Mar 4, 2022
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“If you’re changing the world, you’re working on important things, you’re excited to get up in the morning.” – Larry Page
Every month at about this time, the financial world stops everything to focus on what is often considered the most important jobs report in years. Today’s employment report looks like an exception, though. With Fed Chair Powell already telling the markets that March’s meeting will come with a 25 bps rate hike, the Russia Ukraine war intensifying, and commodity prices spiraling out of control, today’s report could be the least important jobs report in years.
Futures are sharply lower this morning following a big sell-off in Europe as war tensions escalate. The big headline last night was news of Russia attacking and seizing control of Europe’s largest nuclear power plant. While initial concerns of a nuclear accident have subsided, investors are coming to a realization that the longer this all drags on, the more damaging to the global economy it all becomes. European benchmark indices are currently down over 3%, while US futures are down about 1%.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Rising commodity prices have been the most direct impact of the Russia-Ukraine war, and crude oil is the most concrete example. Through this morning, WTI crude oil is up just over 20% on the week, and if these gains hold through the end of the day, it would be just one of five periods where crude rallied more than 20% in a week. In 1998, it got close to 20% but came up just short. As shown in the chart below, we’d also note that three of the prior four periods where prices spiked occurred during recessions. We’re at the point now where prices at the pump are higher on the way home from work than on the way in.
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Mar 3, 2022
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“He who knows when he can fight and when he cannot will be victorious.” – Sun Tzu
After a seemingly endless run of days where the futures indicated big moves at the opening bell, this morning, futures on all of the major averages are very little changed fluctuating on either side of unchanged. Even bitcoin is flat on the day! It’s not like there is a lack of potential catalysts, though. We have weekly jobless claims at 8:30, and then at 10, we’ll get the latest reads on Services PMI, Factory Orders, and Durables Goods. Also, don’t forget about Powell’s testimony at 10 AM, and continued developments out of Ukraine..
Jobless claims were just released, and while initial claims were expected to come in at a level of about 230K, the actual reading came in at 215K. Continuing claims were forecast to drop to around 1.44 million, and that reading came in higher than expected rising to 1.476 million which was unchanged from last week.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
With little change in the futures this morning, we thought this would be a good time to take a look at the technical picture for the major US indices. While yesterday’s bounce was welcome, it did little to improve the downtrends in the major averages.
The S&P 500 tracking ETF (SPY) hit a two-week high yesterday, which is less common this year than hitting record highs was last year. Despite the gains, though, the index has yet to even test its downtrend or 200-DMA which doesn’t come into play until around 4,450 on the index and about 445 for the ETF.
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Mar 2, 2022
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“The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.” – Ben Bernanke
Futures are looking to bounce back from yesterday’s weakness, but it’s still early and there are a lot of events on the horizon for today. St. Louis Fed President James Bullard will be speaking right at the open and then a half-hour later, Fed Chair Powell will be testifying in front of a House Panel. Then at 2 PM, we’ll get the release of the Fed’s Beige Book. The only economic indicator of note today was the ADP Private Payrolls report which came in higher than expected. More noteworthy, though, was the 800K positive revision to last month’s report.
News on the Russia-Ukraine front has been relatively quiet. Nothing much new to speak of, but the Russian shelling of Ukrainian targets has continued.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Yesterday, we highlighted the fact that the Nasdaq 100 has traded in an intraday range of over 1% every day this year. Yesterday, another shorter but pretty incredible streak also came to an end as it was the first time since 2/18 that QQQ was not up and down at least 0.5% in the same trading session. Swings from intraday gains of at least 0.5% to intraday losses of 0.5% (or in the opposite order) on an intraday basis indicate a volatile session, and five trading days in a row indicates extreme volatility and uncertainty.
The chart below shows historical streaks where QQQ saw intraday gains and losses of 0.5% in the same trading session. At five trading days, the streak that just ended is tied for the longest since February 2008 (six trading days), but it was well off the record of 18 trading days back in October 2000 – a period where there were multiple streaks with 0.5% intraday swings between gains and losses.
Looking at all the dates shown, though, the thing that stands out is that these types of streaks aren’t common, and they have only been seen during periods where the market was in a period of varying degrees of crisis.
