Although the bears came out slightly on top by the end of Tuesday trading, it was a choppy hurry-up and wait session with pending Durable Goods numbers just around the corner. With some potential market-moving earnings reports and analyst consensus that Durable Goods and Pending Home Sales could decline, it could be a volatile morning session. Index charts are at or near critical support levels, so much is at stake as the bulls and bears battle for control. As you plan forward, remember that we have a GDP number before the bell Thursday. Buckle up anything is possible!
Asian markets closed mixed but mostly lower, with the tech-heavy HSI leading the selling down 1.20%. European markets trade flat to slightly lower this morning as global growth, and potential Fed rate action raises concerns. Finally, with a substantial morning of potentially market-moving earnings and economic reports, U.S. futures point to a slightly lower open, but in truth, anything is possible at the open as the details are revealed. So, prepare for some price volatility and another waiting game in the afternoon for the GDP number.
Economic Calendar
Earnings Calendar
For the Wednesday earnings calendar, we have less than 30 companies listed, most of which have been confirmed. Notable reports include ADSK, BOX, CRM, EAT, DY, GES, IIVI, NTAP, NVDA, WOOF, SNOW, SPLK, VSCO, & WSM.
News and Technicals’
Packable, the parent company of top-ranking Amazon seller Pharmapacks, is laying off employees and ceasing operations, according to documents viewed by CNBC. The health and beauty product retailer was the largest seller on Amazon’s third-party marketplace. Packable is liquidating after a failed effort to go public through a special purpose acquisition company. Nordstrom slashed its financial forecast for the entire year as the department store chain faced a glut of inventory. The retailer’s lowered forecast came even as it reported fiscal second-quarter earnings and sales ahead of analysts’ estimates. Xpeng’s Hong Kong-listed shares plunged more than 12% on Wednesday after the Chinese electric vehicle maker reported a wider-than-expected loss for the second quarter. Xpeng said it expects to deliver between 29,000 and 31,000 electric vehicles in the third quarter, representing a year-over-year increase of around 13% to 20.8%. Xpeng said it is confident that the launch of the G9 SUV in September and two new models in 2023 will help it enter a “growth cycle.” It’s been six months since Russia began its invasion of Ukraine, an act that shocked the world and one that was almost universally condemned. Russia was widely perceived to have been preparing to claim a quick victory in Ukraine, but hopes of swiftly overthrowing Volodymyr Zelenskyy’s pro-Western government soon evaporated. Six months on, the invasion is now facing a long, grinding “war of attrition” that causes widespread death, destruction, and displacement in Ukraine — and is costly for Russia too. Treasury yields ticked slightly lower in early Wednesday trading, with the 12-month at 3.24%, the 2-year at 3.29%, the 5-year at 3.16%, the 10-year at 3.04%, and the 30-year at 3.25%.
Tuesday proved to be a choppy hurry-up and wait for the Durable Goods numbers coming before the bell on Wednesday. Although the bears won the day with all but IWM slightly lower, the volume was very light, with the VIX hovering just above the 24 handles. Today could be an exciting day with the consensus suggesting a weakening Durable Goods number with Pending Home Sales expectations likely declining, adding to the concerns of a slowing economy. However, we also have several potential market-moving earnings reports that will keep the bulls and bears locked in a battle near index price support levels. Expect price volatility through the morning session but don’t be surprised if the afternoon becomes light and choppy as we wait for NVDA earnings and the pending GDP report Thursday before the bell.
On Tuesday, stocks opened the day basically flat and then oscillated up and down around the small gap all day long. The DIA had a slightly more bearish trend to the oscillation, but all 3 major indices gave us indecisive Spinning Top or Doji type of candles. This also sets up a potential Morning Star type of pattern in all 3. The QQQ held its 34ema as support on the day. Six of the 10 sectors were green on the day. However, Energy (+3.12%) was by far the biggest mover to the upside and Communication Services (-1.01%) was the big loser on the day.
On the day, SPY lost 0.25%, DIA lost 0.50%, and QQQ lost 0.08%. The VXX fell more than 5% to 20.14 and T2122 climbed back out of the oversold territory to 34.76. 10-year bond yields rose to 3.065% and Oil (WTI) spiked upward 3.55% to $93.57/barrel. All-in-all, it was an indecisive day on very low volume. It sure seems like Mr. Market was waiting on more clues.
In economic news, the Mfg. PMI came in a bit below estimates Tuesday. However, the Services PMI came in 10.5% below forecasts. July New Home Sales also came in down 12.6%, indicating a significant pullback by potential homebuyers. All this bad news actually buoyed markets mid-morning as traders seemed to project that this is the kind of news that would give the Fed cover to reduce the rate hike expected in September. After the close, API reported Weekly Crude Oil stock fell 5.6 million barrels as US exports were dramatically higher.
TWTR had a rough day Tuesday, closing down 7.32% on heavier than normal volume. This came after it was reported that the company’s former head of cybersecurity became a whistleblower and reported to the SEC that TWTR “engaged in extreme, egregious deficiencies in privacy, security, spam, and content modernization.” The report also alleged TWTR made misrepresentations to Elon Musk, which may impact TWTR’s lawsuit to force Musk to either buy TWTR or pay a $1 billion back-out fee. In the complaint filed with the SEC, the whistleblower alleges he witnessed senior TWTR executives engage in deceitful and misleading communications with the company board, shareholders, and the public. This included the CEO asking the whistleblower to provide false and misleading documents. The complaint alleges that after refusing to comply, he was terminated.
In auto industry news, at the close, TM announced they are recognizing California’s authority to set vehicle emissions standards and dropping out of the action by fellow automakers and the former Trump administration to sue in order to block the state’s regulations. This makes TM eligible for California state fleet purchases and follows in the footsteps of GM, F, HMC, BMW, and Volkswagen who did the same earlier this year.
