SNAP and STX have QQQ A Little Spooked

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Stocks opened basically flat on Thursday, but then sold off for the first hour.  This saw the two large-cap indices to bounce up off their 50sma.  For the rest of the day, we had a series of whipsaws, ending on bullish swing right into the close.  In a broader context, it was another volatile, whipsaw day where the action ended up being bullish…again, on low volume.  7 of the 10 sectors were in the green with Healthcare and Technology leading the winners.  However, Energy and Communication Services were the biggest movers and they were both losing sectors.  The day saw the QQQ drag the large-caps higher on a standout post-earnings move by TSLA.

This all left us with white-bodied candles with longer lower wicks.  So, at this point, all three major indices are above their 50sma and sit a bit extended from their T-line (8ema) as well as in terms of their 4-week New High/Low Ratios.  On the day SPY gained 1.01%, DIA gained 0.52%, and QQQ gained 1.44%. The VXX fell 1.7% to 21.20 and T2122 remains deep in the overbought territory at 96.24.  10-year bond yields also fell sharply, dropping back below 3% to 2.889%, and Oil (WTI) dropped about 3.44% to $96.43/barrel (which was actually a rally up off the session lows).

In economic news, Weekly Initial Jobless claims came in significantly higher than expected (251k vs 240k forecast).  This was the highest level since mid-November.  Meanwhile, the Philly Fed Mfg. Index fell to -12.3, down 9 points from the prior month and much worse than the expected 1.6 value.  This was the lowest rating since May 2021.  Elsewhere, the ECB raised rates by half a percent (but for perspective, only to zero now since they were negative rates).  This was their first rate hike for 11 years and the largest hike since 2000.  As a result, the Euro strengthened against the Dollar.

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In business news, after the close, AMZN agreed to buy primary care provider One Medical for $3.49 billion as the e-commerce giant continues its push into the healthcare sector.  Elsewhere, in a shock, Chinese chipmaker Semiconductor Manufacturing International (located in Shanghai) has advanced its chipmaking technology by more than 2 generations.  They are now shipping 7-nanometer chips to Bitcoin miners.  This essentially guts US sanctions.  It could also make China a serious new competitor to western chipmakers like TSM, INTC, AMD, NVDA, QCOM, and SSNLF (import sanctions permitting). Finally, AXP raised its guidance on what it called resilient credit card usage.

On the Russian invasion story, Turkey announced that Ukraine and Russia will sign a deal today to reopen Ukraine’s Black Sea ports for grain exports.  Meanwhile, Ukraine asked its creditors for a two-year freeze on bond payments (in order to use its diminished resources on war efforts).  BLK is the largest holder of such bonds, holding $1.2 billion across its various funds.  AB is the second largest Ukrainian bond holder with $580 million while Pimco and Eaton Vance both hold around $300 million of the bonds.  Elsewhere, the EU announced another round of sanctions which included freezing the assets of Russia’s largest lender Sberbank.

After the close, MAT, UFPI, and WAL reported beats on both the top and bottom lines.  Meanwhile, WRB, PPG, RHI, and THC, missed on revenue while beating on earnings.  However, SNAP, STX, SIVB, SAM, and ISRG all missed on both lines.

Overnight, Asian markets were mixed again on modest moves.  South Korea (-0.66%) and Shenzhen (-0.49%) were the only appreciable losers.  On the other side, Malaysia (+1.07%), Singapore (+0.92%), and India (+0.69%) led the gainers.  In Europe, stocks are mostly green on modest moves at mid-day.  The FTSE (+0.22%), DAX (+0.32%), and CAC (+0.22%) are leading the region higher with only Belgium (-0.11%) and Finland (-1.22%) showing red at this point in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a mixed open that leans toward the red.  The DIA implies a +0.10% open, the SPY is implying a -0.27% open, and the QQQ implies a -0.50% open at this hour.  10-year bonds are continuing that sharp fall at 2.809% and Oil (WTI) is off another 1.76% to $94.70/barrel in early trading.

The major economic news events scheduled for Friday are limited to Mfg. PMI and Services PMI (both at 9:45 am).  The major earnings reports scheduled for the day include AXP, ALV, CLF, GNTX, HCA, NEE, NHYDY, RF, ROP, SLB, TWTR, and VZ before the open.  There are no major reports after the close.

So far this morning, HCA, AXP, ALB, RF, and DNKEY all reported beats on both the revenue and earnings lines.  Meanwhile, ALV, NEE, and ROP reported misses on the revenue line while beating on earnings.  On the other side, CLF and VZ beat on revenue while missing on earnings.

