Disappointing retail earrings revealed that the consumer might not be as healthy as all the talking heads suggested triggering a massive wave of selling on Tuesday. The negative sentiment traveled around the world as thoughts of a worldwide recession grew. We will now turn our attention to Jobless Claims, Philly Fed MFG Index, and Existing-Home Sales numbers as the national average gas price hit another record high. Expect another challenging day of price action as margin calls rise and forced redemptions pile on in the days and weeks ahead.
Asian markets traded mostly lower, with Hong Kong falling 2.54% after disappointing results from Tencent. This morning, European markets trade decidedly bearish as global markets react to inflation and the weakening consumer. With earnings and economic data ahead, U.S. futures point to a substantial gap as selling extends into Thursday’s open.
Economic Calendar
Earnings Calendar
We have less than 30 companies listed on the Thursday earnings calendar, with several unconfirmed. Notable reports include KSS, BJ, AINV, AMAT, RDY, EXP, FLO, MNRO, NNOX, PANW, ROST, VFC & VIPS.
News & Technicals’
Walmart, Target, Home Depot, and Lowe’s reported quarterly results this week, and they each offered a different perspective on where and how people are spending their money. “While we’ve experienced high levels of inflation in our international markets over the years, U.S. inflation being this high and moving so quickly, both in food and general merchandise, is unusual,” Walmart’s CEO said. As a result, analysts and investors didn’t anticipate that Walmart and Target would take a massive hit on their profits. However, Home Depot and Lowe’s have seen more strength among shoppers in recent weeks. In a tweet to Martin Viecha, Tesla’s senior director of investor relations, Tesla bull Leo Koguan said the company should immediately announce that it plans to buy back $5 billion of Tesla shares this year and $10 billion next year. Tesla shares closed down more than 6% Wednesday amid a broad market sell-off. The company’s stock is down more than 30% this year. When a public company uses cash to buy shares of its own on the open market, a stock buyback is a method that firms use to try to return capital to shareholders. Cisco missed on the top line in the fiscal third quarter and issued a worse-than-expected revenue forecast for the current quarter. Analysts at Citigroup said last month that competitors are taking networking switch market share from Cisco. Tencent, the largest Chinese company listed in Hong Kong by market value, said Wednesday that first-quarter revenue was flat, while profit attributable to shareholders plunged by 23% from a year ago. Fintech and business services revenue, including WeChat mobile pay, fell quarter-on-quarter for the first time since the initial shock of the pandemic and by nearly as much. Management also noted recent supportive comments on regulation from Beijing but said implementation would take time. Treasury yields declined in the early Thursday trading, with the 10-year falling six basis points to 2.83% and the 30-year declining to 3.01%.
All the talking heads keep telling us the consumer was strong, but the disappointing retail earnings reflect consumers changing spending habits due to inflationary pressures. The data sparked a painful sell-off for traders and investors who bought the recent low, hoping the bottom was finally found. Unfortunately, the realization that recession is now likely suggests we could have long summer of market declines ahead. Adding insult to injury, we hit another record high in gas prices, with the national average hitting $4.59 a gallon. This morning, a new Goldman Sachs report projects the national average could top $6.00 this summer! Today we face Jobless Claims, Philly Fed Index, and Existing-Home Sales figures with the futures pointing sharply lower with sentiment declining worldwide. So, buckle up for another hectic day.
Stocks gapped down over a percent on Wednesday as fear of Fed hawkishness and inconclusive news from major retailers on consumer spending led to uncertainty. The bad news for any bulls was that this led into a strong selloff that lasted the entire rest of the day in all 3 major indices. Only a bounce the last 5 minutes of the day prevented us from going out on the lows. This left us with big, ugly black gap-down candles in all 3 major indices and nearing the breakout of a Dreaded-h pattern in all 3. On the day, SPY lost 4.03% (worst day since June 2020), DIA lost 3.53%, and QQQ lost a whopping 4.91%. The VXX rose 5.24% to 26.09 and T2122 dropped back deep into the oversold territory at 5.08. 10-year bond yields dropped back to 2.884% and Oil (WTI) fell 2.8% to $109.25/barrel.
During the day, April Building Permits and Housing starts both came in below forecast. This falls in line with spiking mortgage rates that have seen declines in mortgage applications in recent weeks and may be a sign of the housing market bidding wars slowing. However, the big miss of the day was current crude oil inventories, which came in 4.7 million barrels lower than expected (-3.394 mil actual vs +1.383 mil est.). After hours, the CEO of UAA announced he will be stepping down as of June 1.
On the Russian invasion story, China is now in talks with Russia to buy a huge amount of Russian oil to fill their strategic oil reserves. Even at a steep discount to market price, this would be a huge financial boost to Russian coffers. However, Russian GDP growth missed expectations during Q1. Russian GDP came in at +3.5% (versus +3.7% that was forecast), down from the +4% during Q4. Since almost all of this drop-off came during the last month of the quarter, we can see the impacts of sanctions…even with soaring energy prices to boost numbers.
