All Eyes on Fed as EU Bans Russian Oil

On Tuesday markets opened basically flat again.  All 3 major indices then road a roller-coaster the rest of the day, ending on an upswing on a very volatile day.  This left us with indecisive Doji and Spinning Top candles.  On the day, SPY gained 0.43%, DIA gained 0.15%, and QQQ gained 0.11%.  The VXX fell 1.6% to 27.05 and T2122 rose out of the oversold territory to 39.29.  10-year bond yields rose slightly to 2.987% and Oil (WTI) fell 2.3% to $102.75/barrel.

After the close, AMD, ABNB, EXR, MTCH, SWKS, PKI, PEAK, JKHY, LFUS, ENLC, CRUS, CNR, DOOR, BXC, EIX, SCI, FNMA, and SABR all reported beats on both revenue and earnings.  Meanwhile, PRU, PSA, CZR, AIZ, CNDT, BFAM, MCY, WERN, and GNW missed on revenue while beating on earnings.  On the other side, SBUX, WCN, VRSK, OKE, AMCR, YUMC, LYFT, OSH, and CRK reported beating the estimates on revenue but missed on the bottom line.  Finally, RNR, MCY, and AKAM reported misses on both lines.

Overnight, Chinese company DIDI fell more than 5% overnight as it was announced that the SEC is investigating the company related to its IPO.  Since the company was already forced to delist from the US (US shareholders got Hong Kong shares), it is not quite clear what authority the SEC has or what legal liability the Chinese company or individuals might face.  Nonetheless, the news spooked investors

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On the Russian invasion story, the EU launched new sanctions to halt Russian oil sales by implementing a 6-month phase-out of Russian crude imports.  Two EU countries will be given exemptions that will allow them to continue importing Russian oil until the end of 2023.  Those are pro-Putin Hungary and Slovakia. The sanctions also include removing Sberbank (Russia’s largest bank by far) from the global SWIFT payment system.  Lastly, a new ban prohibits European countries from offering any ships, services, or insurance to any entities for the transport of Russian oil. This could hurt Russian global oil exports, but China and India could also insure and provide ships for such shipments as well to at least some extent. These moves were largely expected but might still impact global oil prices. In other effects, CNN reported overnight that the US has now expended 35% of the US supply of Javelin missiles and 25% of the Stinger missile stockpile. While not threatening to US Defense, this will result in huge new orders to RTX, which is already working with the DoD to redesign and improve (at added cost) the Stinger.

Overnight, the never-ending saga of PR maven Elon Musk continued.  He said that businesses, governments, and perhaps journalists need to start paying to access the TWTR platform.  The vague statement did not address groups like non-profits, but he did say that “casual users” would continue to have access at no cost.  Yet, TWTR has already begun rolling out a subscription service that adds new premium features like “undoing” tweets and adding bookmarks and folders.

Overnight, the Asian markets were mostly lower as mainland China was in it’s last day of holiday shutdown.  India (-2.29%) and Hong Kong (-1.10%) were big outliers to the down side with most moves very modest in size.  In Europe, stocks are nearly red across the board as the Bank of England is expected to announce a 4th-straight rate hike on Thursday.  The FTSE (-0.62%), DAC (-0.08%), and CAC (-0.51%) are all lower in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modest green start to the day.  The DIA implies a +0.31% open, the SPY is implying a +0.34% open, and the QQQ implies a +0.26% open at this hour.  10-year bond yields are down a bit to 2.956% and Oil (WTI) is up almost 4% (on the EU-Russian oil news) to $106.19/barrel in early trading.

The major economic news scheduled for release on Wednesday includes ADP Apr. Nonfarm Payrolls (8:15 am), Imports/Exports and Mar. Trade Balance (both at 8:30 am), Apr. Services PMI (9:45 am), Apr. ISM Non-Mfg. PMI (10 am), Crude Oil Inventories (10:30 am), FOMC Statement and FOMC Rate Decision (both at 2 pm), and the FOMC Press Conference (2:30 pm).  Major earnings reports scheduled for the day include ATI, ABC, AMRX, APG, ARKO, GOLD, BDC, BWA, BHG, EAT, BIP, BRKR, CDW, CRL, CQP, LNG, CLH, CVS, EMR, EXPI, RACE, FTS, FDP, GTES, GNRC, HZNP, IDXX, JHG, JCI, MAR, MRNA, MUR, NYT, NI, PSN, PNW, REGN, SBGI, SITE, SPR, SUN, TT, VNTR, VMC, XYL, and YUM before the open.  Then after the close, ALB, ALGT, ALL, AEL, AFG, APA, ATO, BKH, BKNG, CPE, CENTA, CF, CHK, CIVI, CTSH, CLR, CTVA, CCRN, CW, DCP, CIOD, EBAY, ET, NVST, ETSY, FLEX, GFL, GIL, GDDY, GXO, HST, IR, JAZZ, LHCG, LNC, LUMN, MANT, MRO, MMS, MET, NUS, OPAD, OTEX, PTVE, PARR, PDCE, PXD, PAA, QRVO, QDEL, O, REGI, RCII, REV, RYI, SIGI, SAVE, SFM, SNEX, TTEK, TSE, TTEC, TTMI, TWLO, and UBER report.

So far this morning, REGN, AMKBY, ABC, GNRC, BWA, UTHR, SITE, PSN, GEL, VNTR, CVS, MRNA, CDW, TT, and FTS have all reported beats on both revenue and earnings.  Meanwhile, VWAGY, VWAPY, GOLD, PDYPY, MUR, and FSNUY all missed on revenue while beating on earnings.  On the other side, UBER, NI, FDP, BHG, and KD have reported beating the estimates on revenue but missed on the bottom line.  Finally, IDXX, JHG, EAT, AMRX, and JCI reported misses on both lines.

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This week we will see almost 1,500 earnings reports.  On Thursday, we see APD, APO, BDX, COP, D, EOG, ILMN, ICE, MCK, MNST, MSI, PH, RSG, SRE, SQ, VRTX, WELL, and ZTS.  Finally, on Friday we get CI.

All eyes are on the Fed today, even with other news and plenty of earnings on the calendar. There could be a bit of volatility in the morning, but I would not expect any definitive moves until after Fed Chair Powell’s presser (and maybe not until it is digested, which would mean Thursday). While it is very widely expected (98.5% chance per futures betting) that we will see a half percent rate increase, just as with earnings lately, the focus will be more on the forward guidance from Powell than the actual rate news (unless it is a major shock like a three-quarters of a percent move). With all this said, for now, all we know is that the trend is still very clearly bearish and that we’ve seen a very tepid relief bounce the last 2 days. Even so, “whipsaw” has been the keyword lately. So, caution is still the smart play. Don’t get caught chasing a gap only to be stuck in a reversal that you are not prepared to weather.

Remember that the first rule of making big money in the market is to not lose big money in the market. Staying hedged, nimble, and measured are good things…not bad. So, don’t be stubborn, and protect yourself from yourself. Nobody is right all the time. If you’re wrong, just admit it and take your loss. Just focus on your process and enjoy yourself. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor.

Ed

Swing Trade Ideas for your consideration and watchlist: CLX, XLE, SBUX, CVX, MOS, HAL, AR, FB, AMD, XOM, SLB. 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.

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🎯 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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