On Tuesday, the large-cap indices opened flat while the QQQ gapped down about six-tenths of a percent.  From the open, both the SPY and QQQ sold off for about an hour.  Then the entire market ground sideways in a tight range the rest of the day.  This gave us indecisive, black-bodied (Spinning Top type) candles that are testing whether they can stay above their T-line (8ema).  With that said, we are just seeing a pullback in an otherwise in-tact uptrend. 

On the day, SPY fell 0.40%, DIA fell 0.16%, and QQQ dropped 1.13%.  In terms of extension, VXX fell slightly to 21.94 and T2122 is back in the mid-range at 68.60.  10-year bond yields are up slightly by remaining at 2.779% and Oil (WTI) is also up very slightly to $90.50/barrel.  So, overall, it was just another roller-coaster, “much ado about nothing” day on Wall Street.

In economic news, Q2 Nonfarm Productivity fell 4.6%, but that was better than the consensus forecast of -4.7% and far better than Q1’s -7.4%.  As is normal when productivity falls, Q2 Unit Labor Costs rose 10.8% which was worse than the forecast rise of 9.5%, but still better than Q1’s +12.7%.  After the close, API reported Weekly Crude Oil Inventories rose far more than expected.  The estimate was a flat +0.073 million barrels.  However, the actual build for the week was +2.156 million barrels.

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After the close, WELL, SMCI, HRB, AKAM, GO, TTEC, and ANGI all reported beating on both the top and bottom lines.  Meanwhile, WYNN, ADV, and MAXR all missed on revenue while beating on earnings.  On the other side, DAR, SWX, and LNW beat on revenue while missing on earnings.  However, COIN and RBLX missed on both the revenue and earnings lines.   

In stock news, META raised $10 billion from its first-ever bond offering, with the proceeds slated to be used for share buybacks and investments in revamping the business.  (This follows recent AAPL and INTC bond offerings.)   NCLH pre-announced a loss for the current quarter with revenue below previous estimates.  The cruise line said they expect occupancy rates will not reach pre-pandemic levels for another year, not at 65% of the 2019 levels.  In contrast, rivals RCL and CCL are both saying they expect to be over 100% occupancy this year.

In energy news, Russian oil shipments to Central Europe (Slovakia, Hungary, Czech Republic) via pipeline by Transneft were halted Tuesday by Ukraine.  The reason is that due to sanctions, Russia is unable to pay the transit fees to Ukraine.  This has shut down 250,000 barrels per day of oil flow.  Elsewhere, Bloomberg reports that the UK has a plan in place for at least several days of organized rolling blackouts next winter.  The British government forecasts that electricity capacity will fall short by one-sixth of peak demand on cold days due to natural gas shortages (even after coal-fired generation plants are brought back online).  Finally, the National Avg. Gasoline price has fallen below $4/gallon for the first time since March.  Gas prices have fallen more than $0.18 in the last week and $0.72 in the last month. In somewhat related news, the Rhine river (a massive logistics thoroughfare for Europe, including oil, natural gas, coal, etc.) has become unpassable as a changing climate has dropped the water level too low for barge traffic over much of the major river.

Overnight, Asian markets were nearly red across the board.  Only Singapore (+0.47%) and India (+0.06%) managed to stay in the green.  Meanwhile, Hong Kong (-1.96%), Shenzhen (-0.87%), and Taiwan (-0.74%) led the region lower.  In Europe, stocks are mixed but lean slightly to the green side at mid-day.  The FTSE (+0.05%), DAX (+0.16%), and CAC (-0.12%) are typical of the region with only Norway (-1.14) and Denmark (+0.80%) showing significant moves in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly green start to the day (before data).  The DIA implies a +0.20% open, the SPY is implying a +0.24% open, and the QQQ implies a +0.29% open at this hour.  10-year bond yields are up slightly to 2.799% and Oil (WTI) is off almost 2% to $88.83/barrel in early trading.

The major economic news events scheduled for Wednesday include July CPI (8:30 am), EIA Weekly Crude Oil Inventories (10:30 am), 10-year Bond Auction (1 pm), and July Federal Budget Balance (2 pm).  The major earnings reports scheduled for the day include ARCO, BHG, CAE, FOXA, HMC, LTH, NOMD, WEN, and WWW before the open.  Then, after the close, APP, AVAH, AVT, BRFS, CACI, CPNG, ENS, MFC, STN, VZIO, and ZIMV report

So far this morning, WEN and LTH have reported beats on both lines.  Meanwhile, WWW, ADRNY, RKUNY, DNPLY, and BHG all missed on revenue while beating on earnings.  On the other side, HMC and NOMD beat on revenue while missing on the earnings line.  However, VWDRY missed on both the top and bottom lines.

In economic news later this week, on Thursday we get July PPI and Weekly Jobless Claims.  Then on Friday the July Import/Export Price Index, Michigan Consumer Sentiment, and WASDE Ag Report are released.

With CPI data on the docket this morning, expect pre-market trading to get volatile at about 8:30 am. (The consensus estimate is that we will see 8.7% annual inflation.) On a related note, BAC told clients they expect the yield curve to invert more deeply (more than any time since the 1980s) on the Fed’s inflation-fighting actions. Elsewhere, Elon Mush has sold almost $7 billion worth of TSLA stock. (This brings his total sale of TSLA stock to $32 billion since November.) He claims this most recent sale was a preventative move, to avoid a massive sale of the stock if the court rules against him in the TWTR court case. However, he also said he would buy more shares of TSLA in the event he wins the case. With that backdrop look for another low volume, volatile day. So, either look for longer horizons (loose stops and ability to ride fluctuations) or tighten up on the bat and take smaller, faster swings. Overall the trend remains bullish, even if we are pausing or pulling back a tick to ease over-extension.

Remember that trading is our job. So, do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. Always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all our money!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: CVNA, X, IGT, WFC, UBER, BAC, NTR, AA, NVAX, QNST, AR. 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.

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🎯 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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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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