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NATO Tells Bulls “Not So Fast My Friend”

February 16, 2022 by Ed Carter

Russia started pulling back some of their troops (away from Ukraine) and the bulls jumped for joy Tuesday. All 3 major indices gapped higher (1% – 1.5%) at the open, but then they meandered sideways, retesting the open level. The large-cap indices continued the meander sideways for the rest of the day, but the QQQ caught a modest afternoon rally, all 3 of them closed near the highs of the day. DIA and SPY tested but were unable to break through their T-lines, but QQQ managed to get that done. This left us with Morningstar signals in all 3 indices. IWM was the strongest of them all as it was clearly a risk-on day. On the day, SPY gained 1.61%, DIA gained 1.25%, and QQQ gained 2.49%. The VXX fell 8.24% to 21.39 and T2122 shot all the way up into the edge of the overbought territory at 81.75. 10-year bond yields rose to 2.043% and Oil (WTI) “plummeted” 3% to $92.07/barrel.

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After the close, CINF, ANDE, ALC, DVN, WELL, ENLC, ABNB, AKAM, MRC, ACCO, CLW, and WIRE all reported beats on both lines. Meanwhile, VIAC, MCY, IAC, RBLX, CF, WYNN, LZB, and CRK all missed on earnings, but beat on revenue. REZI and INVH missed on revenue, but beat on earnings. However, WFG and SEDG reported misses on both lines.

Contrary to yesterday’s “the Russians are heading back to their barracks” message, this morning the market is greeted with a message from the other camp. NATO head Jens Stoltenberg told the press today that “it appears that Russia continues their military buildup (at the border).” British PM Johnson also told the press of troubling intelligence such as Russian Field Hospitals being constructed near the border of Belarus and Ukraine. He went on to threaten to stop Russian companies from raising capital via London’s financial markets if an invasion does take place. The point is, we did not have a clear picture last week, earlier this week, or today about what Putin will actually do. So, volatility is all that a trader can say is almost certain.

Overnight, the Asian markets were green across the board with the lone exception of India (-0.17%). Japan (+2.22%), South Korea (+1.99%), Taiwan (+1.56%), and Hong Kong (+1.49%) led the way higher. In Europe, stocks lean to the green side on mostly modest moves, but there is a handful of red showing at mid-day. The FTSE (-0.22%), Dax (+0.03%), and CAC (+0.05%) are the big dogs, but the smaller exchanges are showing a bit more move (both ways) in early afternoon trading. As of 7:30 am, US Futures are pointing toward a slightly red open. The DIA implies a -0.11% open, the SPY is implying a -0.07% open, and the QQQ implies a -0.02% open at this hour. 10-year bond yields are flat, but Oil (WTI) is up 1% in early trading.

The major economic news scheduled for Wednesday includes Jan. Retail Sales and Jan. Import/Export Price Indices (both at 8:30 am), Jan. Industrial Production (9:15 am), Dec. Business Inventories (10 am), Crude Oil Inventories (10:30 am), and Jan. FOMC Meeting Minutes (2 pm). The major earnings reports scheduled for before the market include AMCX, ADI, GOLD, BGCP, CRL, CROX, DNB, GRMN, GNRC, HLT, KHC, NUS, OC, R, SHOP, SITE, SAH, SUN, VMC, and WAB. Then after the close, ALB, ALSN, ATUS, AIG, AWK, AR, AMAT, APP, SAM, BFAM, CAKE, CSCO, CYH, COMP, CNDT, CPRT, DASH, ET, EQIX, HST, H, KAR, KGC, MRO, NTR, NVDA, OCDX, PXD, RUSHA, SNPS, TROX, UFPI, VMI, and WCN report.

The premarket futures are flat this morning ahead of Retail Sales numbers. With cold water tossed on the bullish knee-jerk reaction (assuming Russian-West tensions were over) this morning, it’s possible markets wait to see if anything can be learned by picking through the tea leaves of the Fed minutes. With that said, the public statements make it clear the Fed is divided into at least 2 factions (Hawks who want to see at least a half of a percent hike in March and 1% before July and Doves who want a quarter percent hike in March, followed by a “let’s see what that does before we do anything else” approach). That leaves markets uncertain…and the one thing markets hate most is uncertainty. So, stay nimble and/or hedged to volatility, and remember we have both potential support and potential resistance nearby.

Remember that you don’t have to trade every day and you definitely don’t need to chase the premarket moves by trading early. Stick to your trading rules and manage the things that 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. The first rule of making 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. (That’s why we set stops in the first place.) Trading is a marathon, not a sprint.

Swing Trade Ideas for your consideration and watchlist: No trade ideas today (Rick is on vacation this week). 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.

