Markets gapped down hard in the SPY and QQQ, DIA only opened 0.35% lower on FB earnings knee-jerk reaction. However, that was just the beginning of a volatile, roller-coaster ride downward that ended near the lows in all 3 major indices. This left us with large black, gap-down candles with more upper wick than lower in all 3 of those indices. On the day, SPY lost 2.32%, DIA lost 1.42%, and QQQ lost a massive 4.01%. Both the SPY and QQQ fell through their T-lines, but the DIA was able to hold above its own 8ema. The VXX spiked over 12% to 21.76 and T2122 dropped to 29.63. 10-year bond yields spiked to 1.831% and Oil (WTI) jumped over 2% to $90.12 (the highest price since 2014).
The market got some good economic news Thursday. Jobless claims came in below forecast. However, the big economic news was that Q4 Productivity came in twice what was expected (+6.6% vs. +3.2% est.) at the same time Q4 Unit Labor Cost rose only one-fifth as much as expected (+0.3% vs. +1.5% forecast). Even January Services and ISM Services PMIs both beat forecast. Unfortunately for bulls, that was all ignored by the market as all eyes seem to have been on FB and what their “miss and lower” would do to the rest of the big tech names. By day end, FB was down more than 26%, dragging down TWTR (-5.56%), NFLX (-5.54%), MSFT (-3.86%), and even GOOG (-3.64%) with them.
After the close, ATVI and F reported misses on both lines while MCHP, HIG, NLOK, PRU, SNAP, SWKS, and FTNT all reported beats on both lines. At the same time, CLX missed on earnings, but beat on revenue. However, the most anticipated report was AMZN, which beat on earnings, but missed on revenue. Nonetheless, it soared 19% in post-market trading on news of a Prime service price hike. SNAP was up more than 60% on its first-ever quarterly profit.
After hours, Reuters reported the Brazilian expected soybean harvest will be down significantly. The Brazilian soybean forecast was reported down 14% versus forecast and this shortfall (20 million metric tons) does not factor in other South American crop shortfalls. (These other shortfalls are expected due to poor weather in Argentina during the growing season.) This news will likely drive US Soybean prices higher, impacting both animal and human food prices. So far this morning, REGN, APD, and CBOE have reported beats on both lines. ETN, AON, and BMY have reported earnings beats, but all 3 missed on revenue. RCL has not reported yet.
Overnight, the Asian markets that were open were mixed. (All Chinese markets are closed until Feb. 4th or 5th). Singapore (+2.04%) and South Korea (+1.67% on its first day back from holiday break) led the gainers. Japan (-Overnight, the Asian markets that were open were mixed. Hong Kong reopened after the Lunar New Year holiday and played catchup, spiking 3.24%. (Shanghai and Shenzhen are still closed.) Beyond those, South Korea (+1.57%) led the gainers with most of the losses being in smaller markets and less than half of a percent. In Europe, markets are mostly in the red at mid-day. The FTSE (-0.10%) is an outlier, but the DAX (-1.51%) and CAC (-0.83%) are typical of the region in early afternoon trading. Only Russia (+1.31%) and Portugal (+0.48%) are showing green. As of 7:30 am, US Futures are pointing toward a mixed open. The DIA implies a -0.36% open, the SPY is implying a -0.02% flat open, and the QQQ implies a +0.53% open at this hour. 10-year bond yields are down slightly and Oil (WTI) is making another huge upside move of over 2% in early trading.
The major economic news scheduled for release Friday includes Jan. Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Ja. Participation Rate, and Jan. Unemployment Rate (all at 8:30 am). Major earnings reports scheduled for before the market include ADNT, APD, AON, BMY, BEPC, BEP, ETN, REGN, RCL, SNY, and SPB. There are no reports scheduled for after the close.
The mixed premarket futures indicate indecision, but all 3 of the indices are down significantly from premarket highs. This would tend to indicate the pullback will continue, but after such a brutal day Thursday, perhaps a pause is in order for the QQQ. Whipsaw action is likely in the face of indecision. So, be careful. Remember that today is Friday and there is a weekend news cycle ahead. So, take profits where you can, get small, hedged, or lighten up on Delta.
Stick to your trading rules and manage the things that you can control. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Remember that the first rule of making money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.) Trading is a marathon, not a sprint.
Ed
Swing Trade Ideas for your consideration and watchlist: No trade ideas today You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 Dick Carp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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