Markets opened basically flat on Tuesday but then proceeded to rally until 11 am before a sideways grind that lasted until 3 pm.  Prices rallied the last hour of the day taking all 3 major indices out near their highs.  This left use with large white candles and Morning Star patterns in all 3 of those indices.  All 3 also climbed back above their T-line (8ema) before the close.  On the day, SPY gained 1.63%, DIA gained 1.48%, and QQQ gained 2.22%.  The VXX fell 2.3% to 24.73 and T2122 jumped up to the upper mid-range at 70.26.  10-year bond yields spiked again to 2.94% (highest since 2018) and Oil (WTI) fell 5.28% to $102.50/barrel.

Contrary to Monday’s call by the Fed’s Bullard (Hawk) for several half-point interest rate hikes (and potentially using three-quarters point rate hikes) targeting a “neutral rate of 3.5% by year-end, on Tuesday we heard from Atlanta Fed President Bostic.  Bostic (usually considered a hawk) told CNBC he was concerned that raising rates too fast could hurt the economy and wants the FOMC to be “very measured” in rate hikes.  He also said that the “neutral rate” could be as low as 1.75%, half of what Bullard (the most extreme hawk) felt would be neutral.

SNAP Case Study | Actual Trade

After the close Tuesday, IBM, OMC, and FHN all reported beats on both revenue and earnings.  NFLX reported a significant beat on earnings ($3.53 actual vs $2.92 est.) but missed on revenue (as well as reporting it lost subscribers for the first time) and was absolutely hammered (down as much as 28%) in post-market trading on that miss. On the opposite side, IBKR missed on earnings, but beat on revenue.

As mentioned in yesterday’s blog, both the US and UK announced today that they will be sending new military assistance packages to Ukraine.  This is in addition to last week’s $800 million package.  The White House specifically mentioned that the new package would include more heavy artillery and shells.  However, the Pentagon declined to outline the contents of this next package.  The main US suppliers of artillery such systems are GD, RTX, NOC, and LMT.

News out of China may give us a chance to capitalize on future news.  The largest and fourth-largest ports in the world are currently shut down due to covid lockdowns. There are over 300 container ships and over 500 bulk-carrier ships waiting offshore to be unloaded and reloaded with exports.  This very likely means that once China opens and they surge to get the backlog out, the logjam will move back to the US ports of LA, Long Beach, and Oakland.  All this means more supply chain problems for major importers.  The five largest are WMT, TGT, HD, LOW, and DOLE.

Overnight, the Asian markets were mixed but leaned toward the green side.  Shenzhen (-2.07%) and Shanghai (-1.35%) saw by far the biggest losses while New Zealand (+1.10%), India (+1.05%), and Taiwan (+0.91%) led the more numerous gainers.  In Europe, stocks are nearly green across the board.  The FTSE (+0.16%) lags, but the DAX (+1.03%) and CA (+1.13%) are typical of the region with even Russia (+2.47%) up strongly in early afternoon trading.  As of 7:30 am, US Futures are pointing toward another flat start to the day.  The DIA implies +0.14%, the SPY is implying +0.03%, and QQQ implies a -0.13% open to the day.  10-year bond yields are back down to 2.863% and Oil (WTI) is up just over 1% in early trading.

The major economic news scheduled for release on Wednesday includes March Existing Home Sales (10 am), Crude Oil Inventories (10:30 am), and Fed Beige Book (2 pm).  There is also a Fed speaker scheduled (Daly at 10:30 am).  Major earnings reports scheduled for the day include ABT, ANTM, ASML, BKR, CMA, LAD, MTB, NDAQ, PG, and before the open.  Then after the close, AA, CVNA, CCI, CSX, EFX, KMI, KNX, LRCX, LSTR, LBRT, SEIC, SNBR, STLD, THC, TSLA, UAL, and VMI report.

So far this morning, ABT ANTM, PG, ASML, LAD, and NDAQ have all reported beating estimates on both revenue and earnings.  At the same time, RCI and MTB both missed on revenue while beating on earnings.  However, BKR and CMA missed on both the top and bottom lines.

Overnight it was announced that the largest public pension fund (CalPERS), which is a major holder of BRKB stock, will be voting in favor of a proposal to replace Warren Buffett as Chairman of Berkshire Hathaway. The “Oracle of Omaha” has been the public face and perceived leader of stock markets for at least 40 years and this move is notable, though not unexpected for a man who is 91 years old. No word is yet available on when the vote can be forced. However, in 2021 Buffett announced that his successor would be Greg Abel who is currently BRKB Vice-Chair for Non-Insurance Businesses.

Yesterday’s action took us back to the top of the recent trading range. However, it appears that the bulls may make at least an early bid to push up out of that range today. However, volatility and day-to-day chop have been the norm for a while now. So we have to respect the fact that we are right at a level of resistance in all 3 major indices. So, be cautious. Don’t be in a hurry to chase into a rally the first few minutes of the day. Swing trading is not about catching every cent of a move. It’s about taking your slice out of the middle of a swing.

Remember that the first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor.

Ed

Swing Trade Ideas for your consideration and watchlist: CLVT, IT, HTZ, DISH, FIS, CMCSA, CLX, MA, NKE, XLB, MCD, APD, MRO, MNST, US, MMM. 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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