Markets opened flat on Wednesday but then the bulls took over and put in a slow, steady, all-day rally.  However, there was very modest profit-taking in the last 10 minutes of the day.  This action left us with large white candles with small upper wicks in all 3 major indices.  DIA and SPY both managed to print Bullish Engulfing signals but none of the 3 major indices managed to touch (or climb up through) its T-line (8 ema).

On the day, 9 of the 10 sectors were green with Energy (-1.13%) being the laggard.  Meanwhile, Utilities and Consumer Cyclical (both up 2.67%) led the gaining sectors.   SPY gained 1.79%, DIA gained 1.32%, and QQQ gained 2.01%.  The VXX fell 3.64% to 18.55 and T2122 climbed out of the oversold territory to 39.00.  10-year bond yields fell to 3.277% and Oil (WTI) dropped a whopping 5.79% to $81.87/barrel.  (The oil decline was mostly based on fears of a dramatic demand decline in the face of skyrocketing European energy prices as well as rate hikes in Europe and the US.)

In economic news, Imports/Exports fell slightly in July ($330 billion and $259 billion vs. June’s $340 and $261 billion).  However, the July Trade Deficit also dropped by just over $10 billion (from $81 billion to $71 billion).  Next door in Canada, the Central Bank raised rates three-quarters of a percent to 3.25% as expected.  After the close, the API Weekly Crude Oil Inventories showed a 3.645-million-barrel increase for the week which was a surprise since a 0.733-million-barrel drawdown was the consensus.  Also after the close, the Fed announced it is reviewing Bank Capital Requirements which might impose tighter controls on large regional banks, depending on the outcome of its review of the “economic climate for lenders.”

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In stock news, AAPL held its annual product announcement.  The company outlined a new line of iPhone 14s with 4 models ranging between $800 and $1,100 dollars.  These will include satellite-based SOS capability using GSAT satellites.  AAPL stock gained 0.93% on the day on this early afternoon news.  GSAT traded in a massive range (85%) but closed down just 1.44% on the day.

After the close, CPRT reported beats on both the revenue and earnings lines.  At the same time, PLAY and CASY beat on revenue while missing on earnings.  On the other side, GME missed on revenue while beating on earnings.  However, AEO missed on both the top and bottom lines. So far this morning, BILI has reported a beat on revenue while missing on earnings.

In miscellaneous news, the US Dollar continues its rally, reaching another 24-year high versus the Yen and a 37-year high against the British Pound yesterday.  However, the Euro gained against the Dollar and is back very slightly above parity.  Elsewhere, a pair of papers were published at an economic forum yesterday claiming that the Fed’s fight against inflation will need to cause more harm to the economy (will be more restrictive) than the market currently appreciates.  In the US West, the CA power grid managed to get through the eighth day of record heat without blackouts.  However, that continues to be a close run race.  Finally, the ECB will announce its decision on interest rates (+0.75% expected) at 8:15 am with a presser to follow at 8:45 am.

Overnight, Asian markets were mostly green with the notable exception of mainland China.  Japan (+2.31%), Australia (+1.77%), and Taiwan (+1.20%) led the region higher while Hong Kong (-1.00%), Shenzhen (-0.86%), and Shanghai (-0.33%) were the only red in the region.  In Europe, stocks are following Asia’s lead at mid-day.  The FTSE (+0.20%), DAX (-0.25%), and CAC (+0.27%) are typical of the continent in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a very modestly green start to the day.  The DIA implies a +0.19% open, the SPY is implying a +0.17% open, and the QQQ implies a +0.16% open at this hour.  10-year bond yields are lower to 3.241% and Oil (WTI) is up fractionally to $81.22/barrel in early trading.

The major economic news events scheduled for Thursday are limited to Weekly Jobless Claims (8:30 am) and Weekly Oil Inventories (11 am).  Fed Chair Powell also speaks at 9:10 am.  The major earnings reports scheduled for the day include BILI before the open.  Then after the close, DOCU and RH report.

In economic news later this week, on Friday, there are no major economic reports.  However, in terms of earnings later this week, on Friday, we hear from ABM, KR, and WDH.

As we start the day, keep in mind that AAPL may get some pushback in sales (and therefore the stock market) as it is testing the price elasticity of its phones by raising prices in 14 markets around the world while also keeping prices the same for iPhone 14s in the US. In politics to watch (which could impact US companies later), the UK’s new PM Truss announced a stimulus package that puts a $2,880 cap on what households pay for energy for the next two years. This will save a typical British household $1,154 annually. The pinch this will put on energy companies was offset (sugar for their medicine) by also announcing the government is granting new oil and gas exploration leases in the North Sea.

With that backdrop, we should note the market is still in a downtrend and yesterday’s strong candle is only a white candle in a sea of black ones until we get confirmation of a reversal (which we do not have yet). So, do not assume a reversal has happened until you have confirmation. Also be aware that futures are likely to react to the ECB Rate news, US Weekly Jobless Claims, and Fed Chair Powell speaking all before the open. So, be prepared for some volatility, at least early in the day. The T-line (8ema) above will be a key level for all 3 indices today as the bulls test their strength. So, keep an eye on that as well.

Remember that trading is our job, not a pastime or 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 trade ideas today, GPN, TGT, PYPL, KEYS, WMT, SQQQ, DXCM, SNAP, SDOW, GERN. 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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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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