Markets gapped about 1% higher for the second straight time on Monday, following Europe and Asia.  They even managed to follow-through for a few minutes.  However, by 10 am, a long, slow selloff had taken over to more than fill the gap and drive to the lows of the day before rebounding the last 10 minutes of the day.  This left us with gap-up, Bearish Engulfing Candles with an upper wick on all 3 major indices.  Once again, all this action is taking place on very low volumes. Energy was far and away the biggest gaining sector, while Healthcare was by far the biggest losing sector of the session.  Four of the 10 sectors were positive with the other six being negative.  On the day, SPY lost 0.79%, DIA lost 0.64%, and QQQ lost 0.85%.  The VXX gained 1.72% to 21.91 and T2122 was flat remaining in the overbought territory at 81.63.  10-year bond yields rose to 2.982% and Oil (WTI) spiked 4.64% to $102.12/barrel.

In economic news, despite the increase in bond yields, the curve remains inverted.  The 5-year bond yields is higher than the 10-year bond yield and the 2-year yield is higher than the 5-year yield.  So “2s vs 5s,” “5s vs 10s,” and “2s vs 10s” are all inverted, which are all potential indicators of a coming recession.  Also related to bonds, it was announced that China’s holdings of US Bonds (debt) fell to $980 billion, below $1 trillion for the first time in 12 years (since May 2010). I am not sure if this is a reflection of the health of the Chinese economy, on Chinese perception of US debt risks, come combination of the two, or pure coincidence.

In business news, more companies are reporting belt-tightening.  Early in the day Monday, GS announced it will slow hiring and reinstitute year-end performance reviews and staff reductions.  Later, AAPL said they will slow hiring and reduce spending for some groups.  This comes after MSFT reported over the weekend that they had laid off 1% of its staff and GOOGL said last week they will slow hiring and expected employees to work harder to avoid job cuts.  It was also reported (but not announced) that META has told team managers to weed out poor performers to reduce staff sizes as its Ad business struggles.

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On the Russian story, as many expected, state-owned Gazprom said that due to “unforeseen circumstances” it is not in a position to comply with gas contracts in Europe.  This claim was made to not only cover future non-supply but also to cover the gas shipment reductions (40%) that Gazprom has put in place since June (as direct responses to Western sanctions). Germany has forcefully rejected the Gazprom “force majeure” claim.  European economists are projecting scenarios where the cutoff of Russian gas would reduce the German GDP by at least 6% with major industries like chemicals being shut down nearly completely.  So, in addition to people staying warm in winter, such a move would crush the European economy.

In Forex news, the dollar dropped early this morning on rumors that the ECB will raise rates by 50 basis points amidst a worsening inflation background.  European bonds and stocks fell on the more hawkish outlook. 

After the close, IBM reported beats on both the top and bottom lines.  However, the company slightly reduced guidance for the year in terms of free cash flow (from $10.5 billion to $10 billion) as well as reporting that gross margins shrank from 55.2% (Q1) to 53.4% (Q2).  So far this morning, JNJ, VLVLY, TFC, HAL, TELNY, CFG, and SBNY have all reported beats on both lines.  Meanwhile, NVS, MAN, and HAS all missed on revenue while beating on earnings.  However, ALLY reported a miss on both the top and bottom line.

Overnight, Asian markets were mixed but leaned heavily to the red side on modes moves.  Japan (+0.65%) and India (+0.38%) were the only appreciable gainers.  Meanwhile, Hong Kone (-0.89%), Thailand (-0.74%), and Australia (-0.56%) paced the losses.  In Europe, stocks are also mixed on modest moves at mid-day.  Russia (-1.92%) is by far the biggest loser.  Meanwhile, the FTSE (+0.28%), DAX (+0.01%), and CAC (-0.12%) are typical of the region in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.66% open, the SPY is implying a +0.83% open, and the QQQ implies a +0.88% open at this hour.  10-year bond yields remain flat at 2.98% and Oil (WTI) is down almost 2% to $100.57/barrel.