In addition to reporting earnings this morning, KSS also slashed forward guidance on both sales and profits. This came as the company said it expects to have received the last of the expected buyout offers in the next few weeks. There are known bids from FRG, another from SPG (who wants to combine KSS with former JCPenney), as well as a separate private equity group. It is unknown who the additional bidder(s) may be that the company is waiting for in the next few weeks.
Overnight, Asian markets were mostly in the red. Only Shenzhen (+0.38%) and Shanghai (+0.36%) managed gains while India (-2.65%), Hong Kong (-2.54%), and Japan (-1.89%) paced the losses. In Europe, we see red across the board at mid-day. The FTSE (-2.36%), DAX (-2.10%), and CAC (-1.75%) lead the way and are typical of the region in early afternoon trading. As of 7:30 am, US Futures are pointing toward a second straight significant gap lower. The DIA implies a -1.12% open, the SPY is implying a -1.15% open, and the QQQ implies a -1.23% open at this hour. 10-year bond yields are down strongly to 2.839% and Oil (WTI) is off 1.77% to $107.65/barrel in early trading.
The major economic news scheduled for release Thursday includes Weekly Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am), and April Existing Home Sales (10 am). Major earnings reports scheduled for the day include WMS, BJ, KSS, and VIPS before the open. Then, after the close, AMAT, DECK, FLO, PANW, ROST, and VFC report.
So far this morning SQM, BJ, EXP, and MBT have reported beats on both lines. At the same time, KSS and WMS both reported beating the estimates on revenue but missing on the bottom line. On the other side, VIPS missed on revenue while beating on earnings. Finally, PLCE missed on both revenue and earnings.
After Wednesday’s rout in the market, fear has spread. The signal of this is bond yields dropping as investors stash money n bonds, bidding up their price (and thus push down yields). The bond market has also seen much more volatility in the last few days as skittishness has now infected bond markets as well. The proximate cause most talking heads point to is concern over economic slowdown (not inflation). Whether those analysts are right or not, when you add geopolitical risk to the mix, markets are just plain uncertain and nervous. So, continue to be very careful. The short and mid-term trends are bearish, the mid-term move is getting a bit long in the tooth. Plus in the short-term (as shown by T2122), we are oversold and have the potential support of a “bear market level” (down 20% from highs) in the area. So, remain nimble and hedged. Above all, don’t give in to FOMO and feel the need to chase a move or predict a reversal either way.
Trading is a job, not a lottery ticket. So, work the process. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Also, remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. Keep in mind that nobody is right all the time. When you’re wrong, just admit it and take your loss. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss.
Ed
Swing Trade Ideas for your consideration and watchlist: MO, ADM, MOS, SLB, NTR, RBLX, BTI, AMD. 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
The relief rally extended on Tuesday with a substantial overnight gap that immodestly met with bearish actively pushing the indexes back down to filling gaps ahead of Jerome Powell’s comments. However, the bulls found inspiration to rally back to morning highs after hearing the fed will continue to raise rates until inflation contracts. We have a busy day or retail earnings along with Housing and Petroleum numbers that likely keep traders guessing and price action challenging on Wednesday.
While we slept, Asian markets traded mixed but mostly higher as data revealed Japan’s economy shrank less than expected. Likewise, European markets trade mixed this morning, searching for direction after the U.K. inflation hits a 40-year high of 9%. Finally, disappointing results from LOW and TGT have U.S. futures pointing to a modestly bearish open with housing numbers just around the corner.
Economic Calendar
Earnings Calendar
Wednesday’s earnings calendar remains retail themed, with about 30 companies listed through several unconfirmed. Notable reports include LOW, ADI, BBWI, CSCO, HWKN, IBEX, SCVL, SQM, SNPS, TGT, TJX, TGI & ZIM.
News & Technicals’
Fed Chair Jerome Powell said he would back interest rate increases until prices fell back toward a healthy level. “If that involves moving past broadly understood levels, we won’t hesitate to do that,” the central bank leader told the Wall Street Journal. Just 31% of investors participating in the New York-based bank’s annual shareholder meeting voted in support of a $52.6 million award that was part of Dimon’s 2021 compensation package. In the form of 1.5 million options that Dimon can exercise in 2026, the bonus was designed to keep the CEO and chairman at the helm of JPMorgan Chase for another five years. While the so-called “say on pay” vote results are nonbinding, JPMorgan’s board said it takes investor feedback “seriously” and intended Dimon’s bonus to be a one-time event, according to a company spokesman. Goldman Sachs analysts have cut their China GDP forecast to 4% from 4.5% after weak data in April. The bank does not expect China will start fully easing Covid controls before the second quarter of 2023. On Monday, Citi — which had one of the highest China GDP forecasts — cut its outlook for growth to 4.2% from 5.1%. Finland and Sweden formally applied to join NATO on Wednesday marking another step toward the Western military alliance’s expansion. Netflix is laying off around 150 employees across the company. The eliminated positions represent less than 2% of the streamer’s 11,000 staffers, with most of the cuts happening in the U.S. The staff reductions come less than a month after Netflix reported its first subscriber loss in a decade and forecasted future losses in the next quarter. U.K. inflation jumps to a 40-year high of 9%, driven by food and energy costs. A quarter of Britons have resorted to skipping meals as inflationary pressures and a food crisis conflate what Bank of England Governor Andrew Bailey recently dubbed an “apocalyptic” outlook for consumers. Treasury yields traded flat early Wednesday, with the 10-year pricing at 2.96% and the 30-year at 3.16%.
