The rebound continues …. in stock markets that is, oil sold off on a rolling shutdown from Covid in Shanghai and hopes for a ceasefire in Ukraine. WTI traded down to $103.20 after settling at $105.96 down about -$10.70 on the day or -9.29%. Gold fell -$40.61 at the $1917.14 low. The markets were powered by $AAPL and $TSLA today, S&P 500 gained 0.7%, Nasdaq Composite rose 1.3%, Dow rose 0.3% and Russell 2000 was flat. Meme stocks exploded with AMC and GME leading the surge.
We look at the indices, $AAPL, $AMC $HYMC $GME $CLVR and others, 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 earnings season. We got the Bear Market rally resolution which has angered the BTFD quotient.
- May WTI crude oil (CLK22) traded down to $103.20 after settling at $105.96 down about -$10.70 on the day or -9.29%.
- Off the high price of $129.44. The highest in 2008 was $147.27.
- May RBOB gasoline (RBK22) closed down -24.01 (-6.99%).
- The April Nymex gas futures contract settled at $5.508/MMBtu, down 6.3 cents day/day. May shed 7.3 cents to $5.538.
- Options expiration on Monday and April contract’s expiry Tuesday.
- With weather demand waning, Bespoke looks for the first storage injection of the season on Thursday with the U.S. Energy Information Administration’s (EIA) next print. The report will cover the week ended March 25. Bespoke projected a storage increase of 22 Bcf, in line with expectations for a modest increase found by a preliminary Reuters poll.
- BNEF data showed gas flows to U.S. export terminals Monday rose +4.4% w/w to 13.1 bcf. On Saturday, gas flows to U.S. export terminals rose to a record 13.77 bcf.
- Baker Hughes reported Friday that the number of active U.S. nat-gas drilling rigs in the week ended March 25 were unchanged at a 2-1/4 year high of 137 rigs. Active rigs have recovered sharply from the record low of 68 rigs posted in July 2020 (data since 1987).
Commodities and FX
- The U.S. Dollar Index increased 0.4% to 99.14 with the British pound (-0.7%) and Japanese yen (-1.5%). The yen fell after the Bank of Japan offered to buy an unlimited amount of JGBs at 0.25% as part of its policy to control the yield curve.
- Gold futures settled $14.40 lower (-0.7%) to $1,939.80/oz
- May silver (SIK22) closed -4.19 (-1.64%).
- CME Bitcoin Futures Settle MAR 22 +3535. 48190.0
For The Day
- Dow 34955.89 +94.65 (0.27%)
- Nasdaq 14354.90 +185.60 (1.31%)
- SP 500 4575.52 +32.46 (0.71%)
- NYSE Adv 1653 Dec 1654 Vol 857.0 mln
- Nasdaq Adv 2159 Dec 2375 Vol 5.0 bln
S&P 500 sector watch:
- 8 of the 11 S&P 500 sectors closed higher
- Consumer discretionary (+2.7%), information technology (+1.2%), and real estate (+1.3%) sectors.
- The energy (-2.6%), materials (-0.5%), and financials (-0.3%) sectors closed lower.
