Markets all gapped higher again on Thursday (up 0.42% in the SPY, up 0.21% in the DIA, and up 0.86% in the QQQ).  However, at that point, we saw a bit of a divergence.  The QQQ again led us higher with a fairly strong and steady rally all day until we saw a little profit-taking in the last 15 minutes.  Meanwhile, the SPY ground sideways in a tight range along its opening level until 11:30, at which point it followed the QQQ with a steady rally that was only broken by profit-taking the last 15 minutes of the day.  On the other hand, DIA lagged again, grinding sideways in a tight range after the open until just after 10:30 am.  Then DIA sold off to retest the opening gap and spend the rest of the day meandering back and forth inside that gap area.  This action gave us gap-up white-bodied candles (more body than wick) in both the QQQ and SPY.  For its part, the DIA gave us a black-bodied Doji-type Harami that never came close to challenging the Wednesday highs.

On the day, all 10 sectors were in the green again with Technology (+2.05%) way out front leading and Industrials (+0.27%) again lagging well behind the other sectors.  At the same time, SPY gained 0.79%, DIA gained 0.08%, and QQQ gained 1.70%.  The VXX gained a half of a percent to 24.21 and T2122 climbed slightly and remains in the high end of the overbought territory at 95.99.  10-year bond yields plummeted again to 3.765% while Oil (WTI) popped another 2.05% to close at $77.30 per barrel.  So, again on Thursday, we saw the big tech names like NVDA (+4.74%) and GOOGL (+4.72%) stretch the market higher.  Meanwhile, the stodgy DIA was held up by MSFT (+1.62%) and CSCO (+1.56%) as the likes of WBA (-1.91%), TRV (-1.69%), and CVX (-1.34%) tried to drag the industrials lower.  This all took place on less-than-average volume in all three major index ETFs.

The major economic news on Thursday, June PPI came in better than expected at +0.1% (compared to a forecast of +0.2% but well above May’s -0.4% reading).  The May PPI data was also revised lower.  In addition, the “Core PPI” fell 0.2% in June.  At the same time, the Weekly Initial Jobless Claims came in below the anticipated level at 237k (versus a forecast of 250k and the prior week’s reading of 249k). Later in the day, The June Federal Budget Balance was reported as worse than expected at -$228.0 billion (compared to a forecast of -$175 billion but better than the May value of -$240 billion).  Overall, this was good economic data showing that inflation is slowly headed in the right direction, and yet the job market is holding up fine.  On the Fed front, San Francisco Fed President Daly reiterated her previous position that two more hikes will be needed this year.  She told a CNBC interview that she wants to start heading toward neutral as inflation gets closer to the 2% Fed goal.  However, she said, “It’s too early to say we have declared victory on inflation.”  Later, St. Louis Fed President (and Uber-hawk) Bullard announced he will be stepping down on August 14 in order to take a dean position at Purdue University.  This will be just under 3 weeks after the July Fed meeting and six weeks prior to the September meeting.  However, Bullard is not a voter this year.  Finally, last night Fed Governor (and voter) Waller said flat out what many Fed members have been implying and hinting at.  He said, “I see two more 25-basis-point hikes in the target (Fed Funds) range over the four remaining meetings this year as necessary to keep inflation moving toward our target.”

SNAP Case Study | Actual Trade

In sundry economic news, Bloomberg reports that in addition to it now looking much more likely that the US will avoid the long-feared recession, the same may be true on a global level.  At least this is one possible conclusion to be drawn from labor markets.  Bloomberg reports that Global job cuts in June were down 25% from May (reaching the lowest level since December) and have been down four of the last five months.  At the same time, the UN and EU are scrambling to save the Black Sea grain deal (allowing Ukrainian grain exports) after Putin has threatened to kill the agreement.  The current deal expires Monday (7/17) and the UN is considering giving in to Russian blackmail by reconnecting a Russian bank to the SWIFT payment network for grain and fertilizer transactions.  In a related story, India (the world’s largest exporter of rice, shipping 41% of global supplies) is currently considering a export ban on most varieties rice.  Bloomberg reports this is due to rising Indian domestic rice prices amidst a disruptive “El Nino” weather pattern.  Finally, after the close, the Fed announced that Bank borrowing from the Fed declined again (very slightly this time) for the week ending July 12.  Total Fed lending from its two backstop programs was $105 billion, down $320 million from the prior week.

In stock news, MITT made a stock-and-cash offer for WMC on Thursday.  The offer will disrupt the all-stock bid made on June 28 by Terra Property Trust.  (The MITT offer is equal to $9.88 per share, which was a 12% premium at the time of the offer and more than a 9% premium on the WMC closing price Thursday).  In other deal news, XOM announced that it has agreed to buy DEN for $4.9 billion in an effort to accelerate the XOM carbon dioxide sequestration (pumping CO2 into wells) program.  Elsewhere, GS announced it has sold off $1 billion in personal loans made by its consumer unit Marcus.  No details were provided, but GS booked $470 million in losses on those loans in Q1.   At the same time, GOOGL announced it is rolling out its “Bard” AI Chatbot to Europe and Brazil.  This news eased market fears over international regulatory hurdles and GOOGL stock soared 4.72% on the day.  In other news, Kelly Blue Book announced that registrations of TSLA Model Y vehicles (TSLA’s least expensive model) surged 103% between January and May.  Meanwhile, NKLA shares skyrocketed 61% on Thursday after the company announced it had entered a strategic partnership with hydrogen producer Bayotech, which has agreed to buy 50 of the NKLA truck produced in the next 5 years.

