Last Day of May coming in after Memorial Day markets were very much getting ready for Summer. Oil was all the chatter early, WTI prices turn negative under $115 after testing $120.00/bbl on EU’s agreement to ban 90% of Russian crude imports by the end of the year. U.S. Treasuries ended Tuesday negative territory led by the10-yr note. Fed Chairman Powell met with President Biden today and was reportedly assured that the White House will give the Fed space to deal with inflation.
Dow fell -222.84 points or -0.67% at 32990.11 S&P index fell 26.07 points or -0.63% at 4132.16 NASDAQ index fell -49.73 points or -0.41% 12081.40 Russell 2000 fell 23.85 points or -1.26% at 1864.04 We look at the indices, $AAPL $CRM $ZKIN $TNXP Gold, Copper, BTC, ETH, Natgas and oil in the podcast.
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 July at the $114.67 Down $0.40 or -0.35%
- WTI off the high price of $129.44. The highest in 2008 was $147.27.
- Brent Crude Futures 116.15 0.55 0.48
- Natural Gas Futures $8.16 down $0.51 or -5.96%. The high price last week reached $9.43. The price is still up 121% from the end of year level of $3.70.
- Unleaded Gasoline Futures 3.9520 0.0358 0.91
- 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.”
Commodities and FX
- The U.S. Dollar Index increased 0.1% to 101.77.
- Gold futures settled $8.90 lower (-0.5%) to $1,848.40/oz with a modest move higher in both treasury yields and the greenback.
- Silver Futures 21.560 -0.128 -0.59
- Copper Futures 4.2960 0.0000 0.00
- Corn Futures 751.75 -1.75 -0.23
- Wheat Futures 1096.25 8.75 0.80
- Bloomberg Commodity Index 131.34 -2.53 -1.89
- Bitcoin USD 31883 126 0.40
- Ethereum USD 1946.98 -1.15 -0.06
- Ripple USD 0.4232 0.0046 1.09
US Indices & S&P 500 sector watch:
- Dow fell -222.84 points or -0.67% at 32990.11
- S&P index fell 26.07 points or -0.63% at 4132.16
- NASDAQ index fell -49.73 points or -0.41% 12081.40
- Russell 2000 fell 23.85 points or -1.26% at 1864.04
- NYSE Composite 15827.05 -115.58 -0.72
- CBOE Volatility 26.19 0.47 1.83
- NYSE Adv 1093 Dec 2240 Vol 2.2 bln
- Nasdaq Adv 1949 Dec 2818 Vol 5.7 bln
- Only one S&P Sector closed higher today, Consumer Discretionary. At its high today, the energy sector was up 2.2% but closed down 1.5%
Key After Hours
- Ambarella (AMBA) beats by $0.07, reports revs in-line; guides JulQ revs below consensus… AMBA down 6.4%
- ChargePoint (CHPT) reports Q1 results, beats on revenue; guides Q2 and FY23 revenue inline… CHPT down 4.1%
- Digital Turbine (APPS) reports EPS in-line, grows revs 93.7% yr/yr to $184.14 mln; expects Q1 EPS of $0.34-0.35 and revs of $183-187 mln… APPS up 0.5%
- HP Inc. (HPQ) beats by $0.03, beats on revs; guides JulQ EPS mostly above consensus; guides FY22 EPS mostly above consensus… HPQ up 0.3%
- Meta Platforms (FB) to change ticker symbol to “META” effective June 9… FB up 0.1%
- Salesforce (CRM) beats by $0.04, reports revs in-line; guides Q2 EPS below consensus, revs below consensus; raises FY23 EPS guidance above consensus, raises non-GAAP operating margin guidance, lowers revenue guidance below consensus… CRM up 5.9%
- Victoria’s Secret (VSCO) beats by $0.27, reports revs in-line; guides Q2 EPS in-line, revenue inline… VSCO up 6.7%
US Markets YTD
- Dow Jones Industrial Average -9.3% YTD
- S&P 500 -13.3% YTD
- S&P 400 -11.5% YTD
- Russell 2000 -16.6% YTD
- Nasdaq Composite -22.8% YTD
Cboe Daily Market Ratios:
Index – Last – Chg – % Chg
- UK: FTSE 100 7607.66 7.60 0.10
- Germany: DAX 14388.35 -187.63 -1.29
- France: CAC 40 6468.80 -93.59 -1.43
- Italy: FTSE MIB 24505.08 -303.57 -1.22
- Spain: IBEX 35 8851.50 -79.30 -0.89
- Stoxx Europe 600 443.35 -3.22 -0.72
- Switzerland: Swiss Market 11611.38 -124.88 -1.06
- Japan’s Nikkei -0.3%;
- Hang Kong’s Hang Seng +1.4%;
- China’s Shanghai +1.2%;
- India’s Sensex -0.6%;
- South Korea’s Kospi +0.6%;
- Australia’s All Ordinaries -0.9%.