Although the relief rally extended with a big gap, it quickly found some feisty bears pushing it back to fill gaps. However, after the Powell speech, where he reaffirmed the FOMC’s inflation-fighting stance, the bulls found a willingness to rally the indexes back to highs of the day to deliver and other day whipsawing prices. Unfortunately, this morning LOW and TGT delivered disappointing earnings results, and the national average gas prices hit another record high, increasing the bulls’ difficulty in following through on the Wednesday relief. So, today we will turn our attention to the Housing starts and permits that the consensus suggests declined just slightly last month. In addition, traders will alos want to keep an eye on Mortage Applications, Petroleum numbers, and a 20-year bond auction. Price volatility is likely to remain high with overhead resistance levels near.
Markets gapped strongly higher at the open Tuesday on good sales numbers from WMT and HD. However, they immediately began fading the gap in all 3 major indices. The lows were reached just before 11 am only to see a long, slow rally take over. Price had climbed back to the open level about 1 pm only to print another whipsaw between 2 pm and 3 pm before running up to new highs late. This has left us with indecisive, gap-up, Spinning Top or even Hangman candles in all 3 of those averages. The good news for bulls is that those 3 were able to pass a retest of their T-lines (8ema). The bad news is that the downtrend line has not yet been reached and there is still a lot of resistance above. On the day, SPY gained 2.04%, DIA gained 1.30%, and QQQ gained 2.59%. The VXX rose slightly to 24.79 and T2122 climbed up above the mid-point to 67.14. 10-year bond yields rose sharply to 2.984% and Oil (WTI) fell 2% to $111.86/barrel.
During the day, April Retail sales came in as expected (+0.9%) but the Core Retail Sales beat expectations (+0.6% vs +0.4% est.). This was offset by larger than expected builds in March Retail Inventories. However, April Industrial Production also came in above expectations at +6.4%. Then in a Wall Street Journal interview, Fed Chair Powell said he’ll continue to back rate increases until “we see inflation coming down in a clear and convincing way,” even if that meant moving past levels broadly seen as “neutral.” He said that this policy might come at the expense of increasing the unemployment rate past the current 3.6%. This is the most hawkish Powell we’ve ever heard. However, overall he said he sees the most likely paths to lead to a “softish landing” for the economy.
In stock news Tuesday, C jumped 7.59% on news of Warren Buffett taking a $3 billion position in the stock. All the semiconductor stocks climbed with AMD spiking 8.73% after catching an upgrade from Piper Sandler. Meanwhile, MU surged 5.69% and NVDA surged 5.29%, as QCOM ran up 4.31%, and INTC climbed 3.06%. However, despite the strong Tech gains, the top-performing sectors were Basic Materials and Consumer Cyclicals (both up 3.14% as sectors). After the close, KEYS reported a beat on both the revenue and earnings lines. Also, for the second day in a row, a major corporation faced shareholder rejection of its executive compensation plan. This time, after-hours it was announced that JPM shareholders rejected CEO Jamie Dimon’s bonus ($52.6 million in stock options) by more than a 2-to-1 margin.
On the Russian invasion story, the leaders of Finland and Sweden are submitting their country’s NATO membership applications today in a meeting with NATO Sec. Gen. Stoltenberg. The leaders of both nations with then visit the White House to meet President Biden on Thursday. Elsewhere, Bloomberg reported last night that the US State Dept. would not extend the sanctions carve-out that allowed Russia to pay bond debt in dollars when it expires on May 25th. This greatly raises the chance of Russian default when the next payments are due May 27th. Finally, President Biden is preparing a $500 million military aid package (money they can spend on US-made arms) for India. This is intended to start weaning India off of buying arms from Russia.
Weekly mortgage demand for new home purchases fell 12% week-on-week and was down 15% from one year ago. Refinancing applications also continue to nose dive, falling another 10% week-on-week. This came as 30-year, fixed-rate interest levels fell slightly from 5.53% to 5.49%. Clearly, people still remember the 3% rate from the start of the year and have a hard time swallowing 5.49%.
Overnight, Asian markets mixed but leaned heavily to the green side. Taiwan (+1.50%), New Zealand (+1.08%), and Australia (+0.99%) led the gains, but increases were widespread. Only Shanghai (-0.25%), and Shenzhen (-0.20%) had appreciable losses. In Europe, markets are more evenly mixed at mid-day. The FTSE (-0.11%), DAX (+0.02%), and CAC (-0.18%) lead the region as always with Russia (+2.03%) as an outlier. As of 7:30 am, US Futures are pointing toward a down start to the day. The DIA implies a -0.44% open, the SPY is implying a -0.60% open, and the QQQ implies a -0.83% open at this hour. 10-year bond yields are back up to 3.001% and Oil (WTI) is up 1.1% to $113.64/barrel in early trading.
