Member e-Learning 12-19-24 – Ed
PCE Data and Triple Witching on Tap Today
The Bulls tried to rebound Thursday…they tried. SPY gapped up 0.87%, DIA gapped up 0.82%, and QQQ gapped up 0.88%. At that point, all three major index ETFs sold off. SPY and DIA fell two-thirds of the way back across their gaps by 10:40 a.m. while QQQ completely recrossed its gap during the same time. From there, SPY and DIA chopped up and down in their gaps all day. (Well, SPY fell just below its gap the last few minutes of the day.) Meanwhile, QQQ chopped along the bottom of its gap and then drove South the last 30 minutes. This action gave us black candles with small upper wicks in all three major index ETFs. All three remain below their T-line (8ema) while SPY retested its 50sma (and failed the test) from below. Also, while DIA printed an 11th-straight black candle, it did break the streak of down candles at 10. This all happened on just-above-average volume in all three major index ETFs.
On the day, eight of the 10 of the sectors were in the red as Basic Materials (-0.94%) was way out front leading the way lower. On the other side, Utilities (+0.79%) held up far better than any of the other sectors. Meanwhile, SPY lost 0.03%, DIA gained 0.08%, and QQQ lost 0.45%. VXX spiked another 8.55% to close at 56.14 and T2122 climbed very slightly but remains at the bottom of its oversold territory to close at 0.93. On the bond side, 10-Year bond yields spiked again to close down to 4.572% while Oil (WTI) fell 1.03% to close at $69.85 per barrel. So, Thursday saw Bulls try to bounce back at the open. However, it was a short-lived attempt as all three major index ETFs almost immediately fell back into the gap and ended the day very near their lows.
The major economic news scheduled Thursday includes Weekly Initial Jobless Claims, which came in lower than expected at 220k (compared to a 229k forecast and well down from the prior week’s 242k). On the ongoing side, Weekly Continuing Jobless Claims were also down to 1,874k (versus the 1,890k forecast and 1,879k prior week value). At the same time, the Q3 Core PCE Price Index was down to 2.20% (still higher than the 2.10% forecast but well-down from Q2’s 2.80% reading). Meanwhile, the Q3 GDP (Quarter-on-Quarter) was up to 3.1% (compared to a 2.8% forecast and even up from Q2’s 3.0% value). On the price side, the Q3 GDP Price Index was down to 1.9% (in-line with the 1.9% forecast but far down from Q2’s 2.5% reading). At the same time, the Philly Fed Mfg. Index was down to -16.4 (versus a +2.9 forecast and the November -5.5 value). In terms of employment, the Philly Fed Mfg. Employment Index was down to 6.6 (compared to November’s 8.6 reading). Later, Nov. Existing Home Sales were higher than anticipated at 4.15 million (versus a 4.09 million forecast and well up from October’s 3.96 million number). At the same time, the Nov. US Leading Economic Indicator Index was up sharply to +0.3% (compared to a -0.1% forecast and up sharply from October’s -0.4% value). At the close, Oct. TIC Net Long-Term Transactions were down to $152.3 billion (versus September’s $216.1 billion). Then after the close, Fed’s Balance Sheet was down $8 billion on the week from $6.897 trillion to $6.889 trillion.
After the close, NKE reported beats on both the revenue and earnings lines. At the same time, BB, FDX and AVO missed on revenue while beating on earnings. (AVO missed massively on revenue and beat massively on earnings.) However, SCHL missed on both the opt and bottom lines.
Overnight, Asian markets were nearly all red. Only New Zealand (+1.18%) bucked the trend as the other 11 exchanges were under water. Taiwan (-1.84%), India (-1.52%), and Australia (-1.24%) led the region lower. In Europe, we see a clean sweep by the Bears at midday. The CAC (-1.22%), DAX (-1.50%), and FTSE (-0.87%) lead that region lower in early afternoon trade. Meanwhile, in the US, as of 87:20 a.m., Futures are pointing toward a significant gap lower as Republicans killed the negotiated CR deal on Elon Musk (and later Trump’s) order. Then they flat out failed to produce any alternative. So, the US government is set to shutdown tonight. (Asia tanked on that news and Europe followed. So, the best guess is that is why we are headed lower to start the day as well.) The DIA implies a -0.54% open, the SPY is implying a -0.98% open, and the QQQ implies a -1.56% open at this hour. At the same time, 10-Year Bond yields are “down” to 4.536% and Oil (WTI) is off one percent to $68.70 per barrel in early trading.
The major economic news scheduled for Friday include November Core PCE Price Index, Nov. PCE Price Index, and Nov. Personal Spending (all at 8:30 a.m.), Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations (all at 10 a.m.). The major earnings reports scheduled for before the open are limited to CCL and WGO. Then, after the market, there are no reports scheduled. Also, don’t forget that today is triple witching, with stock options, stock index options, and stock index futures all expiring.
So far this morning, WGO missed on both the top and bottom lines.
With that background, it looks like more blood in the streets is in order for Friday. All three major index ETFs gapped significantly lower to start the premarket. All three have also followed-through with black-bodied candles with small upper wicks since that start. That being the case, the short-term trend is very, very bearish. Looking further out, all three have now broken their daily mid-term uptrend lines, but have not yet formed bearish trends. In the long-term, looking at higher-timeframe charts, this is nothing but a blip in a strong bull trend. In terms of extension, all three are very extended below their T-line (8ema) based on the early session. Meanwhile, T2122 is also deep in its oversold territory. (Less than a point from that indicator’s theoretical oversold limit.) So, the Bulls certainly have reversion to the mean on their side. However, the Bears have all the momentum and the news cycle in their corner. In terms of the 10 Big Dogs, all 10 are in significant red numbers at this point of the morning. TSLA (-4.99%) is way out front leading the tech selloff. On the other end, AAPL (-1.13%) and MSFT (-1.15%) are holding up best. Once again, TSLA is the leader in terms of dollar-volume traded by about 3 times over NVDA (with the next closest 5 times less in dollar-volume than NVDA). Finally, remember its Friday…payday…and time to prepare for the weekend news cycles. Also, be aware of triple witching activity in the afternoon.
