The bulls tried hard to convince us that inflation hitting the highest level since 1981 didn’t matter as the Dow surged 330 points in early trading. That all changed when the second in command at the Fed reiterated, they would aggressively raise interest rates to fight the rapidly rising prices. Today we get a reading on PPI and toss in the beginning of 2nd quarter earnings to fuel the fire’s volatility. With geopolitical tensions rising and China going into lockdown, the second quarter could prove as challenging as the first, with wild price gyrations and uncertainty.
Asian markets traded mixed but mainly bullish overnight as China’s exports rose more than expected. European markets, however, trade mixed but mainly in the red with an ECB decision on the horizon amid rising inflation. Once again, the futures point to a gap open with PPI just around the corner as JPM earnings disappoint.
Economic Calendar
Earnings Calendar
Today we officially kick off the second quarter earnings season that begins with the big banks. Notable reports include JPM, DAL, BBBY, BLK, FAST, FRC, INFY, RENT, & SJR.
News & Technicals’
The China lockdowns have the potential to trigger supply chains issues that could dwarf 2020 and 2021 challenges. Many goods are stuck in China now, and a “big problem looms” for the global economy, says IMA Asia’s Richard Martin. In the last few weeks, China has been battling its most severe Covid outbreak on the mainland since the initial shock of the pandemic in early 2020. A trade rupture between Germany and Russia could dent German manufacturing – one of three global manufacturing centers besides the U.S. and China, S&P Global’s Chief Economist Paul Gruenwald told CNBC’s “Squawk Box Asia.” According to Germany’s Federal Statistical Office, trade between Germany and Russia jumped significantly in 2021, with the value of goods surging 34.1% to 59.8 billion euros ($65 billion). Research and consultancy firm Wood Mackenzie also warned that the global economy could undergo “more permanent changes” with global trade possibly altered by the crisis. Fewer than 10,000 people are using CNN+ on a daily basis two weeks into its existence, sources said. The paltry audience casts doubt on the future of the application following the recently completed combination of Discovery and WarnerMedia into Warner Bros. Discovery. Warner Bros. Discovery CEO David Zaslav hasn’t commented publicly on CNN+’s long-term future. He told CNBC in February he’d need to see how the application performed before deciding on any next moves. Treasury yields were back on the rise in early Wednesday trading, with the 10-year advancing to 2.7786% and the 30-year rising to 2.8632%.
With inflation hitting the highest level since 1981, the market briefly tried to make us believe it didn’t matter as the Dow surged 330 points. However, when Brainard reiterated that the Fed would aggressively raise rates to fight the rapidly rising prices, the bears took over, winning the day. Today we face the beginning of the 2nd quarter earnings season, and a PPI number expected to also come in hot. The willingness of the market to ignore the critical internals in favor of wild speculation will continue to fuel the dangerous price volatility creating huge point whipsaws and reversals. As a result, Inexperienced retail traders are likely to suffer the most when the Fed finally pops this speculation bubble. Adding in the significant emotional gyrations of the earnings season will only add to the volatility. Toss in a China lockdown and the geopolitical complications, and the path forward looks very challenging.
Stocks gapped higher at the open Tuesday, presumably on the fact that March CPI “only” came in at 8.5%. There was even a little follow-through during the first half-hour of the day. However, markets then rethought their position and this led to a steady selloff that lasted the entire rest of the day. This left us with black candles with plenty of wicks at both ends in all 3 major indices. On the day, SPY lost 0.37%, DIA lost 0.29%, and QQQ lost 0.42%. The VXX also lost 1.4% to 25.74 and T2122 climbed a bit, but remains in the lower half of the mid-range at 39.32. 10-year bond yields fell back to 2.72% after being at a 3-year high early in the day.
Tuesday also saw Oil (WTI) spike massively (over 7%) to $100.98 after being up “only 5%” most of the day. This seemed to initially be related to lockdown easing in Shanghai leading traders to expect higher demand. Yet, more talk of European sanctions on Russian oil and OPEC slashing the forecast for Russian oil exports led to fears about supply as well. President Biden’s easing of maximum ethanol percentage regulations seemed to do little to impact either oil or gas prices, at least for the day.
On the Russian invasion story, after-hours Reuters reported that the US will announce another $750 million in weapons aid for Ukraine today, including heavy ground artillery such as howitzer cannons. Among the winners of contracts to resupply the US military will be RTX, LMT, RTN, BA, NOC, GD, and LHX who have all been invited to the Pentagon to discuss their capacity to supply Ukraine and refill American stockpiles. Overnight, Sweden’s ruling party decided to back entry into NATO in a direct afront to Putin’s demands and threats.
