Holiday week trading is typically challenging due to the rapid decline in volume as traders shut down for travel. However, this week could be different with all the news hype about the beginning of a Santa Claus rally and an economic calendar full of market-moving data. Then don’t forget the possible market volatility that could happen should Biden change with the Fed Chair! With so much data coming our way, expect significant price volatility even as we pump the tech giants to new records and incredible P/E ratios. Remember to take some profits along the way.
Asian markets traded mixed overnight after the central bank kept loan rates steady. European markets trade mixed and flat this morning due to rising pandemic restrictions and protests that have erupted as a result. We don’t seem to have the same concerns with the U.S. futures, pointing to a bullish open that includes fresh new records as the tech giants continue to surge higher.
Economic Calendar
Earnings Calendar
We have 36 companies listed on the earnings calendar to kick off the shortened holiday week, with several unconfirmed. Notable reports include A, ARWR, IBEX, KEYS, NIU, URBN, & ZM.
News & Technicals’
The People’s Bank of China deleted several phrases in its latest monetary policy report, a move that economists say signals a shift toward easier policy. Despite signs of a growing slowdown in the economy, the phrases had signaled a level of restraint in central bank policy. However, the PBoC maintained a tough stance on the property market, which has struggled in the wake of Beijing’s crackdown on real estate developers’ high debt levels. In addition, Illinois legislators agreed to spend up to $694 million over the next five years to keep a handful of nuclear power plants open. The operator of the plants, Exelon, said they were losing hundreds of millions of dollars and that nuclear can’t compete with cheap natural gas and subsidized wind and solar. Critics say that Exelon had the state over a barrel and that longer-term solutions are necessary to make clean energy cheaper and more accessible. Protests against fresh Covid restrictions have continued to rock Europe over the weekend. There were demonstrations in Vienna, Brussels, and Amsterdam against new Covid rules. In addition, new coronavirus cases continue to surge across the continent. Treasury yields rose in early Monday trading, with the 10-year climbing to 1.5583% and the 30-year advancing to 1.9107% as we wait on the Biden Fed Chair appointment.
Holiday trading is always a hit-and-miss scenario when it comes to volume. That said, the news has laid it on thick over the weekend that we have the perfect setup for the so-called Santa Clause Rally to begin. Now toss in possible uncertainty with a Fed Chair appointment, inflation data, and Durable goods, GDP, and Personal incomes combined with likely declining volume throughout the shortened week, and anything is possible! However, the weekend hype seems to be working with the future, suggesting nothing but blue skies as we continue to extend the tech giants to phenomenal P/E ratios. So stay with the trend, but please remember to take some profits along the way just in case a scare or two comes along that engages the bears and price volatility.
We saw a divergence on Friday. The SPY opened flat and then meandered sideways all day, leaving a black-bodied indecisive candle with a larger upper wick. The DIA gapped down, sold off for half an hour and then meandered sideways the rest of the day, leaving a large black-bodied candle. However, the QQQ gapped higher at the open and rallied for half an hour before doing the same sideways meander the rest of the day. This left it as a white-bodied Spinning Top candle. On the day, QQQ gained 0.56%, SPY lost 0.18%, and DIA lost 0.96%. The VXX rose to 20.96 and T2122 dropped into the oversold territory at 16.43. 10-year bond yields fell significantly to 1.541% and Oil (WTI) was down over 4% before closing down 3.67% at $76.11/barrel (a 6-week low).
After the close Friday, F and RIVN announced they are canceling plans to co-develop an electric vehicle. F still retains a 12% ownership stake in RIVN. The CEO of F (Jim Farley) referenced “growing confidence” that F can “win in the electric space” by itself as part of the reasoning for the announcement.
Protests against Covid rules, lockdowns, and vaccination requirements broke out across Europe over the weekend. As cases have reached all-time highs (by a considerable margin) in places like Germany and Austria and cases are rising in France, Italy, UK, etc. Going into Winter, this could be a very bad situation for that region and its economy…and by extension, the US and Asia.