The major economic news scheduled for release Wednesday are limited to April Building Permits and April Housing Starts (both at 8:30 am), and Crude Oil Inventories (10:30 am). Major earnings reports scheduled for the day include ADI, ARCO, LOW, TGT, TJX, and ZIM before the open. Then, after the close, BBWI, SQM, CSCO, CPRT, and SNPS report.
So far this morning ADI and ZIM have reported beats on both lines. At the same time, TGT reported beating the estimates on revenue but missing on the bottom line. On the other side, LOW missed on revenue while beating on earnings. TGT shares were down 23% in premarket trading on the earnings miss, punished the same as WMT (which lost 11.38% Tuesday) for higher-than-expected costs. LOW was down 3% in premarket on a revenue miss that the company blamed on cooler weather (despite rival HD beating sales estimate just yesterday).
Inflation, how it will be fought, and how that will impact markets is the main topic on trader’s minds today. As Fed Chair sounded quite hawkish Tuesday and the UK printed 9% April inflation overnight, Mr. Market is scared. It could also be traders thinking it’s time to take profits on this relief rally after gaining 4% in the SPY over the last 4 days. Add geopolitical risk to the mix and there is uncertainty in the air. Either way, we need to remember the trend is still bearish and there is a lot of resistance above. We have not made a low, high, higher-low, and higher-high yet. So be very careful chasing long positions. That said, the bearish move is long in the tooth as well and near the potential support of a 20% fall to bear levels. So, remain nimble and hedged. Above all, don’t give in to FOMO -OR- feel the need to predict a reversal either way.
Trading is a job, not a lottery ticket. So, work the process. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Also, remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. Keep in mind that nobody is right all the time. When you’re wrong, just admit it and take your loss. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss.
Ed
Swing Trade Ideas for your consideration and watchlist: SLB, MOS, LLY, KO, PSA, GILD, ZC, JPM, IVR, LYFT DAL, AXP, ABNB, SHOP, MSTR, BBBY. 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
In this video, one of our great members shares what he has learned about sector analysis and screening for watchlist selection (including some cool TC2000 layouts).
The price action in Monday’s market showed considerable uncertainty as the SP-500 squeaked above 4000 while the Nasdaq failed to reclaim 3000. I assumed the uncertainty was due to the pending Retail Sales number coming out before the bell today, but the futures seem to project a very bullish result in the pre-market. If correct, it could trigger a substantial short squeeze, but watch for a nasty pop and drop at the open if the number disappoints. Watch those overhead resistance levels and remember Jerome Powell speaks at 2 PM eastern.
Asian markets closed green overnight, led by Hong Kong surging 3.27% as the tech volatility continues. European markets are also in rally mode this morning, with the DAX leading the way, up more than 1.50% this morning. However, ahead of Retail Sales, Industrial Production numbers and comments from the Jerome Powell U.S. futures point to a substantial gap up open. Buckle up the drama is likely to spike the price volatility, so be careful jumping the gun with the fear of missing out!
Economic Calendar
Earnings Calendar
We have a lighter day on the earnings calendar with just over 70 companies listed, but many are unconfirmed. Notable reports include WMT, AER, AGYS, TCS, HD, HUYA, JBI, JD, JMIA, KEYS, NXGN, QUIK & SE.
News & Technicals’
Home Depot on Tuesday raised its full-year outlook after reporting strong quarterly earnings, fueled by the company’s strongest first-quarter sales on record. For 2022, Home Depot is expecting sales growth of about 3% and earnings per share growth in the mid-single digits. This marks Ted Decker’s first quarter at the helm of the company. Twitter estimated in a filing earlier this month that fewer than 5% of its monetizable daily active users during the first quarter were bots or spam accounts. But Musk estimates that around 20% of the accounts on Twitter are fake or spam accounts, and he’s concerned that the number could be even higher. “My offer was based on Twitter’s SEC filings being accurate,” Musk tweeted early Tuesday morning. Twitter CEO Parag Agrawal laid out how the social media company fights fake and spam accounts on the platform. The information, posted in a lengthy Twitter thread, comes just days after Elon Musk said on Twitter that he would put his $44 billion acquisition of the company “on hold” while he researches the proportion of fake and spam accounts on the platform. Musk responded to Agrawal’s tweets with a smiling feces emoji. He later added: “So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter.” Turkey’s Erdogan has doubled down on his opposition to Sweden and Finland joining the NATO alliance, in a move some analysts say is aimed at gaining concessions. NATO’s ascension to a new member state requires consensus approval from all existing members. Turkey, which joined the alliance in 1952, is a crucial player in NATO, boasting the second-largest military in the 30-member group after the United States. Treasury yields rose in early Tuesday trading, with the 10-climbing to 2.92% and the 30-year rising to 3.13%.