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🎯 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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Rumors and Speculation

February 15, 2022 by Doug Campbell

On Monday, index price action surged and fell violently as rumors and speculation swirled over a Russian invasion. However, after hearing that Russia is sending some troops back home, futures point to another overnight reversal. So could we see a short squeeze, a big whipsaw, or a pop and drop this morning with another PPI reports expected to come in hot. Your guess is as good as mine as this emotional market swings wildly. So, plan your risk carefully and keep a close eye on overhead price resistance.

Asian markets traded mixed but mainly lower overnight due to geopolitical tensions. However, hearing the news of a partial troop drawdown, European markets trade decidedly bullish this morning. U.S. future also points to a substantial overnight reversal ahead of PPI data and a busy earnings day. So prepare for another day of wild price action from this emotionally charged market.

Economic Calendar

Earnings Calendar

The Tuesday earnings calendar ramps up the reports, with around 130 companies fessing up to quarterly results. Notable reports include AKR, ABNB, AKAM, ANDE, ANGI, BWA, CEVA, CF, CINF, CRK, DENN, DVN, FELE, GXO, HSIC, HUN, IAC, IQV, LZB, MAR, PACB, QSR, RSLX, SEDG, UPST, VIAC, WH, WYNN, & ZTS.

New & Technicals’

The Russian government has announced that Moscow is beginning to return troops at the Ukrainian border to their bases. Igor Konashenkov, a spokesman for the Russian Ministry of Defense, said troops recently posted along the border with Ukraine had begun moving back to their military garrisons. Timothy Ash, the emerging markets senior sovereign strategist at BlueBay Asset Management, said the move could signal a significant defeat for Putin. As a result, global attention is focused on Russia and whether President Vladimir Putin will order an invasion of Ukraine. Until earlier this month, China had been mostly silent as tensions have risen between NATO and Russia. In 2021, global semiconductor industry sales reached a record $555.9 billion, up 26.2% year on year, the U.S.-based Semiconductor Industry Association (SIA) said. In addition, the SIA said that they expect demand to “rise significantly” in the coming years. China remained the biggest market, with sales totaling $192.5 billion in 2021. St. Louis Fed President James Bullard told CNBC on Monday that he thinks the Fed needs to push interest rates up quickly. “Our credibility is on the line here,” he said as he advocated for a rapid interest rate increase of a full percentage point. This year, markets have begun pricing in seven rate hikes since Bullard first made his hawkish position known last week. Treasury Yields moved higher in early Tuesday trading, with the 10-year rising to 2.0294% and the 30-year moving up to 2.3277%.

As rumors and speculation swirled around about a Russian invasion, index prices proved to be very volatile on Monday. The wild price moves continued overnight, with some troops leaving the border, raising hopes of a de-escalation of tensions. The next hurdle for the market to cross is the PPI report that many suspect will come in hot, adding to inflationary concerns and pressuring Fed to act aggressively. Along with the big day of inflation data, we have a large group of earnings reports adding to the potential price volatility. The significant overnight reversal could trigger a short squeeze this morning, but with so much data coming our way, traders will have to also watch for the possible pop and drop or large point whipsaws. Market emotion is high, so be prepared for almost anything and remember the Retail Sales figures could add to the wild price gyrations with low consumer sentiment.

Trade Wisely,

Doug

Russia Moving Troops Away From Ukraine

February 15, 2022 by Ed Carter

Monday was an interesting day, with a 1.5% swing in premarket futures (after Russia’s President Putin said “okay” to his Foreign Minister saying they should continue talking to the West because there was always a chance to reach a deal). The net result was a flat open and a whipsaw day that ended up only moderately moved. All 3 major indices printed indecisive, Spinning Top type candles. On the day, SPY lost 0.33%, DIA lost 0.40%, and QQQ gained 0.12%. The VXX rose slightly to 23.31 and T2122 dropped just into the oversold territory at 18.75. 10-year bond yields spiked back up to 1.991% and Oil (WTI) spiked almost 2% to $94.92 (on intraday news that the US was closing its Embassy in Kyiv and rumors that the Russians were moving toward the border of Ukraine).

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The Fed made no announcement following their emergency meeting on Monday, and based on comments made to the press it is likely they have no consensus. (Bullard called again for a 1% increase before July 1, George said she supports a more gradual approach, and Daly said she favors one modest hike in March and then wait and see.) However, Reuters reports that by afternoon, futures of the Fed Funds Rate showed that traders are now under a decreased belief the Fed will raise rates before the March Fed meeting (down to 3% implied probability from 30% last Friday). In addition, futures on the Secured Overnight Financing Rate (the topic of the emergency meeting) now show traders only believe there is a 2% chance of that rate rising before the March Fed meeting (down from 16% on Friday). These seem to indicate a strong belief there will be no rate increases prior to March. Of course, traders can be wrong, but leaks (even from the Fed) also happen.

