Suspend the Debt Limit

Suspend the Debt Limit

Last night the U.S. House passed a bill to suspend the debt limit and fund the government through early December.  Futures markets responded with a sharp reversal from overnight lows despite the bill’s steep challenge in the Senate.  Consider that carefully as you approach today’s opening gap up ahead of an FOMC decision.  The pop and drop has become a regular occurrence the last couple of weeks, so stay focused and avoid chasing into the gap.  After the morning rush of energy, don’t be surprised if the price becomes choppy while we wait on the Fed.

Overnight Asian markets traded mixed but mostly higher as investors watch the fallout of the Evergrande default.   However, European markets have a relief rally in mind seeing green across the board.  The U.S. points to a bullish gap-up open after a debt ceiling suspension and ahead of the Federal Reserve decision on a taper.  So, let’s hurry up and wait!

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have just nine companies listed.  Notable reports include BB, GIS, FUL, KBH, & SCS.

News & Technicals’

The House passed a bill last night that would temporarily fund the government and suspend the debt limit. However, the legislation will face a challenge in the Senate, as Minority Leader Mitch McConnell says Republicans will vote against raising the debt ceiling. If not approved, the government would shut down on Oct. 1, and the U.S. would be unable to pay its bills sometime in October if Congress does not pass legislation addressing both issues. The Fed’s September meeting has been widely anticipated since the central bank is expected to signal that it’s close to announcing the taper of its bond purchase program. But the focus of markets will be squarely on what the Fed now forecasts for interest rates and inflation. According to Jamie Dimon, the top uncertainty for the Fed is the path of inflation.  Dimon said that if those hot inflation figures continue into December, U.S. policymakers may have to admit that at least part of the price increases are here to stay.  Treasury yields are again falling this morning, with the 10-year dropping 8 basis points to 1.3328% and the 30-year falling 11.5 basis points to 1.8685%. 

Another gap up open that closed the day lower kept the VIX elevated into the Tuesday close.  However, after the House suspended the debt ceiling and temporarily funded the government until early December, the futures rallied off of overnight lows, pointing to another attempt to pump the market this morning.  With the debit suspension facing a substantial challenge in the Senate and facing an FOMC decision on taper, one has to wonder if we’re setting up another pop and drop this morning.  The index chart technicals showed little to no improvement yesterday, and I suspect after a morning burst of energy, prices will become choppy as they wait for the Fed.  We never know how the market will react to their decision, so remain focused and flexible, prepared for whatever comes our way. 

Trade Wisely,

Doug

Evergrande Fear Fades As We Wait on Fed

Markets gapped about six-tenths of a percent higher at the open Tuesday as markets tried to recover from the ugly Monday session.  However, volatility continued to reign as prices swung in waves all day.  Unfortunately for bulls, the last two major waves of the day were to the downside.  This left us with black-body candles with upper wicks that went out on or near the lows in all 3 major indices.  On the day, SPY lost 0.10%, DIA lost 0.09%, and QQQ gained 0.12%.  The VXX fell to 28.70 and T2122 popped back out of the oversold territory to 28.37.  10-year bond yields rose to 1.323% and Oil (WTI) rose slightly to $70.51/barrel.

After the close, a US government agency, headed by Attorney General Garland, reported it will be “reviewing” the proposed ZM acquisition of FIVN (announced in July). In the announcement, the agency pointed to foreign participation (ZM has R&D operations in China and FIVN has operations in Russia). 

Elsewhere after hours, FDX shares fell as the company missed on earnings and cut its Q4 profit forecast as cost increases are expected to outpace their recently announced price increase.  In addition, DIS shares fell hard when CEO Chapek told a GS event that his company believes the Delta variant will cause Q4 subscription growth to come in below previous estimates.  On the other side, SFIX shares jumped after the company unexpectedly reported a profit while beating on both lines.  ADBE also rose after beating on both lines.

Following very strong Housing starts data yesterday, this morning’s weekly mortgage demand spiked to the highest level since April.  Analysts say this points to strong home sales for September.  The average 30-year fixed, conforming loan rate remains at 3.03%. However, new purchase loan applications rose 2%, but refinance applications climbed 7% week-on-week.  While mortgage demand remains below the same week a year ago, the gap is narrowing.