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Once again, earnings remain the primary focus of markets today. Last night’s terrible miss by SNAP on horrific ad sales has the high-tech QQQ spooked. So, despite generally good results, the 3 major indices are looking leery in the premarket. PMI numbers may have an impact after the market opens. However, as of now, we look to open flat to modestly bearish again. Don’t be surprised if the intraday whipsaw action continues. Still if we look at the daily chart, it is clear the bulls have the momentum in the short-term with part of a gap still left to fill to the upside in the large-cap indices.

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. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. 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.

TC2000 Discount

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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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.

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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

Extended Condition

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Extended Condition

Disappointing home sales and mortgage data produced a bullish but choppy price action as the indexes remained in a short-term extended condition.  Traders and investors will have to grapple with our most significant day of earnings so far this quarter, as well as Jobless Claims and the Philly Fed MFG data.  We may also see a market reaction to the pending ECB rate decision as they begin fighting record inflation.  Bullish earnings speculation remains strong but be careful not to overtrade and take some profits with the FOMC and GDP coming our way next week.

Asian markets traded mixed overnight as the Bank of Japan held trades steady.  European markets trade mixed with muted results as they wait on the ECB rate decision.  With a big day of market-moving data ahead, U.S. futures suggest a mixed open as I write this report but prepare for about anything as the market reacts to the results.  Market emotion is high, so don’t rule out the possibility of some significant point swings. 

Economic Calendar

Earnings Calendar

We have our most hectic day of the week on the earnings calendar, with more than 70 companies listed.  Notable reports include ABB, ALK, AAL, T, AN, DHI, DHR, DPZ, DOV, FITB, ISRG, KB, NOK, NUE, PM, SAP, & TRV.

News & Technicals’

According to reports, the European Central Bank could go big on its first rate hike in 11 years.  A new anti-fragmentation tool and a sizeable rate hike would come as the ECB deals with its primary mandate: price stability.  The eurozone inflation print for June came in at 8.6%, up from 8.1% in May, and German producer prices in June were 32.7% higher than a year earlier.  There had been concerns across the region that there could be a complete shutdown of gas supplies via the pipeline after it was closed earlier this month for maintenance.  However, data on operator Nord Stream’s website showed that flows increased from zero to 29,284,591 kWh/h for 0600-0700 Central European Time Thursday.  On July 10, the last day of operations before the maintenance work began, flows were roughly the same level, just above the 29,000,000 kWh/h.  Speaking to Parliament, Draghi said he was going to speak to President Sergio Mattarella and inform him of his intentions after failing to unite his fragile coalition government.  Last week, Mattarella rejected Draghi’s first resignation and asked him to lead more negotiations with lawmakers in the hope of avoiding snap elections.  United Airlines on Wednesday notched a key profit milestone in its pandemic recovery.  However, it said it will scale back its growth plans through 2023.  Airlines have reported strong demand as well as high costs for fuel and other expenses.  Microsoft eases hiring as economic concerns affect more of the tech industry but declined to specify which divisions will slow the hiring pace.  The company lowered its quarterly earnings guidance in June but attributed the move to changing exchange rates.  The Asian Development Bank has cut the growth forecast for China due to concerns over the country’s zero-Covid approach and strict lockdowns, which have also impacted its troubled property market.  As a result, gross domestic product growth for the world’s second-largest economy is expected to be at 4% in 2022, down from an earlier estimate of 5%, ADB said in a report published Thursday.  China’s continued “adherence to a zero-covid strategy in response to renewed outbreaks early in 2022 has triggered the reimposition of strict lockdowns,” the bank wrote in its report.  Treasury yields rose slightly in early Thursday trading, with the 2-year inverted trading at 3.23%, the 5-year at 3.18%, the 10-year at 3.04%, and the 30-year at 3.17%.

The short-term extended condition of the market, disappointing housing data, and some mixed earnings results produced a choppy day of price action, but overall the bulls won the day.  However, today will be our biggest day of earnings results so far this quarter which means anything is possible as traders react.  We also face a pending ECB rate decision; Jobless Claims that have recently experienced a slow creep upward as well as Philly Fed MFG data.  Unfortunately, the rising bond yields and 2/10 inversion continue to suggest a recession adding an element of uncertainty despite the hopeful bullishness of the recent relief rally.  So continue to expect challenging price action with overnight gaps and reversals in the days and weeks ahead.

