 2.00%.
- Treasury Secretary Yellen claimed that the Federal Reserve has a path to avoiding a recession.
- Fed Chairman Powell’s second term was confirmed by the Senate by an 80-19 vote.
- Banco de México Raises Rates Again with Inflation Risk to Mexican Economy – TRADERS COMMUNITY
- Solid 30-year Treasury Bond Auction with High Yield of 2.997% Follows CPI and PPI – TRADERS COMMUNITY
- Into The Vortex – EIA Reported Natural Gas Storage Grew 76Bcf – TRADERS COMMUNITY
- US Producer Price Inflation Rose 0.5% m/m and 11.0% y/y in April – TRADERS COMMUNITY
- Weak U.S. 10-year Treasury Bond Auction Graded C Minus with High Yield of 2.943% and 1.4 Basis Point Tail – TRADERS COMMUNITY
- Around The Barrel – US Crude Oil Strategic Reserves Falls at Record Pace to Lowest Since May 2001 – TRADERS COMMUNITY
- U.S. Inflation Higher Than Expected in April CPI +8.3% y/y vs 8.1% y/y – TRADERS COMMUNITY
- American Household Financial Stress Highest Level Since Outset of the Pandemic in April 2020 – TRADERS COMMUNITY
- Strong U.S. 3-year Treasury Bond Auction with High Yield of 2.802% – TRADERS COMMUNITY
- Federal Reserve Financial Stability Report Warns on Worsening Liquidity Risks – TRADERS COMMUNITY
- Ford Sells Almost 8% in Electric Truck Developer Rivian Automotive as Soon as Allowed – TRADERS COMMUNITY
- Brazil Central Bank Aggressively Raises Rates For Tenth Consecutive Time, Another 100bp to 12.75%, Signals More To Come – TRADERS COMMUNITY
- Federal Reserve Raises Rates 50 Basis Points First Time Since 2000 as Expected – TRADERS COMMUNITY
- US Mortgage Applications Rise First Time in Two Months Ahead of Federal Reserve Expected to Raise Rates 50bps – TRADERS COMMUNITY
- Baltic Sea Freight Index Gains for Third Straight Month in April – TRADERS COMMUNITY
- Marathon Oil (MRO 26.21, +1.82, +7.5%): best performer in the sector, rallying back above its 50-day moving average (24.99).
- APA (APA 40.01, +2.63, +7.0%): returning to its 50-day moving average (40.69).
- Devon Energy (DVN 67.53, +3.77, +5.9%): returning to its May high (69.75).
- EOG Resources (EOG 124.94, +5.38, +4.5%): rising back above its 50-day moving average (119.64).
- Occidental Petroleum (OXY 62.22, +2.81, +4.7%): rising into the top half of its range from Monday after beating Q1 expectations.
- ConocoPhillips (COP 101.86, +3.86, +3.9%): rising back above its 50-day moving average (99.57).
- Exxon Mobil (XOM 88.07, +3.05, +3.6%): rising into the top half of its range from Monday.
- Williams Companies (WMB 35.27, +1.09, +3.2%): bouncing off its 50-day moving average (33.82).
- Chevron (CVX 165.58, +4.80, +3.0%): rising back above its 50-day moving average (164.41).
- Kinder Morgan (KMI 18.89, +0.37, +2.0%): rising back above its 50-day moving average (18.70).
- Valero (VLO 121.72, +1.73, +1.4%): weakest performer in the sector, trading in the upper half of yesterday’s range.
- Bank of England policymaker Ramsden said that he expects more rate hikes due to inflation risk and that the central bank’s forecasts are not trying to guide the economy lower.
- Finland’s leaders are preparing to apply for NATO membership.
- U.K.’s Q1 GDP expanded 0.8% qtr/qtr (expected 1.0%; last 1.3%), growing 8.7% yr/yr (expected 9.0%; last 6.6%).
- Swiss April PPI was up 1.3% m/m (last 0.8%) and up 6.7% yr/yr (last 6.1%).
- A People’s Bank of China vice governor said that support for the real economy will be increased.
- South Korea will reportedly eliminate capital gains taxes for most shareholders.
- POSCO will invest KRW25 trln in its battery business over the next eight years.