So far this morning, DAL, FAST, and FRC have reported beats on both revenue and earnings. JPM and BBBY both beat on revenue but missed on earnings. JPM did so after taking over a $525 million hit from Russian sanctions and BBBY blamed supply chain woes (low inventories) for a poor holiday quarter. Finally, BLK missed on revenue while reporting a massive beat on earnings ($9.52 actual vs. $8.92 est.).
Overnight, the Asian markets were mixed. Japan (+1.93%), South Korea (+1.86%), and Taiwan (+1.83%) led the gainers. Meanwhile, Shenzhen (-1.60%) and Shanghai (-0.82%) paced the losses. In Europe, stocks are mostly red at mid-day. The FTSE (+0.08%), DAX (-0.89%), and CAC (-0.51%) lead the way with only Norway (+1.62%) being a significant winner in early afternoon trading. As of 7:30 am, US Futures are pointing to a green start to the day. The DIA implies a +0.42% open, the SPY is implying a +0.51% open, and the QQQ implies a +0.67% open at this hour. 10-year bond yields are flat at 2.725% and Oil (WTI) is up almost 1.8% to $102.44/barrel in early trading.
The major economic news scheduled for release on Wednesday is limited to March PPI (8:30 am) and Oil Inventories (10:30 am). However, earnings season kicks off in earnest today with these major earnings reports scheduled before the open, BBBY, BLK, DAL, FAST, FRC, INFY, JPM, and SJR. There are no major earnings scheduled for after the close.
Everybody expects a very hot PPI number this morning, but as usual, it won’t be as hot as yesterday’s 8.5% CPI number. (Business always passes on more than the hit they take.) Yesterday’s number led to an initial gap up, but then a rethink. Will we get the same today? It’s hard to say, especially since we are starting back into earnings season and eyeballs will be focusing on the rearview mirror for a while, gauging the impact of Russian sanctions (on companies that shut Russian operations or lost business due to embargoes) and inflation. This will be even more evident in consumer names as markets try to read through “just how badly has consumer spending been hurt by rising prices.” We should still expect volatility (like yesterday morning’s big reversal) and be prepared. That means continuing to be either being very nimble/quick, being hedged, or having loose enough stops (and the ability to withstand short-term pain) to ride out the whipsaw action. Trade carefully and position yourself so that shocks in either direction don’t throw you into a panic.
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.
Ed
Swing Trade Ideas for your consideration and watchlist: EXR, MRO, SHEL, OXY, X, DRE, CF, KGC, FE, MDT, DVN, TWTR, ZBH, LULU, EOG, APA, FIS, XLU, CVX, ET. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Uncertainty brought out the bears yesterday as the market braces for the impacts of a hot inflation reading and the possible impacts of another China lockdown. Bond yields continue to increase, adding selling pressure to the tech sector, with the DIA, SPY, QQQ, and IWM pushing below their 50-day averages. Can we continue to ignore the impacts of rising rates and insidious tax of rapidly rising inflation on the consumer? We will soon find out but prepare for some wild price volatility that may include head fakes, whipsaws, and reversals as the market reacts.
Asian markets closed mixed as investors tried to measure the impacts of another widespread lockdown in China. European markets see red across the board as a significant undisclosed investor sells German banks tanking Deutsche bank by 9.5%. With a light day of earnings and pending CPI reading, the U.S. futures point to a flat open in the premarket, but anything is possible after the number comes out. So, prepare for just about anything.
Economic Calendar
Earnings Calendar
We have 15 companies listed on the earnings calendar, most of them unconfirmed. Notable reports include ACI & KMX.
News & Technicals’
Economists expect inflation to rise 1.1% in March from the prior month, but the year-over-year gain is 8.4%, the highest since December 1981. The consumer price index will be reported Tuesday at 8:30 a.m. ET. The main culprits behind the jump in headline inflation were food and energy, but the cost of housing has continued to rise. “It’s going to be ugly,” said one economist of the March report. “It’s a perfect storm.” Japan’s health ministry said Monday that the new XE variant, first detected in the U.K., was found in a woman in her 30s who arrived at Narita Airport. The XE subvariant is a so-called recombinant, or mix, of two earlier omicron strains, BA.1 and BA.2. According to the latest statistics from the U.K, one hundred twenty-five cases of XE have been detected in the U.K., almost double the previous count. Health Security Agency. President Joe Biden is visiting corn-rich Iowa on Tuesday to announce he’ll suspend a federal rule preventing the sale of higher ethanol blend gasoline this summer as his administration tries to tamp down prices at the pump that have spiked during Russia’s war with Ukraine. The Environmental Protection Agency will issue an emergency waiver to allow the widespread sale of 15% ethanol blend, usually prohibited between June 1 and Sept. 15 because of concerns that it adds to smog in high temperatures. Senior Biden administration officials said the move would save drivers an average of 10 cents per gallon at 2,300 gas stations. Members of Congress from both parties, as well as industry groups, had urged Biden to grant the E15 waiver. Treasury Yields continued to rise in early Tuesday trading, with the 10-year trading up to 2.8250% and the 30-year slightly higher at 2.8353%.
