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“There are decades where nothing happens, and there are weeks where decades happen.” – Vlad Lenin

Good Morning Subscriber,

This earnings season, you could even say there are after-hours sessions where decades happen.  Between earnings reports from Netflix (NFLX), PayPal (PYPL), and Meta Platforms (FB) last night, some very large market cap stocks have lost a fifth of their value overnight.  These kinds of declines in reaction to one quarter’s worth of corporate performance are not exactly normal market events, and in the case of FB, today’s decline could be the largest single-day decline in market cap for a single stock in history!  These are some unprecedented moves, and we’re not even halfway through earnings season!

We have a busy day of economic data ahead as well with Non-Farm Productivity, Unit Labor Costs, Jobless Claims, ISM Services, Durable Goods, and Factory Orders.  Jobless Claims were already released and came in right around expectations while Non-Farm Productivity topped forecasts and Labor Costs were lower than expected.  Following last month’s weaker than expected ISM Services report, the headline index is expected to show further deceleration this morning but still come in at a healthy reading of around 60.0.  Durable Goods and Factory Orders, meanwhile, are both expected to show declines of less than 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.

Yesterday looked like an encouraging day for the Nasdaq 100 as the index traded and closed back above its 200-DMA, but that’s unlikely to last long as the index is expected to gap down more than 2% at the open this morning putting it back below its 200-DMA.

Going back to 2000, today will likely be the Nasdaq 100 ETF’s (QQQ) 106th downside gap of more than 2%.  In the charts below, we show its performance from the open to close on the day of prior downside 2%+ gaps broken out by weekday along with the frequency of positive returns for each day of the week.  Overall, the best day for QQQ to gap down 2% has been Wednesday as it has averaged a gain of 1.52% from the open to close with positive returns 54.5% of the time.  Average intraday gains on Tuesday haven’t been nearly as strong (0.42%), but QQQ has been more consistent to the upside with gains 60% of the time.  Unfortunately, Thursdays haven’t been a very good day for QQQ to gap down 2%+.  On those 17 prior occurrences, QQQ’s average performance from the open to close has been a decline of 0.02% with positive returns less than a third of the time.

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