The inflation data came, some earnings came and more earnings will come next week, nothing moved the needle yet. The market is truly in wait and see mode. The shorts and longs both are not making any money. There aren’t any sustainable moves on either side. The selling covered calls has been working but painfully slow. The same amount of trading gains now takes about one week as supposed to be in one day in the good old days.
Tesla reported earnings and it was 20% less than the previous year. The stock bad earnings selloff took down its March 13 low which is not a good indicator for the general market. Could Tesla stock lead the NASDAQ down to test its March low? It really depends on the earnings report next week and the May Fed meeting.
Google reports on Tuesday April 25, Facebook reports on Wednesday April 26 and Amazon reports on Thursday April 27. Apple reports after the Fed meeting. The earnings will probably not be that great, but not horrible either as the companies are actively working on cutting costs. The real test is the Fed meeting on May 3. Even though everyone is guessing one more rate hike in May and then pause. The Fed officials also transmitted the same message via multiple news channels. But the market is frozen as every asset is predicated on interest rate. People simply don’t know how to price assets as interest rate is a moving target right now. Tesla has lowered its best selling EV price several times and each price decrease created buyer’s remorse. How do you feel about your new Tesla EV? It just got $5000 cheaper shortly after you bought it. Eventually some of the Tesla buyers will wait and wait to avoid catching the falling price. This type of consumer behavior creates a vicious cycle for Tesla. Tesla will make a lot less money, but many other EV new comers may go out business and the EV price war drags on.
The weakened Tesla EV demand is a direct result of higher interest rates. The residential and commercial real estate market are frozen as interest rate is not settled in any form. In order for the market to move higher, the uncertainty surrounding the interest rates has to be removed. This could explain why the NAZDAQ is trading painfully slow and not able to go anywhere in the last three weeks.
Below is the NASDAQ weekly chart. It is still above the down trend line and yet not able to trade above the February 3 high. It must take out the February 3 high in the next two weeks. If not, it will fall down to test the March 17 low.
Sorry, traders. The market is not cooperating. Have to wait for the good time to return.