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Earnings Inspired the Bulls

April 21, 2022 by Doug Campbell

The QQQ struggled yesterday, with NFLX losing 50 billion in value in a single day, but earnings inspired the bulls to stretch the Dow index toward a test of recent highs. Today we will hear from Jerome Powell, followed by more comments from James Bullard as the 5-year bonds invert slightly over the 10-year with a 30-year inversion near. Finally, it will be a busy morning of earrings, Jobless Claims, and Philly Fed Mfg. numbers that consensus expects to decline. So, plan for an extra dose of volatility and watch for the potential of a pop and drop as the Dow tests the resistance of recent highs.

During the night, Asian markets traded mixed, with Shanghai leading the selling, falling 2.26% at the close as lockdowns continue amid surging infection rates. However, with the war in Ukraine intensifying European markets, trade decidedly bullish this morning. With a busy day of earnings, economic data, and Fed speeches, U.S. futures point to a substantial gap higher with earnings fueled speculation.

Economic Calendar

Earnings Calendar

We have our busiest day of the week, with about 120 companies listed on the earnings calendar today. Notable reports include ABB, ALK, AAL, T, AN, BJRI, BX, SAM, DHR, DOW, FCX, GPC, HBAN, ISRG, KEY, MMC, NEE, NEP, NUE, PM, POOL, PPG, DGX, SNAP, SIVB, TSCO, TPH, UNP, & WSO.

News & Technicals’

Melvin Capital, the embattled hedge fund run by its once high-flying founder Gabe Plotkin, has been discussing a novel plan with its investors under which the firm would return their capital while giving them the right to reinvest that capital in what would essentially be a new fund run by Plotkin. According to people familiar with his plans, Plotkin has committed to keeping his “new” fund at or below $5 billion in capital and returning to a focus on shorting stocks. Buy with Prime enables third-party retailers to take advantage of Amazon’s vast shipping and fulfillment network for orders placed on their site. Prime members can order items on other retailers’ websites using payment and shipping information stored in their Amazon accounts. The service is only available by invitation to some Amazon merchants, but the company plans to make it more widely available in the future. The rapid rise in the U.S. 10-year Treasury yield to three-year highs has erased its gap with its Chinese counterpart, which hasn’t happened for more than a decade. Analysts said that the narrowing gap reflects diverging monetary policy between the two countries. Investors are watching the implications of the narrowing yield gap for the Chinese yuan. Tesla beat analysts’ expectations on the top and bottom lines for Q1 2022. For the period ending March 31, 2022, Tesla reported $3.22 earnings per share and revenue of $18.76 billion. When Russia invaded Ukraine, no one knew how long the ensuing conflict would last or how deep the shockwaves sent through Europe or the rest of the world. As the war approaches its third month, however, the fallout from the conflict is becoming more apparent, and the outlook does not look good. Treasury yields climbed in early Thursday trading, with the 10-year rising to 2.871% and the 30-year moving to 2.909%.

Earnings inspired the bulls on Wednesday, with the Dow Surging 249 points while the Nasdaq struggled with NFLX losing 50 billion in value in a single day. With the strong report out of TSLA, futures are once again surging in the premarket, rapidly approaching signifiant price resistance levels. The T2122 indicator may also reach a short-term overbought condition this morning ahead of a Jerome Powell speech followed by more comments from James Bullard. Before the bell, we have a busy morning of earnings reports, Jobless Claims, and a Philly Fed Mfg. Reports that consensus expects to decline. Expect another day of volatility as data rolls out. Watch for the potential of a pop and drop as prices stretch to test index resistance levels with the 5-year bonds slightly inverted over the 10-year and near a 30-year inversion. Remember, as we stretch higher, pullback risk grows, so be careful not to chase stocks already extended away from support levels.

Trade Wisely,

Doug

Earnings and Oil Use Cheer Bulls This AM

April 21, 2022 by Ed Carter

All three major indices gapped modestly higher at the open Wednesday. This was followed by an immediate 30-minute selloff in the QQQ. Then all 3 of those indices “roller-coastered” their way sideways in a volatile rest of the day. This left us with a gap-up Doji in the DIA, a gap-up black Spinning Top type candle in the SPY, and a Large black Dark Cloud Cover candle in the QQQ. On the day, SPY lost 0.10%, DIA gained 0.68% (largely on the earnings-related big gains from IBM +7.08% and PG +2.66%), and the QQQ lost 1.50%. The VXX fell 1.37% to 24.39 and T2122 rose to just outside the overbought territory at 76.55. 10-year bond yields fell to 2.846% and Oil (WTI) ended unchanged at $102.56/barrel.l.

During the day, Crude Oil inventories came in dramatically lower than expected (-8 million barrels vs + 2.5 million barrels set.). The Fed Beige Book also indicated that (surprise!) inflationary pressures remain strong. NFLX continued to be hammered for Tuesday night’s earnings miss, closing down 35% (which was actually up more than 4% from the lows of the day). AAPL has its Atlanta store employees file for a union election (jumping ahead of the New York City store that is also gathering signatures in order to trigger a union vote). San Francisco Fed President Daly (a dove) also voiced her thoughts. This included that she fears the coming series of rate hikes could tip the economy into recession, but that she also thought the dip would be mild.

