Market Wrap – Tech Begging for a Facebook Boost April 27, 2022

Today was split into three sessions, Pre Facebook fake earnings drop, Post Real $FB after market when reversed the S&P and Nasdaq futures. The S&P 500 rose 0.2% Wednesday in a volatile session trading between a 0.3% decline and 1.6% gain. The Nasdaq Composite was unchanged after fading intraday gains.  After $FB rose $27 after hours Nasdaq Futures rose 200 handles and S&P almost 40

Treasuries saw mild selling pressure after two days of gains. The 2-yr yield rose two basis points to 2.57%, and the 10-yr yield rose five basis points to 2.82%. The U.S. Dollar Index rose 0.7% to 102.97. WTI crude futures rose 0.3%, or $0.33, to $101.75/bbl. 

We look at the indices, $MSFT $XOM $AAPL $GOOGL $FB $TSLA Gold, Copper, BTC, 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

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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 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.


Market Closes

Energy

  • WTI off the high price of $129.44. The highest in 2008 was $147.27.
  • 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 climbed above its high from 2020 to 102.92, pausing within a point of its high from early 2017. The highest since the very peak of the pandemic scare in March 2020.
  • Gold futures settled $15.40 lower (-0.8%) to $1,888.70/o pulled down by gains in both the US dollar and treasury yields.
  • Silver Futures 23.325 -0.219 -0.93
  • Copper Futures 4.4630 -0.0010 -0.02
  • Corn Futures 814.50 13.00 1.62
  • Wheat Futures 1091.25 -3.75 -0.34
  • Bloomberg Commodity Index 129.66 1.36 1.06
  • Bitcoin USD 39210 115 0.29
  • Ethereum USD 2886.09 21.25 0.74

Stocks

US Indices & S&P 500 sector watch:

  • DJIA 33301.93 61.75 0.19
  • Nasdaq Composite 12488.93 -1.81 -0.01
  • S&P 500 4183.96 8.76 0.21
  • Russell 2000 1884.04 -6.44 -0.34
  • NYSE Composite 15741.82 47.58 0.30
  • CBOE Volatility 31.60 -1.92 -5.73
  • NYSE Adv 1588 Dec 1648 Vol 1.1 bln
  • Nasdaq Adv 2394 Dec 2053 Vol 4.7 bln
  • The S&P 500 communication services sector (-2.6%) the worst-performing sector with Alphabet (GOOG 2300.41, -89.71, -3.8%) and Meta Platforms (FB 174.95, -6.00, -3.3%) ahead of earnings after the close, and bleeding in Netflix (NFLX 188.54, -9.86, -5.0%).
  • Information technology (+1.4%), materials (+1.5%), and energy (+1.5%) sectors each gained roughly 1.5%.

Key After Hours


US Markets YTD

  • Dow Jones Industrial Average -8.4% YTD
  • S&P 500 -12.2% YTD
  • Russell 2000 -16.1% YTD
  • Nasdaq Composite -20.2% YTD

Cboe Daily Market Ratios:

Cboe Daily Market Statistics

Europe

  • UK: FTSE 100 7425.61 39.42 0.53
  • Germany: DAX 13793.94 37.54 0.27
  • France: CAC 40 6445.26 30.69 0.48
  • Italy: FTSE MIB 23830.11 148.35 0.63
  • Spain: IBEX 35 8477.70 38.40 0.46
  • Stoxx Europe 600 444.31 3.21 0.73
  • Switzerland: Swiss Market 12051.48 118.20 0.99
  • DJIA 33301.93 61.75 0.19
  • Global Dow 3811.00 -12.56 -0.33

Asia

  • Hong Kong: Hang Seng 19946.36 11.65 0.06
  • Japan: Nikkei 225 26386.63 -313.48 -1.17
  • China: Shanghai Composite 2958.28 71.86 2.49
  • India: S&P BSE Sensex 56819.39 -537.22 -0.94
  • Australia: S&P/ASX 7261.2 -56.8 -0.78
  • S. Korea: KOSPI 2639.06 -29.25 -1.10
  • Global Dow 3811.00 -12.56 -0.33
  • DJIA Futures 33321 161 0.49

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

Bonds

U.S. Treasuries ended Wednesday mostly lower. Today’s $49 bln 5-yr note auction met underwhelming demand, which masked above-average foreign interest. Treasuries saw mild selling pressure after two days of gains. The 2-yr yield rose two basis points to 2.57%, and the 10-yr yield rose five basis points to 2.82%.