In earnings news, after the close on Monday, AAP, AMKR, CAR, TNET, SCI, CLR, and ANET all reported beats on both lines. Meanwhile, BKD, PRI, and VNO all missed on earnings but reported beats on revenue. So far this morning, MAR, IQV, ALLE, HSIC, ZTS, and BWA have all reported beats on both lines. Meanwhile, FIS beat on earnings but came in light on revenue. Finally, LDOS just reported a miss on both lines.

Overnight, the Asian markets were mixed and varied. India (+3.03%), Shenzhen (+1.70%), and Malaysia (+1.00%) led the gainers. Meanwhile, South Korea (-1.03%), Hong Kong (-0.82%), and Japan (-0.79%) paced the losses. In Europe, stocks are nearly green across the board on the Russian “step back” news at mid-day. Only Norway (-0.34%) is in the red, while the FTSE (+0.70%), DAX (+1.84%), and CAC (+1.56%) are typical of the continent. Russia (+3.08%) is an outlier as that country has started to return some troops to their home bases (away from Ukraine). As of 7:30 am, US Futures are pointing to a large gap higher. The DIA implies a +1.29% open, the SPY is implying a +1.64% open, and the QQQ implies a +2.20% open at this hour. 10-year bond yields are spiking to 2.035% and Oil (WTI) is down more than 3.6% on the Russia-Ukraine news.

The only major economic news scheduled for Tuesday is Jan. PPI and NY Empire State Mfg. Index (both at 8:30 am). The major earnings reports scheduled for before the market include ALLE, ARCH, ABG, BWA, ECL, FIS, FSV, HSIC, HUN, IQV, LDOS, LGIH, MAR, RPRX, QSR, SABR, TRP, WCC, and ZTS. Then after the close, ACCO, ABNB, AKAM, ANDE, CF, CINF, CLW, CRK, DVN, WIRE, ENLC, GXO, IAC, INVH, LZB, MCY, MRC, REZI, RBLX, SEDG, TX, TOST, VIAC, WELL, and WYNN report

Pent-up bullish energy is likely to be released this morning as Russia has started moving some of its troops back away from the Ukrainian border. That news has sparked strong rallies in Europe and in the US futures market. So, the bulls will have the momentum early. Don’t get caught chasing, because the Russia news is not final and it does nothing to address the main overhang, Fed reaction to inflation (and inflation impacts on corporate profit). More immediately, it also does not change the fact we’ve been seeing a lot of intraday volatility/swings. So, stay nimble and/or hedged to volatility, and remember we have some potential support (at the bottom of a dreaded h pattern) not far below.

🎯 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

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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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Consumer Sentiment Falls

February 14, 2022 by Doug Campbell

As if the hotter than expected inflation was not enough, the sharply declining consumer sentiment report came along to kick the market while it was down on Friday morning. The threat of Russian invasion only adds to the uncertainty keeping the price volatility high waiting for the next shoe to drop. The PPI report on Tuesday, Retail Sales, and FOMC minutes Wednesday, with housing data later in the week, also clouds this week’s path forward. We have a few potential market-moving as we progress through the week to add to the highly emotional price action likely in the week ahead.

Asian markets closed mostly lower, with the Nikkei leading the selling down 616.49 points or -2.23%. This morning, European markets trade decidedly bearish with red across the board and the DAX and CAC down 3% or more. In addition, U.S. futures that opened traded last night trying to put on a brave face now point to a gap down open with Russia-Ukraine tensions and Fed rate hikes, worrying both traders and investors. As a result, expect price volatility to remain challenging throughout the week.

Economic Calendar

Earnings Calendar

We have around 100 companies listed, with many unconfirmed to begin the new trading week. Notable reports include AAP, ALX, AMKR, ANET, CAR, CLR, KRG, OTTR, SRG, VNO, WEBR.

News & Technicals’

On Sunday evening, Ukrainian Foreign Minister Dmytro Kuleba said that Ukraine had requested a meeting with Russia within 48 hours. German Chancellor Olaf Scholz will hold talks with the presidents of Ukraine and Russia on Monday and Tuesday. U.S. national security advisor Jake Sullivan told CNN on Sunday that a Russian attack on Ukraine could happen this week. Every indication suggests that Putin continues to build up troops at the border Russia shares with Ukraine, said Michael McFaul, a former U.S. ambassador. “There’s no indication at all that Putin has stopped his march towards war, his preparedness towards war,” said McFaul, who is now a director at the Freeman Spogli Institute for International Studies. However, there remains a lot of uncertainty over what will happen with Ukraine because Putin is “isolated” and rarely speaks to his advisors. The Federal Reserve should be measured in its path to raise interest rates, San Francisco Fed President Mary Daly said Sunday. “History tells us with Fed policy, that abrupt and aggressive action can actually have a destabilizing effect on the very growth and price stability we’re trying to achieve,” Daly said. Daly supports the Fed raising rates in March and said “it’s too early to call” how many times the central bank will hike rates this year. Treasury Yields moved slightly lower in early Monday trading, with the 10-year pricing at 1.9371% and the 30-year dipping slightly to 2.2399%.