A rapidly rising infection rate in China and fears of a hot inflation reading pushing bond yields higher kept the bears active on Monday, fearing economic impacts. Add in the intensifying war in Ukraine, and uncertainty ruled the day though the fear registered by the VIX remained relatively modest. This morning, investors will turn attention to the CPI, which could come in at levels not seen since 1981. Overall the market has had an amazing ability to ignore the impacts of inflation, but the Fed, now willing to sacrifice market growth to fight rising costs, adds a new wrinkle for investors. As a result, anything is possible, and traders will have to stay focused on price action with the possibility of intraday whipsaws or full-on reversals as the uncertainty unfolds. So, fasten those seatbelts tightly as it could be a bumpy ride!
Markets gapped down Monday after bond yields spiked then managed to hang on for about an hour. However, then a long, slow selloff took over that ran into the end of the day. This left us with big, ugly, gap-down black candles that closed not far off the lows in all 3 major indices. All 3 also managed to drop through their 50sma, although to be fair the DIA only fell about 50 cents below its 50sma. On the Day, SPY lost 1.66%, DIA lost 1.18%, and QQQ lost 2.32% as money fled from the high-growth tech names. The VXX rose almost 6% to 26.10 and T2122 fell toward the bottom of the mid-range to 26.60. As mentioned, 10-year bond yields spiked to 2.771% while Oil (WTI) fell over 3.5% to $94.80/barrel.
During the afternoon, the Biden Admin. began preparing the public for a Consumer Price Index report that will show that “inflation is extraordinarily elevated.” This will be a follow-up on February’s CPI coming in a 7.9%, which was the highest level recorded since January 1982. The March CPI Index will come out this morning. In that same vein, the Biden Administration announced is set to allow fuel to contain a higher percentage of ethanol in an effort to reduce gas prices.
On the Russian invasion story, Russia defaulted on its foreign debt, because it offered to pay the bondholders in Rubles (held in a Russian bank account and not movable during sanctions). However, it also became clear that limited/targeted sanctions were not having much strategic impact so far, although they may be hurting the Russian Mains Street. It seems the rise in energy and food price spikes have greatly increased the value of Russian energy (Nat. Gas, Oil, and Coal) and Ag (Wheat) exports, while current sanctions have limited many imports. The upshot of all this is that the Russian current-account surplus is the largest it has been since at least 1994 according to Bloomberg. As a result, Russia added $3.4 billion to its war chest in the first quarter. On this news, Ukrainian President Zelensky again called for Western sanctions on Russian oil sales. Overnight, the WTO lowered its estimate of international trade growth from +4.7% to +3.0% due to the impacts of the Russian invasion.
On the ground, Russia began its renewed offensive in the Donbas overnight. The US and UK are investigating reports that Russians used chemical weapons in Mariupol on Monday. However, Russia vehemently denies the allegation.
Overnight, the Asian markets were mostly red, with the exception of mainland China. Shenzhen (+2.05%), Shanghai (+1.46%), and Hong Kong (+0.52%) were the only green in the region. Meanwhile, Japan (-1.81%), Singapore (-0.99%), and South Korea (-0.98%) paced broader losses. The same is true in Europe, where stocks are mostly red at mid-day. The FTSE (-0.43%), DAX (-0.93%), and CAC (-0.64%) are typical of the continent in early afternoon trading. As of 7:30 am, US Futures are pointing toward a flat start to the day. The DIA implies a -0.03% open, the SPY is implying a -0.03% open, and the QQQ implies a +0.02% open at this hour. However, 10-year bond yields are on the move higher again to 2.792% and Oil (WTI) is up 4.1% to $98.14 in early trading.
The major economic news scheduled for release on Tuesday includes March CPI (8:30 am), 10-year Bond Auction (1 pm), and Federal Budget Balance (2 pm). There is also a Fed speaker (Brainard at 12:10 pm). The only major earnings reports scheduled for the day are ACI and KMX, both before the open.
The big CPI number is likely to drive at least the start of the day as markets are flat until the print at 8:30 am. What is harder to gauge is whether the expectations of an “extraordinarily high” number are already baked into the market (resulting in a muted response) or whether traders will be “shocked” by the news. If it is already baked in, we may be in a “wait and see” mode until earnings start again Wednesday. In either case, we should expect more volatility and be prepared for intraday reversals. That means continuing to be either being very nimble/quick, being hedged, or having loose enough stops (and the ability to withstand short-term pain) to ride out the whipsaw action. Trade carefully and position yourself so that shocks in either direction don’t throw you into a panic.
