Although the bulls enthusiastically started the day with a relief rally in mind, the shrinking global PMI figures quickly took the wind out of their sails. As a result, the indexes remain in a short-term oversold condition with price support levels failing and the technical damage piling on insult to injury. Though we are overdue for some relief, we face a wave of Fed speakers today and an ECB rate decision tomorrow, followed by Jerome Powell. Will the bulls find inspiration there, or will the rate increase fears continue to fuel the bears? We will soon find out but expect the price action to remain challenging and volatile.
Asia markets traded mostly lower overnight as China’s trade data missed expectations. With an ECB rate decision in sight and growing fears of recession, European markets trade in the red across the board this morning. With little market-moving data from earnings, U.S. futures indicate a flat to slightly bullish open filled with Fed speak and the Beige Book later this afternoon. So, fasten your seatbelts tightly and stay focused because anything is possible.
Economic Calendar
Earnings Calendar
On the midweek earnings calendar, we have about 30 companies listed with less than 20 verified reports. Notable reports include ASO, AVAV, AEO, CASY, PLAY, GIII, GME, KFY, NIO, REVG, & VRNT.
News & Technicals’
Russian President Vladimir Putin slammed the West again on Wednesday, saying sanctions imposed on Russia for its invasion of Ukraine are a “danger” to the world. Putin said the current global geopolitical crisis had been precipitated by the U.S.’s “slipping dominance” in global politics and economics. He said the West had been reluctant to recognize “irreversible tectonic shifts” in international relations, particularly a pivot east. U.S. President Joe Biden has called Putin a “war criminal.” Google and Alphabet CEO Sundar Pichai gave more details about how he is thinking of making Google run “on fewer resources” as it faces a slew of challenges to its businesses. Pichai said he hopes to improve efficiency by 20%. He gave past examples of cutting down a team and merging two products into one. Bitcoin traded below $19,000 on Wednesday, hitting its lowest level since June following a global drop in stock markets and the U.S. dollar’s continued strength. The value of the entire cryptocurrency market also fell below $1 trillion as digital coins across the board saw a sell-off. Policy tightening by the Fed has strengthened the U.S. dollar, which has weighed on risk assets. Bitcoin has traded in correlation to stocks, so if equities fall, in general, so does cryptocurrency.
A recession is inevitable, says the CEO of Deutsche Bank, and Germany must cut its reliance on China. Sewing said Russia’s invasion of Ukraine had shone a spotlight on the dangers of becoming too dependent on individual countries and regions. “When it comes to dependencies, we also have to face the awkward question of how to deal with China,” he said. European economies are facing an energy crisis and soaring prices over the coming months. There have been concerns in some quarters that the increasing cost of charging an EV will disincentivize uptake among consumers. “The cost advantage for electric vehicles versus a gasoline car is fast diminishing here in Europe, and I’m wondering to what degree that will begin to impact EV sales,” Saxo Bank’s Peter Garnry tells CNBC. Treasury yields pull back slightly in early Wednesday trading, with the 12-month at 3.57%, the 2-year at 3.47%, the 5-year at 3.42%, the 10-year at 3.32%, and 30-year at 3.48%.
The bulls tested the waters for a relief rally only to run into the shrinking global PMI report and quickly lost the edge to the bears. Unfortunately, the price action and technical damage continue to grow as supports give way to additional selling as the short-term oversold condition extends. Perhaps traders extending their holiday played a part, but the slowing global economy and fears of rate increases have taken a toll on sentiment. Today we will get a reading on International Trade followed by a wave of Fed speakers. Keep in mind the ECB is expected to raise rates by 75 basis points tomorrow, and then we will hear from Jerome Powell. Plan your risk carefully!
Stocks gapped slightly higher (about 0.25%) at the open Monday. However, that was another bull trap as the bears immediately stepped in to sell off the 3 major indices for the first hour. The bulls did step back in to rally us back to the highs of the day shortly after 11 am. Still, that was the end of the bull’s strength as all 3 major indices oscillated lower the rest of the day, closing midway between the lows and the previous day’s close. This action left us with somewhat indecisive Black Spinning Top type candles across all the major indices.
On the day, all 10 sectors were in the red with Industrials (-0.01%) just barely below break-even and Energy (-1.35%) leading the market lower. The SPY lost 0.39%, DIA lost 0.50%, and QQQ lost 0.72%. This all happened on very slightly above-average volume. The VXX gained eight-tenths of a percent to 19.25 and T2122 fell even further into the oversold territory at 6.06. 10-year bond yields spiked higher to 3.342% and Oil (WTI) was just south of flat at $86.70/barrel.
In stock news, AIG announced that its upcoming IPO of its Corebridge Financial (CRBG) will be priced between $21 and $24 per share and they expect to raise $1.92 billion on the IPO. Elsewhere, NWL cut its forward guidance after hours, citing a deteriorating economic climate and inflationary pressure. Then after the close, Reuters reported that sources tell them that CVS’s weekend acquisition of SGFY is likely to face stiff antitrust regulator opposition from the FTC. Finally, in an attempt to steal AAPL’s thunder (AAPL holds its iPhone 14 launch event today), Tuesday afternoon GOOGL announced their new Pixel watch and Pixel 7 phones (running Android 13) will go on sale on October 6.
In miscellaneous news, the dollar continued to be strong and gained against the Euro and Yen after the July ISM Services PMI showed edged higher (56.9 vs. 56.7 in June and Economist forecasts of 54.7). The Yen reached another 24-year low of 142 Yen per dollar on that move. Elsewhere, after hours, Reuters reported that CEOs from banks (BAC. TFC, and MTB) all said consumers and businesses are still in good financial shape. Despite inflation and fear of recession, consumers spent 10% more in August than the same month in 2021. In addition, bank account balances are higher than even before the pandemic according to those bank CEOs.
In energy news, for the second consecutive day, California narrowly averted blackouts. Scorching temperatures above 100 pushed electrical demand to record levels again. At 5:30 pm Pacific, California’s grid operator ordered its highest level of emergency, warning that blackouts were imminent and the CA Office of Emergency Services then asked people to turn off electrical devices. Within 5 minutes electric demand dropped significantly and the crisis was avoided (at least for the moment). However, this was a tight-run affair and the CA electric demand is very near a crisis that could shut down (or at least slow down) the state’s business operations while electric supply is very tight (read: while the heatwave persists).
