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Where’s the Relief Rally?

January 28, 2022 by Doug Campbell

The Thursday gap up raised the hope that a relief rally may finally begin once again disappointed with a bearish reversal that now threatens a test of Monday’s low. After the solid earnings performance from APPL, overnight futures rallied, but they have also reversed, suggesting a lower open this morning. Though internals suggest a short-term oversold condition, a relief rally may be tough to come by with mixed earnings results, a hawkish Fed, and the growing concerns of a Russian invasion as we head toward the weekend. Moreover, earnings numbers intensify next week so expect the volatility to keep traders on edge as February approaches.

Asian markets ended the trading week with a volatile session as the real estate crisis intensified in China. This morning, European markets trade decidedly bearish, seeing red across the board lead by the DAX down more than 2%. Likewise, U.S. futures reversed overnight bullish to suggest a bearish open with Personal Income and Consumer Sentiment data on the horizon.

Economic Calendar

Earnings Calendar

We get a little break on the number of earnings on Friday with less than 60 companies listed and a good number of them unconfirmed. Notable reports include CVX, ALV, BAH, CAT, CHTR, CHD, CL, RDY, GNTX, LYB, PSX, SYF, WY, & WETF.

News & Technicals’

Apple reported its largest single quarter in revenue ever, with sales growing over 11% despite supply challenges and the lingering effects of the pandemic. In addition, Apple beat analyst estimates for sales in every product category except iPads. Apple CEO Tim Cook said that the company’s supply issues were improving. Apple CEO Tim Cook said the company is seeing inflationary pressure in an interview with CNBC’s Julia Boorstin on Thursday. The observation from the Apple CEO comes as the Biden administration and Federal Reserve grapple with questions about how to tame elevated inflation. Robinhood anticipates first-quarter revenue of less than $340 million, down 35% compared with 2021. According to FactSet, Wall Street expected $448.2 million in revenue for Q1. Monthly active users fell to 17.3 million last quarter from 18.9 million in the third quarter. Robinhood is about to face its toughest comps in the first and second quarters of 2022, following its record year in 2021 from events like the GameStop short squeeze. According to CB Insights, tech start-ups raised a record $621 billion in venture capital funding globally in 2021. However, some VC investors worry the boom times may not last much longer as tech stocks fall amid talk of higher interest rates. VCs say they’re already hearing about deals renegotiated at lower valuations and even withdrawal of term sheets. Treasury yields rose slightly in early Friday trading, with the 10-year trading at 1.8266% and the 30-year climbing to 2.1126%.

On Thursday, the wild week continued with another huge point bearish reversal that provided early hope that a relief rally might begin. Now, rather than a relief rally, the selling poses the possibility that the low on Monday could receive another test. As we chop around near the recent lows, the index 50-day moving averages have turned lower, technical overhead resistance levels and hinting of a possible death cross in the weeks ahead if the selling pressure continues. Market internals continue to suggest and shot-term oversold condition, but with a hawkish Fed and the growing concern of a Russian invasion, that’s a big question as we slide toward the weekend. Although we have a lighter day on the earnings calendar, we have economic reports that could provide early session volatility. So as you plan for next week, keep in mind that earnings numbers continue to intensify and will likely keep us guessing with overnight reversals and intraday whipsaws.

Trade Wisely,

Doug

Third Bull Trap in a Row and Earnings

January 28, 2022 by Ed Carter

On Thursday, for the third day in a row, markets gapped higher, put in a little follow-through and then sold off to spring the bull trap. This left us with black candles (a very big one in the QQQ) with upper wicks. On the day, SPY lost 0.46%, DIA squeaked out a +0.04% gain, and QQQ lost 1.01%. The VXX rose to 24.49 and T2122 fell deeper into the oversold territory at 2.11. 10-year bond yields fell to 1.808% and Oil (WTI) was down slightly to $86.91/barrel.

