Market Wrap – Oil and Nasdaq Get a Big Bear Hug March 14, 2002

After being up in the morning stocks reversed sharply and got no love from oil dumping under $100. The negative impact to growth stocks following another rise in Treasury yields outweighed the benefit of weaker oil prices ($102.82, -6.28, -5.8%). The Nasdaq Composite (-2.0%) and Russell 2000 (-1.9%) both fell about 2%, while the Dow Jones Industrial Average finished flat.

After hours COUP was the big loser when they reported earnings and lowered guidance. This is a high-risk earnings season. We saw another Bear Market rally fail after initially soaring on BTFD. We look at the indices, $AAPL, $AMZN, Gold, Copper, BTC, ETH, Natgas and oil in the podcast. We talk through 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

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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. 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 & @velocityradar 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.


Market Closes

Energy

  • April WTI crude oil (CLJ22) futures settled lower at $103.01 Down $6.32 or 5.78% after briefly falling below $100.00/barrel intraday, a low price of $99.76 and a high price nearly $10 higher $109.72
  • Off the high price of $129.44. The highest in 2008 was $147.27.
  • April RBOB gasoline (RBJ22) closed down -14.32 (-4.32%). 
  • April Nymex natural gas (NGJ22) lost 6.7 cents day/day and settled at $4.658. May lost 6.4 cents to $4.702.
  • Temperatures are projected to be “so exceptionally comfortable” between Thursday and March 23 that weak demand will likely “result in the first weekly storage build of the year,” the firm said. “And with a warmer-than-normal pattern favored to continue March 24-31, another build is likely” for the subsequent Energy Information Administration (EIA) storage report.
  • “The energy market fallout from Russia’s egregious invasion in Ukraine continues,” said EBW Analytics Group’s Eli Rubin, senior analyst. Traders “are pulling back from Russian supplies, with estimates of 2-3 million b/d of oil and product supply unable to find buyers as traders fear official new sanctions, desire to avoid being seen financing Russia, and freight and insurance costs spike.”
  • BNEF data showed gas flows to U.S. export terminals Monday rose +16% y/y to 13.002 bcf.  On Feb 18, gas flows to U.S. export terminals rose to a record 13.482 bcf.

Commodities and FX

  • The U.S. Dollar Index fell 0.2% to 98.97
  • Gold futures settled $24.20 lower (-1.2%) to $1,960.80/oz.  
  • May silver (SIK22) closed down -0.862 (-3.30%
  • CME Bitcoin Futures Settle MAR 22 +505 38830.0

Stocks

For The Day

  • Dow industrial average, +1.05 points or 0.0% at 32945.425
  • S&P index -31.2 points or -0.74% at 4173.12
  • NASDAQ index -262.58 points or -2.04% at 12581.23
  • Russell 2000-37.94 points or -1.92% at 1941.719
  • NYSE Adv 847 Dec 2404 Vol 1.2 bln
  • Nasdaq Adv 1138 Dec 3225 Vol 5.8 bln

S&P 500 sector watch:

  • 7 of the 11 S&P 500 sectors closed lower
  • S&P 500 information technology (-1.9%), communication services (-1.8%), and consumer discretionary (-1.8%) sectors, which contain the mega-caps, were among the laggards next to the energy sector (-2.9%). 
  • Financials sector (+1.3%), health care (+0.7%), consumer staples (+0.6%), and industrials (+0.3%)

ome of the biggest the gainers included:

  • Deutsche Bank, plus a .63%
  • Moderna, +8.59%
  • Pfizer, +3.92%
  • Charles Schwab, +3.78%
  • American Express +2.9%
  • Wells Fargo +2.87%
  • Dollar Tree +2.76%
  • Bank of America +2.13%
  • Papa John’s +2.13%
  • Visa +1.89%
  • American Express +1.64%

Some of the biggest losers included:

  • Gamestop, -15.77%
  • Doordash, -12.54%
  • Nio, -12.26%
  • Alibaba, -10.38%
  • Tencent, -8.94%
  • Palantir, -8.52%
  • Snowflake, -7.58%
  • Sofi, -7.25%
  • Qualcomm, -7.25%
  • Snap, -7.02%
  • Block, -6.9%

Looking at the Dow 30, the biggest losers included:

  • Nike, -4.13%
  • Intel -3.12%
  • Apple -2.66%
  • Chevron -2.45%
  • Salesforce -2.38%

The biggest gainers in the Dow 30 included

  • American Express +2.9%
  • Travelers +1.9%
  • Visa +1.89%
  • Coca-Cola +1.86%
  • 3M +1.77%

Key Earnings Reviews


  • Uber (UBER 29.27, -1.49, -4.8%), meanwhile, announced a fuel surcharge for customers, exacerbating concerns that inflation will slow down consumer spending. UBER shares fell 5%. 

US Markets YTD

  • Dow Jones Industrial Average -9.3% YTD
  • S&P 500 -12.4% YTD
  • Russell 2000 -13.5% YTD
  • Nasdaq Composite -19.6% YTD

Cboe Daily Market Ratios:

Cboe Daily Market Statistics

Europe

  • German DAX, +2.2%
  • France’s CAC, +1.8%
  • UK’s FTSE 100 +0.6%
  • Spain’s Ibex, +1.1%
  • Italy’s FTSE MIB +1.65%

Asia

  • Japan’s Nikkei: +0.6%
  • Hong Kong’s Hang Seng: -5.0%
  • China’s Shanghai Composite: -2.6%
  • India’s Sensex: +1.7%
  • South Korea’s Kospi: -0.6%
  • Australia’s ASX All Ordinaries: +1.1%.

