Attention to Inflation

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Attention to Inflation

Finishing last week lower, the market will now turn its attention to inflation and the kick-off to earnings with big bank reports on Friday.  In addition, Jerome begins congressional testimony on Tuesday, CPI Wednesday, PPI Thursday, and retail sale and industrial production on Friday.  All of this with the SPY, QQQ, and IWM in a precarious technical position adding to the uncertainty.  I think we can expect price volatility to remain high, so plan your risk accordingly.

Asina markets traded mixed with the HSI rebounding 1.08% overnight.  Across the pond, European markets trade mostly lower, albeit a choppy trading session.  Facing a big week of market-moving data, U.S. futures have recovered from overnight lows, but with treasury yields continuing to rise, the NASDAQ  remains under pressure this morning.  So trade wisely; it could prove to be a challenging week ahead.

Economic Calendar

Earnings Calendar

We have just eleven companies listed and only six verified reports to kick off the new trading week.  Notable reports include AZZ, CMC, and VOXX.

News & Technicals’

U.S. and Russian officials are in Geneva on Monday to begin a series of high-stakes talks this week.  Tensions remain higher than ever over Ukraine, but both sides have already warned prospects for a resolution are low.  Moreover, Russia has been building up its military presence at its border with Ukraine in recent months, leading to heightened concerns that Russian President Vladimir Putin is planning on invading the country.  Moscow denies such claims, saying it has a right to place troops where it likes within its territory.  Draghi’s government, comprised chiefly of politicians from different parties and some technocrats, has appeased markets due to its parliamentary support and reform plans.  However, analysts at Goldman Sachs said Draghi’s departure would “trigger uncertainty regarding the new government and its policy effectiveness.”  Over 1,000 of the country’s parliament and regional representatives will begin voting on Jan. 24.  North Korea is seeking to build up its missile capability to boost its “bargaining position,” says one political analyst, who pointed to the country’s latest attempt last week to test-fire a hypersonic missile.  On Thursday, state media claimed the country had test-fired a “hypersonic missile” the previous day.  “You start the new year, and North Korea does this type of test that shines the light back on it,” John Park, director of the Korea Project at the Harvard Kennedy School, told CNBC’s “Squawk Box Asia” on Monday.  Treasury yields climbed higher in early Monday trading, with the 10-year rising to 1.7975% and the 30-year trading at 2.1469%.

After finishing the week lower, the market will turn its attention to inflation and the congressional testimony of Jerome Powell.  While the DIA remains in a bullish technical position, the SPY, QQQ, and IWM indexes now have some challenges to overcome if the bulls want to remain in control.  The overhead resistance level is substantial, but I’m guessing there are still some very high hopes that earnings season can provide the inspiration needed.  We kick off the big bank earnings on Friday.  The Fed testifying in congress, inflation data, retail sales numbers, and the beginning of earnings season!  Add in geopolitical tensions with Russia and North Korea chiming in, and we have a week of uncertainty ahead.   What could go wrong with that?  Expect uncertainty and price volatility to remain high so plan your risk accordingly.

Trade Wisely,

Doug

Bear Looking to Keep The Momentum

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Markets opened flat on Friday.  However, the SPY and QQQ proceeded to sell off until 11 am.  During this time the DIA simply meandered sideways.  From 11-noon, all 3 indices rallied and then ground sideways until about 3:15 pm.  All 3 then sold off the last 45 minutes of the day.  This left indecisive candles in all 3 indices with a white Doji in the DIA, a black Spinning Top in the SPY, and a black candle with good-sized wicks on both ends in the QQQ.  On the day, SPY lost 0.40%, DIA lost 0.02%, and QQQ lost 1.08%.  VXX lost almost 3% to 18.82 and T2122 remained in the mid-range at 61.99.  10-year bond yields rose sharply again to 1.767% and Oil (WTI) lost seven-tenths of a percent to $78.90/barrel.  For the first week of the year, SPY was down 1.87%, DIA was down just 0.28%, but the rotation was obvious as the QQQ was down 4.52%.

Click for video

During premarket Friday there was some conflicting data.  December Nonfarm Payrolls came in a +199k, which was less than half of what was expected.  (Oddly, the ADP Dec. Nonfarm Payrolls had come in a +807k, versus the same +400k expected just two days prior.) However, the Dec. Unemployment rate fell to 3.9% (versus 4.1% expected) while the Participation rate remained steady.  So, markets were left with either “which data do you believe?” or “None of the data is good” as their options.