Overnight, Asian markets were mostly modestly lower.  An IMF spokesman said they do not expect the Evergrande crisis to be a “Chinese Lehman Brothers moment.” She said the differences include the company owning physical assets (properties) and the Chinese government has much stronger controls over their financial markets and is in a better fiscal position to simply take ownership of the debt and assets if needed than the US/West did in 2008.  Taiwan (-2.03%) was the outlier because after a drop at the open, Shanghai (+0.40%) recovered fully and both Shenzhen (-0.57%) and Japan (-0.67%) made significant comebacks.  In Europe, markets are up significantly at mid-day, bouncing as they have seen a lack of panic in Chinese markets.  The FTSE (+1.15%), DAX (+0.55%), and CAC (+1.11%) are typical of the region in early afternoon trading.  As of 7:30 am, US Futures are also pointing to another up open.  The DIA is implying a +0.58% open, the SPY implying a +0.51% open, and QQQ implying a +0.30% open.

The major economic news scheduled for release on Wednesday includes August Existing Home Sales (10 am), Crude Oil Inventories (10:30 am), and Fed Interest Rate Projections, Fed Interest Rate Decision, and FOMC statement (all at 2 pm), and the Fed Chair presser (2:30 pm).  The major earnings scheduled for the day include GIS before the open.  Then after the close, FUL, KBH, and SCS report.

With the rest of the world rebounding as the Evergrande debt crisis in China did not look so scary today, US markets are likely to wait and see what the Fed does/says before making big bets. The ugly day Monday and volatility then and Tuesday should give us pause about any further pullback or reversal into rally mode. We have resistance overhead and some support below. So, consider how much confirmation you want before blindly chasing an intraday trend.

Remember, you don’t have to trade every day. Activity does not equal progress. And when you do trade, the Trend is your friend. Right now, that trend remains bearish with a lot of volatility. So, manage your existing trades before you chase any new ones. Focus on the process and on managing the things you can control. Don’t worry about the things you can’t control. Discipline and good trading rules are what separates trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.

Ed

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

🎯 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

|607% in just 24 months |

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 PlansPrivate 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

Significant Technical Damage

Significant Technical Damage

With worries, the Evergrande default contagion could spread significant technical damage to the index charts yesterday.  Although the significant overnight reversal certainly relives yesterday afternoon’s short-term oversold condition, it does not relieve the extremely high price volatility danger.  Consider the overhead resistance and the very real possibility of substantial intraday whipsaws.  The Evergrande problem is just beginning, not over, and we have an FOMC meeting just around the corner.  Emotions are high, so trade wisely.

With China markets still closed for a holiday, the NIKKEI sold off 2.17%, monitoring Evergreade developments.  This morning, European markets are in relief rally mode, seeing green across the board trying to overcome some of yesterday’s selloff.  Ahead of Housing numbers and an FOMC meeting decision just around the corner, the U.S. futures point to a substantial gap up, this time punishing those that held short positions overnight.  Stay focused as substantial intraday whipsaws are possible, making for very high-risk trading. 

Economic Calendar

Earnings Calendar

We have just 11 companies listed on the earnings calendar, with most of several unconfirmed reports.  Notable reports include FDX, ADBE, ACB, AZO, CBRL, NEOG, SFIX.

News & Technicals’

With government funding expiring at the end of September, Treasury Secretary Janet Yellen has said the U.S. would likely not be able to pay its bills sometime in October if Congress does not suspend the debt limit. As a result, Congress will attempt to include a debt ceiling suspension that will kick the can down the road funding the government through December.  Economists expect Chinese officials to stem the spillover from liquidity issues at Evergrande, the country’s largest property developer, before it slams the banking system and bleeds into foreign financial centers. But strategists also say Beijing needs to act quickly to restructure Evergrande because markets are becoming nervous and hurting sentiment.  Early this morning, the yield on the 10-year Treasury notes dropped 17 basis points to 1.3220%, while the 30-year fell 15 basis points to 1.8625%. 

