It’s been a tough week of price action, with economic reports continuing to show deteriorating economic conditions. However, since the bears have thus far been unable to make new index lows, there may be hope of a relief rally if today’s economic data cannot inspire the bears. The T2122 indicator suggests a short-term oversold condition, so fingers crossed the PMI, ISM, and Construction spending numbers can show us a light at the end of the tunnel! Keep in mind we are heading into a 3-day weekend, so plan your risk carefully.
While we slept, Asian markets closed Friday, trading with losses across the board, with the Nikkei leading the way. European markets trade mixed and near the flat line after ECB warns of rate hikes on the way after their inflation rate hit a record high of 8.6%. Though U.S. futures have recovered from overnight lows, they continue to point to a bearish open as we wait on manufacturing and construction data with an uncertain 3-day weekend ahead.
Economic Calendar
Earnings Calendar
To kick off third-quarter trading, we have no confirmed earnings reports.
News & Technicals’
European inflation hits a new record high of 8.6%, and the ECB is preparing for a rate hiking cycle. Speaking earlier this week, ECB President Christine Lagarde struck a hawkish tone. As a result, there are growing questions about the future of monetary policy in the eurozone amid fears of a recession in the coming months. Philip Lane, the bank’s chief economist, said the ECB needs to remain vigilant. Chief Product Officer Chris Cox warned employees at Facebook-parent Meta that lean times are ahead. To make up for last year’s Apple privacy update, which decreased the company’s ability to target ads, Meta will invest in Instagram Reels, its TikTok competitor, as well as shopping and messaging features. Kohl’s has called off talks to sell its business to The Vitamin Shoppe owner Franchise Group; sources tell CNBC. This decision from Kohl’s comes as its stock price slumps and its sales decline. Franchise Group had been lowering its bid for Kohl’s to closer to $50 per share from about $60. Earlier this year, Kohl’s rejected a buyout offer from Starboard-backed Acacia Research priced at $64 a share. Its stock closed Thursday at $35.69. Micron Technology, a major vendor of memory chips for PCs and smartphones, said on Thursday that it now expects smartphone sales to be meaningfully lower than expected for the rest of 2022. The company said consumer demand is slowing because of China’s lockdowns, the Russia-Ukraine war, and rising inflation. Treasury yields fell in early Friday trading, with the 10-year slipping to 2.97% and the 30-year dipping to 3.16%.
It’s been a tough week for the market and the worst first half of the year since 1970. With Europe’s inflation rate hitting 8.6%, beginning a rate hiking cycle, and the uncertainty of 3rd quarter earnings just around the corner, the challenging times are likely to continue in the weeks ahead. However, there may be hope that a relief rally could soon begin. As of now, the bears have been unable to make a new market low, and the T2122 indicator remains in a short-term overbought condition. Trader anticipation of earnings season may also inspire some short bursts of buy-side speculation. That said, geopolitical tensions and the decorating economic data are likely to make price action challenging, with gaps and overnight reversal possible as we wait on the banks to report.
Stocks gapped just over a percent lower at the open Thursday and then followed through at least that much lower in the next 30 minutes. However, then the reversal took hold and the bull ran us back up to flat on the day by about 12:30 pm. The whip was no over though as we reversed the bears ran us back down to the open levels about 45 min. later and so on and so on all day long. This volatile action left us with long-legged, Doji or Spinning Top type candles in all 3 major indices. All but 2 sectors were in the red again as Energy was the weakest sector for the second day in a row. On the day, SPY lost 0.77%, DIA lost 0.62%, and QQQ lost 1.24%. VXX climbed 1% to 23.08 and T2122 rose, but remains deep in the oversold territory at 8.95. 10-year bonds rallied late but closed down at 3.018% and Oil (WTI) was down more than 3.5% to $105.87/barrel as the day/quarter/half ended.
Speaking of the end of the period, the S&P 500 just finished its worst half since 1970, losing 21% since the start of the year. Not to be outdone, QQQ lost more than 32% over the same period, but this was just the worst performance since the 2002 dot-com bust for the tech-heavy index. For the month, SPY lost 8.57%, DIA lost 6.68%, and QQQ lost 9.08%. The quarter was also brutal with QQQ down 22.69%, DIA down 11.16%, and SPY off 16.40%.
During the day we continued the trend of bad economic data. The May PCE Price Index came in slightly lower than expected, but still near 40-year highs. This is the Fed’s preferred inflation measure. However, even if better than expected the number is still bad enough that they are not likely to reduce the speed of rate hikes. Meanwhile, Jobless Claims came in 3,000 higher for the week than expected. Finally, later in the day Chicago PMI came in a bit lower than forecast, but remained in expansion territory (56.0 vs. 58.0 est.).
In energy news, despite all the constant talk about inflation, June saw some relief. US natural gas prices fell 16.5% for the month of June. This was the worst monthly loss for that commodity in the last 3 years. Over the same time span, WTI Oil fell 7.65%. However, it is important to note that WTI is up more than 28% YTD while natural gas is up 31.3% on the year.
In cryptocurrency news, Bitcoin closed the month below $19,000. This capped a greater than 40% loss for the month of June and it is also down more than 58% on the year. GTBC also sued the SEC for rejecting its application to offer a Bitcoin spot-price ETF. Finally, Celsius Network (the largest cryptocurrency lender) said late Thursday that it was now exploring strategic options including M&A deals and restructuring. This comes after it froze withdrawals earlier in June while citing “extreme market conditions.”
After the close, MU missed on revenue while beating on earnings. During the earnings report, MU also offered a dim outlook for the rest of 2022, on worries that consumers are not spending as much on computers and phones. Analysts were caught off guard by all this because MU held an analyst’s day with just 2 weeks left in the quarter and were very upbeat, presenting a rosy picture. MU stock was down hard on the news, off as much as 9.6% in after-hours trading.