The hotter than expected inflation coupled with the sharply declining consumer sentiment brought out the bears Friday, creating lower highs and breaking support levels in the index chart. Unfortunately, the Russian / Ukraine tensions only add to the uncertainty of the path forward in the market. In this week’s economic calendar, we have PPI, Retail Sales, FOMC minutes, and housing data that will likely keep price volatility high and uneasy traders guessing. At this point, we can not rule out a retest of the January low intraday whipsaws and overnight reversals. We still have a few potential market-moving earnings reports this week that could inspire the bulls, but if Russia invades, all bets are off, and anything is possible. A dangerous market condition may be an understatement, so if you plan to trade, plan carefully and be willing to take any profits quickly because they could easily evaporate in the subsequent price gyration. Having an edge as a swing or position trader could be slim to none, while experienced day traders could have the upper hand as the market searched for clarity.

Trade Wisely,

Doug

Russia and Fed Meeting Driving Sentiment

February 14, 2022 by Ed Carter

Markets opened dead flat on Friday. However, QQQ immediately headed South and by late morning the large-cap indices followed. There was no recovery as stocks closed near their lows in all 3 major indices. The proximate cause of this bad day was the word that the Fed is holding an emergency meeting to talk about rates today. That and increased fear of a Russian invasion of Ukraine. This move left us with big, ugly black candles in all 3 major indices that broke down below the February lows and seem on their way back to challenge the January lows. On the day, SPY lost 1.97%, DIA lost 1.49%, and QQQ lost 3.17%. The VXX rose over 13.5% to 23.24 and T2122 fell but remains in the mid-range at 33.16. 10-year bond yields fell back to 1.918%, but Oil (on the Russian invasion fear) was the big mover, spiking almost 4.5% to $93.90/barrel.

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Both Bloomberg and CNN reported Friday that traders (funds) are now keeping a close eye on “2yr vs 10yr Bond Yields.” Last year the Fed produced research that found that every recession (at least since 1955 which was the study timeframe) was preceded by an inversion of the 2yr and 10yr bond yields. (Logically, locking up money for 10 years should deliver higher returns than locking it up for 2 years. An inversion is when the yield on a 2yr bond goes above the yield on a 10yr bond.) This indicator has preceded every recession and only produced one false-positive. As of Friday, the 2yr yield is at 1.487% while as mentioned above, the 10yr is at 1.918%. However, the 2yr yield is up 110% on the year and the 10yr yield is up only 27% during the same time. As this gap narrows and we approach inversion, expect the big money to be fleeing cyclicals and moving into recession plays.

So far this morning, AB, ARES, BRKR, IAA, MGA, COOP, SLVM, UA, UAA, and NWL have all reported beats on So far this morning, THS and some Japanese ADRs (TKOMY, JAPAY, KNBWY, STBFY) have reported a beat on both lines. However, both KELYA and KELYB reported massive beats (more than double expected) earnings, while also coming up significantly short on revenue. GTX reported in a similar way, beating (but not double) on earnings, but also missed slightly on revenue.

Overnight, the Asian markets are nearly red across the board. Only Australia (+0.37%) and Malaysia (+0.31%) managed to stay green. Meanwhile, India (-3.06%), Japan (-2.23%), and Taiwan (-1.71%) led the way lower. In Europe, we do see all red as of mid-day on Russian Invasion fears. The FTSE (-2.00%) is “leading” continent by holding up relatively well, but the DAX (-3.26%) and CAC (-3.49%) are more typical in early afternoon trading. As of 7:30 am, US Futures are pointing toward a gap-down open. The DIA implies a -0.79% open, the SPY is implying a -0.92% open, and the QQQ implies a -1.18% open at this hour. 10-year bond yields are up slightly relative to Friday and Oil (WTI) is off a quarter of a percent in early trading.

The only major economic news scheduled for Monday is any announcement or decision that comes from the emergency Fed Rate Meeting today. It is unclear if Fed Member Bullard will keep his 11 am speaking engagement, given the emergency Fed meeting. The major earnings reports scheduled for before the market include GTX, KELYA, and THS. Then after the close, AAP, ANET, CAR, BKD, CLR, HE, NTWK, PRI, and SCI report.

Russia did not invade Ukraine this weekend (as many had feared), but the brinksmanship remains underway with serious jitters (especially in Western Europe, like Germany, where the country is dependent on Russian Natural Gas). That and the emergency rate meeting by the Fed are sure to dominate the headlines and chatter among traders today. So, fear will likely be the driver early. And that forecast of mood (fear) is also what we are seeing in premarket prices this morning. So, stay nimble and/or hedged to volatility, and remember we have some potential support (at the bottom of a dreaded h pattern) not far below.

