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QQQ Remained Under Pressure

April 11, 2022 by Doug Campbell

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!

Trade Wisely,

Doug

Musk Rejects Bd Seat But Has TWTR Ideas

April 11, 2022 by Ed Carter

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.

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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.

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.

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

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

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

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

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

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

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Little News But Downgrades Galore

April 8, 2022 by Ed Carter

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.

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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.

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.

🎯 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

Fed To Fight Inflation

April 7, 2022 by Doug Campbell

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.

Trade Wisley,

Doug

Jobless Claims and Fed’s Bullard Ahead

April 7, 2022 by Ed Carter

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.)

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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.

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.

🎯 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

Hawkish Comments

April 6, 2022 by Doug Campbell

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.

Trade Wisely,

Doug

Fed Doves Scare Markets In Reality Check

April 6, 2022 by Ed Carter

Stocks gapped modestly lower Tuesday. At that point, both the large-cap indices immediately filled the gap before joining QQQ in an all-day selloff that closed just up off the lows. In the process, all 3 major indices gave back all of Monday’s gains as well as falling through their respective T-lines. All 3 printed black candles. On the day, SPY lost 1.26%, DIA lost 0.83%, and QQQ lost 2.22%. The VXX gained 1.5% to 24.81 and T2122 fell all the way back to 32.34, still in the mid-range but approaching the lower end of the range. 10-year bond yields spiked higher to 2.552%, which allowed them to get the “2s vs 10s” out of inversion, but the “5s vs. 30s” still remains inverted. Oil (WTI) fell 2.15% to $101.06/barrel.

The main story driving markets Tuesday was Minneapolis Fed President (and Vice-Chair nominee) Lael Brainard (normally a dove who favors loose FOMC policy) spooking markets mid-day when said she expects the Fed to start reducing its balance sheet in May. What really gave the bears strength was that she said she foresees the FOMC doing so at “a rapid pace.” She also said that rate hikes may come at a more aggressive pace than the 0.25% increments the Fed did in March and has been normal. Later in the day, San Francisco Fed President Mary Daly (also a dove) told a different group that rates are going higher and said she does not think this will cause a recession. This news and hawkish tone from two of the FOMC’s doves raised fears among investors. this continues to scare markets this morning as futures bets are now pricing in half percent hikes at several Fed meetings over the remainder of the year.

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On the Russian invasion story, President Biden, the EU, and G7 are set to announce another round of coordinated sanctions on Russia in response to the recently found war crimes. This round will include targeting more Russian Banks, Kremlin officials, and their family members. A ban on new investment in Russian state-owned firms will also be included. Most importantly, the EC will ban $4.3 billion of Russian coal in phases. This will be the first real hit to Russia’s most important sector, Energy. In fact, early this morning European Council President Von der Leyen said she expects eventual sanctions directly on Russian oil and gas imports to Europe.

Spiking rates continue to crush mortgage demand. The average 30-year fixed-rate mortgage rose from 4.80% to 4.90% during the week. They even went above 5% on Tuesday, a first since 2018. This caused refinance loan applications to fall another 10% week on week, while new home purchase applications fell 3%. Overall, mortgage demand is down 40% from one year ago.

Overnight, the Asian markets leaned heavily to the red side. Only Malaysia (+0.50%) managed any real gain. Meanwhile, Hong Kong (-1.87%), Japan (-1.58%), and South Korea (-0.88%) paced the losses. In Europe, the lone, minor exception of Russia (+0.20%) stocks are red across the board at mid-day. The FTSE (-0.33%) lags again, but the DAX (-1.69%) and CAC (-1.88%) are typical of the continent in early afternoon trading. As of 7:30 am, US Futures are pointing to a gap lower at the open. The DIA implies a -0.57% open, the SPY is implying a -0.81% open, and the QQQ implies a -1.35% open to start the day. 10-year bond yields are spiking again to 2.633% and Oil (WTI) is up 1.35% to $103.32 in early trading.

Major economic news scheduled for release on Wednesday is limited to Crude Oil Inventories (10:30 am) and FOMC Meeting Minutes (2 pm). There will also be a Fed speaker (Harker at 9:30 am). The only major earnings reports scheduled for the day are RPM, SCHN, and GBX before the open as well as LEVI after the close.

The words of two Fed doves gave markets a scare Tuesday and apparently, markets came to realize this was not something we should shake off overnight. So, we are looking for a gap down after yesterday/s all-day reversal of Monday. Again we have basically no market-moving news scheduled and basically no earnings which might drive markets. So, traders’ eyes will continue to focus on interest rates, the fear of recession, and the talking heads (fund managers) are likely to promote the idea that the Fed should not do half-percent raises. Volatility still remains a concern, but the very short-term trend is back in control of the bears. Position yourself accordingly.