During the day Friday, C followed up on its October announcement that vaccination is a condition of employment.  It sent a memo to all employees saying that if they had not proven they have been vaccinated by next week they will be put on unpaid leave and will be terminated as of January 31.  CNBC reports that about 90% of the workforce at C has already submitted proof of vaccination, but that still leaves 22,000 employees at risk of termination, which could have an impact on bank operations.  So far, the other major banks (JPM, BAC, WFC, GS, and MS) have not gone as far as terminating their non-compliant staff.

Friday gave us some very odd food inflation data.  Despite widespread food inflation and news of high food prices, fertilizer prices had a wild week, especially on Friday.  After the price of urea (nitrogen) had swung at least $100/short ton each day of the week, Friday saw fertilizer prices fall 12% (most since 2009).  This massive fall in price is unexplained and comes despite the fact very little of that commodity was available at the discounted price.  (US production is sold out, there are production plant closures across Europe due to a lack of natural gas, China still not willing or able to export until at least May, and the Middle East essentially sold out with production already sold through the end of February.)  Yet the prices fell 12% on a single day.

Overnight, Asian markets were mixed.  Hong Kong (+1.08%) and India (+1.07%) led the gainers while South Korea (-0.95%) was the only red ticker that was not nearly flat.  In Europe, stocks are strongly in the red, with only a couple of minor exchanges showing green at mid-day.  The FTSE (-0.12%), DAX (-0.39%), and CAC (-0.54%) are typical of the region in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a down open.  The DIA implies a -0.13% open, the SPY is implying a -0.31% open, and the QQQ implies a -0.67% open as it appears both the rotation and pullback will remain in place at least early Monday.  10-year bond yields are up very slightly and Oil (WTI) is down two-thirds of a percent in early trading.

There is no major economic news scheduled for release Monday.  The only major earnings report scheduled for before the market is CMC.  There are no major reports scheduled for after the close.

LTA Scanning Software

The bears seem to have maintained the momentum over the weekend as premarket prices are sitting at the lows across the board. Be very careful with long positions and remember that hedging and waiting are both valid ways to reduce risk. However, also remember that intraday whipsaw has been the norm lately, especially in large-cap spaces.

Remember 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.) 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.

Ed

Swing Trade Ideas for your consideration and watchlist: JNJ, CTRA, CVS, FCX, DG, TNA, MMC, GME, SKIN. 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.

TC2000 Discount

🎯 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.

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

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Payrolls and Overnight Asian Chip News

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Stocks put in a roller-coaster day that ended indecisively in the SPY and QQQ.  DIA was also volatile but ended the day down more than the others.  This left us with a long-legged Doji in the SPY, a Spinning Top candle in the QQQ, and a black candle in the DIA.  On the day, SPY lost 0.09%, QQQ, lost 0.07%, and DIA lost 0.47%.  The VXX rose slightly to 19.38 and T2122 rose to mid-range at 47.26.  10-year bond yields came back down after being over 1.75% during the morning to close at 1.723% and Oil (WTI) spiked to $79.58/barrel.

Click for video

After the close, CNBC reported that hedge funds are dumping tech stocks (growth stocks) at a massive pace so far in 2022.  They claimed it was the largest rotation by the big money funds in a decade.  This is also obvious on the chart as the QQQ is down 5% so far this year.

Meanwhile, two Asian chipmakers reported strong quarterly updates overnight.  Samsung and STMicro both reported blowout numbers with Samsung saying that its operating profit will be up 52% while STMicro reported its full-year came in +25% sales from the previous year.  Both commented on the strong demand for contract manufacturing services (where they make chips for other brands such as INTC, AMD, NVDA, QCOM, AVGO, and many other tech companies).  However, they also directly compete with some of those as well as TSM, MU, TI, and others. European chip stocks are spiking on the read-through.  We may see the same later with the US chipmaker stocks.