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
Member e-Learning 12-19-24 – John
Revised Outlook for Interest Rates
Following the Federal Reserve’s revised outlook for interest rates, trading became highly volatile, leading to a panic during the regular session. Jeff Buchbinder, LPL Financials’ chief equity strategist, attributed Wednesday’s market slump to “stretched positioning and sentiment,” which made stocks susceptible to a selloff. He noted that the significant rise in inflation expectations and the consequent bond selloff provided a convenient trigger. With the tech sector’s support waning, no other groups were able to compensate for the gap. Investors are now eagerly awaiting the GDP report, with futures indicating a cautious rebound.
European markets experienced significant declines, mirroring global trends. The Swedish Riksbank announced a 25-basis-point rate cut, while Norway’s central bank opted to keep its policy rate unchanged but hinted at potential rate reductions starting in March 2025. The Bank of England is also set to discuss its monetary policy decisions later in the day. Amid these developments, shares of British public services provider Serco Group rose by approximately 6.77%, whereas French broadcaster Canal+ saw its shares drop by 10.39%. Investors are closely watching these central bank actions and their implications for the broader market.
Asia-Pacific stocks and currencies experienced a decline amid a broader market sell-off. This downturn followed the Bank of Japan’s decision to maintain its policy rate at 0.25% for the third consecutive meeting. In reaction to this decision, Japan’s Nikkei 225 fell by 0.69%, and the Topix decreased by 0.22%. South Korea’s Kospi index dropped 1.95%, while the Kosdaq index declined 1.89%. Australia’s S&P/ASX 200 saw a 1.7% drop, Hong Kong’s Hang Seng index fell by 0.36%, and China’s CSI 300 index managed a slight increase. Investors are closely monitoring these developments as they reassess their positions in the market.
Economic Calendar
Earnings Calendar
Notable reports for Monday before the bell include CAN, KMX, CTAS, CAG, DRI, FDS, LW, & PAYX. After the bell reports include AVO, FDX, & NKE.
News & Technicals’
The Federal Open Market Committee (FOMC) voted 11-1 on Wednesday to reduce the federal funds rate to a range of 4.25%-4.5%. Cleveland Fed President Beth Hammack was the sole dissenter, advocating for maintaining the current rates. Despite the rate cut, Fed Chair Jerome Powell emphasized that interest rates are still significantly restraining economic activity and indicated that the Fed plans to continue cutting rates. However, Powell noted that further rate cuts would depend on more substantial progress in reducing inflation. The new quarterly forecasts revealed that several officials now anticipate fewer rate cuts next year compared to their earlier projections, and they expect slower progress on inflation in 2025. Additionally, Powell addressed a question regarding the Fed’s potential response to possible tariffs from the Trump administration.
Micron Technology shares plummeted by 15% following the release of disappointing guidance for the second quarter. Despite this, the company reported in-line revenue results and exceeded quarterly earnings expectations, with adjusted earnings per share of $1.79 on revenue of $8.71 billion, surpassing analysts’ forecasts of $1.75 per share. Year to date, Micron’s shares have risen by 22%, although this lags behind Nasdaq’s 29% gain. In its earnings report, Micron emphasized growth opportunities in data centers and artificial intelligence ventures, particularly those involving Nvidia’s processors.
On Thursday, the 10-year U.S. Treasury yield increased slightly, rising over one basis point to 4.516%, following the Federal Reserve’s indication that fewer rate cuts might be expected next year. This rise came after the yield surpassed 4.5% in the previous session; a level often associated with heightened market volatility. In contrast, the 2-year Treasury yield fell by more than two basis points to 4.331%. According to the CME FedWatch tool, the likelihood of another rate cut at Fed’s first policy meeting in January has dropped to below 10%. Investors are closely monitoring these developments as they reassess their expectations for future monetary policy.
During his annual “Direct Line” Q&A session with Russian citizens on Thursday, President Vladimir Putin acknowledged that inflation is a significant issue in Russia and that the economy is overheating. He described inflation as an “alarming signal” and emphasized that both the government and the Russian central bank are working towards achieving a “soft landing” for the economy. Despite these challenges, Putin expressed confidence in the overall performance of the economy, projecting a growth rate of 3.9-4% for the year.
Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School, described the recent stock sell-off on Wall Street as “healthy.” He explained that the Federal Reserve’s cautious outlook on future rate cuts served as a “reality check” for investors. Siegel noted that the market had been in a “runaway situation,” and the Fed’s stance reminded investors that interest rates would not drop as low as they had hoped when the easing cycle began. He remarked that the market’s previous optimism was excessive, making the sell-off unsurprising. Siegel also predicted that the Fed would likely reduce the number of rate cuts next year, possibly implementing just one or two reductions.
As we attempt to achieve a relief rally keep in mind the revised outlook for interest rates will keep price volatility challenging and option prices higher than normal for a while so plan carefully. Today we have another big day of market-moving economic data that will kick off with the GPD report so buckle up it could be another very bumpy day.
