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Technical Update: Potential Bottom Forming?

What’s in Today’s Report:

  • Technical Update: Still Trending Lower But Potential Prospects of a Bottom Forming
  • Charts: S&P 500 Downside Target Reached, VIX in Compressing Range

Stock futures are modestly higher with global shares amid positive news out of China regarding covid policies.

China announced shortened quarantine times for incoming visitors in the latest move to ease covid-restrictions and potentially move away from their zero-Covid policy stance.

Economically, the German GfK Consumer Climate Index for July was no worse than feared at -27.4 vs. (E) -27.9 which is easing concerns about a swift drop-off in global economic growth.

Today, there are several economic reports to watch for: International Trade in Goods (E: -$102.0B), Case-Shiller Home Price Index (E: 1.8%), and most importantly Consumer Confidence (E: 101.0). Investors will want to see a continued slowdown in the data, but not to the degree that would raise concerns about a “hard landing.”

Two Fed officials are also scheduled to speak today: Barkin (8:00 a.m. ET) and Daly (12:30 p.m. ET) and there is a 7-Yr Treasury Note auction at 1:00 p.m. ET that could move yields and influence stock trading.

 

Sevens Report Q2 ’22 Quarterly Letter Coming July 1.

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Tom Essaye Quoted in Market Watch on June 23rd 2022

Don’t trust the stock-market bounce until S&P 500 is back above 3,800: analysts

Since the beginning of last week, 3,800 has become a new ceiling for the S&P 500 as sellers have repeatedly stepped in and overwhelmed the tentative, weakhanded bids…said Tom Essaye, founder of Sevens Report Research, in a Thursday note. Click here to read the full article.

Tom Essaye Quoted in CNBC on June 6, 2022

Nasdaq rises slightly to start week, shaking off jump in bond yields

Since those lows near 3,800 in the S&P 500 there has been real progress: China is reopening and hopefully the economy will be close to operating at near-full capacity within a month. That will add a large tail-wind to the global economy, and perhaps most importantly, ease supply chain stress…Tom Essaye of the Sevens Report said in a note. Click here to read the full article. 

 

Not As Bad As Feared, But How Much Better Are Fundamentals?

What’s in Today’s Report:

  • Fundamentals:  Not As Bad As Feared, But How Much Better Are They?
  • Weekly Market Preview:  Can the S&P 500 Hold This Recent Bounce?
  • Weekly Economic Cheat Sheet:  Friday’s CPI is the Key Report This Week

Futures are solidly higher thanks to positive news from China.

The economic reopening in China progressed over the weekend as COVID cases continued to decline, authorities relaxed more restrictions in Beijing, and none of the fifty largest cities in China have intense restrictions in place.

Also in China, the WSJ reported authorities may soon end their probe into Didi, and that might also signal an end to the government crackdown on Chinese tech stocks (if so that’d be a major positive for Chinese tech names and a peripheral positive for tech stocks more broadly).

Today there are no notable economic reports or Fed speakers, so it should be a generally quiet day of news.  Across the pond, UK Prime Minister Johnson faces a “no confidence” vote in Parliament, but he’s expected to survive it (if he doesn’t, that could be a surprise negative for stocks today but again that is unlikely).

Bounce or Bottom? A Key Level to Watch

What’s in Today’s Report:

  • Bounce or Bottom?  A Key Level to Watch

Futures are slightly higher following a night of mixed earnings and continued reopening in China.

Shanghai continued to reopen and Beijing is still avoiding the most draconian lockdowns and that’s helping broader market sentiment.

Economic data was sparse as the only notable report was Euro Zone M3 (6.2% vs. (E) 6.3%) but that’s not moving markets.

Today the key report is the Core PCE Price Index (E: 0.3%, 4.9%) and if it underwhelms vs. expectations and furthers the idea that inflation has peaked, look for a continuation of this week’s rally.  We also get Consumer Sentiment (E: 59.1) and the key there will be the five-year inflation expectations.  If they drop below 3.0%, that’ll be an additional positive for stocks today.