Trade Wisely,

Doug

Earnings Reports Calling The Tune Today

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Markets opened flat on Wednesday and then ground sideways in a tight range for the first hour of the day.  Then we saw a strong rally for a little over 30 minutes before resuming the sideways grind until about 12:45 pm.  At that point, we saw a sharp selloff that also lasted about 30 minutes before bobbing along sideways for the next 1.5 hours.  A slower rally took over at about 2:30 pm to take price back near the highs of the day only to fade the last 30 minutes.  This left us with white-bodied candles with plenty of wick on each end.  The DIA printed a Doji-type candle and the SPY a Spinning Top.

All 3 of the major indices have now broken through their 50sma and medium-term downtrend.  Exactly half of the 10 sectors are green and half are down.  With that said, Technology is by far the biggest mover, up nearly 2.5% on the day on big moves by NFLX, NVDA, AMD, META, and AMZN.  Once again, all of this happened on below-average volume.  On the day, SPY gained 0.65%, DIA gained 0.20%, and QQQ gained 1.59%. The VXX fell 1.28% to 21.57 and T2122 (the 4-week new High/Low ratio) is deep in the overbought territory at 96.60.  10-year bond yields climbed back above the key 3% level to 3.034% and Oil (WTI) fell just over 1.5% to $102.61/barrel. 

In business news, Reuters reported that SHEL is looking to sell two of its US Gulf of Mexico oil and gas projects (fields), hoping to raise $1.5 billion.  Then after the close, as part of its quarterly report, TSLA announced it sold 75% of its Bitcoin to raise $936 million in cash. Also after the close, F announced it will cut as many as 8,000 jobs in order to raise money for its electric vehicle investments.  Then this morning F reassured markets that it already has secured 100% of the batteries it needs for its 2022 and 2023 plans.

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On the Russian invasion story, natural gas flows resumed from Russia via the Nord Stream 1 pipeline.  However, the flow resumed only at the reduced (60% of capacity) rate that Russia initiated in retaliation for sanctions.  On the ground, Russian forces are getting closer to Ukraine’s second largest power plant (after having previously taken the largest).  Elsewhere, US and European sources claim that Russia is taking the steps needed for their country to annex Eastern and Southern Ukraine by September.  This news comes the same day that Deputy Chair of the Russian Security Council said that Ukraine could disappear from the map as a result of current events.

After the close, STLD, KMI, CSX, CCK, AA, CCI, KNX, and VMI all reported beats on both the top and bottom lines.  Meanwhile, TSLA and EFX missed on revenue while beating on earnings.  On the other side, UAL, LVS, and WTFC beat on revenue while missing on earnings.  However, LSTR and SEIC reported misses on both the top and bottom lines.

So far this morning, T, PM, DOW, TRV, DHR, NOK, MMC, TSCO, IQV, DGX, IPG, KEY, ALK, SON, HBAN, SNA, and SNV have all reported beats on both the revenue and earnings lines.  Meanwhile, SAP, AAL, FITB, DPZ, and HRI all reported beating on revenue while missing on earnings.  On the other side, DHI, AN, BX, DOV, POOL, and TPH all missed on revenue while beating on earnings.  However, ABB missed on both the top and bottom lines.

Overnight, Asian markets were mixed but leaned to the upside.  Hong Kong (-1.51%), Shanghai (-0.99%), and Shenzhen (-0.94%) paced the losses as Real Estate market problems remained top of mind in China.  Meanwhile, Taiwan (+1.39%), South Korea (+0.93%), and Malaysia (+0.93%) led the gainers in the region.  In Europe, we see a similar story taking shape at mid-day.  The FTSE (-0.47%), DAX (-0.45%), and CAC (+0.32%) are typical of the performance spread in the region.  However, Russia (-1.03%) and a couple of other smaller exchanges are down more than a percent in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a mixed and mostly flat start to the day.  The DIA implies a -0.19% open, the SPY is implying a -0.13% open, and the QQQ implies a +0.03% open at this hour.  10-year bond yields are up to 3.051% and Oil (WTI) remains extremely volatile, down 4.5% to $95.42/barrel in early trading.

The major economic news events scheduled for Thursday is limited to Philly Fed Mfg. Index and Weekly Jobless Claims (both at 8:30 am).  The major earnings reports scheduled for the day include AIR, ABB, ALK, AAL, T, AN, BX, DHI, DHR, DPZ, DOV, DOW, FITB, FCX, HRI, HBAN, IPG, IQV, KEY, MMC, NOK, NUE, PM, POOL, DGX, SAP, SNA, SON, SNV, TSCO, TRV, TPH, UNP, and WBS before the opening bell.  Then after the close, SAM, COF, ISRG, MAT, PPG, RHI, STX, SNAP, SIVB, THC, UFPI, VLRS, WRB, and WAL report. 

In economic news coming later this week, on Friday Mfg. PMI and Services PMI are released.