In stock legal and regulatory news, the NRLB announced Thursday that it received a complaint against AMZN for refusing to bargain with the union elected by workers at the e-commerce giant’s Staten Island, NY distribution center.  (AMZN challenged the election but lost the appeal to the NRLB in January.  However, AMZN spokesmen said this complaint was nothing new and the company will not recognize the union, at least until it has exhausted all legal challenges to the union’s election.)  Elsewhere, a Ninth Circuit Appeals Court opened a docket on the FTC appeal of the lower court ruling against providing an injunction preventing the closing of the MSFT acquisition of ATVI.  No date has yet been set for the hearing of the case.  At mid-morning, a US District Judge ruled blockchain company Ripple Labs did not violate SEC law by selling tokens on public exchanges.  Markets immediately saw this as a huge victory for cryptocurrency (against government regulation of the same). COIN shot 30% higher (ending the day up 24.49%) while MSTR spiked 13% (and ended up 11.69%).  Later, TM and the NHTSA announced that the Japanese car company has recalled 118k 2023 cars (110k in the US) due to a wiring defect in the driver-side airbag.  By mid-afternoon, the EPA announced it has fined CPE $1.3 million for excess emissions (from tanks, flares, and other equipment) at the company’s West Texas Permian Basin operations.  At the end of the market session, Reuters reported that the FTC has opened an investigation into MSFT-backed OpenAI over claims the AI company is putting consumer personal data and reputations at risk through its AI operations.  This is the first potential regulation of artificial intelligence, even if only in terms of potential fines for violating consumer privacy.

Overnight, Asian markets leaned heavily to the green side.  Only Shenzhen (-0.14%) and Japan (-0.09%) were in the read.  Meanwhile, Thailand (+1.60%), South Korea (+1.43%), and Taiwan (+1.30%) led the rest of the region higher.  In Europe, the bourses are mixed at midday with six exchanges in some shade of red and nine in the green to some degree.  The CAC (+0.26%), DAX (-0.22%), and FTSE (+0.25%) are typical and lead the way in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a mixed start near the flat line to the day.  The DIA implies a +0.42% open, the SPY is implying a +0.09% open, and the QQQ implies a -0.04% open at this hour.  At the same time, 10-year bond yields are bouncing back (early), up to 3.787% and Oil (WTI) is just on the red side of flat at $76.79 per barrel in early trading.

The major economic news events scheduled for Friday include June Import Price Index and June Export Price Index (both at 8:30 am), Preliminary July Michigan Consumer Sentiment and Preliminary July Michigan Consumer Expectations (both at 10 am). The major earnings reports scheduled for before the opening bell include BLK, C, ERIC, JPM, STT, UNH, and WFC.  There are no major earnings scheduled for after the close.    

So far this morning, JPM, WFC, BLK, and UNH all reported beats to both the revenue and earnings lines.  These were all “good beats” showing very strong quarter-on-quarter growth in revenue and earnings with the exception of BLK beating while having a 1.4% decline in revenue quarter-on-quarter.  Meanwhile, ERIC missed slightly on revenue at the same time they beat on earnings.  However, that was a “bad beat” on earnings since earnings were down 50% quarter-on-quarter for ERIC.  On the other hand, STT missed significantly on revenue while beating significantly on earnings and both of the numbers reported were quarter-on-quarter increases from Q1.     

In miscellaneous news, Reuters reported that US Small Businesses borrowing has not fallen off much.  In other words, the feared credit crunch does not appear to have materialized (at least yet) despite increasing rates and dire commentator predictions.  According to the National Federation of Independent Business, the average interest rate paid by small firms in June was 9.2% (up 1.4% from May).  However, the lending continues as 28% of surveyed small businesses said they regularly borrowed in June, roughly in line with May but far below the three-year high the survey reported in April.  Meanwhile, part of the strong rally in Oil (and other commodities) is the continuing crash of the US Dollar against major currencies.  The dollar sold off steadily all-day Thursday against the Euro, British Pound, Aussie Dollar, and even Canadian Dollar.  Elsewhere, the Republican focus on social culture wars continues as 13 GOP AGs warned the 100 largest US companies that they will sue those companies over any diversity policies those companies have in place.  The letter sent to the 100 singled out AAPL, GOOGL, MSF, and UBER specifically, but threatened all 100.  Finally, the WHO warned that aspartame (most widely-used artificial sweetener) may cause cancer in high doses.  However, the agency also said the topic needed more research and the sweetener should be safe in normal amounts.  This lessened the blow on companies like KO and PEP which use it in many products.

With that background, it looks like the Bulls are looking to close the week out strong. The DIA candle in particular is large and white after starting the early session down from Thursday’s close. However, note that the DIA is also right at a resistance level while the other two major index ETFs have broken through theirs earlier in the week. SPY is looking to gap up but is more tentative and for its part QQQ is looking to open higher but is a very indecisive premarket candle. Obviously, all three remain above their T-line (8ema) and the bias remains bullish across the market. Regardless, after the open settles out, do not be surprised to see some profit-taking after a strong week in all three major indices. Also, don’t forget that its Friday. So, pay yourself, move your stops, hedge, or do whatever you need to do to prepare for the weekend. All that said, do not be surprised if we drift while we wait. As far as extension goes, the SPY and QQQ are starting to get a bit stretched from the T-line. DIA remains fine in that regard. However, again, the T2122 indicator remains deep into that overbought territory. The old saying stands: “The market can remain overbought longer than we can stay solvent being right too early.” So, once again, if either the bulls or the bears did find the energy to run today, there is a slack available…there is just more slack available to the Bears.

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 absolutely 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 money is 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