Recall Last Month: 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

Bonds

U.S. Treasuries saw festering concerns about inflation and impending policy action by the Federal Reserve, which holds a two-day FOMC meeting starting Tuesday, to get inflation in check. 

  • 2-yr: +9 bps to 1.84%
  • 3-yr: +12 bps to 2.03%
  • 5-yr: +12 bps to 2.08%
  • 10-yr: +14 bps 2.14%
  • 30-yr: +12 bps to 2.48%

Solid U.S. 30-year Treasury Bond Auction with High Yield of 2.375% Follows Screeching CPI – TRADERS COMMUNITY

What You Need Know About Quantitative Tightening QT Bifurcations Explained – TRADERS COMMUNITY

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%.

News Highlights

USA

Europe

  • Germany’s February Wholesale Price Index +1.7% m/m (0.9% expected; last 2.3%) and 16.6% yr/yr (last 16.2%)
  • France’s January Trade Balance EUR8.0 bln (EUR -9.8 bln expected; last EUR -11.4 bln)
  • Spain’s January Retail Sales 4.0% yr/yr (last -2.4%)
  • Separate reports noting that Russia has stepped up its military attacks on Ukrainian cities, has asked China for help in providing military equipment, is recruiting mercenaries form other countries, and has said convoys delivering military equipment to Ukraine are legitimate targets.

Asia

  • Turquoise Hill Resources (TRQ 26.21, +6.08): +30.4% after acknowledging a privatization proposal received from Rio Tinto (RIO 70.83, -1.89, -2.6%) for $2.7 billion.
  • The Hang Seng plunged 5.0% with many stocks facing de-listing possibility in U.S. getting hit hard.
  • Hong Kong, along with mainland China, also had to battle with COVID concerns. China has put Shenzhen in a lockdown mode, suspending all non-essential business until March 20. That is impacting Apple supplier, Foxconn, while COVID remediation issues in general are weighing on the casino operators and many tech stocks. Worries about a slowdown in China continue to fuel expectations that policy stimulus will be provided.
  • U.S. and Chinese delegates meeting in Rome to discuss Russia-Ukraine situation amid reports Russia is asking China to provide military equipment.
  • New Zealand announced that it will cut its fuel excise tax by NZ$0.25/liter for three months.

Looking ahead:

Monday: 

  • India, February consumer price index (CPI) data,
  • UK, Office for National Statistics annual review of the “shopping basket” of items making up the suite of consumer price inflation indices

Tuesday: 

  • Canada, January manufacturing data
  • China, monthly retail sales figures
  • EU, January industrial production data France, February inflation rate Germany, research group ZEW economic sentiment survey
  • India, trade statistics
  • Japan, balance of trade data
  • Opec monthly oil market report
  • UK, March payroll employment figures plus February insolvency numbers
  • US: February labour statistics US February PPI (prior 1.0%), Core PPI (prior 0.8%), and March Empire State Manufacturing Survey (prior 3.1) at 8:30 ET

Wednesday: 

  • Canada, February CPI data
  • International Energy Agency monthly oil market report
  • Italy, February CPI data
  • Japan, January industrial production figures
  • US: Weekly MBA Mortgage Index (prior 8.5%) at 7:00 ET; February Retail Sales (prior 3.8%), Retail Sales ex-auto (prior 3.3%), and February Import/Export Prices at 8:30 ET; January Business Inventories (prior 2.1%) and March NAHB Housing Market Index (prior 82) at 10:00 ET; weekly crude oil inventories (prior -1.86 mln) at 10:30 ET; and March FOMC Rate Decision (prior 0-0.25%) at 14:00 ET

Thursday:

  • St Patrick’s day: Irish taoiseach Michael Martin will hold the annual shamrock ceremony with US president Joe Biden in Washington
  • Norway, 23 Nato members plus Finland and Sweden begin winter exercises in northern Norway in the Cold Response 2022 event
  • Australia, Reserve Bank of Australia’s quarterly bulletin
  • EU, February inflation data
  • Japan, two-day Bank of Japan monetary policy committee meeting begins plus February CPI data
  • Spain, January trade balance figures
  • UK, Bank of England’s monetary policy committee vote on interest rates
  • US: February Housing Starts (prior 1.638 mln), Building Permits (prior 1.899 mln), weekly Initial Claims (prior 227,000), Continuing Claims (prior 1.494 mln), and March Philadelphia Fed Survey (prior 16.0) at 8:30 ET; February Industrial Production (prior 1.4%) and Capacity Utilization (prior 77.6%) at 9:15 ET; and weekly natural gas inventories (prior -124 bcf) at 10:30 ET

Friday: 

  • Holi, the Hindu festival of colors
  • Sikh festival of Hola Mahalla begins
  • Canada, January retail trade figures EU, January trade figures Italy, January trade balance figures UK, February retail sales figures
  • US: Quadruple Witching Day, when stock index futures, stock index options, stock options and single-stock futures expire February Existing Home Sales (prior 6.50 mln) at 10:00 ET

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!