Overnight, Asian markets were mixed. South Korea (+1.42%) and Shenzhen (+1.41%) led to the upside, while India (-1.96%) paced the losses. However, outside of those 3 exchanges, most moves in the region were modest. In Europe, markets are mostly red at mid-day. The FTSE (flat), DAX (-0.06%), and CAC (-0.12%) are fairly indicative of the region in early afternoon trading with the exception of Russia (-2.75%) which continues to get hammered on the recent fall in oil prices. As of 7:45 am, US Futures are pointing toward a green open. The DIA is implying a +0.25% open, the SPY implies a +0.29% open and the QQQ implies a +0.40% open.
The major economic news scheduled for release Monday is limited to Oct. Existing Home Sales (10 am). Major earnings reports scheduled for the day are limited to AVYA before the open. Then after the close, A, KEYS, URBN, and ZM report.
Sorry for the delay this morning. A lack of sleep the last 3 days has caught up with me. Remember this is a short week for the market. Expect light volume, especially as the week wears on as traders look to extend the holiday or get an early jump on Travel.
So, watch your current positions before looking to add any new trades. Consider how you want to enter the weekend news cycle (and potential low-volume week ahead) and if there is any profit-taking or hedging to get done. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.
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.
🎯 DickCarp: 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.
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 mightly shove in the tech giants got the job done for new records in the QQQ and SPY while at the same time, the number of stocks falling below their 50 and 200-day moving averages grew. That’s awesome, but it also begs the question, what happens if big tech buying reaches an exhaustion point? With parts of Europe re-entering pandemic lockdowns, very little earings inspiration, and only Fed speak on the economic calendar, price action could become very choppy if the bears remain lethargic. In addition, next week, heading into the Thanksgiving holiday, may see declining volumes as travel picks up, so plan your risk carefully.
Asian markets close trading mostly higher, with Hong Kong shedding 1.07% after disappointing results from Alibaba. European markets see nothing but red this morning as sentiment declines due to more pandemic lockdowns and restrictions grow. Finally, with a very light day on the earnings and economic calendar, U.S. futures suggest a mixed open industrial’s declining sharply while the tech sector continues to surge.
Economic Calendar
Earnings Calendar
Our Friday earnings calendar is very light, with just nine confirmed reports. Notable reports include BKE & FL.
New & Technicals
Democrats moved toward a vote on President Joe Biden’s social safety net and climate plan. A Congressional Budget Office estimate said the Build Back Better Act would add $367 billion to budget deficits over a decade but did not account in the topline for revenue raised by increased IRS enforcement of tax laws. Five Democratic holdouts wanted to see a CBO score before they voted for the bill. If the House passes the legislation, the Senate will likely approve a different version of it. Thursday evening President Biden suspends enforcement of business vaccine mandate due to court mandate and escalating legal challenges companies and states. Austria announced this morning they would re-enter a total national lockdown while Germany added more restrictions on Thursday. Treasury yields declined in early Friday trading, with the 10-year dipping to 1.5565% and 30-year falling to 1.9405%.
With a mightly shove by the tech giants, the Nasdaq closed at a new record high, and the SP-500 squeaked out a new closing high in the process. Unfortuntually, at the same time, the number of stocks slipping below their 50 and 200-day averages grew. With parts of Europe re-entering Covid lockdowns, futures that were bullish during the night have taken a bearish turn. With little on the earnings calendar to provide inspiration and nothing but Fed speak on the economic calendar, it could be an interesting day if the bears start to show some interest. If the bulls find the energy to defend, I would expect a choppy price action day as we slide into the weekend. Keep in mind as you plan forward that next week, we could see light volumes as traders get some post-Covid restriction family time travel for Thanksgiving.
Markets gapped up a bit on Thursday and then put in a choppy day. A mid-afternoon rally took s to the highs, but we backed off the last few minutes. It is worth noting that the DIA diverged from SPY and QQQ as CSCO and KD (formerly IBM) had outsized moves to the downside. This action gave us a black hammer candle in the DIA, a strong white candle with a lower wick in the QQQ (also closing at a new all-time high close), and a white hammer-type candle in the SPY (also closing at a new all-time high close). On the day, SPY gained 0.34%, QQQ gained 1.03%, and DIA lost 0.13%. The VXX gained almost a percent to 20.71 and T2122 fell to 26.09. 10-year bond yields fell just slightly to 1.584% and Oil (WTI) rose slightly to $78.67/barrel.