Remember, big bank earnings start Wednesday and 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.
Ed
Swing Trade Ideas for your consideration and watchlist: GPN, AMCR, CCI, EOG, GFL, MRO, XOM, CMCSA, MNST, HES, TGT, CLX, FIS, LUMN. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
With bond rates risking, the QQQ remained under pressure from the bears while the bulls focused their efforts on the DIA. So far, the DIA and SPY have successfully held their 50-day averages though the IWM failed to hold, and QQQ looks to violet this crucial technical level at the open today. This week’s theme will be inflation as we get readings for CPI and PPI, which are both expected to come in hot, clearing a path for an aggressive rate hike by the Fed. We can hope for the best, but traders should prepare for more challenging volatility in this holiday-shortened week.
Overnight Asian markets closed in the red, with Hong Kong leading the selling down over 3% after the release of surging producer price numbers. European markets traded mixed this morning with worries about inflation and the intensifying war in Ukraine. With bond rates rising, inverted U.S. futures point to a flat, slightly bearish open with inflation data just around the corner.
Economic Calendar
Earnings Calendar
We have just over 20 companies to kick off the short week of trading. However, there is only PCYO confirmed.
News & Technicals’
Elon Musk informed Twitter on Saturday morning that he would not take the board seat. However, CEO Parag Agrawal announced publicly on Sunday that Musk remains the largest shareholder of Twitter, and the company will remain open to his input. Musk’s appointment would have started on April 9, contingent on a background check and formal acceptance. Nio announced Sunday it would raise the prices for its three SUVs — the ES8, ES6, and EC6 — by 10,000 yuan ($1,572), effective May 10. A day earlier, on Saturday, Nio said it suspended production due to Covid-related restrictions in the last several weeks that halted production at suppliers’ factories. Many other electric car companies, from Tesla to Xpeng, have raised prices in the last several weeks. French leader Emmanuel Macron and his far-right rival, Marine Le Pen, face off in the final vote on April 24. A flurry of early projections and exit polls showed the incumbent. Macron came first with 28.1-29.5% of the vote, followed by Le Pen with 23.3-24.4%. The rising cost of living and the Russia-Ukraine war has been front and center. Support for Macron had jumped following Russia’s unprovoked invasion of Ukraine and his mediation efforts earlier this year. Federal Reserve policymakers will try to slow down the economy and subdue inflation. Higher rates make money costlier and borrowing less appealing. That, in turn, slows demand to catch up with supply, which has lagged badly throughout the pandemic. Fed officials also have talked tough on inflation to dampen future expectations. Potential effects include lower wages, a halt or even a drop in home prices, and a decline in stock market valuations. Treasury yields continue to be a concern, with the 5-year trading at 2.8154%, the 10-year climbing to 2.7629%, and the 30-year pricing at 2.7629% in early Monday trading.
While the DIA found some bullish price action, the QQQ remained under pressure, with bond rates rising while inverted. Though the bulls have defended the 50-day support of the DIA and SPY, IWM failed this fundamental psychological level, and the QQQ is likely to follow suit at open today. Moreover, with news that the war in Ukraine intensified over the weekend, the uncertainty could keep the market on edge in this holiday-shortened week. Though we have several Fed speakers today, there is not much else providing inspiration today. However, with hot numbers expected in the CPI on Tuesday and the PPI on Wednesday, traders will should expect considerable volatility in the days ahead. If that’s not enough to deal with, we will have Retail Sales on Thursday before closing for the Good Friday holiday. I hope you are rested from the weekend because it could be a challenging 4-days ahead!
On Friday, the large-caps opened flat and then put in a volatile day. Meanwhile, the QQQ gapped down about a half of a percent and then after a morning bounce spent the afternoon selling off. This left us with a black Doji in the SPY, a white Spinning Top in the DIA, and a black candle in the QQQ. On the day, SPY lost 0.27%, DIA gained 0.40%, and QQQ lost 1.40% as money rotated out of the high-growth tech stocks and into defensive sectors. The VXX rose over 2.5% to 24.57 and T2122 came back up to near mid-range at 53.47. 10-year bond yields ended up again to 2.704% and Oil (WTI) gained almost 2% to $97.90/barrel.
In miscellaneous business news, Elon Musk made the surprise announcement that he has rejected a seat on the TWTR board. This came a day after he suggested a number of changes to the TWTR Blue subscription program, including having the company add the ability to accept payments in dogecoin. Bloomberg reports that F may reopen the factories it closed in India to make electric vehicles. This news comes 2 days after the company’s joint venture in Turkey has begun production of an electric version of the company’s Transit van. Elsewhere, Chinese EV maker NIO raised prices by about $1,600. That company has also had to halt production due to Covid closure of their plant.