Remember that you don’t have to trade every day and you definitely do not need to trade early. Stick to your trading rules and manage the things that 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. Remember that the first rule of making 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. (That’s why we set stops in the first place.) Trading is a marathon, not a sprint.

🎯 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

50 Basis Point?

February 11, 2022 by Doug Campbell

After the very disappointing read on inflation, the market is facing the very real possibility of a 50 basis point rate increase at the March FOMC meeting. This morning we will get the Consumer Sentiment number after the open, with a lighter day of earnings events to supply some levity. Today, the bulls will have a tough job as they try to defend the recent higher lows in the indexes as we head toward the weekend with tensions rising on the Ukrainian border. The technical picture took substantial damage yesterday, but it could worsen quickly if we lose this critical support level.

Asian markets closed their Friday session mixed, but mostly lower, and European markets see red across the board as the world reacts to the likely consequences of rising inflation. Likewise, U.S. Futures point to a lower open ahead of a lighter day of earnings events and a temperature reading on consumer sentiment. Plan your risk wisely as we head into the weekend with tensions rising on the Ukrainian border.

Economic Calendar

Earnings Calendar

As usual, the Friday earnings calendar gives us a little break with less than 60 companies listed, and a number of those are unconfirmed. Notable reports include AXL, APO, ARES, CLF, D, ENB, FTS, GPRE, GPP, MGA, NWL, UAA, & WPC.

News and Technicals’

The latest U.S. January inflation data came in like a “punch in the stomach” for the Federal Reserve, said the chief global economist of Citi Research, Nathan Sheets, adding that means the next rate hike could be as aggressive as 50 basis points. According to the labor department, the U.S. consumer price index for January surged to 7.5% year-over-year. In addition, both headline and core CPI rose 0.6%, compared to estimates for a 0.4% increase by both measures. “These inflation data today came like a punch in the stomach for Jay Powell and his colleagues,” Nathan Sheets told CNBC’s “Squawk Box Asia” on Friday. Adding to the market pressure, President Joe Biden has issued a warning that U.S. citizens should leave Ukraine immediately as tensions with Russia over its military activity intensify. Secretary of State Antony Blinken also urged Americans to leave Ukraine on Friday, warning “an invasion could begin at any time.” Meanwhile, British Prime Minister Boris Johnson warned on Thursday: “Things are as dangerous as I have seen them in Europe for a very, very long time.” CEO Steve Cahillane told CNBC on Thursday that Kellogg may cover higher input costs due to skyrocketing inflation with higher prices and productivity. “We don’t want prices to get too high, but we’re in an environment where it’s broad-based, it’s across everything, but we’ve been able to cover it. Our pricing performance has been very solid,” he said. Cahillane said that price elasticity has been at historic lows, but Kellogg still plans to be cautious about raising prices this year. California’s Department of Fair Employment and Housing says it conducted a three-year-long investigation and received hundreds of complaints from Tesla workers. The agency says it found evidence that Tesla routinely kept Black workers in lower-level roles, assigned them more physically demanding work, and retaliated against them when they complained about racist slurs on the assembly line. The agency is seeking unspecified damages and for the company to reinstate workers who were unfairly terminated.

The 10-year dipped just one basis point in early Friday trading holding at 2.0119% as the market now anticipates an FOMC rate increase of 50 basis points at the March meeting. After the disappointing read on inflation, the 2-year Treasury yield surged 26 basis points, the biggest single-day move in since 2009. The report also showed the 4^th straight decline in real incomes to add insult to injury. The resulting market selloff created technical damage as the Dow, for the second time, failed its 50-day average. The SPY reversed with still under its 50-day, and the QQQ failed below its 200-day, further complicating the technical picture. However, there is still hope that the recent higher low in the indexes could hold as support if the bulls can find the energy to defend. Let’s hope the reading on Consumer Sentiment at 10 AM Eastern today doesn’t kick us while we’re down with another decline. With the Whitehouse calling for all Americans to leave Ukraine due to rising tensions, the bulls will have their work cut out for them as we head toward the weekend.

Trade Wisely,

Doug

Markets Tepid After Yesterday’s Reversal

February 11, 2022 by Ed Carter

Markets did a massive change of heart at 8:30 am when the January CPI number came in hotter than expected. This caused a 1%-2% gap down in the major indices. However, that was a bear trap as all 3 major indices immediately filled the gap in a strong rally that lasted the first 45 minutes. Unfortunately for bulls, that rally was a bull trap. Fed member Bullard came out and said he favors at least a 1% rate hike before July including a half-percent hike in March and he also wants to see the Fed starting to reduce its balance sheet during Q2. That was just what bears wanted to hear as stocks sold off the entire rest of the day. This all left us with very long-wicked, black candles that close not too far from the lows. On the day, SPY lost 1.79%, DIA lost 1.43%, and QQQ lost 2.26%. The VXX climbed over 5% to 20.31 and T2122 dropped back into the mid-range at 41.94. 10-year bond yields spiked hard to 2.052% and Oil (WTI) gained slightly to $90.01/barrel.

