Selling picked up today with Natural Gas and oil also getting pounded. Rising interest rates, Russia’s war in Ukraine, and China’s COVID-related lockdowns. Upstart reported after the close and Palantir before, both proud members of the Dribbler Dirty Dozen and symbolic of the overvalued tech market. $PLTR fell 22% on earnings, $UPST 45%. The S&P 500 fell 3.2% on Monday, closing below the 4,000 level in a broad-based whacking led by the growth stocks. The Nasdaq Composite (-4.3%) and Russell 2000 (-4.2%) both fell more than 4.0% while the Dow Jones Industrial Average outperformed on a relative basis with a 2.0% decline.
Ten of the 11 S&P 500 sectors closed lower with selling interest accelerating in the last 45 minutes of action.
We look at the indices, $AAPL $NFLX $UPST $TSLA Gold, Copper, BTC, ETH, 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
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 settled lower by $6.57 (-6.0%) to $103.43/barrel. Saudi Arabia cut oil prices for Asian buyers due to weak demand resulting from coronavirus-related lockdowns in China, according to Bloomberg.
- WTI off the high price of $129.44. The highest in 2008 was $147.27.
- Brent Crude Futures 105.44 -0.50 -0.47
- Natural Gas Futures 7.200 0.094 1.32
- Unleaded Gasoline Futures 3.6186 -0.0233 -0.64
- 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 was little changed at 103.70.
- Gold futures settled $26.20 lower (-1.3%) to $1,856.60/oz, finding their worst percentage losses in over a week.
- Silver Futures 21.765 -0.055 -0.25
- Copper Futures 4.1930 -0.0005 -0.01
- Corn Futures 773.25 1.25 0.16
- Wheat Futures 1085.50 -7.25 -0.66
- Bloomberg Commodity Index 124.76 -5.58 -4.28
- Bitcoin USD 30031 -1045 -3.36
- Ethereum USD 2228.90 -57.20 -2.50
US Indices & S&P 500 sector watch:
- DJIA 32245.70 -653.67 -1.99
- Nasdaq Composite 11623.25 -521.41 -4.29
- S&P 500 3991.24 -132.10 -3.20
- Russell 2000 1762.08 -77.48 -4.21
- NYSE Composite 15057.87 -508.68 -3.27
- CBOE Volatility 34.75 4.56 15.10
- NYSE Adv 296 Dec 2859 Vol 618.2 mln
- Nasdaq Adv 736 Dec 3443 Vol 4.1 bln
- Ten of the 11 S&P 500 sectors closed lower with selling interest accelerating in the last 45 minutes of action.
- The energy sector (-8.3%) was the worst performer, falling 8% as weaker oil prices ($103.43/bbl, -6.57, -6.0%) contributed to some profit-taking activity in the space. Information technology (-3.9%) and consumer discretionary (-4.3%) sectors.
- The consumer staples sector (+0.1%) managed a gain.
Key After Hours
- 3D Systems (DDD) misses by $0.06, reports revs in-line; guides FY22 revs in-line… DDD down 7.0%
- Alphabet (GOOG) will end Google App Store sales in Russia, according to Arstechnica… GOOG up 0.2%
- GoodRx (GDRX) beats by $0.02, beats on revs; guides Q2 revs below consensus; unlikely to achieve prior FY22 guidance… GDRX down 35.2%
- Groupon (GRPN) beats by $1.33, misses on revs; guides Q2 revs below consensus; guides FY22 revs below consensus… GRPN down 13.8%
- Hims & Hers Health (HIMS) reports EPS in-line, beats on revs; guides Q2 revs above consensus; guides FY22 revs above consensus… HIMS up 4.4%
- Microchip (MCHP) beats by $0.10, beats on revs; guides Q1 EPS above consensus, revs above consensus… MCHP up 1.9%
- Novavax (NVAX) beats by $0.07, misses on revs; reaffirms FY22 sales outlook… NVAX down… NVAX down 15.9%
- PubMatic (PUBM) beats by $0.03, reports revs in-line; guides Q2 revs in-line; guides FY22 revs in-line… PUBM down 5.8%
- RingCentral (RNG) beats by $0.05, beats on revs; guides Q2 EPS above consensus, revs in-line; guides FY22 EPS above consensus, reaffirms FY22 revs guidance; appoints Sonalee Parekh as CFO… RNG up 1.7%
- thredUP (TDUP) misses by $0.01, beats on revs; guides Q2 revs below consensus; guides FY22 revs below consensus… TDUP down 10.5%
- Trex (TREX) beats by $0.08, beats on revs; guides Q2 revs above consensus… TREX up 4.4%
- Upstart (UPST) beats by $0.08, beats on revs; guides Q2 revs below consensus; lowers FY22 revs outlook… UPST down 42.5%
US Markets YTD
- Dow Jones Industrial Average -11.3% YTD
- S&P 500 -16.3% YTD
- Russell 2000 -21.5% YTD
- Nasdaq Composite -25.7% YTD
Cboe Daily Market Ratios:
Index – Last – Chg – % Chg
European stock indexes closed near the lows of the day in relentless selling that accelerated after the US open.