Six months after Russia’s invasion, the fighting continues in Ukraine, just at a less frantic pace. On Tuesday, the US State Dept. urged US citizens to leave Ukraine as it expects heavy attacks by Russian missiles, rockets, and artillery on civilian targets in the next few days. This is because today is Ukrainian flag day and Thursday is Ukrainian National Independence Day. Russia also resumed shelling very near the Zaporizhzhia nuclear power plant (the largest in Europe). On Tuesday, that shelling killed one plant worker. In the US, Congress is set to approve an additional $3 billion in weapons including HiMARs (made by LM), Howitzers and ammunition (made by GD), etc.
In earnings news, after the close Tuesday, JWN, INTU, TOL, CAL, and LZB all reported beats on both the top and bottom lines. Meanwhile, AAP missed on the revenue line while reporting in-line earnings. On the other side, SCSC beat on revenue while missing on earnings. However, URBN missed on both the revenue and earnings lines. It is also worth noting that JWN, AAP, and TOL all lowered forward guidance while SCSC raised their 2022 guidance. So far this morning, RY, IIVI, and DY have all reported beats on both lines. Meanwhile, EAT reported a beat on revenue while missing on earnings. However, WOOF missed on both lines. Of those, EAT has lowered forward guidance.
Overnight, Asian markets leaned heavily to the downside. Shenzhen (-2.88%), Shanghai (-1.86%), and Hong Kong (-1.20%) led the region lower. In Europe, stocks are mixed on modest moves at mid-day. The FTSE (-0.50%), DAX (-0.10%), and CAC (+0.09%) are leading the mixed bag in that region in early afternoon trade. As of 7:30 am, US Futures are pointing to a flat open (before data). The DIA implies a -0.02% open, the SPY is implying an unchanged open, and the QQQ implies a -0.03% open at this hour. 10-year bond yields are flat and Oil (WTI) is up another 1% in early trading.
The major economic news events scheduled for Wednesday include July Durable Goods Orders (8:30 am), July Pending Home Sales (10 am), Weekly EIA Crude Oil Inventories (10:30 am), and a 5-year Bond Auction (1 pm). The major earnings reports scheduled for the day include Wednesday we get reports from EAT, DY, IIVI, WOOF, and RY before the open. Then, after the close, ADSK, GES, NTAP, NVDA, CRM, SPLK, VSCO, and WSM report.
In economic news later this week, on Thursday, we get a Q2 GDP Revision, Weekly Jobless Claims, and the Jackson Hole Central Banker Symposium begins. Finally, on Friday, we get July PCE Price Index, July Personal Spending, July Trade Goods Balance, July Retail Inventories, Michigan Consumer Sentiment, and the Jackson Hole Central Banker Symposium continues with Fed Chair Powell Speaking.
In earnings later this week, on Thursday we hear from ANF, BURL, CM, COTY, DG, DLTR, GFI, GOGL, HAIN, PTON, TD, DELL, FTCH, GPS, MRVL, ULTA, VMW, and WDAY. Finally, on Friday, JKS reports.
Markets are seemingly pausing to wait on more clues. Many talking-heads believe that news would be Fed Chair Powell’s speech at Jackson Hole on Friday morning. Regardless of whether that is the shoe Mr. Market is waiting on to drop, all we can do is trade the chart in front of us. Premarkets have recovered from earlier lows. However, there is no denying that the short-term trend is down with potential support levels below, the broken mid-term trend was bullish, and the broken longer-term trend was bearish. So, caution is in order, and volatility (both intraday and weekly) is to be expected.
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: 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
Fears of future rate hikes and the weakening economies of China and Europe emboldened hungry bears to bear current uptrends and test price support levels in the index charts. As a result, the Treasury Yields spiked, and the U.S Dollar reached a multi-year high, further complicating foreign economic conditions. So who will gain inspiration today with few notable earnings, PMI Composite Flash, and New Home Sales data just around the corner? With the VIX spiking on the fear of yesterday’s selling, expect some challenging price volatility as we wait for the market-moving economic reports later this week.
With Singapore inflation hitting a 14-year high, Asian markets closed in the red across the board overnight. European markets trade mixed this morning, with energy prices rising and the Euro at a 20-year low. Ahead of earnings and economic data, U.S. futures look to bounce slightly after the sharp selloff on Monday that broke the recent trend in the index charts. Plan carefully with potentially market-moving economic data coming Wednesday and Thursday.
Economic Calendar
Earnings Calendar
We have 30 companies listed on the Tuesday earnings calendar, with more than 20 confirmed to report. Notable reports include AAP, CAL, DKS, INTU, SJM, JD, JWM, M, MDT, PYCR, TOL, & URBN.
News and Technicals’
The Euro is trading at a two-decade low of 0.9903 against the dollar; with some speculating, it could slide much lower. However, strategists are “definitely biased towards further euro depreciation,” says a head strategist at Citi Bank. According to analysts, China’s power cuts this year are not likely to stretch too far beyond summer, as the conditions of this year’s power crunch differ from last year’s. This year’s crisis is a result of two factors: “abnormally hot weather” and a lack of rainfall. Last year, power generation plants cut back on production due to high coal costs they could not offset with fixed electricity sales, and provincial governments rationed power usage to meet yearly emissions targets. The growing risk of a “major financial accident” that causes a market capitulation later in the year could open up opportunities for investors, according to Beat Wittman, chairman, and partner at Zurich-based Porta Advisors. Wittman argued that until central banks were forced to begin tightening this year, monetary policy and liquidity conditions had been “too loose for too long,” and policymakers, led by the U.S. Federal Reserve, were now scrambling to restore lost credibility. Zoom’s revenue growth slowed to 8% from 12% in the year-ago quarter, a lesser result than analysts had predicted. The video-calling software maker blamed the strong revenue miss partly on the U.S. dollar. Ford Motor is cutting about 3,000 jobs from its global workforce, most of which are in North America. The cuts will include 2,000 salaried positions and 1,000 agency jobs in the U.S., Canada, and India, Ford Chair Bill Ford and CEO Jim Farley. Treasury yields drifted slightly lower in early Tuesday trading, with the 12-month at 3.21, the 2-year at 3.33%, the 5-year at 3.17%, the 10-year at 3.02%, and the 30-year at 3.23%.
