Morning Market Update Wednesday, July 20

Providing Market Insights and Returns

Futures are slightly in the red, DOW FUT down 0.17%, S&P FUT down 0.15%, NAS FUT down 0.04%, WTI down around 2% but still above $100, 10-yr pulling back a bit @2.97%, 2s/10s still inverted. Europe indices red across the board and Asian markets closed the green. UK saw a June CPI YY of 9.4%, a 40-yr high, just as heat waves hits and the country sees its hottest day recorded. Everyone is still holding their breath to see what will happen with Gazprom and if the Nat Gas will be turned on after maintenance is finished tomorrow. Putin stated that Gazprom will fulfill its obligations, but also mentioned that an attempt to cap Russian oil prices will lead to sky-high prices. Putin seems to know the power he has in controlling natural gas, and anything could happen in the next 24-48 hours. European markets jumped yesterday when the hopeful news came out. We will see what develops. Kathy Wood is closing one of her funds, not surprising from a performance perspective but we are still amazed at the amount of inflows into ARKK which is down 50% YTD. Perhaps ARKK is a good contrarian indicator, once these big inflows turn to outflows, we will see capitulation? Investors were excited yesterday about NFLX better than expected subs losses. This afternoon, everyone will be looking at TSLAs numbers.

Huge rally yesterday, with just about everything in the green. As we noted yesterday, the S&P has been hitting resistance at the 25-day EMA, yesterday it broke through and closed just shy of the 50-day. Similar story for the DOW & QQQ, both closing slightly above their 50-day. Today will be significant to see if all 3 indices can break through that resistance zone or if it will hold. The indicators that we watch are still not supportive of a bottom, and would cycle out of the high Beta names as this looks like a bear market rally. Take an extra look at the S&P, we haven’t seen a close above the 50-day since early April. Let’s see what develops