Overnight, Asian markets were mixed again, but leaned heavily to the upside today.  Hong Kong (+1.82%), Australia (+1.29%), and South Korea (+1.18%) led the way higher.  Taiwan (-1.08%) was a big outlier to the downside with the 4 other red exchanges all being not far below flat.  In Europe, markets are mixed at mid-day.  The FTSE (-0.09%), DAX (-0.40%), and CAC (-0.24%) are all trading lower.  However, most of the smaller exchanges are on the upside in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a mixed and modest open.  The DIA implies a -0.01% open, the SPY is implying a +0.14% open, and the QQQ implies a +0.25% open (on read-through from those Asian chipmaker reports).  10-year bond yields are flat (but expect volatility when the Payrolls number hits) and Oil (WTI) is up almost another percent to $80.10/barrel in early trading.

The major economic news scheduled for release Friday includes Dec. Avg. Hourly Earnings, Dec. Nonfarm Payrolls, Dec. Participation Rate, and Dec. Unemployment Rate (all at 8:30 am).  The major earnings reports scheduled for before the market is limited to GBX.  There are no major reports scheduled for after the close.

LTA Scanning Software

Expect movement this morning, especially in the Treasury market and on inflation-sensitive names. If the ADP Nonfarm Payrolls number (more than twice as big of a gain than expected) is any indication of the official Payrolls report at 8:30 am, we could see fear of an overheating in the economy. (For reference, ADP came in a +807k vs +400k est. and the consensus forecast for the official number today is also +400k.) The point is, don’t be surprised by a big premarket reaction, which may well lead to either follow-through or a snapback after traders have had a chance to digest the news.

Volatility is the watchword now as markets are not quite sure whether it is time for a downtrend or at least a pullback. Remember 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.) 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.

Ed

Swing Trade Ideas for your consideration and watchlist: IGT, APTV, FFIE, BTU, F, FE, GM, TGT. 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.

TC2000 Discount

🎯 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.

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

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

A More Aggressive Fed

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A More Aggressive Fed

On Wednesday afternoon, the bears came back to work reacting to a more aggressive Fed creating some technical damage in the charts.  With the rapid rise in bond yields, the QQQ and IWM suffered the brunt o the technical damage, while the SPY and DIA had only some price support losses at the close.  So now the question is, with this highly speculative and emotional market environment, will we ignore the Fed and rush back in to buy the dip, or will the bears start to show some teeth?

Asian markets had a rough night, closing mainly in the red, with Japan dropping 2.88%.  European markets see only red this morning, with the DAX and CAC both down more than 1% at the time of this report.  However, U.S. futures point to a mixed open ahead of trade and jobless data.  So, prepare for price volatility to remain high as we sort through yesterday’s damage. 

Economic Calendar

Earnings Calendar

We have our biggest day of reports on the Thursday earnings calendar so far this year.  Notable reports include BBBY, CAG, FC, HELE, KRUS, PSMT, SCHN, & WDFC. 

News & Technicals’

Minutes from the Fed’s December meeting indicated that officials were ready to dial back policy help aggressively.  One key aspect, the central bank’s balance sheet, was the subject of extended discussion, with policymakers pointing to a reduction in bond holdings in the coming months.  Members expressed concern about inflation and said the jobs market is nearing full employment.  Stocks slid following the release while government bond yields rose.  Scammers around the world took home a record $14 billion in cryptocurrency in 2021, thanks in large part to the rise of DeFi.  Losses from crypto-related crime rose 79% from 2020.  Cryptocurrency theft rose 516% from 2020 to $3.2 billion worth of cryptocurrency.  Of this total, 72% of stolen funds were taken from DeFi protocols.  New Covid-19 variants are likely to keep emerging until the whole world is vaccinated against the virus, experts warn.  According to data, in low-income countries, only 8.5% of people have received at least one dose of a vaccine.  Experts note that the sharing of vaccinations is not just an altruistic act but a pragmatic one.  Treasury yields moved slightly higher in early Thursday trading, with the 10-year rising to 1.7281% and the 30-year trading up to 2.1210%.

Yesterday’s selloff created some technical damage due to a more aggressive Fed and the rapidly rising bonds.  QQQ took the most damaging hit, with the index cutting right through the psychological support of its 50-day average as well as losing some key price supports.  IWM also had a damaging day, failing at its 50-day and dropping straight through the 200-day.  That said, the selling may have been painful for those that chased into the DIA and SPY indexes this week, but by in large, there was minor price action damage.  However, the SPY fell very close to its 50-day average, and with bond yields continuing to rise in early Thursday trading, I would not rule out a test of that level soon.  Expect volatility to remain high as this highly speculative and emotional market decides to shake off the Fed and rush back in to buy up the dip.  Today we will turn our attention to the trade and jobless numbers as we prepare for the Employment Situation number coming before the bell Friday morning. 

