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Upbeat Guidance from MSFT

January 26, 2022 by Doug Campbell

Upbeat guidance from MSFT reversed early selling and sparked a substantial rally in overnight futures, but it would be wise to remember it will take a lot of work to repair the technical damage. Moreover, the significant gap raises the danger level of another punishing whipsaw or pop and drop with so much market-moving data around the corner. A relief rally is overdue but don’t get caught up in the morning hype and drama it creates. Instead, stay focused on price action and carefully consider the risk of every position before jumping back into the fire ahead of an FOMC rate decision.

Asian markets traded mixed overnight as investors wait for the Fed decision and how aggressively they intend to fight inflation. However, European markets trade decidedly bullish this morning with hopes of a relief rally high while bracing for the possible volitility the FOMC can create. Ahead of market-moving earnings and economic reports, U.S. futures suggest a considerable gap up at the open and a continuation of the wild overnight price volatility. Watch for the possibility of big point whipsaws or even the dreaded pop and drop as traders react to all the data.

Economic Calendar

Earnings Calendar

We have a busy day with more than 120 companies listed on the earnings calendar. Notable reports include INTC, TSLA, ABT, ANTM, AZPN, T, ADP, BA, CACI, GLW, CCI, DRE, EW, FANUY, FCX, GD, HES, HESM, KMB, KNX, LRCX, LVS, LC, LEVI, MTH, NDAQ, NSC, NG, PKG, PLXS, PTC, RJF, STX, NOW, SIMO, SLG, SLM, TER< URI, VRTX, WHR, & XLNX.

News & Technicals’

Microsoft surpassed estimates on the top and bottom lines, but Azure cloud revenue merely matched analysts’ expectations. In addition, the company’s gaming business is in the spotlight after Microsoft said it would acquire Call of Duty publisher Activision Blizzard for $68.7 billion. Bentley Motors plans to spend £2.5 billion (about $3.4 billion) over the next decade to become a fully electric luxury brand by 2030. The investment will include significant upgrades to Bentley’s historic plant manufacturing campus in England. Bentley’s first all-electric vehicle is scheduled to roll off the production line in 2025. Agreements from technology companies and betting firms helped the NFL lure a record $1.8 billion in sponsorship revenue, a 12% increase year-over-year from the 2020 season. Team sponsorship revenue only increased 4%, but the NFL is now allowing teams to sell intellectual property rights overseas. However, the NFL is still sitting on the sidelines regarding crypto sponsorships. The US has sent the clearest message yet that Russia, its key personnel and economic sectors, and its leader Vladimir Putin could face the severest sanctions it has ever faced. US President Joe Biden intimated that President Putin’s Russian counterpart could face personal sanctions on Tuesday. In addition, the US has outlined new sanctions and targets that it could impose if there is an invasion. The Kremlin has said any personal sanctions on Putin would be politically destructive. Treasury yields traded with little movement in early Wednesday trading with the 10- pricing at 1.7851% and the 30-year standing at 2.1309%.

Technically the index charts have a lot of work to repair the damage created by the selling uncertainty this month. The wild price volitility continued on Tuesday with substantial point swings as we face market-moving earnings reports and economic data that include a rate decision from the FOMC at 2:00 PM Eastern this afternoon. Upbeat guidance from MSFT reversed early selling and dramatically shifted overnight futures markets in hopes that a relief rally would begin. However, internal indicators continue to suggest a short-term oversold condition. Still, the big gap-up suggested this morning could easily create another painful pop and drop with so much data coming your way today. That said, keep your wits about your today and stay focused on the price action remembering the wild volatility is likely to continue with the FOMC decision and reports from INTC and TSLA this afternoon. Watch overhead resistance levels as areas where the bears could set up defensive positions.

Trade Wisely,

Doug

All Eyes on Fed Statement and Presser

January 26, 2022 by Ed Carter

The good news is that Tuesday was a bit less volatile than Monday. However, we opened with a 1%-2% gap lower. This led to a roller-coaster in all 3 indices, with the SPY and DIA completely fading the gap before rolling over again. Meanwhile, the QQQ roller-coaster stayed around the gap-down level before also closing on a downswing. This left us with long-legged, Spinning Top (indecisive) candles in all 3 major indices. On the day, SPY lost 1.19%, DIA lost only 0.21%, and QQQ lost 2.32%. The VXX rose slightly to 23.82 and T2122 climbed just out of the oversold territory to 23.16. 10-year bond yields closed up to 1.781% and Oil (WTI) rose almost 2.5% to $85.38 on continued fear of a Russian invasion of Ukraine.

