12/01/2022 ES Trade Plan Worksheet

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Dec 012022
 

Wednesday’s rally sent the S&P 500 to a positive 5.4% up for November after Fed Chair Powell hinted the Fed would slow the pace of rate hikes at the next meeting.  Powell also said that he still thinks the Fed can manufacture a soft landing for the economy, reducing inflation while avoiding a recession.  The S&P 500 closed above its 200-day moving average for the first time since early April 2022.

The US dollar wrapped up its weakest month since 2010.  Since the Fed started raising rates, foreign investors have poured into US Treasuries which bid the US dollar to a peak in September.  The October and November rallies in equities has the US dollar easing back from its recent high.  The US dollar is also at it’s 200-day moving average, but as support.  If the dollar bounces, the S&P 500 will face headwinds.

Costco Wholesale (COST) is down 3% premarket after posting weaker than expected earnings.  Sales through Nov 27 were up 5.7% over last year, but slower than 7.7% for October and 10.1% for September.

Five Below (FIVE) is up nearly 9% premarket after beating expectations and showing a sales acceleration.  The company is benefiting from a US consumer shift to lower priced items and value.

Corporate earnings include Ambarella (AMBA), American Outdoor Brands (AOUT), Big Lots (BIG), ChargePoint (CHPT), Designer Brands (DBI), Dollar General (DG), G-III Apparel (GIII), Kroger (KR), Li Auto (LI), Manchester United (MANU), Marvell Technology (MRVL), Patterson Companies (PDCO), Toronto-Dominion Bank (TD), Ulta Beauty (ULTA), Veeva Systems (VEEV), Weber (WEBR), Zscaler (ZS).

The economic calendar remains full.  The main shows are PCE and Claims @ 8:30am ET and ISM Manufacturing PMI @ 10:00am ET.  Other data includes Personal Income and Personal Savings @ 8:30am ET, Final Manufacturing PMI @ 9:45am ET, and Construction Spending @ 10:00am ET.  The Fed’s Bowman speaks @ 9:30am ET and Bar speaks @ 3:00pm ET.

Volatility expanded in yesterday’s runup but should contract today.

Whale bias is bearish into the 8:30am ET numbers on strong overnight volume.

 

 Posted by at 6:54 am

11/30/2022 ES Trade Plan Worksheet

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Nov 302022
 

Fed Chair Powell gives a keynote address to the Brookings Institution @ 1:30pm ET.  Markets will be evaluating Powell’s tone (i.e., how hawkish?) before tomorrow’s PCE inflation data.  FedWatch is currently pricing a 70% chance of a 50-basis point rate hike in December.  Powell’s speech could challenge current market speculation that the Fed will soon slow rate hikes.

Jobs data will play a key role in the Fed’s decision.  The ADP November employment report is released @ 8:15am and October JOLTS job openings @ 10:00am ET.  The November jobs report will be released this Friday.

China posted weaker than expected factory activity; the lowest in 7 months.  The slowdown was caused by Covid lockdowns.  The PMI data is adding to speculation China will ease on their strict Covid policies.

Biogen (BIIB) is up over 2% premarket after unveiling promising late-stage trial data of their Alzheimer’s treatment lecanemab.  Data shows a success rate between 23% and 37% in slowing cognition and daily function decline.  Side-effects are high however and noted in 13% of the participants, including 2 fatalities linked to micro-hemorrhages.  The Alzheimer’s Association has asked the FDA to approve the treatment.

Hewlett Packard Enterprise (HPE) is up 3.5% premarket after posting stronger than expected earnings and issuing an upbeat forecast.  HPE was the service-focused division of Hewlett Packard that was spun off in 2015.  The company claims to now have a right-sized cost structure and substantial order book which will increase recurring revenues at higher margins.

Earnings for Wednesday include Donaldson (DCI), Five Below (FIVE), Frontline (FRO), Hormel Foods (HRL), La-Z-Boy (LZB), Nutanix (NTNX), Okta (OKTA), Petco Health and Wellness (WOOF), Pure Storage (PSTG), PVH (PVH), Royal Bank of Canada (RY), Salesforce (CRM), Snowflake (SNOW), Splunk (SPLK), Synopsys (SNPS), Titan Machinery (TITN), and Victoria’s Secret (VSCO).

The economic calendar is overloaded.  In addition to the ADP and JOLTS data, the calendar includes GDP, Goods Trade Balance and Wholesale Inventories @ 8:30am ET, Chicago PMI @ 9:45am ET, Pending Home Sales @ 10:00am ET, Oil @ 10:30am ET, and Beige Book @ 2:00pm ET.  Before Powell’s 1:30pm ET speech, Fed Governor Lisa Cook gives a talk on monetary policy and the economy starting @ 12:35pm ET.

Volatility seems to be settling in with an average daily range of the ES around 50 points.  Today’s Fed and economic data reactions could certainly increase volatility for today.

No Whale bias as large trader overnight activity was too light to be significant.