The major economic news events scheduled for Tuesday include June Building Permits and June Housing Starts (both at 8:30 am).  The major earnings reports scheduled for the day include ALLY, CFG, HAL, HAS, JNJ, LMT, MAN, NVS, SBNY, and TFC before the opening bell.  Then after the close, CALM, IBKR, JBHT, NFLX, and OMC report.

In economic news coming later this week, on Wednesday, June Existing Home Sales and Crude Oil Inventories are announced.  On Thursday we get Philly Fed Mfg. Index and Weekly Jobless Claims.  Finally, on Friday Mfg. PMI and Services PMI are released.

Again, earnings season and recession fears (including those stoked by Russia) are top of mind for most traders. There are smaller issues that pop up, such as rumors NCR is in talks to be acquired by a private equity firm or that individual companies are tightening belts to get ahead of a downturn. However, with the Fed still more than a week out, those two major themes dominate markets. Futures are showing that markets are in a positive mood this morning. However, expect more volatility and chop. The only two things that we know for sure are that we are seeing very low volumes (which tells us there is not much conviction in either the bull or bear camps) and we also know the trend remains bearish until it is broken and price proves it can hold the break.

Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Always move your stops in your favor and remember the “Legend of the man in the green bathrobe“…it is NOT house money, it’s all our money! One way to put this is Buffett’s first rule of making big money in the market, which is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality. Lastly, remember it is Friday. So, be prepared for the weekend news cycle.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: MRVL, DKNG, C, SOFI, KWEB, CGC, WMT, AAPL, ARKK, NFLX, AFRM. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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

Stocks gapped 1% – 1.5% higher across all 3 major indices on Friday.  However, from that point they just ground sideways in a very tight range, until a pop higher the last 5 minutes of the day.  This left us with gap-up, white-bodied candles that closed very near the high of the day.  Each of those 3 major indices are now sitting just above their respective T-lines (8ema).  It’s worth noting volume remains well-below average.  All 10 sectors were solidly green with Financial Services being by far the hottest group. On the day, SPY gained 1.87%, DIA gained 2.04%, and QQQ gained 1.81%.  The VXX fell 3.5% to 21.54 and T2122 spiked just up into the overbought territory at 81.67.  10-year bond yields fell to 2.926% and Oil (WTI) prices were up almost 1.9% to $97.55/ barrel.  It’s worth noting that the 2yr vs 10yr bond yields and 5yr vs 10yr bond yields both remained inverted at the end of the week.  By the end of the day Friday, 31.35% of stocks were trading above their 40sma.  At the same time, 16.16% of stocks are trading above their 200sma. 

Taking a broader look, on the week, SPY was down 0.92%, QQQ was down 1.17%, and DIA was down 0.24%.  All 3 printed Hammer-type candles on that weekly chart.  However, all 3 also remain below their weekly T-lines and 50sma levels.  Those 50smas also continue to fall.  In short, the trend remains to the downside.

In economic news Friday, the NY Empire State Mfg. Index came in much higher than expected (11.10 vs -2.00 forecast and -1.20 in June).  June Retail Sales also came in a bit above expectation (+1.0% vs +0.8% estimated and -0.1% the prior month).  However, May Business inventories rose slightly more than expected and May Retail inventories were the same as the prior month.  Finally, the Michigan Consumer Sentiment came also in slightly above forecast (47.3 actual versus 47.0 consensus estimate but still down from the June 47.5).  Taken as a whole, these are clues that the Fed will continue on course for a 0.75% rate hike on July 27.