After the close ROST continued the strong retail earnings and WDAY and INTU kept the trend going as all 3 posted beats on both the revenue and earnings lines. However, AMAT missed on both lines, which was an interesting result in the red-hot semiconductor business. This morning FL beat on both lines but said it expects supply chain issues to impact Q4 and is suffering in premarket as a result.
Despite the strong earnings in retail, rationalization continues. CVS, which had a blowout quarter announced Thursday that it will be closing 900 of its 10,000 US stores as it shifts to slightly more of an online-focused business model. M also blew away estimates for the quarter. However, they too said they will close 10 stores in January and are still considering the timing of the closure of 60 more stores (which were part of the previously announced 125 store closures planned by 2023). Again, M said they are focusing on a stronger “digital presence.”
In government news, the House is scheduled to vote on the President’s Social Spending (and budget) bill today. Republican wrangling to slow the vote appears to not have worked. However, even if passed, the bill would then go to the Senate, which does not plan to even start considering the bill until after the Thanksgiving break. Another potential shoe to fall is the nomination of the next Fed Chair. President Biden has said it will be announced as soon as today, but in the next few days at least. While the renomination of Chair Powell continues to be the betting favorite, a second possibility is Fed Governor Lael Brainard. CNBC analysts predict markets would move quickly (in a bullish way) if Brainard were nominated because she is a noted dove (and thus likely to be slower on the tapering and slower to raise rates).
Overnight, Asian markets were mixed again with a wide spread of results. Indonesia (+1.26%), Shenzhen (+1.19%), and Shanghai (+1.13%) paced the gainers, but the green was widespread among the major exchanges in the region. Meanwhile, Hong Kong (-1.07%) was the biggest loser by a third of a percent due to follow-through after BABA’s terrible report on Thursday. In Europe, markets are red almost across the board as a resurgence of Covid-19 has forced more mitigation measures, including lockdowns for the unvaccinated in Germany and a full lockdown in neighboring Austria. Even after the ECB’s President Lagarde said that any rate hike in 2022 is not in the cards, did not help. The FTSE (-0.60%), DAX (-0.18%), and CAC (-0.73%) are typical of the continent, with only two minor and barely green exchanges at mid-day. As of 7:30 am, US Futures are pointing toward a mixed open. The DIA is implying a -0.58% open, the SPY implies a -0.26% open, and the QQQ implies a +0.36% open at this hour.
The major economic news scheduled for release Friday is limited to Oct. Building Permits (8:30 am) and a couple of Fed speakers (Waller at 10:45 am and Clarida at 12:15 pm). However, remember that this is options expiration Friday. So, be wary of volatility and pinning, especially in the afternoon. Major earnings reports scheduled for the day are limited to FL before the open. There are no earnings reports scheduled for after the close.
The bullish trend continues, especially in the QQQ and to a lesser extent SPY, both of which sit at all-time highs. However, there is a notable divergence by the mega-cap DIA (which to be fair is only 1.5% from its own all-time high). In particular, CVX is pulling the DIA down hard in premarkets as Oil (WTI) is continuing its very recent cliff-fall (down another 3.5% in early trading).
Remember that it’s Friday and next week is a short week for the market. So, watch your current positions before looking to add any new trades. Consider how you want to enter the weekend news cycle (and potential low-volume week ahead) and if there is any profit-taking or hedging to get done. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.
Ed
Swing Trade Ideas for your consideration and watchlist: PLUG, VXX, NOK, FCEL, MSFT, AAPL, CVS. 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.
🎯 DickCarp: 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.
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
Though the Dow continued to pull back yesterday, the bulls held strong defending recent lows and prevented a lower low’s technical damage. Though the S&P is now suggesting that Evergrande is likely to default is suspect we will ignore the possible U.S. impacts in favor of new record highs in the Nasdaq and SP-500. However, this push higher seems to be struggling with momentum, so make sure you have a plan if the tide starts to go out.
