Markets opened just a touch higher on Monday.  SPY opened 0.04%, DIA opened dead flat, and QQQ opened 0.09% higher.  From that point, all three major index ETFs wandered sideways for 90 minutes.  Then the QQQ and SPY began a modest but steady rally at 11 a.m.  DIA followed starting at 1 p.m.  Then at 3 p.m., the Bulls kicked it into gear so that even after a modest 20-minute pullback all three major index ETFs went out very near their highs of the day.  This action gave us large, white-bodied candles in all three with SPY and QQQ being at least “Trader’s Best Friend” patterns (Doji followed by a large white candle) and QQQ even being a Morning Star signal if you are lenient on the first candle.  All three remain above their T-line (8ema).

On the day, eight of the 10 sectors were in the green as Technology (+1.36%) led the way higher.  At the same time, Communications Services (-0.07%) and Energy (-0.05%) were the only down sectors (barely).  Meanwhile, the SPY gained 0.79%, DIA gained 0.58%, and QQQ gained 1.02%.  (All three closing at new all-time high closes.)  Meanwhile, VXX gained 0.41% to close at 14.59 and T2122 jumped up to the top end of its overbought territory at 94.08.  10-year bond yields dropped to 4.076% and Oil (WTI) fell 1.32% to close at $76.98 per barrel.  So, markets opened just on the bullish side of flat, bided their time for 90 minutes, and then rallied the rest of the day.  The last hour was the strongest move of the day.  This all happened on a well-less-than-average volume in all three major index ETFs.

There was no major economic news released on Monday.

After the close, ARE, CLS, CR, FFIV, GGG, HP, NUE, SANM, SMCI, WHR, and WWD all reported beats on both the revenue and earnings lines.  Meanwhile, CLF missed on revenue while beating on earnings.  It is worth noting that CLS, SANM, SMCI, and WWD all raised forward guidance.  However, WHR lowered guidance.

So far this morning, AOS, DHR, GM, JBLU, MDC, MPC, MPLX, MSCI, and PNR all reported beats on both the revenue and earnings lines.  Meanwhile, JCI, OSK, PFE, PHM, and UPS all missed on revenue while beating on earnings.  On the other side, PII beat on revenue while missing on earnings.  It is worth noting that GM also raised its forward guidance.

In stock news, Reuters reported Monday that STLA has begun volume-level production of large and mid-sized hydrogen fuel cell vans.  At the same time, AMZN withdrew from its $1.4 billion acquisition of IRBT.  (This move was in response to opposition from EU antitrust regulators.  The deal was originally valued at $1.7 billion but investigations led to delay and drove the price down.)  At the time this withdrawal was announced, IRBT also announced it would lay off about 31% (350) of its employees.  (IRBT plunged as much as 19% on the day, but closed down just 8.77%.)  Later, the Wall Street Journal reported that GM dealers were pressuring GM corporate to launch and offer more hybrid vehicles to match demand.  Elsewhere, HCMLY announced Monday that it will spin off its North American operations.  (No announcement was made on a potential IPO, with NASDAQ and NYSE both courting the Swiss giant.)  At the same time, WMT announced it will offer annual stock grants to its store managers in an effort to attract and retain talent.  (The awards mean that the most successful store managers could earn more than $400k per year.)  After the close, ALB laid off 300 employees (4% of its global workforce).  This was part of a previously announced cost reduction plan.  (The company expects the move to save it $50 million in 2024.)  Also after the close, Reuters reported that TER (semiconductor testing equipment maker) had pulled more than $1 billion of manufacturing out of China in 2023 in order to ensure compliance with sanctions.

In stock legal, governmental, and regulatory news, the Republican Chairmen of two US House committees sent a letter to President Biden asking that the administration launch investigations into four Chinese companies involved in the F battery plant that is planned for construction in MI. Later, AAL was sued (in a potential class-action suit) for having stripped 1.1 million frequent flier miles from two customers after they doubled up using credit card mileage bonuses.  The pair allege AAL wrongly accused them of fraud.  Elsewhere, TM urged the owners of 50,000 2003-2005 vehicles to stop driving their cars immediately until after recall repairs on airbag inflators can be done.  After the close, PHG (maker of recalled and deadly CPAP machines and masks) reached a settlement with the FDA and Dept. of Justice.  Under the agreement, the company will stop selling sleep apnea machines in the US (until it meets FDA corrective actions and gets approval), which could cost the company $400 million per year.  Also after the close, X agreed to a $42 million settlement of a lawsuit, including $37 million in facility improvements related to a 2018 fire.  (After the fire, X operated its plant without the required desulfurizing equipment for three months, emitting huge clouds of sulfurous gas.). The settlement was with environmental groups and the Allegheny County Health Department.

Overnight, Asian markets were mostly in the red as the region reacted to Monday’s court-ordered liquidation of China Evergrande.  Shenzhen (-2.40%), Hong Kong (-2.32%), and Shanghai (-1.83%) led the region lower.  Meanwhile, in Europe, we see a mostly green picture at midday.  The CAC (+0.47%, DAX (+0.19%), and FTSE (+0.51%) lead the region higher (with only four of the 15 exchanges in red numbers) in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing to an open just on the red side of flat.  The DIA implies a -0.16% open, the SPY is implying a -0.12% open, and the QQQ implies a -0.04% open at this hour.  At the same time, 10-year bond yields are down slightly to 4.064% and Oil (WTI) is flat at $76.78 per barrel in early trading.