In business news, KSS announced that it has ended talks with FRG and no longer intends to pursue selling the business. The reason stated is that the retail situation has gotten significantly worse since the start of the sale negotiations. KSS also lowered its outlook. KSS stock is down 17% while FRG remains unchanged on the news in premarket trading. Elsewhere, in an interesting twist, despite lockdowns in various regions across the country and generally tough market conditions, Chinese EV maker NIO reported record sales for June, delivering just under 13,000 vehicles (up 60% from one year prior). Even more interesting is that Chinese EV rivals XPEV and Li Auto both reported even better numbers for the month. XPEV delivered 15,295 vehicles (up 133% from the same month in the prior year) and Li Auto delivered 13,024 vehicles (up 69% from June 2021). NIO stock is up 2.6% and XPEV is up 3% in premarket trading.
Overnight, Asian markets leaned heavily to the downside. Only Malaysia (+0.38%) and Thailand (+0.28%) managed any green. Meanwhile, Taiwan (-3.26%) was an outlier to the downside as Japan (-1.73%) and South Korea (-1.17%) led the region lower. In Europe, stocks are mixed but lean slightly toward the red at mid-day. The FTSE (-0.25%), DAX (-0.10%), and CAC (unch.) are typical of most exchanges with half a dozen exchanges in the green led by Russia (+1.13%) in early afternoon trading. As of 7:30 am, US Futures are pointing toward a modestly red start to the day. The DIA implies a -0.36% open, the SPY is implying a -0.38% open, and the QQQ implies a -0.45% open at this hour. 10-year bond yields are down sharply again to 2.939% and Oil (WTI) is up nearly 2% to $107.85/barrel in early trading.
The major economic news events scheduled for release Friday are limited to June Mfg. PMI (9:45 am) and June ISM Mfg. PMI (10 am). There are no scheduled earnings reports either before the open or after the close.
As July starts, markets are expecting a 75-basis-point rate hike on July 28 and probably at least another half of a percent in September. As recession looks more likely, companies are falling all over one another in the mad scramble to lower forecasts (and more importantly market expectations) for the earnings season that gets into full swing in a couple of weeks. And on top of these issues, there is continued worry of very high inflation. Yet, there are also indications that (in places) inflation rates (if not prices) may have peaked. The market continues its bearish trend, but it must also be said that the trend is getting “long in the tooth” at least in the longer term.
In the short term, I would not be at all surprised if we see a low-volume day. (Thursday was the first time in two weeks we even reached the 50-day average volume in the SPY and QQQ…and even so, the DIA did not make that milestone). With a 3-day weekend ahead and news reports of travel problems (flight delays and cancellations), I expect a fair number of traders to call it a week and try to get ahead of the crowd. If you are trading, get yourself set for the long news cycle. Look at getting flat (or at least smaller), or hedged, especially if you have profits. They will sell the positions back to you Tuesday, I promise.
Don’t chase gaps. Demonstrate patience and wait for confirmation. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Remember that trading is our job. So, do the work and follow the process. And always, always, always move your stops in your favor. Remember the “Legend of the man in the green bathrobe“…it’s NOT house money, it’s all our money (so don’t give very damn much of it back). Also, the first rule of making big money in the market 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. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: No trade ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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
Weak economic reports, a confirmed recession, growing geopolitical concerns, and the hits keep coming as we slide toward the 3rd quarter and a likely tough earnings quarter for companies to perform. Additionally, today we face the possibility of rising jobless claims and a Personal Income and Outlays report that likely supports the stance of the more interest rate hikes. Although the T2122 indicator suggests a short-term oversold condition, today’s data could keep the bears engaged and discourage the bulls from defending. So, try not to panic, avoid speculation, and don’t fight the bear!
Asia markets traded mostly lower while we slept except for the Shanghai with modest gains as data showed their factory activity grew in June. However, European markets trade decidedly bearish this morning due to persisting recession concerns. With another day of potentially market-moving data just around the corner, the U.S. futures suggest a substantial gap down. So, protect your capital and prepare for another challenging day of volatile price action.
Economic Calendar
Earnings Calendar
This Thursday, we have our busiest day of the week on the earning calendar. Notable reports include MU, WBA, AYI, STZ, SMPL, LNN, RNLX, & TRIB.
News & Technicals’
Wells Fargo CEO Charles Scharf said at the Aspen Ideas Festival on Wednesday that he expects to see the Federal Reserve continue with more significant rate hikes. Scharf credited the Fed for being “very clear about how they’re going to think about what the right movements are going to be,” but the bank CEO still thinks the economy will be surprised by the repercussions. Hackers targeted Horizon, a blockchain bridge that lets users swap tokens between different networks. There are “strong indications” that Lazarus Group, a hacking collective with solid ties to Pyongyang, orchestrated the attack, blockchain analytics firm Elliptic said in a blog post-Wednesday. Harmony said it is “working on various options” to reimburse users as it investigates the theft but stressed that “additional time is needed.” Bitcoin on Thursday briefly fell below $19,000 as the world’s largest digital currency remains under pressure. Investors are also worried about rampant inflation forcing global central banks to raise interest rates. That also sparks fears of a recession in the U.S. and other countries. Meanwhile, major crypto hedge fund Three Arrows Capital fell into liquidation, adding further woes to the market. Treasury yields moved slightly lower in early Thursday trading, with the 10-year priced at 3.06% and the 30-year dipping to 3.10%.
The hits keep coming, with the GDP confirming a recession, mortgage applications continuing to recede, and Powell reiterating an aggressively hawkish Fed. But, if there was some good news, it was the decline in the oil and gas prices as the overall market chopped in a wide price range on lower than average volume. Today we have the potential to receive some more hits with Jobless Claims that have edged slightly higher the last two weeks and a reading on Personal income and outlays that likely favors the hawkish Fed stance. The T2122 indicator is in the bullish reversal zone, but with the low sentiment, we can’t rule out more downside punishment, so buckle up for another challenging day of price action and volatility.
On Wednesday, markets opened flatish and essentially traded in a tight range all day. (The QQQ was slightly more volatile, but still traded in a 1.5% range.) This leaves us with indecisive Doji-like candles on the day, with the SPY and QQQ failing to climb back above their T-lines (8ema) and DIA managing to climb just back above and hold it. Seven of the 10 sectors were in the red, with only Healthcare being more than half of a percent in the green. Energy was by far the worst-performing of the sectors, being down more than 2.75% for the day. On the day, SPY lost 0.12%, DIA gained 0.23%, and QQQ gained 0.10%. The VXX was flat at 22.84 and T2122 dropped a bit further into the oversold territory at 7.58. 10-year bond yields fell significantly to 3.097% and Oil (WTI) fell 2.2% to $109.29 after having been up more than 1% early in the day.