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After the close, ILMN, RSG, VRSN, SSNC, MPWR, Z, GDDY, ZG, CSL, DVA, KAJMY, BHF, SGAMY, TEX, MTD, and MWK all reported beats on both lines. Meanwhile, EXPE, FE, BIO.b, BIO, EQH, WU, and OSCR all beat on earnings while missing on revenue. On the other end, DXCM, FLO, CC, NSP, and BECN all beat on revenue, but missed on earnings. Lastly, EEFT missed on both lines.

So far this morning, AB, ARES, BRKR, IAA, MGA, COOP, SLVM, UA, UAA, and NWL have all reported beats on both lines. Meanwhile, CLF and D reported misses on both lines. APO, FTS, G, and GPRE all missed on earnings, while beating on revenue.

Overnight, the Asian markets leaned heavily to the downside. New Zealand (-1.93%), Shenzhen (-1.55%), and India (-1.31%) led the way lower. Only Japan (+0.42%) and Malaysia (+0.56%) managed to stay green. In Europe, with the lone exception of a modestly green Athens (+0.30%), the entire continent is red. The FTSE (-0.71%), DAX (-0.28%), and CAC (-1.07%) are leading the way in early afternoon trading. As of 7:30 am, US Futures are pointing to a mildly red open. The DIA implies a -0.12% open, the SPY is implying a -0.12% open, and the QQQ implies a -0.13% open at this hour. 10-year bond yields are down t o2.001% and Oil (WTI) is up 1.5% in early trading.

The major economic news scheduled for release Friday is limited to Michigan Consumer Sentiment (10 am). Major earnings reports scheduled for before the market include AB, AXL, APO, ARES, BRKR, CAE, D, ENB, FTS, G, GT, GPRE, IAA, MGA, COOP, NWL, NMRK, SLVM, US, and UAA. There are no reports scheduled for after the close.

Remember that it’s Friday and there is a weekend news cycle ahead. So, be prepared. With that said, the action in the premarket looks very mild today given the recent major gaps at the open. Maybe the big money is taking off early for a ski weekend (or SuperBowl prep). There has been a lot of great earnings news this cycle, but just keep in mind that all it took was one Fed member to say something yesterday to completely reverse markets. Stay nimble and/or hedged to volatility and remember we have overhead resistance that still needs to be worked through.

Stick to your trading rules and manage the things that 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. Remember that the first rule of making 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. (That’s why we set stops in the first place.) Trading is a marathon, not a sprint.

Swing Trade Ideas for your consideration and watchlist: No trade ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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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CPI Report

February 10, 2022 by Doug Campbell

Although the Wednesday rally was nice this morning, traders and investors now hold their breath for the CPI report. Consensus estimates suggest inflation increased in January and may come in at more than a 40-year high! If true, will that push the FOMC to act more aggressively in the March meeting, raising the interest rate by 50 basis points? Toss in a slew of earnings reports, and the stage is set for another day of challenging price action.

Overnight Asian markets closed green across the board with relatively modest gains waiting on the inflation data. European trade mixed but mostly higher with all eyes on the U.S. ahead of the CPI report. U.S. futures traded mixed ahead of critical inflation data and a bevy of earnings reports likely to keep traders guessing and price volatility high on Thursday. So, let’s get ready to rumble.

Economic Calendar

Earnings Calendar

We have another big Thursday on the earnings calendar, with about 210 companies expected to report throughout the day. Notable reports include KO, AFRM, MT, AZN, BE, APRN, CC, NET, CIGI, COUR, CS, CYBR, DDOG, DVA, DXCM, DUK, EB, EXPE, FLO, GDDY, HUBS, HII, ILMN, K, LH, MLM, MHK, MCO, PTEN, PEP, PCG, PM, PIPR, QLYS, SSTK, TEX, TTE, TWTR, UPWK, VRSN, WU, YELP, ZBRA, ZEN, & Z.

News & Technicals’