Monday’s price action displayed considerable uncertainty as the Dow chopped in a relatively wide range while the Nasdaq struggled to find direction most of the day. However, in the last hour of the day, the SP-500 regained the 4000 by a narrow margin, while the Nasdaq failed to reclaim the 3000 level. The U.S. futures are remarkably happy in the pre-market ahead of Retail Sales numbers after a strong showing from Home Depot raised hope of a robust consumer. Such a move could trigger a short squeeze at the open or a nasty pop and drop if the economic data should disappoint. No matter what happens, keep in mind the downtrend and overhead resistance levels where the feisty bears may set up defenses. With the National Average gas prices hitting another record at $4.52 per gallon and diesel prices at $5.57, consumer spending habits are likely to change.
Monday started with a small gap lower as we got bad Chinese economic data and the NY Empire State Mfg. Index missed estimates. After that, we saw a roller-coaster ride with a slightly bullish trend until 3 pm. From that point, stocks slid the rest of the day. This action allowed all 3 major indices to retest their T-Line and fail again. However, DIA held out to barely print a second straight green day as markets fight with their downtrends. This left us with indecisive, Doji or Spinning Top candles in all 3 major indices. On the day, SPY lost 0.37%, DIA gained 0.18%, and QQQ lost 1.16%. The VXX fell almost 5% to 24.69 and T2122 climbed again, but remains below the mid-point at 35.11. 10-year bond yields fell on the day to 2.886% and Oil (WTI) rose 3.3% to $114.16/barrel.
Monday, Bloomberg reported Elon Musk has floated the idea of buying TWTR at a lower price than approved by the board. This came the same day that he and TWTR CEO Agrawal went back and forth on whether or not there are many fake accounts on the platform. The stock took an 8.18% loss on the day and in the process gave back more than all the gains made since Musk’s position purchase was made public. Then early this morning Musk said that TWTR must prove its claims of 5% or fewer “bot accounts” for the purchase to proceed at all. TWTR was down as much as another 4% in after-hours trading.
Cryptocurrencies continue to have massive issues as another “stablecoin” (DEI) lost its peg to the US Dollar, falling below 70 cents. The algorithm selling Bitcoin and NFTs in an attempt to maintain the peg simply could not keep up. As with Luna (which is now of no value), this puts pressure on Bitcoin and cryptocurrencies in general on a reputation basis as well as direct selling to maintain the peg. However, Bitcoin, rallied late in the day to regain the $30,000 level after falling to $29,000 during the day. In related news, COIN reported that people holding their crypto wallets at COIN are to be treated as “unsecured creditors” in the event of bankruptcy. This means if the COIN exchange files for bankruptcy, people holding accounts will be paid last in the disbursement of assets. COIN plummeted another 9% on the day and is down 53% since May 4th.
After the close, TME missed on revenue while beating on earnings. On the other side, TTWO and AE both beat on revenue while missing on earnings. In other stock news, after-hours, INTC announced that shareholders have rejected the company’s top executive pay packages by almost a two-to-one margin. The vote is not binding on the board, but is a clear sign that shareholders are watching company performance. In other compensation news, MSFT announced it will nearly double its employee compensation budget as well as increase the stock options given to some classes of employees by 25%. This was all a major effort to retain staff in a very competitive job market.
On the baby formula story, ABT reached a deal with the FDA to restart their Sturgis MI plant (which the FDA shut down in February). This increases the largest baby formula maker’s capacity by at least one-third. Elsewhere, Nestle (a global baby formula maker with smaller US presence) is flying large supplies of formula to the US today while Reckitt Benckiser (UK formula maker) is also boosting production by 30% and shipping more to the US in order to capture market share and alleviate the US shortage.
Economic news later this week includes April Building Permits, April Housing Starts, and Crude Oil Inventories on Wednesday. Then Thursday we see Weekly Jobless Claims, Philly Fed Mfg. Index, and April Existing Home Sales. There is no major news scheduled for Friday.
Overnight, Asian markets leaned heavily to the green side on encouraging Covid news out of China. Hong Kong (+3.27%) and India (+2.63%) were outliers, but Shenzhen (+1.23%), Taiwan (+0.98%), and South Korea (+0.92%) led the way higher. In Europe, we see green across the board at mid-day with Tech stocks leading the way. The FTSE (+0.96%), DAX (+1.53%), and CAC (+1.38%) lead the way as usual in early afternoon trading. As of 7:30 am, US Futures are pointing to a large gap higher at the start of the day. The DIA implies a +1.43% open, the SPY is implying a +1.67% open, and the QQQ implies a +2.01% open at this hour. 10-year bond yields are back up to 2.919% and Oil (WTI) is up another 0.67% to $114.95/barrel in early trading.
The major economic news scheduled for release on Tuesday includes April Retail Sales (8:30 am), April Industrial Production (9:15 am), Mar. Business Inventories and Mar. Retail Inventories (both at 10 am), and a few Fed speakers (Bullard at 8 am, Harker at 9:15 am, Chair Powell at 2 pm, and Mester at 2:30 pm). Major earnings reports scheduled for the day include AER, HD, JD, SE, and WMT before the open. Then, after the close, KEYS reports.