Click for video

During the day, Q4 GSP came in as a massive beat (a 40-year high). The print was +6.9% while the consensus estimate was 5.5%. So, the Q4 economy was much stronger than expected, but the strongest inflation in 40 years also contributed to this high print. On the other hand, December Durable Goods Orders and Pending Home Sales both came in much weaker than expected.

After hours Thursday, AAPL, AJG, BZH, V, WDC, WRB, JNPR, RHI, and KLAC all reported beats on both lines. However, EMN, MDLZ, OLN, RMD, SYK, TEAM, and X beat on revenue but missed on earnings. On the opposite side, FICO and WAL beat on earnings but missed on revenue. Meanwhile, BOOT and CE missed on both lines.

Overnight, Asian markets mixed. Japan (+2.09%), Australia (+2.19%), and South Korea (+1.87%) led the gainers. However, New Zealand (-1.64%), Hong Kong (-1.08%), and Shanghai (-0.97%) were all lower as the region gets ready for the long Chinese market holiday that begins Monday. In Europe, stocks are nearly red across the board at mid-day, with the lone exception of Russia (+0.90%). The FTSE (-1.23%), DAX (-1.97%), and CAC (-2.11%) are typical and lead the region lower on fear of a Russian invasion of Ukraine and the closing of the Nord Stream 2 Gas Pipeline. As of 7:30 am, US Futures are pointing toward a down open. The DIA implies a -0.74% open, the SPY is implying a -0.77% open, and the QQQ implies a -0.48% open at this hour. 10-year bond yields are trading higher at 1.841% and Oil (WTI) is up to $87.24/barrel in early trading.

So far this morning, CAT, CHD, CTXS, PSX, SYF, VFC, and WY have all reported beats on both lines. Meanwhile, ALV, BAH, CHTR, HNNMY, and CL have reported beats on earnings, but came in light on revenue. At the same time, CVX, LYB, and SEOAY beat on revenue, but missed on earnings.

The major economic news scheduled for release Friday includes Dec. PCE Price Index, Q4 Employment Cost, and Dec. Personal Spending (all at 8:30 am), and Michigan Consumer Sentiment (10 am). Major earnings reports scheduled for before the market include ALV, BAH, CAT, CHTR, CVX, CHD, CL, LYB, MOG.A, SYF, VFC, and WY. There are no major reported scheduled for after the close.

Overhead resistance, the realization of a rough year with no help from the Fed, and fear over a Russian invasion of Ukraine have the bears in control. However, while they have smacked down the bulls’ attempt at a rally the last 3 days in a row, the bears have not been able to drive the market to further depths. So, be careful in an environment of intraday reversals and overall indecision. Also, remember it’s Friday and there is a weekend news cycle to be endured. Consider hedging, getting small, and especially taking profits where you have them.

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, stick to your trading rules and manage the things you can control. Don’t be stubborn, protect yourself from yourself. When you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.)

Swing Trade Ideas for your consideration and watchlist: TZA, SQQQ, SPXU, SDOW, SDS, DXD, DUST, RWM, DOG, JDST, QID. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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FOMC Turns Hawkish

January 27, 2022 by Doug Campbell

After the Dow swings more than 800 points from high to low, traders and investors remain on edge after learning the FOMC’s hawkish intentions. As a result, the wild price action continued in the overnight futures even after the better than expected reports from INTC and TSLA. Today we have another big day of market-moving economic and earnings reports that could easily inspire more whipsaws and reversals. The path forward remains very dangerous, so plan your risk carefully as the Fed attempts to fight inflation without slowing the economy.

Asian markets had a rough night reacting to the Fed as the Nikkei fell more than 3%, closing indexes in the red across the board. European markets gyrate in a volatile session this morning with a mix of gains and losses as they try to find direction. U.S. futures rallied off of overnight lows, suggesting a tentative open with a slew of market-moving reports ahead to keep traders on high alert.