Hungry bears drove index charts sharply lower Monday, breaking current uptrends and testing price support levels that mostly held. Additionally, the U.S. Dollar surged upward yesterday as weakening economies in China and Europe spiked treasury yields raising concerns about future rate hikes. With a few more notable earnings and economic data from PMI Composite Flash & New Home Sales to provide some inspiration, expect price volatility. The question to be answered will it be the bulls or bears inspired, and will support levels hold or fail? It would be wise to plan carefully with the Durable Good number Wednesday before the bell and the GDP report out Thursday morning. As a result, it would not be out of the question to see some choppy price conditions as we wait.
The bears started the week off with a roar as stocks gapped 1.2% – 1.5% lower at the open Monday. The bulls never found their footing as prices slowly worked their way lower from the open to reach the lows about 3:45 pm. Nine of the10 sectors are lower, with Consumer Cyclicals and Technology taken the worst hit (both down more than 2.6%) while Energy was the only sector to barely stay green. All 3 indices also gave up their T-line (8ema) and 20sma levels as the uptrend line is now clearly broken. The QQQ is even testing its 34ema for support at the moment.
All-in-all, it was a strong bear day with a large gap and strong black candle in all the major indices. On the day, DIA closed down 1.85%, SPY closed down 2.06%, and QQQ was down 2.63%. Interestingly, VXX was basically flat at 21.22 and 10-year bond yields rose only slightly to 3.029%, indicating traders are not out buying up bonds (which would be normal on a big “risk off” day). However, T2122 now shows the market is in oversold territory at 19.20, and Oil (WTI) is off just marginally to $90.67/barrel.
In general stock news, F announced 3,000 salaried and contracts job cuts (across North America and India) as part of a restructuring to move more into the electric vehicle market. Elsewhere, workers at a GE plant in Alabama have launched a union initiative. (A vote has not yet been authorized by the NLRB, pending the count of submitted union request cards.) In the healthcare space, PFE and BNTX filed with the FDA for authorization to ship a Covid-19 booster specifically formulated to target the Omicron variant.
In meme stock news, AMC gapped down 36%, traded in a 27% range, and closed down 42% on the day. This came after a rival (Regal, which is UK-based) warned of bankruptcy over the weekend and the AMC company distributed what it calls “APE Units” as a dividend over the weekend. The issuance of APE units are similar to a 2-for-1 stock split. Another meme stock, BBBY fell more than 16% Monday in follow-through to Friday’s 41% loss.
In energy news, Oil recovered Monday after Saudi Oil Minister bin Salman said the commodity’s futures were detached from fundamentals. He also said OPEC+ may cut production output if the 2015 Iranian nuclear deal (which allows Iran to export oil) is reinstated. However, the offset to this news is that Iran has said it can quickly double its 3.8 million barrels per day production if sanctions were lifted. Elsewhere, COP won an appeal of the $8.7 billion it was awarded by the World Bank Tribunal in 2019. (This includes over $1 billion in interest on the amount owed since the original award.) The claim stems from Venezuela’s nationalization of COP’s assets in the country back in 2007.
In economic news, the Equipment Leasing and Finance Assn. (ELFA) said that business borrowing to lease equipment rose 2% in July. This saw the association’s economic confidence index rise to 50. (Any reading above 50 indicates a positive outlook for the economy.) In addition, the dollar continues to be extremely strong. The Euro now trades at 0.993 per dollar and the British Pound is trading at 1.177/dollar making US exports more expensive, but also imports and commodities cheaper.
After the close Monday, NDSN and PANW both beat on the top and bottom lines. At the same time, ZM reported a miss on revenue while beating on earnings. So far this morning, JD, MDT, BNS, M, BEKE, SJM, DKS, and XPEV have all posted beats to both the revenue and earnings lines. However, M, BEKE, and XPEV all lowered their forward guidance.
Overnight, Asian markets leaned strongly to the downside. Thailand (+1.10%) and India (+0.50%) were the only green in the region. Meanwhile, Australia (-1.21%), Japan (-1.19%), and South Korea (-1.10%) paced the losses across the region. In Europe, we see a similar picture taking shape at mid-day. The FTSE (-0.40%), DAX (+0.09%), and CAC (-0.32%) are leading the region lower with only Russia (+1.17%) and a couple of the minor exchanges showing any strength in early afternoon trade. As of 7:30 am, US Futures are pointing toward a flat, but green, start to the day. The DIA implies a +0.08% open, the SPY is implying a +0.10% open, and the QQQ implies a +0.12% open at this hour. 10-year bond yields are flat at 3.02% and Oil (WTI) is up 1.90% to $92.03/barrel in early trading.
The major economic news events scheduled for Tuesday include Mfg. PMI and Services PMI (both at 9:45 am), July New Home Sales, (10 am), and the API Weekly Crude Oil Stocks Report (4:30 pm). Fed member Kashkari also speaks at 7 pm. The major earnings reports scheduled for the day include BNS, DKS, DOLE, SJM, JD, BEKE, M, MDT, and XPEV before the open. Then after the close, AAP, CAL, INTU, LZB, JWN, SCSC, TOL, and URBN report.
In economic news later this week, on Wednesday, July Durable Goods Orders, July Pending Home Sales, Weekly EIA Crude Oil Inventories, and 5-year Bond Auction are reported. Then Thursday, we get a Q2 GDP Revision, Weekly Jobless Claims, and the Jackson Hole Central Banker Symposium begins. Finally, on Friday, we get July PCE Price Index, July Personal Spending, July Trade Goods Balance, July Retail Inventories, Michigan Consumer Sentiment, and the Jackson Hole Central Banker Symposium continues with Fed Chair Powell Speaking.