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Mar 1, 2022
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“One doesn’t recognize the really important moments in one’s life until it’s too late.” – Agatha Christie
It was a pretty quiet night in markets, but things have taken a turn for the worse since Europe opened for trading. What was looking like a flat open for the markets about four hours ago is now looking more like a decline of close to 1%. In yesterday’s post, we noted that despite the big moves following the weekend’s events neither crude oil nor gold managed to take out their prior highs from last week. Well, this morning both are rallying again, and while gold has yet to take out its recent intraday high, WTI is trading above $100 per barrel and at new multi-year highs. Bottom line is that no one knows where this is all going, so it’s probably best to avoid making a big stand in one way or the other but use extreme market moves (in either direction) to your advantage.
In economic news today, investors will be watching Markit Manufacturing at 9:45 and then Construction Spending and the ISM Manufacturing report at 10 AM.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Yesterday was the 39th trading day of the year, and it was also the 39th straight day where the intraday range of the Nasdaq 100 ETF (QQQ) was more than 1%. Seems like a lot, right? Looking back over the last ten years, 39 straight trading days of 1% ranges on an intraday basis ranks as one of the longer streaks we have seen. The longest streak during this period was 46 trading days coinciding with the COVID crash, and besides that, the only one that was longer was the 41 trading days ending 1/10/19.
While the current streak ranks as one of the longest of the last ten years, it is nowhere near the longest on record. In the chart below, we show streaks of 1% intraday ranges in QQQ going back to its inception in early 1999. Notice anything in the chart? From early 1999 through October 2003 – a period encompassing more than four and a half years – QQQ traded in an intraday range of more than 1% every single day! How’s that for volatile? The current streak of 39 trading days also pales in comparison to streaks of more than 100 trading days that QQQ experienced during the financial crisis, but in the chart, those streaks barely even register to the 1999 to 2003 period. As volatile and hectic as the last eight weeks have been for markets, it’s still nothing compared to the ‘old days’.
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Feb 28, 2022
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“The two most powerful warriors are patience and time.” – Leo Tolstoy
Some periods of time or more eventful than others, and this past weekend was one of the more news-jammed weekends we have seen in years as nearly the entire world has unified against Russia’s actions in Ukraine. Futures are lower this morning in reaction to the continued hostilities, but there are a ton of moving parts to contend with. Make sure to read this morning’s full recap of all the events in today’s Morning Lineup.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Despite the weak picture in the futures market, equity prices still remain well above their lows from last week, and within the commodity space, we’ve seen a similar picture play out. For both gold and WTI crude oil, last night saw early moves higher at the open, but neither commodity was able to rally enough to take out the intraday highs from last week. Besides the fact that they weren’t able to take out those highs, both commodities have also given up much of their early gains. Gold is now 3.4% off last week’s high of 1,976.5 per ounce while WTI is down 4.72% from its high of 100.54 per barrel. Those highs from last week will be key levels to watch. Nobody knows how things are will play out from here, but last week’s highs in gold and crude oil are important milestones to watch. As long as they are able to remain in place, the better sign it is that the worse of this crisis could be behind us.
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Feb 25, 2022
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“Don’t blindly follow someone, follow market and try to hear what it is telling you.” – Jaymin Shah
After trading lower most of the night, futures have seen a significant turnaround leading up to the opening bell. Although not nearly as dramatic as Thursday’s intraday reversal, major US indices are currently looking at steady gains. Whether that holds into the closing bell ahead of the weekend remains to be seen. The catalyst behind this morning’s strength has been calls for diplomacy from China in settling the Ukraine conflict and apparent signals from Russia that they too are ready to have diplomatic talks. At the same time, though, the Russian military says it has seized control of a key airport outside of Kyiv.
Economic news this morning was generally positive Durable Goods, Personal Income, and Personal Spending all surpassing expectations while inflation data was mostly inline with expectations.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
Yesterday, we noted that the Nasdaq 100 ETF’s (QQQ) positive reversal was just the third time in its history that the ETF gapped down more than 3% at the open and finished the day more than 3% higher. The other two days were in April 2000 and May 2001. Neither of those two prior days were followed by positive returns for US stocks. Widening out the criteria a little more, yesterday was only the 14th time that QQQ gapped down 2% at the open and finished the day higher. Once again, the vast majority of prior instances occurred during the dot-com bust, but they weren’t exclusively confined to that period, and there have also been a handful of prior occurrences since the end of the financial crisis that occurred late in market selll-offs as well. In other words, the jury is still out, and given the catalyst behind yesterday’s downside gap (a major geopolitical conflict) it’s probably not a good idea not to read too much into one day’s action.
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