Trade Wisely,

Doug

Rotation Picks Up As Market Follows Fed

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Wednesday saw the large-caps open flat while the QQQ gapped down about 0.35%.  The divergence kicked it up a notch as the DIA put in a ragged morning rally, SPY ground sideways all morning, and the QQQ slowly sold off.  However, the bears picked up steam about noon as stocks started sinking in all 3 major indices.  Then at 2 pm, as the December Fed minutes came out, the bears really took over as stocks sold off hard and closed near the lows of the day across the board.  This left us with big, ugly black candles in all 3 major indices, with only the DIA able to stay above its T-line.  On the day, DIA lost 1.03%, SPY lost 1.92%, and QQQ lost a whopping 3.07%.  The VXX rose almost 8% to 19.29 and T2122 dropped all the way down to 29.05.  10-year bond yields shot up to 1.70% and Oil (WTI) gained a fraction to $77.17/barrel. 

Click for video

As mentioned, the December FOMC Meeting Minutes came out on Wednesday afternoon.  The surprise was that in addition to agreeing on speeding the bond-buying taper and pulling forward the first rate hike, there was a lengthy discussion about reducing the size of the Fed Balance Sheet.  (Not just stopping the growth, but many Fed voters are in favor of reducing the balance sheet by selling assets they had purchased over the years.)  In fact, many members were pushing for tightening not only by raising rates twice this year but also starting to sell the $8.3 trillion of treasuries and mortgage-backed securities that the Fed has bought.  This could happen as soon as rate hikes start (March is expected) and would put a serious damper on markets and the economy.

In premarket earnings, WBA easily beat analyst expectations on both earnings and revenue estimates for the quarter.  (Reporting they were aided by vaccinations and testing business.) They also raised guidance for the year.  WBA was up 3.6% in premarket trading, but has come back to +1.5% as of 7:30 am.  Elsewhere, CAG missed on earnings, but beat on revenue.  FE reported in-line on earnings and beat on revenue.  Meanwhile, STZ beat on both lines, and BBBY missed on both lines.

Overnight, Asian markets were mixed, but leaned heavily to the red as Asia caught up to the bearishness caused by the Fed Minutes.  Japan (-2.88%) and Australia (-2.74%) were far out front in leading the selloff.  Thailand (-1.42%) was the next closest.  On the upside, Hong Kong (+0.74%) and Singapore (+0.66%) were the only gainers.  In Europe, we see red nearly across the board at mid-day.  Only Finland (+0.51%) is showing any green.  The FTSE (-0.57%), DAX (-1.09%), and CAC (-1.40%) are typical of the spread across the region at this hour.  As of 7:30 am, US Futures are pointing toward a mixed open with continuing rotation toward safety.  The DIA implies a +0.28% open, the SPY is implying a +0.02% open, and the QQQ implies a -0.42% open.  10-year bond yields continue to spike and are at 1.744% while Oil (WTI) is up 1.18% in early trading.

The major economic news scheduled for release Thursday includes Weekly Initial Jobless Claims, Import/Exports, and Nov. Trade Balance (all at 8:30 am), Nov. Factory Orders and Dec. ISM Non-Mfg. PMI (both at 10 am).  The major earnings reports scheduled for before the market include BBBY, CAG, FE, STZ, HELE, LW, SCHN, and WBA.  There are no major reports scheduled for after the close.

LTA Scanning Software

Today will be the test to see if rotation toward the safety of mega-cap names (and especially away from the tech growth names) continues as the reaction to Fed hawkishness has had a night to sink in. Earnings season is about to ramp back up. So, we will likely see a disparity between great rear-view mirror earnings and fear of a tightening economy ahead (with the Fed moving to fight inflation and Congress unable to pass the President’s Budget/Spending bill). The very short-term trend is bearish in all 3 major indicies. However, we still sit near the all-time highs, especially in those massive-cap DIA names.

Volatility is the watchword now as markets are not quite sure whether it is time for a downtrend or at least a pullback. Remember 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.) 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.

