U.S. stock futures dipped Wednesday as prices struggle to follow-through after a strong session Tuesday, driven by tech stocks and a decline in oil prices from their recent highs. Despite this positive momentum, the market could face further volatility, as October is historically the most turbulent month, especially with the U.S. presidential election just weeks away. Investors are also keenly awaiting the release of the latest Federal Reserve meeting minutes at 2 p.m. ET, which could provide further insights into the economic outlook and monetary policy direction.
On Wednesday, European markets experienced slight gains despite fluctuating positive sentiment, largely influenced by the volatility in Chinese markets. The mixed performance in Asia, especially the significant sell-off in Chinese stocks, led to a cautious mood among European investors. Nevertheless, certain sectors managed to post gains, with banks rising by 1.7% and oil and gas stocks adding 1.6%. Key events to watch in Europe today include the German government’s latest economic forecasts and the NATO defense ministers’ meeting in Belgium.
On Wednesday, Chinese stocks experienced a significant sell-off amid a volatile trading day across Asia-Pacific markets. The mainland CSI 300 index plummeted by 7.05%, ending a 10-day winning streak and closing at 3,955.98. Similarly, Hong Kong’s Hang Seng index dropped 1.7% in its final hour of trading. In contrast, Japan’s Nikkei 225 rose by 0.87% to 39,277.96, and the Topix index increased by 0.3%, closing at 2,707.24. Australia’s S&P/ASX 200 saw a modest gain of 0.13%, finishing at 8,187.4. Meanwhile, New Zealand’s central bank cut its policy rate by 50 basis points to 4.75%, whereas the Reserve Bank of India maintained its rate at 6.5%.
Economic Calendar
Earnings Calendar
Notable reports for Wednesday before the bell include HELE. After the bell reports include AZZ.
News & Technicals’
Boeing announced it has withdrawn its contract offer following a breakdown in negotiations with the machinist union. Over 32,000 Boeing machinists went on strike on September 13 after decisively rejecting a new contract proposal. The union stated that Boeing failed to offer wage increases and other improvements during the latest round of discussions, leading to the current impasse. This development marks a significant escalation in the labor dispute between Boeing and its machinists.
Starting Wednesday, Disneyland will increase the prices of its most popular tickets. While the base entry price will stay at $104, other ticket prices will rise by $7 to $12. Additionally, the cost of the Magic Key annual passes will see a hike of 6% to 20%, translating to an increase of $100 to $125 depending on the pass type. These adjustments reflect Disneyland’s ongoing efforts to manage demand and enhance the guest experience.
Late Tuesday, the Department of Justice announced it is contemplating a potential breakup of Google as an antitrust measure. The DOJ is evaluating both behavioral and structural remedies to prevent Google from leveraging products like Chrome, Play, and Android to favor its search engine. The judge has not yet ruled on these remedies, and Google is expected to appeal, which could prolong the legal process for years. This development marks a significant step in the ongoing scrutiny of Google’s market practices.
On Monday, a U.S. judge issued a permanent injunction requiring Google to provide alternatives to its Google Play store for downloading apps on Android phones. This ruling, delivered by Judge James Donato in a California court, represents the most significant outcome of Epic Games’ antitrust lawsuit against Google, which began in 2020. Additionally, Epic and Google will establish a three-person committee to review technical issues related to Google’s compliance with the injunction, according to the court filing.
Although very select stocks gave us an impression of a very bullish shift this morning, futures prove that the market remained locked in the consolidation range and struggle to follow through continues. The rising bond yields pushed mortgage rates higher triggering a sharp decline in applications this morning raising some uncertainty as we wait for the FOMC minutes. However, we are likely getting closer to big move in the market perhaps inspired by the Thursday CPI report or the big bank reports beginning Friday morning. Buckle up for a possible explosion of volatility in the days ahead.
Tuesday saw a drift higher across the market after the opening bell. SPY gapped up 0.47%, DIA gapped up 0.21%, and QQQ gapped up 0.52%. From there, both SPY and QQQ followed-through with a rally that lasted until 10:50 a.m. Then, those two major index ETFs ground sideways in a small range until 1 p.m. when a new steady rally kicked in. For its part, after the open, DIA immediately recrossed the gap and chopped sideways for the first hour. Then, it drifted slowly higher the rest of the day. This was broker by slight profit-taking the last minutes of the day in all three major index ETFs. This action gave us a large white-bodied candle in the SPY that recrossed above its T-line (8ema) and closed while testing its short-term downtrend line. (SPY also missed another all-time high close by just 65 cents.) At the same time, QQQ printed a large, white-bodied candle that crossed back above its T-line as well as its short-term downtrend line. For its part, DIA was the weakest of the three, giving us a white-body Spinning Top Bull Harami type candle that closed right at a retest of its T-line but did not get up to retest the short-term downtrend line. This happened on below-average volume in the SPY, DIA, and QQQ.
On the day, seven of the 10 sectors were in the green with Technology (+1.31%) far out in front (by 0.68%) of the rest of the group. On the other side, Energy (-2.30%) was by far the biggest mover and biggest loser. Meanwhile, SPY gained 0.95%, DIA gained 0.28%, and QQQ gained 1.49%. VXX fell 4.04% to close at 55.39 and T2122 climbed to the other side of its mid-range at 51.26. At the same time, 10-Year bond yields fell slightly to close at 4.018% while Oil (WTI) plummeted 4.24%, ostensibly on somewhat reduced Middle East war fears, to close at $73.89 per barrel. So, while there was no major driver for the rally Tuesday, Fed members generally leaning toward quarter-point cuts and a “no news is good news” feeling surrounding expansion of the conflicts (i.e. the next Israeli attack on Iran and perhaps Yemen also) led the Bulls to a modest gap up and then a drift higher.
The major economic news scheduled for Tuesday was limited to August Exports, which were up to $271.80 billion (compared to the July value of $266.60 billion). On the opposite side, August Imports were down a bit to $342.20 billion (versus July’s $345.40 billion reading). This resulted in an August Trade Balance of $70.40 billion (compared to a forecasted -$70.10 billion but down from July’s -$78.90 billion). Then, after the close, API Weekly Crude Stocks came in with a much bigger inventory build than anticipated at +10.900 million barrels (versus a forecasted +1.950 million barrels and the previous week’s 1.458-million-barrel drawdown).
In Fed news, on Tuesday, Fed Governor Kugler made a case for more rate cuts. She said she had agreed with the half percent cut in September and feels more should come. Kugler said, “While I believe the focus should remain on continuing to bring inflation to 2%, I support shifting attention to the maximum-employment side of the FOMC’s dual mandate as well.” She continued, “The labor market remains resilient, but I support a balanced approach to the FOMC’s dual mandate so we can continue making progress on inflation while avoiding an undesirable slowdown in employment growth and economic expansion.” Meanwhile, NY Fed President Williams indicated the Fed was “well positioned” and said he supported quarter-point cuts moving forward, saying that the FOMC Dot Plot (which calls for two quarter-point cuts by year end) is a “very good base case.” Later, Atlanta Fed President Bostic said, “The labor market … is certainly slowed down, but is not slow.” However, Bostic also said, “We have to get it back to that 2% target,” … “(Referring to inflation) It’s too high … That’s still quite a ways to go and I want people to understand that I’m still laser-focused on the inflation target.”