- Japan’s March Current Account surplus reached JPY2.549 trln (expected surplus of JPY1.752 trln; last surplus of JPY1.648 trln). April Bank Lending rose 0.9% yr/yr (last 0.5%) while April Economy Watchers Current Index improved to 50.4 from 47.8.
- Australia’s March Building Permits fell 18.5% m/m, as expected (last 42.0%) and Private House Approvals fell 3.0% m/m (last 14.6%).
The Day Ahead:
- Monday: March Wholesale Inventories (Briefing.com consensus 2.3%; Prior 2.5%)
- Tuesday: April NFIB Small Business Optimism Index (Prior 93.2)
- Wednesday: MBA Mortgage Applications Index (Prior +2.5%); April CPI (Briefing.com consensus 0.2%; Prior 1.2%) and Core CPI (Briefing.com consensus 0.4%; Prior 0.3%); April Treasury Budget (Prior -$192.7B)
- Thursday: Weekly Initial Claims (Briefing.com consensus 191K; Prior 200K) and Continuing Claims (Prior 1384K); April PPI (Briefing.com consensus 0.5%; Prior 1.4%) and Core PPI (Briefing.com consensus 0.6%; Prior 1.0%)
- Friday: April Import Price Index (Prior 2.6%) and Import Price Index, Ex-Fuel (Prior 1.2%); April Export Price Index (Prior 4.5%) and Export Price Index, Ex-Ag (Prior 4.5%); May Preliminary Univ. Of Michigan Index of Consumer Sentiment (Briefing.com consensus 63.5; Prior 65.2)
Monday (May 9)
Pre-Market: ACM AZUL BNTX CLVT COTY DUK ELAN ENR HSKA DINO HGV HEP JLL RIDE MAC MSGE PLTR RCM RDNT TGNA TWKS THS TSN VTRS WOW
After-Hours: DDD AMC AMWL ANGI AZTA BLI BLNK BHF BWXT CARG DHT DNB EQH ESE EVBG FGEN GDRX GRPN HLIO HRTX HI HIMS HBM ICUI IAC IFF JRVR FROG LPSN MGY MAXR MESA MCHP MRC NCMI NHI NVAX OPK OPRT PLUG PRAA PRIM PRA PUBM RNG RBA ROVR SWAV SPG SDC SU SUPN TASK TDUP TREX UNVR UPST VVV VECO VRM XPO YMAB ZNGA
Tuesday (May 10)
Pre-Market: MASS ACRS AHCO ALGM AMRS ARMK AVYA AZEK BHC BSY BCO BLDR CRNC CEVA CHH CRON XRAY DM DBD DSEY EBIX EPC ENOV EVRI FOXA HAE HL H IAA IIVI IGT ITCI KNBE LCII LI MBUU MIDD EYE NXST NCLH NOVT PTON PLNT RETA REYN STER STVN SYY TTGT TPG TDG VERX WMG
During Market Hours: ENTA
After-Hours: EGHT AKA ABCL BIRD ARLO ARRY AXON BOOT ELY CELH COIN COLL CRCT CUTR DAR MSP DV DOUG EA EOLS EXEL FNF FLYW GFS GMED GOCO GO GRWG HALO HCAT ICHR INO IPAR JXN JAMF KGC LNW MTTR MODN NSTG OXY OLO OSUR PLBY PRPL RXT RPAY RBLX RKT SCSC SOFI SWCH SKIN REAL TTD U VUZI WELL WES WYNN YELL ZETA ZD
Wednesday (May 11)
Pre-Market: ATC FVRR KRNT DNUT LTH NOMD OLPX PFGC PRGO SLVM WEN WWW YETI
After-Hours: DIBS ACVA DOX APP ATCO BYND BMBL CPA CPNG BROS FLNC MFC MQ PAAS RIVN SMRT SONO STE SLF COOK DIS ZIP
Thursday (May 12)
Pre-Market: CAMT CYBR CYXT DAVA GENI HIMX HLLY IS KELYA NABL NICE NVMI PGTI PRMW SHCR SIX DTC SQSP TPR TNK USFD UTZ
After-Hours: AFRM AQN BLND BRLT COMP LAW DUOL FIGS HRT INDI LZ MLNK MSI NVTS NEWR PAYO POSH TBLA TOST VZIO VTEX UP
Friday (May 13)
Trust you all had a great day, sleep well and get your trading plan sorted.
Any questions please feel free to ask them below. Trade Smart!