Trade Wisely,
Doug
Expected 2025 Rate Cuts Reduced and Bears Roar
On Wednesday, markets started out little changed. SPY opened 0.04% lower, DIA opened 0.09% higher, and QQQ opened down 0.14%. From there all three major index ETFs rallied the first hour and then wobbled sideways until 2 p.m. Then the Fed news started coming out and all three sold off sharply and continuously until a tiny bounce at the end of the day. This action gave us huge black candles and what could be called Bearish Trader’s Best Friend in the SPY, DIA, and QQQ. SPY and QQQ both crossed below their T-line (8ema), with SPY and DIA both also crossing below their 50sma. For DIA, this was a 10th consecutive black candle and lower close in the DIA. That is the first time this has happened since 1974. This all took place on well-above-average volume in all three major index ETFs.
On the day, all 10 of the sectors were in the red as Consumer Cyclical (-3.80%) led the way lower. (However, half the sectors lost more than 3%.) On the other side, it was Tuesday’s big loser, Communications Service (-1.79%) held up better than any of the other sectors. Meanwhile, SPY lost 2.98%, DIA lost 2.61%, and QQQ lost 3.61%. VXX spiked 16.78% to close at 51.72 and T2122 fell all the way down to the bottom of its oversold territory to close at 0.82. On the bond side, 10-Year bond yields spiked higher to close down to 4.504% while Oil (WTI) was flat to close at $70.00 per barrel. So, on Wednesday, the market was all about the Fed…and the market was not pleased with what it heard (see below). What had started as a modestly bullish day after the modest morning rally turned into a bloodbath the last two hours of the day.
The major economic news scheduled Wednesday included Preliminary Nov. Building Permits, which came in higher than expected at 1.505 million (compared to a forecast of 1.430 million and an October reading of 1.419 million). At the same time, Q3 Current Account was down again to -$310.90 billion (versus a forecast of -$286.0 billion and a Q2 -$275.0 billion number). Meanwhile, Nov. Housing Starts were down coming in at 1.289 million (compared to the 1.350 million forecast and October’s 1.312 million value). Later, the EIA Weekly Crude Inventories showed a smaller-than-predicted drawdown of 0.934 million barrels (versus a forecasted 1.600-million-barrel drawdown and the prior week’s 1.425-million-barrel draw). Then at 2 p.m., the Fed Interest Rate Decision was a quarter-point cut as anticipated, down to 4.50% compared to the previous 4.75%. At the same time, Fed Q4 Current Year Interest Rate Projection was stable at 4.4% while the Q4 1st Year Interest Rate Projection spiked half a percent to 3.9% (up from the prior quarter’s 3.4%). Looking further out, the Fed Q4 2nd Year Interest Rate Projection also rose to 3.4% (from the previous value of 2.9%) while the Q4 3rd Year Interest Rate Projection rose less to 3.1% (compared to the previous 2.9% value). Far out on the horizon, the Q4 Longer-Term Interest Rate Projection rose a tick to 3.0% (versus the previous quarter’s 2.9% forecast).
In Fed news, as mentioned, the FOMC cut rates a quarter percent as the market had expected. However, at the same time as the rate-cut announcement, updates to the Fed “Dot Plots” (average of FOMC member interest rate forecasts) showed that they now only expect two quarter-point rate cuts in 2025, with Fed Funds ending 2025 at 4.00%. It also showed they expect 2024 inflation (PCE inflation rate) to come in at 2.4% and 2025 to ends at 2.5%. Later, in his press conference, Fed Chair Powell said it is too soon to tell what the new Trump Administration will do to the economy. When questioned about it, Powell said, “it’s very premature to make any kind of conclusions. We don’t know what will be tariffed, from what countries, for how long, in what size …We need to take our time, not rush and see what the new president delivers.” (Trump campaigned on heavy tariffs, which would be hugely inflationary as well as being economically restrictive. On the other hand, he also campaigned on more tax cuts for corporations and the wealthy, which would theoretically lead to economic expansion…but lead to an increased deficit. However, Trump is not known for telling the truth or being consistent. So, time will tell.) Powell went on to say, “From this point forward it’s appropriate to move forward cautiously and look for progress on inflation … from now we are in place where the risks are in balance.”
After the close, MLKN and SCS reported beats on both the revenue and earnings line. Meanwhile, MU missed on revenue while beating on earnings. On the other side, WS beat on revenue while missing on earnings. However, LEN missed on both the top and bottom lines.
Overnight, Asian markets were mostly red in sympathy with the US. Shenzhen (+0.61%) was the only appreciable gainer (Malaysia at +0.03% did also hang onto green). On the other side, South Korea (-1.95%), Australia (-1.70%), and Thailand (-1.53%) led the broad-based losses. In Europe, we see a similar picture taking shape at midday. Only Portugal (+0.33%) is in the green as 13 of the 14 bourses are red at midday. The CAC (-1.54%), DAX (-1.22%), and FTSE (-1.39%) lead the region lower in early afternoon trade. Meanwhile, in the US, at of 7 a.m., Futures are pointing toward a modest rebound to start the day. The DIA implies a +0.32% open, the SPY is implying a +0.35% open, and the QQQ implies a +0.23% open at this early hour. At the same time, 10-Year Bond yields continue to run higher at 4.534% while Oil (WTI) is off 0.21% to $70.43 per barrel in early trading.