So far this morning HD, JD, SE, AER, HUYA, and IMBBY all reported beats on both lines. At the same time, WMT and VOD reported beating the estimates on revenue but missing on the bottom line. Finally, MARUY has reported misses on both lines. It is worth noting that HD raised guidance for the rest of the year after record Q1 sales. HD was up 3% in premarket trading. The WMT miss was unusual and attributed higher costs which included “overstaffing,” which raises the fear of layoffs in a job market where just yesterday the company announced a new incentive program to increase hiring among college graduates. WMT is down 5% in premarket trading.
Coming off weeks of losses, the bulls seem to be latching on to good Covid news from China (implying some improvement of supply chain issues and increasing Chinese demand) as well as the strong HD earnings and forecast. The fact that WMT also beat on revenue (despite a bad earnings miss) may also give hope that the consumer is not tapped out yet. However, inflation, geopolitical risk, and the cryptocurrency meltdown still also weigh on Mr. Market’s mind. So, be damn careful about chasing into the gap higher. Caution remains the smart play. Remember the trend is still to the downside, despite the last couple of candles. Also bear in mind that those bullish candles failed a test of the T-line twice now. This does not mean they will always fail, it just suggests there remains a lot of resistance overhead. Remain nimble and hedged. Above all, don’t give in to FOMO -OR- feel the need to predict a reversal.
Trading is a job, not a lottery ticket. So, work the process. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Also, remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. Keep in mind that nobody is right all the time. When you’re wrong, just admit it and take your loss. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss.
Ed
Swing Trade Ideas for your consideration and watchlist: MMAT, EPAM, WDC, GILD, IBM, MMM, HAL, XLE, DOW. 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
On Friday, markets breathed a sigh of relief, finding some willing bullish buyers encouraging those holding short positions to take some profits heading into the weekend. Sadly the bullish move left more questions than answers, unable to breach overhead price resistance levels. Additionally, with the national average gas prices hitting a new record high, possible recession talk increased over the weekend. We will kick off the week with a reading on Empire State MFG. Data with a retail earnings focus throughout the week. Keep a close eye on overhead resistance levels for entrenched bears and expect price volatility to remain challenging in the week ahead.
Asian markets traded mixed overnight as China’s economic numbers disappointed as lockdowns continue to weigh on the economy. European markets trade with modest declines this morning as inflation impacts weigh on investor confidence. U.S. futures also point to modest declines at the open, struggling to find momentum amidst the uncertainties of the path forward.
Economic Calendar
Earnings Calendar
As we kick off a new trading week, the earnings calendar has a theme of retail reports. Notable reports Monday include ACRX, BZFD, CCSI, DAC, FTK, GAN, IPW, KALA, NU, PASG, PTE, RYAAY, SSYS, TTWO, TME, TSEM, WRBY, WEBR & WIX.
News & Technicals’
Ukraine has been unable to export grains, fertilizers, and vegetable oil, while the conflict also destroys crop fields and prevents a typical planting season. In addition, some nations have imposed restrictions on exports. This is the case in India, for example, which announced Saturday a ban on wheat sales “to manage the country’s overall food security.” On Sunday, Amazon’s Jeff Bezos tweeted that inflation is most hurtful to the least affluent in the United States. The comments from Bezos were in response to a thread in which President Joe Biden claimed the U.S. was on track to see its largest yearly deficit decline. Bezos on Friday called out President Biden over a tweet that said taxing wealthy corporations could help lower inflation. Former Goldman Sachs CEO Lloyd Blankfein said he believes the economy is at risk of recession. Speaking on “Face the Nation” on CBS, Blankfein said a recession is “a very high-risk factor.” There’s a path. It’s a narrow path,” said Blankfein, who retired from Goldman Sachs several years ago and now holds the title of senior chairman. The pandemic exacerbated a pilot shortage by slowing down training, hiring and creating a wave of early retirements. Airlines offered pilots early retirements to cut labor bills during the depths of the pandemic. The process to become airline-qualified in the U.S. is lengthy and expensive, making entry barriers high. After disagreeing on pricing, the Irish low-cost airline terminated talks over a substantial order of Boeing 737 Max 10 jets worth tens of billions of dollars in September 2021. O’Leary told CNBC following Ryanair’s full-year results that the company had been “very disappointed with the performance” of Boeing from a commercial perspective over the last 12 months. Treasury yields eased slightly in early Monday trading, with the 10-year slipping to 2.91% and the 30-year dipping to 3.08%.
We finished the week with a sigh of relief as the market found a few willing buyers giving short some traders a good reason to take profits heading into the weekend. But unfortunately, the technical picture of the index charts remains strongly bearish, with substantial resistance levels blocking the path to recovery. Moreover, during the weekend, the talk of a likely recession increased as the insidious inflation tax continues to impact consumer spending. The national average gas price set another new record this weekend at $4.48 per gallon, with diesel rising to $5.57, adding pressure to everything we buy, sell or do. It will be interesting to see how this might impact the earnings performance of the retailers scheduled to report this week. As for me, I will plan for the wild volatility to continue watching for bear attacks at or near price resistance levels.