Overnight Asian markets were mostly lower, led by tech shares and developer concerns, as Hong Kong fell 1.29%. European markets trade flat and mixed, worrying about the implications of the slipping consumer sentiment due to inflation impacts. However, U.S. futures don’t appear to have any concerns pointing to a bullish open and possible new record high.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have 35 companies listed with a few unconfirmed. Notable reports include BABA, AMAT, ATKR, AHM, BECN, BRBR, BJ, CAL, CSIQ, FTCH, HP, INTU, JD, KSS, M, NUAN, PANW, WOOF, POST, ROST, VIPS, WWD, & WDAY.
News & Technicals’
Saule Omarova, President Joe Biden’s choice to lead one of the nation’s top bank regulators, is set for a fiery nomination hearing. While Republicans have warned against recommending a candidate whose academic work calls to “end banking as we know it,” skepticism has also come from a Democrat, Sen. Jon Tester. Just one Democratic defection on a committee vote to recommend her to the broader Senate would likely end her nomination to head the Office of the Comptroller of the Currency. “I know that difference between the job of an academic … and the job of a regulator, which is very circumscribed,” Omarova said in an interview Tuesday. N26′s American customers will no longer be able to use its app from Jan. 11, 2022. The Berlin-based fintech said the move aimed at shifting focus to its core European business. It’s a reminder of how difficult it has been for European fintech to expand its services in the U.S. Evergrande default is highly likely, according to the S&P. “We still believe an Evergrande default is highly likely,” S&P Global Rating analysts said in a report Thursday. The firm has lost the capacity to sell new homes, which means its main business model is effectively defunct,” the report said. Treasury Yields pulled back slightly yesterday and continued to relax in early Thursday trading. The 10-year declined to 1.5838%, and the 30-year fell to 1.9713%.
Though we pulled back in Dow, creating lower high patterns, the bulls held strong preventing a lower low from occurring and avoiding technical damage. Unfortunately, the Russell was not so lucky with the price creating a lower low while holding substantial price support and the bullish trend. Though there may be some reason for uncertainty in the industrials, the tech sector continues to surge within striking distance of a new record high and lifting the SP-500 as well. That said, overall market momentum is slowing as inflation impacts curtail consumer activities. With jobless claims and manufacturing data on the horizon, the bulls are back on the job in the premarket.
Stocks opened flat Wednesday and then meandered sideways with a slight bearish lean the rest of the day. This left us with a Bearish Harami Spinning Top in the SPY, a black follow-through (from the prior day’s Gravestone Doji) candle in the DIA, and a Doji in the QQQ. On the day, SPY lost 0.25%, DIA lost 0.57%, and QQQ gained 0.05%. The VXX gained 1.63% to 20.52 and T2122 fell to 31.91. 10-year bond yields fell to 1.587% and Oil (WTI) dropped 3.37% to $78.04/barrel.
As noted, Oil dropped hard on Wednesday. The primary reasons for this were concerns about oversupply expressed in reports from the Intl. Energy Agency and OPEC. Both organizations cited concerns over the reemergence of Covid in Europe. Not cited, but certainly looming, was the major pressure President Biden has been placed under to release oil from the US strategic reserve. At any rate, contrary to the concerns about oversupply, US Oil inventories fell 2.1 million barrels last week versus an analyst consensus expectation of an increase of 1.4 million barrels.
After hours, NVDA crushed earnings, easily beating the consensus forecast on both lines. The company reported an unexpected 55% growth in data center sales as the advent of Artificial Intelligence (which uses specialty cards NVDA makes) grows across the business world. In earnings news from this morning, retail continues to post strong earnings as M, KSS, JD, and BJ all handily beat on both lines of their reports. However, BABA missed on both lines, a victim of the Chinese government crackdown on their domestic online industry.
Bloomberg reports that JPM economists are now predicting the Fed will make its first interest rate hike in September 2022. Their report says the economy has changed in fundamental ways since the last time the Fed said outright it did not expect a rate hike until at least 2023. The author (Michael Feroli) says that the FOMC’s goal of full employment will be reached by the middle of 2022 and the bond-buying taper should be complete by June. At that point, according to Feroli, the Fed will have no choice but to raise rates in order to fight inflation. Among the other big bank economists, GS recently said they expect the first rate hike in July, but MS economists still expect rates to remain unchanged throughout all of 2022.