Yesterday created significant technical damage in the index charts, and likely shook investor confidence to the core.  However, a substantial overnight reversal is underway to punish any short traders who chose not to take profits during yesterday’s rout.  The T2122 indicator was signaling a short-term oversold condition and with a hopefulness that Beijing will step in to curb the credit crisis in the aftermath of the Evergrande default watch for a robust short-squeeze relief rally.  That said, be very careful as we approach resistance levels and watch for possible whipsaws because the bear may not give up so easily this time around.  The big emotional gap up this morning makes for high-risk long entries, especially when you consider the very high implied volatility and FOMC decision just around the corner.  I suspect the rollercoaster ride is not over, considering the considerable decline in bond yields this morning. 

Trade Wisely,

Doug

Bulls Look to Rebound From Evergrande

Stop me if you’ve heard this one before.  So, China caught a virus and the US got sick.  Ba-dum-dum.  In this case, China’s virus is the Evergrande fund’s $300 billion loan default, and “the US” refers to US markets. At any rate, US markets started the week with a big gap down and then put in a wide-ranging, indecisive Spinning Top candle day in all 3 major indices.  On the day, SPY lost 1.66%, DIA lost 1.80%, and QQQ lost 2.17%.  That made Monday the worst day since May.  However, for context, it’s important to remember that we are still just 4-6% off the all-time high in the various indices.  The VXX rose almost 11% to 29.74 and T2122 dropped deep into the oversold territory at 3.54.  10-year bond yields fell to 1.311% and Oil (WTI) dropped 1.56% to $70.85/barrel.

Afterhours, RDS.A announced a deal to sell the entirety of its Permian Basin assets (operations and drilling rights) to COP.  The deal was for $9.5 billion and includes current production of 175,000 barrels per day.  This deal ends Shell’s US onshore production operations, but RDS.A will continue to operate their production offshore from Texas. 

On Monday, Covid-19 surpassed the 1918 Spanish Flu as the deadliest pandemic in US history.  There have been 43.1 million total cases and 694,619 total deaths in the country.  Meanwhile, the averages 133,979 new cases and 1,623 new deaths per day across America.  In related news, this morning JNJ (whose top vaccine selling point was a single dose) says that the vaccine is 94% effective when a booster dose is given two months after the original dose.

Overnight, Asian markets were mixed, but mostly green.  Japan (-2.17%) was a huge e outlier as fear from the Evergrande debt crisis impacting Japanese firms gripped the Nikkei.  However, the region’s few other losses were very minor.  Meanwhile, India (+0.95%), Thailand (+0.74%), Shenzhen (+0.71%), and Singapore (+0.71%) led the gainers.  In Europe, we see green across the board at mid-day.  The FTSE (+1.14%), DAX (+1.53%), and CAC (+1.37%) are typical as the continent rebounds from the initial Evergrande shock.  As of 7:45 am, US Futures are pointing toward a gap higher at the bell.  The DIA is implying a +0.83% open, the SPY implying a +0.77% open, and the QQQ implying a +0.75% open.  10-year bond yields and Oil are also rebounding in early trade as the Dollar is just on the red side of flat so far this morning. 

The only major economic news scheduled for release on Tuesday are August Building Permits, Q2 Current Accounts, and August Housing Starts (all at 8:30 am).  The major earnings scheduled for the day include AZO and CBRL before the open.  Then after the close, ADBE, FDX, and SFIX report.

Markets are trying to rebound after the ugly Monday session. However, a lot of technical damage was done and the whipsaw is in effect both intraday and interday. Be careful not to get caught in that whiplash. Also, with the Fed Meeting starting today, it would not be surprising for markets to start drifting until the FOMC shows its next card Wednesday afternoon. So, be ready for a dead drift sideways if it comes.

Keep in mind that you don’t have to trade every day. And when you do trade, the Trend is your friend. Right now, that trend is bearish. So, manage your existing trades before you chase any new ones. Focus on the process and on managing the things you can control. Don’t worry about the things you can’t control. Discipline and good trading rules are what separates trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.

Ed

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

🎯 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

|607% in just 24 months |

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 PlansPrivate 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

Evergrande Default

Evergrande Default

The next shoe drops as the liquidity issues of the Evergrande default create shock waves around the world.  The dip buyers on Friday will feel considerable pain this morning due to the weekend reversal, and the technical damage to the index charts signals tremendous uncertainty ahead. Finally, with an FOMC meeting just around the corner, will bulls defend the or will the bears continue to push lower at the open of today trading? 