During the day, Fed Chair Powell reiterated the central bank’s pledge to fight inflation by raising rates. Specifically, he said inflation was the biggest risk to the economy and while there is some risk of the Fed overshooting and causing a recession, it’s more important to prevent higher inflation from taking hold in the long term. At the same event, ECB President Lagarde played down the risk of recession in Europe. Instead, she too is more concerned about inflation and its impact on the economy of the region. However, she also warned that the tight monetary policy required to fight inflation could be a strain on the countries with high debt levels (in particular Italy).
In business news, during the day, one of the FCC Commissioners called on AAPL and GOOGL to remove TikTok from their app stores. In doing so, Brendan Carr cited a report that the Chinese government had accessed US TikTok users’ data. After hours it was announced that the CEO of XRX died. UBS also paid a $25 million fine to settle fraud charges levied by the SEC after the close. Elsewhere, PFE and BNTX revealed they have signed a $3.2 billion deal with the US gov’t. for 105 million doses of vaccine with deliver starting in the late summer. (There is also a US option to increase the order by another 195 million doses if needed.) Finally, RH released a revised 2022 forecast, adjusting revenue growth projections down and also reducing the operating margin forecast. RH stock was down as much as 8.5% in after-hours trading.
In economic news, Bloomberg reports Senate Democrats are working to shrink the amount of tax increases (on corporations and the rich) in President Biden’s previously proposed economic plan. This is a move to appease WV Senator Manchin and AZ Senator Sinema who were the real reason the package failed to pass earlier this year. No timeline for a renewed proposal and vote on the package was offered by Bloomberg. Elsewhere, for what it’s worth, the CEO of WFC (Scharf) told a conference yesterday that he does not believe the economy is ready for the big Fed rate hikes he sees coming. He went on to explain that he does not believe all the shocks caused by larger (bigger than 50 basis point) hikes have been factored into forecast models and that he feels small and mid-size businesses simply will not be able to handle the shocks that 75-basis-point or even 1% or more rate hikes as they come.
In cryptocurrency news, Bitcoin fell below $19,000 again Thursday as the digital currency selloff continues. This rout caused crypto hedge fund Three Arrows Capital (3AC) to fall into liquidation, which added to the woes of that market. For what it is worth, JPM crypto analysts have told customers that they believe the massive deleveraging they have seen in the crypto space is in an advanced state and may not last much longer. Finally, it was also announced overnight that the recent $100 million cryptocurrency theft at blockchain bridge Horizon is very likely a state-sponsored North Korean hack.
After the close, MLKN reported beats on both revenue and earnings. So far this morning, AYI, STZ, and WBA all reported beats on both the top and bottom lines. WBA specifically cited growth in its online sales channel.
On the Russian invasion story, Russia announced that its unemployment rate fell to 3.9% in May (a record low, and surely they would never cook the books). The Russian Economic Minister also said he expects Russian GDP to contract by 7.8% for the year despite huge gains from energy sales and the impact of inflation. (Western estimates have been 10%-35% contraction.) In addition, according to Rosstat (a supposedly independent source), Russian Industrial production fell 1.7% for the month of May. However, their biggest problem is that May Retail Sales fell 10.1% (after a 9.8% fall in April). This contraction was far more than was forecast. Elsewhere, NATO formally offered membership to Sweden and Finland after Turkey was appeased by the US promising to upgrade Turkey’s F-16 fleet. Putin then warned that if NATO builds any defense infrastructure in either country Russia would “respond.” On the ground, Russia retreated from Snake Island after they have repeatedly suffered heavy losses on that small, but strategic “unsinkable battleship.”
Overnight, Asian markets were mostly in the red with the exception of mainland China which popped on Chinese Manufacturing PMI rising for the first time in 4 months and President Xi declaring victory over covid. Shenzhen (+1.57%) and Shanghai (+1.10%) were the only green in the region. Meanwhile, Taiwan (-2.72%), Australia (-1.97%), and South Korea (-1.91%) led the region lower. In Europe, stocks are sharply lower across the board at mid-day. Russia (-5.70%) is an outlier. However, the FTSE (-1.87%), DAX (-2.73%), and CAC (-2.81%) are typical and lead the region lower in early afternoon trading. In the US, as of 7:30 am, Futures are pointing toward a strong gap lower at the start of the day. The DIA implies a -1.18% open, the SPY is implying a -1.36% open, and the QQQ implies a -1.57% open at this hour. 10-year bond yields a plunging again to 3.046% and Oil (WTI) is off a half of one percent to $109.21 in early trading.
The major economic news events scheduled for release Thursday, include May PCE Price Index, Initial Jobless Claims, and May Personal Spending (all at 8:30 am), and Chicago PMI (9:45 am). On the earnings front, we get reports from AYI, STZ, and WBA before the open. Then, after the close, we hear from MU.
In economic news coming later this week, on Friday we get June Mfg. PMI and June ISM Mfg. PMI.
On the earnings front, there are no reports on Friday, July 1.
The worst half since 1970 is coming to an end today and Mr. Market seems to be in a “give ’em more of the same” mood this morning. With the periods ending and a long weekend ahead, we should expect volatility and quite possibly dying volume in the afternoon (if traders head out to stretch that long weekend). Moreover, it looks like price might be heading down to test a “Dreaded h” pattern in all 3 major indices. So, caution is the watchword for today.
Don’t chase gaps. Demonstrate patience and wait for confirmation. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Remember that trading is our job. So, do the work and follow the process. And always, always, always move your stops in your favor. Remember the “Legend of the man in the green bathrobe“…it’s NOT house money, it’s all our money (so don’t give very damn much of it back). Also, the first rule of making big money in the market 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. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: UNP, MOS, XOM, TWTR, CSX, MSFT, AXP. 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.