On Friday, stocks gapped up 1% – 1.5% in the major indices and then followed through to the highs of the day just after noon. Then the afternoon saw a roller-coaster ride that ended on an upswing, but not at the highs. This left us with gap-up, white candles that failed a test of the down-trending T-line (8ema) in all three major indices and the small-cap IWM. On the day, SPY gained 2.34%, DIA gained 1.45%, and QQQ gained 3.71%. The VXX fell more than 3.5% to 25.97 and T2122 climbed out of the oversold territory to 25.97. 10-year bond yields closed up to 2.937% and Oil jumped 4% to $110.38/barrel. On the week, all the major indices printed gap-down, indecisive, long-legged Spinning Top candles.
Part of the reason for Friday’s rally was the Fed removing some uncertainty from the market. FOMC Chair Powell said on Thursday that larger rate hikes are off the table for now, but the Fed will be hiking rates half of a percent at each of the next two Fed meetings (June 15 and July 27). Elsewhere, it was revealed that top tax officials from the US, UK, Canada, Australia, and the Netherlands met in London Friday to discuss 50 potential crypto-based tax crimes. These crimes include a $1 billion Ponzi scheme carried out cross-border using an unspecified cryptocurrency as well as NFTs.
Meme stock trading came back into vogue last week. Some examples include GMA closing up almost 10% on a 10% gap up Monday and trading in a 12.5% range over the week. AMC closed down 14.17% while trading in a 45% range during the week. BBBY closed down more than 20% and traded in a 35% range during the week. BB closed up about 4% after trading in a 25% range during the week. Finally, HOOD closed up 5.63% after trading in a 41% range over the week.
On the Russian invasion story, Russia took action against Finland, stopping the supply of electricity (20% of the country’s power supply) and also stopping the flow of natural gas (used to generate another 6% of the country’s power) after the Finn government announced it will ask parliament to approve an application for NATO membership. On Sunday, Sweden followed suit, with PM Andersson saying the country will now work toward NATO membership. (This raises the question of how Russia will react. Will they cut off gas flows to Europe as they did to Finland?) Early Monday, MCD said it will sell its closed Russian stores rather than ever try to reopen. From Russia’s standpoint, this raises the specter of whether the 1,000 companies which closed operations in its country will ever reopen. Elsewhere, India has banned wheat exports in anticipation of a global shortage due to Ukraine being unable to ship grain and droughts worldwide. This is not a huge fear for the US (other than price hikes being ensured). However, Asia, Africa, and to a lesser extent parts of Europe need to worry about food shortages coming.
Energy markets and stocks/ETFs may face more turmoil this week. In Europe, nat. gas prices were up 10% last week after the shutdown of one-third of the Russian Natural gas flow. This week the EU is expected to unveil its $195 billion Euro plan to completely stop importing Russian oil and gas by 2027. The plan is expected to include deals with Egypt, Israel, and Nigeria for natural gas to replace the current Russian supply as a stop-gap. Elsewhere this week, many of the major US retailers will be reporting this week. So, there may be guidance or at least a read-through on the outlook for consumers as markets gauge a potential economic slowdown.
Economic news later this week includes April Retail Sales, April Industrial Production, Mar. Business Inventories, Mar. Retail Inventories, and a couple Fed speakers on Tuesday. On Wednesday we get April Building Permits, April Housing Starts, and Crude Oil Inventories. Then Thursday we see Weekly Jobless Claims, Philly Fed Mfg. Index, and April Existing Home Sales. There is no major news scheduled for Friday.
Overnight, Asian markets were mixed in very modes moves (by recent standards). Singapore (+0.82%), Japan (+0.45%), and Taiwan (+0.43%) led the gains. Meanwhile, Shenzhen (-0.59%), Shanghai (-0.34%), and South Korea (-0.29%) paced the losses. In Europe, we see a similar story taking shape at mid-day. Notable exceptions are Russia (+2.25%) and Denmark (+1.65%). However, the FTSE (+0.05%), DAX (-0.53%), and CAC (-0.29%) lead the way as usual. As of 7:30 am, US Futures are pointing toward a slightly negative start to the day. The DIA implies a -0.14% open, the SPY is implying a -0.34% open, and the QQQ implies a -0.48% open at this hour. 10-year bond yields are down a bit to 2.913% and Oil (WTI) is also down almost 1% to $109.42/barrel.
The major economic news scheduled for release on Monday is limited to NY Empire State Mfg. Index (8:30 am) and a Fed speaker (Williams at 8:55 am). Major earnings reports scheduled for the day are limited to TSEM and WEBR before the open. Then, after the close, TTWO and TME report.
So far this morning TSEM reported beats on both lines. Meanwhile, WIX has reported beating the estimates on revenue but missed on the bottom line. Finally, MARUY has reported misses on both lines.
Notable earnings reports later in the week include WMT, HD, SE, AER, and KEYS on Tuesday. Then on Wednesday, we get reports from LOW, TGT, CL, ADI, ARCO, CSCO, SNPS, CPRT, BBWI, and SQM. On Thursday we hear from VIPS, KSS, BJ, CAE, WMS, AMAT, ROST, VFC, FLO, PANW, and DECK. Finally, on Friday we see numbers from DE, FL, and BAH.