  • 2-yr: +2 bps to 2.57%
  • 3-yr: UNCH at 2.73%
  • 5-yr: +2 bps to 2.82%
  • 10-yr: +5 bps to 2.82%
  • 30-yr: +4 bps to 2.91%
  • $49 bln 5-year Treasury note auction results (prior 12-auction average):High yield: 2.785% (1.231%).
  • Bid-to-cover: 2.41 (2.42).
  • Indirect bid: 64.0% (61.6%).
  • Direct bid: 19.5% (17.4%).

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

  • Pending Home Sales fell 1.2% in March (Briefing.com consensus -1.5%) after falling a revised 4.0% (from -4.1%) in February.
  • The advance goods trade deficit widened to $125.30 bln in March from a revised deficit of $106.30 bln (from -$106.60 bln) in February.
  • Advance Retail Inventories increased by 2.0% in March after increasing a revised 1.5% (from 1.1%) in February.
  • Advance Wholesale Inventories increased by 2.3% in March after increasing by a revised 2.6% (from 2.1%) in February.
  • The weekly MBA Mortgage Index fell 8.3% to follow last week’s 5.0% decrease. The Purchase Index fell 7.6% while the Refinance Index fell 9.0%.
  • Around The Barrel – US Distillate Fuel Oil Stocks at 14yr Lows – TRADERS COMMUNITY

Market Notables

  • Align Tech (ALGN) misses by $0.10, misses on revs… ALGN down 19.5%
  • Amgen (AMGN) beats by $0.12, beats on revs; reaffirms FY22 EPS in-line, revs in-line… AMGN down 5.3%
  • Canadian Pacific (CP) misses by CAD 0.04, misses on revs… CP down 3.3%
  • Discover Financial Services (DFS) beats by $0.61, misses on revs; approves $4.2 bln for share repurchases; increases quarterly dividend 20% to $0.60/share… DFS up 2.8%
  • Ford Motor (F) beats by $0.01, beats on revs; reaffirms FY22 adjusted EBIT of $11.5-12.5 bln… F up 2.0%
  • Las Vegas Sands (LVS) misses by $0.16, misses on revs, cites pandemic-related restrictions… LVS up 1.3%
  • Lending Club (LC) beats by $0.13, beats on revs; guides Q2 revs above consensus; FY22 revs midpoint above consensus… LC up 21.4%
  • Mattel (MAT) beats by $0.12, beats on revs; reaffirms FY22 EPS guidance, revs guidance; reaffirms FY23 EPS guidance… MAT up 3.1%
  • Meta Platforms (FB) beats by $0.21, misses on revs; guides Q2 revs below consensus, lowers FY22 expense guidance… FB up 19.5%
  • O’Reilly Auto (ORLY) misses by $0.27, reports revs in-line; reaffirms FY22 EPS, revs guidance… ORLY down 6.8%
  • PayPal (PYPL) reports EPS in-line, beats on revs, TPV growth of 13%; guides FY22 EPS below consensus, revs below consensus… PYPL up 2.4%
  • Pinterest (PINS) beats by $0.06, reports revs in-line… PINS up 7.5%
  • Qualcomm (QCOM) beats by $0.29, beats on revs; guides Q3 EPS above consensus, revs above consensus… QCOM up 6.8%
  • Teladoc (TDOC) beats by $0.05, reports revs in-line; guides Q2 revs below consensus; guides FY22 revs below consensus, lowers FY22 adjusted EBITDA guidance… TDOC down 35.0%
  • Tyler Tech (TYL) beats by $0.22, beats on revs; guides FY22 EPS mostly above consensus, revs in-line… TYL up 0.2%
  • Upwork (UPWK) beats by $0.11, beats on revs; guides Q2 EPS in-line, revs above consensus; lower FY22 revs outlook… UPWK up 10.8%
  • Vale S.A. (VALE) announces new share buyback of up to 500 mln shares and ADRs… VALE up 3.4%