On the Russian invasion story, on Saturday, UK PM Johnson visited Kyiv to promise the Ukrainians armored vehicles, anti-ship missile systems, and $500 million in added World Bank loan guarantees. This brings Britain’s loan guarantees for Ukraine to $1 billion. Meanwhile, S&P downgraded Russia to “selective default” on Saturday. Most analysts believe the country will at least partially default on the $649 to bond holders that is due today. As of now, Russia has only promised to place the equivalent in Rubles in its own National Settlement Depository (meaning it would be inaccessible to the lenders until after sanctions). Still, the World Bank said on Sunday that despite the “heavy sanctions” Russia faces, they expect the Russian economy to contract by only 11% for 2022 (compared to 45% for Ukraine).
Economic news for later this holiday-shortened week includes March CPI, 10-year note auction, and Federal Budget Balance on Tuesday. Wednesday brings March PPI and Oil Inventories. On Thursday we get March Retail Sales, March Import/Export Indices, Weekly Jobless Claims, February Bus. Inventories, Michigan Consumer Sentiment, and a Fed speaker. US Markets are closed for Good Friday, but we get NY Empire State Mfg. Index and March Industrial Production numbers. Also, remember that Friday is Tax Day in the US.
Overnight, the Asian markets were red across the board, with the lone exception of Australia (+0.10%) which eked out a small gain. Shenzhen (-3.67%), Hong Kong (-3.03%), and Shanghai (-2.61%) led the region lower after higher-than-expected Chinese Consumer and Producer Price news showed that inflation is running at 8.3% in that country. In Europe, stocks are mixed at mid-day. The FTSE (-0.28%), DAX (-0.19%), and CAC (+0.74%) are typical of the spread across the continent in early afternoon trading. As of 7:30 am, US Futures are pointing to a red start to the morning. The DIA implies a flat -0.04% open, the SPY is implying a -0.34% open, and the QQQ implies a -0.71% open at this hour. 10-year bond yields are also spiking again to 2.759% and Oil (WTI) is down more than 3.75% to $94.58/barrel in early trading.
There is no major economic news scheduled for release on Monday. However, Fed member Bostic speaks at 9:30 am. There are also no major earnings reports scheduled for the day.
Notable Earnings Reports for this week include a slow start with none on Monday. However, on Tuesday we get ACI and KMX. Then Wednesday earnings ramp back up with BBBY, BLKL, DAL, FAST, FRC, INFY, JPM, and SJR. On Thursday we get ALLY, C, ERIC, GS, MS, PNC, PGR, RAD, STT, TSM, USB, UNH, and WFC. There are no earnings scheduled for Friday.
The lack of economic news or earnings this morning has traders searching for a clue ahead of the open. Still, the war continues in Ukraine, China has realized they have serious inflation (which is a problem given that they are still easing to promote growth), and earnings season kicks off again on Wednesday. So, we may see more tepid moves and volume today as markets wait for the next shoe to drop. With all this said, we should expect more volatility and be prepared for intraday reversals. That means either being very nimble/quick, being hedged, or having loose enough stops (and the ability to withstand short-term pain) to ride out the whipsaw action. Trade carefully and position yourself so that shocks in either direction don’t throw you into a panic.
Remember, big bank earnings start Wednesday and 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.
Ed
Swing Trade Ideas for your consideration and watchlist: WEAT, AAP, STX, TGT, NKE, SYY, DIS, CSCO, KLAC, AMAT, HAS, ROKU. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Stocks opened just on the Southside of flat on Thursday before selling off slightly in the morning. Then we saw a reversal and strong rally that lasted until we got a pullback the last half hour of the day. This left us with indecisive, Spinning Top candles in all 3 major indices. On the day, SPY gained 0.50%, DIA gained 0.35%, and QQQ gained 0.24%. The VXX fell 1.35% to 24.05 and T2122 rose a bit to 36.96. 10-year bond yields surged again to 2.665% and Oil (WTI) rose just less than 1% to $97.13/barrel.
US Consumer debt jumped by almost $42 billion in February. Debt levels rose to a record $4.5 trillion. That was a much higher rate than the January increase and signals the impacts on consumers, which are being stretched thin by inflation. Credit card debt alone jumped almost 21% in the month, compared to a 4% increase back in January. This begins investors worrying about missed payments and bad debt collection and write-off impacts on creditors and especially regional banks (card issuers). This probably accounts for the fact that consumer confidence is at a 10-year low.