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After the close Wednesday, TSLA, EFX, KNX, LSTR, SCX, SEIC, KMI, VMI, and THC all reported beating on both the revenue and earnings lines. TSLA in particular blew away Wall Street’s expectations ($3.22 actual vs $2.26 est. and $18.76 billion vs $17.80 bill est.). Meanwhile, AA, and CCI both missed on revenue while beating on earnings. On the opposite side, CVNA and GL both beat on revenue while missing on earnings. However, LCRX and SNBR reported misses on both lines.

In business news this morning, AMZN announced that it plans to open up its Prime delivery service to other retailers. This will allow other merchants to sell their goods under the “Buy with Prime” without explicitly mentioning AMZN…for a fee of course. The service will also appeal to the 200 million existing AMZN Prime members. Elsewhere, AAL says that it expects a Q2 profit and is seeing very strong bookings. It has returned to 94% of its 2019 flight schedule, which is more than competitors DAL and UAL.

Overnight, the Asian markets were mixed again, with more exchanges in the green than red, but the losers moved more than the winners. Shenzhen (-2.70%), Shanghai (-2.26%), and Hong Kong (-1.25%) paced the losses. Meanwhile, India (+1.49%) and Japan (+1.23%) were by far the biggest gainers. In Europe, stocks are mostly green at mid-day. The FTSE (+0.17%) lags again while the DAX (+1.57%) and CAC (+1.82%) are leading the region higher in early afternoon trading. As of 7:30 am, US Futures are pointing toward a green start to the day. The DIA implies a +0.63% open, the SPY is implying a +0.79% open, and the QQQ implies a +1.08% open at this hour. 10-year bond yields are back up to 2.877% and Oil (WTI) is up three-quarters of a percent to $103.05 in early trading.

The major economic news scheduled for release on Thursday, we get Initial Weekly Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am), and Fed Chair Powell speaks at both 11 am and 1 pm. Major earnings reports scheduled for the day include ABB, ALK, AAL, T, AN, BX, DHR, DQ, DOV, DOW, FCX, GPC, HRI, HBAN, KEY, MMC, NEE, NUE, PNR, PM, POOL, DGX, SNA, SON, SNV, TSCO, TPH, UNP, WSO, and XRX before the open. Then after the close, SAM, FE, ISRG, PPG, SNAP, SIVB, and UFPI report.

So far this morning, AN, PM, BX, DOW, DHR, MMC, AAL, TSCO, DGX, DOV, SON, HBAN, POOL, WSO, SNA, PNR, ALK, TPH, SNV, and DQ have all posted beats on both lines. Meanwhile, T missed on revenue while beating on earnings. On the other side, KEY, XRX, and HRI beat on revenue but missed on the earnings line. However, ABB missed on both lines.

Earnings will be a tailwind for the bulls today as a large majority of reports came in as beats on both lines last night and this morning. However, Jobless Claims have a chance to rock the boat in premarket while Fed Chair Powell is also speaking during the day. The mega-cap Dow Components look to be breaking free of the recent range while the broader SPY and QQQ seem to still be struggling with that resistance. This may indicate a rotation toward the names perceived to be safer in a rising-rate environment. However, remember that both intraday volatility and day-to-day chop have been the norm for a while now. So, respect that fact and continue to be cautious. Don’t be in a hurry to chase into a rally the first few minutes of the day. Swing trading is not about catching every cent of a move. It’s about taking your slice out of the middle of a swing.

Remember that the first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself. 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.

Swing Trade Ideas for your consideration and watchlist: MCK, CLX, TSLA, DVN, NKE, CCJ, MO, URA, IBM, ORCL, APD, UA, SWN, F, FSR, APA, GM, COP. 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.

🎯 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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Squeezing Out Short Traders

April 20, 2022 by Doug Campbell

The bulls defied the IMF global growth downgrade, the worsening situation in Ukraine squeezing out short traders as they rushed in stocks. However, one day does not make a trend, and it will be interesting to see if they have the energy to follow through today after the disappointing NFLX report. Next, we will turn our attention to mortgage data, existing-home sales, and a busy day of earnings and Fed speakers. Expect price volatility to remain high as the earnings drama continues.

Asian markets closed mixed overnight as China keeps its benchmark lending rate unchanged amid its struggling real estate sector. European markets had a shaky start to the day but have since turned positive as they watch Ukraine developments. U.S. futures trade modest and mixed this morning, with the Nasdaq under some pressure with NFLX indicated to open more than 25% lower.

Economic Calendar

Earnings Calendar

We have a busy day with more than 90 companies listed on the Wednesday earnings calendar, though several are unconfirmed. Notable reports include TSLA, ABT, AA, ANTM, ASML, BKR, BDN, CNS, CMA, CCI, CSX, EFX, GL, KMI, LRCX, LAD, MMLP, NDAQ, PG, SLG, STLD, THC & UAL.