At the same time, Boston Fed President Collins indicated there are more cuts to come. She said, “Further adjustments of policy will likely be needed.” She continued, “I will stress that policy is not on a pre-set path and will remain carefully data dependent, adjusting as the economy evolves.” Collins also said, “It will be important to preserve the currently healthy labor market conditions,” noting that it would “require economic activity continuing to grow close to trend, which is my baseline outlook.” Finally, Fed Vice Chair Jefferson told a Davidson College event, “The FOMC has gained greater confidence that inflation is moving sustainably toward our 2% goal.” He continued, “To maintain the strength of the labor market, my FOMC colleagues and I recalibrated our policy stance last month.” In addition, Jefferson said, “Economic activity continues to grow at a solid pace. Inflation has eased substantially. The labor market has cooled from its formerly overheated state.” On inflation, he said, “I expect that we will continue to make progress toward that goal.”
In stock news, on Tuesday, NVDA announce that Taiwanese contract manufacturer Foxconn is building the largest production facility in the world in Mexico to assemble NVDA’s next generation GB200 superchips. At the same time, a regulatory filing shows that BRKB had sold more of its BAC shares, with total proceeds of its reduction now exceeding $10 billion. However, BRKB still owns 10.1% of BAC shares. Later, HON announced it will spin off its advanced materials unit via IPO. BCS values that division at $11 billion. At the same time, IT industry publication The Information reported that OpenAI is moving away from a MSFT datacenter focus in a bid for more independence as a way to get closer to ORCL who has its own datacenter unit. Later, BA announced it had delivered 33 jets in September, down from 40 in August, but up six from August 2023. The company noted the impact of the mid-September strike of 33k Pacific Northwest BA workers. At the same time, AWK announced it had disconnected its computers following a “cybersecurity incident.” The water utility said it had discovered unauthorized activity in its network on October 3.
Elsewhere, LYFT announced it is rolling out a number of improvements aimed at attracting more drivers. Later, Reuters reported that GS has taken derivative positions equal to a 6.7% stake in UNCFF as of September 30. Later, German company FMS said Tuesday it was working with the US FDA and HHS to boost production at its NC plant after direct competitor BAX suffered hurricane damage last week. (Both companies are leaders in the IV solutions business.) At the same time, descendants of the founders of PG lost a shareholder vote to oust company CEO Moeller and members of the board environmental sustainability committee. After the close, S&P placed BA on a rating of “credit watch negative” as the plane maker’s strike drags on. At the same time, Reuters reported BA is weighing options to raise cash by issuing new stock or stock-like securities. Sources told Reuters the company hopes to raise $10 billion to assuage credit agency concerns. Later, Unifor (the Canadian version of UAW) said it had started negotiations with CP. At the same time, WOPEY announce it had completed the $1.2 billion acquisition of TELL.
In stock legal and governmental news, on Tuesday, Reuters reported that the US Dept. of Justice will outline the actions GOOGL could take to restore competition in online search following an August court finding that the company is an illegal monopoly. (This action plan may include the breakup of the company.) At the same time, a Paris-based arbitrator ruled in favor of BP and prohibiting KOS from selling LNG from its Senegal project to other parties. After the close, C filed a motion asking a US District Court to dismiss a suit filed by NY Attorney General James for lax security and failing to reimburse customers who fall victim to online scammers due to company deficiencies. At the same time, the FAA issued a safety alert over BA 737 jet rudder problems, warning that the rudder could become jammed or only operate in a limited manner.
In miscellaneous news, on Tuesday, the EIA Short-Term Energy Outlook said that US electrical power demand will reach a record 4,093 billion kilowatt-hours in 2024 and then another record of 4,163 billion kilowatt-hours in 2025. (For reference, US demand was 4,000 billion kilowatt-hours in 2023.) This breaks down into forecasts of 1,503 billion kWh for residential use, 1,412 billion kWH for commercial use, and 1,033 billion kWh for industrial user. Elsewhere, the ports of Tampa and Sarasota closed Tuesday ahead of Hurricane Milton. Meanwhile, major freight terminals in SC, including the large one at Charleston, began implementing restrictions.
In China news, markets were disappointed late Tuesday when the Chinese National Development and Reform Commission announced $28 billion of additional spending (stimulus) would be pulled forward into Q4 from 2025. Analysts had expected the package to be a staggering $420 billion.
In Middle East news, Israeli PM Netanyahu barred his Defense Minister (Gallant) from making a scheduled trip to the US. This trip was supposed to focus on coordination between Israel and the US related to the retaliatory strike on Iran. Netanyahu has twice tried to fire Gallant in the last year. So, tension between the two is fierce. Still, r, there may be other political angles involved. For example, Reuters reports Netanyahu is demanding a phone call from President Biden prior to sending his defense minister to the US. (Perhaps as a vain show that he is the top dog and must be kowtowed to before actual work gets done.) In addition, Netanyahu is also demanding that the War Cabinet approves his attack plans prior to the trip taking place. (Again, so he gets his way and perhaps to prevent US input into the plan.) There is also significant possibility that Netanyahu has US political motives.
Overnight, Asian markets were mixed with China really pushing to the downside over disappointment about the stimulus details announced Tuesday night. Shenzhen (-8.15%), Shanghai (-6.62%), and Hong Kong (-1.38%) were the big losers. On the other side, New Zealand (+1.75%) and Japan (+0.87%) were the winners. In Europe, the bourses are mixed but lean toward the green side with nine of the 14 exchanges in the green at midday. The CAC (+0.28%), DAX (+0.29%), and FTES (+0.29%) lead the region higher in early afternoon trade. Meanwhile, in the US, the market is just on the red side of flat as of 7:30 a.m. The DIA implies a -0.08% open, the SPY is implying a -0.05% open, and the QQQ implies a -0.09% open at this hour. At the same time, 10-Year bond yields are at 4.02% and Oil (WTI) is off another 0.58% to $73.14 per barrel in early trading.
The major economic news scheduled for Wednesday is limited to Weekly EIA Crude Oil Inventories (10:30 a.m.) and September FOMC Meeting Minutes (2 p.m.). However, we also hear from Fed members Bostic (8 a.m.), Williams (11 a.m.) and Daly 6 p.m.). The no major earnings reports scheduled for before the open are limited to HELE. Then, after the close, there are no major reports scheduled.
In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September Core CPI, September CPI, September Federal Budget Balance, and Fed Balance Sheet. We also hear from Fed member Williams. Finally, on Friday, September Core PPI, September PPI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and the WASDE Ag report are delivered.
In terms of earnings reports later this week, on Thursday, DAL and DPZ report. Finally, on Friday, earnings season kicks off again in earnest as BK, BLK, FAST, JPM, and WFC report.
With that background, markets look nearly flat at this point of the premarket. All three major index ETFs opened the early session lower, but have printed white-bodied candles with tiny upper wicks to recover almost all of the gap at this point. SPY and QQQ remains above their T-line (8ema). However, the DIA has still not quite reached its T-line yet. So, the short-term trend is back to modestly bullish. The mid-term trend remains bullish. In the longer-term we still have a strong Bull trend in all three major index ETFs and they remain not far from their all-time highs. (SPY missed a new all-time high close Tuesday by 0.10%). With regard to extension, none of the major index ETFs are extended from its T-line (8ema). In addition, the T2122 indicator sits in the center of its mid-range. So, markets have room to run either direction, if either the Bulls or Bears can find momentum. With regard to those 10 big dog tickers, they are evenly split this morning with five on each side of break-even. The biggest dog, NVDA (+1.26%) leads that pack higher on both price move and volume. On the other side, GOOGL (-0.96%) is the laggard of the group on that DOJ action plan report. It is worth noting that the biggest dog, NVDA has traded 3.5 times the dollar-volume as next-closest ticker TSLA (-0.09%). This is typical for a bullish day in recent months.