BAC market analysts turned bearish on the economy overnight, lowering ratings on the entire transportation and homebuilding industries. They also expressed concern over the banking sector not showing the profit gains that are expected in typical rising rate environments. The bottom line is that they now expect a recession and almost immediate rotation into defensive sectors and assets (such as bonds). Are they late to the party…you be the judge?
On the Russian invasion story, Congress voted to approve the stripping of Russia of its most-favored-nation trade status and also banned Russian oil and gas imports. Less reported but more importantly, earlier the US re-enacted (by unanimous Senate vote) the World War II “Lend-Lease” program and has removed the 5-year limit on the duration of loans. The bill also declares the conflict in Ukraine began with the ceasing of Crimea. This implies the US will back Ukraine through the end of the conflict (years if needed), including the recapture of Crimea. On the other side of things, Germany urged their banks and gas purchasing companies to keep their contracts with Russia Gazprom. In addition, Hungary bought a stake in Russian Sberbank in a sign of support for Putin by his friend Hungarian PM Orban. MSFT also announced it had used a court order to disable 7 internet domains used by Russia to hack Ukrainian targets such as media organizations and government agencies.
Overnight, the Asian markets were mixed but leaned to the upside in modest trading. India (+0.82%), Taiwan (+0.62%), Shanghai and Australia (both +0.47%) led the gains. Meanwhile, Singapore (-0.62%) was the main loser with a couple of other exchanges just on the red side of flat. However, in Europe, we see green across the board (with the lone exception of Russia’s -1.18%) at mid-day. The FTSE (+0.97%), DAX (+1.31%), and CAC (+1/37%) are typical of the continent in early afternoon trading. As of 7:30 am, US Futures are pointing toward a modestly green start to the day. The DIA implies a +0.40% open, the SPY is implying a +0.33% open, and the QQQ implies a +0.34% open at this hour. 10-year bond yields are up again to 2.688% and Oil (WTI) is down to $95.95/barrel in early trading.
Major economic news scheduled for release on Friday is limited to the WASDE (World Agriculture) Report at noon. There are no major earnings reports scheduled for the day.
As the premarkets look modestly higher this morning, we are still looking at a down week at this point. A lack of economic news and/or earnings leaves traders to focus on news such as the Russian overnight bombing of a railway station full of evacuees and market analysts becoming more convinced recession is coming to an economy near you sometime in the next two quarters. These will be limited headwinds for the bulls. With all this said, we should expect more volatility (just like yesterday’s big intraday reversal) and be prepared. That means either being very nimble/quick, being hedged, or having loose enough stops (and the ability to withstand short-term pain) to ride out the whipsaw action. Trade carefully and position yourself so that shocks in either direction don’t throw you into a panic.
Remember that it’s Friday and we have a weekend news cycle ahead. 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. So, 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.
Ed
Swing Trade Ideas for your consideration and watchlist: OLLI, HBIO, TLRY, X, ORCL, MRO, BITO, XLF. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
The Fed minutes confirmed the Fed plans to fight inflation aggressively, creating a bit of Wednesday volatility. The question is, will this prick the bubble of high stock valuations and home prices inflated by all the money printing? Only time will tell, but one thing seems inevitable, the Fed may have to sacrifice the market growth they have long defended to get the job done. Today we will hear from James Bullard, that pointed to Fed credibility when asking for a one-point increase in rates last month! Could we see another dose of price volatility this morning as a result?
Overnight Asian markets struggled to close the session with red across the board. However, this morning, European markets are cautiously higher as they monitor the hawkish Fed and Russian aggression. With Jobless claims and more Fed speak pending, U.S. futures point to modest gains at the open.
Economic Calendar
Earnings Calendar
The Thursday earnings calendar lists about 40 companies, but many of them remain unconfirmed. Notable reports include ANGO, APOG, CAG, STZ, NTIC, PSMT & WDFC.
News & Technicals’
Members of the NATO military alliance have been supplying Kyiv with weapons since Russia’s unprovoked invasion of Ukraine in February. However, this is not enough for Ukraine’s Foreign Affairs Minister, Dmytro Kuleba. NATO Secretary-General Jens Stoltenberg said Wednesday: “We need to be prepared for the long haul.” Shell has announced that it will write off between $4 and $5 billion in the value of its assets after pulling out of Russia. The announcement offers a first glimpse at the potential financial impact to Western oil majors of exiting Russia. Shell was forced to apologize on March 8 for buying a heavily discounted consignment of Russian oil. It subsequently announced that it was withdrawing from Russia. China warned on Thursday it would take strong measures if U.S. House of Representatives Speaker Nancy Pelosi visited Taiwan and said such a visit would severely impact Chinese-U.S. relations, following media reports she would go next week. The possible visit has not been confirmed by Pelosi’s office or Taiwan’s government, but some Japanese and Taiwanese media reported it would take place after she visits Japan this weekend. Chinese Foreign Ministry spokesperson Zhao Lijian told reporters that Beijing firmly opposed all forms of official interactions between the United States and Taiwan, and Washington should cancel the trip. Denim retailer Levi Strauss reported fiscal first-quarter earnings, and revenue topped analysts’ estimates. The company sold more jeans and T-shirts at higher price points, often directly to customers. Levi reaffirmed its forecast for fiscal 2022, assuming no significant worsening of inflationary pressures or closures of global economies. Levi CEO Chip Bergh told CNBC that consumers have yet to trade down for less expensive apparel. Treasury yields fell slightly in early Thursday trading, with the 5-year dropping to 2.6381%, the 10-year dipping to 2.5659%, and the 30-year slightly lower to 2.6046%.