In earnings reports later this week, on Friday we hear from AXP, ALV, CLF, GNTX, HCA, NEE, NHYDY, RF, ROP, SLB, and VZ.

LTA Scanning Software

Earnings remain the main focus for traders today. However, the Jobless Claims and to a lesser extent Philly Fed number coming at 8:30 may also drive markets. As of now, we look to open flat to modestly bearish. Still, there were a lot of strong earnings reports last night and so far this morning and the big tech names look to be trying to pull the rest of the market higher with them. So, don’t be surprised if the bulls find some energy…at least early. The QQQ shows a bullish trend, but the SPY and DIA are still just shy of getting that designation. With a gap to fill above in the large-cap indices, just keep in mind that the path of least resistance in the short term is upward.

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

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No tickers 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.

TC2000 Discount

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Bulls had a Really Good Day

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Price resistance levels cut like butter as the bulls had a really good day following through from the overnight reversal with the Dow more than 1700 points off the low just four trading days ago.  There suddenly seems to be no concern that bond yields point toward a recession, and with the coming rate hike, the desire to hurry up and buy something is taking over.  However, be careful not to chase or overtrade, with the T2122 indicator suggesting a short-term overbought condition. 

Asia markets rallied strongly overnight in reaction to the U.S. buying surge, with the Nikkei leading the buying, up 2.67%.  However, European markets have reversed early bullishness after their inflation hit a 40-year high of 9.4%, worrying that Russia will shut down energy supplies.  U.S. futures have also reversed from early bullishness after mortgage demand dropped to a 22-year low as inflation-driven rate hikes damage home buying demand.  That said, don’t rule out the power of earnings and the fear of missing out as the wild volatility in price action continues.

Economic Calendar

Earnings Calendar

The Wednesday calendar has about 30 confirmed earnings reports.  Notable reports include ABT, ASML, BKR, BIIB, CMA, CCI, CSX, KMI, NDAQ, NTTRS, PACW, TSLA, & UAL.

News & Technicals’

Netflix lost nearly 1 million subscribers in the quarter after forecasting a dip of 2 million.  The company forecast 1 million net adds for the third quarter, below Wall Street estimates of 1.8 million.  Netflix is counting on changes, such as cracking down on password sharing and adding an advertising tier, to start in 2023.  Bitcoin surged as high as $23,800 Wednesday, up 8% in 24 hours and trading at levels not seen since mid-June.  Traders took comfort from the prospect of a rate hike from the Federal Reserve that is less aggressive than feared.  Ether climbed above $1,500 amid optimism over a highly anticipated upgrade to its network known as the “Merge.”  According to U.S. intelligence, Russia is laying the groundwork to annex parts of Ukraine.  “We’re seeing ample evidence and intelligence and in the public domain that Russia intends to try to annex additional Ukrainian territory,” National Security Council spokesman John Kirby told reporters at the White House.  Kirby that the U.S. observed a similar Russian playbook in 2014 ahead of the Kremlin’s annexation of Crimea, a Ukrainian peninsula on the Black Sea.  Citing supply chain challenges due to Russia’s war in Ukraine, Gupta said the two countries capture a large part of the market share.  Russia and Ukraine are the largest exporters of krypton — a gas used in chip production.  Semiconductors are used in everything, from mobile phones and computers to cars and home appliances.  Rising inflation and expectations of more monetary tightening are already causing a “consumer-led slowdown,” said Gupta.  Last week, a spike in reported numbers of homebuyers halting mortgage payments prompted many banks to announce their low exposure to such loans.  Across banks covered by Goldman Sachs, average exposure to property, including mortgages, was just 17%.  If more homebuyers refuse to pay their mortgages, the poor sentiment would reduce demand — and theoretically, prices — in a vicious cycle.  “It is critical for policymakers to restore confidence in the market quickly and to circuit-break a potential negative feedback loop,” Goldman Sachs chief China economist Hui Shan and a team said in a report Sunday.  Treasury yields dipped slightly in early Wednesday trading, with the 2-year inverted at 3.13%, the 5-year at 3.11%, the 10-year at 2.98%, and the 30-year trading at 3.15%. 

The bulls had a really good day on Tuesday, with the Dow closing up more than 1700 points from the low just four trading days ago.  The buying party continued after the bell, with NFLX jumping more than 6% despite losing nearly 1 million subscribers and declining revenue.   European inflation hit a 40-year high of 9.4%, with the risk of Russia shutting off the energy supply, yet the bulls push for a positive open fuelled by tremendous earnings speculation.  The T2122 indicator suggests a short-term overbought condition, but that does not mean we can’t go higher, as the fear of missing out is a powerful motivator.  That said, don’t allow greed to prevent you from taking some profits in case of a sudden reversal of sentiment comes into play.