In real estate-related news, mortgage demand dropped again as the national average rate for a 30-year, fixed-rate, conforming loan rose from 5.80% to 5.94%. Refinance loan applications fell another 1% on the week (83% lower than the same week in 2021) and new home purchase loan applications also fell 1% (23% lower than last year). In other real estate news, the big banks (GS, MS, JPM, etc.) have now removed the final hurdles to full-time employees returning to the office. There are some exceptions as C is being more flexible in allowing workers to use a hybrid remote / in-office schedule.
So far this morning, NIO beat on revenue while missing on earnings. KFY and GIII both came in in-line on revenue while missing on earnings. Meanwhile, REVG came in in-line on revenue while beating on earnings.
Overnight, Asian markets were mixed but leaned to the red side. Taiwan (-1.82%), Australia (-1.42%), and South Korea (-1.39%) led the region lower as China’s trade data missed expectations amid “Zero Covid” shutdowns in various parts of that country. In Europe, we see even more red at mid-day. The FTSE (-0.59%), DAX (-0.39%), and CAC (-0.32%) are leading the region lower with only Spain (+0.55%) showing any significant green in early afternoon trade. As of 7:30 am, US Futures are pointing toward a flat start to the day. The DIA implies a +0.09% open, the SPY is implying a +0.12% open, and the QQQ implies a +0.13% open at this hour. 10-year bond yields are down a bit to 3.324% and Oil (WTI) is up a quarter of a percent in early trading.
The major economic news events scheduled for Wednesday are limited to July Import/Exports and July Trade Balance (8:30 am) and Fed Beige Book (2 pm). However, there are also 3 Fed speakers (Mester at 10 am, Brainard at 12:40 pm, and Vice Chair Barr at 2 pm). The major earnings reports scheduled for the day include ASO, GIII, KFY, NIO, and REVG before the open. Then after the close, AEO, CASY, CPRT, and GME report.
In economic news later this week, on Thursday, Weekly Jobless Claims and Weekly Oil Inventories are reported. Finally, on Friday, there are no major economic reports.
In terms of earnings later this week, on Thursday, we hear from BILI, DOCU, and RH report. Finally, on Friday, we hear from ABM, KR, and WDH.
In the watch and phone announcement noted above, GOOGL CEO Pichai said he hopes to improve the company’s efficiency by 20% and that could include a headcount reduction. This is just the latest example of companies fearing a recession or at least an economic slowdown. Elsewhere, be aware that analysts are now expecting the Central Bank of Canada to hike interest rates 0.75% at 10 am today. This may have a modest impact on US markets.
The downtrend remains in place, but the extension to the downside also remains extreme. The premarket indices continue to be flat but are just now on the red side of that break-even line. The SPY is sitting at a potential support level, but the DIA and QQQ support is much less discernable. Expect chop and be very careful about chasing any move as it is likely to be a precursor to reversal.
Remember that trading is our job, not a pastime or hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). 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, Rick is on vacation visiting a gandbaby. 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
The Friday early bullishness ended with a nasty pop and drop, extending the short-term substantial oversold condition of the index charts. However, a ray of relief rally hope may have been left behind with the ViX unable to make a new high and some possible tweezer bottom candle patterns. That said, I think we should keep a close eye on overhead price resistance levels for more bearish activity with global economic conditions slowing. Expect price action to remain challenging in the days and weeks ahead.
Asian markets traded mixed as we slept with the Australian Central Bank raising rates by 50 basis points. European markets trade in the green hoping for a bit of relief as they welcome a new U. K. Prime Minster. Finally, with a light day of earnings, PMI, and ISM numbers around the corner, U.S. futures point to a bullish open, hoping to relieve recent selling pressure. Plan your risk carefully and expect volatility to remain challenging.
Economic Calendar
Earnings Calendar
We have a light earnings calendar to begin this shortened trading week. Though there are about 20 companies listed, most are small, low-volume companies. Notables for today include COUP, GWRE & PATH.
News & Technicals’
CVS said it would acquire Signify Health for $30.50 per share in cash. The deal marks a big push by CVS into the in-home health care space. Signify announced its decision to explore strategic alternatives in early August. Analysts said that OPEC+’s decision to implement a small production output cut is more of a political statement and symbolic message sent by the alliance. On Monday, the group announced a small oil production cut of 100,000 barrels per day to bolster prices. Just last month, OPEC+ decided to raise oil output by the same target of 100,000 barrels per day. The analysts were also skeptical about the efficacy of price caps on Russian oil. As Liz Truss becomes Britain’s new prime minister on Tuesday, questions are being raised over her plans for the U.K.’s historic financial district: the City of London. A re-merging of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) could be on the cards, but one former insider asks if it’s change for change’s sake. The “battle” to deregulate the banking sector is like “winding the clock back to the pre-2008 global financial crash,” campaign group head Fran Boait said.
“I have said this a number of times this year and I’m educating policymakers. Look, the worst is still to come,” Uniper CEO Klaus-Dieter Maubach told CNBC on Tuesday at Gastech 2022 in Milan, Italy. On Friday, Russia’s state-owned energy giant Gazprom indefinitely halted gas flows to Europe via a major pipeline, stoking fears that parts of Europe could be forced to ration energy through winter. Uniper, as Germany’s biggest importer of gas, has been hit hard by vastly reduced gas flows via pipelines from Russia, which have sent prices soaring. Apple is gaining momentum in online advertising, while Facebook and Google appear to be losing steam. Apple’s ad platform for app developers mirrors the rise of Amazon’s ad business for retailers. TikTok overtook Snap at the bottom tier of online ad platforms. Bond yields traded higher Tuesday morning, with the 12-month at 3.46%, the 2-year at 3.45%, the 5-year at 3.35%, the 10-year at 3.24%, and the 30-year at 3.38%.
Friday’s pop and drop may not have been a big surprise, but it was disappointing all the same due to the short-term, substantial oversold condition on the index charts. However, there may be a bit of a silver lining with some tweaser bottom candle patterns left behind and a VIX unable to break recent highs. Perhaps this holiday-shortened week can produce some needed relief to the selling! However, please don’t mistake my hopefulness for some relief as bullishness. I think a rally could set up short positions as the world economic picture continues to slow ahead of the central bank rate increases. If traders extend their holiday plans, it is possible we could see a light volume day but continue to plan for price volatility in the days ahead.