- UK: FTSE 100 7216.58 -171.36 -2.32
- Germany: DAX 13380.67 -293.62 -2.15
- France: CAC 40 6086.02 -172.34 -2.75
- Italy: FTSE MIB 22832.56 -643.16 -2.74
- Spain: IBEX 35 8139.20 -182.80 -2.20
- Stoxx Europe 600 417.46 -12.45 -2.90
- Switzerland: Swiss Market 11444.18 -286.24 -2.44
- Hong Kong: Hang Seng 20001.96 -791.44 -3.81
- Japan: Nikkei 225 26319.34 -684.22 -2.53
- China: Shanghai Composite 3004.14 2.58 0.09
- India: S&P BSE Sensex 54470.67 -364.91 -0.67
- Australia: S&P/ASX 7120.7 -84.9 -1.18
- S. Korea: KOSPI 2610.81 -33.70 -1.27
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 attracted some buying amid the carnage in stocks. The 10-yr yield, which hit 3.20% overnight, backed down to 3.05% by the settlement (down four basis points). The 2-yr yield declined six basis points to 2.60% after hitting 2.73% overnight.
- 2-yr: -6 bps to 2.61%
- 3-yr: -7 bps to 2.83%
- 5-yr: -6 bps to 2.98%
- 10-yr: -4 bps to 3.08%
- 30-yr: -1 bp to 3.21%
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%.
- Atlanta Fed President (non-voter) Bostic said that while a 75-bps hike is not in his current forecast, he is not ruling out such a move.
- Into The Vortex – Natural Gas Outlook as Europe Weans Itself Off Russian Supplies – TRADERS COMMUNITY
- Brazil Central Bank Aggressively Raises Rates For Tenth Consecutive Time, Another 100bp to 12.75%, Signals More To Come – TRADERS COMMUNITY
- Federal Reserve Raises Rates 50 Basis Points First Time Since 2000 as Expected – TRADERS COMMUNITY
- Around The Barrel – US Crude Oil Builds as Gasoline and Distillate Draw Again – TRADERS COMMUNITY
- US Mortgage Applications Rise First Time in Two Months Ahead of Federal Reserve Expected to Raise Rates 50bps – TRADERS COMMUNITY
- Baltic Sea Freight Index Gains for Third Straight Month in April – TRADERS COMMUNITY
- Uber (UBER 23.05, -3.02, -11.6%) fell nearly 12.0% after CNBC reported that the company was planning to cut costs, exacerbating the underlying growth concerns in the market.
- Palantir (PLTR 7.46, -2.02, -21.3%) dropped 21% on disappointing revenue guidance
- Rivian (RIVN 22.78, -6.01, -20.9%) also dropped 21% amid news that Ford Motor (F 13.37, -0.84, -5.9%) and a large unknown seller were planning to unload millions of shares, according to CNBC.
- EU officials are struggling to agree on the sixth set of sanctions on Russia due to opposition from Hungary, Greece, Cyprus, and Malta.
- EU Foreign Minister Borell argued in favor of seizing Russian assets to rebuild Ukraine.
- European Central Bank policymaker Holzmann voiced support for two or three rate hikes before the end of the year.
- Eurozone’s May Sentix Investor Confidence fell to -22.6 from -18.0 (expected -20.8).
- France’s March trade deficit reached EUR12.40 bln (last deficit of EUR10.40 bln) and March Current Account deficit reached EUR3.20 bln (last deficit of EUR900 mln).
- Japan’s Prime Minister Kishida confirmed that Japan plans to phase out the use of Russian oil over time.
- South Korea’s President Yoon took office today.
- China’s Premier Li warned that his country’s employment situation is “complicated and grave.”
- Hong Kong’s leader Carrie Lam will be replaced by John Lee.
