The 3 major indices gapped modestly lower at the open Thursday.  Then, initial volatility kicked in for the first hour of the day, reaching the day’s highs and lows in that hour.  After that, stocks meandered sideways in a tight range in the lower half of the day’s range until 2:45 pm (when the bears pushed us lower into new lows for the day.  This action left us with black-bodied, long-wick, indecisive candles in all 3 major indices.  All 3 still remain above their T-line (8ema).  This can also be seen as a Bearish Harami candle in the QQQ and SPY indices.

On the day, 9 of the 10 sectors are in the red.  Energy (+0.74%) was the lone green sector while Utilities (-2.90%) was by far the lagging sector.  Meanwhile, the SPY was down 1.04%, DIA down 1.16%, and QQQ down 0.79%.  The VXX was up 2.92% to 20.09 and T2122 fell but remains in the mid-range at 42.25. 10-year bond yields spiked to 3.822% and Oil was up 1.44% to $89.02/barrel.  Overall, this made Thursday a day of consolidation, perhaps as the market waits on today’s September Payrolls reports.

In economic news, the Weekly Initial Jobless claims came in higher than expected at 219k (versus 203k forecast and last week’s 190k reported).  Meanwhile, among Fed speakers, Minneapolis Fed President Kaskari said the Fed has “more work to do on bringing down inflation” and that the Fed is “quite a way away from being able to pause aggressive rate hikes.  At the same time, Chicago Fed President Evans said that the Fed’s rate policy is likely headed to 4.5% – 4.75% by Spring 2023, saying the Fed has “further to go” (on rate hikes).  New Fed Governor Cook said that inflation “remains stubbornly and unacceptably high and the data over the last few months show that inflationary pressure remains broad-based.”  She went on to say “we (Fed) will keep at it until the job is done.”  So, once again, every Fed speaker has told us that there is no letup in sight on Fed rate hikes (despite Fed Fund Futures pricing in a rate cut next year).

SNAP Case Study | Actual Trade

In stock news, during the day, a French court substantially lowered the fine that had been levied against AAPL (from $1.1 billion to $366 million) for anti-competitive behavior.  While the court agreed that AAPL had abused retailers economic dependency on the company, it also overruled the guilty charge of price-fixing as unproven.  Elsewhere, TM announced that is resuming production of its first electric vehicle (which had been halted for 3 months while new safety measures were designed and implemented related to the batteries).  HMC also announced its first electric SUV, which will hit the market for the 2024 model year.  Meanwhile, the Executive Chairwoman of FFIE resigned (Oct. 3 but announced Thursday), citing death threats she has received during the ongoing fight for control of the company’s board.  In addition, BRY stock jumped during the late afternoon when Reuters reported the company is exploring “strategic options including a potential sale.”  Finally, Elon Musk again asked for a postponement of the TWTR litigation and said that he expects the original deal to close on or about Oct. 28.

In profit warning news, after the close, LEVI missed on revenue and beat on earnings.  However, it also cut its full-year forecast.  LEVI also warned on profits citing inflation and a consumer shift away from higher-end products.  Elsewhere, AMD issued its Q3 preliminary results (it is scheduled to officially report November 1, after the close).  The company said results are likely to come in well below forecast on both weaker demand and supply chain issues.  The company expects gross margins of about 50% (versus the previous forecast of 54%).  Meanwhile, Bloomberg reports that its sources indicate CS may lose $2 billion this year.  In related news, CS is trying to bring in an unnamed outside investor to purchase its advisory and investment banking units as the main part of CEO Koerner’s restructuring plan.  Finally, this morning CS announced it will be buying back just over $3 billion of its own debt and selling the bank-owned Savoy Hotel (located in the Swiss Financial district) in an attempt to fight off a falling share price and ever-increasing bets against the company’s credit default swaps.

In pot news, President Biden pardoned thousands of people with federal convictions for simple marijuana possession.  He also initiated a new review of how the drug is classified.  (Currently marijuana is classified as “schedule 1” or the most dangerous class of drug.  This is a higher classification, meaning harsher penalties, than fentanyl or methamphetamine.)  The President also went on to put pressure on state and local officials by saying nobody should be in jail solely for marijuana possession and urged governors to follow his lead on the matter.  Cannabis tickers like TLRY and CGC jumped more than 20% on the news.

Overnight, Asian markets were red across the board.  Hong Kong (-1.51%), Taiwan (-1.37%), and Shenzhen (-1.29%) led the region lower.  Meanwhile, in Europe, stocks are mixed on modest moves at midday.  The FTSE (+0.14%), DAX (-0.08%), and CAC (+0.16%) lead the region on volume, per normal, in early afternoon trade. However, it appears the region is waiting on the US September Payrolls Reports as a read-through to economic slowing (and perhaps Fed actions).  As of 7:30 am, US Futures are pointing toward a mixed, flat start to the day.  The DIA implies a +0.22% open, the SPY is implying a +0.06% open, and the QQQ implies a -0.25% open at this hour (pre-news).  10-year bond yields are up again to 3.845% and Oil (WTI) is up 1% to $89.35/barrel in early trading.

The major economic news events scheduled for Friday include Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment Rate (all at 8:30 am).  We also have a Fed speaker (Williams at 10 am).  There are no major earnings reports scheduled for the day.

With September Payrolls data coming today, do not be surprised if a beat is bad for markets (as traders assume the Fed will keep on the path of over-sized rate hikes) and visa-versa (a miss may cause traders to jump to the conclusion that the Fed will ease up). The average estimate is for a gain of 255k jobs in September. In either case, we can probably expect the market reaction to be an overreaction and a short-lived one at that. In other words, we are likely to see a swing back the other way very soon. On top of that, there has been no indication whatsoever from Fed members that they are even considering an easing. In fact, most true Fed Watchers are of the opinion they will not change course until something in the economy breaks.

With this backdrop, the premarket action seems to be waiting on the news. Market extension is not an issue as the premarket action has us sitting on the T-line (8ema) in all 3 major indices. The one thing we know for sure this morning is that the strong bear trend has not been broken and that is the main directional indicator we should heed. As mentioned, expect significant volatility today, especially in the premarket as the Payrolls data is released. So, in general, unless you are very quick or very comfortable in high volatility, this could be a day to sit on your hands and “wait and see” at least in the morning.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. 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. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, 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: No tickers 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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service