News & Technicals’

Shares of Netflix cratered more than 25% on Tuesday after the company reported a loss of 200,000 subscribers during the first quarter. It’s the first time the streamer has reported a subscriber loss in more than a decade. Netflix blamed increased competition, password sharing, inflation, and the ongoing Russian invasion of Ukraine for the stagnant subscriber growth. Netflix said more than 100 million global households use a shared password, with more than 30 million in the U.S. and Canada. As a result, Netflix suggested it will begin to make accounts that share passwords pay up. Netflix has long ignored password sharing because it has been growing without cracking down on it, but it announced it lost subscribers in the first quarter for the first time in more than a decade. IBM beat consensus on the top and bottom lines. The technology services company offloaded Watson’s healthcare assets to a private-equity firm in the quarter. The stock has outperformed the S&P 500 so far this year. Russia’s war with Ukraine entered a new phase this week, with Moscow focusing its war machine on eastern Ukraine. The move is seen as a bid for Russia to cement its grip on the Donbas — an area that includes two breakaway, pro-Russian self-proclaimed “republics” — and try to annex it. Analysts warn how Russia’s latest offensive goes in the Donbas region could prove extraordinarily significant and decisive in the war against Ukraine. It could determine how Ukraine’s territorial boundaries look in weeks and years. Treasury yields dipped slightly early Wednesday, with the 10-year one basis point to 2.9034% and the 30-year down two basis points to trade at 2.9643%.

Bulls rushed into stocks yesterday, squeezing out short traders defying the IMF global growth downgrade and mixed earnings results. Now the question is can they follow through on that rally after the very disappointing results from NFLX after the bell. Surprisingly, the market seems to have chosen to ignore the rising commodities and inflation or that the Fed will begin to act more aggressively next month. Add to that list the war in Ukraine, the weakening economy in China, and lockdowns that will likley create supply chain challenges. Today, we will have another big round of earnings to supply price volatility, Mortage App data, Existing Home Sales, Petroleum Status, Fed Speakers, and a 20-year bond auction. Remember that one day does not make a trend that we still have significant resistance levels above in the index charts. So, plan your risk carefully and watch whipsaws and overnight reversals as earnings events continue to ramp up.

Trade Wisley,

Doug

NFLX Hammered on Subscriber Decline

April 20, 2022 by Ed Carter

Markets opened basically flat on Tuesday but then proceeded to rally until 11 am before a sideways grind that lasted until 3 pm. Prices rallied the last hour of the day taking all 3 major indices out near their highs. This left use with large white candles and Morning Star patterns in all 3 of those indices. All 3 also climbed back above their T-line (8ema) before the close. On the day, SPY gained 1.63%, DIA gained 1.48%, and QQQ gained 2.22%. The VXX fell 2.3% to 24.73 and T2122 jumped up to the upper mid-range at 70.26. 10-year bond yields spiked again to 2.94% (highest since 2018) and Oil (WTI) fell 5.28% to $102.50/barrel.

Contrary to Monday’s call by the Fed’s Bullard (Hawk) for several half-point interest rate hikes (and potentially using three-quarters point rate hikes) targeting a “neutral rate of 3.5% by year-end, on Tuesday we heard from Atlanta Fed President Bostic. Bostic (usually considered a hawk) told CNBC he was concerned that raising rates too fast could hurt the economy and wants the FOMC to be “very measured” in rate hikes. He also said that the “neutral rate” could be as low as 1.75%, half of what Bullard (the most extreme hawk) felt would be neutral.

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After the close Tuesday, IBM, OMC, and FHN all reported beats on both revenue and earnings. NFLX reported a significant beat on earnings ($3.53 actual vs $2.92 est.) but missed on revenue (as well as reporting it lost subscribers for the first time) and was absolutely hammered (down as much as 28%) in post-market trading on that miss. On the opposite side, IBKR missed on earnings, but beat on revenue.

As mentioned in yesterday’s blog, both the US and UK announced today that they will be sending new military assistance packages to Ukraine. This is in addition to last week’s $800 million package. The White House specifically mentioned that the new package would include more heavy artillery and shells. However, the Pentagon declined to outline the contents of this next package. The main US suppliers of artillery such systems are GD, RTX, NOC, and LMT.

News out of China may give us a chance to capitalize on future news. The largest and fourth-largest ports in the world are currently shut down due to covid lockdowns. There are over 300 container ships and over 500 bulk-carrier ships waiting offshore to be unloaded and reloaded with exports. This very likely means that once China opens and they surge to get the backlog out, the logjam will move back to the US ports of LA, Long Beach, and Oakland. All this means more supply chain problems for major importers. The five largest are WMT, TGT, HD, LOW, and DOLE.

Overnight, the Asian markets were mixed but leaned toward the green side. Shenzhen (-2.07%) and Shanghai (-1.35%) saw by far the biggest losses while New Zealand (+1.10%), India (+1.05%), and Taiwan (+0.91%) led the more numerous gainers. In Europe, stocks are nearly green across the board. The FTSE (+0.16%) lags, but the DAX (+1.03%) and CA (+1.13%) are typical of the region with even Russia (+2.47%) up strongly in early afternoon trading. As of 7:30 am, US Futures are pointing toward another flat start to the day. The DIA implies +0.14%, the SPY is implying +0.03%, and QQQ implies a -0.13% open to the day. 10-year bond yields are back down to 2.863% and Oil (WTI) is up just over 1% in early trading.

The major economic news scheduled for release on Wednesday includes March Existing Home Sales (10 am), Crude Oil Inventories (10:30 am), and Fed Beige Book (2 pm). There is also a Fed speaker scheduled (Daly at 10:30 am). Major earnings reports scheduled for the day include ABT, ANTM, ASML, BKR, CMA, LAD, MTB, NDAQ, PG, and before the open. Then after the close, AA, CVNA, CCI, CSX, EFX, KMI, KNX, LRCX, LSTR, LBRT, SEIC, SNBR, STLD, THC, TSLA, UAL, and VMI report.