The major economic news scheduled for Tuesday includes Jan. Conf. Board Consumer Confidence and Dec. JOLTs Job Openings (both at 10 a.m.), and API Weekly Crude Oil Stocks report (4:30 p.m.).  The major earnings reports scheduled for before the open include AOS, GLW, DHR, GM, HCA, HUBB, JBLU, JCI, MDC, MAN, MPC, MPLX, MSCI, OSK, PNR, PFE, PII, PHM, SYY, and UPS.   Then, after the close, AMD, GOOGL, ASH, BXP, CP, CB, EA, ENVA, EQR, FBIN, GOOG, HA, JNPR, LFUS, MTCH, MSFT, MOD, MDLZ, RNR, RHI, SWKS, SBUX, SYK, TER, and UNM report.

In economic news later this week, on Wednesday, Jan. ADP Nonfarm Employment Change, Q4 Employment Cost Index, Jan Chicago PMI, EIA Weekly Crude Oil Inventories, FOMC Rate Decision, FOMC Statement, and FOMC Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, Q4 Labor Costs Index, S&P Global Mfg. PMI, Dec. Construction Spending, Jan. ISM Mfg. Employment, Jan. ISM Mfg. PMI, Jan. ISM Mfg. Price Index, and Fed Balance Sheet.  Finally, on Friday, Jan Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Jan. Private Nonfarm Payrolls, Jan. Participation Rate, Jan. Unemployment Rate, Dec. Factory Orders, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations are reported.

In terms of earnings reports later this week, on Wednesday, APTV, ADP, AVY, AVY, BA, BSX, EAT, COR, GIB, EVR, FTV, GPI, HES, LII, MHO, MA, NDAQ, NYCB, NVO, ODFL, OTIS, PSX, ROK, ROP, SLGN, TEVA, TMO, UMC, AFL, ALGN, AVB, AXS, BHE, BOOT, BV, CHRW, CCS, CMPR, CTVA, CACC, FLEX, THG, LSTR, MTH, MEOH, MET, NXT, PTC, QRVO, QCOM, SEIC, SIGI, TTEK, UGI, and VSTO report.  On Thursday, we hear from FLWS, ATI, MO, ATKR, BALL, BDX, BR, BIP, BC, CAH, CMS, DLX, DOV, ETN, EPD, RACE, HON, HII, ITW, IP, JHG, KEX, LANC, LAZ, MKL, MRK, PH, PTON, PBI, DGX, RVTY, RCI, RCL, SBH, SNY, SNDR, SIRI, SR, SWK, TSCO, TT, WNC, WEC, WRK, AMZN, AAPL, TEAM, CLX, COLM, DECK, DXC, EMN, GEN, HIG, HOLX, HLI, HUBG, KMPR, LPLA, META, MCHP, MTX, NOV, OTEX, POST, RGA, SKX, SKYW, and X.  Finally, on Friday, ABBV, AON, BSAC, BMY, BBU, BEPC, BEP, CBOE, CHTR, CVX, CHD, CI, XOM, IMO, LYB, REGN, SAIA, and GWW report.

In miscellaneous news, ICE reported Monday that global futures (including derivatives) have hit a record level of open interest.  They reported that 87.2 million stock futures contracts traded on January 25, leaving an open interest of 61.5 million contracts.  At the same time, 33 million energy futures contracts traded leaving an open interest of 56 million contracts.  Elsewhere, JPM reported Monday evening that the 11 new “spot price of Bitcoin” ETFs are seeing large drops in money inflows. 

In government news, after the close, a bipartisan group of Congressional negotiators reached agreement on spending levels for each of the 12 funding bills needed to keep the government open.  These total to the amount previously agreed by House Speaker Johnson and Senate Majority Leader Schumer ($1.59 trillion) but below the amount originally agreed before the GOP reneged on the June 2023 deal. While Johnson could use Democratic votes to get the bills passed in the House, it is unknown whether any of the MAGA extremists would call for his ouster if he did that. (Of course, theoretically, Democrats could also override that tiny minority holding everything hostage by voting for Johnson during a “vote to vacate the chair,” but it is uncertain whether the Democrats would do that.  So, we have a step toward keeping the government open.  However, plenty of uncertainty remains on both sides of the aisle as to whether this step really has any meaning.  Elsewhere, the Treasury Department said on Monday that it expects to borrow $760 billion in Q1, which is $55 billion below the estimate released in October.  The primary reason we do not need to borrow as much is that the economy has been stronger than expected, resulting in higher tax inflows and a higher cash balance than previously forecasted.

With that background, it appears that all three major index ETFs are undecided early. All opened the premarket near their Monday close level and have put in small, black-bodied, and indecisive candles so far in the early session. All three remain above their T-line (8ema) and very, very near their all-time highs. So, the Bulls are still in control of the trend in both the short term and the longer term. In terms of extension, none of the three are too far stretched from the 8ema. However, the T2122 indicator is well into its overbought range. So, the market will again need a pause or pullback soon. Still, both sides have some slack to work with if they can gain enough momentum to do it. Even though 99% of the market knows exactly what to expect from the Fed, with the Fed announcement being tomorrow afternoon, don’t be surprised if today is a “wait and see” day. Continue to keep watching those Tech Big Dogs. (I follow 10, but somebody has coined the term “Magnificant 7” and five of those seven report this week. If those big dogs move as a group, it is basically impossible for the rest of the market to do anything but follow given their trading volumes.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 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