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 ended Tuesday negative territory led by the10-yr note. The 10-yr note yield settled the day up 10 basis points at 2.84% while the 2-yr note yield jumped eight basis points to 2.54%.
- 2-yr: +8 bps to 2.54%
- 3-yr: +7 bps to 2.71%
- 5-yr: +9 bps to 2.81%
- 10-yr: +10 bps to 2.84%
- 30-yr: +9 bps to 3.06%
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%.
- Yamana Gold (AUY 5.98, +0.81, +15.7%): to be acquired by Gold Fields (GFI) for $6.7 bln in stock
- CatchMark Timber Trust (CTT 11.18, +2.88, +34.7%): to combine with PotlatchDeltic (PCH) in an all-stock transaction currently valued at $12.88 per share
- Zoom Video (ZM 112.01, +1.59, +1.4%): Daiwa double upgrades to Outperform from Underperform
- Into The Vortex – Natural Gas Outlook as Temperatures Heat Up – TRADERS COMMUNITY
- Around The Barrel – Crude Oil and Gasoline Summer Outlook – TRADERS COMMUNITY
- The Conference Board’s Consumer Confidence Index dipped to 106.4 in May (Briefing.com consensus 103.7) from an upwardly revised 108.6 (from 107.3) in April. In the same period a year ago, the index stood at 120.0.
- The key takeaway from the report is that inflation continues to be top of mind for consumers, which could pose downside risk for the economy if inflation pressures persist and curtail consumers’ discretionary spending activity.
- The Chicago PMI rose to 60.3 in May (Briefing.com consensus 55.5) from a revised 56.4 (from 58.5) in April.
- The FHFA Housing Price Index rose 1.5% in March after increasing a revised 1.9% (from 2.1%) in February.
- The S&P Case-Shiller Home Price Index was up 21.2% yr/yr in March (Briefing.com consensus 20.0%) after increasing a revised 20.3% (from 20.2%) in February.
- France’s CAC 40 Weakest European Bourse in May, closes Down 1% for the Month – TRADERS COMMUNITY
- Eurozone Inflation Accelerates in May to New Records, Follows German and Spanish CPI – TRADERS COMMUNITY
- German and Spanish Inflation Soar to Records with Consumer Sentiment at All Time Lows Ahead of ECB Meeting – TRADERS COMMUNITY
- Austrian Chancellor Nehammer said that Russian natural gas imports should not be sanctioned.
- Eurozone’s May CPI was up 0.8% m/m (expected 0.6%; last 0.6%) and up 8.1% yr/yr (expected 7.7%; last 7.4%). May Core CPI was up 0.5% m/m (last 1.0%) and up 3.8% yr/yr (last 3.5%).
- Germany’s May unemployment decreased by 4,000 (expected -16,000; last -13,000) while the Unemployment Rate remained at 5.0%, as expected.
- France’s Q1 GDP contracted 0.2% qtr/qtr (expected 0.0%; last 0.7%) but grew 4.5% yr/yr (expected 5.3%; last 4.9%). May CPI was up 0.6% m/m (last 0.4%) and up 5.2% yr/yr (expected 5.0%; last 4.8%). April PPI was unchanged m/m (last 4.5%). April Consumer Spending fell 0.4% m/m (expected 0.8%; last -1.4%)
- Italy’s Q1 GDP expanded 0.1% qtr/qtr (expected -0.2%; last -0.2%), growing 6.2% yr/yr (expected 5.8%; last 6.4%). May CPI was up 0.9% m/m (last -0.1%) and up 6.9% yr/yr (expected 6.2%; last 6.0%).