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After hours, the Commerce Department released a report that said due to supply chain problems, some US manufacturers are down to less than 5 days’ worth of inventory of computer chips (semiconductors). The report summarized survey finding from 150 manufacturers, which said on average they had maintained 40 days of supply in 2019, but were down to 5 days of inventory last fall and have not recovered. While the report did not name any specific companies, it did cite the auto, consumer electronics, and medical device industries. The report also said the worst-hit businesses are those that use older “legacy” (low margin) chips in their products.

After the close Tuesday, MSFT, COF, FFIV, and TXN all reported beats on both lines. So far this morning, ADP, T, TEL, NDAQ, and GLW have all reported beats on both lines. However, ANTM and GD both beat on earnings but came in light on revenue.

Overnight, Asian markets were mixed. Australia (-2.49%) was an outlier with Japan (-0.44%) and South Korea (-0.41%) pacing losses and India (+0.75%), Shenzhen (+0.70%), and Shanghai (+0.66%) leading the gains. In Europe, stocks are strongly green across the board at mid-day. The FTSE (+1.80%) lags, while the DAX (+2.28%) and CAC (+2.26%) are typical of the continent in early afternoon trading. As of 7:30 am, US Futures are pointing toward a strong start to the day. The DIA implies a +0.94% open, the SPY is implying a +1.28% open, and the QQQ implies a +1.81% open at this hour. 10-year bond yields are up to 1.79% and Oil (WTI) is also up three-quarters of a percent in early trading.

The major economic news scheduled for release Wednesday includes Dec. Trade Goods Balance and Dec. Retail Inventories (both at 8:20 am), Dec. New Home Sales (10 am), Crude Oil Inventories (10:30 am), and then the FOMC Interest Rate Decision and FOMC Statement (both at 2 pm), followed by the FED Chair Press Conf. (2:30 pm). Major earnings reports scheduled for before the market include ABT, APH, ANTM, ADP, T, BA, NSC, FCX, GD, GLW, HES, KMB, KNX, NDAQ, NSC, PGR, ROL, and TEL. Then after the close, AMP, AVT, AXS, CACI, CLS, CCI, EW, FLEX, INTC, LRCX, LSTR, LVS, LEVI, MTH, MEOH, MKSI, PKG, PLXS, PTC, RJF, STX, SEIC, NOW, TER, TSLA, URI, VRTX, WHR, and XLNX report.

While we have other economic data and earnings, the Fed decision (and especially the statement and presser) will call the market tune today. Bull traders seem to be anticipating no shocks, as they’re trying to front-run the announcements. That leaves the real risk exposure to the downside. However, don’t be surprised if markets lose their nerve and decide to drift into the announcement today. Either way, we can expect tremendous volatility right after the announcement as traders reset positions once the outcome is known. So, as I continue to say, markets will not fall forever. Now is the time to be preparing for the rally that will follow (whenever it comes). Get those trading plans and rules tuned up, decide on your watchlists for a potential rotation, and be prepared. However, it is not time to predict a turn or chase moves you have missed. Trade carefully.

The first rule of making money in the market is to not lose big money in the market. So, stick to your trading rules and manage the things you can control. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Don’t be stubborn. When you’re wrong, just admit it and take your loss. (That’s why we set stops.)

Swing Trade Ideas for your consideration and watchlist: CF, FANG, APA, USO, WSM. 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.

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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Wild Ride on Wall Street

January 25, 2022 by Doug Campbell

The wild ride on wall street continues as traders capitulate, dropping the Dow more than 1000 points only to race back in to close all four indexes in the green. However, with a big day of earnings that includes the tech giant, MSFT traders fear the potential outcome with the VIX closing near a 30 handle. Add to that a worrisome Consumer Confidence due to inflation impacts and, of course, a pending FOMC decision Wednesday afternoon, and we have all the ingredients for additional volatility today.