Trade Wisely,

Doug

More Earnings Reaction On Tap Today

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Stocks gapped higher Tuesday and then slowly followed through to the upside until about 2:15 pm.  At that point, we saw a sideways grind take shape that lasted until the bulls again stepped in the last half hour of the day.  This left us with all 3 major indices forming something like a Fig Newton pattern on the daily chart and closing near their highs.  It was also the best day in 3 weeks for US markets.  The SPY and DIA are still fighting with their respective 50sma and longer-term downtrend resistance levels.  However, QQQ has cleared both those levels and is trying to pull the large caps higher with it, on the strength of names like NVDA, AMD, META, GOOG, AMZN, and NFLX.  All 10 sectors were in the green, with Industrials and Technology leading the way.  On the day, SPY gained 2.70%, DIA gained 2.40%, and QQQ gained 3.08%.  The VXX was flat at 21.85 and T2122 spiked deep into the overbought territory at 98.71.  10-year bond yields have popped back above 3% to 3.028% and Oil (WTI) closed 1.2% higher at $103.81/barrel.  All-in-all, the day was a very nice move on below-average volume for the bulls.

In business news, AMZN sued thousands of Facebook group administrators who allegedly brokered false/fake AMZN product reviews.  META shut down more than 10,000 such groups that AMZN reported for this behavior.  Later in the day, a judge ruled that the trial over the lawsuit brought by TWTR against Elon Musk (seeking to force his $54.20/share purchase) will begin in October.  Musk had sought to delay the trial until mid-2023.  After the close ATVI announced that a second group of employees (this time Quality Assurance testers) have formed a union, just months before the company’s acquisition by MSFT closes.  While this is a tiny group (20 people), it does represent a second department where either ATVI or MSFT will need to deal with the same union (Communications Workers of America).

In China news, the middle-class backlash against the housing sector is building steam.  The real estate sector in China has a long history of starting huge housing projects, selling the units prior to completion, and then never finishing the development (often due to the developer defaulting on loans and going out of business).  A now widespread boycott of paying mortgage payments on such projects has taken root and spread.  Currently, Bloomberg reports more than 300 projects from 24 real estate developers spread across over 90 cities are now participating in the boycott.  This is tripled in size from my first report on it a couple of weeks ago.  This is huge news, because real estate makes up one-fifth of the Chinese economy and public protest of any kind is unheard of in that country.  Elsewhere, SEC Chair Gensler again told reporters it was unclear whether Chinese authorities and American regulators will reach a deal to avoid delisting 200 Chinese companies from US stock exchanges.  He went on to say he was not particularly confident.

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On the Russian story, the Wall Street Journal reported that EU sources are currently expecting that Russia will restart the flow of natural gas through the Nord Stream 1 pipeline (as scheduled) when the planned maintenance period ends Thursday.  The flow is expected to return to 60% of capacity (down 40% from prior levels).  Elsewhere, the Ukrainian First Lady will speak to the US Congress today.  She is expected to ask for more aid and condemn human rights abuses.  In that vein, the US is preparing yet another shipment (the 16th) of military aid for Ukraine.

After the close, OMC, JBHT, CALM, and PNFP all reported beats on both the top and bottom lines.  Meanwhile, IBKR beat on revenue while missing on earnings.  On the other side, NFLX missed on revenue while beating on earnings.  NFLX stock was up as much as 8.5% in after-hours trading as it lost fewer subscribers than analysts had expected (down just less than one million versus a loss of 2 million expected).

So far this morning, ABT, ASML, BIIB, TLSNY, NDAQ, CMA, and ELV all reported beating on both the top and bottom lines.  Meanwhile, MTB missed on revenue while beating on earnings.  On the other side, AKZOY, NTRS, and FHN beat on revenue but missed on earnings.  Finally, BKR, WIT, and HCSG reported misses on both lines.

Overnight, Asian markets were green across the board.  Japan (+2.67%) was an outlier to the upside as the Bank of Japan decided to remain accommodative in fear that economic growth is uncertain (they did not raise rates).  Singapore (+1.68%), Australia (+1.65%), and Hong Kong (+1.11%) led the region higher.  It is worth noting that Hong Kong ended its city-wide Covid isolation program.  In Europe, stocks are mixed but lean to the red side at mid-day.  The FTSE (-0.27%), DAX (-0.39%), and CAC (-0.26%) are leading the region lower.  However, 7 of the smaller exchanges are in the green, led by Greece (+0.95%) and Russia (+0.80%).  As of 7:30 am, US Futures are pointing toward a flat to modestly red start to the day.  The DIA implies a -0.16% open, the SPY is implying a -0.13% open, and the QQQ implies a flat -0.03% open at this hour.  10-year bond yields as back down to 2.969% and Oil (WTI) is off almost 2% to $102.21/barrel in early trading.