Counterintuitively, stocks gapped higher at the open Friday after better-than-expected August Payrolls (+315k vs. +300k forecast) which would logically be seen as helping to lead the Fed to a larger September Rate hike that one would think the bulls would hate. However, maybe traders were hanging their hats on the oddly higher Unemployment rate which rose to 3.7% as opposed to the previous (and expected) 3.5%, which could be seen as giving the Fed cover for a smaller hike. In either case, after some volatility and a 2-hour sideways grind, all 3 major indices sold off hard about noon and then took another leg down about 3:15 pm. This action left us with large Bearish Engulfing candles that failed a retest of the T-line (8ema).
On the day, 8 of the 10 sectors were red with Healthcare (-1.25%) and Technology (-1.11%) leading the market lower. Energy (+2.06%) was an outlier on the other side due to G7 agreeing to try to limit the price Russia can get for its oil and, probably not coincidentally, Gazprom shut down natural gas flows to Europe but also announced it had “found a leak” and can no longer commit to restart the gas flows September 3 as previously planned. The SPY lost 1.05%, the DIA lost 1.04%, and QQQ lost 1.41%. (This capped off a terrible third-straight down week for the major indices. On the week, SPY lost 3.22%, DIA lost 2.84%, and QQQ lost 3.99%.) VXX fell almost 2% on the day to 19.09 and T2122 climbed but remains deep in oversold territory at 10.70. 10-year bond yields fell to 3.195% and Oil (WTI) rose modestly to $87.19/barrel.
In stock news, Friday afternoon it was announced that for the first time AAPL iPhones account for more than half (just over 50%) of all US smartphones. Elsewhere (also Friday afternoon) the CFO of BBBY committed suicide by jumping from his high-rise apartment balcony. This leaves BBBY without a CEO or CFO as it works to compile its quarterly report for the period ending August 27. Bloomberg reported Saturday that AMZN has now abandoned dozens of existing and planned delivery facilities around the US as sales have slowed in the post-pandemic period.
In Forex news, the Euro sank to a new 20-year low (below $0.99) Monday following the news Russia will not reopen the Nord Stream One gas pipeline. However, the Euro recovered a bit to the $0.99 level within 6 hours. Meanwhile, the British Pound hit a 2-year low against the dollar as the UK’s Tory Party selected Liz Truss as its new leader and therefore also new Prime Minister. After her selection, she vowed to cut taxes and also cut energy bills (2 promises, in the short-term and long-term). No specifics were offered.
In energy news, on Friday, G-7 countries (US, Canada, France, Germany, Italy, UK, and Japan) agreed to force a price cap on Russian Oil and explore insurance rules that would ban shipments of Russian oil above a capped price. (Analysts predict this plan is likely to be ineffective at best without the cooperation of China and India.) Not at all coincidentally, Russia announced the flow of natural gas to Europe would not resume as planned Saturday (ostensibly due to an oil leak in a turbine). Shortly after Russia’s announcement, Germany announced an additional $65 billion (bringing the total to $95 billion) in Consumer Energy Inflation Relief. Then on Monday, OPEC+ announced a production cut of 100,000 barrels per day starting in October. This came one month after the group’s token increase of 100,000 barrels per day just one month ago. The group said that the small September increase (seen as a rebuff of President Biden) was always intended as a temporary measure. Oil prices surged higher on this small decrease. Finally, Tuesday Uniper (largest German Gas supplier) warned of a European crisis coming soon unless drastic steps are taken to control markets. The company’s CEO said that wholesale prices are now 20 times what they were two years ago.
In Russian invasion news, the head of the UN Inspectors (Intl. Atomic Energy Agency) will release its report on the findings from inspection of the Zaporizhshia nuclear power plant (largest in Europe) following Russia’s takeover and continued shelling in the area. Elsewhere, India said Monday that it will carefully consider the G-7 price cap on Russian oil. On another front, French President Macron called for his citizens to cut energy use by 10% in order to avoid rationing in coming months. For its part, Russia has upped the threats to cut energy supplies to the West and sell more oil to Asia in response to the G-7 price-cap. They also, through Gazprom, said they have no idea when the gas can resume flowing into the Nord Stream One pipeline, saying it is up to SMNEY (Siemens Energy) to repair the turbine. However, Siemens said the leak in a turbine is no reason to halt gas flows.
Overnight, Asian markets mixed but leaned to the upside on the day. Shanghai (+1.36%), Shenzhen (+1.04%), and Thailand (+0.73%) led the region higher on mostly modest moves. In Europe, stocks are mostly solidly in the green with the major outlier being Norway (-2.54%) at mid-day. The FTSE (+0.16%), DAX (+0.90%), and CAC (+0.49%) are leading the region higher in early afternoon trade. As of 7:30 am, US Futures are pointing toward a gap higher to start the day. The DIA implies a +0.67% open, the SPY is implying a +0.70% open, and the QQQ implies a +0.75% open at this hour. 10-year bond yields are rising again at 3.244% and Oil (WTI) is down two-thirds of a percent to $86.33/barrel in early trading.
The major economic news events scheduled for Tuesday are limited to Aug. Services PMI (9:45 am) and Aug. ISM Non-Mfg. PMI (10 am). In terms of earnings, there are no major earnings reports scheduled for the day.
In economic news later this week, on Wednesday we get July Trade Balance and Fed Beige Book. Then Thursday, Weekly Jobless Claims and Weekly Oil Inventories are reported. Finally, on Friday, there are no major economic reports.
In terms of earnings later this week, on Wednesday ASO, GIII, KFY, NIO, REVG, AEO, CASY, and GME report. Then Thursday, we hear from BILI, DOCU, and RH report. Finally, on Friday, we hear from ABM, KR, and WDH.
The last piece of news to start the week is that CVS has reached an agreement to buy SGFY for $8 billion or $30.50/share. (That would be a 6% premium over Friday’s closing price of $28.77 for SGFY.) AMZN had been mentioned as a bidder for the healthcare provider and this deal is just another example of vertical integration in the Healthcare-Pharmacy space.