Tom Essaye Quoted in CNBC on March 31, 2022

Dow drops to snap four-day winning streak, Nasdaq falls more than 1%

Above 4,600 in the S&P 500, markets have now traded through most fundamental bounds of valuation, and for this rally to continue, we’ll need to see real, actual positive events (not just events that aren’t as bad as feared)…Tom Essaye of The Sevens Report said in a note to clients Wednesday. Click here to read the full article.

Tom Essaye Quoted in Big News Network on March 31, 2022

Above 4,600 in the S&P 500, markets have now traded through most fundamental bounds of valuation, and for this rally to continue, we’ll need to see real actual positive events…Tom Essaye of the Sevens Report. Click here to read the full article.

 

Market Multiple Levels: S&P 500

What’s in Today’s Report:

  • What Does a Peace Deal Look Like?
  • Market Multiple Levels: S&P 500

Markets are trading with a clear risk-on tone today as U.S. stock futures track big gains in European shares, while both the dollar and oil decline on potential progress towards an end to the conflict between Russia and Ukraine.

Earlier today, Kremlin Press Secretary, Peskov, noted that sanctions by the West are making Russia “think carefully” about the situation and that Russia will continue with talks with Ukraine, spurring fresh optimism for a peace deal.

Looking into today’s session, there is one economic report to watch in the morning: JOLTS (E: 10.90M), and then a 10-Yr Treasury Note Auction at 1:00 p.m. ET.

The market’s main focus will remain Russia/Ukraine today as this morning’s risk-on money flows are being driven by perceived progress towards a ceasefire deal ahead of tomorrow’s scheduled talks in Turkey. And if news flow about the conflict is generally positive, oil continues to decline on fading geopolitical concerns, and the S&P 500 can top yesterday’s intraday highs, a relief rally could really gain momentum today.

Is the Ukraine Conflict a Threat to Stocks?

What’s in Today’s Report:

  • Is Russia/Ukraine a Potential Major Bearish Event? (Good, Bad, and Ugly Scenarios)
  • Chart: S&P 500 Tipping Points to Watch

Stock futures are flat and international markets traded mixed through a quiet night of news however Treasury yields notably continued to grind higher overnight.

Economically, the January NFIB Small Business Optimism Index fell to 97.1 vs. (E) 97.5 but the release is not materially moving markets this morning.

Looking into today’s session, there is just one lesser followed economic report due out: International Trade in Goods (E: -$83.0B), which should not have a major impact on trading, while no Fed officials are scheduled to speak.

Earnings season is already beginning to wind down but a few notable releases today include: PFE ($0.85), BP ($1.18), and PTON (-$1.18).

Bottom line, investors are continuing to digest last week’s jobs print and looking ahead to the CPI report on Thursday as the main driver of the market remains central bank policy expectations. There is a 3-Yr Treasury Note auction at 1:00 p.m. ET today and with an otherwise quiet calendar the results could move markets (strong auction = dovish, stocks can rebound; weak auction = hawkish, volatility likely to rise).

Fed Wildcards to Watch

What’s in Today’s Report:

  • Wildcards to Watch: Tapering Schedule and Balance Sheet Reduction
  • Chart: Inside Day in the S&P Underscores Trader Indecision
  • Technical Breakpoints for the Market Today

Stock futures are firmly higher as trader focus shifts ahead to the Fed while investors digest mostly upbeat earnings.

MSFT initially fell by 7%+ after earnings yesterday but a positive outlook by management during the investor call has helped shares turn positive and rise by more than 4%.

Looking into today’s session, there are two economic reports due out this morning: International Trade in Goods (E: -$95.1B) and New Home Sales (E 760K) but neither should move markets ahead of the FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET) which will be the main events today.

Earnings today include: BA (-$0.09), T ($0.76), FCX ($0.96), PGR ($0.99), TSLA ($2.26), INTC ($0.90), STX ($2.36), RJF ($1.77).

Bottom line, the market is coiled up after the volatile start to the week and whether the Fed is dovish or hawkish today will decide whether we see a relief rally or break down to new lows.