In earnings later this week, on Wednesday we get reports from EAT, CY, IIVI, WOOF, RY, ADSK, GES, NTAP, NVCA, CRM, SPLK, VSCO, and WSM. Then Thursday we hear from ANF, BURL, CM, COTY, DG, DLTR, GFI, GOGL, HAIN, PTON, TD, DELL, FTCH, GPS, MRVL, ULTA, VMW, and WDAY. Finally, on Friday JKS reports.
The bears ran wild on Monday, but the QQQ seems to be trying to hold its 34ema and the DIA may be trying to hold its own 20sma as support. The bulls will have a tailwind this morning from great earnings to start the day, but even in that victory, pessimists are looking at things like JD’s beats through a bearish lens. Plus, there is bad news in things like M cutting full-year guidance. Many traders are waiting to hear what Fed Chair Jerome Powell has to say in Jackson Hole on Friday before they take any firm view. Still, what they are trying to handicap is just whether the Fed will raise rates by 0.50% or 0.75% in September. Will Powell’s words really tell us anything a full month before the September 21 decisions date? And would that quarter of a percent make a huge difference? I don’t think so, but Mr. Market gets the only vote on both counts. With all of that said, the short-term trend is bearish and the mid-term bullish trend has been broken. So, we’re fast approaching levels of potential support, but need to reestablish a longer-term trend one way or the other. For now, the bias is bearish.
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: DVN, MRO, OXY, APA, MOS, XLE, XOM, EOG, VLO, DE, CVX, GM, NTR, KMI, PG. 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
A bit of profit-taking began with the bear’s more active on Friday as the rising bond yields raised concerns to suggest the Fed may remain aggressive. However, don’t count out the bulls just yet because by Friday’s close, the bullish trend remained intact, and price supports were not at risk of failing. Unfortunately, the bears are showing their teeth in the premarket, so expect a bit more price volatility, and the battle to hold at price support begins. In addition, with little on the earnings and economic calendar to inspire, markets could be more sensitive to the news cycle.
Asian markets traded mostly lower during the night as China once again surprised the market with another rate decrease just one week after the last cut. European markets also trade in the red this morning as rate hikes fears grow with the Euro at parity with the dollar again. With a light day of earnings and economic news, the bears seem hungry, with futures pointing to a gap-down open testing trend and price support levels. Plan for an extra dose of price volatility this morning.
Economic Calendar
Earnings Calendar
To begin the week, we have over 30 companies listed but only 20 or so confirmed, most of them coming from small-cap names. Notable reports include NDSN, PANW, & ZM.
News & Technicals’
China trimmed its key lending rates again on Monday, one week after it cut two interest rates in a surprise move. The People’s bank of China trimmed its five-year loan prime rate to 4.30% from 4.45% and its one-year- prime loan rate to 3.65% from 3.70% on Monday. Last week, the Chinese central bank lowered the one-year medium-term lending facility (MLF) loan rate for some financial institutions by ten basis points. The U.K. faces substantial energy bill increases. As a result, a cap on annual energy prices is set to rise to more than £3,500 this fall and over £4,000 next year, a level considered unaffordable for most households. The current package of government support is widely viewed as inadequate, but further plans look set to be delayed until a new prime minister is elected on Sept. 5th. Proposals include an increase in windfall taxes on energy companies, tax cuts, a commercial bank financing package for suppliers, and the temporary nationalization of some firms. Alibaba and Tencent executives have been focusing on cutting costs across the business, from headcount to exiting non-core businesses. It comes after both Alibaba and Tencent posted a set of second-quarter results confirming that these once free-wheeling and high-flying behemoths are not growing anymore. Alibaba and Tencent have felt the effects of a Covid-induced economic slowdown in China which is hitting areas from consumer spending to advertising budgets. Officials said that South Korea and the United States began their largest joint military drills in years on Monday with a resumption of field training as the allies seek to tighten readiness over North Korea’s potential weapons tests. The annual summertime exercises, renamed Ulchi Freedom Shield this year and scheduled to end on Sept. 1st, came after South Korean President Yoon Suk-yeol, who took office in May, vowed to “normalize” the combined exercises and boost deterrence against the North. South Korea launched the four-day Ulchi civil defense drills on Monday, designed to boost government readiness, for the first time since the pandemic’s start. Treasury yields ticked slightly lower early Monday, with the 12-month at 3.18%, the 2-year at 3.29%, the 5-year at 3.11%, the 10-year at 2.98%, and the 30-year at 3.22%.
Friday saw the bear’s more active, with the indexes pulling back with a morning gap down with only a modest selling pressure through the rest of the day. However, by the close bullish trends and price supports remained intact. Bond yields rose throughout the day on Friday, suggesting the Fed will continue to remain hawkish while the yield inversion points to a deepening recession possibility. In addition, the rising rate of auto repossessions remains worrisome as consumers struggle with rising housing and food prices. With a very light day on the earrings and economic calendar, the bears are showing some aggression in the premarket that may break uptrends and test support levels at the open. As a result, expect an extra dose of price volatility but don’t expect the bulls to give up easily. A bounce back to resistance is not out of the question.
Markets gapped lower at the open Friday and followed through to the downside until 11 am. From that point, all 3 major indices ground sideways the rest of the day. This left us with gap-down black candles with modest wicks on both ends. The SPY and the QQQ have failed their T-lines (8ema). However, the DIA managed right at the T-line. All 10 sectors were red with Technology, Basic Materials, and Consumer Cyclicals leading us lower.
On the day, SPY lost 1.34%, DIA lost 1.05%, and QQQ lost 1.95%. The VXX was flat at 21.16 and T2122 (4-week New High/Low Ratio) dropped like a stone, falling out of the overbought territory to the low mid-range at 35.71. 10-year bond yields rose sharply to 2.972% and Oil (WTI) was off a little less than a half of a percent to $90.09/barrel. This resulted in the first down week following the last 4 weeks being up.