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.
🎯 DickCarp: 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.
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
Markets gapped down, ground sideways, sold off hard, and then ground sideways again on Monday. SPY gapped down 0.28%, DIA gapped down 0.30%, and QQQ gapped down 0.41%. At that point, all three major index ETFs chopped sideways not far from the open level for a while. SPY and DIA started their next leg, a sharp selloff at about 11:30 a.m. For its part, QQQ kept chopping sideways until 2 p.m. before it too sold off even faster. All three reached the lows of the day at about 3 p.m. before drifting sideways with a modest bullish trend. This action gave us a black-body candle after an indecisive candle, which crossed back below its T-line (8ema). All three also have wicks on both end of the candles. This happened on below-average volume in the SPY, DIA, and QQQ.
On the day, nine of the 10 sectors were in the red with Utilities (-1.91%) way out front (by almost three-quarters of a percent), leading the rest of the market lower. On the other side, Energy (+0.37%) held up almost a half percent better than any other sector. Meanwhile, SPY lost 0.90%, DIA lost 0.90%, and QQQ lost 1.07%. VXX spiked 8.91% to close at 57.72 and T2122 dropped to the bottom side of its mid-range at 44.66. At the same time, 10-Year bond yields popped up over 4% to close at 4.02% while Oil (WTI) spiked another 3.98% on Middle East fears to close at $77.33 per barrel. (So, WTI has spiked 14.3% over 7 trading days on Israeli versus the region fears.)
The major economic news scheduled for Monday is limited to August Consumer Credit which came in at $9.93 billion (compared to a forecast of $11.80 billion and hugely below July’s $26.63 billion reading). On one hand, this means US consumers are likely in better shape, having less installment debt. However, it also means consumers were not out spending, which could indicate lower consumer confidence. Either way, it should be read as bearish for the US Dollar. (And things that are bearish for the Dollar are, by definition, bullish for commodity prices.) Still, it is worth noting that Consumer Credit figures have always been subject to sizable revisions due to a lack of reporting uniformity or requirements.
In Fed news, on Monday, Minneapolis Fed President Kashkari seemed to say the same thing Chicago Fed President Goolsbee had said on Friday. Namely, the Fed liked the strong September Labor report. Kashkari said, “It looks like it is still a strong labor market…it’s really good news as we want to keep a strong labor market.” He went on to say, “The balance of risks has shifted away from higher inflation towards maybe higher unemployment.” … “So that’s a really good fact that the job market has stayed strong while inflation has come down.” Then early Tuesday, Fed Governor Kugler said she had supported the half-percent rate cut in September. She said, “While I believe the focus should remain on continuing to bring inflation to 2%, I support shifting attention to the maximum-employment side of the FOMC’s dual mandate as well.” She did go on to note the better-than-expected Payrolls report from Friday and said she now supports a “balanced approach” to future cuts, saying, “The labor market remains resilient, but I support a balanced approach to the FOMC’s dual mandate so we can continue making progress on inflation while avoiding an undesirable slowdown in employment growth and economic expansion.” Later, NY Fed President Williams had an interview with the Financial Times in London. Williams said, “The current stance of monetary policy is really well positioned to both hopefully keep maintaining the strength that we have in the economy and the labor market, but also continuing to see that inflation comes back to 2%.” He defended the larger half-percent first cut, saying it was “right in September and right today.” Williams went on to say that the Fed’s Dot Plot (which shows two additional quarter-point rate cuts this year) is a “very good base case.”
In stock news, on Monday, APD surged on reports that activist investor Mantle Ridge had taken a more than $1 billion position. This set off a chain reaction, including two analyst upgrades. (APD ended the day up 9.52% after a 7% gap higher at the open.) At the same time, SRRK announced positive results from its Phase 3 clinical trial for its apitegromab treatment for muscular atrophy. (SRRK gapped up 254% and closed out the day at +361.99%.) Later, Reuters exclusively reported that UL will invest more than $165 million to improve its European supply chain. In addition, UL sources said the company’s European homecare unit will increase R&D and promotion spending by 40% in 2025. (No dollar figure was given.) At the same time, the Wall Street Journal reported that GOOGL’s share of the $300 billion search market is under pressure from AI rivals and other platforms like TikTok offering native Internet search functions. WSJ reported that GOOGL’s share of that market is expected to end the year at below 50% for the first time in more than a decade.
Meanwhile, AMZN’s share of that market is expected to reach 22.3% this year. Later, GM announced it had restarted production at assembly plants following the hurricane-related supplier shortages. At the same time, CVX announced it is selling its Athabasca oil sands and Duvernay shale assets to CNQ for $6.5 billion (all cash). CVX expects the deal to close Dec. 6. (Those two resources produced 84k barrels of oil per day in 2023.) Later, EQNR announced it had bought a 9.8% stake in Danish offshore wind farm developer ORSTED for $2.5 billion. At the same time, Reuters reported that activist investor Starboard Value had bought about a $1 billion stake in PFE. (PFE gapped higher on the news and closed near the opening level, up 2.17%.)
In stock legal and governmental news, on Monday, the US Supreme Court declined to hear an appeal by UBER and LYFT, which were seeking to avoid lawsuits from the state of CA on behalf of drivers. (The drivers had been forced to sign agreements to keep legal disputes in arbitration rather than court.) Later, a Seattle-based US District Judge unsealed his Sept. 30 ruling that the FTC case against AMZN for antitrust violations will proceed to trial. (It is worth noting that a few of the co-plaintiff states, namely NJ, PA, MD, and OK, had their claims dismissed.) At the same time, the US State Dept. approved the sale of $965 million in arms to Romania and Italy. RTX is the maker of the $285 million of arms sold to Romania while BAESY produced the $680 million sold to Italy. Later, a US District judge ruled that GOOGL must offer alternatives to its Google Play store for downloading and paying for apps on Android phones on antitrust grounds. (The order restricts GOOGL from paying phone makers to preinstall the Google Play store or from sharing Play store revenue with other app distributors.) For its part, GOOGL immediately vowed to appeal the decision.
Elsewhere, STLA filed eight additional lawsuits against the UAW union, alleging the union violated its labor contract by threatening to strike over the company’s delaying of investments it promised in the contract. Later, a group representing drug compounders sued the FDA over its decision to remove LLY’s bestselling weight-loss and diabetes drug from the “shortage list” last week. Thereby hurting drug compounder’s ability to sell their own version of the drugs Zepbound and Mounjaro. The suit alleges that those drugs are still in short supply. (If left on the list, it would require rationing of the drugs by LLY to any given buyer and give generic compounders a leg-up since they are not bound by the list rules.) Finally, Mexico’s antitrust regulator made a preliminary finding Monday saying that GPAGP (tortilla-maker Gruma) holds unacceptable price-fixing power in the corn tortilla market in Mexico.
In miscellaneous news, on Monday, the CBOE announced it will list “hedged ADRs” that Us investors can use to buy foreign-listed stocks while limiting impacts from any currency fluctuations. Initially, these will include ADRhedged offerings for AZN, HSBC, and SHEL. However, 14 other hedgedADR offerings will follow quickly. Elsewhere, Hurricane Milton quickly went from Category 3 to Category 5 Monday. This caused at least one oil and gas platform (owned by CVX) to shutdown. Meanwhile, some FL ports have also begun restricting navigation or planning for Tuesday closure.