This week, the Biden administration rolled out a plan to allocate $5 billion to states to fund electric vehicle chargers over five years as part of the bipartisan infrastructure package. The historic investment is part of the administration’s broader plan to combat human-caused climate change and advance the clean energy transition. Despite a rise in EV sales in the U.S. in recent years, the transportation sector is still one of the largest contributors to U.S. greenhouse gas emissions. Disney reported earnings for the fiscal first quarter that beat analyst estimates. In addition, disney+ subscriptions beat estimates, adding nearly 12 million subscribers in the quarter. Disney’s parks, experiences, and consumer products division saw revenues reach $7.2 billion during the quarter, double the $3.6 billion it generated in the prior-year quarter. According to people with knowledge of the matter, Salesforce co-CEOs Marc Benioff and Bret Taylor spoke about the company’s vision for an NFT cloud service. The discussion came during an online sales kickoff on Wednesday. In a December blog post, a director of the market strategy at Salesforce predicted that 2022 would be a big year for NFTs. Shares of Delivery Hero plummeted around 29% Thursday. Analysts pointed to Delivery Hero’s 2022 guidance as to the reason behind the negative market reaction. The Germany-based food delivery firm forecast core profit margins between 1% and 1.2%. Unilever’s CEO has ruled out any “transformational” acquisitions after its failed £50 billion GSK bid. Alan Jope told CNBC said major deals were “off the table” after receiving pushback from investors. Instead, the company pointed to further price risings in 2022 as it reported its results Thursday. Treasury yields moved slightly higher in early Thursday trading, with the 10-year inching higher to 1.9406% and the 30-year rising to 2.2465%.

After a nice rally Wednesday, the market will now turn its attention to inflation as we wait for the CPI report. Some suggest the number will come in hot with inflation running at the highest level in more than 40 years. If that is the case, it will pressure the FOMC to act more aggressively in the March meeting. It’s hard to know how the market will react to the CPI reading. However, if the market sees the chances of a 50 basis point rate increase rising, we should not rule out the possibility of an adverse reaction. Though the DIA broke through its 50-day average yesterday, the SPY, QQQ, and IWM remain in a precarious technical position if the bears happen to reengage. Toss in a huge day of earings, and the recipe for another day of volatile price is complete.

Trade Wisely,

Doug

DIS, KO Reports Help Bulls With CPI Ahead

February 10, 2022 by Ed Carter

US Markets followed the world higher with a 1%-1.30% gap higher at the open Wednesday. However, from that point onward it was a meandering grind sideways with a very slight bullish trend, which saw all 3 major indices close near their highs of the day. This left us with gap-up white candles in the SPY and QQQ as well as a gap-up white Doji in the DIA. On the day, SPY gained 1.41%, DIA gained 0.85%, and QQQ gained 2.12%. The VXX fell 4% to 18.71 and T2122 rose into the overbought territory at 86.02. 10-year bond yields fell slightly on the day to 1.949% and Oil (WTI) rebounded two-thirds of a percent to $89.98/barrel.

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After the close Wednesday, DIS made a huge splash by reporting double the expected earnings on more than $3 billion higher than forecast revenue. In particular, Disney+ subscriptions and Disney Parks came roaring back to boost profits. In other earnings news after hours, TM, UBER, MGM, MOH, TWLO, MAT, SONO, PAGP, STC, RE, and LRLCY all reported beats on both lines. Meanwhile, MSI and DCP beat on earnings but also reported misses on revenue. On the other side, IFF, SGEN, UHAL, PAA, BKH, and USX missed on earnings, but beat on revenue. The losers were ZNGA, IRBT, and LUMN who all missed on both lines.

So far this morning, earnings have been pretty strong. BG, CDW, CVS, HMC, TM, EQNR, PFGC, PAG, LAD, ICL, REYN, and ARCC all reported beats on both lines. YUM and TRMB missed on earnings, but beat on revenue. So far this morning, KO, PEP, PM, LIN, LH, MLM, IPG, GPN, ZBRA, and TPR have all posted beats on both lines. FE beat on earnings but came in significantly short on revenue. Meanwhile, MCO, KIM, and HII beat on revenue but missed on earnings. DUK and TWTR reported misses on both lines. Of particular note among these reports is that KO revenue was up 10% and despite their miss, TWTR authorized a $4 billion buyback program. Finally, despite beating on both lines PEP warned of cost pressures potentially impacting future results.

Overnight, the Asian markets were mixed but leaned toward the upside. Shenzhen (-0.73%) was the only appreciable loser while Malaysia (+1.20%), Taiwan (+1.03%), and India (+0.81%) led the gainers. In Europe, stocks are mixed on modest moves at mid-day. The FTSE (+0.21%), DAX (+0.38%), and CAC (-0.05%) are fairly typical of the continent, with some smaller exchanges showing losses of closer to half of a percent in early afternoon trading. As of 7:30 am, US Futures are pointing toward a flat open. The DIA implies a +0.12% open, the SPY is implying a -0.07% open, and the QQQ implies a -0.12% open at this hour. 10-year bond yields are trading lower to 1.93% and Oil (WTI) is up almost 1% in early trading.

The major economic news scheduled for release Thursday includes Jan. CPI and Weekly Initial Jobless Claims (both at 8:30 am) as well as Jan. Federal Budget Balance (2 pm). Major earnings reports scheduled for before the market include MT, AZN, GOOS, KO, CIGI, DBD, FAF, FMCC, GPN, GPI, HRI, HII, NSIT, IPG, K, LH, LCII, LECO, LIN, MLM, MCO, PATK, PBF, BTU, PEP, PCG, PIPR, SON, TPR, TU, TWTR, WSO, and ZBRA. Then after the close, ASTL, EQH, BIO, BHF, ELY, CSL, CC, DVA, DXCM, EXPE, FE, FLO, GDDY, ILMN, NSP, ITUB, MTD, RSG, SSNC, TEX, WU, Z, and ZG report.