So far this morning, ABT ANTM, PG, ASML, LAD, and NDAQ have all reported beating estimates on both revenue and earnings. At the same time, RCI and MTB both missed on revenue while beating on earnings. However, BKR and CMA missed on both the top and bottom lines.

Overnight it was announced that the largest public pension fund (CalPERS), which is a major holder of BRKB stock, will be voting in favor of a proposal to replace Warren Buffett as Chairman of Berkshire Hathaway. The “Oracle of Omaha” has been the public face and perceived leader of stock markets for at least 40 years and this move is notable, though not unexpected for a man who is 91 years old. No word is yet available on when the vote can be forced. However, in 2021 Buffett announced that his successor would be Greg Abel who is currently BRKB Vice-Chair for Non-Insurance Businesses.

Yesterday’s action took us back to the top of the recent trading range. However, it appears that the bulls may make at least an early bid to push up out of that range today. However, volatility and day-to-day chop have been the norm for a while now. So we have to respect the fact that we are right at a level of resistance in all 3 major indices. So, be cautious. Don’t be in a hurry to chase into a rally the first few minutes of the day. Swing trading is not about catching every cent of a move. It’s about taking your slice out of the middle of a swing.

Swing Trade Ideas for your consideration and watchlist: CLVT, IT, HTZ, DISH, FIS, CMCSA, CLX, MA, NKE, XLB, MCD, APD, MRO, MNST, US, MMM. 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.

🎯 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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Frustrating day of Multiple Whipsaws

April 19, 2022 by Doug Campbell

The bulls and bears battled for control all day on Monday, becoming a frustrating day of multiple whipsaws. Volume remains notable anemic, but with another surge in the last minutes of the day, the DIA held its 50-average while the other indexes chopped below theirs. As earnings ramp up, there is a lot of hope that consumers will keep spending habits high despite the impacts of inflation. As a result, expect challenging price action in the weeks ahead with big moves, depending on the outcome. Remember, the war in Ukraine and rising interest rates could still poison the well of enthusiasm at a moment’s notice, so plan your risk carefully.

Asian market closed mixed overnight as currency fluctuations inspired the HSI to sell off 2.28%. European markets trade in the red across the board this morning as the war in Ukraine enters the next phase. With a busy day of earnings and housing data on the way, U.S. futures reversed early bullishness, pointing to a modestly lower open as Russian aggression worries investors.

Economic Calendar

Earnings Calendar

We have just short of 60 companies listed on the Tuesday earnings calendar. Notable reports include JNJ, NFLX, CFG, FITB, FHN, FULT, HAL, HAS, IBKR, IBM, LMT, MAN, PACW, PLD, SBNY, TRV, TFC, WTFC.

News & Technicals’

On Monday, a federal judge in Florida ruled that the CDC had overstepped its authority when it issued a mask mandate for planes and other forms of public transportation. As a result, the CDC mandate is no longer in effect, and the TSA will not enforce it, a Biden administration official said. According to press secretary Jen Psaki, the White House is reviewing the court’s ruling, and the Justice Department will decide whether it will appeal. The court’s ruling comes less than a week after the CDC extended the mandate for 15 days, amid a rise in Covid infections nationwide due to the more contagious omicron BA.2 subvariant. Private equity firm Apollo Global Management would consider providing financing for a Twitter buyout in preferred equity, sources say. But Apollo isn’t interested in joining a private equity consortium to acquire the social media company. Elon Musk, the CEO of Tesla and SpaceX and the world’s wealthiest person, offered to buy Twitter for $43 billion last week. As inflation soars to record highs, pensions feel the pinch, making it even more important to make sure yours is working for you. U.S. inflation hit a fresh 40-year high in March, rising 8.5% year-on-year, while U.K. consumer prices shot up 7% over the same period, as the war in Ukraine pushed up energy prices. “The blistering inflation rate we have been seeing for a year now will ravage those living on a pension, and the pension fund itself,” Dan North, senior economist at Allianz Trade North America, told CNBC. While the first quarter ended with more than $20 billion in net inflows to mainland Chinese stocks, the bulk occurred in January, and the pace of buying dropped sharply as the quarter progressed, data from EPFR Global showed. Anything that relates to China we can find in causality and reasoning from either Russia or [the] U.S. right now,” said Steven Shen, manager of quantitative strategies at EPFR. There’s been “sizeable outflows from China equities since last year, reflecting a notable de-risking on China,” according to Max Luo, director of China asset allocation at UBS Asset Management. Treasury yields moved higher in early Tuesday trading, with the 10-year briefly reaching 2.91% and the 30-year slipping slightly to 2.9512%.

Monday proved to be a frustrating day of multiple whipsaws ending with another end-of-day dark pool surge holding the DIA at its 50-day average. With the Fed’s James Bullard suggesting a 75 basis point interest rate increase and Russia advancing in Ukraine, futures have pulled back from overnight highs. We have a busy day of earnings to focus on with our first big tech report from NFLX after the bell to get a glimpse of consumer spending habits. This morning we will also get a reading on the Housing Starts and Permits, where the consensus suggests only a modest decline. With so many forces pushing and pulling on the market, expect the price volatility to remain challenging. There is so much hope that consumers came through with spending despite the high inflation that good reports could move stocks with enthusiasm. However, if they miss, I suspect they could also get severely punished, with many suggesting that a recession is on the way. As a result, it would be wise to plan for a bumpy ride in the weeks ahead.