🎯 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
Market worries about declining economic conditions left behind bearish reversal candle patterns on the index charts as the bears halted the recent relief rally. Today the question of whether the U.S. economy is or is not in recession will be answered before the bell with the release of the GDP report. What happens next is anyone’s guess, so plan your risk carefully as we will then wait for yet another Jerome Powell speech reaction. Adding in the end of the quarter price jockeying, expect the uncertainty and challenging price action to extend into the possible market-moving economic reports Thursday morning.
The Asia market’s wild price swings continued overnight as sellers regained control, with the Hong Kong’s tech-laden index falling 1.88%, leading all indexes lower by the close of trading. European markets focused on economic conditions trade in the red across the board this morning. As we wait on the GDP report, a Jerome Powell speech, U.S. futures point to bearish open. Recession or no recession, that is the question!
Economic Calendar
Earnings Calendar
Wednesday brings us a few more earnings events on the earnings calendar to add to the day’s price uncertainty. Notable reports include BEND, BBBY, CULP, DCT, GIS, MKC, NG, PDCO, PAYX, SCHN, SGH & UNF.
News & Technicals’
The Fed opted for a 75 basis point hike to its benchmark rate earlier this month, the most significant increase since 1994, with inflation running at a 40-year high. Mester — a voting member of the Federal Open Market Committee — said July’s meeting would likely involve a debate among FOMC policymakers over whether to opt for 50 or 75 basis points. Brendan Carr, one of the FCC’s commissioners, shared Tuesday via Twitter a letter to Apple CEO Tim Cook and Alphabet CEO Sundar Pichai that pointed to reports and other developments that made TikTok non-compliant with the two companies’ app store policies. Alphabet, Apple, and TikTok did not immediately respond to CNBC requests for comment. Carr’s letter, dated June 24 on FCC letterhead, said if Apple and Alphabet do not remove TikTok from their app stores, they should provide statements to him by July 8. Tesla is closing its office in San Mateo, California, where employees worked on improving the company’s driver assistance systems. The company is eliminating about 200 jobs along with the closure. Omicron is continuing to evolve into more contagious subvariants. Dr. Peter Marks, who heads the FDA’s vaccine division, said the U.S. faces a Covid outbreak this fall as vaccine immunity wanes and people spend more time indoors. Updating the shots to target omicron could provide more durable protection against the virus, though current supporting data is limited. Economists fear that “forever sanctions” on Russia, and Europe’s reliance on the country’s gas, mean the continent is suffering disproportionately. Reduced flows of Russian gas, and the lingering threat of a full supply disruption, have driven some European governments toward a reluctant return to coal. A European Commission energy spokesperson told CNBC that Gazprom and Moscow were using energy supplies as an “instrument of blackmail.” Treasury yields relaxed slightly in early Wednesday trading, with the 10-year dipping to 3.17% and the 30-year slipping to 3.29%.
Worries about the economic outlook brought the bears back to work yesterday after the morning gap and a brief surge higher. The pop and drop pattern left behind bearish reversal patterns near downtrends and price resistance levels punishing those that rushed in with a fear of missing out. The GDP number will finally settle the debate if the U.S economy has escaped recession or has already entered recession. How the market reacts to the data is anyone’s guess. However, the manufacturing numbers earlier this week indeed suggest a slowing economy that could soon produce an increase in jobless numbers this summer. Traders should also brace for the possible price volatility created by another Jerome Powell speech that has already been foreshowed by Mester’s 75 basis point increase in July. Buckle up for another day of uncertainty as the drama unfolds.
On Tuesday, markets gapped and then ran higher for a 1% gain across all 3 major indices during the first 10 minutes of the day. However, this was just a bull trap. From that point, we saw a steady and protracted selloff right into the close. This gives us Bearish Evening Star type signals in all 3 major indices and all 3 also gave up their T-lines (8ema). On the day, SPY lost 2.00%, DIA lost 1.57% and QQQ lost 3.05%. The VXX rose slightly to 22.78 and T2122 dropped back into the oversold territory at 17.11. 10-year bond yields fell slightly to 3.183% and Oil (WTI) gained 2% to $111.75/barrel.
Bloomberg reported new problems in the US supply chain. Due to the buildup in retailer inventories (ahead of the holiday season), and slowdowns by rail and trucking carriers, the largest ports in the US are dealing with over-flowing warehouses. This is due to a glut of containers awaiting shipment to the rest of the US. The volume of inbound containers has tripled since February. However, truck and rail carriers are unable to catch up. As a result, 28,000 containers sit in the Port of Los Angeles, with two-thirds of them have been waiting to be loaded on rail cars for more than 9 days. This comes just weeks before 115,000 rail workers may begin a strike on July 18 (after months of failed contract negotiations and, in addition, dock workers’ contracts also expires on this Friday. In the other (main) mode of transport, half of the truck loading gates remain unfilled daily, even as storage at both the ports of Los Angeles and Long Beach (which together handle over 42% of Asian import containers) sits at 99.7%. (Normally there is a vacancy rate of about 5%.) Put all together, these conditions can mean new (or worse) delays and shortages among manufacturers and retailers starting immediately.
In oil news, WTI surged another 2% Tuesday after it was reported that Saudi Arabia and the UAE have told the west they cannot increase production because they are near max production capacity. In addition, Reuters reported Monday that the Strategic Petroleum Reserve fell by 6.9 million barrels in the last week. This brings the SPR to less than 498 million barrels, which is the lowest level since 1986 (and down about one-third from the all-time high SPR level reached in 2010). With that all said, US oil production is still at the same level it was in 2019. So, the problem does not seem to be domestic production.
In business news, the board of DIS has extended the contract of CEO Bob Chapek for another 3 years. TSLA laid off 200 workers from its CA Autopilot team. PINS CEO Ben Silbermann stepped down after the close. Former GOOGL Commerce Unit President Bill Ready will take the vacated role. After the close it was announced that XOM and IMO will sell Canadian assets to SPGYF (Whitecap Resources) for $1.48 billion.