 

 Posted by at 6:26 am

09/26/2022 ES Trade Plan Worksheet

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Sep 262022
 

As global central banks raise and lower (as the case with Turkey) interest rates, global currencies are taking a wild ride.  While American tourist are enjoying the strong dollar, retirement accounts, institutional portfolios, corporate earnings, and crypto holds are feeling pain caused by the currency movements.

Strong tech companies are feeling pain.  Nvidia is down 57% YTD, AMD is down 52% YTD, and Amazon is down 32% YTD, all primarily due to interest rates and the currency markets.

It’s rare times when a premier company like FedEx misses earnings by $2 and announces cost cuts of $3 billion.  Nike (NKE) posts earnings on Thursday and given they are a global company like FedEx, currencies will likely negatively impact the current and foreseeable future earnings.

The pound has hit a historic low of 1.0327 after release of last week’s new Conservative government ‘mini-budget’ and the euro has hit a 20-yuear low of 0.9689 against the dollar.

Oil prices continue to weaken as $100/barrel seems far in the rear-view mirror as prices return to Jan 2022 prices.  WTI for November hit $78.49/barrel while Brent contracts are trading around $85.50.

There are no corporate earnings of note for Monday.

The economic calendar is light with Chicago Fed @ 8:30am ET and Dallas Fed @ 10:30am ET.  Boston Fed President Susan Collins speaks @ 10:00am ET.

Volatility remains high.

No Whale bias as large traders leaned bearish overnight but not with enough volume to be significant.

 

 Posted by at 7:26 am

09/23/2022 ES Trade Plan Worksheet

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Sep 232022
 

Fed Chair Jerome Powell could shake up the markets once again this afternoon.  He is set to give the opening remarks for a Fed Listens event in Washington D.C. @ 2:00pm ET.  Given the fireworks his press conference generated on Wednesday, there is potential for more this afternoon.

The Securities and Exchange Commission (SEC) has decided that zero-commission brokerages are not ripping their customers off and will allow brokerages to continue being paid for order flow (PFOF) from market makers like Citadel Securities or Virtu Americas.  Rather than an all-out PFOF ban, the SEC thinks more price transparency and requiring brokers to execute at the best possible price at the time will reduce the problem of small investors paying too much and allow commission-free brokerages like Robinhood to exist.  One study showed that the differences in prices between fee brokerages and commission-free brokerages cost investors up to $34 billion per year.

Stocks are down overnight with some global markets hitting 2-year lows as global central banks crank up the rate hikes.  German PMIs showed a deep contraction in manufacturing.

In the US, the Atlanta Fed’s GDPNow tool is forecasting third quarter growth of 0.3% and the bond market continues to give recession warnings with the 2-year rising to 4.19%.  Meanwhile, Goldman Sachs cut their full year target for the S&P 500 to 3600.

Speaking of big banks, they got Congressional pressure on Thursday to raise savings interest rates.  While Fed rates have increased significantly, big bank savings interest rates have not moved from 0.01%.  The banks are posting 10s of billions in quarterly profits, around 25% of gross revenue, catching the ire of lawmakers.  Many regional banks now paying 2% or more on savings accounts.

Costco (COST) is down over 3% premarket after beating earnings but warning of narrowing profit margins.

Corporate earnings include Carnival (CCL).

The economic calendar focus is the Flash PMIs @ 9:45am ET.

Volatility remains high.

Whale bias is short into the US session open on decent large trader volume.

 

 Posted by at 7:27 am

06/20/2022 Juneteenth Federal Holiday

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Jun 202022
 

Ok, I’ll admit that I totally forgot about this new Federal holiday and went to work as usual this morning… On June 17, 2021, Congress passed legislation making June 19th a Federal holiday called Juneteenth National Independence Day. The date marks the day that Union General Gordon Granger’s June 19, 1865 proclaimed that Texas was freed from slavery. Texas, along with other Southern states had outlawed Abraham Lincoln’s Emancipation Proclamation. This year, the first Federally recognized Juneteenth falls on Monday, June 20. US stock markets are closed today.

 Posted by at 6:52 am

06/05/2019 ES Trade Plan Worksheet

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Jun 052019
 

Fed Chair Jerome Powell reinforced Fed’s James Bullard’s remarks that trade wars with China, Mexico, and the EU put a dark cloud over the US economy.  Powell said yesterday “as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”  Fedwatch now places the probability of a interest rate decrease at 53% for July.

Presidential candidate Sen. Bernie Sanders will be crashing Walmart’s annual meeting at the invitation of WalMart workers.  He expected to push Walmart to raise wages higher than the $11/hour minimum wage.

Earnings today include FIVE, AEO, GILL, CPB, CLDR, SFIX, MDB, and UNFI.  The economic calendar is full with focus on the 8:15am EST ADP and 10:00am EST ISM Non-Manufacturing PMI.  Also on the calendar are Final Services PMI @ 9:45am EST, Oil @ 10:30am EST and Beige Book @ 2:00pm EST.

Fed speakers include Vice-Chair Clarida @ 9:45am EST and Bowman @ 10:00am EST.  Volatility is up again due to yesterday’s Fed induced rally.  US stocks had their largest move in over 5 months.  Size bias is long into the US session open.

 

 Posted by at 6:08 am