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In supply chain news, over the weekend, President Biden took action to prevent 115k railroad workers from striking today (and for another 60 days). He also appointed an emergency board whose task is to find a contract compromise within 30 days.  This action prevents 30% of US freight from coming to a halt.  However, from a different direction, ADM is among the major rail users already complaining about inadequate (untimely) rail service. The nation’s ports are staggering from slow rail (and trucking) service causing containers to stack up and having nowhere to put them.  The Port of Los Angeles currently has over 33,000 containers waiting for an average of 9-plus days for pickup by rail or trucking shippers. MarineTraffic says over 640,000 containers are sitting on ships waiting to be unloaded at US ports at the moment.  And CNBC says that out of all US ports, only the Norfolk, VA, and NY/NJ ports are operating at normal speeds.  As a potential answer to this, railroads are proposing that they be allowed to reduce the minimum staffing for a train from two to one employee. Not surprisingly, unions oppose the move as a major safety hazard.

In the invasion story, Saturday Russia took another step back toward a centrally-planned economy.  Putin has appointed a new Deputy Prime Minister (Manturov, formerly Trade Minister) whose job is to mobilize the Russian economy to support the war. New laws force companies to accept military contracts (on the military’s terms) and force workers to work nights, weekends, and holidays, as well as give up vacations if the company feels it necessary. Manturov also declared two new focuses of the Russian economy.  First, he plans to develop local (Russian-made) attack drones.  Second, Taiwan won’t sell them advanced chips and even after ramping up the buying of lower-end chips from China, they have decided they want to develop a Russian semiconductor industry (which will take years at best). 

On the same topic from a different perspective, the first step toward creating this new industry would be to get the lithography equipment needed to make a semiconductor Fab plant. However, currently, ASML (Netherlands) is the only source of lithography equipment in the world and they won’t sell to Russia.  So, Russia will need to steal and/or develop this technology to compete with ASML. Elsewhere, from a European economy point of view, Gazprom announced that they extracted 10% less and exported 33% less natural gas in the first 6 months of 2022 compared to 2021. With the natural gas flow now shut down completely (ostensibly for maintenance) and fear Russia will not turn it back on, the SHEL CEO warned Europe that energy rationing may hit the region by winter and the IEA concurred that Russia is likely going to prevent European nations from filling storage tanks before winter to maximize their leverage.

Overnight, Asian markets were green across the board.  Hong Kong (+2.70%), South Korea (+1.90%), and Shanghai (+1.55%) led the region higher but even the laggard (New Zealand) was up 0.37%.  (Japan was closed today for a holiday.) In Europe, the same is true with the exception of Russia (-0.62%) at mid-day.  This comes on optimism from the EU announcing it will sign a new gas supply deal with Azerbaijan (to replace Russian gas) and a weakening dollar.  The FTSE (+1.19%), DAX (+1.28%), and CAC (+1.53%) are leading the region up in early afternoon trading.  As of 7:30 am, US Futures are pointing toward another significant gap higher to start the day.  The DIA implies a +0.96% open, the SPY is implying a +1.01% open, and the QQQ implies a +1.18% open at this hour.  10-year bond yields are at 2.956% and Oil (WTI) is up almost 2% to $99.51/barrel in early trading.

There are no major economic news events scheduled for Monday.  The major earnings reports scheduled for the day include BAC, SCHW, GS, PLD, and SYF before the opening bell.  Then after the close, we hear from IBM.  So far this morning, GS, NRCBY, and SYF have all reported beats on both lines.  BAC beat on revenue while coming in light on earnings.  (SCHW and PLD report closer to the bell.)

In economic news coming later this week, on Tuesday we get June Building Permits and June Housing Starts.  Then Wednesday, June Existing Home Sales and Crude Oil Inventories are announced.  On Thursday we get Philly Fed Mfg. Index and Weekly Jobless Claims.  Finally, on Friday Mfg. PMI and Services PMI are released.

Earnings season will continue to be a big story and leads the news today. Futures are showing that markets like what they hear out of Europe and earnings so far today. However, be aware that both large-cap indices gaps could be seen as testing the mid-term downtrend. (As the old saw goes, “trust but verify”…or in our case get confirmation.) We certainly could have put in a bottom, but the most recent swing-low was a lower-low (for the DIA and SPY) and that puts a kink in a new bullish trend. So, expect more volatility and chop. Since the vast majority of traders don’t remember a similar situation, we are likely to whipsaw back and forth as the market re-learns the lessons taught in prior decades. There are only two things that we know for sure. First, the low volumes of the last few weeks tell us there is not a huge amount of conviction in either the bull or bear camps (and a LOT of retail traders have fled the market). Second, we know the trend remains bearish until it is broken and price proves it can hold the break.

Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Always move your stops in your favor and remember the “Legend of the man in the green bathrobe“…it is NOT house money, it’s all our money! One way to put this is Buffett’s first rule of making big money in the market, which is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality. Lastly, remember it is Friday. So, be prepared for the weekend news cycle.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: AI, BA, ARKK, AFRM, TDOC, TCOM, DKNG, TGT, AAPL, NFLX, RIDE, TLT, C. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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

Stocks gapped significantly lower Thursday as banks missed on earnings and some Fed members were talking about a potential 1% rate hike on July 27.  The markets then sold off for the first 30 minutes before the bulls stepped in at 10 am to start a long, steady rally that reached the highs of the day at about 3:30 pm. This left us with gap-down, white candles with longer lower wicks.  As has been usual for weeks now, all the day’s action happened on lower-than-average volume. By day end, just 26% of all stocks are trading above their 40sma and only 15% of them are trading above their 200sma. All 10 sectors are in the red with Basic Materials being the worst-performing group of the day. The 3 major indices all remain below their T-line (8ema).  On the day, SPY lost 0.24%, DIA lost 0.44%, and QQQ gained 0.36%.  The VXX was flat at 22.32 and T2122 fell back into the oversold territory at 12.39.  10-year bond yields climbed to 2.959%.  However, note that the “2yr vs 5yr” and “2yr/5yr vs 10yr” yield rates are still inverted.  Oil (WTI) was flat on the day at $96.25/barrel. 

As mentioned above, earnings season got off to a less than stellar start Thursday as JPM, MS, TSM, ERIC, and CAG all reported misses on either one or both lines.  JPM CEO Jamie Dimon summed up the economy pretty well. He said that on one hand, the economy continues to grow, the job market remains strong, and consumers’ ability to spend remains healthy.  However, geopolitical tensions, high inflation, poor consumer confidence and uncertainty about Fed tightening impacts are all having very negative consequences.  For its part, JPM only missed on earnings due to increasing their bad loan reserved by nearly half a billion dollars.  However, rival MS missed on a terrible decline in investment banking revenue.  This tells us that businesses are not willing to borrow for mergers and acquisitions at this point in the cycle.  The bottom line is that this is likely a harbinger of a bad earnings season, which is something we have not seen in about a decade (give or take 2020).

In Fed news, the Fed Funds Futures now indicate a 31% probability of a 1% rate hike on July 27.  However, the most likely scenario remains a 0.75% rate increase, which has a 69% probability according to the futures.  This comes after two of the Fed hawks spoke out.  St. Louis Fed President Bullard said he would prefer a 75-basis-point hike and Fed governor Waller said that was what he supported, but said he’d be open to a larger hike if new data shows demand is not slowing.  Finally, Fed Chair Powell and former Vice-Chair Clarida were also cleared of violating any trading rules from 2019-2021 after an independent watchdog published its findings on the Office of the Inspector General’s website.

SNAP Case Study | Actual Trade

In China news, according to Bloomberg, the Chinese Ministry of Housing and Financial Regulators called an emergency meeting with Chinese banks on Thursday night.  It appears there is a widespread mortgage payment boycott taking shape with borrowers refusing to make mortgage payments on at least 100 projects spread across more than 50 cities in the country.  The fear is that this boycott will spread even wider to individual home buyers.  This appears to be a reaction to the recent real estate sector defaults and the government’s response to those companies’ situations.  JEF estimates that a default on just the 100 projects now involved would result in bad loan losses totaling 1% of the entire Chinese mortgage balance.  Elsewhere, the Chinese Q2 GDP numbers came in far below estimates.  The Chinese economy grew 0.4% in Q2 compared to analyst estimates of +1% and Q1’s +4.8% growth.  However, in a small bright spot, June Retail Sales topped expectations, rising 3.1% (no growth was the expected consensus of regional economists). GS has cut its 2022 Chinese growth projection from 4% to 3.3% in response to the news.