- China’s April trade surplus reached $51.12 bln (expected surplus of $50.65 bln; last surplus of $47.38 bln) as imports were unchanged yr/yr (expected -3.0%; last -0.1%) while exports increased 3.9% yr/yr (expected 3.2%; last 14.7%). April FX Reserves decreased to $3.120 trln from $3.188 trln (expected $3.133 trln).
- Japan’s April Services PMI rose to 50.7 from 50.5. March Average Cash Earnings rose 1.2% yr/yr (expected 0.9%; last 1.2%) and March Overtime Pay rose 2.5% yr/yr (last 5.8%).
The Day Ahead:
- Monday: March Wholesale Inventories (Briefing.com consensus 2.3%; Prior 2.5%)
- Tuesday: April NFIB Small Business Optimism Index (Prior 93.2)
- Wednesday: MBA Mortgage Applications Index (Prior +2.5%); April CPI (Briefing.com consensus 0.2%; Prior 1.2%) and Core CPI (Briefing.com consensus 0.4%; Prior 0.3%); April Treasury Budget (Prior -$192.7B)
- Thursday: Weekly Initial Claims (Briefing.com consensus 191K; Prior 200K) and Continuing Claims (Prior 1384K); April PPI (Briefing.com consensus 0.5%; Prior 1.4%) and Core PPI (Briefing.com consensus 0.6%; Prior 1.0%)
- Friday: April Import Price Index (Prior 2.6%) and Import Price Index, Ex-Fuel (Prior 1.2%); April Export Price Index (Prior 4.5%) and Export Price Index, Ex-Ag (Prior 4.5%); May Preliminary Univ. Of Michigan Index of Consumer Sentiment (Briefing.com consensus 63.5; Prior 65.2)
Monday (May 9)
Pre-Market: ACM AZUL BNTX CLVT COTY DUK ELAN ENR HSKA DINO HGV HEP JLL RIDE MAC MSGE PLTR RCM RDNT TGNA TWKS THS TSN VTRS WOW
After-Hours: DDD AMC AMWL ANGI AZTA BLI BLNK BHF BWXT CARG DHT DNB EQH ESE EVBG FGEN GDRX GRPN HLIO HRTX HI HIMS HBM ICUI IAC IFF JRVR FROG LPSN MGY MAXR MESA MCHP MRC NCMI NHI NVAX OPK OPRT PLUG PRAA PRIM PRA PUBM RNG RBA ROVR SWAV SPG SDC SU SUPN TASK TDUP TREX UNVR UPST VVV VECO VRM XPO YMAB ZNGA
Tuesday (May 10)
Pre-Market: MASS ACRS AHCO ALGM AMRS ARMK AVYA AZEK BHC BSY BCO BLDR CRNC CEVA CHH CRON XRAY DM DBD DSEY EBIX EPC ENOV EVRI FOXA HAE HL H IAA IIVI IGT ITCI KNBE LCII LI MBUU MIDD EYE NXST NCLH NOVT PTON PLNT RETA REYN STER STVN SYY TTGT TPG TDG VERX WMG
During Market Hours: ENTA
After-Hours: EGHT AKA ABCL BIRD ARLO ARRY AXON BOOT ELY CELH COIN COLL CRCT CUTR DAR MSP DV DOUG EA EOLS EXEL FNF FLYW GFS GMED GOCO GO GRWG HALO HCAT ICHR INO IPAR JXN JAMF KGC LNW MTTR MODN NSTG OXY OLO OSUR PLBY PRPL RXT RPAY RBLX RKT SCSC SOFI SWCH SKIN REAL TTD U VUZI WELL WES WYNN YELL ZETA ZD
Wednesday (May 11)
Pre-Market: ATC FVRR KRNT DNUT LTH NOMD OLPX PFGC PRGO SLVM WEN WWW YETI
After-Hours: DIBS ACVA DOX APP ATCO BYND BMBL CPA CPNG BROS FLNC MFC MQ PAAS RIVN SMRT SONO STE SLF COOK DIS ZIP
Thursday (May 12)
Pre-Market: CAMT CYBR CYXT DAVA GENI HIMX HLLY IS KELYA NABL NICE NVMI PGTI PRMW SHCR SIX DTC SQSP TPR TNK USFD UTZ
After-Hours: AFRM AQN BLND BRLT COMP LAW DUOL FIGS HRT INDI LZ MLNK MSI NVTS NEWR PAYO POSH TBLA TOST VZIO VTEX UP
Friday (May 13)
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!