The confirmation that the Fed plans to fight inflation aggressively in the minutes provides some volatility in an overall bearish day that created lower lows to follow the lower high made on Tuesday. The good news is the DIA, SPY, and QQQ held above their 50-day averages at the end of the day, providing hope of a bullish defense. However, with the most hawkish Fed member, James Bullard, set to speak at 9:00 AM this morning, another dose of volatility could be on the way. Remember the last meeting Bullard was calling for a full 1 point increase in rates, calling it a matter of Fed credibility. The bond yield inversion also weighs on investors’ minds as Janet Yellen warns of energy and food shortages continuing to pressure inflation. That said, I would not be surprised to see a bit of a relief rally by the end of the week unless more geopolitical issues arise.
Markets gapped down significantly Wednesday and then ground sideways, first in a fairly tight range, but then in a very volatile way to end the day. This left us with gap-down, indecisive candles in all 3 major indices. The SPY printed a Doji while the DIA and QQQ printed Spinning Top candles. On the day, SPY lost 0.99%, DIA lost 0.43%, and QQQ lost 2.17%. The VXX fell 1% to 24.55 and T2122 dropped to 28.39. 10-year bond yields pulled back over the day but still spiked higher to 2.59% and Oil (WTI) fell 4.85% to $97.02/barrel.
The Fed minutes released Wednesday afternoon told us that the Fed has reached a consensus to begin reducing the FOMC Balance Sheet by $95 billion/month probably starting in May. This is twice the rate compared to the last time the Fed shrunk its balance sheet and may leave bond markets starved for supply even as traders try to flee to the safety of bonds. (This will fight against the Fed’s attempt to raise rates since higher bond prices mean lower yields.) There was also a strong hint that at least some of the interest rate hikes ahead will be 0.50% hikes. These are clear signs the Fed is now hawkish and will be aggressive in its fight against inflation. While this caused considerable volatility in the afternoon today, buckle up as the most Hawkish member of the Fed (Bullard) will be speaking today. (He previously called for a full percentage hike by the first of July.)
During the day, Oil Inventories came in much higher than expected. The consensus forecast had called for a 2 million barrel drawdown, but inventories came in showing a 2.4-million-barrel increase. This came the same day that Congress took turns blasting top executives from major oil companies. Executives from XOM, CVX, BP, SHEL, PXD, and DVN all took turns being berated for windfall profits as well as increasing their buyback plans and dividends rather than increasing production. The companies were also blasted for investing in Russian projects after Russia ceased and annexed Crimea.
In other market news, BRKB (Warren Buffett’s Berkshire Hathaway) revealed that it has taken a $4.2 billion position in HPQ, causing the computer and printer company stock to soar as much as 17% in premarket trading. Elsewhere, Chinese company Tencent has shut down its fledgling rival to AMZN subsidiary Twitch (video game streaming platform). This comes after Chinese regulators killed a merger between the two video game streaming platforms that Tencent had major stakes in. This eliminates the only major global rival to AMZN in that growing niche market. Also this morning, CAG reported beats on both lines while STZ beat on revenue at the same time it reported a miss on earnings.
Overnight, the Asian markets red across the board. Taiwan (-1.96%), Japan (-1.65%), and Shenzhen (-1.65%) led the region lower. However, losses were widespread and only New Zealand (-0.03%) was anywhere near flat on the day. In Europe, we see a different story altogether. Stocks are green across the board with only two minor exceptions of the FTSE (-0.07%) and Norway (-0.27%) at mid-day. The DAX (+0.71%) and CAC (+0.70%) are typical of the continent with even Russia (+1.17%) gaining in early afternoon trading. As of 7:30 am, US Futures are pointing toward a slightly green start to the day. The DIA implies a +0.04% open, the SPY is implying a +0.18% open, and the QQQ implies a +0.31% open at this hour. 10-year bond yields are up slightly to 2.607% and Oil (WTI) is up 2.23% to $98.35 in early trading.
