U.S. Market Wrap and Forecast for Wednesday

SP-500 Volatility Index (VIX) imploded on Tuesday, dropping more than 14% as Reddit favorites reverted toward historic means. The return to sanity improved risk appetites, lifting major index benchmarks toward January highs.  Broad-based buying interest characterized the constructive session, with big tech, blue chips, and small caps all gaining more than 1%. Bond yields hit two-week highs, putting pressure on gold and silver while Bitcoin gained ground.

Tuesday Wrap-Up

Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOG) got bought aggressively ahead of their post-market earnings reports. Dow component Visa Inc. (V) bounced strongly at 50-week EMA support a few days after meeting Q4 top and bottom line estimates. Gamestop Inc. (GME) got halted several times after downside and upside stretched past circuit breakers. That stock hit the lowest low since Jan. 25 during the heavy session.

Silver plunged after reversing at August 2020 resistance, closing back at late January levels. The clueless financial media overplayed the ‘new bubble’ theme earlier this week, which doesn’t jive with very routine price action in the last 12 months. Older traders observed a moment of silence after Harley – Davidson Inc. (HOG) reported a $0.44 loss per-share on a staggering 32.4% year-over-year revenue decline. That stock fell 16% during the regular session.

Looking Ahead to Wednesday

Alphabet and Amazon Q4 earnings will move Wednesday’s market, with both mega-caps expected to report record quarterly profits. Lofty expectations place a high bar into mid-week, especially with elevated U.S. unemployment and the pandemic wearing on everyone’s nerves.  Other FAANG stocks look rangebound for now, suggesting ‘buy-the-news’ reactions’ will run into selling pressure at range resistance levels.

The January ADP employment report will also impact Wednesday’s session. This monthly data release was reformulated a few years ago after posting a long string of stinkers and has been remarkably reliable since that time. In any case, no one expects improvement in U.S. employment numbers at the moment, with the local pandemic coming off ridiculously high numbers, compared to the rest of the world. However, the reaction might offer a clue to Friday’s more important Non-Farm Payrolls release.

For a look at all of today’s economic events, check out our economic calendar.