Tesla couldn’t save the ship, after opening up higher there were no buyers on the way down for stocks. The S&P 500 couldn’t stay above its 200-day moving average (4497) to then below its 50-day moving average (4413) on a closing basis. The 10-yr yield flirted with 2.96%, after Fed Chair Powell said he wasn’t ready to declare peak inflation, adding that the Fed could move to a tight policy after reaching a neutral rate, if necessary. Netflix continued to sell off with the Nasdaq Composite (-2.1%), Dow Jones Industrial Average (-1.1%), and Russell 2000 (-2.3%) all reversing and closed sharply lower.
We look at the indices, $AAPL $NFLX $SNAP $TSLA 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 104.03 1.84 1.80
- Brent Crude Futures 108.83 0.50 0.46
- Natural Gas Futures 6.930 -0.007 -0.10
- Unleaded Gasoline Futures 3.3303 0.0455 1.39
- 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.”
- Weather forecasts shifted back a little warmer, “more appropriately, less cool,’” according to Bespoke Weather Services who said models backed off the level of cooling in the eastern half of the nation at the end of April and early May. In total, four gas-weighted degree days (GWDD) were dropped from the 15-day forecast, The pattern, though, still holds onto its overall cooler-than-normal tilt.
- 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.
- 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 U.S. Dollar Index fell 0.6% to 100.31, after four consecutive gains.
- Gold Futures 1953.40 -2.20 -0.11
- Silver Futures 24.725 -0.546 -2.16
- Copper Futures 4.6835 0.0315 0.68
- Corn Futures 794.50 -15.50 -1.91
- Wheat Futures 1076.25 -21.25 -1.94
- Bloomberg Commodity Index 131.30 0.27 0.21
US Indices & S&P 500 sector watch:
- DJIA 34792.76 -368.03 -1.05
- Nasdaq Composite 13174.65 -278.41 -2.07
- S&P 500 4393.66 -65.79 -1.48
- Russell 2000 1991.46 -46.72 -2.29
- NYSE Composite 16499.33 -262.01 -1.56
- CBOE Volatility 22.68 2.36 11.61
- NYSE Adv 594 Dec 2602 Vol 956.6 mln
- Nasdaq Adv 1029 Dec 3330 Vol 5.1 bln
- All 11 S&P 500 sectors closed lower in a steady decline with energy (-3.1%) and communication services (-2.4%) taking a brunt of the damage. The consumer staples sector (-0.1%) outperformed on a relative basis with a 0.1% decline.)
Key After Hours
US Markets YTD
- Dow Jones Industrial Average -4.3% YTD
- S&P 500 -7.8% YTD
- Russell 2000 -11.3% YTD
- Nasdaq Composite -15.8% YTD
Cboe Daily Market Ratios:
- UK: FTSE 100 7627.95 -1.27 -0.02
- Germany: DAX 14502.41 140.38 0.98
- France: CAC 40 6715.10 90.19 1.36
- Italy: FTSE MIB 24805.62 -72.61 -0.29
- Spain: IBEX 35 8814.60 45.10 0.51
- Stoxx Europe 600 461.57 1.47 0.32
- Switzerland: Swiss Market 12301.33 -8.84 -0.07
- DJIA 34792.76 -368.03 -1.05
- Global Dow 4028.00 -34.29 -0.84
- Japan’s Nikkei: +1.2%
- Hong Kong’s Hang Seng: -1.3%
- China’s Shanghai Composite: -2.3%
- India’s Sensex: +1.5%
- South Korea’s Kospi: +0.4%
- Australia’s ASX All Ordinaries: +0.2%
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 finished Thursday with losses across the curve paced by shorter tenors. Late action saw a bounce in 10s and 30s while shorter tenors remained closer to their lows, resulting in fresh highs for the year in yields on the 10-yr note and shorter tenors.