Europe

  • Germany’s Finance Minister Lindner warned about a “very high risk” of a feedback loop between inflation and higher wages.
  • Deutsche Bank reported better than expected profit for Q1 while Mercedes-Benz reported profit growth for Q1.
  • Germany’s May GfK Consumer Climate fell to -26.5 from -15.7 (expected -16.0).
  • U.K.’s April CBI Distributive Trades Survey fell to -35 from 9 (expected -3).
  • France’s April Consumer Confidence fell to 88 from 90 (expected 92).
  • Italy’s March non-EU trade deficit reached EUR510 mln (last deficit of EUR1.55 bln).
  • Swiss April ZEW Expectations fell to -51.6 from -27.8.

Asia

  • Japan’s Prime Minister Kishida announced a JPY6.2 trln stimulus package while a JPY2.7 trln extra budget is expected to be compiled at a later time.
  • There was some speculation that a plan to reopen Japan to tourists will be proposed.
  • China’s March Industrial Profit was up 8.5% YTD (last 5.0%).
  • South Korea’s April Consumer Confidence rose to 103.8 from 103.2.
  • Australia’s Q1 CPI was up 2.1% qtr/qtr (expected 1.7%; last 1.3%) and up 5.1% yr/yr (expected 4.6%; last 3.5%).

Looking ahead:

  • The Day Ahead:
  • Monday: Nothing of note
  • Tuesday: March Durable Orders (Briefing.com consensus 1.1%; prior -2.2%), Durable Orders ex-transportation (Briefing.com consensus 0.5%; prior -0.6%) at 8:30 ET; February FHFA Housing Price Index (prior 1.6%) and February S&P Case-Shiller Home Price Index (Briefing.com consensus 18.9%; prior 19.1%) at 9:00 ET; March New Home Sales (Briefing.com consensus 770,000; prior 772,000) and April Consumer Confidence (Briefing.com consensus 106.0; prior 107.2) at 10:00 ET; and $48 bln 2-yr Treasury note auction results at 13:00 ET
  • Wednesday: Weekly MBA Mortgage Index (prior -5.0%) at 7:00 ET; March advance goods trade deficit (prior -$106.60 bln), March advance Retail Inventories (prior 1.1%), and March advance Wholesale Inventories (prior 2.1%) at 8:30 ET; March Pending Home Sales (Briefing.com consensus -1.5%; prior -4.1%) at 10:00 ET; weekly crude oil inventories (prior -8.02 mln) at 10:30 ET; and $49 bln 5-yr Treasury note auction results at 13:00 ET
  • Thursday: Advance Q1 GDP (Briefing.com consensus 1.1%; prior 6.9%), advance Q1 GDP Deflator (Briefing.com consensus 7.3%; prior 7.1%), weekly Initial Claims (Briefing.com consensus 182,000; prior 184,000), and Continuing Claims (prior 1.417 mln) at 8:30 ET; weekly natural gas inventories (prior +53 bcf) at 10:30 ET; and $44 bln 7-yr Treasury note auction results at 13:00 ET
  • Friday: March Personal Income (Briefing.com consensus 0.4%; prior 0.5%), Personal Spending (Briefing.com consensus 0.6%; prior 0.2%), PCE Prices (prior 0.6%), core PCE Prices (Briefing.com consensus 0.3%; prior 0.4%), and Q1 Employment Cost Index (Briefing.com consensus 1.1%; prior 1.0%) at 8:30 ET; April Chicago PMI (Briefing.com consensus 62.0; prior 62.9) at 9:45 ET; and final April University of Michigan Consumer Sentiment Survey (Briefing.com consensus 65.7; prior 65.7) 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!