So far this morning, GIS and PDCO have both reported beats on the revenue and earnings lines. Meanwhile, MSM missed on revenue while beating on earnings. However, BBBY and MKC both missed on the top and bottom lines. (SCHN and UNF report at 8 am). In addition, BBBY reports that its CEO is leaving the company after they missed estimates by a large margin.
In technical analysis news, the S&P 500 closed back in the bearish market territory on Tuesday with only 65 of the 502 members managing to close in the green on the day. However, exactly half (251) of them remain above their T-line (8ema). This list includes XOM, OXY, UNH, QCOM, KO, PFE, PG, MRK, BA, BMY, and ABBV. At the same time, 70 of the 502 are above their 50sma, including XOM, UNH, PFE, MRK, BMY, and ABBV.
On the mortgage front, after an odd increase in mortgage applications, the demand for loans was basically flat last week. Even as the average interest rate fell to 5.84% from the prior week’s 5.98%, loan applications did not change much. New home purchase loan applications rose 0.1% (but were still 24% lower than one year ago) while new home loan applications rose 2% (but were still down 80% from one year ago).
Overnight, Asian markets were red across the board. Shenzhen (-2.20%), Hong Kong (-1.88%), and South Korea (-1.82%) led the way lower. However, losses were widespread with only a couple of the smaller exchanges managing to lose less than a quarter of one percent. In Europe, stocks are not universally in the red, but only two minor exchanges are managing to hold on to the green side of flat at mid-day (and only by their fingernails). The FTSE (-0.59%) lags but the DAX (-2.00%) and CAC (-1.27%) are typical of the region in early afternoon trading. As of 7:30 am, US Futures are pointing toward a slightly lower start to the day. The DIA implies a -0.08% open, the SPY is implying a -0.23% open, and the QQQ implies a -0.35% open at this hour. 10-year bond yields are down to 3.162% and Oil (WTI) is up 1% to $112.89/barrel in early trading.
The major economic news events scheduled for release Wednesday, we get Q1 GDP (final rev at 8:30), Crude Oil Inventories (10:30), and 3 Fed speakers (Mester at 6:30 am, Chair Powell at 9 am, and Bullard at 1:05 pm). On the earnings front, we get reports from BBBY, GIS, MKC, MSM, PDCO, PAYX, SCHN, and UNF before the open. Then, after the close, we hear from MLKN and SGH.
In economic news coming later this week, on Thursday, we get May PCE Price Index, Initial Jobless Claims, May Personal Spending, and Chicago PMI. Finally, on Friday we get June Mfg. PMI and June ISM Mfg. PMI. There will also be the ECB Central Banking forum (6/27-6/29) where both Fed Chair Powell and ECB President Lagarde speak.
On the earnings front, on Thursday, we get reports from AYI, STZ, WBA, and MU. There are no reports on Friday, July 1.
Yesterday’s much lower than expected Consumer Confidence number caused a tech rout as traders fled from growth stocks. Not only did this hit stocks, but Bitcoin is back below $20,000 again this morning. Central Bankers are not helping matters as markets watch the ECB Central Bank Forum for clues and, so far, the speeches have all pointed toward bigger and faster hikes as Euro ara inflation data gave mixed signals. (German inflation came in lower than expected while some others came in higher. Spain unexpectedly printed a double-digit inflation number.) Today the speakers will also be key with Fed Chair Powell speaking as well as BoE Governor Bailey, and ECB President Lagarde. With this all said, this may not be the day for any major new moves by traders. Month/Quarter/Half end is fast approaching, we have a long weekend ahead, and uncertainty is the rule in markets now.
Demonstrate patience and wait for confirmation. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Remember that trading is our job. So, do the work and follow the process. And always, always, always move your stops in your favor. Remember the “Legend of the man in the green bathrobe“…it’s NOT house money, it’s all our money (so don’t give very damn much of it back). Also, the first rule of making big money in the market 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. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: SQQQ, TZA, SDS, CVX, SU, LYFT, AMD, M, AMAT, TNA, BITO. 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.
🎯 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
Though we began the day with a bullish gap up, we spent the rest of the day in an uncertain chop zone that finally came to rest at the close, mostly lower. When we pair the typical end-of-quarter window dressing possibility, a GDP number that could show us in recession with index downtrends and significant overhead resistance, it’s easy to understand the uncertainty of what comes next. So, expect price volatility as we wait for the GDP reading and another dose of Jerome Powell’s tough talk on inflation. Plan your risk carefully as anything is possible.
Asian markets continued the bear market rally overnight, closing Tuesday trading with modest gains. European markets trade green across the board this morning as the ECB downplays inflation. U.S. futures point to another gap up open toward overhead resistance levels ahead of trade and consumer confidence reports. Avoid the fear of missing out as we stretch higher and near technical resistance levels as we wait on the GDP report.
Economic Calendar
Earnings Calendar
With just three days left until the end of the quarter, we have light days on the earnings calendar. Notable reports include AVAV, CGNT, EPAC, SNX, AMED & PRGS.
News & Technicals’
JPMorgan Chase and Citigroup said Monday that increasingly stringent capital requirements forced the firms to keep their dividend unchanged while rivals announced bumps to their quarterly payouts. Bank of America said that it was raising its quarterly dividend by 5% to 22 cents per share. Morgan Stanley said it raised the payout 11% to 77.5 cents per share. Wells Fargo boosted its dividend by 20% to 30 cents a share. Goldman Sachs appeared to have one of the larger dividend increases, a 25% bump to $2.50 per share. Investors are concerned about high inflation and have been closely tracking what the ECB is saying, but Lagard plays down recession risks. They are also wary of the high levels of debt in Europe, particularly Italy, and how a return to tighter monetary policy could become a financial constraint for these economies. However, Legard says the ECB is ready to move faster on rates if needed. Overseas travelers will only need to quarantine at a centralized facility, such as a hotel, for seven days upon arrival in mainland China, the National Health Commission announced Tuesday. Previously, overseas arrivals in China typically had to spend 14 to 21 days in centralized quarantine, depending on the country’s city of entry and destination. Tuesday’s announcement also said that within China, close contacts of confirmed Covid cases would likewise only need to spend seven days in centralized quarantine, followed by three days of health monitoring at home. Credit Suisse vows to forge ahead with its risk management overhaul, despite what its CEO called a “challenging” environment. The embattled Swiss lender will hold an Investor Deep Dive event Tuesday, setting out reforms across its risk, compliance, technology, and operations functions, along with the wealth management business. The embattled Swiss lender will hold an Investor Deep Dive event Tuesday, setting out reforms across its risk, compliance, technology, and operations functions, along with the wealth management business. Treasury yields moved slightly higher in early Tuesday trading, with the 10-year rising to 2.23% and the 30-year increase to 3.34%.