The premarket action looks like traders are thinking an inside day (rest) might be in order after yesterday’s big gap up and hold. However, there has been a lot of great earnings news since the close yesterday. So, the bulls have a tailwind. With that said, more inflation data at 8:30 am is likely to remind many that the Fed will be tightening (and that may embolden the bears a bit). Regardless, don’t get caught trying to outguess the market. Follow either way the market wants to lead. Stay nimble and/or hedged to volatility and remember we have overhead resistance that still needs to be worked through.

Swing Trade Ideas for your consideration and watchlist: CHD, SPLK, PLUG, XLE, AAPL, ZLAB, NTCO. 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

Improved Technical Position

February 9, 2022 by Doug Campbell

The surge upward in the Dow on Tuesday improved the technical position of the index as it tested its 50-day average as resistance. Unfortunately, the SPY, QQQ, and IWM still have a lot of work to do with significant technical and price resistance levels above to test the resiliency of the bulls. Moreover, expect price volatility to remain high with a jam-packed earnings calendar for the next two days, a possible market-moving CPI before the bell on Thursday.

Asian markets closed green across the board overnight, with the HSI leaning the way up 2.06%. This morning, European markets are also in rally mode, with all indexes advancing in the morning session. Ahead of a big day of earnings data, U.S. futures seem ready to shake off worries of the pending CPI report Thursday morning, pointing to bullish open across the board. However, watch for whipsaws or the possible pop and drop as we test overhead resistance levels if the hit and miss earnings results continue.

Economic Calendar

Earnings Calendar

We have a busy day on the Wednesday earnings calendar with nearly 170 confirmed reports. Notable reports include DIS, AFG, NLY, ARCC, BG, CCJ, CHEF, CME, CXW, CVS, DFX, FWRD, FOX, GSK, GBDC, HMC, IIVI, IRBT, LAD, MAT, NESA, MGM, MOH, MSI, NGL, ORLY, PAG, PPC, RDWR, SGEN, SONO, TEVA, TM, TRMB, TWLO, UBER, YUM, & ZNGA.

News and Technicals’

Facebook owner Meta closed with a market cap below $600 billion on Tuesday for the first time since May 2020. That also happens to be the number House legislators picked as the threshold for a “covered platform” in a package of competition bills aimed at Big Tech. The milestone points to one of the challenges of crafting laws that target the tech industry. Gas supplies to Europe will more likely be disrupted because of violence in the region rather than as a result of being weaponized, Dan Yergin told CNBC on Tuesday. Russia provides more than 30% of Europe’s gas, and Europe’s gas markets are linked by a network of pipelines, some of which pass through Ukraine. Although OPEC+ has decided to go ahead and return production output to 400,000 barrels per day for March, some producers could struggle to return to previous levels of production, said Yergin. WHO official Maria Van Kerkhove said the omicron subvariant BA.2 is more transmissible than BA.1, currently the dominant version of omicron worldwide, and will likely become more common. Dr. Abdi Mahamud, the WHO’s Covid incident manager, said it’s unclear whether BA.2 can reinfect people who previously had BA.1. Van Kerkhove emphasized that there’s no indication of a difference in illness severity between BA.2 and BA.1, though she noted that research is ongoing. The House passed a temporary government funding bill to prevent a shutdown later this month. The Senate plans to approve the plan by a February 18 deadline to avoid a lapse in federal funding. The bill would extend funding through March 11 and give lawmakers enough time to craft a long-term spending plan. Treasury Yields relaxed slightly in early Wednesday trading, with the 10-year dipping to 1.9216% and the 30-year declining to 2.2147%.

The Tuesday rally improved the technical position of the Dow, testing its 50-day moving average as resistance. The SPY has seesawed in a consolidation reversing its direction four days in a row as it consolidated between the technical levels of the 200 and 50-day averages. Unfortunately, the QQQ remains challenged by the overhead resistance of its 200-day average, and the IWM faces nearly a year’s worth of overhead price resistance. That said, the bulls are working hard with the help of institutions like JPM, promoting an upside rally. Earnings results remain mixed, but the next two days will be jam-packed on the earnings calendar so prepare for more price volatility and the possibility of substantial overnight gaps. Keep in mind as you plan forward, we will get a CPI number Thursday morning that could prove substantially market-moving. Also, keep an eye on overhead resistance for the entrenched bears and the possible Russian invasion of Ukraine that may upset any bullish sentiment in half a heartbeat.

Trade Wisely,

Doug