Asian markets retreated sharply overnight, closing in the red across the board. However, European markets see only green this morning, trying to relieve the pressure of the recent selloff. That said, the price volatility continues this morning, with the Dow futures suggesting a substantial gap down and keeping traders guessing as to what comes next! So, prepare for another day of wild price action.

Economic Calendar

Earnings Calendar

We have a busier day on the Tuesday earnings calendar with another big tech report to punctuate the day. Notable reports include MSFT, MMM, AGYS, AXP, ADM, BXP, CNI, COF, GGIV, GE, HA, HYMPY, INVZ, JNJ, LMT, LOGI, NAVI, NEE, NEP, PCAR, PII, RTX, TXN, TRMK, UMC, VZ, WSBC, & XRX.

News & Technicals’

Crisis talks aimed at averting a military confrontation between Russia and Ukraine appear to be faltering, as Western allies prepare for a possible conflict between the neighbors that could be “painful, violent and bloody.” The U.S. Department of Defense has said that about 8,500 American troops are awaiting orders to deploy to the region if Russia does invade Ukraine. Europe has been conspicuously absent from last-ditch negotiations to prevent tensions between Russia and Ukraine from spilling into conflict. Bitcoin, the world’s largest virtual currency, briefly plunged below $33,000 Monday to its lowest level since July. It’s since recovered above $36,000 but is still down almost 50% from a record high of nearly $69,000 in November. That’s got some crypto investors talking about the possibility of a “crypto winter.” IBM shares jump after the company reported a 6% growth in revenue over the fourth quarter. IBM executives have been telling investors to look for mid-single-digit revenue growth. The company spun out its managed infrastructure services unit during the quarter into a publicly held company named Kyndryl. President Joe Biden called Fox News reporter Peter Doocy “a stupid son of a bitch” on a live microphone Monday after Doocy asked Biden if inflation was a political liability to him. Doocy regularly baits Biden during press events, shouting over other reporters and trying to get the president off guard. Biden has a long record of swearing on hot microphones. Treasury yields climbed in the early Tuesday trading, with the 10-year rising to 1.7760% and the 30-year edging up to 2.1133%.

No doubt about it yesterday was a wild ride as traders capitulated with the Dow falling more than 1000 points then surged back up to close the day green across all four indexes. But, unfortunately, the wild volatility continued in the overnight futures markets, dropping more than 250 Dow points. Today we have a busy day of earnings, with the MSFT report coming after the bell. After the NFLX disappointment and the considerable Nasdaq selloff, there is a palpable uncertainty as we wait for the tech giant to report. During the morning session, we will face Case-Shiller home price numbers and worrisome Consumer Confidence numbers amid rising inflation. Of course, anything is possible with an FOMC decision just around the corner, so buckle up for the wild ride to continue.

Trade Wisely,

Doug

Now That Was a Whipsaw And the Ride Isn’t Over Yet

January 25, 2022 by Ed Carter

Monday was quite the roller-coaster ride. A gap lower of 1%-1.7% across the 3 major indices and started a wild whipsaw ride (each whip being more than 1% in size) to the downside all morning. The lows of the day were reached about 12:30 pm, when (for no particular reason) sentiment reversed and a wild whipsaw ride to the upside began. Again, each major wave of movement was over 1% in size. All 3 major indices closed in the green and near their highs of the day even as we saw a range of more than 5% in those indices on the day. This left us with white candles with long lower wicks across the board. On the day SPY gained 0.40%, DIA gained 0.39%, and QQQ gained 0.49%. The VXX closed up 2.5% to 23.79 and T2122 remains deeply oversold at 2.47. 10-year bond yields ended up slightly after their own wild ride of a day, closing at 1.774% and Oil (WTI) was down 1.44% to $83.91.

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As mentioned, we experienced massive intraday swings Monday. While this has not happened in a long time, huge intraday volatility is not unknown. Bloomberg looked at the Nasdaq 100 (QQQ) over the last 25 years as a gauge for such volatility. They found many days that were similar to Monday’s whipsaw action in both 2008 (Financial Crisis) and during 2000-2002 (dot-com bubble burst). That said, the swing we just saw was the largest since January 8, 2001. This may give us a clue to the potential volatility to come during the shift from massive spending and debt related to pandemic recovery and the shift to the new Fed’s goal of reversing that situation to fight inflation. The moral of the story is that if you’re trading, be damn sure you can handle real pain and are comfortable with volatility.