The major economic news events scheduled for Wednesday are limited to June Existing Home Sales (10 am) and Crude Oil Inventories (10:30 am).  The major earnings reports scheduled for the day include ABT, ASML, BKR, BIIB, CMA, ELV, LAD, MTB, NDAQ, NTRS, and WIT before the opening bell.  Then after the close, AA, CCI, CCK, CSX, DFS, EFX, KMI, KNX, LSTR, LVS, SEIC, STLD, TSLA, UAL, VMI, and WTFC report. 

In economic news coming later this week, on Thursday we get Philly Fed Mfg. Index and Weekly Jobless Claims.  Finally, on Friday Mfg. PMI and Services PMI are released.

In earnings reports later this week, on Thursday we get reports from AIR, ABB, AAL, T, AN, BX, DHI, DHR, DPZ, DOV, DOW, FITB, FCX, HRI, HBAN, IPG, IQV, KEY, MMC, NOK, NUE, PM, POOL, DGX, SAP, SNA, SON, SNV, TSCO, TRV, TPH, UNP, WBS, SAM, COF, ISRG, MAT, PPG, RHI, STX, SNAP, SIVB, THC, UFPI and WRB.  Finally, on Friday we hear from AXP, ALV, CLF, GNTX, HCA, NEE, NHYDY, RF, ROP, SLB, and VZ.

LTA Scanning Software

Earnings season remains the top story for markets. However, Mortgage demand dropped to its lowest point since 2000 last week as the average 30-year fixed-rate conforming loan rate rose to 5.82%.  This comes as the overall demand fell another 6%, as new home purchase applications were down 7% week-on-week (down 19% versus the same week last year) and refinance applications fell 4% on the week. So, the housing market will also get some focus from traders.

Recession fears (including those stoked by Russia) will remain in the back of trader’s minds and eyes will also start drifting toward the Fed with a rate meeting next week. Futures are showing a very modestly bearish start to the day right now. However, there are more earnings reports coming before the open and overall the market is in a positive mood after yesterday’s strong showing. Remember that the SPY is still fighting with its mid-term downtrend line and 50sma. So, volatility remains a high probability. The only two things that we know for sure are that we are seeing very low volumes (which tells us there is not much conviction in either the bull or bear camps) and we also know the longer-term trend remains bearish, while we have been in a sideways to slightly bullish more for a few weeks.

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

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: HALO, INSG, AGNC, XBI, SWKS, INMD, RIVN, BMY, NFLX. 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.

TC2000 Discount

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Pop and Drop

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Pop and Drop

Although we began the trading week with an exuberant gap up, the fade into a pop and drop pattern at price resistance on weak volume left more questions than answers.  The price action left behind bearish engulfing and dark cloud cover candle patterns on the index charts but can the bear follow, or will the bull find the energy to defend?  With increasing earnings reports and a reading on Housing Starts and Permits before the bell, prepare for just about anything with a dose of high price volatility to test technical and price resistance.  Silly season is underway, so plan carefully and avoid trading as the drama unfolds.

 Overnight Asian market seemed to struggle with direction closing the day with mixed results.  European markets trade in the red across the board this morning seemly uncertain about the earnings results.  However, U.S. futures again point to a gap up open ahead of possible market-moving data as the high earnings speculation continues.  Expect another bumpy day of price action, and the bulls and bears duke it out at technical and price resistance levels.

Economic Calendar

Earnings Calendar

We have about 20 confirmed earnings reports to deal with on the Tuesday calendar.  Notable reports include ALLY, CALM CFG, HAL, HAS, IBKR, JNJ, JBHT, LMT, MAN, NFLX, NVS, TFC, & UCBI.