The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q3 Core PCE Price Index, Q3 GDP, Q3 GDP Price Index, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 a.m.), Nov. Existing Home Sales and Nov. US Leading Economic Indicator Index (both at 10 a.m.), Oct. TIC Net Long-Term Transactions (4 p.m.), and the Fed’s Balance Sheet (4:30 p.m.). However, the major earnings reports scheduled for before the open include ACN, KMX, CTAS, CAG, DRI, FDS, LW, and PAYX. Then, after the market, BB, FDX, AVO, NKE, and SCHL report.
In economic news later this week, on Friday, November Core PCE Price Index, Nov. PCE Price Index, Nov. Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.
In terms of earnings reports later this week, on Friday, CCL and WGO report.
So far this morning, ACN beat on both the revenue and earnings lines. However, LW missed on both the top and bottom lines.
With that background, the market seems to be trying to bounce off of the huge drops on Thursday. However, this is a very indecisive bounce with all three major index ETFs giving a premarket modest gap up, but then printing mostly wicks and little body in the early session candles. After Thursday, all three are far below their T-line (8ema). That being the case, the short-term trend is bearish. However, looking further out, the mid-term and longer-term trends remain bullish. In terms of extension, SPY and especially DIA are stretched below their T-line at this point. (Having been the strongest prior to Thursday’s move, QQQ is not quite as stretched.) Meanwhile, T2122 is deep in its oversold territory. (Less than a point from that indicator’s theoretical oversold limit.) So, the Bulls certainly have room to run today. However, coming off the Fed reduction in predicted future cuts, the Bears have the momentum. In terms of the 10 Big Dogs, nine of the 10 are in green numbers at this point of the morning. TSLA (+2.43%) and NVDA (+1.92%) are leading the group higher. On the other end, AAPL (-0.21%) is the laggard in the bounce. Once again, TSLA is the leader in terms of dollar-volume traded by about 3 times over NVDA (with the next closest 8 times less in dollar-volume than NVDA).
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
Interest Rate Decision
U.S. stock futures rebounded on Wednesday morning as traders anticipated the Federal Reserve’s December interest rate decision. The Dow Jones Industrial Average has been experiencing its worst downturn in 46 years, primarily due to a shift from traditional economy stocks to technology stocks, which are underrepresented in the Dow compared to broader market indices. The Federal Reserve is expected to announce its policy decision at 2:00 p.m. ET, with Fed funds futures indicating a 95% probability of a quarter percentage point rate cut, according to the CME FedWatch tool. This potential rate cut has heightened market interest and influenced trading activity.
European stocks saw gains on Wednesday, buoyed by economic data and corporate news. The U.K. reported a 2.6% rise in inflation for November, aligning with market expectations. Investors anticipate that the Bank of England will maintain its current interest rates at its final monetary policy meeting of the year on Thursday. In corporate news, shares of French carmaker Renault surged by 6% following reports of potential merger talks between Nissan and Honda, in which Renault holds a minority stake. This development contributed to the positive sentiment in the market.
Investors in Asia closely monitored Japan’s trade data ahead of an upcoming Bank of Japan rate decision. Japan’s exports saw a year-on-year increase of 3.8% in November, while imports fell by 3.8%, significantly missing expectations. This mixed economic data influenced regional markets differently. The Nikkei 225 closed 0.72% lower, reflecting investor caution. In contrast, South Korea’s Kospi rose by 1.12%, and Hong Kong’s Hang Seng index increased by 0.95%. Australia’s S&P/ASX 200 experienced a slight decline of 0.06%. Meanwhile, China’s CSI 300 gained 0.51% as investors awaited the People’s Bank of China’s loan prime rate announcement on Friday.
Economic Calendar
Earnings Calendar
Notable reports for Wednesday before the bell include ABM, BIRK, GIS, JBL, & TTC. After the bell reports include LEN, MLKN, MU, SCS, & WS.
News & Technicals’
Despite inflation remaining above target, a robust 3% economic growth rate, and a strong labor market, futures market traders are almost certain that the Federal Open Market Committee (FOMC) will lower its benchmark overnight borrowing rate by 25 basis points, bringing it to a target range of 4.25% to 4.5%. This anticipated rate cut contrasts with the typical response of raising rates or maintaining the current level under such economic conditions. To justify this decision, Chair Jerome Powell and the committee will need to communicate their rationale effectively. Former Boston Fed President Eric Rosengren recently expressed his opposition to a rate cut at this meeting, highlighting the complexity of the decision.
U.S. Treasury yields edged higher on Wednesday as investors awaited the Federal Reserve’s latest interest rate decision and guidance on the economic outlook. The yield on the 10-year Treasury note rose by two basis points to 4.40%, while the 2-year Treasury yield increased by one basis point to 4.25%. Market participants are keenly watching the post-meeting statement and the press conference with Fed Chairman Jerome Powell for insights into the central bank’s monetary policy stance and its assessment of the broader economy. These communications are expected to provide crucial clues about future policy directions.
Nissan shares soared by 24% while Honda Motor stock declined, following reports that the two Japanese automakers are considering a merger. According to the Nikkei newspaper, Honda and Nissan are exploring the possibility of operating under a holding company and are expected to sign a memorandum of understanding soon. Joe McCabe, president and CEO of AutoForecast Solutions, commented to CNBC that Nissan requires a “revitalization” after its partnership with Renault deteriorated. This potential merger could mark a significant shift in the automotive industry landscape.
Novo Nordisk’s popular diabetes medication, Ozempic, may have an unexpected side effect. Danish health authorities announced on Monday that they are requesting the European Union’s drug regulator to review findings from two Danish studies. These studies suggest a link between Ozempic and an increased risk of non-arteritic anterior ischemic optic neuropathy (NAION), a rare eye condition that can cause vision loss due to reduced blood flow to the optic nerve.