After the close on Monday, BRO, CR, IBM, STLD, and ZION all beat on both lines. IBM spiked in after-hours trading after posting its best revenue growth in 10 years (+6.5%) on strong cloud services sales in Q4. So far this morning, VZ, AXP, LMT, ADM, IVZ, and MMM have all reported beats on both lines. Meanwhile, JNJ, NEE, RTX, and GE reported beats on earnings but came in light on revenue.

Overnight, Asian markets were nearly red across the board (with only India +0.75% in the green). Shenzhen (-2.83%), Shanghai (-2.58%), and South Korea (-2.56%) led the region lower. In Europe, we see the opposite at mid-day. Bourses are green across the board on the continent with the FTSE (+0.84%), DAX (+0.54%), and CAC (+0.82%) leading the region higher. As of 7:30 am, US Futures are pointing toward another major gap lower. The DIA implies a -0.73% open, the SPY is implying a -1.39% open, and the QQQ implies a -2.00% open at this hour. 10-year bond yields are also up sharply to 1.774% and Oil (WTI) is flat in early trading.

The only major economic news scheduled for release Tuesday is Conf. Board Consumer Confidence (10 am). However, major earnings reports scheduled for before the market include MMM, AXP, ADM, ERIC, GE, IVZ, JNJ, LMT, NEE, PCAR, PII, RTX, UMC, VZ, and XRX. Then after the close, BXP, CNI, COF, FFIV, HA, MSFT, RNR, and SLGN report.

The Fed meeting starts today as markets are clearly spooked. What may have traders worried is any mention of 4 or more rate hikes this year, when the FOMC position to this point has been to expect 3 hikes. The wildcard everyone is waiting to drop will be what is said about the lightening of the Fed’s massive balance sheet of bonds and other mortgage-backed assets. So, as I said yesterday, now is the time to be preparing for the bottom. Not time to be predicting a turn or chasing moves you have missed. Trade carefully.

Swing Trade Ideas for your consideration and watchlist: UVXY, SPLK, QID, SDS, TDOC, HAL, FSLY. 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

Erratic day of Price Action

January 24, 2022 by Doug Campbell

Friday proved to be an erratic day of price action, with growing geopolitical tensions and the worries of the pending FOMC raising the bar of uncertainty. In addition, sporadic earnings results as we begin to ramp up the number of reports and economic numbers hinting at a slowing economy just add to the precarious path forward. Unfortunately, overnight futures action continues to whipsaw in huge point moves suggesting today could see much of the same. So plan your risk carefully as we wait for the Fed decision Wednesday afternoon.

Asian markets closed mixed after a choppy session with tech stock still under selling pressure. However, this morning, the European markets trade decidedly bearish with Ukraine invasion concerns and a possible hawkish Fed. In addition, U.S. futures whipsawed during the night, now pointing to a modestly lower open ahead of earnings results and the PMI flash report. So, hang on tight as we begin another day of volatile uncertainty.

Economic Calendar

Earnings Calendar

To begin the trading week, we have more than 40 companies listed, with the majority of them confirmed. Notable reports include BOH, BMRC, CR, HAL, HMST, IBM, PETS, SMBK, STLD, TRST, & ZION.

News & Technicals”

The U.S. State Department urged U.S. citizens in Ukraine to leave the country immediately, as Russia’s military buildup at the border shows no sign of dissipating. According to Ukrainian and Western officials, Russia has repeatedly denied it is preparing to invade its neighbor Ukraine, despite stationing around 100,000 Russian troops at various locations along the border. As a result, analysts are now questioning whether the West can actually deter Russia and just how far Western allies are willing to defend the country. Ballistic missiles intercepted two over Abu Dhabi early Monday morning. The ministry confirmed no casualties from the attack and that “fragments of the ballistic missiles fell in different areas” around Abu Dhabi. The targeted missile launch comes just one week after a deadly Houthi-claimed attack on Abu Dhabi that used what UAE officials say were drones and missiles. According to a person familiar with the matter, an activist is pushing Peloton to fire its chief executive officer and consider a sale as its share price has plummeted. Blackwells Capital, which has a stake of less than 5% in Peloton, believes Peloton could be an attractive acquisition target for larger technology or fitness-oriented companies, the person said. To be sure, Foley and other insiders have super-voting Class B shares, which gave them control over 80% of Peloton’s voting power as of Sept. 30, according to a proxy filing. Cryptocurrencies continued their dramatic slide Saturday. Bitcoin was trading at around $35,000, about half of its value since its November high. Treasury Yields trade mixed in early Monday trading with the 10-year trading at 1.7475% and the 30-year declining slightly to 2.0602%