Ed

Swing Trade Ideas for your consideration and watchlist: RAD, COP, CVS, BYND, AMD, CBOE, PWR. 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.

TC2000 Discount

🎯 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.

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

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Surging Bond Yields

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Big tech names suffered some selling yesterday, with the QQQ leaving behind a bearish engulfing candle at price resistance, and bond yields rose at their fastest new year pace in 20-years!  However, the DIA set another consecutive daily record as rotation into consumer defensive names continues.  Later today, we may get more insight from the Fed minutes as concerns of a more aggressively hawkish committee may raise rates as soon as the March meeting.  Don’t be surprised to see more of a choppy market condition today as we wait.

Asian markets finished the day mixed but mostly lower, with tech stock falling amid rising bond yield pressures.  However, when writing this report, European indexes continue to extend with modest gains across the board.   Ahead of ADP, Petroleum Statis, and the Fed minutes, U.S. futures trade muted with mostly modest declines indicated at the open.

Bond Yields

Big tech names suffered some selling yesterday, with the QQQ leaving behind a bearish engulfing candle at price resistance, and bond yields rose at their fastest new year pace in 20-years!  However, the DIA set another consecutive daily record as rotation into consumer defensive names continues.  Later today, we may get more insight from the Fed minutes as concerns of a more aggressively hawkish committee may raise rates as soon as the March meeting.  Don’t be surprised to see more of a choppy market condition today as we wait.

Asian markets finished the day mixed but mostly lower, with tech stock falling amid rising bond yield pressures.  However, when writing this report, European indexes continue to extend with modest gains across the board.   Ahead of ADP, Petroleum Statis, and the Fed minutes, U.S. futures trade muted with mostly modest declines indicated at the open.

Economic Calendar

Earnings Calendar

We have another light day on the hump day earnings calendar with 15 companies listed and only four verified.  Notable reports include RPM, SMPL, & UNF.

News & Technicals’

The updated guidance comes after the CDC faced criticism last week for shortening its recommended isolation period without asking for people to get tested.  The CDC said people are most contagious two days before symptom onset and three days afterward.  Dr. Rochelle Walensky, the CDC’s director, said during a White House Covid update last week that up to 90% of transmission happens during that period.  The company announced that once-prominent Chrysler plans to reinvent itself as an all-electric vehicle brand by 2028.  Those plans begin with Chrysler Airflow and a crossover concept unveiled online for the CES consumer technology show in Las Vegas.  The concept is a preview of an upcoming production vehicle slated for 2025.  Walmart announced Wednesday that it would expand the availability of its InHome delivery service from six million to 30 million households.  InHome allows employees wearing cameras to enter a customer’s home to deliver groceries and other purchases or to pick up returns, even when the customer is not there.  Walmart also said it would hire 3,000 employees to support the service’s expansion.  Treasury yields declined slightly in early Wednesday after surging upward the last two days.  The 10-year dipped to 1.6438%, and the 30-year declined to 2.047%.

Another day of records for the DIA, but with big tech selling off in reaction to surging bond yields, the SPY could not hold onto a new record.  Bond yields rose at their fastest new year pace in 20 years as the market turned its attention to a more aggressively hawkish Fed.  As a result, worries are growing that an interest rate increase may be on the way as early as the March meeting.  Today we may get some insight into the thinking of the Fed with the release of the last meeting minutes later this afternoon.  The bearish engulfing candle left behind on the QQQ index adds a little uncertainty and is beginning to confirm the intuitional rotation we identified into defensive consumer staple names.  If big tech were to see follow-through selling, a break of the 50-day average could signal some uncertainty ahead. 

Trade Wisley,

Doug

ADP Payrolls, Service PMI, and Fed Minutes

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Markets diverged Tuesday with the large caps gapping three to four-tenths of a percent higher at the open while the QQQ opened flat.  At that point, the SPY and especially the QQQ started an all-day selloff.  Meanwhile, the DIA rallied and then meandered sideways, never falling back below the gap-up open.  This left us with a huge black Bearish Engulfing candle in the QQQ, a Shooting Star (at another all-time high) in the DIA, and a Black Spinning Top candle very near the all-time high close in the SPY.  On the day. SPT lost 0.03%, DIA gained 0.59%, and QQQ lost 1.30%.  VXX was flat at 17.88 and T2122 backed off but remains in the overbought territory at 89.68.  10-year bond yields spiked again to 1.651% (which was actually a step back from 1.68% earlier in the day) and Oil (WTI) rose 1.22% to $77.01/barrel. 