In Middle East news, Yemen’s Houthi rebels got in on the Middle East fighting again on Monday. The Houthi claim to have fired two missiles at Jaffa, Israel. (The IDF claimed to have shot down one of the two.) Meanwhile, the Israeli bombing campaign in Beirut and Southern Lebanon as well as the Israeli ground invasion of Lebanon continued. For his part, Israeli PM Netanyahu said they were fighting a “war of resurrection” and they are in the process of changing the security reality of the region and their attacks will not stop until all their goals are achieved. Perhaps in response, French President Macron called on an arms embargo of Israel in the face of 42k Palestinians and more than 2,000 Lebanese killed in Israeli actions over the last year. With this as the backdrop, oil markets continue to reflect big fear over the threatened, and likely coming, Israeli retaliation to Iran’s recent 180 missile barrage. (Analysts are speculating Israel will attack Iran’s oil infrastructure to damage its economic output and cause maximum pain to domestic.)
Overnight, Asian markets were mixed as China resumed trading after a week-long national holiday. Mainland China remained “crazy strong” as they were right before their break with Shenzhen (+9.17%) and Shanghai (+4.59%) by far the biggest gainers. On the other side, Hong Kong (-9.41%) and Japan (-1.00%) stood out among losers. Meanwhile, in Europe, we see red across the board at 7:15 a.m. The CAC (-0.64%), DAX (-0.22%), and FTSE (-1.15%) lead the region lower in early afternoon trade on Chinese responses to the EU tariffs on Chinese electric vehicles. In the US, as of 7:15 a.m., Futures are pointing toward a green start to the morning. The DIA implies a +0.13% open, the SPY is implying a +0.41% open, and the QQQ implies a +0.50% open at this hour. At the same time, 10-Year bond yields are essentially flat from the Monday close at 4.024% and Oil (WTI) is actually down 1.58% to $75.90 per barrel in early trading.
The major economic news scheduled for Tuesday includes August Exports, August Imports, and August Trade Balance (all at 8:30 a.m.), EIA Short-Term Energy Outlook (noon), and API Weekly Crude Stocks report (4:30 p.m.). We also hear from Fed member Bostic (12:45 p.m.). There are no major earnings reports scheduled for before the open. However, after the close, PEP reports.
In economic news later this week, on Wednesday, EIA Crude Oil Inventories and the September FOMC Meeting Minutes are reported. However, we also hear from Fed member Bostic and Fed member Daly. On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September Core CPI, September CPI, September Federal Budget Balance, and Fed Balance Sheet. We also hear from Fed member Williams. Finally, on Friday, September Core PPI, September PPI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and the WASDE Ag report are delivered.
In terms of earnings reports later this week, on Wednesday, we hear from HELE. Then Thursday, DAL and DPZ report. Finally, on Friday, earnings season kicks off again in earnest as BK, BLK, FAST, JPM, and WFC report.
So far this morning, PEP missed on revenue while beating on earnings. PEP also cut its full-year forecast, citing weakness in US snack sales and the repercussions from its Quaker Foods recalls in North America.
With that background, markets look modestly bullish so far in the premarket. All three major index ETFs opened the early session roughly flat, but have printed white-bodied candles with tiny upper wicks at this point. SPY and QQQ have crossed back above in a retest of their T-line (8ema). However, the DIA has not quite reached its T-line yet. So, the short-term trend is back to modestly bullish. The mid-term trend remains bullish. In the longer-term we still have a strong Bull trend in all three major index ETFs and they remain not far from their all-time highs. With regard to extension, none of the major index ETFs are extended from its T-line (8ema). In addition, the T2122 indicator sits in the center of its mid-range. So, markets have room to run either direction, if either the Bulls or Bears can find momentum. With regard to those 10 big dog tickers, eight of the 10 are in the green this morning. The biggest dog, NVDA (+2.06%) leads that pack higher on both price move and volume. On the other side, INTC (-0.40%) is the laggard among that group. It is worth noting that the biggest dog, NVDA has traded 3.5 times the dollar-volume as next-closest ticker TSLA (+1.14%). This is typical for a bullish day in recent months.
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.
🎯 DickCarp: 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.
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
Stock futures saw a slight rebound following a challenging day on Wall Street, where rising oil prices and bond yields exerted downward pressure on the markets. On Tuesday morning, these factors eased somewhat, improving investor sentiment. The 10-year Treasury yield notably climbed above 4%, reaching its highest level since early August, while West Texas Intermediate oil futures rose above $77 per barrel, impacting the broader market negatively. However, the energy sector benefited from the rise in oil prices, making it the only one of the 11 sectors in the S&P 500 to close Monday in positive territory. Investors are now turning their attention to upcoming economic data on small businesses and the trade deficit.
European markets continued to decline as regional sentiment worsened amid ongoing concerns about the Middle East conflict. Mining stocks led the losses, dropping 4.54%, while household goods fell by 2.37%. European luxury stocks, including major brands like LVMH and Kering, also opened lower as hopes for a demand boost from Chinese stimulus measures faded. This downturn follows a shaky start to the week, reflecting broader investor apprehension.
Chinese markets experienced a volatile session following a briefing from the National Development and Reform Commission that lacked specifics on additional stimulus measures. The CSI 300 index in mainland China surged over 10% at the opening but eventually trimmed its gains to close 5.93% higher at 4,256.1. Meanwhile, Hong Kong’s Hang Seng index saw a dramatic drop of over 10% before recovering slightly to end with a 9% loss. Other Asia-Pacific markets also faced declines, influenced by Japan’s economic data showing a 1.9% year-on-year decrease in household spending for August, marking the steepest decline since January.
Economic Calendar
Earnings Calendar
Notable reports for Monday before the bell notable reports include PEP, & ACCD. After the bell there are no notable reports.
News & Technicals’
Uber is enhancing its platform with new sustainability-focused features. One notable addition is the “EV preference” option, allowing customers to choose fully electric vehicles by default when hailing a ride. On the delivery side, Uber Eats is expanding its offerings to include farmers’ market produce in New York City and Los Angeles. For drivers, Uber is introducing an “EV Mentor” program and an AI chatbot powered by OpenAI’s ChatGPT, designed to assist drivers with questions about purchasing and using battery electric vehicles instead of traditional gas-powered ones. These updates reflect Uber’s commitment to promoting environmentally friendly practices across its services.
A Delaware bankruptcy judge has approved FTX’s reorganization plan nearly two years after the cryptocurrency exchange filed for bankruptcy. The company has amassed between $14.7 billion and $16.5 billion in assets, which it intends to distribute to its creditors. Under the court-approved plan, 98% of FTX’s creditors are expected to receive 119% of their allowed claims, marking a significant recovery for those affected by the exchange’s collapse.
On Tuesday, South Korean tech giant Samsung Electronics announced that it anticipates lower-than-expected profits for the third quarter. The company, a leading memory chip manufacturer, projected an operating profit of approximately 9.10 trillion won, a significant increase from last year’s 2.43 trillion won. However, this figure falls short of the 11.456 trillion won ($7.7 billion) forecasted by analysts polled by LSEG for the quarter ending September 30.
Super Micro shares surged by 15% after the computer server company announced it is shipping over 100,000 graphics processing units (GPUs) per quarter, driven by the growing demand for artificial intelligence. As a major player in the AI boom, Super Micro provides computers that serve as servers for data storage, websites, AI training models, and more. Despite this positive momentum, the company is currently about nine weeks behind in releasing its annual report, which was initially expected in August.
Although the easing bond yields are providing a slight rebound this morning, we should remember the indexes remain within their choppy range and market breadth remains very low. Of course, big moves are possible if something changes in the Middle East. Other than that, the market will likely continue to chop until waiting on FOMC minutes, CP, PPI and beginning of earnings season on Friday. Trade wisely and try not anticipate ahead of these big data points.