With significant geopolitical concerns and investors worried about the upcoming Fed decision, the indexes ultimately fell prey to the bears after a very erratic day of price action. Unfortunately, the wild price action continued in the overnight futures markets that have whipsawed as they searched for direction amid the uncertainty. Although the T2122 indicator suggests an extreme oversold condition, we should expect more of the say today. Questionable economic reports and spermatic earnings results have not helped the situation, and as we ramp the number of reports, price volatility is likely to continue. Should we find a reason to begin a relief rally, watch overhead resistance levels, and keep in mind a lot of the wild speculation will be less willing to rush back in, meaning a less robust rally is possible.

Trade Wisely,

Doug

Crypto Getting Crushed And Fed This Week

January 24, 2022 by Ed Carter

Markets saw some whipsaw early, but then all 3 major indices started a protracted selloff at 11 am that lasted right into the close. This left us with more big, ugly black candles with modest upper wicks. On the day, SPY lost 1.96%, DIA lost 1.43%, and QQQ lost 2.77%. All three have now given up their 200sma. The VXX rose over 9% to 23.20 and T2122 fell even more to a ridiculously oversold 0.85. 10-year bond yields fell to 1.771% on strong bond demand and Oil (WTI) fell eight-tenths of a percent to $84.83/barrel. All-in-all, it was the worst week in the market since March of 2020, with the QQQ down 7.45%, SPY down 5.75%, and DIA down 4.68% in a 4-day week.

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The dramatic fall in cryptocurrencies continues. Bitcoin closed at $67,130 range in early November (11/7). However, it closed at $35,096 on Saturday (after having fallen another 14% Friday and more on Saturday). A pretty brutal 48% loss over 2.5 months. In early trade today, Bitcoin is down almost another 5% to $33,498.30. Along with the currency itself, related stocks continue to tumble. One example is that MSTR was down almost 25% on the week last week. In addition to the hit from the currency tumbling, one morel cause for this was the SEC announced late Thursday that they are rejecting the way MSTR has been accounting for its Bitcoin holdings.

In a hopeful sign on the inflation front, wholesale fertilizer prices have fallen every week this year. The price of wholesale urea has fallen dramatically each day last week, including 8.2% on Friday alone. Unfortunately, retail prices (what farmers pay) have not fallen yet. However, the wholesale prices are back to the level they were at the first week of October, preceding the massive spike that lasted Oct.-Dec.

Overnight, Asian markets were mixed but lean to the downside. India (-2.66%) was an outlier with South Korea (-1.49%) and Hong Kong (-1.24%) leading the losses. Meanwhile, Taiwan (+0.50%) and Japan (+0.24%) paced the gainers. In Europe, tensions from a potential Russian invasion of Ukraine have markets red across the board at mid-day. Russia (-6.24%) is obviously an outlier, but the FTSE (-1.17%), DAX (-1.84%), and CAC (-1.83%) are representative of the continent. As of 7:30 am, US Futures are pointing toward a down open. The DIA implies a -0.32% open, the SPY is implying a -0.44% open, and the QQQ implies a -0.70% open at this hour. 10-year bond yields are down to 1.735% and Oil is flat in early trading.

The major economic news scheduled for release Monday is limited to Mfg. and Services PMI (both at 9:45 am). Major earnings reports scheduled for before the market include: HAL and PHG. Then after the close, BRO, CR, IBM, LOGI, STLD, and ZION report.

Markets are likely to look ahead to the Fed Meeting announcements and press conference on Wednesday. However, pretty much the whole market is sure what they will hear then…a rate hike coming in March as well as the beginning of the selloff of Fed-owned bonds. A wildcard might be something GS suggested in a weekend note. They said the Fed may do more than 4 rate hikes this year. If the Fed were to come out and say that on Wednesday, we could easily see capitulation selling. So, now is the time to be preparing for the bottom, but not predicting a turn or chasing short moves you missed. Trade carefully.

