Markets opened mostly flat on Thursday.  SPY opened up 0.02%, DIA opened 0.19% higher, and QQQ opened down 0.07%.  However, after that start, all three major index ETFs slowly walked a stair-step trend lower all day long.  That action gave us large, black-bodied candles in all three. SPY printed what could be called a “Bearish Trader’s Best Friend” signal (Doji followed by a gap-down large black candle).  It retested its T-line (8ema) from overhead and managed to close just above the average.  Meanwhile, DIA printed a Doji Continuation Pattern (two large black candles separated by a Doji in between), which is also sometimes called a Doji Sandwich.  It did not quite retest its T-line.  At the same time, QQQ printed a Bearish Trader’s Best Friend like SPY.  QQQ also retested (from above) and passed the test of its T-line. Once again, this happened on below-average volume in all three major index ETFs.

On the day, nine of the 10 sectors were red with Healthcare (-1.74%) and Industrials (-1.48%) way out in front leading the market lower.  On the other side, Energy (+0.81%) was the only sector to hang onto green territory for the day.  At the same time, SPY lost 0.64%, DIA lost 0.48%, and QQQ lost 0.69%.  VXX was just on the red side of flat to close at 43.48 and T2122 dropped but remains just outside of oversold territory at the bottom of its mid-range to close at 24.73.  Meanwhile, 10-Year bond yields climbed again to 4.455% while Oil (WTI) was just up 0.31% to close at $68.67 per barrel.  So, Thursday saw a flattish open and then an all-day tepid, step-like selloff that continued the pullback.  With that said, all three major ETFs remain above their T-line (8ema) and that means the trend is bullish, if only modestly.

The major economic news scheduled for Thursday included the Weekly Initial Jobless Claims, which came in a bit better than expected at 217k (compared to a forecast of 224k and the prior week’s 221k reading).  On the on-going side, Weekly Continuing Jobless Claims were also down a touch to 1,873k (versus a 1,880k forecast and the 1,884k previous week value).  At the same time, October Core PPI (Month-on-Month) was up a tick as predicted at +0.3% (compared to a +0.3% forecast and the September +0.2% reading).  For the headline number, the October PPI (Month-on-Month) was also up a tick as anticipated to +0.2% (versus a +0.2% forecast and +0.1% September number).  Later, EIA Weekly Crude Oil Inventories showed a larger-than-expected inventory build of 2.089 million barrels (compared to a forecasted +0.400 million barrels and in-line with the previous week’s +2.149 million barrels reading).  After the close, the Fed’s Balance Sheet showed a $27 billion decline from the prior week, down to $6.967 trillion.

In Fed news, on Thursday, Fed Governor Kugler told an Economist conference that the FOMC has made good progress toward both of its mandates.  Kugler said, “The United States has seen considerable disinflation while experiencing a cooling but still resilient labor market.” However, she continued, “(a combination of) continued but slowing trend in disinflation and cooling labor markets means that we need to continue paying attention to both sides of our mandate.”  She went on, “If inflation doesn’t retreat further it would be appropriate to pause our policy rate cuts. But if the labor market slows down suddenly, it would be appropriate to continue to gradually reduce the policy rate.”  At the same time, Richmond Fed President Barkin said high union wage settlements (thinking of the BA deal) and incoming President Trump’s broad and high tariffs are among the reasons the FOMC must be cautious. 

Barkin told a Real Estate Roundtable, “Being thoughtful, gradual, systemic, methodical …in terms of declaring victory…is not a bad judgment, because you may have cost pressures coming for things like wages or tariffs or whatever happens…On the other hand you can’t ignore things that are disinflationary.”  Later, Fed Chair Powell said that the FOMC doesn’t need to be in a hurry to cut rates.  Powell said, “The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”  He continued, “We know that reducing policy restraint too quickly could hinder progress on inflation. At the same time, reducing policy restraint too slowly could unduly weaken economic activity and employment.”

After the close, AMAT, GLOB, and POST all reported beats on both the revenue and earnings lines.

Overnight, Asian markets were mostly red with only four of the 12 regional exchanges above break-even.  Shenzhen (-2.62%) and Shanghai (-1.45%) were by far the biggest losers while Australia (+0.74%) was far-and-away the biggest gainer.  In Europe, we see a similar picture with just four of 14 bourses in the green at midday.  The CAC (-0.13%), DAX (-0.11%), and FTSE (+0.07%) lead the region in mixed and modest early afternoon trade.  Meanwhile, in the US, as of 7 a.m., Futures are pointing toward a down start to the day.  The DIA implies a -0.41% open, the SPY is implying a -0.54% open, and the QQQ implies a -0.80% open at this hour.  At the same time, 10-Year bond yields are back “down” to 4.437% and Oil (WTI) is off a third of a percent to $68.45 per barrel in early trading.

There is major economic news scheduled for Friday include October Core Retail Sales, October Retail Sales, October Export Price Index, October Import Price Index, and NY Empire State Mfg. Index (all at 8:30 a.m.), October Industrial Production (9:15 a.m.), September Business Inventories and September Retail Inventories (both at 10 a.m.).  We also hear from Fed member Williams at 1:15 p.m.  The major earnings reports scheduled for before the open include BABA and SPB.  Then, after the close, there are no reports scheduled. 

So far this morning, BABA and SPB both beat on revenue while missing on earnings.  (SPB missed by more than 14% on revenue that was 4.5% higher than expected.)

With that background, the Bears seem in control of the market early.  SPY and QQQ both gapped down through their T-line (8ema) to start the premarket and have printed indecisive Doji-type candles since then.  At the same time, DIA opened the early session above its T-line but has sold off to be retesting that average now, being just below it but not on the premarket low.  That being the case, the short-term trend has turned down or, at best, may be flat in the case of the DIA.  However, the mid-term and longer-term trends remain bullish.  (We would do well to remember that we are less than 2% from the all-time high in all three major index ETFs.)  In terms of extension, none of the major index ETFs are stretched from their T-lines and the T2122 indicator is now back in the lower part of its mid-range.  So, there is room to run for either the Bulls or Bears, if either can get some momentum. In terms of the 10 Big Dogs, nine of the 10 are in the red this morning.  INTC (-0.96%) paces the losses while TSLA (+0.50%) is holding up better than the others.  It is worth noting that TSLA is again the leader in terms of dollar-volume traded with 4.5 times as much money changing hands on that ticker as NVDA (-0.27%), which itself has traded 7.5 times as much as the next closest ticker. Finally, remember it’s Friday.  So, prepare your account for the weekend by lightening up positions or hedging if appropriate.

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