Trade Wisely,

Doug

Earnings in US and Russia Spooks Europe

April 19, 2022 by Ed Carter

Markets opened little changed on Monday and then traded sideways in a roller-coaster fashion the rest of the day. This left us with indecisive Spinning Top candles in all 3 major indices. On the day, SPY gained 0.04%, DIA lost 0.06%, and QQQ gained 0.08%. The VXX rose a little more than a percent to 25.31 and T2122 fell a bit but remains in the mid-range at 34.90. 10-year bond yields continue to spike, ending at 2.857% and Oil (WTI) closed higher to $107.42/barrel.

In business news, Jack Dorsey (former CEO, who is still a board member), criticized the TWTR board. This came less than a day after Elon Musk fired back at the TWTR “poison pill,” claiming the board doesn’t own enough TWTR stock to be aligned with investors. On top of this, Bloomberg reported that sources tell them that Apollo Group would be willing to finance Musk’s takeover bid. Elsewhere, following on the SBUX and AMZN trend, workers at an AAPL store in New York City have begun the process of attempting to unionize. In earnings news, after the close, JBHT posted beats on both revenue and earnings.

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After the close, Fed member Bullard (strongest Hawk) said that “inflation is far too high” at an event for the Council on Foreign Relations. He went on to say that the economy will not fall into recession and that he expects the unemployment rate to fall below 3% later this year. He also repeated his argument that the Fed Funds Rate needs to get to at least 3.5% by the end of the year and said that a three-quarter of a percent hike is possible if required, but that he would prefer multiple half-percent hikes in the FOMC Meetings to come.

So far this morning, CFG, HAL, and SBNY have reported beats on the revenue and earnings lines. Meanwhile, JNJ, LMT, TRV, and TFC all missed on revenue while beating on earnings. On the other side, FITB and HAS both missed on the bottom line while beating on revenue.

Overnight, the Asian markets were mixed again. Hong Kong (-2.28%) and India (-1.25%) were far and away the biggest losers on the day. Meanwhile, South Korea (+0.95%), Japan (+0.69%), and Taiwan (+0.56%) led the gainers. In Europe, stocks are nearly red across the board at mid-day. Russia (-4.03%) is an outlier, but many of the smaller exchanges have well over a 1% loss at this point. The FTSE (-0.35%), DAX (-0.73%), and CAC (-1.12%) lead the continent as always, just based on exchange size, in early afternoon trading. As of 7:30 am, US Futures are pointing toward a flat start to the day. The DIA implies a +0.01% open, the SPY is implying a -0.03% open, and the QQQ implies a -0.07% open at this hour. 10-yeat bond yields are up to 2.89% and Oil (WTI) is down 1.4% to $106.66/barrel in early trading.

The major economic news scheduled for release on Tuesday are limited to March Building Permits and March Housing Starts (both at 8:30 am). Major earnings reports scheduled for the day include CFG, FITB, HAL, HAS, JNJ, LMT, MAN, PLD, SBNY, TRV, and TFC before the open. Then after the close, FHN, IBKR, IBM, NFLX, and OMC report.

Following yesterday’s Federal judge ruling that the CDC does not have the power to issue mask mandates, the TSA announced overnight that they will stop enforcing mask requirements. This may (or may not) prove helpful for travel stocks as we enter what industry sources expect to be a massive wave of travel in Spring and Summer. However, the White House and Justice Dept. are still reviewing the ruling and determining whether to appeal the decision. So, this may change and in either case, it seems like convenient timing for the ruling after the worst of the pandemic is 1-2 years behind us.

The renewed Russian assault on Donbas has European markets spooked. It seems clear that Moscow has directed its military to employ terror and leave scorched earth if Putin cannot have what he wants. So, we are likely to hear of another round of military aid heading from the US and EU, which can benefit the military industrials like RTX, LMT, GD, NOC, and maybe WCHS. Beyond that, the volatility continues and is likely to continue. On any earnings news, forward guidance will be just as important as results. Expect a lot of news and analysis to focus on that guidance as they try to handicap the impact of rate hikes and Fed-led economic landing. So, continue to be cautious, hedged, and/or have stops that are loose enough to ride out the whipsaw (and be ready to withstand that short-term pain). Trade carefully.

Stick with those 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. Remember that the first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself.

Swing Trade Ideas for your consideration and watchlist: ATUS, WRB, LULU, ORCL, IP, X, CMCSA, DIS, GFI, COP, MRO, CF, APA, SHW, OKE. 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.

🎯 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

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

Bears Gained Ground Last Week

April 18, 2022 by Doug Campbell

The bears gained ground slightly last week as investors weighed the impacts of rapidly rising inflation and the Fed talking aggressively hawkish. In addition, as investors continue to deal with the uncertainties in Ukraine, the likely supply chain issues due to China’s lockdowns earnings season ramps up. Can companies continue to perform with the rising costs and consumers forced to make spending habit changes? Prepare for intraday whipsaws and overnight reversals as the data rolls out.

Asian markets closed mixed overnight, with Chinese economic data raising concerns about a slowing economy with lockdowns entering another week. However, European markets trade with modest gains across the board after the ECB confirms the end of bond-buying to address their punishing inflation. Though well off the overnight lows, U.S. futures point to a slightly bearish open as earnings season shifts into high gear.

Economic Calendar

Earnings Calendar

We have about 60 companies listed but less than 20 confirmed reports to kick off the new trading week. Notable reports include JNJ, NFLX, BAC, IBM, BK, SCHW, ELS, FNB, JBHT, PNFP & SYF.