As we catch a very needed relief rally in the DIA and IWM plan carefully if you intend to add new positions with the FOMC interest rate decision coming at 2 PM Eastern. Also keep in mind that we have a pending GDP report on Thursday and the Core PCE figures coming Friday morning as well as the possible government shutdown midnight on Friday unless a deal is reached in Congress.
Trade Wisely,
Doug
Fed Day with More Than 95% Expecting A Cut
Markets gapped lower on Tuesday. SPY gapped down 0.42%, DIA gapped down 0.49%, and QQQ gapped down 0.33%. From there, all three major index ETFs meandered around their opening level, but DIA was the weakest, never quite getting back to the open in the afternoon. (It is worth noting this was DIA’s nineth-consecutive black, candle and down day…its worst streak since 1978.) This action gave us Doji-like, indecisive candles in all three. QQQ was the best-looking candle, printing a black, Spinning Top of Doji-like candle that was also a Bearish Harami (inside day). At the same time, SPY gapped down below its T-line (8ema) and retested and failed that level on the way to printing a Doji. Finally, DIA made a big gap-down, black-bodied Spinning Top candle that retested its 50sma and closed above.
On the day, eight of the 10 of the sectors were in the red as Communications Services (-1.13%) and Financial Services (-1.07%) leading the way lower. On the other side, Healthcare (+0.16%) held up better than any of the other sectors. Meanwhile, SPY lost 0.41%, DIA lost 0.65%, and QQQ lost 0.44%. VXX climbed 2.48% to close at 44.29 and T2122 dropped back into the bottom of its oversold territory to close at 6.09. On the bond side, 10-Year bond yields reversed after an overnight move higher to close down to 4.397% while Oil (WTI) dropped 0.74% to close at $70.19 per barrel. So, on Tuesday, the market was all about the open. After that start, all three major index ETFs just meandered in waves back-and-forth across the opening level. This all happened on not far below-average volume in SPY, DIA, and QQQ.
The major economic news scheduled for Tuesday included Nov. Month-on-Month Core Retail Sales, which came in flat at +0.2% (compared to a +0.4% forecast but in-line with October’s +0.2% reading). On the headline side, Nov. Month-on-Month Retail Sales were up +0.7% (higher than the +0.6% forecast and October’s +0.5% number). Later, the Nov. Month-on-Month Industrial Production was up but still down at -0.1% (versus the +0.3% forecast but better than October’s -0.4% value). On an annualized basis, Nov. Year-on-Year Industrial Production were down at -0.90% (compared to a forecasted +0.10% and worse than October’s -0.45% reading). Later, Oct. Business Inventories were up +0.1% (versus the forecasted +0.2% and September’s flat 0.0%). At the same time, Oct. Retail Inventories were steady at +0.1% (compared to the forecast and prior month value of +0.1%). Then, after the close, the API Weekly Crude Oil Stocks report showed an unexpectedly large 4.700-million-barrel drawdown (versus a forecasted 1.850-million-barrel drawdown and the previous week’s 0.499-million-barrel inventory build).
In Fed news, the Fed quiet period ends Wednesday with the rate decision, statement, and Fed Chair Press Conference. So, no Fed news Tuesday.
After the close, HEI reported a miss on revenue while beating on earnings.
Overnight, Asian markets were mixed, but leaned toward the green side with seven of the 12 exchanges above break-even while another was unchanged. South Korea (+1.12%) was by far the biggest mover and gainer. On the other side, Japan (-0.72%) paced the losses. In Europe, the market outlook is brighter with 12 of the 14 bourses in the green at midday. The CAC (+0.27%), DAX (+0.29%), and FTSE (+0.15%) lead the region higher in early afternoon trade. In the US, as of 7:30 a.m., Futures are now pointing to a moderate gap up to start the morning. The DIA implies a +0.30% open, the SPY is implying a +0.31% open, and the QQQ implies a +0.29% open at this hour. At the same time, 10-Year Bond yields are back up to 4.413% and Oil (WTI) is up 0.86% to $70.68 per barrel in early trading.
The major economic news scheduled for Wednesday include Preliminary Nov. Building Permits, Q3 Current Account, and Nov. Housing Starts (all at 8:30 a.m.), EIA Weekly Crude Inventories (10:30 a.m.), Fed Interest Rate Decision, FOMC Statement, Q4 Current Year Interest Rate Projection, Q4 1st Year Interest Rate Projection, Q4 2nd Year Interest Rate Projection, Q4 3rd Year Interest Rate Projection, Q4 Longer-Term Interest Rate Projection (all at 2 p.m.), and the FOMC Chair Press Conference (2:30 p.m.). However, the major earnings reports scheduled for before the open include ABM, BIRK, GIS, JBL, and TTC. Then, after the market, LEN, MU, MLKN, SCS, and WS report.
In economic news later this week, on Thursday we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q3 Core PCE Price Index, Q3 GDP, Q3 GDP Price Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, Nov. Existing Home Sales, Nov. US Leading Economic Indicator Index, Oct. TIC Net Long-Term Transactions, and the Fed’s Balance Sheet. Finally, on Friday, November Core PCE Price Index, Nov. PCE Price Index, Nov. Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.
In terms of earnings reports later this week, on Thursday, we hear from ACN, KMX, CTAS, CAG, DRI, FDS, LW, PAYX, BB, FDX, AVO, NKE, and SCHL. Finally, on Friday, CCL and WGO report.
So far this morning, AMTM beat on both the top and bottom lines.