The downtrend remains in place after 3 weeks of pullback. So, while the premarkets are looking to make a modest gap higher, do not get caught up in FOMO to the upside. At this point, it looks like a move to relieve over-extension more than a reversal.
Remember that trading is our job, not a pastime or hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). 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, Rick is on vacation visiting a gandbaby. 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
Hot employment data continues to worry the market about aggressive Fed rate hikes. Though the bulls triggered hopes of a relief rally yesterday, we have the Employment Situation to deal with this morning. Analysts suggest the number could come in hot but will the bulls continue to defend yesterday’s low, or will it inspire the bears? Traders could be thinking about an early getaway to extend the 3-day weekend, so don’t be surprised if volume quickly drops off after the data-driven volatility of the open.
Asian markets traded mostly lower as we slept with worries about the FOMC’s next decision. However, European markets trade decidedly bullish with cautious eyes on the U.S. jobs report. With no earnings inspiration this morning, U.S. futures suggest a flat to slightly lower open, pensively waiting on the Employment Situation number before switching gears and heading into the long holiday weekend. Consequently, it could be a wild morning session followed by light and choppy price action as traders get away early and extend their weekend plans.
Economic Calendar
Earnings Calendar
Although we have about 20 companies listed on the Friday earnings calendar, only one report confirmed from GB that’s not particularly notable.
News & Technicals’
Stocks have been selling off, and bond yields have risen ahead of Friday’s August employment report, providing a critical reading of the labor market. It is a particularly important report because it is expected to be one of the last big economic reports the Federal Reserve will consider before it raises rates at its late September meeting. According to Dow Jones, economists expect 318,000 jobs added in August, and the unemployment rate held steady at 3.5%. In addition, on Thursday, a National Labor Relations Board official recommended that Amazon’s objections to a historic union election in New York be rejected. In April, workers at Amazon’s JFK8 warehouse voted to form its first U.S. union. Amazon has until Sept. 16 to appeal the NLRB official’s recommendations. Starbucks on Thursday named Laxman Narasimhan as its next chief executive officer. Narasimhan most recently served as CEO of health and hygiene company Reckitt. He’ll join Starbucks in October, learning about the company and its reinvention plan, before assuming the top job in April. Morgan Stanley analysts laid out an economic scenario for China if authorities do not provide enough funding and other support to stabilize the real estate market. The analysts said Chinese stocks would plunge, GDP would slow, and unemployment would rise. However, they said spillover from real estate to the rest of China’s economy “remains manageable so far.” Between April 2020 and June 2021, solar panels at Amazon fulfillment centers caught fire or experienced electrical explosions at least six times. “The rate of dangerous incidents is unacceptable and above industry averages,” an Amazon employee wrote in an internal report viewed by CNBC. Rooftop solar is part of Amazon’s overall plan to zero emissions by 2040.
Thursday again saw the bears dominate early trading as hot employment data continues to worry investors about aggressive rate hikes from the Fed. However, the bulls finally staged a bit of a comeback at the end of the day, raising hopes of a relief rally. Unfortunately, we have the Employment Situation number before the bell this morning that analysts suggest could also come in hot. So, I guess the question is will it inspire the bears, or will the bulls stand their ground supporting yesterday’s lows? After we pass the data-driven morning volatility, traders will begin thinking about the long weekend ahead and the uncertainty it may provide. I don’t think we can rule out the possibility of light choppy price action or pile-on selling to reduce risk as we slide into the 3-day weekend.
Markets gapped lower at the open on Wednesday on fears raised by the closing of yet another major (21 million population) Chinese City due to a covid outbreak. (The gaps were between half of a percent and nine-tenths of a percent.) We then saw some follow-through with the 3 major indices reaching the lows of the day by 11 am. At that point, markets ground sideways for a couple of hours. The day then ended with a slow protracted 3-hour rally that filled the opening gap and closed very near the highs of the day. This action gave us white-bodied Hammer-type candles in all 3 major indices. It is worth noting that Thursday saw slightly above average volume in all 3 major indices (and that was the first time that has happened on a green day since August 16).
On the day, seven of the 10 sectors were in the red, with Basic Materials and Energy both down more than 2%. Healthcare (+0.91%) and Utilities (+0.82%) were by far the leading sectors Wednesday. Despite the sectors leaning red, the SPY gained 0.31%, DIA gained 0.45%, and QQQ gained 0.04%. The VXX rose 1% to 19.44 and T2122 remains deeply oversold at 3.57. 10-year bond yields spiked higher to 3.257% and Oil (WTI) plummeted another 3.5% to $86.44/barrel. Overall, this was a small attempt by the bulls to find their footing (support) after reeling since last Friday’s Jackson Hole inspired bloodbath.
In economic news, Weekly Initial Jobless Claims came in better than expected (232k actual versus 248k forecast and 237k previous week). Q2 Nonfarm Productivity also came in better than expected, but still down. The actual was -4.1% while -4.5% was the consensus forecast and last quarter we saw -4.6%. August Mfg. PMI and August ISM Mfg. PMI also both came in stronger than expected (PMI 51.5 actual vs 51.3 forecast and ISM PMI at 52.8 actual versus 52.0 forecast). All of these things would indicate the economy is at least slightly stronger than expected…therefore giving the Fed cover for a larger September rate hike. However, on the other side, Q2 Unit Labor Costs came in lower than expected. They showed a +10.2% actual versus a +10.7% consensus forecast and last quarter’s +10.8%. This would tend to indicate that there is less inflationary pressure on labor costs than expected, which would speak against a heavy hand by the Fed.
In stock news, US military veterans sued MMM to prevent the company from spinning off its healthcare business. The lawsuit calls the move by MMM a blatant attempt to transfer liability over defective earplugs to another company after a judge had ruled MMM could not use bankruptcy to avoid the damages. Elsewhere, the UK Antitrust Regulator has ruled that the MSFT acquisition of ATVI (for $69 billion) could harm competition. This is not likely to derail the deal but should force MSFT to give broader assurances around the not ordering platform exclusivity of games to block rivals SONY and Nintendo from having access to ATVI games.