Click for video

The mid-morning JOLTS report showed that a record 4.53 million workers quit their jobs in November (a 8.9% increase over October).  However, the number of job openings also declined more than expected to 10.56 million (vs 11 million expected).  However, those 10.56 million openings was still significantly smaller than the 6.88 million people who were unemployed and seeking work for the month.  This suggests that employers may be pulling back a bit on hiring, but the great resignation is still dwarfing the slowdown, which maintains pressure on salaries to move higher.

During the day it was announced that Toyota has surpassed GM to become the top-selling car-maker in the US.  This ends a 90-year win streak by GM.  The news is evidence that Toyota has been better able to manage supply chain problems (chip shortages) than its US counterparts (who have all suffered much more frequent plant closings due to a lack of parts).  The actual numbers were Toyota sold 2.3 million vehicles in the US (up 10.4% from 2020), while GM sold 2.2 million vehicles in 2021 (down 12.9% from 2020) and F sold 1.7 million vehicles.  Despite losing the crown to Toyota, GM stock was up almost 7.5% and F was up a whopping 11.67% on the day after announcing a doubling of their production plans for the electric F-150 Lightning.

In miscellaneous news, 30-year fixed mortgages hit a 9-month high last week (half a percent higher than one year ago).  This caused mortgage demand to fall as refinance loan applications were down 2% on the week and new home purchase applications were down 4%.  In the Auto sector, Chrysler (owned by STLA) announced plans to go completely electric (no internal combustion) by 2028.  Once a major automaker, Chrysler and affiliated brands are back on the outs. However, they will be the largest carmaker to go “all-electric” if they reach the goal as announced.

Overnight, Asian markets were mixed but leaned heavily to the red side.  Shenzhen (-1.79%), Hong Kong (-1.64%), and South Korea (-1.18%) led the way lower as Chinese property developers are suffering more scrutiny and pushback from their government.  In the latest move Evergrande was ordered to demolish 39 buildings in one of its projects in the name of “environmental laws.”  In Europe, stocks are mixed at mid-day.  The FTSE (+0.16%), DAX (+0.70%), and CAC (+0.60%) are leading the continent higher, but most of the smaller exchanges are in the red in early afternoon trading.  As of 7:30 am, US Futures are pointing to a mixed open.  The DIA implies a +0.04% open, the SPY is implying a -0.05% open, and the QQQ implies a -0.36% open at this hour.

The major economic news scheduled for release Wednesday includes Dec. ADP Nonfarm Payrolls (8:15 am), Dec. Services PMI (9:45 am), Crude Oil Inventories (10:30 am), and Dec. Fed Meeting Minutes (2 pm).  The only major earnings reports scheduled for before the market Wednesday are RPM and UNF.  There are no major reports scheduled for after the close.

LTA Scanning Software

Markets may wait this morning for some read-through from the 2 pm December Fed Meeting Minutes. However, the divergence among the major indices indicates rotation, which leads me to think the larger issue is over-extension and fear of declining growth. The ADP Payroll number may, in fact, be the better read-through for the market today. So with the QQQ in a pullback, SPY consolidating, and DIA trying to go it alone to new highs, be very careful chasing the bulls. You don’t want to be behind them when the herd spins around and heads back down the hill.

Remember 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, when you’re wrong, admit it and take your loss. (That’s why we set stops.) 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.

Ed

Swing Trade Ideas for your consideration and watchlist: SYK, JBHT, IPG, DRI, XLI, MT, TTWO, 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.

TC2000 Discount

🎯 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.

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

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Bulls Won the Day

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Bulls Won the Day

We kicked off the new year with a substantial dose of price volatility with a nasty whipsaw that covered more than 200 Dow points from high to low.  However, the bulls won the day shaking off the volatility and powering higher to set new records in the DIA and SPY.  In addition, Apple became the first three trillion market cap company and is now 7% of the SP-500 with a P/E ratio a full 10 points above its 5-year average!  That said, no price seems too high with the bulls pushing for yet another gap up open this morning.  Go bulls.