Economic Calendar

Earnings Calendar

Thursday will be our busiest day on the earnings calendar this week. Notable reports include AAPL, AOS, ALK, MO, TEAM, BZH, BX, BOOT, CP, CE, CNX, CMCSA, DHR, DB, DOW, EMN, HCA, IP, JBLU, JNPR, KLAC, MMC, MA, MKC, MCD, MDLZ, MSCI, NOC, NUE, OLN, HOOD, ROK, LUV, STM, SYK, TROW, TXT, TSCO, X, VLO, V, & WDC.

News & Technicals’

Tesla beat on the top and bottom lines. CEO Elon Musk gave a “product road map” update saying the company would not release any new model vehicles in 2022. Instead, Tesla focuses on developing autonomous vehicle tech and scaling up production at its new factories in Austin, Texas, and outside of Berlin. Intel reported fourth-quarter earnings on Wednesday. Intel’s largest business, its Client Computing Group, was down 7% year-over-year to $10.1 billion, though it still beat analysts’ estimates. Gelsinger said that the company’s next-generation server chip, Sapphire Rapids, remained on schedule to start shipping this quarter and for production to ramp up in the second quarter. According to investment bank Morgan Stanley, the economic costs of China’s zero-Covid policy are increasingly expected to outweigh its benefits. As a result, the bank has now cut its forecast for the first-quarter GDP to 4.5%. “At this point, we think investors are still being too bullish with their expectation about corporate earnings,” said Laura Wang, chief China equity strategist at the firm. Germany has provoked outrage in some quarters after it offered to supply 5,000 military helmets to Ukraine to help it defend itself against a possible Russian invasion. The U.S. and U.K. have sent military hardware to Ukraine, as 100,000 Russian troops are believed to be located along the border with Ukraine. However, Germany has been conspicuously reluctant to send equipment to the country. Apple hit a record 23% market share in China in the fourth quarter of 2021, with the iPhone maker reclaiming the number one player for the first time in six years, Counterpoint Research said. That was driven by the “relatively lower starting price” of its iPhone 13, which had a strong camera and 5G features. Meanwhile, China’s smartphone market declined in 2021 due to component shortages and sluggish consumer spending, Counterpoint Research said. Treasury yields traded mixed early Thursday, with the 10-year rising to 1.8495% and the 30-year declining to 2.1413%.

I guess it’s no surprise the FOMC decision to raise rates beginning in March created wild price gyrations that first shot the Dow up more than 500 but faded, selling off over 800 points in just over an hour. The volatility continued in the overnight futures, dropping some 300 additional points to rally back near falt this morning. Internals still indicate a short-term oversold condition, but another day of market-moving economic and earnings reports includes the behemoth APPL after the bell. Both INTC and TSLA beat earnings estimates after the bell on Wednesday; however, the stocks are indicated slightly lower at the open today. We should not rule out the possibility of testing the overnight futures lows, but we should also prepare for a relief rally should the day’s data inspire the bulls. That said, we will have to keep a close eye on overhead resistance levels and expect price volatility to remain very challenging in the weeks ahead.

Trade Wisely,

Doug

Market Looks to Reevaluate Fed News

January 27, 2022 by Ed Carter

Once again, the bulls gapped stocks 1%-2% higher at the open Wednesday. Then we saw a sideways meander until 2 pm. However, when the Fed announcement and presser came out, all 3 major indices sold off hard to the lows of the day before drifting back upward to close up off the lows. This left us with gap-up, big black candles with good-sized wicks on both ends across the major indices. On the day, SPY lost 0.33%, DIA lost 0.44%, and QQQ lost 0.16%. The VXX rose 2% to 24.32 and T2122 fell back into the oversold territory at 11.27. 10-year bond yields spiked again to 1.867% and Oil (WTI) rose a bit under 2% to $87.07/barrel.

Click for video

The big news of the day was the FOMC decision and Fed Chair Powell’s press conference. Oddly enough, we learned exactly what we expected to hear. The Fed signaled it will raise rates in March on an aggressive path to fight inflation, will have stopped buying bonds (completed the taper) by then, and will begin to significantly reduce its $9 trillion bond holdings over the remainder of the year. Again, none of this was anything we did not already know. So, perhaps it was Chair Powell’s refusal to rule out a hike at every meeting the remainder of the year (he was asked) that spooked markets. Regardless of the exact trigger, markets sold hard on the news, but the bears did not have the strength to close us out on the lows or to reach significantly lower levels.