Fed Chairman Powell appeared at an IMF debate today, sharing his belief that it is appropriate to move more quickly on interest rates, adding that a 50-bps hike is on the table for the May meeting.
- 2-yr: +12 bps to 2.69%
- 3-yr: +11 bps to 2.89%
- 5-yr: +12 bps to 2.98%
- 10-yr: +8 bps to 2.92%
- 30-yr: +5 bps to 2.93%
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%.
- Into The Vortex – EIA Reports Natural Gas Storage Grew Larger Than Expected 53Bcf – TRADERS COMMUNITY
- Tesla Delivers Record Earnings Despite Global Supply Chain Headwinds – TRADERS COMMUNITY
- Initial jobless claims for the week ending April 16 decreased by 2,000 to 184,000 (consensus 195,000). Continuing jobless claims for the week ending April 9 decreased by 58,000 to 1.417 million, which is the lowest level since February 21, 1970.
- The report is that it covered the week in which the survey for the April employment report was conducted. The decidedly low level of initial claims should feed expectations for strong nonfarm payrolls growth in April.
- The Leading Economic Index rose 0.3% in March (Briefing.com consensus 0.3%) after increasing a revised 0.6% (from 0.3%) in February.
- The Philadelphia Fed survey fell to 17.6 in April (Briefing.com consensus 21.0) from 27.4 in March.
- Around The Barrel – US Crude Oil Draws -8.02 Billion Barrels Reverses Last Week’s +9.38Bbbls Build – TRADERS COMMUNITY
- US Mortgage Applications Fall for Sixth Straight Week as Mortgage Rates Surge to Highest Since 2010 – TRADERS COMMUNITY.
- Tesla (TSLA 1049.00, +71.80): +7.4% after beating top and bottom-line estimates and reiterating expectations to achieve 50% average annual growth in deliveries over a multi-year horizon.
- AT&T (T 19.70, +0.27): +1.4% despite missing EPS estimates.
- Dow Inc. (DOW 68.95, +1.41): +2.1% after beating top and bottom-line estimates.
- American Airlines (AAL 21.56, +2.08): +10.7% after beating top and bottom-line estimates.
- United Airlines (UAL 50.45, +3.93): +8.5% on expectations for Q2 to be the highest quarterly revenue in company history and for the company to be profitable in FY22. United missed top and bottom-line estimates.
- Alaska Air (ALK 61.61, +2.92): +5.0% after beating EPS estimates and guiding FY22 revenue above consensus.
- There are growing expectations that the European Central Bank will raise rates as early as July after policymakers de Guindos and Wunsch discussed the possibility.
- Eurozone’s March CPI was up 2.4% m/m (expected 2.5%; last 0.9%) and up 7.4% yr/yr (expected 7.5%; last 5.9%). March Core CPI was up 1.2% m/m, as expected (last 0.5%) and up 2.9% yr/yr (expected 3.0%; last 2.7%).
- France’s April Business Survey rose to 108 from 107 (expected 105).
- An extra budget will be compiled by Japan’s government.
- South Korea’s exports through the first 20 days of April were up 16.9% yr/yr with chip exports increasing 22.9%.
- South Korea’s March PPI was up 1.3% m/m (last 0.5%) and up 8.8% yr/yr (last 8.5%).
- Hong Kong’s March Unemployment Rate rose to 5.0% from 4.5%.
- New Zealand’s Q1 CPI was up 1.8% qtr/qtr (expected 2.0%; last 1.4%) and up 6.9% yr/yr (expected 7.1%; last 5.9%).
- The Day Ahead:
- 7:00 ET: Weekly MBA Mortgage Index (prior -1.3%)
- 8:30 ET: March Existing Home Sales (Briefing.com consensus 5.80 mln; prior 6.02 mln)
- 10:30 ET: Weekly crude oil inventories (prior +9.38 mln)
- Treasury Auctions:
- 13:00 ET: $20 bln 30-yr Treasury bond reopening results
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!