In stock news, on Friday, BRKB was also granted permission to buy up to 50% of OXY (BRKB already owns just over 20% of the stock) and OXY shares closed up 8.48% on the news. Then on Saturday, it was reported that a jury ordered F to pay $1.7 billion in a Georgia rollover accident case from 2014. US Sec. of Transportation Buttigieg urged the 10 largest US airlines to do more to help stranded or delayed passengers following a large uptick in cancellations and delays this summer. AAL, DAL, UAL, LUV, JBLU, ALK, and SAVE were among the companies warned to do more or face stiff fines from the DOT. Elsewhere, a federal judge found SBUX guilty of firing 7 Memphis employees for seeking to form a union and has ordered SBUX to reinstate them. This is one of at least 3 federal cases brought by the National Labor Relations Board against SBUX (for the same illegal practice), which is desperately trying to stop unionization after 200 of its stores have recently unionized. Finally, Elon Musk was back on TWTR Sunday, saying that TSLA will hike the price of their “full self-driving” service by 25% on Sept. 5.
In personal computer tech news, AMD, NVDA, both now have a glut of current version graphics cards that they and their distributors need to unload very soon in order to make room for new models. The recent tremendous drop in Ethereum prices (which discouraged miners from buying as many cards on which to mine as they had in the past) is in part responsible. In addition, Ethereum will move to “proof of stake” (for the purpose of this blog just means you will no longer be able to mine Ethereum on a PC graphics card) by September 15. Regardless of the cause, AMD and NVDA are in a bind and clashing pricing on their current stock in order to unload it. AMD will announce its new line sometime 9/15-9/27 and will release the first 1-2 models of that lineup in October. At the same announcement, AMD will introduce its new 7000-series CPU lineup and the first of these will be for sale in November. INTC (which tried and failed to break into the graphics card business over the last year is also expected to announce new CPUs on 9/27, with the first of those models released for sale in December. The point is that all 3 companies are currently under tremendous pressure to discount graphics cards, more glut pressures are coming, and newer/faster models are on the horizon. In terms of CPUs, it appears AMD will beat Intel to market with their newest models by about 1-2 months, likely resulting in an increase in market share.
In China news, the PBOC made another surprise, but small, rate cut on Monday. The Chinese Central Bank lowered 1-year rates by 5 basis points and the 5-year by 15 basis points. Reuters reports leading analysts saying they expect China to continue cutting (10 basis points at a time) the remainder of the year. By themselves, rate cuts will have a supportive impact on China’s troubled real estate developers. However, the Beijing government is also planning a $29.2 billion package of “special loans” for the construction sector to help developers deliver unfinished projects and ease its national mortgage payment boycott movement (according to Bloomberg).
In technical analysis news, both the SPY and QQQ have gapped back down to test their 20sma as support in premarket. At this point, the SPY is holding that level and it looks like the QQQ is failing. The DIA has a way to go, but is headed that direction. Of course, the 20sma, 34ema, and 50sma are rising for all 3 major indices after weeks of rally. Markets seem focused on anticipating the Fed’s September action and as of this moment, Futures are pricing in a 61-basis-point hike. Unfortunately for traders, we will not hear from Fed Chair Powell until Saturday in Jackson Hole.
Overnight, Asian markets were mixed, even as China issued another surprise rate cut on Monday. Shenzhen (+1.19%), New Zealand (+0.68%), and Shanghai (+0.61%) led the gains. Meanwhile, India (-1.51%), South Korea (-1.21%), and Taiwan (-1.06%) paced the losses. In Europe, stocks are mostly in the red at mid-day. The FTSE (-0.24%) lags while the DAX (-1.71%) and CAC (-1.19%) lead the region lower. There are only two exchanges (Russia +1.19% and Norway +0.49%) showing green in that region in early afternoon trading. As of 7:30 am, US Futures are pointing toward a gap lower at the bell. The DIA implies a -0.85% open, the SPY is implying a -1.09% open, and the QQQ implies a -1.47% open at this hour. 10-year bond yields are just very slightly up to 2.975% and Oil (WTI) is starting the week up a half of a percent to $91.22/barrel.
There are no major economic news events scheduled for Monday. There are no major earnings reports scheduled for before the open. However, after the close, NDSN, PANW, and ZM report.
In economic news later this week, Tuesday we get Mfg. PMI, Services PMI, July New Home Sales, and the API Weekly Crude Oil Stocks Report. Then Wednesday, July Durable Goods Orders, July Pending Home Sales, Weekly EIA Crude Oil Inventories, and 5-year Bond Auction are reported. Thursday, we get a Q2 GDP Revision, Weekly Jobless Claims, and the Jackson Hole Central Banker Symposium begins. Finally, on Friday, we get July PCE Price Index, July Personal Spending, July Trade Goods Balance, , July Retail Inventories, Michigan Consumer Sentiment, and the Jackson Hole Central Banker Symposium continues with Fed Chair Powell Speaking.
In earnings later this week, on Tuesday we hear from BNS, DKS, DOLE, SJM, JD, BEKE, M, MDT, XPEV, AAP, CAL, INTU, LZB, JWN, SCSC, TOL, and URBN. Then Wednesday we get reports from EAT, CY, IIVI, WOOF, RY, ADSK, GES, NTAP, NVCA, CRM, SPLK, VSCO, and WSM. On Thursday we hear from ANF, BURL, CM, COTY, DG, DLTR, GFI, GOGL, HAIN, PTON, TD, DELL, FTCH, GPS, MRVL, ULTA, VMW, and WDAY. Finally, on Friday JKS reports.
Traders took profits Friday and seem in the same mood this morning. The main focus seems to be on being in front of what the Fed will do in September as the probability of a 75-basis-point hike is growing again after a brief period of 50bp expectation. In addition, Europe was spooked by Russia’s saber-rattling again when they announced a the end of last week that they “need” to shut off gas flow to Europe for 3 days of maintenance at the end of this month. This comes as Europe (and especially Germany) are desperately trying to fill storage tanks ahead of Winter. That announcement played a large part in Europe’s down start on Monday. With all of that said, the short-term trend is bearish, but the mid-term trend remains bullish and we are fast approaching a level of support from the June and Early August highs.