After gaping up, the market price action spent the day in an uncertain chop, ultimately ending the day moslty lower. While we can’t rule out the possibility of some end-of-quarter window dressing, the pending GDP could show us we are already in a recession and adds a significant dose of uncertainty. We should also consider the possibility of a choppy consolidation as we wait on 3rd quarter earnings to begin, which could prove challenging due to the state of the economy and the inflationary pressures. Finally, we will get the latest reading on the International Trade in Good numbers before the bell, followed by Case-Shiller and Consumer Confidence to keep us guessing what comes next. Plan your risk carefully, remembering Wednesday morning before the open, and we get the GDP report and more Fed from Jerome Powell.
Stocks gapped very modestly higher at the open Monday but immediately sold off about 3 times more than the opening gap rose…all before reversing once again. This whipsaw action continued, with price spending the afternoon on the downside of the previous close. Overall, this gave us a small bearish move on the day. This left us with black-body candles that did not quite qualify as Dark Cloud Cover candles above the T-line in all 3 major indices. Six of the 10 sectors were bullish and 4 of the sectors were bearish. However, Energy made by far the biggest move, up over 3.25% on the day. With that said, SPY lost 0.37%, DIA lost 0.18%, and QQQ lost 0.70% on the day. The VXX fell 2.25% to 22.60 and T2122 dropped a little further down in the mid-range to 63.86. 10-year bond yields rose to 3.207% and Oil (WTI) climbed almost 2% to $109.74/barrel on the day.
In economic news, May Durable Goods Orders and May Pending Home Sales both came in much higher than expected. The Pending Home Sales number is particularly surprising since interest rates rose overall during the month. These two reports tend to suggest consumers are still willing and able to make major purchases. This stands in conflict with a CNBC report Monday (of a Lending Club report) that said that 58% of Americans are now living paycheck-to-paycheck.
In business news, Bloomberg reported that crypto exchange FTX is considering acquiring HOOD. (Last month the CEO of FTX took a 7.6% stake in HOOD.) As a result, HOOD traded in a 24% range on the day, closing up 14%. However, after the close, FTX CEO Bankman-Fried said there were no active M&A conversations taking place with HOOD at this point. Elsewhere, AAL regional carriers (subsidiaries) are offering pilots triple pay to pick up flights during July. Perhaps in a hint of waning demand, AMZN announced it will be holding a second “Prime Day” sale this year (the original Prime Day is July 12-13) in Q4. After the close, BAC said it will raise its dividend by 5%. Meanwhile, MS raised its dividend by 11% and approved a new $20 billion share buyback plan as of the start of Q3.
After the close, NKE and TCOM both reported beats on both the top and bottom lines. However, CNXC missed on revenue while beating on earnings. On the other side, JEF reported a beat on revenue while missing on earnings. So far this morning, SNX reported beats on both lines.
In technical analysis news, 112 of the S&P500 components are trading above their 50sma. These include GOOGL, GOOG, UNH, JNJ, CRM, PFE, MRK, BMY, ABBV, and VZ. Of that same group, BMY and LLY are trading at 52-week highs. However, 421 of the 502 are trading above their T-line (8ema).
In China news, the second-largest economy has now begun easing its “Covid Zero” policy restrictions. Foreign travelers have had their “quarantine on entry” time cut in half. At the same time, regional lockdowns have been lifted in many areas as covid rates have fallen. In addition, for the first time since January 2020, Chinese President Xi will be traveling (but not too far) as he visits Hong Kong later this week. Markets have taken all these announcements positively.
On the Russian invasion story, Russia continues its missile strikes on Kiev and other Western Ukrainian cities. Most infamous of these was a strike on a shopping mall in the city of Kremenchuk. G-7 leaders have labeled the attack a “war crime” as they are urgently discussing how they can reduce the price Russia receives for oil, thus actually reducing Russian revenues for the first time since the start of the war. However, it is unclear (to say the least) that they can impact the price China or India pay Russia for oil. The suggestion is that the G-7 can dictate the terms of shipping insurance to only cover oil below a certain limit price. Separately, NATO announced it will be increasing the size of its “high readiness” forces in the Eastern part of the alliance to over 300,000 troops. Also, Ukraine is now going to receive 3 Turkish Bayraktar TB2 attack drones at no cost after a crowdfunding campaign has paid for those weapons.
Overnight, Asian markets were green across the board. Hong Kong (+2.35%), Australia (+1.94%), and New Zealand (+1.70%) paced the gains with Malaysia (+0.10%) a lagging outlier. In Europe, stocks are mostly following Asia at mid-day. The FTSE (+0.67%), and DAX (+0.87%), are leading the region higher with the CAC (+0.01%) and two minor exchanges either red or barely green in early afternoon trading. As of 7:30 am, US Futures are pointing toward a modest gap higher to start the day. The DIA implies a +0.36% open, the SPY is implying a +0.47% open, and the QQQ implies a +0.61% open at this hour. 10-year bond yields are off a bit to 3.166% and Oil (WTI) is up half of a percent to $108.12/barrel in early trading.
The major economic news events scheduled for release Tuesday include May Goods Trade Balance and May Retail Inventories (both at 8:30 am), and Conf. Board Consumer Confidence (10 am). On the earnings front, we get a report from SNX before the open. However, there are no major reports scheduled after the close.
In economic news coming later this week, on Wednesday, we get Q1 GDP, Crude Oil Inventories, and 2 Fed speakers. On Thursday, we get May PCE Price Index, Initial Jobless Claims, May Personal Spending, and Chicago PMI. Finally, on Friday we get June Mfg. PMI and June ISM Mfg. PMI. There will also be the ECB Central Banking forum (6/27-6/29) where both Fed Chair Powell and ECB President Lagarde speak.