In energy news, XOM and RDS.A agreed to sell their California oil joint venture operations to German asset manager IKAV for $4 billion. Elsewhere, the US Dollar reached yet another 20-year high Thursday, providing an additional headwind for oil prices (which are denominated in dollars). In nuclear news, the California legislature approved a bill to extend the life of the state’s only atomic power plant by 5 years on Thursday. This reversed the 2016 decision to retire the PCG Diablo Canyon plant by 2025. The bill also provided PCG with a $1.4 billion loan to keep the plant operational until 2030.
After the close AVGO and LULU both reported beats on the revenue and earnings lines. Both companies also raised forward guidance. However, JOAN beat on revenue while missing on earnings. The company left guidance as-is.
This morning, META and QCOM announced an agreement to jointly develop and produce a chipset META’s Quest virtual reality devices. The chipset will be based on QCOM’s Snapdragon chip line which is already widely used in Android phones. This partnership comes just weeks ahead of META launching a new virtual reality headset (set for October). However, losses have continued to widen in META’s “Reality Labs” division since the company bet its future on virtual reality by rebranding in 2021.
Overnight, Asian markets leaned heavily to the red side on modest moves. Taiwan (-0.87%), Hong Kong (-0.74%), and Singapore (-0.57%) led the region lower. In Europe, stocks lean heavily to the upside at midday. The FTSE (+0.62%), DAX (+1.31%), and CAC (+0.44%) are leading the region higher with only 3 smaller exchanges showing red in early afternoon trade. As of 7:30 am, US Futures are pointing toward a slightly red start to the session (granted, well ahead of critical data). The DIA implies a -0.13% open, the SPY is implying a -0.18% open, and the QQQ implies a -0.36% open at this hour. 10-year bond yields are up just slightly to 3.258% and Oil (WTI) is up almost 2% to $88.29/barrel in early trading.
The major economic news events scheduled for Friday include Aug. Avg. Hourly Earnings, Aug. Nonfarm Payrolls, Aug. Participation Rate, and Aug. Unemployment Rate (all at 8:30 am), July Factory Orders (10 am). There are no major earnings reports scheduled for the day.
Today brings a slew of data before the open, most importantly August Payrolls data. This is widely expected to come in hotter than the consensus forecast (+300k) and most analysts think this will cause the bears to roar (as traders then expect another 0.75% hike later this month). However, US futures are already pricing in an 80% probability of a 0.75% rate hike. So, to me, the risk seems to be to the upside if somehow the Payroll data comes in a bit soft. With that said, the premarket is essentially flat (just on the red side) already while we wait on the data.
Expect volatility at the open as markets react to Payrolls, Unemployment Rate, and Participation. However, with a 3-day weekend ahead, it is very likely we see light volume in the afternoon (perhaps all day) as the big traders head for a long weekend in the Hamptons. So, be careful about initiating any new positions that you might not be able to get out of later in the day. The short-term trend remains strongly bearish, but we did put in candles that suggest the bulls tried to find support Thursday. If nothing else, we are due a pause just to relieve bearish overextension. The bottom line is that we are in a downtrend, but the bulls are trying to hold this level and the bears may have gotten ahead of themselves.
Again, remember it is Friday and we have a 3-day weekend ahead. Prepare yourself by taking profit, hedging, and/or getting smaller in your risk positions. 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. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). 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, Rick is on vacation visiting a gandbaby. 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
Stocks gapped higher Wednesday between 0.2% (DIA) and 0.95% (QQQ). However, once again this was a bull trap. After about 25 minutes of meandering higher from the open, the bears stepped in and took all 3 major indices on a slow, protracted selloff that lasted the rest of the day and closed on the lows. This action gave us black-bodied candles with small upper wicks and no lower wick across all those indices. It could be seen as the completion of the second half of the Bearish Doji Continuation which was started last Friday.
On the day, all 10 sectors were in the red with Basic Materials and Communications Services leading the way lower. The SPY lost 0.79%, the DIA lost 0.75%, and QQQ lost 0.58% during the session. The VXX fell another 1.23% to 19.24 and T2122 (4-week New High/Low Ratio) remains deeply oversold at 3.00. 10-year bond yields surged higher to 3.178% and Oil (WTI) fell more than 3% to $88.86/barrel. All-in-all, it was a slow, methodical, bear day in the market.
In economic news, the Aug. ADP Nonfarm Payrolls added far fewer jobs than was expected or was added in July (+132k vs. +300k forecast and +268k in July). This indicates a slowing economy. However, the Aug. Chicago PMI came in slightly better than expected at 52.2 (versus 52.0 forecast and July’s 52.1 number). Elsewhere, the EIA Weekly Crude Oil Inventories diverged from Tuesday night’s API number. EIA showed a drawdown of 3.326 million barrels for the week, which was more than twice the expected drawdown (1.483 million barrels) and slightly worse than the prior week’s drawdown of 3.282 million barrels.
In stock news, after the close, BBBY confirmed what it had leaked. The retail chain will close 150 stores, cut about 20% of its jobs (roughly 6,400), and change its merchandising strategy by cutting private label lines in favor of national third-party brands. BBBY also confirmed that it has secured a $500 million loan (to get it through the holiday season) and it now forecasts a 26% drop in sales for Q2. BBBY stock was down 21% on Wednesday. Also, after the close, COST reported that its “Same Store Sales” grew 10.1% in July and 15.3% over the same period last year. Elsewhere, Arm (owned by SFTBY) filed a lawsuit against QCOM. At issue was that QCOM acquired Nuvia (a chip design firm) last year and neither company informed or gained consent from Arm as required by Arm’s license agreement. Finally, late last night, NVDA reported that the US government has ordered them to stop selling chips to Russia and China. The company had previously gotten export exemptions to continue selling to China, but now doubts that exemption will be extended again. NVDA said it expects to lose $400 million in sales this quarter due to the restriction.
In energy news, on Wednesday, US Gasoline futures fell back below the price they were at when Russia invaded Ukraine in February ($2.59/gallon). Elsewhere, OPEC+ put out a statement Wednesday that failed to mention production cuts (as had been threatened by Saudi Arabia last week). Instead, the release hyped up global demand for oil, which analysts read as meaning cuts were the last thing on the minds of OPEC+ members. In related news, the White House said President Biden has informed Israel about the revival of the 2015 JCPOA nuclear deal with Iran. (This deal reportedly will allow Iran to ship oil, significantly increasing global supplies.) In addition, after the close, the White House announced the G7 will be discussing the Biden Administration’s proposal to put a price cap on Russian oil when the group meets Friday.