News and Technicals’

American’s new CEO Robert Isom said the airline is adequately staffed for the summer travel season. However, airline passengers have at times faced thousands of flight cancellations and delays due to understaffing over the past year. Earlier this month, American’s partner, JetBlue, said it would trim summer flying by as much as 10%. A court filing out late Friday said a judge ruled Tesla CEO Elon Musk knowingly made false statements when he tweeted about a take-private deal for the company in 2018. Shareholders are suing Tesla and Musk to recover the money they lost after Musk tweeted that he was considering taking the automaker private at $420 a share and had “funding secured” to do so. After those tweets, the SEC charged Musk with civil securities fraud. They struck a revised settlement agreement in 2019, but Musk is trying to terminate that agreement now. Finally, Twitter adopted a limited duration shareholder rights plan, often called a “poison pill,” a day after billionaire Elon Musk offered to buy the company for $43 billion, the company announced Friday. Such a move is a common way to fend off a potential hostile takeover by diluting the entity’s stake eying the takeover. The board voted unanimously to adopt the plan. The city said that three people have died as of Sunday, attributing the deaths to preexisting health conditions. The official announcement noted all three people were elderly and were not vaccinated against Covid-19. The city also said it would begin another round of mass virus testing, set to end Thursday. Treasury yields traded higher in early Monday trading, with the 10-year rising to 2.866% and the 30-year trading at 2.942%.

We finished last week with the bears gained ground with a slight advantage as investors grappled with pricing stock amid rapidly rising inflation. This week traders turn their attention to a big week of earnings reports with uncertain about gains due to producer inflationary impacts. Unfortunately, we also have to deal with Russia gaining ground in Ukraine and the China lockdowns expected to affect supply chains substantially. As a result, price volatility in the week ahead is likely to continue as the bulls try to defend the 50-day averages in DIA, currently the only index able to hold this crucial psychological level last week. As bond yields continue to rise, QQQ could struggle the most if tech earnings begin to slow as strained consumers change buying habits. So get ready for just about anything as silly season kicks into high gear.

Trade Wisey,

Doug

Bank Earnings, TWTR Drama, and Ukraine

April 18, 2022 by Ed Carter

Markets opened basically flat on Thursday and then sold off the rest of the day. This resulted in black, Bearish Engulfing candles and Oreo Cookie patterns in the SPY and QQQ, with DIA putting in a black candle with all 3 closing on the lows of the day. On the day, SPY lost 1.25%, DIA lost 0.43%, and QQQ lost 2.29%. The VXX rose to 24.99 and T2122 dropped to right in the middle at 50.67. The 10-year bond yields spiked again to 2.827% and Oil (WTI) rose more than 2% to $106.44/barrel.

On Friday, we got some positive economic news. The NY Empire State Mfg. Index came in above expectations. The same was true of March Industrial Production, which came in almost double the forecast value (+0.9% vs 0.4% forecast).

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Related to Elon Musk’s hostile TWTR takeover bid, the stock traded in a volatile way Thursday, but never got even close to the offered $54.20/share. It actually closed down 1.68% to $45.08. This seems to imply that the market does not believe the deal will ever happen. Friday, a couple of analysts downgraded the stock as now “being in the middle in an Elon circus.” Also on Friday, a Saudi Prince offered to match Musk’s deal and buy the company at the same price (perhaps offering a more palatable buyer). However, late in the day TWTR board unanimously passed a “poison pill” policy. This means if anybody acquires 15% of company stock without board approval, then other TWTR holders will be allowed to buy additional shares at a deep discount. This would flood the market with shares of TWTR, driving down the price and making a takeover much harder, slower, and more expensive.

So far this morning, BAC and SYF have both reported beating on both lines. At the same time, BK printed a beat on revenue while reporting in-line earnings. However, we should note that BK’s in-line report was still down 11.3% from the prior quarter.

On the Russian invasion story, Russia is continuing to fire missiles at major Ukrainian cities like Karkhiv, Kiyv, and Lviv. Meanwhile, Ukrainian resistance continues to hold out in the last stronghold of the destroyed city of Mariupol. The Russian Donbas offensive is underway with heavy fighting in the town of Kreminna, which is located Southeast of Karkhiv in the Luhansk region. On the economic side, Ukraine has submitted its application questionnaire to join the EU. More importantly, many analysts are now saying that renewed aid is desperately needed as Ukraine is in need of more heavy weapons and, in particular, more ammunition to maintain its fight in the face of the massive Russian assault. So, look for more aid to be coming from NATO countries and new orders to be placed in turn with companies like GD, WCHS, NOC, and RTX.

Overnight, the Asian markets were mixed but leaned to the red side. India (-1.73%), Japan (-1.08%), and Singapore (-0.98%) paced the losses. Meanwhile, Hong Kong (+0.67%), Australia (+0.59%), and Shenzhen (+0.37%) led the gainers. In Europe, stocks are also mixed, but in this case, lean to the upside at mid-day. The FTSE (+0.47%), DAX (+0.62%), and CAC (+0.72%) lead as usual while Russia (-1.76%) is an outlier to the downside in early afternoon trading. As of 7:30 am, US Futures are pointing toward a modestly lower start to the day. The DIA implies a -0.12% open, the SPY is implying a -0.26% open, and the QQQ implies a -0.33% open at this hour. 10-year bond yields are up again to 2.837% and Oil (WTI) is down fractionally in early trading.