On the earnings front, on Wednesday we get reports from BBBY, GIS, MKC, MSM, PDCO, PAYX, SCHN, UNF, MLKN, and SGH. Thursday, we get reports from AYI, STZ, WBA, and MU. There are no reports on Friday, July 1.
Stocks seem to be setting up for a modest gap higher again. Just be sure to remember that yesterday’s gap was met with reversal and whipsaw action has been the norm for quite some time. So, if you chase a gap, be prepared to take the volatility. GS analysts warned that the upcoming quarter’s earnings estimates are too high. While this may end up being true, that is a statement about the average and not very useful on any specific trade. The mid and longer-term trends remain strongly bearish, while the trend this week is strongly bullish. In addition, we are neither oversold nor over-bought at this point. Caution remains the watchword. Small, nimble, and/or hedged are not bad things. Bear in mind that “slow and steady” wins the race.
Demonstrate patience and wait for confirmation. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Remember that trading is our job. So, do the work and follow the process. And always, always, always move your stops in your favor. Remember the “Legend of the man in the green bathrobe“…it’s NOT house money, it’s all our money (so don’t give very damn much of it back). Also, the first rule of making big money in the market 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. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: STNG, BANF, BA, TGT, TUP, WMT, NFLX, QID, CVNA, AAPL, FNGU. 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.
🎯 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
Traders that jumped in on the Friday buying surge are hoping the bear market relief rally can follow through as we slide toward the end of the 2nd quarter. There is, of course, the possibility of an end-of-quarter window dressing, but with down-trend and overhead resistance levels above, the bulls will have their work cut out for them. This morning we face the Durable Goods and Existing Home Sales economic reports that analyses expect to both show declines. Plan for some price volatility as the data is released, and prepare for just about anything with the threat of recession on the horizon.
Asia markets rallied overnight after the strong Friday surge in the U.S. as the Hong Kong tech sector rose 2.35%. European markets are also bullish this morning; however, they seem much more tentative ahead of potential market-moving data. U.S. futures recovered from early losses to point toward a bullish open, hoping that the economic data won’t derail the relief rally. So, plan carefully and keep a close eye on the overhead resistance that the bears may work to defend.
Economic Calendar
Earnings Calendar
Winding down the 2nd quarter, we have a light day to begin the week. Notable reports include NKE, CIDM, DLNG, & JEF.
News & Technicals’
Interest payments totaling $100 million were due on May 27 and were subject to a grace period that expired on Sunday night as Russia faces a historic default. Sweeping sanctions imposed by Western powers in response to Russia’s invasion of Ukraine and countermeasures from Moscow have effectively ostracized the country from the global financial system. Bolstering the defense of the Baltic region is seen as one of the most critical decisions for NATO leaders to take at the group’s June 29-30 summit. The 30-member military alliance is poised to reflect on how the group can respond to Europe’s new security reality in the wake of Russia’s onslaught in Ukraine. “We need to move to deterrence by denial. We need a credible military construct on the Eastern flank that will deter Putin,” a spokesperson at Estonia’s foreign ministry told CNBC. Three Arrows Capital, a crypto-focused hedge fund, has to meet a deadline on Monday to repay more than $670 million in loans to Voyager Digital or face default. Voyager said it “intends to pursue recovery from 3AC” and is talking to its advisors “regarding legal remedies available.” Three Arrows Capital, or 3AC, is facing a liquidity crisis after the collapse of terraUSD and luna, margin calls on its loans, and a massive slump in the crypto market. U.K. tax officials recently fined wise CEO and co-founder Kristo Kaarmann £365,651 for defaulting on his taxes. The Financial Conduct Authority has now opened an investigation into the matter. The probe could have significant ramifications for Wise and its chief executive. Vast container ships and chunky freight planes — essential in today’s global economy — can now be brought to a halt by a new generation of code warriors. “The reality is that an airplane or vessel, like any digital system, can be hacked,” David Emm, a principal security researcher at Kaspersky, told CNBC. In December, German firm Hellmann Worldwide Logistics said a phishing attack had impacted its operations. Treasury Yields begin the week Higher with the 10-year pricing at 3.16% and the 30-year trading at 3.30% early Monday price action.
The Friday surge upward raised hopes that a bear market relief rally can find some follow-through bullish energy. Futures began trading in the red but reversed higher as Asian bulls went to work following the Friday U.S. rally. However, this morning traders will turn their attention to the Durable Goods report, and Pending Home Sales figures that consensus suggests could show declines. At the same time, the T2122 indicator though it moved substantially higher on Friday, still has some upside potential if the bulls can remain inspired. With significant overhead resistance just above and the worries of a possible recession with the Wednesday GDP report, it would not be a surprise if the bears remain active defending the downtrends, so the bulls will have their work cut out for them! Plan carefully, respect overhead resistance and expect price action to remain challenging in the days ahead.
Major indices gapped 0.8%-1% higher at the open Friday and followed-through sharply to the upside the first 30 minutes of the day. However, from that point, all 3 major indices ground sideways in a tight range until the bulls stepped in at about 3:30 pm to surge into the close. All 3 are now well above their T-line (8ema) and printing large, gap-up, white candles with no lower wick and little upper wick. The SPY definitely qualifies as a Marubozu candle. On the day, SPY gained 3.18%, DIA gained 2.70%, and QQQ gained 3.43%. The VXX fell more than one percent to 23.12 and T2122 remains in the mid-range, but are now near the top-end of that range at 70.29. 10-year bond yields rose to 3.136% and Oil (WTI) pulled back late, but still closed up 2.75% to $107.14/barrel. All-in-all, this completed the first up week of the month for any of the major indices, delivering 5.5% to 7.25% gains for the week of needed over-extension relief. However, with 30 minutes left in the day, all this action has taken place on low volume.