After the close GEF, PSTG, and VEEV all reported beats on both the revenue and earnings lines. However, COO beat on revenue while missing on earnings. FIVE missed on both the top and bottom lines. GEF and PSTG raised their guidance while COO and FIVE lowered forward guidance.
So far this morning, CPB, SAIC, SIG, GMS, and WB have all reported beats on both the top and bottom lines. Meanwhile, HRL beat on revenue while missing on earnings. HRL also lowered its forward guidance. On the other side, GCO missed on revenue while beating on earnings. However, PDCO, CIEN, FLWS, and OLLI all reported misses on both lines. FLWS and GCO also both lowered forward guidance.
Overnight, Asian markets leaned heavily to the downside. South Korea (-2.28%), Australia (-2.02%), and Taiwan (-1.94%) led the region lower with only two smaller exchanges managing to stay on the green side of flat. In Europe, stocks are red across the board at mid-day. The FTSE (-1.38%), DAX (-1.40%), and CAC (-1.25%) are leading the region lower in early afternoon trade. As of 7:30 am, US Futures are pointing toward a gap lower to start the day. The DIA implies a -0.48% open, the SPY is implying a -0.50% open, and the QQQ implies a -0.68% open at this hour. 10-year bond yields are surging again, now at 3.20%, and Oil (WTI) is down another 2% to $87.81/barrel in early trading.
The major economic news events scheduled for Thursday include Weekly Initial Jobless Claims, Q2 Nonfarm Productivity, and Q2 Unit Labor Costs (all at 8:30 am), PMI Mfg. (9:45 am), and ISM Mfg. PMI (10 am). There is also another Fed Speaker (Bostic at 3:30 pm). The major earnings reports scheduled for the day include FLWS, CPB, CIEN, GCO, GMS, MOMO, HRL, HOV, OLLI, PDCO, SAIC, SIG, TTC, and WB before the open. Then after the close, AVGO, JOAN, and LULU report.
In economic news later this week, on Friday we get Aug Avg. Hourly Earnings, Aug. Nonfarm Payrolls, Aug. Participation Rate, Aug. Unemployment Rate, July Factory Orders. In terms of earnings, there are no major reports scheduled for Friday.
September looks to be coming in like a bear as the bulls just have not been able to find their footing this week. We remain very extended to the downside at this point (both in terms of the T-line and T2122). However, the futures are not giving the bulls much hope, except that prices have recovered from the overnight lows. Be very careful of chasing any gaps or early moves. Remember that the last two days started with “gap traps” and we want to learn from those examples. The short-term trend remains strongly bearish, the mid-term bullish trend has been broken, and the long-term bearish trend is also broken. Volatility is a high probability and if nothing else we still need a pause to ease overextension. The bottom line is that we are in a downtrend, but the bears may have gotten ahead of themselves with support not far below.
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. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). 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, Rick is on vacation visiting a gandbaby. 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
Early bullishness faded quickly on Tuesday after the JOLTS report came in hot, re-engaging the bears with the expectation of an aggressively hawkish Fed. Yesterday added to the technical damage of index charts with the DIA, SPY, and QQQ closing the day below their 50-day moving averages. Sadly the 9.1% inflation report out of Europe is piling on to the bearish attitude this morning and could make it difficult for the bulls to begin an overdue relief rally. We face a lot of economic data the rest of the week as we slide toward the uncertainty of a 3-day weekend.
Ason markets closed mixed overnight, with China’s declining factory activity adding to the worry of their slowing economy. European markets see red across the board as they struggle with rate tightening fears after hearing their inflation rate hit 9.1%. U.S. futures have seesawed in pre-market trading, wanting a relief rally despite the piling on of adverse economic data from here and around the world. Expect the volatile and challenging price action to continue with earnings and economic reports just around the corner.
Economic Calendar
Earnings Calendar
The mid-week earnings calendar has a few more companies listed than Tuesday, with around 20 confirmed. Notable reports include BF.B, COO, DBI, FIVE, MDB, OKTA, PSTG, SMTC, VEEV, & VRA.
New & Technicals’
Eurozone inflation hit a new record high in August at 9.1%. The rate was above expectations, with a Reuters poll of economists anticipating a rate of 9%. It is expected that gas flows via Nord Stream 1, which runs from Russia to Germany via the Baltic Sea, will be suspended from Aug. 31 through to Sept. 3. The temporary supply halt reflects a deepening gas dispute between Russia and the European Union. It underscores both the risk of a recession and a winter shortage. “Europe is in full bunkering mode and taking no chances with Russian supplies heading into the winter,” said Wei Xiong, senior analyst at energy consultancy Rystad Energy. In addition, analysts told CNBC that Iraq’s political turmoil could bring about a considerable risk to global oil markets. “While Iraqi production is usually fairly resilient to unrest, the current political environment is extraordinarily toxic and poses a considerable risk to the oil sector,” said Fernando Ferreira, a director at Rapidan Energy Group. Those concerns come on the heels of escalated protests in Iraq on Tuesday after powerful Shiite Muslim cleric Muqtada al-Sadr announced his resignation from politics. EV maker BYD falls more than 12%, dragging down Hang Seng Index on Wednesday. According to a filing, Warren Buffett’s Berkshire Hathaway trimmed its stake from 19.92% to 20.04%. Yang Liu of Atlantis Investment says this is a “common trend,” warning “maybe we’ll see more” of such trims. Treasury yields tick higher in early Wednesday trading, with the 12-month at 3.42%, the 2-year at 3.48%, the 5-year at 3.30%, the 10-year at 3.14%, and the 30-at 3.25%.
Futures began the morning pushing for some gains, but after the jobs-opening report came in hot, the bears returned to work expecting an aggressive hawkish Fed. Unfortunately, the selling created more technical damage in the index charts closing the DIA, SPY, and QQQ below their 50-day averages. If there is a silver lining in the clouds, it would be that the T2122 indicator suggests a short-term oversold condition, and a relief rally could begin at any time. However, the bearish data is beginning to pile on as world economies slow and inflation remains persistent. Though I will be watching for clues of an oversold rally, the 9.1% inflation reading out of Europe has reversed early bullishness and could keep the bears engaged. We have a lot of economic reports coming our way the rest of the week, so plan carefully and remember we also face the uncertainty of a 3-day weekend.