In business news, after the close, BAC was fined $225 million for not disbursing state unemployment benefits during the height of the pandemic.  Bloomberg reports that another investigation by regulators has resulted in $1 billion in fines from the 5 biggest US banks (GS, BAC, C, JPM, and MS).  The companies are being fined for failing to monitor/stop employees from using unauthorized, encrypted messaging apps.  It seems each bank will be fined $200 million.

On the Russian invasion story, French President Macron warned his country to prepare for a total cutoff of Russian natural gas.  He promoted alternatives, shutting off public lights at night, and engaging in what he called “energy sobriety.”  Meanwhile, the UK Ministry of Defense released an intelligence update saying that more than 2.5 million people have been forcibly “evacuated” from Ukraine to Russia (filtration camps).  Elsewhere, war crime investigators have noted a sharp increase in the number of mass graves they have found (using satellite imagery) near residential areas that were heavily targeted by Russian artillery according to the Centre for Information Resilience (a non-governmental organization focused on exposing human rights abuses).  This all comes at the same time 45 countries have signed a declaration to punish Russia for war crimes.

Overnight, Asian markets were mixed but leaned to the red side.  Hong Kong (-2.19%), Shanghai (-1.64%), and Shenzhen (-1.52%) led the region lower.  Meanwhile, Taiwan (+0.78%), India (+0.69%), and Japan (+0.54%) led the gains in the region.  In Europe, we nearly see green across the board at mid-day.  Only Sweden (-1.20%) is defying the trend as the FTSE (+0.94%), DAX (+1.63%), and CAC (+0.71%) lead the region higher in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.44% open, the SPY is implying a +0.34% open, and the QQQ implies a +0.28% open at this hour.  10-year bond yields are back down to 2.932% and Oil (WTI) is 1.5% higher to $97.23/barrel in early trading.

The major economic news events scheduled for release Friday include June Retail Sales, June Import/Export Price Index, and NY Empire State Mfg. Index (all at 8:30 am), June Industrial Production (9:15 am), May Business Inventories, May Retail Inventories, and Michigan Consumer Sentiment (all 3 at 10 am).   The major earnings reports scheduled for the day include from BK, BLK, C, PNC, PGR, STT, USB, UNH, and WFC before the open.  There are no major reports scheduled for after the close.

So far this morning, BK, C, PNC, USB, and UNH have all reported beating on both the revenue and earnings lines.  Meanwhile, WFC beat on revenue while missing on earnings.  BLK has reported significant misses on both lines. WFC took its earnings hit for similar reasons to JPM on Thursday. The company increased its reserves for bad loan losses by $588 million and also took a $576 million impairment for Q2 equity losses of its venture capital unit.

Earnings season is here again and we are getting a mixed bag right out of the shoot. Futures are showing that markets did not like that news, but probably more eyes are on inflation as yet another Fed voter (Mester) called for “at least” a 0.75% hike when the Fed announces in 2 weeks. This comes hours after Canada hiked rates by a full percent. So, for the first time, Futures are considering that there might be a 1% hike and traders are need to (and are) starting to consider how that might impact the economy and stocks. Expect more volatility and chop because the vast majority of traders don’t remember a similar situation. So, markets are likely to whipsaw back and forth as the market re-learns the lessons taught in prior decades. There are only two things that we know for sure. First, the low volumes of the last few weeks tells us there is not a huge amount of conviction in either the bull or bear camps. Second, we know the trend remains bearish in both the longer and short-term views.

Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Always move your stops in your favor and remember the “Legend of the man in the green bathrobe“…it is NOT house money, it’s all our money! One way to put this is Buffett’s first rule of making big money in the market, which is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality. Lastly, remember it is Friday. So, be prepared for the weekend news cycle.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: WOLF, RIDE, MRVL, BA, MSOS, BMY, AAPL, LCID, WMT, TLRY, MAT, DT, PGR. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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

On Wednesday, stocks gapped down sharply in all 3 major indices after the June CPI number came in at 9.1%, much higher than expected.  However, the chop continued as all 3 had more than filled the gap before 11 am.  From that point, we saw volatile sideways chop the rest of the day, ending on a down-swing back into the gap.  This left us with white candles with upper wicks.  All 3 failed a retest of their T-line again.  On the day, SPY lost 0.52%, DIA lost 0.72%, and QQQ lost 0.21%.  The VXX was flat at 22.41 and T2122 climbed a bit to 31.00.  10-year bond yields fell to 2.932% and Oil (WTI) was on the green side of flat at $96.09/barrel.  It is worth noting that the 2-year, 5-year, and 10-year bond yields remain inverted, which is a recession indicator.  In fact, the 2s vs 10s inversion is the largest since 2000.

In economic news, as mentioned above the June CPI came in at 9.1% annualized compared to a expected 8.8% and a 8.6% CPI printed in May.  However, (and keeping with the more than month-long decline in gas prices) later in the day, crude oi inventories showed another build of 3.254 million barrels (when a drawdown of 155,000 barrels had been expected).  This shows that demand continues to decline and, at least in oil, price is following demand.  In other economic news, Canada’s Central Bank surprised markets with a rate increase of a full percent to 2.5%.  This is expected to put the breaks on Canada’s real estate market.  US futures markets are still pricing in a 72% chance of a 75-basis-point hike by the Fed on July 28.  However, the chance of a full percentage hike is now 28% according to futures.

In energy news, ERCOT (Texas power grid) was forced to take emergency actions Wednesday to avoid rolling blackouts.  ERCOT began paying $5,000/megawatt.  The action forced electric generators to turn on supply regardless of maintenance and other plans.  The state also forced large Bitcoin mining operations to go offline and pled with residents to raise thermostats and avoid large appliance use between 2 pm and 9 pm.

SNAP Case Study | Actual Trade

I know we don’t want to hear it, but in Covid news, after Tuesday’s announcement from the WHO that they are worried about the newest variant (BA.5).  BA.5 is the most transmissible variant so far, being highly contagious.  Cases are climbing as Europe has seen a 25% spike in cases (which is significant since it is summer and people are outside more) and the US reports that 65% of new cases are of this new variant.  On Wednesday, China again ratcheted up lockdowns and testing after closing Macau casinos just 2 days earlier (they are not releasing timely case numbers).  The WHO called for countries to revisit mask mandates.  The point is that the economy, and therefore companies (or at least major employers) especially the public-facing ones, are not out of the woods yet.

In Forex news, the Euro was forced down to parity before recovering again on Wednesday, reaching its lowest level against the strong dollar in over 20 years. A weak European economy, the war-impact risks, and an unfavorable interest rate difference between the Fed and European Central Banks are stoking the flight to dollars. This situation is likely to get worse before it gets better and many analysts are predicting doomsday if Russia fails to turn back on the natural gas after the planned maintenance shutdown. While the strong dollar helps Americans who want to travel to Europe, it is a strong headwind for American companies trying to sell into the European market.

So far this morning, FRC beat on both the earnings and revenue lines.  Meanwhile, JPM beat on revenue while missing on earnings.  (It is worth noting that JPM more than explained away the down earnings by saying it was building up its “bad loan” reserves by $428 million. If even half of that was passed through to earnings they would have beaten estimates.) On the other side, TSM (the world’s largest chipmaker) missed on revenue while beating on earnings.  However, ERIC had a terrible quarter and missed on both lines.