Coming off a very volatile week and working on 7 straight weeks of losses in the DIA (6 straight in both the SPY and QQQ), markets sit at the edge of bear market territory. Premarkets seem to suggest a wait-and-see feeling this morning, perhaps waiting on the retailer reports coming this week to give a read-through to whether the consumer is tapped out or not. Inflation, geopolitical risk, and cryptocurrency meltdowns also weigh on Mr. Market’s mind. So, caution remains the smart play. Remember the trend is still to the downside, despite Friday’s nice candles. Also bear in mind that those bullish candles failed a test of the T-line. This does not mean they will always fail, it just suggests there remains a lot of resistance overhead. Remain nimble and hedged. Above all, don’t give in to FOMO -OR- feel the need to predict a reversal.
Trading is a job, not a lottery ticket. So, work the process. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Also, remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. Keep in mind that nobody is right all the time. When you’re wrong, just admit it and take your loss. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss.
Ed
Swing Trade Ideas for your consideration and watchlist: EPAM, KO, CVX, GILD, CLX, WDC, OXY, VTRS. 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
Unfortunately, PPI disappointed investors as the inflation improvements hyped by analysts and the financial media failed to show a meaningful change. However, there was a silver lining in the last thirty minutes of the day as the bulls finally pushed back, giving hope that an overdue relief in the selling might begin. With a light day on the earnings calendar, we still have to deal with the Import/Export and Consumer Sentiment reports to find out if the bulls can stay inspired to rally, so stay focused on potential whipsaws as we move toward the uncertainty of the weekend.
Overnight Asian markets rallied, with Hong Kong and the Nikkei surging upward by more than 2.50%. European markets are also in the spirit of a relief rally, seeing green across the board this morning. With a lighter day of earning and economic data U.S. point to a bullish open after six straight days of selling. Expect price action to remain challenging, watching for large point whipsaws as we slide toward the uncertainty of the weekend amid all the geopolitical tensions.
Economic Calendar
Earnings Calendar
We have a much lighter day on the Friday earnings calendar with about 75 listed but a large number of them unconfirmed. Notable reports include DTEGY, HMC, LFMD, RGF, and SDPI.
News & Technicals’
Bitcoin jumped back above $30,000 on Friday as it rebounded from levels not seen since late 2020. Luna, the cryptocurrency associated with TerraUSD, or UST, is now worth $0 as the stablecoin has dramatically lost its $1 peg. On top of the UST saga, crypto markets have been hit by a number of other headwinds. Elon Musk says the Twitter deal is on hold as he waits to find out the number of fake accounts. Twitter’s stock plummeted 18% following the announcement. Musk announced last month that he intends to buy Twitter for $44 billion. He’s tweeted that one of his main priorities would be to remove “spambots” from the platform. Fed Chairman Jerome Powell cautioned Thursday that getting inflation under control won’t be easy. “Nonetheless, we think there are pathways … for us to get there,” he said in an interview with Marketplace published Thursday. Senior administration officials said that the Food and Drug Administration would announce specific actions to increase baby formula imports in the coming days amid a nationwide shortage. During the first week of May, 43% of baby formula supplies were out of stock at stores across the U.S., according to Datasembly, a company that tracks retail data. The shortage comes after Abbott Nutrition, the nation’s largest baby formula manufacturer, closed its plant in Sturgis, Michigan, amid a recall due to contamination concerns. Four infants who consumed products from the plant were hospitalized with bacterial infections. Two of the infants died.
NATO membership would be a historic decision for Finland, which shares a 1,300-kilometer border with Russia. Atlantic Council’s Northern Europe director Anna Weislander says both Finland and Sweden are well prepared to meet the oft-repeated political and military threats against the move by Russian President Vladimir Putin. The armed forces of both countries enjoy high compatibility with NATO member states, she said. Japanese conglomerate SoftBank Group may, for the first time, spend more on share buybacks than investments through its landmark Vision Fund, according to CLSA’s Oliver Matthew. SoftBank on Thursday posted a record $27 billion loss in its Vision Fund as tech stocks have plummeted in recent months. Shares of SoftBank soared more than 12% on Friday but still finished the week more than 2% lower as investors globally have shunned riskier assets such as tech stocks. Treasury yields surged higher in early Friday trading, with the 5-year up nine basis points to trade at 2.91% as the 30-year also rallied nine basis points to 3.07%.
The bears kept up the selling pressure yesterday after the PPI disappointed investors hoping for more of an improvement. However, in the last 30 minutes, a sharp larry began cutting the day’s losses substantially. Futures suggest a bullish open, hoping that the Import/Export and Consumer Sentiment numbers don’t give more inspiration to the bears. After six straight days of selling, indicators suggest we are overdue for a relief rally. If we do trigger some short covering, remember to respect overhead resistance and downtrend levels for entrenched bears likely willing to defend.