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. 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: ETSY, NET, JNPR, FUTU, OXY, KMI, KHC, XOM, MRO, DVN, SDS, DXD, QID. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 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 bulls worked hard on Thursday amid a bit more bearish activity due to economic data supporting a hawkish Fed at the next meeting. With a light day on both the earnings and economic calendar today, the growing inflationary issues in Europe may drive the price action. Though the bullish trend remains intact, we may want to keep an eye on support levels if the bears start showing their teeth. I would not expect the bulls to give up easily, but if trends or support begin to falter, it could inspire a sharper profit-taking sell-off due to the extreme index extension. As this bull/bear battle at price resistance grows, expect price volatility to become more challenging.
Asian market closed Friday mixed and primarily flat as a heat wave in China complicates an already challenged economy. European markets see red across the board this morning after economic data shows a worsening inflation problem. Finally, with a light day of earnings and economic reports, U.S. futures point to a bearish open in reaction to the deteriorating world economic conditions.
Economic Calendar
Earnings Calendar
We have a very light day on the Friday calendar with less than 15 companies confirmed, most of which are small caps. Notable reports include BKE, DE, FL, & VIPS.
News & Technicals’
After a sudden sell-off, Bitcoin is trading under $22,000, a more than three-week low. Ether, Binance Coin, Cardano, and Solana all fell simultaneously. The reason for the drop was not immediately apparent. The filing shows that Cohen’s RC Ventures dumped its stock on Tuesday and Wednesday at a range of prices between $18.68 per share and $29.22 per share. The firm also sold its call options. Cohen originally purchased his Bed Bath & Beyond shares at an average of roughly $15.34 per share. U.K. inflation jumped to a 40-year high of 10.1% in July as food and energy costs continued to soar, exacerbating the country’s cost of living crisis. The Bank of England expects consumer price inflation to top 13.3% in October. The country’s average energy bills (set via a price cap) are expected to rise sharply in the fourth quarter to eventually exceed an annual £4,266 ($5,170) in early 2023. Germany’s economy stagnated in the second quarter as soaring energy prices and the pandemic and supply disruptions caused a gloomy outlook for Europe’s largest economy, according to its finance ministry. The office said that energy prices were up 105% compared with July 2021, due mainly to higher prices for natural gas and electricity. China is caught in a devastating heatwave that could seriously impact its economy, according to a chief economist at Hang Seng Bank China. The heatwave “is a quite dire situation,” Dan Wang told CNBC’s “Squawk Box Asia” on Thursday, adding it probably could last for the next “two to three months easily.” “It will affect those big energy-intensive industries, and it will have[a] knock-on effect throughout the economy and even the global supply chain,” she said. Starbucks Chief Operating Officer John Culver is departing the company after two decades with the coffee chain. His exit comes in the middle of a broader executive reshuffling at Starbucks. The company will eliminate the role of the COO, instead shifting many of its responsibilities to its head of strategy and transformation. Morgan Stanley cuts Meta price target, citing declining engagement and lower monetization from reels. Treasury yields were little changed in early Friday trading, with the 12-month at 3.21%, the 2-year at 3.25%, the 5-year at 3.07%, the 10-year at 2.92%, and the 30-year at 3.17%.
Though the bears showed a little activity on Thursday, the bulls work hard to hold their ground, ignoring the economic reports likely to keep the Fed aggressively hawkish. However, the details of the slowing world economy have bears showing their teeth this morning. The ECB was slow to react to the rising inflation and, consequently, produced the highest PPI number on record while the U.K. had a 10.1% inflation rate! Perhaps we need to embrace the aggressiveness of the Fed, considering the deficit spending from Congress, lest we may suffer similar consequences here in the United States. With a very light day on the earnings and economic calendars, the compounding world economic issue could drive the days’ price action. The bullish trends continue to hold but watch for the possibility of aggressive bear attacks if supports begin to fail. However, don’t expect the bulls to give up easily, so plan for some price volatility as the battle at resistance ensues.
Markets opened flat Thursday and then then proceeded to waffle back and forth above and below the open price (positive and negative) all day long. This left all 3 major indices above their T-lines (8ema) even though the QQQ did retest (and held) that level earlier in the day. All 3 of those indices are giving us indecisive, Doji / Spinning Top type candles again on the day. However, the 200sma remains an issue (overhead for SPY and QQQ, just below for DIA). Seven of the ten sectors were green. Energy was far and away the biggest moving sector, up more than 2.66% while Healthcare and Communications Services paced the laggards, down about a half of a percent.
On the day, SPY gained 0.29%, DIA gained 0.11%, and QQQ gained 0.24%. The VXX was flat at 21.14, but stocks came back into overbought territory according to T2122 at a reading of 91.15. 10-year bond yields are off just slightly to 2.886%, but oil (WTI) was up 2.58% to $90.38/barrel again. Overall, another positive rest day in a bull trend on below-average volume.
In economic news, Weekly Initial Jobless Claims came in a bit better than expected with 250,000 new claims (versus 265k forecast and 252k last week). At the same time, Philly Fed Mfg. Index also came in much better than expected at +6.2 versus a -5.0 forecast and a -12.3 last month. Taken together, this led some traders to conclude the Fed may still hike rates by 0.75% again in September (assuming the trends hold) as opposed to yesterday’s mainstream view that the hike will only be 50 basis points. FOMC voters Bullard (extreme hawk) and George (slight Hawk) both said as much during the day, indicating they were leaning toward voting for a 0.75% increase at the next meeting. However, there was also some weaker economic news as July Existing Home Sales came in lower than expected at 4.81 million (versus 4.89 million forecast and 5.11 million in June).
In economic outlook news, consulting company PwC released the results of a survey of more than 700 US corporate top executives. The results showed that 52% have also implemented hiring freezes and 44% are rescinding job offers. However, the headline was that half (50%) of US companies are either currently or planning layoffs in the near future. In the same survey, 70% say they have implemented permanent remote-work options, but 60% also said they will be requiring employees to be in the office more often starting in September.