The major economic news scheduled for release on Monday is limited to a Fed speaker (Bullard at 4 pm). Major earnings reports scheduled for the day include BAC, BK, SCHW, and SYF before the open. Then after the close, JBHT reports.

In economic news later this week, on Tuesday we get March Building Permits and March Housing Starts. Then Wednesday, we see March Existing Home Sales, Crude Oil Inventories, and Fed Beige Book will be released. On Thursday, we get Initial Weekly Jobless Claims, Philly Fed Mfg. Index and Fed Chair Powell speaks. Finally, on Friday we get Mfg. PMI and Services PMI.

Coming off the 3-day break, it was Elon Musk’s TWTR drama that maintained the spotlight all weekend. Yet, we also find ourselves at the start of another earnings season. And this quarter’s earnings may be more important than many recent quarters’ numbers (and especially guidance) as traders try to read through how well firms will be able to cope with the rising rates and fear of a hard landing. Recently, both major intraday and day-to-day reversals have been the rule. So, continue to be either being very nimble/quick, hedged, or have stops that are loose enough to ride out the whipsaw (and be ready to withstand that short-term pain). Trade carefully and position yourself for the long weekend news cycle.

Swing Trade Ideas for your consideration and watchlist: GPN, TWTR, VLO, IP, OXY, GPS, BP, HON, MMM, TGT, ZTS, EBAY, OTIS, AME, MAS, SHW, SLB. 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.

🎯 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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Highest PPI Reading on Record

April 14, 2022 by Doug Campbell

The bulls shrugged off the highest PPI reading on record yesterday, choosing to react bullishly in the travel sector after DAL reported a smaller than expected loss. As we wait for a busy morning of big bank earnings and economic reports, Europe waits for an ECB rate decision to fight its inflation battle. It would not be a surprise to see a morning of wild price volatility and an afternoon of uncertainty as we slide into a 3-day weekend as Russia increases its threatening rhetoric.

Asian markets closed green across the board as South Korea tightened its monetary policy. European stocks trade mixed and muted as they wait on the ECB decision. With a big day of data and a pending 3-day weekend ahead, U.S. futures tiptoe around the flatline, pensive about what comes next.

Economic Calendar

Earnings Calendar

We have about 60 companies listed on the Thursday earnings calendar, with many unconfirmed. Notable reports include UNH, ALLY, C, GS, LAKE, MS, PNC, RAD, STT, SNDL, TSM, ERIC, USB & WFC.

News & Technicals’

Russia says a nuclear-free Baltic region would no longer be possible if Finland and Sweden join NATO, alluding to additional nuclear deployments in Europe. The comments come a day after Finland and Sweden said their decision on whether to apply for NATO membership would come within a matter of weeks. Finland and Sweden are members of the EU but not NATO, and the latter shares an 830-mile border with Russia. The risk that the Federal Reserve accidentally tips the U.S. economy into recession as it combats inflation is rising, according to JPMorgan Chase CEO Jamie Dimon. “I’m simply pointing out that those are storm clouds on the horizon that may disappear, they may not,” Dimon said. In the event that a recession does develop, the bank would “have to put up a lot more” for loan loss reserves, Dimon told reporters. A huge leak of internal documents — thought to be an act of revenge over Conti’s pro-Russia stance — revealed details about the notorious hacker group’s size, leadership, and operations. The messages show that Conti operates much like a regular company, with salaried workers, bonuses, performance reviews, and even “employees of the month.” However, cybersecurity experts say some workers were told they were working for an ad company and likely were unaware of who was employing them. Israeli historian and bestselling author Yuval Noah Harari says the growing risk that Russia may turn to nuclear weapons poses an existential threat to humanity. Still, Harari warned that it is not for Western allies to try to preempt such action by seeking regime change in Russia. Federal Reserve board member Christopher Waller said Wednesday that he expects interest rates to rise considerably over the next several months. In a CNBC interview, Waller said current data on inflation and the general strength of the economy justify half-percentage-point increases ahead. The Fed normally increases in 25-basis-point increments. Treasury yields declined slightly in early Thursday trading, with the 10-year dipping to 2.6787 and the 30-year slipping less than a basis point to 2.791%.

The bulls went to work defying the highest PPI reading on record and disappointing results from JPM and BLK. A smaller than expected loss from DAL inspired travel stocks to surge yesterday, with investors seeing a hopeful glimmer the industry is recovering despite the rising inflation. Today the market is bracing for multiple big bank reports and a busy morning of possible market-moving economic data. Markets could also react to an ECB rate decision expected this morning to fight the punishing effects of inflation. Traders should prepare for price volatility as the date rolls out and consider their risk carefully as we slide into a 3-day weekend. With Russia stepping up its threatening rhetoric of shutting off gas supplies to Europe and nuclear action if Finland and Sweden join NATO, the long weekend of uncertainty could make the afternoon session challenging. Buckle up for a possibly bumpy ride.