Asian markets traded mixed overnight, with the Hong Kong plunging 3.30% and ASX dropping 2.10%. Additionally, this morning, European markets are decidedly bearish, with the DAX, CAC, and FTSE indexes down more than 2%. Finally, U.S. futures point to a mean and punishing weekend reversal, with the Dow signaling a gapping down more than 500 points. So get ready for a wild ride. 

Economic Calendar

Earnings Calendar

To kick off the new trading week, we have 17 companies listed on the earnings calendar, but many of them are unconfirmed. So the only notable report today would be from LEN.

News & Technicals’

Evergrande, the Shenzhen-based company, faces a default on its debt burden of roughly $300 billion. The crisis has echoes of the Lehman Brothers bankruptcy, which marked its 13-year anniversary last week, a development that at the time sent shockwaves through global markets. So the question is it a so-called too big to fail, and the government comes in to save the business? In addition, the U.S. is tiring to smooth the tensions with France after they recalled its ambassadors, creating another geopolitical crisis.  On Sunday, Treasury Secretary Janet Yellen asked Congress to raise the federal debt ceiling as the risk of default draws near.  Remarkably as the debt ceiling looms, the U.S. dollar is on the rise this morning due to the liquidity crisis in China.  As a result, bonds are falling hard this morning, with the 10-year dropping to 1.3633% and the 30-year falling to 19030%.

It would seem the liquidity issues of the Evergande default did make its way into the U.S. markets with a big over the weekend reversal.  This morning, traders will wake to the SPY well below its 50-day average and the QQQ gapping down to test its 50-day as support.  In one fell swoop, the DIA will wipe out nearly two months of gains, and the IWM will gap below its 200-day average.  Ouch!  The question is, will the bulls defend, or will the bears continue to push the indexes lower.  If that were enough uncertainty to deal with, we have an FOMC meeting and the possibility of tapering easy money policies on the lips of the committee.  With so much uncertainty, price volatility is likely to become very challenging.  Experienced day traders will likely have the edge, and the buy the Friday dip buyers get severely punished.  So fasten your seatbelt tightly; it’s likely to be a very bumpy ride today.

Trade Wisely,

Doug

Another Punishing Whipsaw

Even after the surprise increase in retail sales, the price action produced another punishing whipsaw to test recent lows after gaping up at the open.  The wild volatility favors the experienced day traders but has likely left everyone else with little to no trading edge due to the extreme whips.  I wish I could say it’s over, but honestly, I think there is more uncertainty to come with the FOMC meeting scheduled for next week.  That said, plan your risk carefully as we slide into the weekend.

Asian markets finished the week with a bit of relief rally overnight, facing the enormous uncertainty of an Evergrande default.  This morning, European markets trade in the red across the board with modest losses as UK retail sales fall.  With a very light day of earnings data and a reading on Consumer Sentiment later this morning, U.S. futures are uncharacteristically muted, pointing to a modestly lower open. 

Economic Calendar

Earnings Calendar

We have just 13 companies listed on the Friday earnings calendar, with only two verified. So the only somewhat notable report for today is that from MANU.

News & Technicals’

A key FDA panel meets Friday to debate and vote on Pfizer and BioNTech’s application to offer booster shots to the general public.  The meeting comes as some scientists, including at least two at the FDA, say they aren’t entirely convinced every American who has received the Pfizer vaccine needs extra doses at this time. French officials in Washington canceled a gala at their compound over frustration with the new security partnership between the U.S., U.K., and Australia. The development comes after France expressed outrage over a new partnership that, in part, ends a long-standing submarine contract between Australia and France.  Snowed under its crushing debt of $300 billion, Evergrande is so huge that the fallout from any failure could hurt not just China’s economy. Contagion could spread to markets beyond China. The U.S. Treasury’s are moving opposite of each other this morning, with the 10-year advancing to 1.334% and the 30-year declining to 1.877%.