In stock news, BBBY closed down 19.63% and traded in a 28% range on the day. This came as near the close, GME CEO Cohen filed a revised Form 144 with the SEC confirming he has sold his entire 9.5 million share stake (including options) in BBBY for a tidy $68 million profit. (Not bad for a trade he was in for 5 months.) His own company, GME (another meme stock), closed down 6.39%. After the close, US safety regulators asked TSLA to provide information about their in-car cameras that are intended to monitor self-driving mode driver awareness. Elsewhere, SBUX’s COO stepped down as the company eliminated that position in a restructuring. Finally, overnight, RIVN announced they are canceling its lowest-cost electric pickup truck.
In earnings news, after the close, AMAT, STNE, and SHG reported beating on both the revenue and earnings lines. Meanwhile, ROST and TKC both missed on revenue while beating on earnings. So far this morning, VIPS beat on both lines. Meanwhile, FL and BKE missed on revenue while beating on earnings. DE was on the opposite side, posting a beat on revenue while substantially missing on earnings.
Overnight, Asian markets leaned heavily to the red side, with 3 exchanges managing to stay green by only a few hundredths of a percent. Shenzhen (-1.27%), India (-1.10%) and New Zealand (-1.10%) led the region lower. In Europe, stocks are mixed, but leaning heavily toward the downside at mid-day. The FTSE (unchanged), DAX (-0.93%), and CAC (-0.53%) are leading the way lower. However, a few smaller exchanges have managed to stay green (most notably Denmark +1.17%) 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 -0.74% open, the SPY is implying a -0.97% open, and the QQQ implies a -1.09% open at this hour. In addition, bond yields are up briskly to 2.95% and Oil (WTI) is down more than 2% in early trading.
There are no major economic news events scheduled for Friday. The major earnings reports scheduled for the day include DE, FL, and VIPS before the open. There are no major earnings reports scheduled for after the close. However, also be aware that today is options expiration Friday.
Despite generally strong earnings, the combination of better than expected Weekly Jobless Claims numbers (which means fear of a larger than futures currently are expecting Fed rate hike) and fear over economic outlook have stocks poised to break a 4-week winning streak in all 3 major indices. We also are facing expirations day for over $2 trillion in options at the close today. So, beware some pinning in the afternoon. With that said, the trend remains bullish, but it appears SPY has failed a test (and DIA may be failing today) of its 200sma. The gist is that the bears have the wind at their backs this morning.
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. 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: ACAD, AMKR, CIEN, CPB, DOV, FISV, KTOS, OKE, STLD, WTRG, XME, JNPR. 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
***Sorry everyone the YouTube is being very slow this morning and I don’t know when or/if the daily video will be active for viewing. Its out of my control! 🤬
Yesterday’s price action may have hinted at a slowing in the current rally; the bulls are clearly in control, and traders have zero concern about the 8.5% inflation and a hawkish Fed. However, with significant overhead resistance and slowing housing and manufacturing sectors as a persistent bond inversion continues, there are still willing buyers that could keep the rally going through the rest of the week. Inspiration for buyers or sellers will come from potentially market-moving economic reports and a handful of notable earnings.
During the night, Asian markets closed in the red across the board, with Goldman and Nomura again cutting China’s GDP outlook. European markets traded with choppy caution after a 50 basis point increase from the bank of Finland. U.S. futures trade cautiously bullish ahead of jobless claims, manufacturing, and housing data. Will the data inspire the bulls or the bears? We will soon get the answer.
Economic Calendar
Earnings Calendar
We have just over 40 companies listed on the Thursday earnings calendar, with around 20 confirmed reports. Notable reports include AMAT, BILI, BJ, CSIQ, EL, KSS, MLCO, NTES, NIO, ROST, TPR, and WB.
News & Technicals’
According to the July minutes, the Fed sees interest rate hikes continuing until inflation eases substantially but did not provide specific guidance. Tensions between the U.S. and China are not helping President Joe Biden’s efforts to control inflation; economist Jeffrey Sachs told CNBC’s “Street Signs Asia.” He said inflationary pressures would likely persist for the foreseeable future. Norway’s central bank hikes rates by 50 basis points in a fight to control surging inflation. The increase takes the Norges Bank’s sight deposit rate to 1.75% from 1.25%, exceeding its prior forecast in June. Norwegian inflation hit an annual 4.5% in July, up from 3.6% in June and well ahead of consensus projections for 3.8%. CNBC’s Jim Cramer on Wednesday said the market could continue to stall out after Wednesday’s slump and urged investors to trim some of their positions. “Things can still go right. I don’t want to freak you out. I think stocks need a cooling-off period after this miraculous run, and we’re getting one for certain,” he said. Iranian negotiating team adviser Mohammad Marandi said on Monday that “we’re closer than we’ve been before” to securing a deal and that the “remaining issues are not very difficult to resolve.” The Biden administration says it’s ready to sign a deal quickly if Iran accepts it. Three major sticking points remain, however. According to Oxford Economics ‘ lead economist, Tommy Wu, developer cash flows through July are down 24% year-on-year on an annualized basis. The data showed a sharp slowdown from growth for nearly every year since at least 2009. In addition, recent homebuyers’ refusal to pay mortgages has worsened real estate developers’ funding situation. Despite multiple reports of government plans to keep developers funded, the central government has yet to announce broader support for real estate officially. Goldman Sachs downgrades its 2022 forecast for China to 3% from 3.3%. Nomura cuts its full-year growth outlook to 2.8% from 3.3%. Both cite weak demand, uncertainties over China’s zero-Covid policy, property woes, and an energy supply crunch. Cisco gave better-than-expected guidance for its full 2023 fiscal year. Management touted strong demand despite a volatile backdrop. Treasury yields ticked slightly lower in early Thursday trading, with the 2-year at 3.27%, the 5-year at 3.04%, the 10-year at 2.88%, and the 30-year at 3.13%.
