Market Wrap – NFTS and NFP, Oil Trades Higher as GameStop and MEMEs Run While Tech Flounders

Following yesterday’s blood on the street after the Fed Minutes carnage stock markets were much calmer after S&P 500 found technical support at the 50-day moving average (4672). Treasury yields continue to push higher ahead of the NFP report. Oil again was the outlier with WTI trading over $80 on Kazakhstan unrest. Natural gas was flat after it’s EIA storage report. On the speculative end we saw Bitcoin and Cryptocurrencies again break levels lower. Risk seems relative, MEME stocks flew 30-50% Higher with GME and DWAC leading the way

Enjoy live commentary from Our Trading Room at YouTube as the day wraps up – feel free to like and share

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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. Listen to our technical and market psychology read on the day. Join the Traders Community Podcast crew @traderscom @knovawave @Mahdavi4 plot out 2022.

Market Closes

  • WTI crude futures settled at $79.46 up $1.61 or 2.07% after a high of $80.24, highest level since November 16. Oil has now been up four straight days and 11 of the last 12 trading days. WTI is up over 27% from its low on December 2 at $62.43. The price is around 7% from its October high at $85.41.
  • February Nymex natural gas (NGG22) on Thursday closed downp -0.019 at $3.863
  • Forecasts for below-normal U.S. temperatures, which should boost heating demand for nat-gas.  Atmospheric G2 on Wednesday said that below-normal temperatures are expected in the East from Jan 10-14, and below-normal temperatures are seen in the northern tier U.S. states from Jan 15-19.
  • BNEF data showed gas flows to U.S. export terminals Wednesday were up +13.3% y/y at 12.3 bcf, modestly below the Dec 19 record of 13.1 bcf.
  • EUR as the strongest of the major currencies, the CAD was the weakest.
  • Gold futures settled $35.90 lower (-2.0%) to $1,789.20/oz
  • U.S. Dollar Index +0.1% to $96.28.
  • March silver (SIH22) closed up +0.114 (+0.49%). 
  • Dow industrial average, 36236.47 -170.64 -0.47% all-time high at 36952.65.
  • S&P index 4696.05 -4.53 or -0.10% at 4700.59 all-time high at 4818.62
  • NASDAQ index 15080.86 -19.31 or -0.13% now down nearly 7% from its all-time high
  • Russell 2000 rose to 2,206.37 +0.56% +12.37 Today
  • NYSE Adv 1823 Dec 1453 Vol 912.7 mln
  • Nasdaq Adv 2155 Dec 2359 Vol 4.7 bln
  • Ark of the Covenant not as it appears #ARK ETF $ARKK $85.580.63%-0.54 $ARKG $55.061.59%-0.89 $ARKX $18.090.55%-0.10 $ARKF $36.800.35%+0.13 $ARKW $108.780.11%-0.12 
  • Apple $172.00 1.67% -2.92
  • The obsession of Apple hitting 3 trillion market at $182.86 was achieved (182.94 high)
  • Bitcoin weaker at 43014 after breaking the channel
  • UK FTSE 100 -1.0%
  • German DAX -1.4%
  • French CAC -1.8%
  • Spain IBEX -0.2%
  • Italy MIB -1.7%

Cboe Daily Market Ratios:

Cboe Daily Market Statistics

S&P 500 sector watch:

  • 5 of the 11 S&P 500 sectors closed lower
  • Materials (-1.2%), health care (-1.2%), and utilities (-1.1%) sectors declined more than 1.0%
  • Information technology sector declined 0.5%. 
  • Biggest gainers financials (+1.6%) and energy (+2.3%)

Markets YTD

  • Dow Jones Industrial Average +0.2% YTD
  • S&P 500 -1.4% YTD
  • Russell 2000 -2.3% YTD
  • Nasdaq Composite -3.5% YTD

Bonds

  • In the Treasury market the 10-yr yield hit just three basis points below its high from last year (1.765%) in midday trade. 2-yr: +6 bps to 0.89% 3-yr: +5 bps to 1.14% 5-yr: +4 bps to 1.48% 10-yr: +3 bps to 1.73% 30-yr: +1 bp to 2.09%
  • CME FedWatch Tool shows the probability for a rate hike in March increased to 67.8% today, versus 59.7% yesterday and 27.1% one month ago. 
  • St. Louis Fed President (FOMC voter) Bullard saying that the initial rate hike could happen as early as March
  • San Francisco Fed President (non-voter) Daly said that the economy is closing in on the Fed’s full employment and inflation goals.