Asian markets traded mixed but mostly higher during the night, with the NIKKEI surging 1.77%.  European markets are also setting new records today, with the FTSE and CAC both up more than 1.30% at writing this report.  Not to be outdone, U.S. futures point to another gap up open, setting more records ahead of ISM and the job openings report.  So, let’s get ready to rumble!

Economic Calendar

Earnings Calendar

We have just four confirmed reports on the Tuesday earnings calendar.  They include ANIX, MLHR, MLKN, and the only notable being SGH.

News and Technicals’

The U.S. reported a record number of new Covid cases on Monday, with over one million new infections.  In addition, a total of 1,082,549 new coronavirus cases were reported on Monday, according to data from Johns Hopkins University, as the highly infectious omicron variant continues to spread throughout the country and beyond.  On Feb. 15, China will implement new rules that require internet companies holding the data of more than 1 million users to undergo a network security review before listing overseas.  The regulator said that the rules aimed at companies that carry out data processing activities affect national security.  Beijing has introduced a slew of new regulations on the tech sector over the past year as it looks to reign in the power of the country’s giants and stamp out anti-competitive behavior.  Ford’s shares jumped by roughly 140% last year, making it the top-performing auto stock.  Morgan Stanley analyst Adam Jonas said it was “truly a breakthrough year for Ford … easily the most important year strategically for the company since the financial crisis.”  Since auto veteran Jim Farley took the CEO helm more than 15 months ago, the stock is up by more than 200%.  Treasury yields climbed sharply yesterday and continued higher in early Tuesday trading.  The 10-year traded up to 1.6385%, while the 30-year advanced to 2.0304%.

Though we started the day with a nasty whipsaw that coved move that 200 points from the high to the low, the bulls won the day setting new records in the DIA and SPY indexes.  Internals also improved but remain remarkably low considering the valuation of the market.  For example, by the close yesterday, 55% of all stocks remained under their 200-moving averages as we set new records.  The stock leading the way is Apple becoming the first company to top 3 Trillion in valuation.  Despite the stated supply chain issues, Apple has more than tripled its price since the 2020 pandemic.  All on its own, Apple is now 7% of the entire SP-500 and carries a whopping 31.61 P/E ratio, a full 10-points above its 5-year average.  A fantastic feat, but one has to wonder what happens if the company were to stumble in the upcoming earnings?  This morning the DIA, SPY, and QQQ all show bullish patterns, with the futures pushing for another gap up open.

Trade Wisely,

Doug

AAPL and TSLA had Themselves a Day

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Markets opened the year by gapping about one-third of a percent higher.  Choppy sideways action then took over until noon.  At that point a slow, but steady rally took over for the rest of the day.  This left all 3 major indices with white bodies and longer lower wicks with the SPY and DIA looking like Hammer-type candles and both closing at new all-time high closes.  On the day, SPY gained 0.58%, DIA gained 0.66%, and QQQ gained 0.97%.  The VXX lost 3.6% to 17.86 and T2122 rose deeper in the overbought territory at 93.46.  10-year bond yields shot higher to 1.638% and Oil (WTI) rose over one percent on the day to $76.02/barrel. 

Click for video

In major market news, AAPL became the first US company to reach $3 trillion in market cap.  This happened on a 2.50% gain on the day, closing at another all-time high.  Meanwhile, TSLA had a tremendous day, gapping 8.7% higher and closing up 13.52% on the record 2021 vehicle deliveries reported Sunday.

The US reported a record of almost 1.1 million new cases of covid yesterday.  The surge is mostly due to omicron (59% of cases), but the majority of the most severe cases still seem to be the delta variant (41% of cases).  As a reference, that 1.1 million accounts for nearly 2% of all cases seen in the US since the beginning of the global pandemic coming just on Monday.  However, due to the way states have become laxer in reporting, it is possible that number is inflated by the holiday weekend.

In a case that may set precedent, Theranos founder and CEO was found guilty on 4 of 11 charges of criminal fraud.  Specifically, she was convicted of defrauding investors by lying about the company’s capabilities.  However, the jury also found her not guilty on 4 charges and did not reach a verdict on 3 charges.  Still, this may (at the margins) make companies think twice before lying to investor conferences or during earnings calls, which would be a good thing. 

