Mon. January 3, 2022 – DIA 365.68 +.65%, QQQ 401.68 +.96%, SPY 477.71 +.58%, IWM 225.32 +1.29% CNN Fear/ Greed Index 68 (Greed)
Markets opened higher with the first trading day of the New Year, new money for a new month and year. Markets then vacillated for a period of time as traders took notice that interest rates were climbing in what appeared to be profit taking in the bond market. The 10-Year Note (yield) Index (TNX) 16.28 +1.16 climbed to technical resistance and held. Energy Services (XLE) 57.22 +3.10% outperformed as WTI crude oil 75.99 +.78 continued its rally. Occidental (OXY) 31.06 +7.14, Schlumberger (SLB) 31.72 +5.91% and Halliburton (HAL) 23.99 +4.90% all outperformed in the group. Consumer Discretionary (XLY) 210.31 +2.87% was the second best performer. After posting spectacular auto delivery numbers, Tesla (TSLA) 1199.78 +13.33% popped. That news benefited high end electric car competitor Lucid Group (LCID) 40.93 +7.57% as well. Semiconductor related shares Advanced Micro Devices (AMD) 150.24 +4.41% and Xilinx (XLNX) 221.27 +4.36%, and Intel (INTC) 53.21 +3.32% caught buying interest. On the downside, team management software provider Atlassian (TEAM) 350.42 -8.10% which topped on a blowout earnings report back on October 28 2021 (483.13) continued its correction from that day. With a new consensus emerging that the Omicron variant was more contagious but less lethal than the Delta variant, COVID-19 vaccine maker Moderna (MRNA) 235.05 -7.45% continued its decline since topping at 497.49 on August 10 2021. On the more upbeat pandemic assessments, cruise ship shares came under buying pressure, Norwegian Cruise (NCLH) 22.18 +6.94%, Carnival Cruise (CCL) 21.41 +6.41% and Royal Caribbean (RCL) 80.83 +5.11% all did well.

Tue. January 4, 2022 – DIA 367.87 +.60%, QQQ 396.47 -1.30%, SPY 477.55 -0.03%, IWM 224.98 -.15% CNN Fear/Greed Index 68 (Greed)
ISM Manufacturing Employment Index (Dec) reported in stronger at 54.2 vs. 53.5 expected. ISM Manufacturing New Orders Index (Dec) came in weaker than expected at 60.4 vs. 60.7. ISM Manufacturing PMI (Dec) 58.7 was weaker than the 60 expected. The outlier in the data set was PMI Manufacturing Prices Paid coming in significantly higher on the index 68.2 vs. 79.5 expected. OPEC agreed to increase production, but some analysts pointed to the inability of various members to increase their production due to spare capacity constraints. Rotation was the word of the day, as interest rates continued to move higher as evidenced by the 10-Year Note (Yield) Index 16.68 +.40 high cap growth was for sale as Financials and Cyclical were bid. WTI crude oil 77.01 +.93 finished higher on the day. Energy Services (XLE) 59.20 +3.46% finished at the top of the 11 S&P500 sector list for a second day in a row. Financial Services (XLF) 40.57 +2.63% came in second along with Industrials (XLI) 107.05 +2.01% third best. Mining and excavation machine manufacturer Caterpillar (CAT) 218.08 +5.35% was the standout performer in the DJIA, followed by JPMorgan (JPM) 167.83 +3.79%, while networking technology firm Cisco Systems (CSCO) 61.25 -3.02% and customer relations software developer (CRM) 248.23 -2.83% were the index’s laggards. On the downside, China Technology firms continued to be for sale after a short respite with Pinduoduo (PDD) 49.82 -11.19% and (JD) 64.20 -6.04% continuing their sell off.