Friday saw three moves by the market. A gap higher, fading of the gap, and a long, protracted rally. SPY gapped up 0.81%, DIA gapped up 0.58%, and QQQ gapped up 1.21%. At that point, all three major index ETFs sold off for more than an hour with SPY and QQQ not quite recrossing the gap, but DIA crossing all the way back below its prior close. However, shortly after 10:30 a.m., all three began a slow, steady rally that lasted right into the last five minutes of the day. This action gave us indecisive but bullish candles in all three. SPY and QQQ both printed long-legged Doji type candles that gapped up through and retested from above (passing that test) their T-line (8ema). At the same time, DIA gapped up through its T-line, retested its T-line from above, and printed a white-bodied Hanging Man type candle that also printed a new all-time high close. This all happened on below-average volume in the SPY, DIA, and QQQ.
On the day, all 10 sectors were in the green with Financial Services (+1.72%) out in front, leading the rest of the market higher. On the other side, Utilities (+0.23%) was the laggard. Meanwhile, SPY gained 0.91%, DIA gained 0.82%, and QQQ gained 1.19%. VXX fell 3.79% to close at 53.00 and T2122 popped up to just outside of its overbought territory to the top of its mid-range at 78.90. At the same time, 10-Year bond yields spiked to close at 3.969% while Oil (WTI) rose another 1.19% on Middle East fears to close at $74.60 per barrel. So, the end of the US port strike and great September jobs data showing the economy isn’t falling off a cliff led to a gap higher. At that point the profit-takers ran for an hour. However, the bulls stepped in to buy the dip and keep slowly buying all day long.
The major economic news scheduled for Friday included Sept. Avg. Hourly Earnings (Month-on-Month), which came in down but better than expected at +0.4% (compared to a forecast of +0.3% but down from August’s +0.5% reading). On an annualized basis, Sept. Avg. Hourly Earnings were up to +4.0% (versus the +3.8% forecast and August’s annual +3.9% number). At the same time, September Nonfarm Payrolls were much stronger than anticipated at +254k (compared to +147k forecast and +159k Aug. value). (It is worth noting that there were also upward revisions to summer payrolls numbers.) On the private side, September Private Nonfarm Payrolls were also much stronger than predicted at +223k (versus a +125k forecast and August’s +114k number). Meanwhile, the September Participation Rate remained steady at 62.7% (compared to a forecast and August reading of 62.7%). Taken together, this gave us a September Unemployment Rate that fell to 4.1% (versus a forecast and August value of 62.7%). So, the data showed us that the economy remains strong on the jobs side with growing earnings even as other data has shown inflation falling. That’s as close to a soft landing (the so-called golden path) as you can get. However, the Bears and folks who think they know better than the Fed, saw the data as an omen of either no rate cut in November or at the very least “disappointing the market” with a lesser cut than was expected. (That latter point overlooks that Fed members, including Fed Chair Powell, all but said were only getting a quarter-point cut in November.)
In Fed news, on Friday morning, Chicago Fed President Goolsbee told Bloomberg the US jobs report was “superb.” Goolsbee said, “You really couldn’t ask realistically for a better report for the economy, coupled with finding out that the (East Coast and Gulf Coast) port strike is not going to be an extended matter … those are two pieces of very good news for the economy.” He continued, “If we get more reports like this, I’m going to feel a lot more confident that we are in fact settling in at full employment.” Goolsbee went on to say there are even some signs that inflation will go lower than the FOMC’s 2% target. He went on to say that despite the strong jobs report, the Fed Funds rate is still far above what most FOMC members see as the eventual “settling point” and that it is appropriate for the Fed to bring the rate down “a lot” over the next 12-18 months.
In stock news, on Friday, rumors spread that APO is in advanced talks to acquire B for $45 per share. (B gapped higher and closed up 12.98% at $45.26 on the news.) Later, TELL announced that shareholders have approved the $1.2 billion acquisition of WOPEY (Australian energy producer Woodside Energy Group). At the same time, the BA and LMT joint venture (United Launch Alliance) announced it had successfully launched a second mission. (This is another step toward Dept. of Defense certification, which is required prior to carrying commercial contracts for national security payloads.) Later, META announce two new services aimed at bringing in more young adult users. The new “Local” and “Explore” tabs are currently being tested in various cities around the US. At the same time, GM announced it had halted production at two plants (an SUV assembly plant and a truck assembly plant) due to the impact of Hurricane Helen on parts suppliers.
Elsewhere, Reuters reported that GOOGL is experimenting with “verified” check marks in search results. (There is no word on whether or no GOOGL intends to monetize such a feature the way Elon Musk did with the former Twitter.) At the same time, UAW union workers at STLA’s Los Angeles parts distribution center voted in favor of strike unless the carmaker settled grievances related to company failures to make product and investments as promised in the most recent national contract with STLA. Later, JNJ announced it will discontinue a mid-stage trial of its experimental pill for the prevention of dengue fever. The company said this came after reprioritization of its R&D portfolio. At the same time, Reuters exclusively reported that RIO is in talks to acquire lithium miner ALTM. If the deal were closed, it would make RIO the third-largest producer of lithium in the world. (Sources tell Reuters the deal would value ALTM at between $4 billion and $6 billion.)
In stock legal and governmental news, on Friday, Reuters reported TMO repeatedly broke FDA contamination rules at its plant that manufactures infant formula and RSV drugs. The report cited documents from US FDA inspections. (TMO makes RSV drugs for SNY and infant formula on behalf of AZN.) At the same time, the NHTSA announced it has opened a probe into 260k F crossover SUVs over losses of braking due to a brake hose defect. Later, COIN announced it will delist certain stablecoins in the European Economic Area by year end. This move was in response to the EU’s landmark crypto regulatory framework which will be fully implemented by December.
Elsewhere, the EU voted to move ahead with tariffs (of up to 45%) on Chinese EVs. The contentious vote passed 10 to 5 with 12 abstentions. Later, the US Supreme Court agreed to hear an appeal from SWBI (Smith & Wesson) to a $10 billion lawsuit brought by the Mexican government. The suit alleges the company and Interstate Arms Company aided and abetted gun trafficking. At the same time, STLA sued the UAW union over strike threats stemming from the company’s plans to delay investments promise in the 2023 labor contract. After the close, the FDA placed a lupus treatment from KZR on hold following the death of four patients, which showed common symptoms and three deaths came soon after administration of the experimental drug.
In miscellaneous news, on Thursday night, the US port strike ended in a tentative deal over wages and benefits. (The automation negotiations will continue with no further strike until January.) Then Friday, Longshoreman resumed work at US East Coast and Gulf Coast ports. This means the port shutdown lasted three days and typically it will take nine days (three days per day of shutdown) to fully recover cargo backlogs. In France, the European Commission approved funds for the removal of 4% of the grape vines in that country. Back in the US, estimates now indicate that economic damage from Hurricane Helene will reach $250 billion. However, the insurance industry says that only about $5 billion of that will be covered by policies. As an immediate response is continuing, the disgraced ex-President and his conspiracy theorist minions (like Elon Musk) continue to sew doubt and deter people from using resources available to them by continually spreading lies, amplifying completely unfounded rumors, and distortions for their political gain.
In Fed prediction news, following Friday’s strong September jobs report, there was a huge shift in the implied probabilities of a November Fed rate cut. Fed Funds Futures trades now bake in a 97.4% probability of a quarter-point cut at the November meeting with 2.6% betting on no change in rates then. One week prior, 46.7% were expecting a half percent rate cut and 53.3% of trades expected a quarter point cut. There were no trades expecting no rate change one week ago.