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. 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. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself.

Swing Trade Ideas for your consideration and watchlist: ZBH, DG, GSK, DRE, JNJ, ALL, IP, GILD, ABBV, NWL, FMC, WFC, AEO, STX, DISCA, COF, SYF, PATH, AIG. 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

Big Tech Leads Rally

April 5, 2022 by Doug Campbell

Big tech names lifted the indexes on Monday after a slow start to the week. But unfortunately, the worries of pending rate increases and a pesky bond yield inversion signaling recession kept most market sectors subdued. This morning we turn our attention to International Trade figures and several Fed speakers likely to sound hawkish as rents, food, and energy continue to inflate. I would not be surprised to see some price volatility if Fed members talk more aggressively to fight rising inflation.

Asian markets closed green across the board, with tech leading the way in Hong Kong as oil prices surge higher. However, European markets see red across the board with modest bearishness with global sentiment in decline. Ahead of trade numbers and a talkative Fed, U.S. futures point to a modestly bearish open, with brent crude again topping 108 a barrel.

Economic Calendar

Earnings Calendar

We have less than 30 companies on the Tuesday earnings calendar, most of them unconfirmed. Notable reports include AYI, ARRY, LNDC, LNN, NG, & SGH.

News & Technicals’

“Do you want an edit button?” Musk asked in a poll that gives Twitter users the option to vote “yes” or “no.” Twitter CEO Parag Agrawal retweeted Musk and urged people to “vote carefully” as the consequences “will be important.” Musk posted the poll just hours after his 9.2% stake in Twitter was made public. Under sanctions put in place after Russia invaded Ukraine on Feb. 24, foreign currency reserves held by the Russian central bank at U.S. financial institutions were frozen. But, according to a U.S. Treasury spokesperson, on Monday, as the largest of the payments came due, including a $552.4 million principal payment on a maturing bond, the U.S. government decided to cut off Moscow’s access to the frozen funds. After two years of the coronavirus pandemic, a recession, and rapid recovery, Americans are worried that the economy may swiftly decline once again. Some 81% of adults said they think the U.S. economy will likely experience a recession in 2022. According to new data, Manhattan real-estate sales topped $7 billion in the first quarter, marking the strongest-ever start to a year as the market shows no signs of slowing. In addition, the average price of a Manhattan apartment jumped 19% over the previous year’s period to $2,042,113. Rising interest rates also have less impact on wealthy buyers, who dominate the Manhattan market. As rates go up, they pay more cash. Treasury yields rose in early Tuesday trading, with the 2-year at 2.461%, the 5-year up to 2.5924%, the 10-year traded at 2.4413%, and the 30-year rose to 2.499%. The inversion continues, and recession fears linger as a result.

Monday trading has a slow start, but the bulls found inspiration in big tech names, lifting the indexes as volume remained relatively low. However, worries of an aggressively hawkish combined with a bond yield inversion kept the activity subdued in most market sectors. Brent crude prices pushed higher overnight as Europe, and the U.S. issued more sanctions against Russia. Russia is not demanding payment of oil and gas in rubles and has made a move to somewhat back their currency with gold. Russia and China continue to build stockpiles of precious metals. Before the market opens, we get a reading on International Trade that continues to run in an alarming deficit, but the market continues to ignore it.

Trade Wisley,

Doug

XOM Profit, Inverted Rates, and Sanctions

April 5, 2022 by Ed Carter

Markets opened relatively flat on Monday. However, at that point, stocks went on a slow, steady, all-day rally. The SPY, DIA, and QQQ all closed very near their highs. This gave us a definite Morning Star signal in the QQQ and 3-candle patterns you could at least say were “Morning Star-like” in the SPY and DIA. With that said, the QQQ sits right at it 200sma and the DIA just below that major average. On the day, SPY gained 0.88%, DIA (the weakest of the trio today) gained 0.35%, and QQQ gained a strong 2.06%. It is worth noting that today’s action took place on volumes that were less than half the normal average across all 3 major indices. The VXX fell 2.4% to 24.43 and T2122 climbed just inside the overbought territory at 83.24. 10-year bond yields rose to 2.41% and Oil (WTI) spiked yet again by 4.4% to $103.64/barrel.