Wed. January 5, 2022- DIA 364.09 -1.03%, QQQ 384.29 -3.07%, SPY 468.38 -1.92%, IWM 217.36 -3.39% CNN Fear/Greed Index 50 (Neutral)
ADP Employment Change (Dec) came with a blowout increase at 807K vs. the 400K. The Markit Services Index (Dec) came stronger than expected 57.6 vs. 57.5. The Markit PMI Composite (Dec) came in just above expectations at 57 vs. 56.9. Equity markets opened mixed with technology shares weak from the start. By mid-day markets were lower in a narrow range until the FOMC minutes were released. Within minutes markets reacted to the downside as traders and computers parsed the statement. It appeared that not only would the Fed continue tapering at its most aggressive level, but that Fed Funds would begin to be hiked in March. By the end of the day, it was the worst performance in the NASDAQ composite in over a year, and interest rates had climbed with the 10-Year Note (yield) Index at 17.05 +.37. The sell programs post release were significant as demonstrated by the Tick readings, there were more than 50 negative tick readings in the afternoon that exceeded -1000. The worst performing S&P 500 sector on the day was Real Estate (XLRE) 49.47 -3.25% followed by Technology (XLK) 168.32 -3.07%. In the DJIA, (CRM) 227.67 -8.28% was hit hardest followed by Microsoft (MSFT) 316.53 -3.84%. In the NDX100 Argentina internet retailer MercadoLibre (MELI) 1129.69 -9.00% was hit hard as well, followed by data security software provider Data Dog (DOGG) 145.52 -7.76%. COVID-19 vaccine developer Moderna (MRNA) 215.23 -7.65% continued its downtrend, while coming close to the November 5 low in the stock. On the upside and bucking the overall trend were pharmaceutical company Merck (MRK) 78.88 +2.43, semiconductor manufacturer Intel (INTC) 53.87 +1.37%, low cost retailer Walmart (WMT) 143.92 +1.35%, and specialty steel manufacturer Nucor (NUE) 122.72 +4.83%.

Thur. January 6, 2022 - DIA 362.39 -.47%, QQQ 384.02 -0.07%, SPY 467.94 -0.09%, IWM 218.60 +.57% CNN Fear/Greed Index 50 (Neutral)
Initial Jobless Claims came in 10K higher than expected at 207K. Factory Orders (MoM) for Nov. reported better than expected at +1.6% vs. +1.3%. ISM Services Employment Index for Dec. came at 54.9 vs. 54.1, but ISM Services New Orders was weaker than expected at 61.5 vs. 65. The ISM Services PMI was weak coming in at 62 vs. 66.9 expected. ISM Services Prices Paid reported in at 82.5, better than the expected 83.6. Markets traded in a narrow band after the previous days Fed induced selloff, with the major indexes stabilizing but lower on the day. Interest rates continued to climb with the 10-Year Note (Yield) Index at 17.33 +.28. Energy Services (XLE) 60.51 +2.23% was the lead S&P 500 sector on the day as WTI crude oil was stable at a recent high 79.5, and the continued news flow out of Kazakhstan’s civil unrest combined with the supply constraints in various OPEC + countries dominated the trade. The shares of Hess (HES) 85.25 +5.47%, Marathon (MRO) 18.03 +4.76, Diamondback (FANG) 123.65 +4.69% and APA Corporation (APA) 29.62 +4.30 all outperformed the energy sector.  With interest rates heading higher Financials (XLF) 40.69 +1.47% was the second best sector, as Travelers Insurance (TRV) 162.33 +1.60% led the DJIA, and SVB Financial 733.29 +7.53% led the S&P 500. HMO’s were weak, as Humana (HUM) 367.53 -19.37% tumbled on news that the company had given a poor outlook for new member growth for its Medicaid Advantage Plans. United Healthcare (UNH) 469.65 -4.09% down on the news was the worst performer in the DJIA.

Fri. January 7, 2022 – DIA 362.22 -0.05%, QQQ 379.86 -1.08%, SPY 466.03 -0.41%, IWM 216.02 -1.18% CNN Fear/Greed Index 51 (Neutral)
Non-Farm Payrolls came in half as much as expected at 199K vs. 400K, but other markers of the health of employment shown better. The Labor Force Participation Rate climbed to 61.9% vs. 61.7% expected. The U6 Underemployment Rate moved down to 7.3% vs. the prior 7.7% and the expected 8%, and the unemployment rate came at 3.9% vs. the expected 4.1%. Equity markets were flat to down with continued rotation from high cap growth to cyclicals and value. Energy Services (XLE) 61.33 +1.36% topped the S&P 500 sector list but there were no large standouts. Reopening plays in the travel & entertainment space moved higher, Norwegian Cruise (NCLH) 22.20 +4.03%, Royal Caribbean (RCL) 81.02 +3.98%, Carnival Cruise (CCL) 21.90 +3.94%, and American Airlines (AAL) 19.28 +3.82% all outperformed. Discovery Networks (DISCA) 30.06 +16.87% bolted higher as Bank of America upgraded its investment rating to “buy” from “hold”, saying the stock could climb 75% on completion of its merger with Warner Media. Competitor Viacom (VIAC) 35.39 +8.16% was higher on a sympathetic move. On the downside D. R. Horton (DHI) 95.24 -6.17% was the biggest loser in the S&P 500 as higher interest rates took a toll on the home building sector.

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