Key Treasury Bond Auctions Along Yield Curve Next Week with Newly Hawkish Fed – TRADERS COMMUNITY

Following the turmoil in the market this week following the Federal Reserve System Chairman Jerome Powell took a decidedly hawkish tone today at last month’s FOMC and the release of Minutes yesterday which sent US stock markets sharply lower. 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%.

News Highlights

  • GameStop Entering NFT and Cryptocurrency Markets. ($151.92▲ 20.89 (15.94%) After Hours) GameStop is launching a division to develop a marketplace for nonfungible tokens and establish cryptocurrency partnerships, has hired more than 20 people to run the unit. Building an online hub for buying, selling and trading NFTs of virtual videogame goods such as avatar outfits and weapons
  • DWAC took off +42.50% or $18 on news Trump to launch Truth Social Media Platform in February.
  • Initial claims for the week ending January 1 increased by 7,000 to 207,000 (consensus 198,000) and continuing claims for the week ending December 25 increased by 36,000 to 1.754 million.
  • The trade deficit for November widened to $80.2 billion (consensus -$69.4 billion) from $67.2 billion in October. Exports were $0.4 billion higher than October exports and imports were $13.4 billion more than October imports.
  • Factory orders for manufactured goods increased 1.6% m/m in November (consensus 1.2%) following an upwardly revised 1.2% increase (from 1.0%) in October. Shipments of manufactured goods jumped 0.7% after increasing 2.0% in October.

Into The Vortex – EIA Reports Draw of -31 Bcf in Natural Gas Storage – TRADERS COMMUNITY

Into New Year and U.S. domestic natural gas demand for heating has weakened   Atmospheric G2 models said that warmer-than-normal temperatures in the eastern U.S. should continue to curb heating demand.  Last week EIA reported a lower-than-expected draw of -31 Bcf of working gas in storage lower than expected. With the global energy crisis LNG exports continue to grow but we balance supply shortages with deliverability.

ISM Non-Manufacturing Index Backs Off Record High in December – TRADERS COMMUNITY

The ISM Non-Manufacturing Index for December pulled back to 62.0% (consensus 67.1%) from a record high 69.1% in November as the Omicron variant runs roughshod over the economy. The Prices Index increased to 82.5% from 82.3% in November. Earlier the ISM Manufacturing Prices Index fell to 68.2% from 82.4%. However, the services is 80% of the US economy, making it an inflation risk.

Around The Barrel – Gasoline and Distillate Builds for Year End Crude Tax Assessment

Welcome to 2022, WTI Oil futures have rallied after OPEC+ holds the status quo. We had Gasoline builds on expected year-end inventory release for tax assessment on December 31 on crude barrels. Last week EIA reported US Crude last Week crude drew -2144Kbbl (incl +2577kbbl build at Cushing). Gasoline stocks drew +10128kbbl. Utilization fell +.1% to 89.7%. Production +200k to 11,800 kbpd.

Looking ahead:

US Jobs Report from Labor Department. According to a Reuters survey of economists, overall nonfarm payrolls are forecast to rise by 400,000 jobs in December, compared to 210,000 jobs added in November. The unemployment rate is expected to slip by a tenth of a percentage point to 4.1%.

Diane Swonk, chief economist at Grant Thornton. “We’re still down 3.9 million jobs, yet the Fed has decided we’re at full employment. We’re likely to see an unemployment rate of 4.1%, which is below what the Fed considers full employment.”

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!