In economic news, on Friday Fed member James Bullard (extreme hawk) said that the fears of a recession are overblown, with “consumers flush with cash built up over the pandemic.” In a similar vein, the IMF announced that they forecast the US will narrowly escape from having a recession in both the remainder of this year and 2023. However, in data released by the Census Bureau Friday, it was reported that 15% of renters (8.4 million Americans) are behind on rent payments, with 3 million at risk of eviction within the next two months. In a tangentially related story, on Friday, Fed Dove Daly joined the FOMC members who publicly say they are open to a 75 basis point hike in July.
In business news, after the close Friday, ULCC sweetened its offer to buy SAVE. The new offer is $4.13/share ($2/share higher than the original bid). This comes after JBLU had also increased its own bid for SAVE. Shareholders of SAVE are set to vote on the takeover offers on Thursday. Also, after the close, CVX announced it will sell it its CA campus and move the company headquarters to TX. The company cited real estate market values and the opportunity to “right-size” its headquarters staff and facilities. The move is expected to come during Q3 of 2023.
As the month, quarter, and half-year all come to a close this week, some analysts (JPM and GS for example) are calling for a pop. (Unless we rally hard early this week, we are looking at the worst market performance for six months since 1970.) The idea behind these analyst calls is that both funds and individual investors will be reallocating their accounts to take advantage of the better valuations and to prepare for the slower economy expected ahead. They also note that this reallocation will be coming in front of another long holiday weekend, meaning they expect traders to be in a better mood (potentially feeling better about buying). However, remember that for any longer-term trades, earnings season kicks off again in mid-July.
On the Russian invasion story, we are now more than 4 months into Russia’s “4 day war.” The grace period on Russian bond debt payments expired Sunday. This means that Russia is now technically in default. It also means that bond giant Pimco is now on the hook for about $2 billion in credit default swaps it bought up just prior to the February invasion. In sanction news, Russia has decided to block rail traffic to Poland in retaliation for Lithuanian blocking of sanctioned cargo being shipped from Russia to Kaliningrad (Konigsberg) by road or rail. While the EU tried to back down after the threat to Poland, the Lithuanian PM is standing strong on the sanction. Elsewhere, Russian hackers stepped up attacks on western (mostly US) targets last weekend. The (likely FSB-controlled) hackers claim they have successfully hacked US infrastructure. Specifically, they say they hacked XOM (shutting down XOM “Rewards+” fuel cards) nationally and hit SHEL systems in Texas. Then on Sunday, the G-7 announced more sanctions on Russia, including a prohibition on importing Russian Gold.
In cryptocurrency news, (and as reported here in the past), Three Arrows Capital (a large crypto-focused hedge fund) is in jeopardy of defaulting on $675 million in loans. With the Monday payment deadline at hand, the company is facing a liquidity crisis after its entanglement with the collapse of the TerraUSD and Luna stablecoins. This plus the (perhaps related) collapse of cryptocurrency prices has 3AC hurting for cash as it already missed a 6/24 payment, meaning the whole $675 million loan is due today.
In technical analysis news, 10 of the DJIA 30 are trading above their 50sma. These include MSFT, CRM, V, VZ, JNJ, UNH, IBM, MCD, MRK, and AMGN. Interestingly, only 3 of the DJIA have a 50sma that is rising, including JNJ, IBM, and MRK. However, all but 3 of the 30 are trading above their T-line (8ema). Those 2 laggards are CVX, CAT, and DOW.
Overnight, Asian markets were green across the board. Hong Kong (+2.35%), Australia (+1.94%), and New Zealand (+1.70%) paced the gains with Malaysia (+0.10%) a lagging outlier. In Europe, stocks are mostly following Asia at mid-day. The FTSE (+0.67%), and DAX (+0.87%), are leading the region higher with the CAC (+0.01%) and two minor exchanges either red or barely green in early afternoon trading. As of 7:30 am, US Futures are pointing toward a modest gap higher to start the day. The DIA implies a +0.36% open, the SPY is implying a +0.47% open, and the QQQ implies a +0.61% open at this hour. 10-year bond yields are off a bit to 3.166% and Oil (WTI) is up half of a percent to $108.12/barrel in early trading.
The major economic news events scheduled for release Monday are limited to May Durable Goods Orders (8:30 am) and May Pending Home Sales (10 am). On the earnings front, there are no reports scheduled before the open. However, after the close, we hear from SNXC, JEF, NKE, and TCOM.
In economic news coming later this week, on Tuesday we get May Goods Trade Balance, May Retail Inventories, and Conf. Board Consumer Confidence. Then Wednesday, we get Q1 GDP, Crude Oil Inventories, and 2 Fed speakers. On Thursday, we get May PCE Price Index, Initial Jobless Claims, May Personal Spending, and Chicago PMI. Finally, on Friday we get June Mfg. PMI and June ISM Mfg. PMI. There will also be the ECB Central Banking forum (6/27-6/29) where both Fed Chair Powell and ECB President Lagarde speak.
On the earnings front, on Tuesday, we hear from SNX. Then on Wednesday, we get reports from BBBY, GIS, MKC, MSM, PDCO, PAYX, SCHN, UNF, MLKN, and SGH. Thursday, we get reports from AYI, STZ, WBA, and MU. There are no reports on Friday, July 1.
The bulls may well be following the weekend forecasts of GS and JPM and rallying into the coming end of the period and holiday. However, volatility is still the watchword in both the stock and bond markets. Intraday reversals and whipsaw action have been almost daily occurrences recently. So, caution and nimbleness remain the smart plays. Don’t be in a hurry to chase that gap. As the saying goes, slow is smooth, and smooth is fast. The mid-term and long-term trends remain strongly bearish, while the trend this week is strongly bullish. Just consider whether this is a market where you have an edge before you get into too many or too large of a position.
As always, remember that trading is our job. So, do the work and follow the process. Demonstrate patience and wait for confirmation. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Always, always, always move your stops in your favor. Remember the “Legend of the man in the green bathrobe“…it’s not house money, it’s all our money (so don’t give very damn much of it back). Also, the first rule of making big money in the market 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. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: ACCD, CHWY, PLTR, DKNG, ARKK, TTWO, SBUX, ZS, ZM, SNOW. 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.
🎯 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.
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