Overnight, Asian markets were mostly green.  Australia (+1.95%), Japan (+1.77%), and Singapore (+1.50%) led the gain.  The only red came from Malaysia (-0.46%), Shenzhen (-0.44%), and Shanghai (-0.20%) as China struggled under the pressure of the Evergrande default.  In Europe, markets are green across the board with the lone exception of Denmark at mid-day.  The FTSE (+1.40%), DAX (+0.78%), and CAC (+1.33%) are typical in early afternoon trading.  As of 7:30 am, US Futures are pointing toward another modest gap higher at the open.  The DIA implies a +0.30% open, the SPY is implying a +0.30% open, and the QQQ implies a +0.24% open at this hour.

The only major economic news scheduled for release Tuesday is Dec. ISM Mfg. PMI and Nov. JOLTS (both at 10 am).  There are no major earnings reports scheduled for before the market Tuesday.  However, after the close, MLKN reports.

LTA Scanning Software

The bulls seem to be pushing to start the year, looking to add to the late December Santa Claus rally. However, we are quite overbought and are dealing with all-time high resistance. So, keep an eye out for signs the market needs to rest of pullback.

Stick to your trading rules and on managing the things you can control. Remember 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, when you’re wrong, admit it and take your loss. (That’s why we set stops.) Trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor.

Ed

Swing Trade Ideas for your consideration and watchlist: ERX, FANG, SOFI, T, BAC. 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.

TC2000 Discount

🎯 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.

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

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Solid Start to the New Year

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New Year

Though volume was incredibly light in the last week of 2021, the strong price action set the stage for a solid start to the new year.  But, unfortunately, the big gap up open greatly increases the risk to retail traders trying to capitalize on the move.  Remember, strong bullish moves premarket also create the possibility of a pop and drop pattern, so make sure you see some follow-through buying before jumping into the fray.  That said, I want to wish you all a very successful 2022, and let us begin the new year with profits and wise trading decisions.

During the night, Asian markets traded mixed with Evergrande shares halted preparing to release information about the most indebted developer.  This morning, European markets trade is mostly bullish, with only the FTSE showing a modest decline when writing this report.  With reading on PMI and Construction Spending just around the corner, U.S. futures point to s substantial gap open that may set new record highs to begin the new year.

Economic Calendar

Earnings Calendar

To begin trading in the new year, we have just three unconfirmed reports on the earnings calendar with no notable events. 

News & Technicals’

Airlines have canceled more than 15,000 U.S. flights since Christmas Eve.  Bad weather worsened flight disruptions on the first day of the year.  In addition, Omicron infections among crews have thinned staffing at some carriers.  China Evergrande Group shares have been suspended from trading on Monday pending the release of “inside information,” the embattled property developer said without elaborating.  Evergrande, the world’s most indebted developer, struggles to repay more than $300 billion in liabilities.  These include nearly $20 billion of international market bonds deemed to be in cross-default by rating firms last month after they missed payments.  China tightened its monetary policy, embarking on “aggressive deleveraging” as it sought to slash debt in the property sector.  But China’s economy appears to be bouncing from a “mini-downturn” into an upswing as the country eases policy, says investment bank, Morgan Stanley.  As a result, the bank is “more bullish than the consensus” and says it sees GDP growth in China accelerating to 5.5% in 2022.  Finally, Tesla just published its fourth-quarter vehicle production and deliveries report for 2021, and it handily beat analysts’ expectations.  In the fourth quarter, Tesla deliveries amounted to 308,600 electric cars, and full-year deliveries amounted to 936,172 vehicles.  According to a consensus compiled by FactSet, Wall Street analysts had anticipated Tesla deliveries of 267,000 in the fourth quarter and 897,000 for all of 2021.

Although the indexes took a little rest last couple of trading days of the year, they maintained bullish technical patterns that set the stage for a solid start to the new year.  The futures surged during the night, suggesting a substantial gap up at the open on the first trading day of 2022.  That said, we still have to be careful remembering that stock valuations are exceptionally high, with bloated P/E ratios and market internals showing that 56% of stocks remain below their 200-day averages.  The fact remains that the big price swings of late and big gap open market adds significant risk for the retail trader jumping into new positions.  Trade with the upside trend but guard against overtrading and avoid complacency.  We have several potential market moving reports coming our way this week, so plan your risk carefully.  I wish you all a very successful 2022!

Trade Wisely,

Doug