TWTR (+27.12%) had its best day since the company’s IPO in November 2013. This happened (mostly on a gap higher) as an SEC filing revealed that Elon Musk had taken a 9.2% passive position in the stock. That position makes him the largest shareholder, but represents less than 1% of his wealth. This, plus the fact that Musk has said he is considering creating his own social media platform has led analysts to believe he will increase his stake in TWTR and eventually take a more active role in the running of the company. Interestingly, Musk seems to be picking another fight with the SEC. His disclosure came 20 days after Musk accumulated his position and that is a violation of SEC rules requiring large passive positions to be disclosed in 10 days or less.

SNAP Case Study | Actual Trade

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The 2-year versus 10-year bond yields inverted again Monday. This means that the 2-year bond pays a higher rate than the 10-year, which is not normal and implies there is greater risk in the short term. Every recession since 1950 has been preceded by such an inversion, although the lag time can be as long as 2 years. There was also one “false positive” where there was an inversion, but no recession followed.

Regarding the Russian invasion, the EU will propose a ban on Russian coal imports as part of its “post war crime” round of sanctions. French President Macron also proposed sanctions against Russian oil. However, these will both be very difficult proposals to get passed since Russia supplies 70% of the EU’s coal and 30% of the EU’s oil. Germany is particularly dependent on Russia for energy. Meanwhile, the US is also preparing another round of sanctions, which is said to include prohibiting Russia from paying its debt payments in US Dollars through American banks. This will just make it harder for Russia to avoid defaulting on loans.

XOM disclosed Monday that they expect to report record profits on April 29. This comes as oil prices have soared and padded the company’s bottom line by at least $2.3 billion for the quarter. However, the company said they also expect to write down its $4 billion investment for a Russian drilling project that the company is in the process of discontinuing as a result of the Russian invasion of Ukraine. Executives from XOM, CVX, BP, DVN, SHEL, and PXD have all been called to testify before Congress about price gouging on Wednesday.

Overnight, the Asian markets were mixed but leaned more to the upside. Hong Kong (+2.10%) was an outlier to the upside, but Shanghai (+0.94%), Shenzhen (+0.91%), and Singapore (+0.82%) led the region higher. AT the same time, India (-0.53%) and Taiwan (-0.38%) paced the losers. In Europe, stocks are mixed but lean to the downside at mid-day. The FTSE (-0.10%) is an outlier, but the DAX (-0.56%), and CAC (-1.67%) are typical to the downside. Russia (-4.68%) is, of course, also an outlier. Gainers include Denmark (+1.60%) and Portugal (+1.27%). As of 7:30 am, US Futures are pointing toward a modestly red start to the day. The DIA implies a -0.28% open, the SPY is implying a -0.27% open, and the QQQ implies a -0.30% open at this hour. 10-year bond yields are up strongly again to 2.463% and oil (WTI) is up nearly another percent in early trading this morning.

Major economic news scheduled for release on Tuesday includes Imports/Exports and Feb. Trade Balance (both at 8:30 am), March Services PMI (9:45 am), March ISM Non-Mfg. PMI (10 am), and a trio of Fed speakers (Kashkari at 10 am, Brainard at 10:05 am, and Williams at 2 pm. The only major earnings report scheduled for the day is AYI before the open.

Premarket action seems to indicate a rest after Monday’s tech-led rally. Again we have minimal impactful news and basically no earnings which might drive markets. Eyes will continue to focus on interest rate inversions and the talking heads (fund managers) are likely to promote the idea that the Fed should not do half-percent raises with the dual pressures of inflation and the war in Ukraine hanging over the economy. Volatility still remains a concern, but the trend is definitely still bullish and yesterday’s action (Morning Star signals on small pullbacks in a strong trend) implies that we will see some follow-through, although not necessarily today. So, all traders can do is focus on the chart and be prepared for volatility-caused short-term pain.

Swing Trade Ideas for your consideration and watchlist: GSK, CVLT, PYPL, MRO, DG, FB, BE, TWLO, AAPL, MSFT, APA, DKNG, PINS, CLF, MTTR, CLOV 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

Musk Gets Into TWTR, TSLA Ships Record Amount

April 4, 2022 by Ed Carter

Markets made a modest gap higher on Friday after the March Payrolls report came in with fewer jobs added than expected. However, it makes the 11^th straight month of more than 400k jobs added, the participation rate is essentially where it was pre-pandemic, and the unemployment rate fell to 3.6%. After the open stocks meandered their way back down to the lows at about 1:30 pm before an afternoon rally took all 3 major indices back up off the lows. This left us with black Hammer-type candles in all 3, although you could make a strong argument for a Doji in the DIA. All 3 are close to their T-lines as of the close, after testing that level. On the day, SPY gained 0.28%, DIA gained 0.34%, and QQQ lost 0.20%. The VXX fell 2.6% to 25.03 and T2122 climbed back just outside the overbought territory to 75.53. 10-year bond yield retreated during the day but still closed up at 2.371%. It is worth noting that both the 2s vs 10s and 5s vs 30s bond yields are inverted, which is broadly seen as an indicator that there will be a future recession. Oil (WTI) fell seven-tenths of a percent to $99.56/barrel as the UK followed President Biden’s example and announced they will be releasing oil from their strategic reserves as well.