In Middle East news, Israel continued heavy airstrikes on Gaza and Lebanon over the weekend. (The AP reported more than 30 strikes in Beirut alone on Sunday evening.) The Israeli ground invasion of Southern Lebanon also continued. Reports indicate over 100 Lebanese killed and an unknown number wounded over the weekend alone. One-third of the Lebanese population are now refugees. Israel confirmed 11 of the IDF ground forces have also been killed. This all comes as it appears Israel is preparing a retaliatory strike on Iran over the 180 missiles that country fired at/toward Israel last week. From an oil market perspective, the majority of oil flows that has been disrupted or are threatened would go to China. However, if China can’t buy from Iran or the rest of the Gulf can’t ship to China due to war, it will end up buying from other sources. This will allow US and other producers to sell at a premium. WTI is up 10% in the last 10 days as of Sunday.
Overnight, Asian markets were mostly green with Japan (+1.80%), Taiwan (+1.79%), and South Korea (+1.58%) pacing the gains. In Europe, the bourses are mixed at midday. The CAC (+0.18%), DAX (-0.24%), and FTSE (+0.46%) lead the region in early afternoon trade. Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a down start to the day. The DIA implies a -0.40% open, the SPY is implying a -0.46% open, and the QQQ implies a -0.62% open at this hour. At the same time, 10-Year bond yields have spiked again to 4.002% and Oil (WTI) jumped another 2.5% on Israeli fears (continued bombing and invasion with threat of attack on Iran) in early trading.
The major economic news scheduled for Monday is limited to August Consumer Credit (3 p.m.). We also hear from Fed members Kashkari (1:50 p.m.) and Bostic (6 p.m.). There are no major earnings reports scheduled for either before the open or after the close Monday.
In economic news later this week, on Tuesday, we get August Exports, August Imports, August Trade Balance, EIA Short-Term Energy Outlook, and API Weekly Crude Stocks report. We also hear from Fed member Bostic (12:45 p.m.). Then Wednesday, EIA Crude Oil Inventories and the September FOMC Meeting Minutes are reported. However, we also hear from Fed member Bostic and Fed member Daly. On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September Core CPI, September CPI, September Federal Budget Balance, and Fed Balance Sheet. We also hear from Fed member Williams. Finally, on Friday, September Core PPI, September PPI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and the WASDE Ag report are delivered.
In terms of earnings reports later this week, on Tuesday, PEP reports. On Wednesday, we hear from HELE. Then Thursday, DAL and DPZ report. Finally, on Friday, earnings season kicks off again in earnest as BK, BLK, FAST, JPM, and WFC report.
With that background, markets look bearish so far in the premarket. All three major index ETFs gapped down to start the early session and have traded lower to retest their T-line (8ema) from above. However, all three are now trading above their T-line (8ema) at the moment. So, the short-term trend remains bullish. The mid-term trend remains bullish. In the longer-term we still have a strong Bull trend in all three major index ETFs and they remain not far from their all-time highs. With regard to extension, none of the major index ETFs are extended above its T-line (8ema). In addition, the T2122 indicator is still in its mid-range (although just outside of overbought territory. So, markets have room to run either direction, if either the Bulls or Bears can find momentum. However, the Bears have a little more slack and the Middle East situation in their corner. With regard to those 10 big dog tickers, nine of the 10 are modestly in the red. AMZN (-1.71%) leads the losses while AMD (+0.49%) is holding up far better than the others. It is worth noting that the biggest dog, NVDA (-0.48%) has traded only 1.5 times the dollar-volume as TSLA (-0.46%). This is typically a factor of three.
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
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🎯 DickCarp: 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.
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
Stock futures declined on Monday as Wall Street faced struggle to maintain momentum. Contributing to the pressure was a rise in U.S. Treasury yields, with the benchmark 10-year Treasury yield increasing nearly 3 basis points to 4.008%, marking its first time above 4% since August. Keith Lerner, co-chief investment officer at Truist Wealth, warned that the upcoming U.S. presidential election and the potential for an “October surprise” could sustain market volatility in the coming weeks. Investors are also closely monitoring international developments, particularly the ongoing tensions in the Middle East.
European stocks began the new trading week on a positive note, initially buoyed by gains in Asia overnight, but quickly pared back those gains. Currently, banks and household goods are the only sectors in positive territory, with increases of 0.2% and 0.4%, respectively. Shares of Rio Tinto fell by 0.26% after the mining company confirmed it was in discussions to acquire lithium producer Arcadium Lithium. On the data front, the U.K.’s Halifax House Price Index revealed that British house prices rose in September at the fastest annual pace since November 2022. Additionally, euro zone retail sales in August edged up by 0.2% from the previous month, aligning with expectations from a Reuters poll.
This week, the financial spotlight is on the Asia-Pacific region as three central banks—the Bank of Korea (BOK), Reserve Bank of New Zealand (RBNZ), and Reserve Bank of India (RBI)—prepare to announce their interest rate decisions. According to a Reuters poll, economists anticipate rate cuts from both the BOK and RBNZ, while the RBI is expected to maintain its current rate. The Nikkei index saw a significant rise, climbing 1.8% to close at 39,332.74, driven by gains in financial and consumer cyclical stocks, with Mizuho Financial Group and Nikon among the top performers.
Economic Calendar
Earnings Calendar
Notable reports for Monday before the bell we have no notable reports. After the bell reports include NAPA.
News & Technicals’
Early Monday, Hurricane Milton intensified to a Category 2 storm, prompting Florida to prepare for its largest evacuation in seven years. The hurricane is projected to impact major population centers such as Tampa and Orlando. Although forecast models show varying paths, the most likely scenario indicates that Milton could make landfall in the Tampa Bay area on Wednesday and maintain its hurricane status as it traverses central Florida before moving into the Atlantic Ocean.
Beginning October 7, banks in the U.K. will be mandated to compensate victims of online fraud up to £85,000. This new regulation comes amid ongoing tensions between financial institutions and tech companies over the responsibility for combating online scams. On Thursday, London-based digital bank Revolut criticized Meta, claiming it has fallen “woefully short” in its global efforts to address fraud. For years, banks have felt they are shouldering the majority of the financial burden from virtual scam attacks, exacerbating the friction between these sectors.
Starboard Value has acquired approximately $1 billion stake in Pfizer, as reported by sources familiar with the situation. The activist fund, led by Jeff Smith, is considering involving former Pfizer CEO Ian Read and ex-finance chief Frank D’Amelio, though their potential roles remain unspecified. This investment comes at a challenging time for Pfizer, which is aggressively cutting costs due to declining demand for its Covid-19 treatments.
The 10-year Treasury yield, a key benchmark for mortgages and car loans, surged back above 4% amid stronger labor market data. This marks its highest level since early August and a significant rebound from its 2024 low of approximately 3.58% just over a month ago. Investors are closely watching speeches from Federal Reserve officials Neel Kashkari, Raphael Bostic, Michelle Bowman, and Alberto Musalem, scheduled for Monday. Additionally, the 10-year Treasury auction is set for Wednesday, which could further influence market dynamics.
I would not be surprised if the struggle to maintain momentum continued this week despite the bullish rally in the market on Friday squeaking out new record high close in the DIA. Market is highly anticipating the kick-off on earnings on Friday hoping the results will finally push us out of this choppy consolidation. However, between now and then we have an FOMC minutes release, a CPI report and a PPI report along with rising bond yields and oil prices providing uncertainty. Of course, all the geopolitical tensions and pending election just piles on the uncertainty facing the market.