With that background, the market seems bullish so far in the premarket early session as more than 95% of Fed Fund Futures trades are expecting a quarter-point cut this afternoon. All three major index ETFs gapped up to open the premarket and have followed through with white-bodied candles to this point. SPY has crossed back above its T-line (8ema) and QQQ is headed back toward its all-time high. With two of the three above their T-line and one below its 8ema, the short-term trend has to be seen as weakly bullish. However, further out, obviously the mid-term and longer-term trends also remain bullish with index ETFs sitting near those all-time highs. In terms of extension, yesterday’s pullback helped the T-line make up some ground on the QQQ and this morning’s premarket move higher is helping DIA relieve some of its stretch to the downside. So, none of them are overly extended from the 8ema. Meanwhile, the T2122 indicator is deep in its oversold territory. So, the Bulls have more room to run today. In terms of the 10 Big Dogs, seven of the 10 are in green numbers at this point of the morning. NVDA (+2.76%) is far and away the leader of the group. On the other end, TSLA (-1.94%) is the biggest loser by 1.80%. Once again, TSLA is the leader in terms of dollar-volume traded by about 1.75 times over NVDA (with the next closest 15 times less in dollar-volume than NVDA).
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
DIA Losing Streak
Stock futures declined following the longest DIA losing streak since 2018. Traders are eagerly awaiting the Federal Reserve’s next rate decision, which will be announced at the end of the central bank’s final two-day policy meeting of 2024, starting Tuesday. According to CME Group’s Fed Watch tool, there is a 95% probability of a quarter-point rate cut on Wednesday. Wall Street is particularly focused on insights into future policy moves that will be discussed during the meeting and in Chair Jerome Powell’s press conference afterward.
Early Tuesday, European markets were mostly in negative territory as investors focused on upcoming central bank meetings. The Bank of England is set to meet on Thursday, with markets currently anticipating only a slim chance of a final rate cut for the year. Despite the overall negative trend, Germany’s DAX index was up by 0.2%, following Chancellor Olaf Scholz’s loss in a confidence vote in the German parliament on Monday, which has triggered a snap election scheduled for February 23. Key data releases in Europe on Tuesday include U.K. unemployment figures and Germany’s Ifo business climate and economic sentiment index.
Asia-Pacific markets showed mixed performance, reflecting the varied gains seen on Wall Street. In a significant move, Chinese leaders announced plans to increase the country’s budget deficit to 4% of GDP in 2025, aiming to sustain economic growth at around 5% next year, according to a Reuters report. The CSI 300 in China fell by 0.26%, and Hong Kong’s Hang Seng Index decreased by 0.16%. Conversely, Australia’s S&P/ASX 200 rose by 0.78%. Japan’s Nikkei 225 and Topix both declined by 0.24%, while South Korea’s Kospi and Kosdaq dropped by 1.29% and 0.58%, respectively.
Economic Calendar
Earnings Calendar
Notable reports for Monday before the bell include HEI, & WOR. After the bell reports include CALM, & NEOG
News & Technicals’
Respondents to the CNBC Fed Survey for December are confident that the Federal Reserve will cut rates on Wednesday, with 93% predicting a quarter-point reduction. However, only 63% believe this is the appropriate action for the Fed to take. The survey, which included 27 respondents such as economists, strategists, and fund managers, also highlighted concerns about the impact of President-elect Donald Trump’s tariffs and threatened deportations on the economic outlook. These factors have tempered optimism among some forecasters. Economist Robert Fry expressed his uncertainty, stating, “I can’t remember being this uncertain about the inflation outlook.”
U.S. Treasury yields edged slightly higher as investors awaited key economic data ahead of the Federal Reserve’s upcoming interest rate decision. By 5:51 a.m. ET, the yield on the 10-year Treasury had risen by over 2 basis points to 4.418%, while the 2-year Treasury yield increased by more than 2 basis points to 4.272%. The U.S. retail sales figures for November, set to be released on Tuesday, are expected to provide new insights into consumer behavior and spending. This will be followed by the latest building permit and housing starts on Wednesday, just before the Fed announces its interest rate decision later that day.
An index of Asian currencies dropped to its lowest level in over two years due to growing pessimism about China’s economic outlook and expectations that Trump’s second administration will strengthen the U.S. dollar. The yen, which had weakened beyond the 154 level against the dollar overnight, ended a six-day losing streak. The yen’s sharp decline over the past week has led strategists to caution that further weakening could prompt verbal intervention from authorities and increase pressure on the Bank of Japan to raise interest rates. However, traders are currently pricing in less than a 20% chance of a rate hike in December, according to swaps market data.
Volkswagen, Mercedes-Benz Group, and BMW have recently issued profit warnings, attributing their concerns to economic weakness and sluggish demand in China, the world’s largest car market. This challenging situation is further exacerbated by the potential imposition of U.S. tariffs on European autos, which could significantly impact Germany’s economy. Germany, being Europe’s largest exporter of passenger cars to the U.S., exported 23 billion euros ($24.2 billion) worth of cars last year, representing 15% of its total exports to the U.S., according to Eurostat and ING Research. The introduction of tariffs would therefore worsen the already difficult circumstances for Germany’s top original equipment manufacturers (OEMs).
The DIA losing streak looks to continue today despite the T2122 indicator signaling a short-term oversold condition. Market breath continues to be extremely concerning as the tech giants soar to record highs seemingly sucking all the energy out DOW and Russell indexes. If a pullback begins be prepared for a possible quick substantial decline.