Stick to your trading rules and on managing the things you can control. Don’t chase, trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor. And keep in mind that the first rule of making a lot of money in the market is to not lose a lot of money in the market. So, don’t be stubborn. When you’re wrong, just admit it and take your loss. (That’s why we set stops.)

Swing Trade Ideas for your consideration and watchlist: TAK, BKR, CHD, BABA, IAC. 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

Punishing Intraday Whipsaw

January 21, 2022 by Doug Campbell

With the hope of a relief rally, the Dow surged in the morning session only to produce a punishing intraday whipsaw that erased more than 750 points by the close. In addition, both the DIA and QQQ failed through their 200-day averages, adding to the technical damage of this selloff. Finally, the disappointing NFLX earnings could create more downside pressure adding insult to injury. Although we are oversold in the short term, the SPY could easily visit its 200-day average today. Next week, a Fed decision is likely to keep uncertainty and price volatility high as we head into the weekend.

Asian markets traded mainly lower overnight tracking U.S. markets. European markets trade decidedly bearish this morning, seeing red across the board. Although U.S. futures bounced from overnight lows, they currently suggest a lower open, with the tech sector leading the way. Expect another challenging day of price action as we wait on next week’s Fed decision.

Economic Calendar

Earnings Calendar

We get a little break on the Friday Earnings calendar with just five verified reports. Notable reports include ALLY, FHB, HBAN, INFO, & SLB.

News & Technicals’

Netflix rarely says streaming competition is a concern for the company but did so in its Q4 2021 earnings report on Thursday. After hours, Netflix shares fell more than 18% after forecasting just 2.5 million new net global subscribers for its first quarter. In addition, Netflix last week announced it was raising prices in the U.S. and Canada, potentially exacerbating competitive pressures. Peloton said its fiscal second-quarter revenue would be within its previously forecasted range, as it takes actions to slash costs and improve profitability. However, the company added fewer subscribers in the latest period than expected. CEO John Foley said the company is focused on “identifying reductions in our operating expenses as we build a more focused Peloton moving forward.” Shares of Peloton closed down 23.9% at $24.22 on Thursday, wiping roughly $2.5 billion off of its market value. Last month, Russia set out several main demands on Ukraine, among other security matters, in a draft security pact. The document demanded that the U.S. must prevent the further eastward expansion of NATO and must not allow former Soviet states to join the alliance. U.S. intelligence agencies are warning that Russia could be weighing a potential invasion of Ukraine, with the Kremlin moving 100,000 troops close to the border. Treasury yields pulled back in early Friday trading, with the 10-year dipping to 1.7919% and the 30-year falling to 2.1103%.

After a morning rally that at one point pushed the Dow up 450 points, we experienced a punishing intraday whipsaw, closing more than 300 down and failing its 200-day average. The QQQ also failed below its 200-day average and may follow-through lower this morning after the very disappointing NFLX report that sold off nearly 20% in after-hours trading. Futures traded sharply lower in overnight trading but have recovered substantially this morning. With a light day of earnings and economic reports, it could be a challenging day of price action as we slide into the weekend worries about the Fed decision next week. Although indicators show we are in a short-term oversold condition, we can’t rule out the possibility that futures might retest the overnight low in the futures. One thing is for sure the price volatility will likely continue to be highly frustrating and challenging in the days ahead.

Trade Wisely,

Doug

Bears Piling On and NFLX Report Helps

January 21, 2022 by Ed Carter

The bears sprung a massive bull trap on Thursday, with a 3% intraday reversal mid-day. Markets gapped higher and all 3 major indices followed through until about 11 am. At that point, the 3 were up 1.5-2.0% on the day. Then the bears sprung the trap and selling kicked in, continuing the rest of the day. It even accelerated to a sheer drop in the last 15 minutes of the day. This left us with big, ugly, black candles with large upper wicks in all 3 major indices. On the day, SPY lost 1.10%, DIA lost 0.88%, and QQQ lost 1.30%. The QQQ and DIA both fell through their 200sma, not finding support. VXX rose another 4% to 21.22 and T2122 dropped deep into the oversold territory at 1.41. 10-year bond yields fell to 1.811% and Oil (WTI) also fell three-quarters of a percent to $86.29.