After a disappointing Jobless claims report and a surprise increase in the retail sales number, the market once again opened with a gap up but quickly found sellers producing another punishing whipsaw.  However, as the day wore on, the bulls buckled down and went to work defending recent price lows in the indexes.  Unforunintly, by the end of the day, the price action left us with more questions than answers, with the DIA remaining under its 50-day while the SPY and QQQ held their bullish trends. Additionally, today we will get the latest reading on the Consumer Sentiment at 10 AM Eastern that could create some price volatility. Finally, as we slide into the weekend, the question we all need to answer for ourselves is, do I feel I have an edge?  Intraday traders could answer that question, yes, but swing and position traders may feel much more uncertain about the path forward.

Trade Wisley,

Doug

Stuck Between Support and Resistance

On Thursday, August Retail Sales came in much, much hotter than expected (+0.7% vs. -0.8% expected) and Jobless Claims came in slightly higher than expected (332k vs 330k) in the first week since extended unemployment expired.  As a result, large caps opened flat while the QQQ gapped down about three-tenths of a percent.  At that point, all 3 sold off for half an hour before starting a slow rally that lasted into the last hour.  However, they then backed off the highs a bit.  This left us with indecisive Doji or Spinning Top candles in all 3 major indices that continue to have trouble breaking through the T-line resistance.  On the day, SPY lost 0.17%, DIA lost 0.18%, and QQQ gained 0.07%.  The VXX rose slightly to 25.15 and T2122 remains in the mid-range at 48.07.  10-year bond yields rose to 1.338% and Oil (WTI) was flat at $72.60 despite a spike in the Dollar (up three-tenths of a percent against other major currencies).

Overnight, Asian markets were mixed but leaned to the green side.  New Zealand (+1.18%) and Hong Kong (+1.03%) were the standout movers to the upside and Australia (-0.76%) was by far the biggest loser on the day.  In Europe, markets are mixed, but mostly lower on modest moves at mid-day.  The FTSE (-0.12%), DAX (-0.26%), and CAC (-0.17%) are typical for the continent in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a modestly lower open.  The DIA is implying a -0.18% open, the SPY implying a -0.25% open, and the QQQ implying a -0.28% open at this hour.  The Dollar is also down a bit with 10-year bond yields up to 1.343% and Oil down half of a percent in early trading. 

The only major economic news scheduled for release on Friday is Michigan Consumer Sentiment at 10 am.  There are no major earnings scheduled for the day.

This afternoon, the FDA Vaccine Advisory panel is meeting to debate and vote on whether to recommend PFE and MRNA booster shots for the general public.  There seems to be a debate amongst the panel on whether there is enough scientific evidence that the booster provides enough additional protection to outweigh the use of all production capacity and vaccine doses for initial vaccinations.  Of course, this has to be weighed against the hesitancy and lack of compliance among the remaining unvaccinated.  Either way, the panel votes, PFE and MRNA (and later JNJ) are all likely to be unaffected.  Their vaccine capacity will be used somewhere at roughly the same profit margin. However, future case surge numbers and economic impacts may be influenced by the decision  

Markets have seemed to consolidate this week, even with intraday volatility with the major indices stuck between resistance overhead and support below. However, the short-term bearish trend remains in place. It appears the fear of reduced economic growth (nationally and globally) remains the dominant driver in the market at the moment. This is interesting since BAC reports that money is piling into stocks at the fastest pace in over a year. BAC said that over $62 billion came out of money-market funds in the first 3 days of this week, with $51 billion of that going into stocks and most of the remainder going into bonds. With all this said, all eyes are looking ahead to the Fed meeting next week for the next clue. So, be careful making bets today.

Remember this is Friday. So, prepare yourself for the weekend news cycle and the likelihood of doldrums heading into the Fed meeting next week. Keep in mind that you don’t have to trade every day. And when you do trade, the Trend is your friend. Manage your existing trades before you chase any new ones. Focus on the process and on managing the things you can control. Don’t worry about the things you can’t control. Discipline and good trading rules are what separates trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.

Ed

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

🎯 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

|607% in just 24 months |

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 PlansPrivate 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

Jobless Claims and Retail Sales

Jobless Claims and Retail Sales

This morning’s question is whether the Jobless Claims and Retail Sales numbers support yesterday’s relief rally or if the bears find another reason to attack?  The DIA and IWM are both in a precarious situation concerning their 50-day averages.  On the other hand, the SPY and QQQ successfully held bullish trends with yesterday’s bounce.  So get ready for some price action volatility as the market reacts to this data.  We could easily experience a short squeeze if the data is good or see the index charts suffer substantial technical damage if the market reacts negatively.  Trade wisely!

