An Earnings Flood and Fed on Deck Today

Markets gapped down between one and two-thirds of a percent at the open Tuesday.  All 3 major indices then followed through by selling off until lows were hit about noon.  From that point, DIA recovered a little with the SPY and QQQ continuing to bob along the lows.  However, from 1:30 pm to 3 pm all 3 indices sold off again to drive to new lows before grinding sideways the last hour.  8 of the 10 sectors are in the red with Consumer Cyclical and Technology taking by far the worst hit.  Healthcare and Utilities sectors managed to stay green.  This action had all 3 major indices printing gap-down, black-bodied candles.  QQQ has clearly given up the T-line as support while the SPY could be said to still be testing it and the DIA has yet to reach that much pullback.  With that said, all 3 are holding just above their 50sma. 

On the day, SPY lost 1.18%, DIA lost 0.76%, and QQQ lost 1.96%.  The VXX rose almost 3.5% to 21.67 and T2122 fell to just outside the overbought territory at 76.34.  10-year bond yields climbed back to remain flat at 2.80% and Oil (WTI) fell 1.6% to $95.16/barrel.  As has been the case for weeks, the volume was very light.  So, overall, it looks like Mr. Market was betting on more downside ahead of Wednesday’s Fed announcement.

In business news, just before the open, SHOP announced it will lay off 10% of its workforce as the company struggles with slowing growth.  After hours, TEVA announced it had reached a nationwide settlement of opioid lawsuits in the amount of $4.25 billion paid over 13 years.  The NHTSA also announced it will be investigating a crash (which killed a motorcyclist) that involved a TSLA which was operating under Autopilot mode.  Of note, both MDLZ and KO raised their full year guidance on strong demand.  Finally, TWTR announced after hours that it will hold its shareholder vote on the Musk acquisition on September 13 (the court case takes place in October).

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In energy news, after hours the American Petroleum Institute announced that US oil inventories fell by more than 4 million barrels last week (a drawdown of 1.21 million barrels was expected).  The White House also announced that it does not plan to continue releasing oil from the Strategic Petroleum Reserve after the initial 6-month window.  Elsewhere, the EU has agreed on cuts to natural gas usage.  Each country agreed to cut their usage by 15% from August through March (versus the average use from 2017-2021).  However, the agreement included exemptions for many industries.  In related news, Germany announced it will cut electric car subsidies in 2023.

After the close, ASH, CB, MDLZ, V, TXN, AMP, CNI, FE, SKX, AGR, AXS, RUSHA, TNET, TER, BYD, CHX, BXP, EQR, CSGP, MTDR, ENPH, and NEX all reported beats on both the top and bottom lines.  Meanwhile, CMG, and AXTA missed on revenue while beating on earnings.  On the other side, JNPR, ZION, and HA beat on revenue while missing on earnings.  However, GOOGL, GOOG, MSFT, and SYK all missed on both revenue and earnings.

So far this morning, BASFY, HUM, BMY, KHC, GPC, WM, TEVA, TEL, AEP, ADP, BSX, RCI, GIB, OC, AVY, TECK, CSTM, TMHC, ICL, HLT, GRMN, ODFL, EVR, IEX, SCL, SHOO, CHEF, TRN, and CCJ all posted beats on bot the top and bottom lines.  Meanwhile, EQNR, GSK, GD, PAG, OTIS, GPI, ROK, CME, TPX, TDY, PRG, and TRN all missed on revenue while beating on earnings.  On the other side, BG, DB, CS, SPOT, UMC, IVZ, EDU, and WNC beat on revenue while missing on earnings.  However, BA, TMUS, and SHW missed on both the revenue and earnings lines.

Overnight, Asian markets were mixed but leaned to the upside.  Hong Kong (-1.13%) was the only appreciable loser on the day.  Meanwhile, Thailand (+1.50%), India (+0.96%), and Taiwan (+0.78%) led the gainers.  In Europe, stocks are mostly green at mid-day.  With only 3 minor exchanges showing very modest red, the FTSE (+0.57%), DAX (+0.26%), and CAC (+0.24%) are more typical of the region in early afternoon trading.  As of 7:30 am US Futures are pointing toward a green start to the day ahead of data.  The DIA implies a +0.37% open, the SPY is implying a +0.80% open, and the QQQ implies a +1.33% open at this hour.  10-year bond yields remain flat at 2.801% and Oil (WTI) is up 1.2% to $96.13/barrel in early trading.

The major economic news events scheduled for Wednesday include June Durable Goods Orders, June Trade Goods Balance, and June Retail Inventories (all at 8:30 am), June Pending Home Sales (10 am), Crude Oil Inventories (10:30 am), the Fed Interest Rate Decision and Fed Statement (both at 2 pm), and FOMC Chair Press Conference (2:30 pm).  The major earnings reports scheduled for the day include AEP, APH, ADP, AVY, BA, BSX, BMY, BG, CAJ, GIB, CHEF, CME, CSTM, CS, CPG, DB, DRVN, EVR, FSV, GRMN, GD, GPC, GPI, HES, HLT, HUM, ICL, IVZ, KHC, LW, MHO, NSC, ODFL, OPCH, OTIS, OC, PAG, PRG, ROK, RCI, ROL, R, SAIA, SHW, SHOP, SLGN, SPOT, SCL, SHOO, TMUS, TMHC, TEL, TECK, TDY, TPX, TEVA, TRN, UMC, WNC, and WM before the open.  Then after the close, ACHC, AEM, ALGN, AMED, AWK, NLY, AR, ACGL, ASGN, AVB, CHRW, CSL, CG, CCS, CAKE, CHE, CHDN, CMPR, CINF, CTSH, COLM, FIX, CYH, ESI, EQT, EQIX, ETSY, RE, FLEX, FLS, F, FBHS, FWRD, GFL, GGG, HP, HOLX, ICLR, INVH, JBT, LCRX, MTH, META, MEOH, MAA, MKSI, MOH, MUSA, MYRG, NCR, NOV, ORLY, OII, OMF, PPC, PLXS, PTC, QCOM, RJF, NOW, SNBR, SSNC, STC, FTI, TDOC, TROX, URI, VICI, WFRD, and WFG report.

In economic news coming later this week, Thursday brings Q2 GDP and Weekly Initial jobless Claims.  Then Friday we get the June PCE Price Index, Q2 Employment Cost Index, June Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.

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With the Fed taking center stage today, the major indices seem a little bullish in premarket. And while there may be a pop to start the day, do not be surprised if we see a reversal or at least a dead market until the FOMC news finally breaks and we hear Fed Chair Powell’s tone in the presser. Futures have pegged it as an extremely high probability of a 0.75% rate hike. However, the outlook for September and beyond will be at least as important as the hike itself. The only exception to this would be if the Fed goes bigger to a 1% hike (which is a low probability according to futures). The point is the market is hanging on words and parsing sentences. So, don’t predict and get burned. Also, don’t be surprised if/when we see more intraday whipsaw action…especially after the 2 pm announcement. Still, the longer-term chart continues to show the downtrend hasn’t been broken (or at least it is not clear it is broken and held) across the major indices. So, be careful taking anything but very short-term trades. Also, remember that Q2 GDP comes out tomorrow and there are a flood of earnings still coming. Caution, hedged, small-and-nimble, or flat are the watchwords at the moment.

Remember that trading is our job. So, 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. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. 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. 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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🎯 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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