Trade Wisely,
Doug
The Wait on The Expected Cut Begins
DIA diverged from the broader index ETFs Monday. SPY gapped up 0.25%, DIA opened 0.08% higher, and QQQ gapped up 0.47%. At that point, SPY and QQQ both followed through with a long, slow, but steady rally. This went on until 3:30 p.m. when both SPY and QQQ sold off the last half hour. For its part, after opening flat, DIA just chopped sideways for 90 minutes and then sold off for an hour before grinding to the side until 3:30 p.m. During that last 30 minutes, it too sold off sharply. This action gave us three divergent candles in the major index ETFs. The QQQ was clearly the bullish leader, gapping higher and then printing a large white-body candle with a small upper wick. Some would even call it a Trader’s Best Friend signal. Meanwhile, SPY gave us a gap-up, white-bodied, Spinning Top that retested, and passed the test of, its T-line (8ema). Finally, DIA printed a black-body candle with a significant upper wick.
On the day, six of the 10 of the sectors were in the red again as Energy (-2.10%) and Communications Services (-1.78%) were far and away the worst-performing sectors. On the other side, Technology (+1.11%) was way, way out front of the other gaining sectors (by 0.90%). Meanwhile, SPY gained 0.42%, DIA lost 0.23%, and QQQ gained 1.44%. (In the process, QQQ printed yet another new all-time high and new all-time high close.) VXX was up 1.69% to close at 43.22 and T2122 climbed, but remained in the top half of its oversold territory to close at 13.11. On the bond side, 10-Year bond yields climbed yet again to 4.405% while Oil (WTI) dropped 1.00% to close at $70.58 per barrel. So, Monday gave us gaps higher with follow-through from the SPY and especially the QQQ. Meanwhile, DIA continued its selloff, printing an eighth-straight black-bodied candle and lower close. This all happened on below-average volume in all three major index ETFs.
The major economic news scheduled for Monday included the NY Empire State Mfg. Index, which came in sharply lower at +0.20 (compared to a forecast of 6.40 and far below November’s 31.20 reading). Later, Preliminary December S&P Global Mfg. PMI was down slightly to 48.3 (versus a 49.4 forecast and a November value of 49.7). At the same time, Preliminary December S&P Services PMI was up at 58.5 (compared to a 55.7 forecast and November’s 56.1 number). Together, these gave us a Preliminary December S&P Global Composite PMI, which was higher at 56.6 (versus a 55.1 forecast and a November’s 54.9 reading).
In Fed news, we are in the Fed quiet period as the FOMC meeting begins Tuesday.
Overnight, Asian markets leaned heavily toward the red side with just one of the 12 exchanges in positive territory. Thailand (-1.70%), India (-1.35%), and South Korea (-1.29%) led the region lower. In Europe, the story is shaping up to be very similar. Only three of the 14 bourses are in the green (barely) at midday. The CAC (+0.15%), DAX (+0.01%), and FTSE (-0.80%) are leading the region lower in early afternoon trade. In the US, as of 7:15 a.m., Futures are pointing toward a down start to the day. The DIA implies a -0.35% open, the SPY is implying a -0.31% open, and the QQQ implies a -0.18% open at this hour. At the same time, 10-Year Bond yields are running higher to 4.436% and Oil (WTI) is down one percent to $70.00 per barrel in early trading.
The major economic news scheduled for Tuesday includes Nov. Core Retail Sales and Nov. Retail Sales (both at 8:30 a.m.), Nov. Industrial Production (9:15 a.m.), Oct. Business Inventories and Oct. Retail Inventories (both at 10 a.m.), and the API Weekly Crude Oil Stocks report (4:30 p.m.). However, the major earnings reports scheduled for before the open are limited to AMTM. Then, after the market, HEI and WOR report.
In economic news later this week, on Wednesday, Preliminary No. Building Permits, Q3 Current Account, Nov. Housing Starts, EIA Weekly Crude Inventories, Fed Interest Rate Decision, FOMC Statement, Q4 Current Year Interest Rate Projection, Q4 1st Year Interest Rate Projection, Q4 2nd Year Interest Rate Projection, Q4 3rd Year Interest Rate Projection, Q4 Longer-Term Interest Rate Projection, and FOMC Chair Press Conference are reported. On Thursday we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q3 Core PCE Price Index, Q3 GDP, Q3 GDP Price Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, Nov. Existing Home Sales, Nov. US Leading Economic Indicator Index, Oct. TIC Net Long-Term Transactions, and the Fed’s Balance Sheet. Finally, on Friday, November Core PCE Price Index, Nov. PCE Price Index, Nov. Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.
In terms of earnings reports later this week, on Wednesday, ABM, BIRK, GIS, JBL, TTC, LEN, MU, MLKN, SCS, and WS report. On Thursday, we hear from ACN, KMX, CTAS, CAG, DRI, FDS, LW, PAYX, BB, FDX, AVO, NKE, and SCHL. Finally, on Friday, CCL and WGO report.
So far this morning, AMTM beat on both the top and bottom lines.
With that background, the market seems bearish so far in the early session. All three major index ETFs gapped down to open the premarket, although DIA clearly was most bearish while the others gave up ground grudgingly. Since that start, all three have printed Doji-type, indecisive candles in the early session. SPY is retesting its T-line (8ema) from above. Once again, at the moment, SPY and QQQ are above their T-line while DIA remains below its own T-line. It is worth remembering that SPY and QQQ still sit at or near all-time highs, but DIA has given back 2%-3% since its highs. With one of the three above its T-line, one right at that 8ema, and one below its T-line again, the short-term trend has to be seen as undecided. However, further out, obviously the mid-term and longer-term trends also remain bullish sitting at or near those all-time highs. In terms of extension, as of last night, QQQ was getting stretched above and as of this morning DIA is getting a little stretched below its T-line. Meanwhile, the T2122 indicator remains well into its oversold territory. So, both sides of the market have room to move and its hard to say whether the cliff-diving DIA or the spiking QQQ is more of an indicator. In terms of the 10 Big Dogs, nine of the 10 are in red numbers at this point of the morning. NVDA (-1.80%) and AMD (-1.67%) lead the pack lower, while TSLA (+2.60%) sits 2.70% better off than any of the others. Once again, TSLA is the leader in terms of dollar-volume traded by about 2.25 times over NVDA (with the next closest 12 times less in dollar-volume than NVDA).