Click for video

PTON got more bad news Thursday. The company announced it has halted production of its bikes and treadmills as demand has fallen dramatically. On the day, PTON fell another percent and is now below the original IPO price. In reaction, PTON put out a pre-announcement this morning, saying they expect Q2 revenue will be within their previously released guidance range and that they are taking significant corrective action to improve profitability.

After hours, NFLX reported a beat on earnings and came in inline on revenue, but it also reported slowing subscriber growth and it forecast future growth slowing even further. As a result, NFLX fell 25% in post-market trading. In other earnings news, so far this morning ALLY, INFO, and SLB have all beaten on both lines. HBAN beat on earnings but missed on revenue.

Overnight, Asian markets were nearly red across the board, with only Hong Kong (+0.05%) hanging on to the green by the skin of its teeth. Australia (-2.27%), Taiwan (-1.75%), and Shenzhen (-1.19%) paced the region’s losses. In Europe, we see red across the board at mid-day. The FTSE (-1.07%), DAX (-1.78%), and CAC (-1.66%) are leading the region lower as fears of a Russia-Ukraine war and rising rates grip markets. As of 7:30 am, US Futures are pointing toward a down start to the day. The DIA implies a -0.29% open, the SPY implies a -0.56% open, and the QQQ implies a -0.91% open at this hour.

The major economic news scheduled for release Friday is limited to Leading Indicators at 10 am. Major earnings reports scheduled for before the market include: ALLY, HBAN, INFO, and SLB. There are no earnings reports scheduled for after the close.

After Thursday’s afternoon selloff, fear is clearly gripping the bulls. We may be seeing capitulation selling as the correction picks up pace. So, be careful about chasing shorts. Just like chasing longs, that can be a dangerous approach in a volatile market. Also, don’t forget it is Friday and we need to prepare for the weekend news cycle. In addition, Friday is payday…so take some profits if you have them.

Swing Trade Ideas for your consideration and watchlist: AAPL, PENN, PLTR, DLTR, PM, XP. 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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Relief Rally?

January 20, 2022 by Doug Campbell

The strong selling into the close of Wednesday opened the door for a relief rally due to the short-term oversold conditions. However, the rally’s success will depend on earnings reports that, as of now, seem uncertain. In addition, as we move toward the Fed tightening monetary policy, the hints of a slowing economic condition could make the path forward challenging. A busy morning of economic reports and the market moving report from NFLX after the bell will keep volatility high. So expect big price action moves, intraday whips, and overnight gaps to challenge trader skills.

Overnight Asian markets rallied sharply after the China Central Bank cut key lending rates due to their slowing economy. European market trade in a choppy morning session with mixed results as of this report. With a big day of earnings and economic data, U.S Futures suggest a bullish open and the possible beginning of a relief rally but watch those overhead resistance levels for entrenched bears.

Economic Calendar

Earnings Calendar

We have nearly 60 companies listed on the Thursday earnings calendar. Notable reports include NFLX, AAL, BANR, BKR, CSX, FITB, ISRG, KEY, MTB, NTRS, OZK, PPBI, PPG, RF, SASR, SIVB, TRV, UNP, & WBS.

News & Technicals’

China’s central bank cut the one-year loan prime rate by 3.8% to 3.7% by ten basis points. Five basis points reduced the five-year loan prime rate from 4.65% to 4.6% — the first cut since April 2020, at the height of the coronavirus pandemic in the country. The industrial economy still hasn’t seen a substantial recovery due to the global pandemic, weakening trade growth, lack of consumer demand, and other factors, spokesperson Luo Junjie told reporters. “On top of that, recently, the coronavirus has spread to many places,” Luo said in Mandarin. “In the first quarter of the year, the industrial economy still faces rather considerable downward pressure. In addition, U.K. Prime Minister Boris Johnson is facing the political battle of his career. Johnson could face a vote of no confidence if enough of his lawmakers turn against him. In addition, Johnson has come under immense pressure amid multiple reports of parties and gatherings allegedly held by government staff and some attended by Johnson during Covid lockdowns in the U.K. Treasury yields ticked higher in early Thursday trading, with the 10-year rising to 1.83379% and the 30-year slightly higher to 2.1533%.