Trade Wisely,

Doug

Earnings, Bird Flu, TWTR Bid and Claims

April 14, 2022 by Ed Carter

Despite a record 11.2% Year-on-Year PPI report before the opening bell, stocks opened flat on Wednesday. However, at that point, we started a slow, steady rally that lasted the rest of the day. This left us with large white candles in all 3 major indices and the SPY and DIA both printing Bullish Engulfing candles. On the day, SPY gained 1.15%, DIA gained 1.03%, and QQQ gained 2.03%. The VXX fell 4.5% to 24.59 and T2122 shot back up to close just outside the overbought territory at 75.61. 10-year bond yields fell slightly to 2.,701%, and Oil (WTI) gained 3.47% to $104.09/barrel.

AMZN announced Wednesday afternoon that they will be adding a 5% “fuel and inflation” surcharge to all sellers as of April 28 for all users of “Fulfillment By Amazon.” The vast majority of sellers are expected to raise the price of goods sold through AMZN in response. (89% of all AMZN sellers use FBA.) AMZN said their fee amounts to 24 cents per package, which is less than the USP surcharge of 42 cents and the FDX surcharge of 49 cents.

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As if food inflation were not bad enough already, the US is suffering from an outbreak of the bird flu. So far, 23 million chickens have died across 24 states. Iowa seems to be the worst-hit state with over 13 million chickens culled in that state so far. The last outbreak, in 2015, saw 50 million birds die over a six-month period. So, this outbreak appears to be worse than the last outbreak. The largest chicken-producer stocks are PPC, SAFM, and TSN, while the largest egg-producing stock is CALM. Among the companies that consume the most chicken as inputs, we see SYY, HRL, PPC, and TSN. Second-level users of chicken and eggs include MCD, WEN, GIS, and KHC.

In earnings news, so far this morning ALLY, GS, MS, STT, TSM, UNH, and USB have all reported beats on both the revenue and earnings lines. Meanwhile, RAD beat on revenue, but missed on earnings. On the other side, PNC and WFC both missed on revenue while beating on earnings. However, ERIC missed on both lines.

In other stock news, Elon Musk has launched a hostile takeover bid to take TWTR private. Musk has offered $54.20/share (roughly $43 billion), which is a small 18% premium on Wednesday’s closing price of $45.85. This move comes less than 24 hours after TWTR investors sued Musk for violating SEC rules and not disclosing he had taken more than a 5% stake in the stock without notifying the SEC within 10 days. TWTR is wildly volatile in premarket, now at $48.88.

On the Russian invasion story, the Biden Administration confirmed another round of military assistance for Ukraine as reported here yesterday. The $800 million package includes howitzer artillery, armored personnel carriers, 500 more Javelin missiles, and 300 more Switchblade Kamikaze Drones. Elsewhere, the major defense contractors met with Pentagon officials, who told them to ramp up production of weapons for Ukraine and to expect at least a 2-year war. These include BA, LHX, RTX, LMT, HII, GD, and NOC. Interestingly, India’s largest oil refiner has suddenly stopped buying Russian oil and the world’s largest oil trader (Vitol) announced it would also stop buying crude from Russia. This may indicate they are bowing to pressure from the Biden Admin.

Overnight, the Asian markets were mixed. Shenzhen (+1.27%), Shanghai (+1.22%), and Japan (+1.22%) led the gainers. Meanwhile, the broad but modest losses were paced by Taiwan (-0.32%), India (-0.31%), and Thailand (-0.25%). In Europe, stocks are mostly modestly green at mid-day. The FTSE (+0.03%), DAX (+0.24%), and CAC (+0.52%) lead the way as usual in early afternoon trading. Russia (-2.16%) is an outlier to the downside for obvious reasons. As of 7:30 am, US Futures are pointing toward an opening just on the green side of flat. The DIA implies a +0.21% open, the SPY is implying a +0.04% open, and the QQQ implies a +0.08% open at this hour. 10-year bond yields are down slightly to 2.684% and Oil (WTI) is off eight-tenths of a percent to $103.24/barrel in early trading.

The major economic news scheduled for release on Thursday includes March Retail Sales, March Import/Export Indices, and Weekly Jobless Claims (all at 8:30 am), Feb. Bus. Inventories and Michigan Consumer Sentiment (both at 10 am), and a couple of Fed speakers (Mester at 3:50 pm and Harker at 6 pm). Earnings season is back as ALLY, C, ERIC, GS, MS, PNC, PGR, RAD, STT, TSM, USB, UNH, and WFC all reporting before the open. There are no major earnings scheduled for after the close.

Also remember that US Markets are closed tomorrow for Good Friday, but we still get NY Empire State Mfg. Index and March Industrial Production numbers. Also, Friday is Tax Day in the US.

There is a flurry of news to start off the last day of the week. The buzz in the premarket is over earnings and Musk’s TWTR buyout bid. It seemed like markets took the PPI number in stride yesterday, so perhaps the focus has shifted away from economic news and back to specific sectors and charts. With a 3-day holiday weekend ahead, don’t be surprised if volume dries up a bit today in the afternoon. Major intraday reversals have been the rule lately, so beware chasing anything at the open. Continue to be either being very nimble/quick, hedged, or have stops that are loose enough to ride out the whipsaw (and be ready to withstand that short-term pain). Trade carefully and position yourself for the long weekend news cycle.

Remember, earnings season is starting again (check those earnings dates) and also that markets are closed Friday (Good Friday). So, you don’t have to chase trades early this week. Stick to those 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. Remember that the first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself.

Swing Trade Ideas for your consideration and watchlist: NVCR, ZBH, DAL, CRSP, FSLR, LUV, CMCSA, DASH, ORCL, NEM, ERX. 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.

🎯 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

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