Markets gapped higher between a third and a half of a percent on Tuesday. However, this was a bull trap as all 3 major indices sold off hard the first 90 minutes of the day. From that point, we saw a sideways grind in a small range (relatively speaking) for the rest of the day. This action is giving us a Bearish Engulfing candle of a Doji / Spinning Top (or if you prefer the start of the completion of a Bearish Doji Continuation or Doji Sandwich signal). This made for the third straight down day for all 3 major indices and all this happened on average volume.
On the day, all 10 sectors are down sharply, with the Energy Sector (down 4%) leading the way lower. The SPY lost 1.05%, DIA lost 0.95%, and QQQ lost 1.11%. The VXX was also down a percent to 19.48 and T2122 is extremely oversold to 3.35. 10-year bond yields have rebounded from early lows and are back up to 3.112% while Oil (WTI) is down 5% to $92.16/barrel on news out of a Pro-Iran UK television station saying Iran has agreed to a deal with the United States to revive the Trump-killed JCPOA nuclear deal and allow Iran to sell oil. All-in-all, it’s looking like it will end up a blah, bull trap, one plus percent down day.
In economic news, the Conference Board Consumer Confidence came in a 103.2, well above the consensus forecast (97.9) s well as July’s reading (95.3). At the same time, July JOLTS (Job Openings) came in higher than expected at 11.293 million (versus a consensus forecast of 10.475 million and a June reading of 11.04 million). Then, after the close, API reported Weekly Oil Stocks surprised with a modest build (0.593 million barrels) while a modest drawdown (-0.633 million barrels) was expected. However, this was still much better than the prior week’s 5.632-million-barrel drawdown.
In Forex / Fed news, the Dollar hit a 20-year high for the second day in a row Tuesday. This came after the JOLTs report suggested a stronger than expected economy. In addition to the forex impacts, traders have upped their bets for a 75-basis-point hike in September. US Futures now have now priced in a 74.5% probability of that 0.75% hike. After the close, NY Fed President Williams told the Wall Street Journal that he expects rate hikes and balance sheet reduction (quantitative tightening) to continue into 2023. Specifically, he pushed back against the idea of a rate cut in 2023 (while the futures market still expects a cut in the fall of 2023). This all just focuses eyes on the August Payrolls report Friday.
In stock news, it was reported Tuesday that SNAP is planning to reduce staffing by 20%. Elsewhere, after its earnings report, BBY told the earnings call that they are now forecasting that consumers will resume the old pattern by doing most of their holiday shopping late. (In 2021, consumers did the majority of their holiday shopping early.) In TWTR news, Elon Musk has asked the judge to postpone the trial over his purchase of TWTR until November (from October 17). In the filing, Musk cited his subpoena of the newly announced TWTR whistleblower as the reason.
After the close CRWD reported beats on both the top and bottom lines. The company also raised guidance. Meanwhile, HPE, HPQ, AMRK, CHWY, and PVH all reported misses on revenue while beating on earnings. In addition, HPQ, PVH, and CHWY all lowered their forward guidance. So far this morning, DBI, DCI, and CHS have all reported beats on both the revenue and earnings lines. Meanwhile, EXPR missed on revenue while beating on earnings.
Overnight, Asian markets were mixed. Shenzhen (-1.29%), Shanghai (-0.78%), and Singapore (-0.55%) led the way lower on weak PMI data out of China (which actually slightly beat expectations but still came in at only 49.4 for Mfg. while Services PMI was at 52.6). Meanwhile, India (+2.58%) Taiwan (+0.95%), and South Korea (+0.86%) paced the gainers. In Europe, markets are mostly in the red at midday with the notable exception of Russia (+3.63%). The FTSE (-1.08%), DAX (-0.36%), and CAC (-0.48%) are typical for most of the continent with a few smaller exchanges just holding on to the green side of flat in early afternoon trade. As of 7:30 am, US Futures are pointing toward a flat to modestly green start to the day. The DIA implies a +0.08% open, the SPY is implying a +0.22% open, and the QQQ implies a +0.58% open at this hour. 10-year bond yields are higher to 3.142% and Oil (WTI) is off 2.68% to $89.17/barrel in early trading.
The major economic news events scheduled for Wednesday include ADP Nonfarm Payrolls (8:15 am), Chicago PMI (9:45 am), EIA Crude Oil Inventories (10:30 am), and a couple of more Fed speakers (Mester at 8 am and Bostic at 6:30 pm). The major earnings reports scheduled for the day include BF.A/B, CHS, DBI, DCI, and EXPR before the open. Then after the close, FIVE, PSTG, and VEEV report.
In economic news later this week, on Thursday Weekly Initial Jobless Claims, Q2 Nonfarm Productivity, Q2 Unit Labor Costs, PMI Mfg., and ISM Mfg. PMI are reported. Finally, on Friday we get Aug Avg. Hourly Earnings, Aug. Nonfarm Payrolls, Aug. Participation Rate, Aug. Unemployment Rate, July Factory Orders.
In earnings later this week, on Thursday, FLWS, CPB, CIEN, GCO, GMS, MOMO, HRL, OLLI, PDCO, SAIC, SIG, TTC, WB, AVGO, JOAN, and LULU report. Finally, Friday there are no major reports.
Markets are limping into the last day of August, coming off 3 straight down days. We remain very extended to the downside at this point and futures are giving us a very modest and indecisively bullish indication. Be very careful of chasing any gaps or early moves (especially to the downside). While the short-term trend is bearish, the mid-term bullish trend is broken, and the long-term bearish trend is also broken, volatility and if nothing else a pause to ease extension is a high probability. The bottom line is that we are in a volatile downtrend, but the bears may have gotten ahead of themselves with support not far below.