News & Technicals’

The majority state-owned Gazprom said Monday that it is not in a position to comply with gas contracts with Europe due to unforeseeable circumstances.  Germany’s energy firm Uniper confirmed to CNBC that Gazprom had claimed “force majeure” on its supplies.  “We consider this unjustified and have formally rejected the force majeure claim,” Lucas Wintgens, spokesperson for Uniper, told CNBC’s Annette Weisbach.  New data from blockchain analytics firm CryptoQuant shows that miners are rapidly exiting their bitcoin positions.  14,000 bitcoin, or more than $300 million at its current price, were transferred out of wallets belonging to miners in a single day — and in the last few weeks, miners have offloaded the largest amount of bitcoin since Jan. 2021.  According to Treasury Department data released Monday, China’s portfolio of government debt in May dropped to $980.8 billion.  It marked the first time since May 2010 that China’s holdings fell below the $1 trillion mark.  Netflix announces its second-quarter earnings results on Tuesday.  The company previously projected a loss of 2 million subscribers for the period.  Netflix is adding an advertising tier and cracking down on password sharing to reinvigorate growth, but those maneuvers won’t kick in until later this year.  Goldman Sachs has slowed its hiring and is looking to cut the fees it pays vendors as the investment bank prepares for tougher times.  But New York-based Goldman has another tool in its arsenal to keep expenses under control: A potential return of year-end job cuts, according to a person with knowledge of the situation.  No target exists yet for headcount reduction, according to the person, and the plans are dynamic and could change.  Treasury yields ticked higher in early Tuesday trading, with the 2-year inverted over the 5,10 & 30-year bonds at 3.17%.  The 5-year trades at 3.10%, 10-year at 2.99%, and the 30-year rose to 3.16%.

We kicked off the week with an exuberant gap up, but the early rally quickly faded into a pop and drop at price resistance leaving behind bearish engulfing candle patterns on the index charts.  Indeed a concerning development if the bears can follow through to the downside today.  However, if the bulls find the energy to defend, we may yet have a chance to break overhead price resistance levels finally.  Today we face a growing number of earnings reports to keep the price volatility high with our first big tech NFLX, reporting after the bell.  We will also get a read on the Housing Starts and Permits that consensus suggests moved up slightly over the last month.  The rising bond prices and the sharp reversal in the dollar pushing commodities higher add some uncertainty, so stay focused on the price, continuing to respect resistance levels. 

Trade Wisely,

Doug

Earnings, Downturn, and Gazprom Lead

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

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

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

SNAP Case Study | Actual Trade

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

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

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

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

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

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

LTA Scanning Software

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

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

See you in the trading room.

Ed

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

TC2000 Discount

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

A Needed Relief Rally

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Although bank earnings continue to disappoint and warn of rising default risks, the bulls kicked off a needed relief rally on Friday.  Speculation and willingness to dive headlong into earnings risk remain surprisingly high, considering the economic conditions.  So, with high emotion, expect overnight gaps, intraday whipsaws, and stocks that miss the lowered expectations to be severely punished.  Watch earnings dates before buying, respect overhead resistance levels, and fear-of-missing-out trade decisions.

Asian markets rallied overnight in reaction to the U.S. bounce, even as oil prices rose 2%.  European markets are also in a bullish mood this morning, seeing green across the board.  Ahead of more big bank earnings, U.S. futures look to extend Friday’s rally pointing to a gap up open before the data.  Expect challenging price action and keep an eye on overhead resistance levels for the possibility of a pop and drop. 

Economic Calendar

Earnings Calendar

This week we pick up the pace of 3rd quarter earnings.  Notable reports include BAC, SCHW, GS, IBM, PLD, & SYF.

News & Technicals’

Celsius is down to $167 million “in cash on hand,” which they say will provide “ample liquidity” to support operations during the restructuring process.   However, according to its bankruptcy filing, Celsius owes its users around $4.7 billion, and there’s an approximate $1.2 billion hole in its balance sheet.  Restaurants and diners alike are feeling the pinch from the industry’s labor shortage.  According to the National Restaurant Association, the industry is still down 750,000 jobs — roughly 6.1% of its workforce — from pre-pandemic levels as of May.  In the first quarter, customers mentioned short staffing three times more often in their Yelp reviews than in the year-ago period, according to the restaurant review site.  The battle to become the U.K. Conservative Party’s next leader — and the country’s next prime minister — heated up over the weekend.  The five candidates vying for the top job looked more like enemies than colleagues as they went head-to-head in a televised debate on Sunday.  They clashed over taxes, Brexit, and trans rights in the latest leadership debate, questioning each other’s office records and political and ideological perspectives.  Earnings could be a main driver of stocks in the week ahead, after a roller-coaster ride on changing sentiment about how much the Federal Reserve will raise interest rates.  Hot inflation data initially sparked speculation the Fed could raise interest rates by a full percentage point.  By the end of the week, strong data and comments from Fed officials quashed those expectations.  In the week ahead, investors are looking to housing data and expect earnings from a broad swath of companies to steer stocks.  Treasury yields rose in early Monday trading, with the 10-year climbing to 2.96% and the 30-year pricing at 3.12%.  Unfortunately, the 2-year continues to point toward a recession at 3.15%, inverted over the five, ten, and thirty-year bonds. 