October trading has begun on a challenging note, with escalating tensions in the Middle East dampening market enthusiasm. These growing concerns have also pushed oil prices higher, with U.S. crude futures rising by over 1.5%, contributing to a week-to-date gain of 4.6%. On Wall Street, investors are anticipating new labor market data, including the release of weekly initial jobless claims on Thursday and September’s payrolls report, which is due on Friday morning.
European stocks declined on Thursday, influenced by the ongoing conflict in the Middle East, which dampened regional investor sentiment. Auto stocks were particularly affected, falling by 1.87% amid reports that the European Union might impose tariffs of up to 45% on Chinese electric vehicle (EV) manufacturers as early as Friday. Investors also evaluated new unemployment data from the euro zone, which revealed that the unemployment rate remained steady at a record low 6.4% in August.
On Thursday, Hong Kong stocks experienced a significant drop, ending a six-day winning streak as the momentum from China’s stimulus measures began to wane. Concurrently, the Japanese yen weakened against the U.S. dollar, marking its largest single-day decline since June 2022. Meanwhile, markets in mainland China will remain closed until October 8th due to a week-long holiday, and South Korea’s markets are also closed for National Foundation Day. Additionally, Taiwan’s markets were shut for a second consecutive day as Typhoon Krathon brought heavy rainfall to the island.
Economic Calendar
Earnings Calendar
Notable reports for Thursday before the bell include ANGO & STZ. After the bell reports include TLRY.
News & Technicals’
Levi Strauss reported mixed quarterly results, announcing plans to sell its Dockers business. While the company experienced robust growth in its namesake brand and Beyond Yoga, sales at Dockers fell by 15% during the quarter. Despite this, Levi’s focus on direct selling and lower cotton costs contributed to a 4.4 percentage point increase in its gross margin.
Europe’s leading car manufacturers are growing increasingly anxious about the potential for substantial fines, especially as demand for electric vehicles (EVs) weakens ahead of stricter carbon regulations. Starting next year, European carmakers will face more stringent emission targets, with the EU cap on average emissions from new vehicle sales dropping to 93.6 grams of CO2 per kilometer. Renault CEO Luca de Meo recently indicated that if EV sales do not improve, the European auto industry could face financial penalties amounting to 15 billion euros ($16.5 billion).
Atlanta is expected to experience haze and a chlorine odor on Thursday as authorities work to manage the aftermath of a chemical lab fire that started on Sunday. Air quality monitoring around the BioLab facility in Conyers detected elevated chlorine levels overnight, according to a news release from the Georgia Emergency Management and Homeland Security Agency on Wednesday. The presence of chemical gas has led to a shelter-in-place recommendation for the entire county, which has a population of 93,570, and mandatory evacuation orders for residents in the vicinity of the plant.
The British pound dropped by over 1% against the U.S. dollar on Thursday following comments from Bank of England Governor Andrew Bailey. In an interview with the Guardian, Bailey suggested that further positive news on inflation could enable the central bank to adopt a more proactive stance on rate cuts. The Bank of England maintained interest rates at 5% in September after a 25-basis point cut in August, citing concerns about high services inflation. Bailey also expressed optimism that cost of living pressures had not been as persistent as previously anticipated.
Israel’s response early Thursday put geopolitics front and center in the minds of investors as the escalating tensions weigh on sentiment. The DIA, SPY and QQQ remain in choppy yet bullish patterns while market breadth continues to wane. I would expect more of the same today unless we can find some substantial inspiration in the weekly claims data. However, the pending employment situation report Friday could also inspire a break of this 2 week long consolidation.
Tuesday saw a modestly lower open and Bearish morning. SPY opened 0.09% lower, DIA opened down 0.17%, and QQQ opened 0.09% lower. At that point, the Bears were in-charge across all three major index ETFs, driving a sharp selloff that reached the lows of the day at 10:15 a.m. in DIA and 11:20 a.m. in the SPY and QQQ. From there, all three rode a slightly bullish roller coaster sideways the rest of the day. This action gave us large, black-bodied candles with significant lower wicks in the SPY and QQQ. Both of them crossed back below their T-line (8ema) and even retested (and passed the test) their 17ema. Meanwhile, DIA printed a black-bodied Spinning Top with most of its wick on the bottom side of the candle. It too retested its 8ema, but unlike the others, it stayed above its T-line. This happened on average volume in the SPY and QQQ but above average volume in the DIA.
On the day, seven of the 10 sectors were red with Technology (-1.71%) WAY out in front (by nine-tenths of a percent), leading the rest of the market lower. On the other side, Energy (+2.02%) was the biggest mover and outperformed the other sectors by more than 1.5%. Meanwhile, SPY lost 0.88%, DIA lost 0.38%, and QQQ lost 1.39%. VXX spiked 7.72% to close at 53.43 and T2122 dropped back to the middle of its mid-range at 54.67. At the same time, 10-Year bond yields fell to close at 3.735% while Oil (WTI) spiked on Middle East fears to close at $70.62 per barrel. So, for the most part, the Bears ruled the morning (mostly on fears over the Israeli invasion of Lebanon and Iran’s retaliatory attack over recent Israeli assassinations conducted in Iran).
The major economic news scheduled for Tuesday included September S&P Global Mfg. PMI, which was down but better than expected at 47.3 (compared to a forecast of 47.0 and an August reading of 47.9). Later August Construction Spending was up but worse than expected at -0.1% month-on-month (versus a +0.2% forecast and the July -0.5% value). At the same time, September ISM Mfg. PMI was flat, which was not as strong as predicted at 47.2 (compared to a 47.6 forecast and in-line with the August 47.2 reading). On the jobs side, Sept. ISM Mfg. Employment Index was down to 43.9 (versus a 47.0 forecast and a 46.0 August value). Related to costs, September’s ISM Mfg. PMI Price Index was significantly lower at 48.3 (compared to a 53.5 forecast and a 54.0 August reading). Meanwhile, August JOLTs Job Openings were up at 8.040 million (versus a 7.640 million forecast and a 7.711 million July number). Later, after the close, API Weekly Crude Oil Stocks were down a little less than anticipated at -1.458 million barrels (compared to the forecast calling for a 2.100-million-barrel drawdown and the previous week’s -4.339 million barrels).
After the close, CALM and LW reported beats on both the earnings and revenue lines. At the same time, NKE missed on revenue while beating on earnings.
In stock news, on Tuesday, SLTA announced an extension of their halt in production of the Fiat 500e until at least November 1. (The halt had initially been planned to end Oct. 11, but was extended three weeks amid slow electric vehicle sales.) At the same time, Reuters reported that sources tell it that AAPL may need to turn back to China to supply iPhone components after a fire destroyed at Tata Group’s Hosur Indian iPhone component plant. The weekend fire has caused what is being called “an indefinite production halt.” Later, EQIX announced it has entered into a $15 billion joint-venture with the Singapore sovereign wealth fund and the Canada Pension Plan Investment Board to build a US data center. (The data center is expected to eventually scale to use 1.5 gigawatts of power.) At the same time, Bloomberg reported that BA is looking to raise $10 billion by selling new shares. Later, MSFT announced it has begun rolling out updates to its consumer Copilot software, giving it an AI assistant and a “more amiable” voice. At the same time, GM reported that its Q3 new vehicle sales fell 2.2% due to fewer sales days in the quarter and lower consumer spending. TM reported an 8% decrease for the quarter. (F and STLA have yet to announce sales.)