Overnight, Asian markets were mixed on relatively modest moves.  Singapore (-1.22%) was an outlier with Thailand (-0.65%) pacing the losses.  Meanwhile, Taiwan (+0.79%), Shenzhen (+0.75%), and Japan (+0.62%) leading the gains in the region.  In Europe, stocks are red across the board at mid-day.  The FTSE (-0.85%), DAX (-0.99%), and CAC (-1.21%) are leading the region lower in early afternoon trading, but other than Russia every exchange is strongly lower.  As of 7:30 am, US Futures are pointing toward a gap down to start the day.  The DIA implies a -1.30% open, the SPY is implying a -1.22% open, and the QQQ implies a -0.85% open at this hour.  10-year bond yields have recovered to 2.961% and Oil (WTI) is off 2.9% to $93.58/barrel in early trading.

The major economic news events scheduled for release Thursday are limited to June PPI and Weekly Jobless Claims (both at 8:30 am).  However, there is a Fed speaker (Waller at 11 am).   Earnings season kicks off again with major reports scheduled from CTAS, CAG, ERIC, FRC, JPM, MS, and TSM before the open.  There are no major reports scheduled for after the close Thursday.

In economic news coming later this week, on Friday we get June Retail Sales, June Import/Export Price Index, NY Empire State Mfg. Index, June Industrial Production, May Business Inventories, and Michigan Consumer Sentiment.

In earnings reports later this week, on Friday we hear from BK, BLK, C, PNC, PGR, STT, USB, UNH, and WFC.   

Earnings season is here again and we are getting a mixed bag right out of the shoot. Futures are showing that markets did not like that news, but probably more eyes are on inflation as yet another Fed voter (Mester) called for “at least” a 0.75% hike when the Fed announces in 2 weeks. This comes hours after Canada hiked rates by a full percent. So, for the first time, Futures are considering that there might be a 1% hike and traders are need to (and are) starting to consider how that might impact the economy and stocks. Expect more volatility and chop because the vast majority of traders don’t remember a similar situation. So, markets are likely to whipsaw back and forth as the market re-learns the lessons taught in prior decades. There are only two things that we know for sure. First, the low volumes of the last few weeks tells us there is not a huge amount of conviction in either the bull or bear camps. Second, we know the trend remains bearish in both the longer and short-term views.

Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Always move your stops in your favor and remember the “Legend of the man in the green bathrobe“…it is NOT house money, it’s all our money! One way to put this is Buffett’s first rule of making big money in the market, which is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality. Lastly, remember it is Friday. So, be prepared for the weekend news cycle.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: MSFT, PANW, TSN, JNJ, CCJ, MOS. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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

On Tuesday stocks opened mixed and then yo-yoed up and down until 1 pm in the QQQ and SPY.  At the same time, after a small gap lower, DIA had managed to recover fast and stay modestly bullish up to that 1 pm mark as well.  However, at 1 pm a steady and accelerating selloff took over (possibly on political news), driving prices to the lows of the day at 3:30 pm.  After the Congressional hearing ended, stocks bounced up off the lows in the last 15 minutes of the day.  This leaves the 3 major indices as gap-down, black candles that are essentially Spinning Tops (indecisive).  All 3 failed in their attempt to regain the T-line (8ema) after the gap lower. 

Eight of the 10 sectors were red, with Energy by far the biggest loser and Communication Services faring the best, although that is only up 0.28%.  Overall, it was another modestly bearish day, but indecisive day, filled with reversals, and all on low volume.  On the day, SPY lost 0.88%, DIA lost 0.56%, and QQQ lost 0.97%.  The VXX climbed 1.2% to 22.48 and T2122 climbed just outside the oversold territory to 26.42.  10-year bond yields fell just a bit to 2.971% and Oil (WTI) plummeted 8% to $95.68 per barrel.

In stock news, airline stocks skyrocketed on the major drop in oil.  These include AAL (+9.98%), UAL (+8.09%), HA (+6.51%), DAL (+6.15%), and LUV (+4.64%).  Trucking companies were the other big winners, including USX (+8.39%), YELL (+7.32%), and TSP (+5.41%).  After the close, TWTR sued Elon Musk seeking to enforce Musk’s original $54.20/share takeover agreement. 