On Friday, the Labor Relations Board announced that Staten Island NY AMZN workers voted in favor of a union (with not enough disputed votes to flip the vote). The re-vote in Bessemer AL is still undecided with the company ahead in the voting, but over 400 votes now going to a ballot dispute process. Meanwhile, in Congress, the House voted to decriminalize marijuana nationally, expunge marijuana conviction records, and levy a tax on marijuana sales (starting at 5% and eventually moving to 8%). This sends the bill to the Senate where passage will be more difficult to get passed. Elsewhere, on Saturday TSLA announced that they had delivered a record 310k cars during Q1.

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TWTR shares spiked as much as 30% in premarket trading after a 13G public filing revealed that Elon Musk has acquired a 9.2% stake in the company. That purchase makes him the largest outside shareholder in the company. However, this purchase was classified as a “passive stake” in the company. Nonetheless, shares are spiking at the prospect of him buying more or taking an active role. His purchase comes less than two weeks after Musk criticized the company over its acceptable speech policies and then conducted a TWTR poll on whether the company adheres to free speech principles and what should be done about it.

On the Russian invasion story, over the weekend it was announced by both sides that the negotiations have progressed to a point where a meeting between Putin and Ukrainian President Zelensky makes sense. This meeting will take place in Turkey in the unspecified not-too-distant future. However, then Sunday, Russia announced that negotiations have not arrived at that point and their original positions still stand. So, this is either negotiating tactics or disarray between the Russian negotiation team and the Kremlin. Meanwhile, several mass graves and evidence of Russian war crimes emerged in liberated regions over the weekend. On Sunday the EU warned they are likely to levy additional sanctions over those crimes. However, the sanction threat again stops short of blocking ALL Russian banks from the SWIFT payments system or stopping the flow of Russian Gas and Oil to Europe

Overnight, the Asian markets were mostly green. India (+2.17%), Hong Kong (+2.10%), and Shanghai (+0.91%) led the region higher while Taiwan (-0.38%) and New Zealand (-0.30%) were the most appreciable losers. In Europe, stocks are leaning to the upside at mid-day. The FTSE (+0.21%), DAX (+0.16%), and CAC (+0.17%) are lagging, but as always far exceed the rest of the continent in volume. Switzerland (+1.09%) is an outlier to the upside as is Denmark (-1.30%) to the downside 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 +0.05% open, the SPY is implying a +0.19% open, and the QQQ implies a +0.40% open at this hour. 10-year bond yields are modestly higher to 2.39% and Oil (WTI) is up less than 50 cents in early trading.

Major economic news scheduled for release on Monday is limited to Feb. Factory Orders (10 am). There are no major earnings reports scheduled for the day.

The economic news later this week includes Imports/Exports, Feb. Trade Balance, Mar. Services PMI, ISM Non-Mfg. PMI, and a couple of Fed speakers all on Tuesday. Wednesday is limited to Crude Oil Inventories and Feb. FOMC Minutes. Thursday brings Weekly Jobless Claims and 4 different speeches from 3 Fed members. Friday will also be limited to the WASDE global agriculture report.

April is statistically the best month for stocks and it starts off with a week of little news and very light earnings activity. MS made a point this weekend to tell their customers they believe the “bear market rally” is now over. JPM’s Jamie Dimon seems to agree, saying that the confluence of inflation and the war in Ukraine creates a dramatic increase in market risk. Still, stocks are up 10% from the lows and have been very strong since mid-March. Volatility has plateaued off recently, but is still far off the lows and remains a concern. Many eyes will be on the interest rate inversions (and the implied future recession) as well as how the Fed is going to get from here to where they end up on rates. With all that said, it is probably time to be back in the market, perhaps on both sides, and cautiously riding the trend. Just be prepared for volatility-caused short-term pain and watch that herd mentality.

Swing Trade Ideas for your consideration and watchlist: TWTR, EYE, CELH, PSFE, SPT, AIZ, PLTK, AUY, AAPL, MSFT, LLY, DBX, IWM, ZBH, BMY, JNJ, FCX. 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