Meanwhile, CVS said it would be laying off 2,900 employees (1% of workforce) as part of a cost-cutting plan. The cuts will primarily be at corporate headquarters in RI. Later, as with most competent companies, TM announced it had built extra inventory of vehicles and parts ahead of the US port strikes. At the same time, SCHW announced that its long-time CEO Bettinger will retire on January 1, after 16 years at the helm. He will be replaced current company President Wurster. Later, CI, CVS, HUM, CNC, and UNH unveiled their 2025 Medicare Advantage plans. The companies told Reuters that 83% of enrollees will have access to a $0 monthly premium plan. At the same time, BRKB announced it had purchase full control of its Energy unit, buying the remaining 8% of stock for $2.37 billion. Later, JNJ announced it will invest more than $2 billion in a new manufacturing facility in NC for the production of biologic drugs and therapies. At the same time, CNBC reported that 500 SBUX locations have voted to unionize as talks between the union and company continue. (The Starbucks Workers United union now represents more than 11k SBUX employees.) After the close, Bloomberg reported AAPL will launch upgrades to iPhone SE and iPad Air product lines in early 2025. At the same time, NKE withdrew its annual forecast and postponed its planned investor day when it reported earnings.
In stock legal and governmental news, on Tuesday, the CFTC announced BCS agreed to pay $4 million to settle civil charges that it violated US law and CFTC rules requiring accurate and timely reporting on swap transactions. (BCS failed to report 5 million such swap transactions from 2018 to 2023.) Later, a US district judge dismissed a shareholder suit against PTON. The suit had alleged PTON defrauded shareholders by concealing how demand for its exercise machines had fallen as COVID vaccines became available and people were allowed to return to public life. Later, the NHTSA announced that owners of 154k Jeep hybrid plug-ins should park the vehicle outside and away from buildings or other vehicles until recall repairs are completed.
At the same time, the Fed announced it had terminated a 2013 enforcement action filed against C related to money laundering. (The enforcement action did not carry a fine but required process and documentations changes.) In 2023, C announced it planned to split the offending unit from the rest of the bank in the second half of 2024. At the same time, the NRLB issued a complaint against AAPL for allegedly violating employees right to organize or advocate for better working conditions by maintaining unlawful workplace rules. (Among the alleged infractions were confidentiality, non-disclose, non-compete, employee misconduct, and off-time social media policies. Among the prohibited topics were pay, discrimination, and promotion standards.)
In miscellaneous news, on Tuesday evening, the state of MI announced the schedule resulting from a summer major MI State Supreme Court decision that raises the state’s minimum wage by 20% to $12.48/hour at the end of February. (The first increase will the to $10.56 on January 1 and then to $12.48 on February 21. It will increase again to $14.97 in February 2028 and then be followed by annual inflation adjustments.) The court decision ruled that after 280k MI voters signed petitions calling for a ballot issue on the state minimum wage, the GOP legislature passed changes in 2018 and then proceeded to illegally water down the increases to insignificant levels.
In Middle East news, Israel’s ground invasion of Lebanon continued, even as the Lebanese army had fled southern Lebanon. Reportedly, 60 Lebanese were killed and an unknown number wounded on Tuesday. Meanwhile, Iran chose to take a retaliatory action for last month’s Israeli assassination of Hamas’ top negotiator in Tehran. Iran fired about 180 missiles toward Israel Tuesday. Many of the missiles were intercepted by Israel’s Iron Dome air defense and US Navy anti-missile systems. However, a few Iranian missiles and a lot of missile fragments did hit southern Israel. No casualties were reported since Israel had plenty of time to move the public to bomb shelters. (The closest Iranian hit seems to have been a missile that landed within six-tenths of a mile from Mossad headquarters.) Israeli PM Netanyahu immediately vowed that “Iran will pay” for its attack.
Overnight, Asian markets were mostly red. Japan (-2.13%) was well out front followed by South Korea (-1.22%) and Malaysia (-1.03%) leading the losses. In Europe, we see a similar picture taking shape as 11 of the 14 bourses are modestly in the red at midday. The CAC (-0.12%), DAX (-0.59%), and FTSE (+0.18%) lead the region lower in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a down start to the day. The DIA implies a -0.38% open, the SPY is implying a -0.26% open, and the QQQ implies a -0.23% open at this hour. At the same time, 10-Year bond yields are up to 3.756% and Oil (WTI) has spiked another 3.62% on Middle East fears to $72.35 per barrel in early trading.
The major economic news scheduled for Wednesday includes September ADP Nonfarm Employment Change (8:15 a.m.), and EIA Weekly Crude Oil Inventories (10:30 a.m.). We also hear from Fed Governor Bowman at 11 a.m. The major earnings reports scheduled for before the open are limited to CAG and RPM. Then, after the close, LEVI reports.
In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September S&P Global Services PMI, September S&P Global Composite PMI, August Factory Orders, September ISM Non-Mfg. Employment, September ISM Non-Mfg. PMI, September ISM Non-Mfg. PMI Price Index, and Fed Balance Sheet. We also hear from Fed member Bostic at 10:40 a.m. Finally, on Friday, September Avg. Hourly Earnings, September Nonfarm Payrolls, September Participation Rate, September Private Nonfarm Payrolls, and September Unemployment Rate. We also hear from Fed member Williams.
In terms of earnings reports later this week, on Thursday, we hear from STZ. However, on Friday, there are no earnings reports scheduled.
In economic news later this week, on Wednesday, September ADP Nonfarm Employment Change, and EIA Weekly Crude Oil Inventories are reported. We also hear from Fed Governor Bowman at 11 a.m. On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September S&P Global Services PMI, September S&P Global Composite PMI, August Factory Orders, September ISM Non-Mfg. Employment, September ISM Non-Mfg. PMI, September ISM Non-Mfg. PMI Price Index, and Fed Balance Sheet. We also hear from Fed member Bostic at 10:40 a.m. Finally, on Friday, September Avg. Hourly Earnings, September Nonfarm Payrolls, September Participation Rate, September Private Nonfarm Payrolls, and September Unemployment Rate. We also hear from Fed member Williams.
In overnight news, a chlorine chemical cloud in Atlanta has triggered a new series of shelter-in-place orders for that major city. This is the fallout of Sunday’s fire at the BioLab chemical plant in Conyers, GA (25 miles Southeast of Atlanta). Multiple counties have had such shelter-in-place orders since the fire, but now the impact is being felt in a major urban population center. Elsewhere, early this morning, LLY announced it will build a $4.5 billion research, development, and manufacturing facility located near Lebanon, IN.
So far this morning, RPM reported a miss on revenue while also beating on earnings. However, CAG reported misses on both the top and bottom lines.
With that background, markets look indecisively bearish so far in the premarket. All three major index ETFs opened the early session lower and have printed mostly wick since that point. All three are now trading below their T-line (8ema). So, the short-term trend is now bearish. The mid-term trend remains bullish. In the longer-term we still have a strong Bull trend in all three major index ETFs and they remain not far from their all-time highs. With regard to extension, none of the major index ETFs are extended above its T-line (8ema). In addition, the T2122 indicator is back in the center of its mid-range. So, markets have room to run either direction, if either the Bulls or Bears can find momentum. However, the Bears have what momentum exists on the back of the Middle East situation and the US East and Gulf port strike. With regard to those 10 big dog tickers, eight of the 10 are modestly in the red. AAPL (-0.58%) leads the losses while META (+0.18%) and NFLX (+0.12%) are holding up better than the others. It is worth noting that the biggest dog, NVDA (-0.35%) has traded only a little more than 2 times the dollar-volume as TSLA (-0.31%). This is typically a factor of at least two to three.
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.
🎯 DickCarp: 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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