- Swiss Q1 GDP expanded 0.5% qtr/qtr (expected 0.3%; last 0.2%), growing 4.4% yr/yr (expected 4.3%; last 3.6%). April Retail Sales fell 6.0% yr/yr (last -6.6%).
- Australia Current Account Surplus Twelfth Straight in Q1 2022 but Lowest Since Q4 2019 – TRADERS COMMUNITY
- The shadow board of the Reserve Bank of New Zealand expects a 50-bps rate hike in July.
- China’s May Manufacturing PMI rose to 49.6 from 47.4 (expected 48.0) and May Non-Manufacturing PMI rose to 47.8 from 41.9.
- Japan’s April Retail Sales rose 2.9% yr/yr (expected 2.6%; last 0.7%), April Industrial Production fell 1.3% m/m (expected -0.2%; last 0.3%), and April Unemployment Rate dipped to 2.5% from 2.6% (expected 2.6%). April Housing Starts rose 2.2% yr/yr (expected 3.0%; last 6.0%) and May Household Confidence rose to 34.1 from 33.0.
- South Korea’s April Industrial Production was down 3.3% m/m (last 1.1%) but up 3.3% yr/yr (last 3.7%).
- Australia’s April Building Approvals fell 2.4% m/m (expected 2.0%; last -19.2%), Q1 Gross Operating Profits rose 10.2% qtr/qtr (expected 4.0%; last 4.6%), and Q1 Current Account surplus reached AUD7.50 bln (expected surplus of AUD13.40 bln; last surplus of AUD13.20 bln).
The Day Ahead:
- Traders Market Weekly: Memorial Weekend a Time for Reflection – TRADERS COMMUNITY
- Monday: Bond and equity markets closed for Memorial Day
- Tuesday: March FHFA Housing Price Index (prior 2.1%) and March S&P Case-Shiller 20-city Home Price Index (prior 20.2%) at 9:00 ET; May Chicago PMI (prior 58.5) at 9:45 ET; May Consumer Confidence (prior 107.3) at 10:00 ET
- Wednesday: Weekly MBA Mortgage Index (prior -1.2%) at 7:00 ET; final May IHS Markit Manufacturing PMI (prior 57.5) at 9:45 ET; April job openings (prior 11.549 mln), April Construction Spending (prior 0.1%), and May ISM Manufacturing Index (prior 55.4%) at 10:00 ET
- Thursday: May ADP Employment Change (prior 247,000) at 8:15 ET; weekly Initial Claims (prior 210,000), Continuing Claims (prior 1.346 mln), revised Q1 Productivity (prior -7.5%), and revised Q1 Unit Labor Costs (prior 11.6%) at 8:30 ET; April Factory Orders (prior 2.2%) at 10:00 ET; weekly natural gas inventories (prior +80 bcf) at 10:30 ET; and weekly crude oil inventories (prior -1.02 mln) at 11:00 ET
- Friday: May Nonfarm Payrolls (prior 428,000), Nonfarm Private Payrolls (prior 406,000), Average Hourly Earnings (prior 0.3%), Average Workweek (prior 34.6), and Unemployment Rate (prior 3.6%) at 8:30 ET; final IHS Markit Services PMI (prior 53.5) at 9:45 ET; and May ISM Non-Manufacturing Index (prior 57.1%) at 10:00 ET
- Monday (May 30)
- Pre-Market: None
- After-Hours: None
- Tuesday (May 31)
- Pre-Market: BEKE
- After-Hours: AMBA APPS HPQ CRM SPWH VSCO
- Wednesday (June 1)
- Pre-Market: CPRI CONN DCI WB
- After-Hours: AI CHWY CRDO DSGX ESTC GME HPE MDB NCNO NTAP PSTG PVH SMTC S PATH VEEV
- Thursday (June 2)
- Pre-Market: CAE CIEN DBI HRL SCWX SPTN TTC
- After-Hours: ASAN CVGW COO CRWD JOAN LULU OKTA PD PHR RH ZUMZ
- Friday (June 3)
- Pre-Market: None
- After-Hours: None
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!