SNAP Case Study | Actual Trade

In economic news, after the close Tuesday, the IMF cut its US GDP growth forecast again.  The international group now forecasts +2.3% for 2022 after having just lowered to 2.9% in late June.  Elsewhere, US Bond yield rates are still signaling recession risk.  The 2-year yield is inverted with the 5-year and 10-year.  The 5-year yield is also inverted with the 10-year.

In Forex and crypto news, the Euro fell to parity with the Dollar on European recession fears during the day.  This was the first parity since 2002.  However, it recovered to 1.0031 per dollar by day end.  Elsewhere, Bitcoin fell over 5% to close at $19,435 and Ethereum plunged more than 8% to $1,046.  In related news, the US Treasury Dept. is seeking comment on the risks and opportunities of digital assets ahead of a report on cryptocurrencies later this year.

Average mortgage rates held steady for the week at 5.74%, while points decreased from 0.65 to 0.59 (for conforming 20% down loans).  However, demand for new home purchase mortgages fell 4% week-on-week and was 18% lower than the same week last year.  Refinance loan applications did rise 2% for the week (after several terrible weeks), but remained 80% lower than the same week one year ago. 

Overnight, Asian markets were mixed.  Taiwan (+2.68%) was an outlier to the upside, but Shenzhen (+0.56%), Japan (+0.54%), and South Korea (+0.47%) led the gainers.  On the downside, Malaysia (-1.04%), Thailand (-0.68%), and India (-0.57%) paced the losses.  In Europe, stocks are nearly red across the board at mid-day. Athens (+1.62%) is the only green in the region as the FTSE (-0.77%), DAX (-0.90%), and CAC (-0.87%) lead the region lower in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly green start to the day (mind you, before CPI data).  The DIA implies a +0.22% open, the SPY is implying a +0.28% open, and the QQQ implies a +0.38% open at this hour.  10-year bond yields are falling again at 2.948% and Oil (WTI) is up 1% to $96.83/barrel in early trade.

The major economic news events scheduled for release Wednesday include June CPI (8:30 am), Crude Oil Inventories (10:30 am), the Fed Beige Book and the June Federal Budget Balance (both at 2 pm).  The only major earnings reports scheduled for the day are DAL and FAST before the open. On that front, DAL reported a beat on the revenue line while coming up short on the earnings line.  Meanwhile, FAST missed on earnings but came in in-line on earnings.

In economic news coming later this week, on Thursday we see the June PPI and Weekly Jobless Claims.  Finally, on Friday we get June Retail Sales, June Import/Export Price Index, NY Empire State Mfg. Index, June Industrial Production, May Business Inventories, and Michigan Consumer Sentiment.

In earnings reports later this week, earnings season kicks off again on Thursday with reports from CTAS, CAG, ERIC, FRC, JPM, MS, and TSM.  Finally, on Friday we hear from BK, BLK, C, PNC, PGR, STT, USB, UNH, and WFC.   

With earnings season is one day away, all eyes will be on the CPI report later this morning. While it is expected to come in at a sizzling hot 8.8% for June. However, some analysts are considering the worst past us having seen a month-long fall in gasoline prices and computer technology prices continuing to fall as they have most of the year. Against that backdrop, it would not be surprising to continue see a knee-jerk reaction to the CPI release only to resolve in choppy action when traders realize a flood of major earnings reports start tomorrow. The one thing we know for sure is that the low volumes of the last few weeks tell us there is not a huge amount of conviction in either the bull or bear camps. With that said, the longer-term trend remains bearish, we may be sitting on shorter-term uptrend support, and we have a lot of technical damage to work through if we are going to start a rally.

Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Always move your stops in your favor and remember the “Legend of the man in the green bathrobe“…it is NOT house money, it’s all our money! One way to put this is Buffett’s first rule of making big money in the market, which is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality. Lastly, remember it is Friday. So, be prepared for the weekend news cycle.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: MVIS, SPCE, CPNG, MU, LCID, AAPL, ACCD, DXD, AJG, SDS, QID. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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