After the close Wednesday, AMP, CCI, INTC, LSTR, RJF, STX, NOW, TER, TSLA, URI, VRTX, and XLNX all reported beats on both lines. However, EW, LVS, and PGR missed on both lines. Meanwhile, DRE, LRCX, MKTX, and WHR missed on either the earnings or revenue lines while beating on the other.

Overnight, Asian markets reacted to the Fed news as the region was nearly red across the board. (Malaysia +0.02% being the exception.) South Korea (-3.50%), Japan (-3.11%), and Shenzhen (-2.77%) paced the losses. In Europe, stocks are mixed at mid-day. The FTSE (+0.49%), DAX (-0.45%), and CAC (-0.34%) are typical of the spread across the region. However, Russia (+2.37%) is an outlier. As of 7:30 am, US Futures are pointing toward a slightly green open. The DIA implies a +0.04% open, the SPY is implying a +0.28% open, and the QQQ implies a +0.50% open at this hour. 10-year bond yields are down to 1.823% and Oil (WTI) is up 1% in early trading.

So far this morning, DHR, MO, MMC, DOW, MSCI, XEL, TROW, ROK, BLL, DOV, TSCO, TDY, AOS, JBLU, CMCSA, VLU, LUV, MKC, and ALK all reported beats on both lines. However, MCD and TXT reported misses on both lines. Meanwhile, SHW, NOC, IP, and KEX reported a beat on one line and a miss on the other.

The major economic news scheduled for release Thursday includes Dec. Durable Goods Orders, Q4 GDP, and Weekly Initial Jobless Claims (all at 8:30 am) as well as Dec. Pending Home Sales (10 am). Major earnings reports scheduled for before the market include FLWS, AOS, ALK, ADS, MO, AIT, BLL, BX, BC, CNX, CMCSA, DHR, DOV, DOW, HCA, IP, JBLU, KEX, MA, MMC, MKC, MCD, MSCI, MUR, NOC, NUE, ORI, ROK, RCI, SAP, SHW, LUV, STM, TROW, TDY, TXT, TSCO, VLO, and XEL. Then after the close, AAPL, AJG, TEAM, BZH, CP, CE, EMN, JNPR, KLAC, MDLZ, OLN, RMD, RHI, SYK, X, V, WRB, WAL, and WDC report.

Traders have had a night to reconsider the Fed news. Often this leads to a reversal of the initial reaction from the afternoon of the report. In this case, that may not happen, because the news was widely expected ahead of time. Either way, it looks like markets are tepidly bullish at least before the morning economic news comes out. If we do open higher, just remember that the last two gaps higher were met with a strong selloff later in the day. So, be careful chasing unless you are hedged, small positioned, and/or very nimble.

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Upbeat Guidance from MSFT

January 26, 2022 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisely,

Doug

All Eyes on Fed Statement and Presser

January 26, 2022 by Ed Carter

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

Click for video

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

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

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

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

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

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

Swing Trade Ideas for your consideration and watchlist: CF, FANG, APA, USO, WSM. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

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

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

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

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

Wild Ride on Wall Street

January 25, 2022 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals’

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

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

Trade Wisely,

Doug

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

January 25, 2022 by Ed Carter

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

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

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

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

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

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

Swing Trade Ideas for your consideration and watchlist: UVXY, SPLK, QID, SDS, TDOC, HAL, FSLY. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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Erratic day of Price Action

January 24, 2022 by Doug Campbell

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

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

Economic Calendar

Earnings Calendar

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

News & Technicals”

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

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

Trade Wisely,

Doug

Crypto Getting Crushed And Fed This Week

January 24, 2022 by Ed Carter

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

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

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

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

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

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

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

Swing Trade Ideas for your consideration and watchlist: TAK, BKR, CHD, BABA, IAC. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching