Stuck in Neutral: Market Remains Range-Bound for Yet Another Day


Joseph Rangel

Feb 15th 2023  .  4 min read

Another Day of Range-Bound Trading 

The retail industry’s latest sales figures were released at 8:30 a.m. Eastern and have demonstrated a positive trend for the first time since October. Initial market forecasts anticipated an increase of 1.9%; however, the data reveals a significant 3% surge in retail sales despite an upsurge in inflation.

Upon the release of the 3% figure, the market witnessed a momentary spike in activity. However, the consequent selling-off of prices suggested that such an impressive report may not necessarily serve as a positive catalyst. In fact, it may provide leverage to the Federal Reserve (Fed) to implement further rate hikes, should it be deemed necessary.

Whilst the emergence of positive growth in retail sales is undeniably encouraging, the long-term implications of this trend are yet to be fully ascertained.

When The Bell Rang

At the sound of the opening bell, the market displayed a notable level of indecisiveness, with a lack of clear trends evident in the early stages of trading. During this period, various stocks showed signs of both rallying and being sold off, leading to a divergence in the market.

However, as the opening drive subsided and the market stabilized, a firm hold was observed near the 4,100 level. This served as yet another testament to the market’s strength, as it has withstood every test since the beginning of the month. In fact, this level of support was reinforced by the 15-day simple moving average (SMA), from which a subsequent upward movement was initiated.

Subsequently, the market continued to grind upwards towards the 4,150 level for the remainder of the trading session.

The conclusion of another trading day saw volatile movement that persisted within a narrow 50-point range. However, with some significant events looming, there is potential for a breakthrough in this range.

To begin with, Roku Inc. (ROKU) and Shopify Inc. (SHOP) are expected to release earnings reports immediately following the opening bell. These highly-anticipated reports could have a substantial impact on the market. Additionally, various key economic events are scheduled to take place later in the week, further heightening expectations for potential market movements.

Earnings After the Bell

Roku Inc. (ROKU) reported its fourth-quarter earnings after the bell. As soon as the closing bell sounded, an immediate move higher occurred on ROKU before numbers even hit the market. As the stock began to move higher, Nasdaq futures also continued to rise. Numbers came out and further bolstered the move as Roku reported net revenue grew 13% year-over-year. Another positive for Roku is that active accounts grew beyond 70 million, a net increase of 9.9 million from 2021. 

Shopify Inc. (SHOP) was another company to release its fourth-quarter financial report. Initially, Shopify moved higher along with ROKU but began to give up the move as the actual numbers for Shopify came out. When numbers finally came out, a sharp move lower occurred. One reason for Shopify being down on earnings is their miss of Earnings-Per-Share (EPS), despite beating their expected revenue numbers. The estimated revenue for Q4 was $1.65B, and the realized figure came in at $1.73B.

Economic Events Tomorrow

Weekly Initial and Continuing Jobless claim numbers come out at 8:30 a.m. Eastern tomorrow. Job numbers paired with recent retail sales numbers may be enough to move the market where, as the report has not had a drastic effect recently. 

Opex Ends The Week

As we approach the end of Options Expiration (OpEX) week, it is important to keep in mind the common price action that is typically observed during this period. OpEX weeks are often characterized by choppy, volatile, and stagnant market activity.

The primary reason for this non-directional behavior is that it allows for Theta decay on both sides of the options chain. As such, we can expect to see a certain level of unpredictability as the premium experiences decay. Understanding these typical patterns can provide valuable insight into market trends during OpEX weeks.

Market Moves Higher Into the Close

The Nasdaq closed negative on the session as the S&P 500 was positive at the closing bell. The S&P 500 futures closed down 0.05%, declining 2 points, while the Nasdaq futures closed up 0.60%, gaining 71 points. The Dow Jones futures followed, closing down 0.47% and falling 160 points.