Despite the disappointing bank earnings, the speculation that lowered earnings estimates will deliver better than expected results kicked off a needed relief rally.  The good news is that the relief was overdue, and we have a little break from the heavily bearish economic reports this week.  The bad news in this all-or-nothing market is the T2122 indicator is quickly reaching the short-term overbought condition with a GDP report and FOMC rate increase just a week away.  As earnings reports ramp up, expect overnight reversals and intraday whipsaws to challenge even the most experienced traders.  With speculation remaining so high, keep in mind that companies that miss expectations will likely get severely punished, so plan carefully!   I believe we will see many disappointing results, so keep an eye on technical and overhead resistance levels for the location for bear attacks. 

Trade Wisely,

Doug

Earnings Top the News This Morning

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

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

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

SNAP Case Study | Actual Trade

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

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

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

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

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

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

LTA Scanning Software

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

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

See you in the trading room.

Ed

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

TC2000 Discount

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Defending 2020 Market Lows

by
Defending 2020 Market Lows

Although the earnings and economic data pointed to significant economic weakness, the bulls went to work defending 2020 market lows on Thursday.  However, the rally continued to show weak volume, and index prices remain under significant technical and price resistance.  So that raises the question, can they follow through with the second day of bullishness filled with market-moving earnings and economic reports?   We will soon find out but prepare for challenging price action by watching for whipsaws and possible complete reversals if the data inspires the bears. 

Asian markets closed mixed but mostly lower overnight as China’s GDP missed expectations.  European markets are, however, in bullish mode this morning, showing green across the board.  Ahead of a big day of data, U.S. futures defy weak economic conditions and inflation pointing to a bullish open even as bad bank results roll in.  Plan carefully headed into the uncertainty of the weekend.

Economic Calendar

Earnings Calendar

The bank majors dominate the earnings calendar today.  Notable reports include BK, BLK, C, PNC, STT, USB, UNH, & WFC.

News & Technicals’

On the one hand, Dimon said the U.S. “economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy.”  “But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go, and the never-before-seen quantitative tightening and their effects on global liquidity … are very likely to have negative consequences on the global economy sometime down the road,” he warned.  The best way to stabilize oil prices is to boost supply, and alternatives to Russian oil are available to the world, said Mathias Corman, the secretary-general of the Organization for Economic Cooperation and Development.  On Thursday, U.S. Treasury Secretary Janet Yellen said a cap on Russian oil prices would be crucial to bringing down inflation.  Industry players told CNBC an improving macroeconomic picture, particular trading patterns, and further shakeout or “deleveraging” could help bitcoin and the crypto market find a bottom.  This could mean further downside for bitcoin to as low as $13,000, will remove the “last remaining weak hands.”  There have been high-profile collapses in the latest “crypto winter,” including lender Celsius and hedge fund Three Arrows Capital.  China eked out GDP growth of 0.4% in the second quarter from a year ago, missing expectations as the economy struggled to shake off the impact of Covid controls.  Analysts polled by Reuters had forecast growth of 1% in the second quarter.  However, retail sales in June rose by 3.1%, recovering from a prior slump and beating expectations for no growth from the prior year.  In the second quarter, mainland China faced its worst Covid outbreak since the height of the pandemic in early 2020.  Starbucks will close 16 U.S. stores, mostly on the West Coast, by the end of July because of safety concerns.  Six stores will close in Greater Los Angeles; six in Greater Seattle; two in Portland, Oregon; one in Philadelphia and D.C.  The move comes as more than 100 stores have voted to unionize since the end of 2021.  Bond yields declined slightly in early Friday trading, with the 2-year slipping to 2.93% and the 30-year dipping to 3.09%.  However, the 2-year remains inverted over five, ten, and 30-year bonds, pricing at 3.12% this morning. 

Disappointing bank earnings, rising jobless claims, and a near-record PPI reading started Thursday with an ugly gap down, but the bulls used that move to buy, defending 2020 market lows.   The T2122 indicator did show a short-term oversold condition at the morning gap down, but the rally is not very convincing so far.  Volume remained suspiciously low, and the indexes remain beneath significant technical and overhead resistance.  Today we face a bigger day of bank earnings, so if you’re a bull, let’s hope the JPM and MS result don’t become expand into a bearish 3rd quarter theme.  Adding to the potential price volatility are Retail Sales, Empire Start MFG., Import & Export Prices, Industrial Production, and Consumer Sentiment data to keep traders guessing as we head into the uncertainty of the weekend.  It could be a hectic day ahead, so plan carefully!

Trade Wisley,

Doug