Asian markets closed mostly lower overnight with worries of an Evergrande default and casinos stocks continuing to tumble due to possible Chinese regulation changes.  However, European markets see green across the board this morning with modest gains.  Ahead of potentially market-moving data, U.S. futures trade slightly in the red at the time of this report, but anything is possible by the open. 

Economic Calendar

Earnings Calendar

Although we have 16 companies listed on the earnings calendar, only one confirmed report from FANDY is not noteworthy.  The market will have to elsewhere to find inspiration.

News & Techincals’

The housing authority has notified China’s major banks that Evergrande Group won’t be able to pay loan interest due Sept. 20. In addition, regulators have warned of broader risks to the country’s financial system if the company’s $305 billion of liabilities can not be contained.  Rising energy prices as we head into the winter are becoming a major concern in Europe and making the market nervous.  What’s more, the run in energy prices is not expected to end anytime soon due to low wind output and the rising commodity prices for carbon.  Who could have guessed that massive amounts of money printing would have a negative effect on energy prices?  Hmmm!  Treasury yields moved slightly higher this morning, with the 10-year trading up to 1.306% and the 30-year advancing to 1.871% ahead of jobs of and retail data. 

The technicals remain precarious for the DIA and IWM as all eyes turn to Jobless Claims and Retail Sales data before the market opens.  Should the bears find a reason to attack, it could create significant technical damage in the index charts and seriously shake investor confidence after yesterday’s hopeful relief rally.  On the other hand, if the bulls can find inspiration, yesterday’s bounce off the bullish trend in the SPY and QQQ could spark a substantial short squeeze.  One can only guess what the reaction might be, so get ready for a potentially wild price action open where anything is possible.  Remember that the reaction in the premarket futures has quickly reversed at the open in the last few trading days. So take a breath and watch price action before leaping in, and even then, prepare for whipsaws or even complete reversals.

Trade Wisely,

Doug

Last Major Economic Data Ahead of Fed

Markets opened flat on Wednesday and then sold off briefly before starting a slow rally that lasted all day long.  The major indices are all testing their T-line (8ema) above as of day end.  This left us with Bullish Harami candles that closed near their highs in all 3 major indices.  On the day, SPY gained 0.83%, DIA gained 0.68%, and QQQ gained 0.74%.  The VXX fell almost 4% to 25.43 and T2122 rose into the mid-range at 65.42.  10-year bond yields rose to 1.304% and Oil (WTI) gained over 3% to $72.64/barrel as oil inventories came in tighter than expected (Gulf of Mexico production still only at 60% of pre-hurricane Ida levels) and the Dollar fell against other major currencies.

Tax hikes to pay for the Democratic domestic agenda were passed out of the House Ways and Means Committee on Wednesday.  The current version would raise $2.9 trillion, primarily by increasing the top corporate tax rate to 26.5% and imposing a 3% surcharge (added tax) on individuals earning more than $5 million per year. 

Last night, Elon Musk’s SpaceX launched an all-civilian rocket into actual orbit of the earth.  (360 miles, many times higher than the sub-orbital flights of the SPCE and Blue Origin flights. The consensus is that this accomplishment is exponentially more difficult than the flights accomplished by the other two companies.) There is speculation that SpaceX will be taken public via IPO in the next year.

Yesterday the FDA refused to take a stance on the PFS booster shot.  The agency cited a lack of “verified” data.  MRNA also released data on “breakthrough” cases that the company said support the need for booster shots.  In general virus news, the total number of cases has risen to 42,479,780 confirmed cases and deaths are now at 685,023.  Meanwhile, the averages have seemed to are plateau at 152,891 new cases and 1,609 new deaths per day.  