Though the indexes are in a bearish technical condition with confirmed downtrends, the Wednesday afternoon rout opened the door for a relief rally due to the short-term oversold conditions. China’s central banks lowered rates adds a little fuel to the relief rally, but traders should keep a close eye on overhead resistance levels for bear traps. In addition, the mix of earnings results places the market in a very different condition than we have experienced in past seasons. That said, we will have to watch earnings results closely as market-moving company reports roll out over the next few weeks. The current selloff has relieved some of the very high valuations, but P/E ratios are still historically highs. If earnings gains show a slowing of economic conditions, the path forward could be challenging. Expect price volatility to remain high as we wait for the market moving report from NFLX this afternoon.

Trade Wisely,

Doug

China Cuts Rates and Bears Roar

January 20, 2022 by Ed Carter

Stocks gave us a small gap higher at the open Wednesday. However, that was just the start of a roller-coaster “gap and crap” action that saw all 3 major indices close near their lows again. This left us with big ugly black candles in all of those indices. For the day, SPY lost 1.02%, DIA lost 0.96%, and QQQ lost 1.09%. The VXX rose another 2.4% to 20.27 and T2122 fell deeper into the oversold territory at 12.75. 10-year bond yields actually fell a bit to 1.85% and Oil (WTI) was up another 1.46% to $86.68 on reports a Russian invasion of Ukraine may be imminent.

Click for video

In a follow-up to a report made the other day about PTON hiring McKinsey to evaluate costs, there were two pieces of news today. First, leaked audios came out with PTON execs are discussing cutting 41% of their sales and marketing staff, cutting some staff from their eCommerce group, and also closing 15 retail stores. Secondly, CNBC has reported that PTON insiders sold over $500 million of stock prior to the start of the big decline that started in January 2021.

In other business news, T and VZ turned on their long-hyped 5G networks nationally. Well, almost nationally. The companies voluntarily “left off” 5G in 2-mile diameter exclusion zones around the 50 largest airports. This was due to FAA fears that part of the 5G spectrum could interfere with altimeters used by planes to fly during bad weather. The FAA has cleared about 45% of the larger passenger and transport aircraft to not be impacted. However, if it had been turned on around those airports, the FAA estimated there would have been about 1,100 flight cancellations or delays per day. (TMUS 5G is not impacted because it uses different frequencies than the low-band that T and VZ use.)

On the earnings front, so far this morning AAL, FHN, FITB, KEY, MTB, SNV, and TRV have all beat on both lines. BKR and RF beat on revenue but missed on earnings. UNP and NTRS do not report until closer to the open.

Overnight, Asian markets were mixed. Hong Kong (+3.42%) was a massive outlier to the upside as China cut lending rates. Oddly enough, mainland China exchanges closed slightly down after the news. However, Japan (+1.11%) and South Korea (+0.72%) lead the way higher in the rest of Asia. On the downside, India (-1.01%) was the only appreciable loser with half a dozen other exchanges being just on the red side of flat. In Europe, stocks are mixed on modest moves as of mid-day. The FTSE (-0.02%), DAX (+0.15%), and CAC (-0.20%) are typical of the continent. As of 7:30 am, US Futures are pointing toward a gap higher. The DIA implies a +0.45% open, the SPY is implying a +0.50% open, and the QQQ implies a +0.84% open at this hour. 10-year bond yields and Oil (WTI) are both down a bit in early trading.

The major economic news scheduled for release Thursday includes Weekly Initial Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am), Dec Existing Home Sales (10 am), and Crude Oil Inventories (11 am). Major earnings reports scheduled for before the market include: AAL, BKR, FITB, FHN, KEY, MTB, NTRS, RF, SNV, TRV, and UNP. Then, after the close, CSX, ISRG, NFLX, PPG, and SIVB report.

The Chinese rate cut overnight was the big news, but earnings and fear of inflation (and Fed reactions to it) are likely to continue to be the main US market drivers. The bulls have not given up, even as the QQQ nears correction territory. However, “mind the gap” as morning optimism is just as likely to be a “gap and crap” as it is a the bottom is in. The bears clearly still have all the momentum so far this week (and year). In short, continue to trade carefully.

Swing Trade Ideas for your consideration and watchlist: EGO, BEKE, SWK, AU, EBAY, UAL, GDX, SAND. 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