Though yesterday’s selling may hint at slowing the current bull run, the 8.5% inflation and hawkish Fed seem to be of zero concern to traders willing to buy near overhead resistance. Moreover, index chart technicals and trends remain bullish though housing and manufacturing are slowing. Finally, rising bond yields point to a troubling and deepening recession possibility as the rate inversion persists, but the overall market seems unconcerned. Thursday brings a busy economic calendar of potential market-moving reports with a handful of notable earnings to inspire. Of course, we will soon find out if all the data inspires the bulls or bears, so buckle up and plan your risk carefully.
Stocks gapped lower between 0.60% and 1.00% in the major indices Wednesday. Then after about an hour of sideways grind, they followed through to the downside to reach the lows of the day shortly after 11:45 am. However, once again the dip buyers stepped in and the bulls began a rally that took us back to the highs of the day closing the morning gap in the large-caps) by 2:40 pm. The Whipsaw took effect there and all 3 major indices started back down the rest of the day. This action left all 3 major indices giving us gap-down, Doji / Spinning Top candles which indicate indecision in the current pullback.
On the day, SPY lost 0.71%, DIA lost 0.45%, and QQQ lost 1.14%. Nine of the ten sectors were in the red with the Energy Sector managing green while Basic Materials, Technology, and Consumer Cyclicals led the way lower. The VXX fell just under 1% to 21.10 and T2122 fell out of the overbought territory to 71.31. 10-year bond yields were significantly higher to 2.889%, while Oil (WTI) was up 1.36% to $87.71/barrel on the day. Overall, a modestly red, indecisive day where all 3 major indices stayed above their respective T-lines (8ema).
In economic news, July Retail Sales came in dead flat, which was slightly below the +0.1% forecast and well below June’s +0.8%. Meanwhile, June Business inventories came in as forecast at 1.4% (down from May’s 1.6%) and June Retail Inventories came in better than expected a 1.5% (versus 1.6% forecast). The big surprise was EIA Oil inventories, which came in down 7.056mil barrels (versus -0.275mil forecast). With this said, the big news was the July FOMC Minutes, which indicated meeting participants are in favor of sustained action to bring down inflation and stated that they saw a “neutral rate” (neither supportive nor restrictive of growth) to be around 2.25% – 2.50%. Futures markets have now priced in a 50-basis-point hike for September (versus the last two meeting’s 0.75% hikes).
In earnings news, after the close, AMCR, BBWI, CSCO, KEYS, and SNPS all reported beating on both the revenue and earnings lines. Meanwhile, ZTO missed on revenue while beating on earnings. So far this morning, CLPBY, BJ, KSS, EL, NTES, SPTN, CSIQ, NICE, and FORTY all reported beats on both lines. Meanwhile, TPR missed on revenue while beating on earnings. However, it is worth noting that KSS, EL, and TPR all lowered forward guidance while reporting.
In stock news, HOG and union employees voted to ratify a 5-year contract that averts a potential strike. The BBY meme stock fell sharply when Ryan Cohen (CEO of GME) filed with the SEC that he is beginning to sell his 9.5 million shares (total holdings) which is roughly 10% of the outstanding shares. Then, after the close, Investing.com reported that DEN is exploring a potential sale after it escaped bankruptcy in 2020.
In Energy news, as mentioned above, US Oil Inventories fell sharply and unexpectedly this week. The EIA went on to report that the cause was not domestic consumption nor a lack of supply. The cause was a record amount of US oil exports of over 5 million barrels per day in the last week while WTI was selling at a steep discount to Brent. Earlier in the day, a US Appeals Court overruled a lower court ruling that had halted the Biden Administrations’ effort to pause and reevaluate oil and gas leasing on Federal land and waters
Bloomberg reports that following the visit of Speaker of the House Pelosi and a second Congressional delegation the following week, formal trade talks between the US and Taiwan will now start in a long-promised effort to deepen ties. This comes amidst strenuous opposition from China. Elsewhere abroad, UK inflation came in at over 10% yesterday, giving them the highest inflation rate among the G-10. Then early this morning (US time), Turkey cut its interest rates to spur growth…even as the country faces an 80% inflation rate.
Overnight, Asian markets were nearly red across the board. Only Singapore (+0.33%) showed any appreciable gains. Meanwhile, Japan (-0.96%), Hong Kong (-0.80%), and Shenzhen (-0.62%) led the rest of the region lower. In Europe, stocks are mixed at mid-day. The FTSE (-0.04%), DAX (+0.67%), and CAC (+0.45%) are leading a slight lean to the upside. However, 7 exchanges are showing red while 8 are showing green in early afternoon trading. As of 7:30 am, US Futures are pointing toward a flat start to the day. The DIA implies a +0.08% open, the SPY is implying a +0.08% open, and the QQQ implies a +0.03% open at this hour. 10-year bond yields are a bit lower to 2.868% and Oil (WTI) is up 1% to $88.98/barrel in early trading.
The major economic news events scheduled for Thursday include Weekly Initial Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am), and July Existing Home Sales (10 am). There are also two Fed speakers (George at 1:20 pm and Kashari at 1:45 pm). The major earnings reports scheduled for the day include BJ, CSIQ, EL, KSS, NICE, SPTN, and TPR before the open. Then, after the close, AMAT and ROST report.
In economic news later this week, on Friday there is no major economic news. However, in earnings later this week, on Friday we get reports from DE, FL, and VIPS.
Earnings were surprisingly good (although some retail forward guidance was lowered) overnight and this morning. We still have Jobless Claims ahead, but at the moment it is looking like a modest (tentative?) bullish start to the day. That would make yesterday’s pullback exactly what the doctor ordered for a sustained rally. We can probably expect another low-volume, perhaps dead morning, as the rest continues. However, you can’t measure a river’s depth on average, meaning there will be pockets of extreme volatility in places like the meme stocks where BBBY is one to watch. The trend remains bullish, but remember the SPY and QQQ still have their 200sma overhead to deal with, and for that matter, DIA has not pulled away from its 200sma after breaking through.
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. 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: FUBO, VRM, C, GM, TOST, TTWO, GE, BAC, DM, WFC, WMT, UNP, TGT, RKT. 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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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