Key After Hours
After Hours Gainers:
Companies trading higher in after hours in reaction to news: HBM +4.1% (provides annual reserve and resource update), FDX +2.6% (Raj Subramaniam to become new CEO), STNG +2.5% (enters into MoU with Carbon Ridge to develop onboard carbon capture), CWK +0.6% (to transfer business in Russia to local operator), RJF +0.5% (to acquire SumRidge Partners), AIG +0.2% (to rebrand Life & Retirement business as Corebridge Financial), BHLB +0.1% (expands partnership with FinTech firm Narmi to enhance its digital banking experience)
Companies trading higher in after hours in reaction to earnings guidance: JEF +3.8%, DNA +3.8%
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: AVAH -18.4%, ZEV -10.4%, PLAY -9.4%, LIDR -6.3%
Companies trading lower in after hours in reaction to news: NEO -22.1% (CEO steps down, co lowers Q1 revenue and EBITDA guidance), SKYH -3.8% (stock offering), SWX -1.9% (commences $400 mln common stock offering), ATER -1.6% (stock offering), BLL -1.5% (to reduce operations in Russia), AMBA -0.7% (names new CFO), NVO -0.4% (FDA approves 2.0 mg dose of Ozempic), LUV -0.1% (reaches tentative labor agreement with customer service employees union)
US Markets YTD
- Dow Jones Industrial Average -3.8% YTD
- S&P 500 -4.0% YTD
- Russell 2000 -7.5% YTD
- Nasdaq Composite -8.3% YTD
Cboe Daily Market Ratios:
- STOXX Europe 600: +0.6% (+0.2% for the week)
- Germany’s DAX: +0.9% (-0.2% for the week)
- U.K.’s FTSE 100: +0.2% (+1.1% for the week)
- France’s CAC 40: +0.8% (-0.2% for the week)
- Italy’s FTSE MIB: +0.7% (+1.5% for the week)
- Spain’s IBEX 35: +0.3% (-0.9% for the week)
- Japan’s Nikkei: +0.1% (+4.9% for the week)
- Hong Kong’s Hang Seng: -2.5% (flat for the week)
- China’s Shanghai Composite: -1.2% (-1.2% for the week)
- India’s Sensex: -0.4% (-0.9% for the week)
- South Korea’s Kospi: unch (+0.9% for the week)
- Australia’s ASX All Ordinaries: +0.3% (+1.6% for the week)
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 5-yr note and longer tenors recorded gains while shorter tenors were negative. The 2s10s spread tightened by seven basis points to 14 bps. The $50 bln 2-yr note sale was on the weak side while the $51 bln 5-yr note auction met solid demand ahead of tomorrow’s $47 bln 7-yr note sale.
- 2-yr: +5 bps to 2.34%
- 3-yr: +5 bps to 2.57%
- 5-yr: -1 bp to 2.57%
- 10-yr: -2 bps to 2.48%
- 30-yr: -3 bps to 2.57%
- $50 bln 2-year Treasury note auction results (prior 12-auction average):
- High yield: 2.365% (0.492%).
- Bid-to-cover: 2.46 (2.55).
- Indirect bid: 55.0% (54.8%).
- Direct bid: 25.5% (18.2%).
- $51 bln 5-year Treasury note auction results (prior 12-auction average):
- High yield: 2.543% (1.090%).
- Bid-to-cover: 2.53 (2.41).
- Indirect bid: 60.2% (61.4%).
- Direct bid: 19.7% (17.1%).
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%.
- The advance goods trade deficit for February narrowed to $106.60 bln from a deficit of $107.60 bln in January.
- Advance Retail Inventories increased by 1.1% in February after increasing 1.9% in January.
- Advance Wholesale Inventories increased by 2.1% in February after increasing a revised 1.1% (from 0.8%) in January.
- Kremlin spokesman Peskov said that President Biden’s remarks were “alarming” after the U.S. president concluded a speech on Friday by saying that Russian President Putin “cannot remain in power.”
- Negotiators from Russia and Ukraine are expected to meet in Turkey this week.
- Germany’s ruling SPD won a regional election in Saarland.
- Spain’s Prime Minister Sanchez announced that EUR6 bln will be spent to offset higher energy prices.
- A referendum to join Russia may be held in Luhansk, Ukraine, but Ukraine’s officials already indicated that the vote would have no legal basis in their eyes.
- China auctioned over 500 kilotons of wheat from state reserves.
- China’s February Industrial Profit was up 5.0% YTD (last 34.3%).
- Hong Kong’s February trade deficit reached HKD32.10 bln (last surplus of HKD6.60 bln) as imports rose 6.2% m/m (last 9.6%) and exports increased 0.9% m/m (last 18.4%).
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!