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
Breaking a Seven-day Losing Streak?
On Monday, stock futures saw a slight rise to potentially breaking a seven-day losing streak, for the Dow Jones Industrial Average. Following a broad rally after President-elect Donald Trump’s November victory, the market has recently shifted to a narrower, tech-led movement. Joe Mazzola, head of trading and derivatives at Charles Schwab, noted that the market’s breadth is diminishing, with the rally becoming more concentrated in a few names. He expressed uncertainty about the sustainability of this trend but suggested it might continue through the end of the year. Investors are also looking ahead to the Federal Open Market Committee’s meeting on Tuesday and Wednesday, where officials are expected to lower the benchmark interest rate again.
European markets saw a decline as traders prepared for the final week of central bank actions for the year and the listing of three French media companies in Europe. France’s CAC 40 index fell by 0.58%, influenced by Moody’s unexpected decision to downgrade the country’s credit rating from Aa2 to Aa3, citing concerns over weakened public finances due to ongoing political instability. Investors were also focused on Berlin, where a vote of confidence in Chancellor Olaf Scholz was scheduled, potentially paving the way for snap elections in February.
Asia-Pacific markets experienced a downturn, reversing earlier gains as investors anticipated key decisions from major central banks, including the Bank of Japan and the People’s Bank of China. Despite a 3% year-over-year increase in China’s retail sales, the figure fell short of the 5% growth forecasted by economists. This underperformance contributed to declines across various indices: mainland China’s CSI 300 dropped by 0.54%, Hong Kong’s Hang Seng index fell by 1%, South Korea’s Kospi decreased by 0.22%, Japan’s Nikkei 225 saw a marginal decline, the Topix index experienced a larger loss of 0.3%, and Australia’s S&P/ASX 200 fell by 0.56%.
Economic Calendar
Earnings Calendar
Notable reports for Monday before the bell no notable reports. After the bell reports include CMP, & MITK.
News & Technicals’
Monday, U.S. Treasury yields remained relatively stable as investors anticipated the Federal Reserve’s final meeting of the year. The 10-year Treasury yield decreased slightly by over 1 basis point to 4.381%, after surpassing 4.4% on Friday. Similarly, the 2-year Treasury yield dipped by less than 1 basis point to 4.234%. Investors were largely expecting a 25-basis-point interest rate cut from the FOMC on Wednesday, with a 97% probability according to the CME FedWatch tool. Market participants are keenly awaiting the Fed’s updated policy statement and Fed Chair Jerome Powell’s press conference for insights into future interest rate decisions. During this blackout period, Fed officials are restricted from making public comments ahead of the meeting.
Softbank CEO Masayoshi Son is set to announce a $100 billion investment in the U.S. over the next four years during a visit to President-elect Donald Trump’s Mar-a-Lago residence in Palm Beach, Florida. This substantial investment could be sourced from various Softbank-controlled entities, including the Vision Fund, capital projects, and Arm Holdings, where Softbank holds a majority stake. Not all of the funds will be newly raised; some will include previously announced investments, such as Softbank’s recent $1.5 billion investment in OpenAI, the company behind ChatGPT. This move underscores Softbank’s commitment to expanding its footprint in the U.S. tech sector.
The Bank of Japan (BOJ) is expected to maintain its benchmark interest rate at 0.25% during its upcoming two-day meeting this week, as it seeks more clarity on domestic wage and spending trends. According to a survey conducted between December 9-13, a slim majority of 13 out of 24 economists (54%) predict that the BOJ will keep rates unchanged, while the same number anticipate a rate hike in January. The BOJ, which last raised rates in July, has indicated its willingness to tighten monetary policy further if wage growth and prices meet its projections. BOJ Governor Kazuo Ueda recently suggested that another rate hike is approaching, contingent on economic data aligning with expectations, but he also highlighted potential risks, such as wage trends next year and changes in U.S. economic policy.
Russia’s central bank is anticipated to implement a significant rate hike later this week as inflation continues to escalate in its war-impacted economy. Despite multiple rate increases aimed at curbing inflation, the consumer price index rose to 8.9% in November, up from 8.5% in October, primarily due to rising food prices. The inflationary pressure has been exacerbated by a weaker ruble, following new U.S. sanctions in November, which has increased the cost of imports. As a result, economists expect the Central Bank of Russia (CBR) to raise interest rates by 200 basis points at its meeting on December 20, bringing the key interest rate to 23%. This move reflects the ongoing economic challenges Russia faces since its invasion of Ukraine in 2022.
Although the Dow is breaking a seven-day losing streak the tech sector stocks continue to reign supreme. However, there is concern about how much longer that can continue unless market breath picks up. This week investors will be focused on the FOMC decision on Wednesday, GDP on Thursday and the Core PCE numbers coming on Friday. Also keep in mind that the current CR will run out on Friday at midnight and the government could shut down unless Congress acts.
Trade Wisely,
Doug