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. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). 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: BABA, Z, SNOW, CAH, UUP, BIG, WEAT, UEC, SQQQ. 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
Stocks gapped down between three-quarters and a full percent on Monday in what the bears hoped was the start of follow-through on Friday’s big move down. However, after some early volatility, the bulls stepped in to fill the gap in a protracted rally from 11 am to 2 pm. Then prices remained near those highs for the next 1.5 hours. However, late in the day, the bulls took their profits, and all 3 major indices sold off hard in the last 15 minutes. This action is giving us indecisive, Spinning Top type candles (long wicks on both ends of the candle) that are resulting in modest bearish moves overall. This sets up either a Bearish Doji Continuation (Sandwich) or a Bullish Morning Star Signal in all 3 indices.
Seven of the 10 sectors were red, with Energy being far-and-away the biggest gainer and Technology being far-and-away the biggest losing sector. On the day, SPY lost 0.67%, DIA lost 0.57%, and QQQ lost 0.99%. The VXX fell more than 2% to 19.71 and T2122 remains deep in the oversold territory at 10.25. 10-year bond yields are up significantly to 3.11% and Oil (WTI) has surged more than 4% to $96.96/barrel.
There was no major economic news on Monday. However, there was a LendingClub survey reported by CNBC that claimed there was a slight decline in the percentage of Americans who are living paycheck to paycheck. The study found that 59% of Americans fall into that category, down from 61% in June, but also above the 54% number from June. In somewhat related news, in the face of nine weeks of declining gasoline prices, US oil refiners have recently been really pushing exports of refined products in order to limit domestic supply and increase their recently-record profits. It has gotten to the point where on Monday Energy Sec. Granholm was basically begging oil refiners to stop increasing those recent record-level distillate and fuel exports.
In stock and miscellaneous news, MSFT announced it will amend cloud licensing deals as of Oct. 1 in order to stave off round another EU antitrust penalties. The changes will make it easier for rivals (GOOGL, AMZN, and BABA) to compete with MSFT in Europe. Elsewhere, TSLA was hit with a class action lawsuit over sudden “phantom braking” by the company’s Model 3 when using the “Driver Assist” (Autopilot) mode. Related to inflation, we’ve received some news lately tending to indicate that inflation has already peaked (especially gas prices). However, the Zumper National Rent Index came out yesterday afternoon and shows that landlords don’t buy that story. The national average rent for a 1-bedroom apartment rose to a record $1,500 in July, up 2% from June and more than 12% from one year ago.
In Russian invasion news, on the ground, Ukraine launched its long-awaited counter-offensive in the Southern Kherson region. More than six months into the war, Monday, Ukraine recaptured 4 villages in that region and breached the first of 3 Russian defense lines. Ukraine also initiated a much smaller offensive in the Eastern Izium region. Elsewhere, Monday evening, EU Commissioner von Der Leyen announced that the EU is planning an “emergency intervention” in the region’s power market. This plan clearly breaks with the EU’s prior “let the market handle the situation” stance. Details are lacking, but EU countries have already been granted permission to cap natural gas prices and many are now calling for the same power on electricity prices. (EU wholesale electricity prices are more than 800% higher than one year ago.) Finally, a team of UN inspectors has left to visit the Russian-occupied Zaporizhzhia nuclear power plant (the largest in Europe) amidst fear over Russian shelling near the plant and Russia’s cutting the plant off from the electric grid. (The plant produces more than 20% of all electricity generated in Ukraine.)
After the close HEI reported a beat on revenue, but missed on earnings. So far this morning, AMWD, BMO, and BBY all reported beats on both the top and bottom lines. Meanwhile, BIDU, BIG, and FUTU missed on revenue while also beating on earnings. However, IQ beat on revenue and came in in line with earnings (a loss of $0.04/share).
Overnight, Asian markets were mixed but leaned to the upside. India (+2.58%), New Zealand (+1.23%), and Japan (+1.14%) led the gains while mainland China showed the only red in the region. In Europe, we see mostly green at midday. The FTSE (+0.12%), DAX (+1.84%), and CAC (+1.11%) are leading the region higher in early afternoon trade. However, Norway (-1.03%) is showing the only appreciable red in the region. In the US, as of 7:30 am, US Futures are pointing toward a green start to the day. The DIA implies a +0.69% open, the SPY is implying a +0.83% open, and the QQQ implies a +1.12% open at this hour. 10-year bond yields are back down to 3.058% and Oil (WTI) is starting the day down more than 2.77% to $94.32/barrel.
The major economic news events scheduled for Tuesday include Conf. Board Consumer Confidence and July JOLTs (both at 10 am), API Weekly Crude Oil Stocks (4:30 pm), and a Fed speaker (Williams at 11 am). The major earnings reports scheduled for the day include AMWD, BIDU, BMO, BBY, BIG, FUTU, and IQ before the open. Then after the close, AMRK, CHWY, CRWD, HPE, HPQ, and PVH report.
In economic news later this week, on Wednesday we see ADP Nonfarm Payrolls, Chicago PMI, EIA Crude Oil Inventories, and another Fed speaker (Mester). On Thursday Weekly Initial Jobless Claims, Q2 Nonfarm Productivity, Q2 Unit Labor Costs, PMI Mfg., and ISM Mfg. PMI are reported. Finally, on Friday we get Aug Avg. Hourly Earnings, Aug. Nonfarm Payrolls, Aug. Participation Rate, Aug. Unemployment Rate, July Factory Orders.
In earnings later this week, Wednesday we get reports from BF.A/B, CHS, DBI, DCI, and EXPR. On Thursday, FLWS, CPB, CIEN, GCO, GMS, MOMO, HRL, OLLI, PDCO, SAIC, SIG, TTC, WB, AVGO, JOAN, and LULU report. Finally, Friday there are no major reports.
Coming off a second straight day of losses, futures seem to indicate the bulls are ready to make a stand. The question is whether this is a true reversal, just an over-extension bounce, or even a bull trap. BAC warned this morning that the flow of funds from its account holders has gotten decidedly defensive since Friday. So, given the strength of the selloff the last 15 minutes Monday, we should be very cautious about chasing any gaps or rallies. We were very extended and at this point, the futures move does not look like a major reversal of market sentiment to me. The short-term trend is bearish, the mid-term bullish trend is broken, and the long-term bearish trend is also broken. The bottom line is that we are in a volatile, undecided market.
Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). 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: CGC, MCK, META, UEC, KSS, ADM, CAH, X, DBC, WEAT, Z, SPXU, QID, UVXY. 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.
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