Overnight, Asian markets were mostly in the red again, led by Chinese stocks.  Shenzhen (-1.91%), Hong Kong (-1.46%), and Shanghai (-1.34%) led the region lower.  However, India (+0.63%) and Australia (+0.58%) were the clear leaders on the green side as Australian unemployment came in lower than expected.  In Europe however, markets are mostly on the green side at mid-day.  The FTSE (+0.48%), DAX (+0.54%), and CAC (+1.09%) are typical of the region with only Russia (-0.36%) and Portugal (-0.45%) on the red side of the ledger in early afternoon trading.  As of 7:30 am, US Futures are pointing to a flat open again.  The DIA is implying a +0.01% open, the SPY implying a -0.07% open, and the QQQ implying a -0.16% open at this hour.  The Dollar and 10-year bond yields are up and Oil (along with other commodities) down in early trading.

The major economic news scheduled for release on Thursday includes August Retail Sales, Philly Fed Mfg. Index, and Weekly Jobless Claims (all at 8:30 am), and July Business Inventories (10 am).  Notably, these are the last major economic data points coming ahead of next week’s Fed meeting. There are no major earnings scheduled for the day.

The bulls pushed back against the recent downtrend yesterday. However, the large-caps are still fighting with the T-line and 17-ema (as well as recent levels) as resistance above. While the QQQ is just back up above the two moving averages, it too continues to have resistance overhead. The point is that while the bulls woke up Wednesday, none of the major indices have broken the downtrend yet. With that backdrop, the morning news, especially Jobless Claims, are likely to drive early action today.

Remember you don’t have to trade every day and that the Trend is your friend. Manage your existing trades before you chase any new ones. Focus on the process and on managing the things you can control. Don’t worry about the things you can’t control. Discipline and good trading rules are what separates trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.

Ed

Swing Trade Ideas for your consideration and watchlist: IGT, CTRM, CSCO, PLAN, F, PLTR, FSM, INTC, DVN. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

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

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

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

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

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

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Inflation Brings Out the Bears

Inflation

A reduction of one-tenth of one percent was not enough to convince the bears to go back to sleep as the CPI reported a 5.3% rate of inflation.  The DIA and IWM failed their 50-day averages, and the SPY closed the day, hovering less than half of one percent above its 50-day.  With the Industrial Production expected to decline today, could it continue to inspire the bears?  Maybe but I suspect a choppy day of price action as we wait for the Jobless Claims and Retail Sales numbers coming before the open Thursday. 

Overnight Asian markets tumbled after China’s retail sales data came in at 2.5% rather than the expected 7% growth estimate.  European markets trade mixed but mostly lower this morning in reaction to the China data and U.S. inflation.  However, once again, here in the U.S., futures currently point to a bullish open. So will it be another pop and drop, or will the bulls dig in and defend a day before our reading on Retail Sales?

Economic Calendar

Earnings Calendar

We have a very light day on the earnings calendar with just eight companies listed.  Notable reports include JKS and WEBR.

News & Technicals’

According to a projection by NBC news, Governor Newsom survived the recall vote and will retain his office.  Apple shares slid lower yesterday during its announcement of new product upgrades though the company expects a super cycle of device upgrades by consumers.  North Korea launched another ballistic missile off its east coast as the Chinese Foreign Minister visited Seoul.  Japanese Prime Minister said the missile launch is simply outrageous and is a threat to the peace and security of the region.  SEC Chair Gary Gensler said they are working overtime to create a set of rules to oversee the volatile cryptocurrency markets.  U.S. treasuries trade mixed Wednesday morning, with the 10-year rising to 1.28% and the 30-year declining to 1.845%. 

Though the CPI said that inflation had moderated by one-tenth of a percent in August, the bears engaged after gapping up at the open.  The DIA suffered the worst of the technical damage failing at its 50-day average and confirming a lower low.  The worries of inflation also pushed the IWM back below its 50-day, missing its 200-day by less than half of one percent.  The SPY closed the day within striking distance of its 50-day average should the bears find some additional energy today.  Amazingly big tech held up very well amidst the selling, and the VIX indicated no elevation in fear.  Watch the Industrial Production at 9:15 AM eastern is expected to decline slightly, but if it were to miss the estimate, it could serve as another stumbling block today.  As you plan forward, remember we have Retail Sales numbers on Thursday along with Jobless Claims before the open, adding to the newsy intrigue of this week.

Trade Wisely,

Doug