Major economic news scheduled for release on Thursday is limited to Weekly Initial Jobless Claims (8:30 am) and 4 speakers (Fed member Bullard at 9 am, Treasury Sec. Yellen at 10:30 am, Fed member Bostic at 2 pm, and Fed member Williams at 4:05 pm. The only major earnings reports scheduled for the day are CAG, STZ, and LW all before the open. There are no major earnings announcements scheduled for after the close.
After a day and a half of markets being spooked by Fed doves, this morning we hear from the staunchest hawk among Fed members. Premarkets are not running scared in the face of this prospect. So, it may be a case of investors already “cooking in” a worst-case and feeling like Bullard’s proposed medicine won’t be so bad. At any rate, stocks are on the green side of flat heading into his talk. That and Weekly Jobless claims are the only news to worry about in premarket. However, we also have 3 other Fed speakers who might rock the boat later in the day. So, maybe markets have found a level to consolidate or find some support. However, expect more volatility as traders continue to try to guess how inflation, rising interest rates, and a potential hard landing will shake out across the market. Trade carefully and position yourself so that shocks in either direction don’t throw you into a panic.
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. So, 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.
Ed
Swing Trade Ideas for your consideration and watchlist: FIGS, HBIO, PYPL, SQ, DOCU, BABA, MCD, ORCL, PFE, TT. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
The bears came out to play yesterday after hearing the hawkish comments from the Fed that is willing to fight inflation aggressively with swift balance sheet reductions and higher interest rates. Even with yesterday’s selling, the indexes remain in bullish price patterns, but that could quickly change if the bulls can’t find the energy to defend price supports. So, after the usual morning push and pull, don’t be surprised if the price action becomes stale and choppy as we wait on the release of the Fed minutes and the volatility it often creates. As you plan forward into Thursday, keep in mind James Bullard speaks and has in the past pushed for a full point rate increase!
Asian markets closed mainly in the red overnight as treasury yields continue to rise, with tech leading the selling. However, the inflation-fighting Fed comments and added Russian sanctions have the European markets bearish this morning, with indexes red across the board. With oil numbers and the Fed minutes ahead, U.S. futures also point to a bearish open, with the tech sector feeling the most pressure.
Economic Calendar
Earnings Calendar
We have just over 20 companies listed on the Wednesday earnings calendar, with the most unconfirmed. Notable reports include CLIR, LEVI, TLRY, RGP, RPM, SCHN & SMPL.
News & Technicals’
Fed Governor Lael Brainard and San Francisco Fed President Mary Daly spoke Tuesday, emphasizing the central bank’s commitment to fighting inflation through higher interest rates. “It is paramount to get inflation down,” Brainard said. Raising rates “is necessary to ensure that again, [you] go to bed at night, you’re not worrying about whether prices will be higher, considerably higher tomorrow,” Daly added. Twitter said in an SEC filing on Tuesday that Tesla CEO Elon Musk has been buying shares on almost a daily basis since the end of January. The filing indicates he’s spent $2.64 billion on Twitter stock. The disclosure came in a 13D filing, confirming that Musk now has an active stake in Twitter. JetBlue Airways made a $3.6 billion all-cash offer for Spirit Airlines, raising questions about Spirit’s deal to combine with rival discount carrier Frontier Airlines. The bid comes less than two months after Spirit and Frontier agreed to merge into a discount airline behemoth. Trading in Spirit shares was halted before the market closed Tuesday after the stock spiked more than 22% to $26.92. CDC Director Rochelle Walensky said high immunity levels from vaccination, boosters, and prior infection should provide some protection against the omicron BA.2 variant in the US. BA.2 makes up a growing proportion of variants in the U.S., but new infections are steady. Hospitalizations have been at their lowest level since 2020. BA.2 has caused significant outbreaks in Europe and China. Treasury yields rise on hawkish Fed comments, with the 5-year trading at 2.7635%, the 10-year at 2.6125%, and the 30-year rising to 2.6204% in early Wednesday trading.
The bears found some inspiration yesterday after hearing the hawkish comments from the Fed, which is willing slow the economy to fight inflation aggressively. However, even with yesterday’s selling, the index patterns held in bullish patterns. The question now is, will bears have the energy to follow through today breaking price supports, or will the bulls have the tenacity to defend? Today we have more Fed speakers, and later this afternoon, we could experience an extra dose of volatility at the release of the Fed minutes. If that’s not enough, one of the most hawkish Fed members, James Bullard, speaks Thursday morning! So, prepare for a bumpy road ahead as the market comes to terms with the fact the Fed must act to control inflation and will no longer serve as the guarantee of support.