Overnight, Asian markets were mostly red. Hong Kong (-1.29%), Shenzhen (-0.90%), and India (-0.75%) paced the losses. Taiwan (+0.44%) and Thailand (+0.39%) were the only appreciable winners in the region Thursday. In Europe, markets are also mostly in the red at mid-day. The FTSE (-0.18%), DAX (+0.06%), and CAC (+0.08%) are the big dogs in the region, but many of the smaller exchanges are further south (such as Portugal -0.86%, Norway -0.76%, and Finland -0.69%) in early afternoon trading. As of 7:30 am, US Futures are pointing toward a green open. The DIA is implying a +0.10% open, the SPY implies a +0.25% open, and the QQQ is implying a +0.51% open at this hour.
The major economic news scheduled for release Thursday is limited to Weekly Initial Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am) as well as 3 Fed speakers (Bostic at 7:30 am, Williams at 9:30 am, and Daly at 3:30 pm). Major earnings reports scheduled for the day include BABA, BERY, BJ, CSIQ, PLCE, AVAL, JD, KSS, M, MMS, WOOF, and VIPS before the open. Then after the close, AMAT, BECN, CAL, FTCH, INTU, PANW, POST, ROST, UGI, WSM, WWD, and WDAY report.
With strong retail industry earnings continuing (signaling there is no let-up in spending by the consumer), the bulls have plenty of energy to help them run again this morning. Premarket prices are looking to challenge the all-time highs in the SPY and QQQ at the open, with the DIA lagging. Both the short and long-term trends are bullish in the SPY and QQQ and the short-term pullback continues in the DIA. However, that DIA longer-term trend remains bullish and even those mega-caps sit near all-time highs.
Watch your current positions before looking to add any new trades. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.
Ed
Swing Trade Ideas for your consideration and watchlist: M, BBWI, AMD, LAC, MU. 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.
🎯 DickCarp: 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.
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
Although the tech enjoyed sustained buying yesterday, bullish momentum struggled with the Dow giving back most of its gains to leave behind an uncertain shooting star pattern. So the question for today can retail continue to inspire enough bullish momentum to keep the indexes rising? The rising dollar and increasing bond yields might signal a risk-off scenario, so keep a close eye on them if they continue marching higher.
Overnight Asian markets closed the day mostly lower, with only China posting a modest gain of 0.44%. European markets appear to have a more bullish outlook, but current gains hover near the flatline as they wait on earnings results. U.S. futures point to a flat to mixed open ahead of retail earnings and housing data.
Economic Calendar
Earnings Calendar
We have 44 companies listed on the earnings calendar with another day of focus on retail. Notable reports include TGT, NVDA, CRMT, BIDU, BBWI, BILI, CSCO, DSX, HI, IQ, LOW, MTOR, MBT, QUIK, SCVL, SONO, TTEK, TJX, UTI, VSCO, VINP, VTRU, XIM, ZTO.
News & Technicals’
Lowe’s beat expectations for fiscal third-quarter earnings, as it got a boost from online sales and business from home professionals. Despite analysts predicting a decline, the home improvement retailer’s same-store sales rose by 2.2% in the three months. In addition, CEO Marvin Ellison said sales to home pros, such as electricians and contractors, rose 16% in the third quarter. Amazon has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain. The e-commerce giant cited high fees charged by the payment processor. Visa said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.” The U.S. Justice Department will sell off $56 million worth of cryptocurrency it seized as part of a massive Ponzi scheme case against a man who promoted the crypto lending program BitConnect. The BitConnect scam has swindled thousands of people in the U.S. and abroad out of more than $2 billion worth of bitcoin. In September, the Securities and Exchange Commission sued BitConnect, its founder Satish Kumbhani and Glenn Arcaro, who was the lead promoter of BitConnect in the United States. Treasury yields dip just slightly in early Wednesday, with the 10-year trading at 1.625% and the 30-year edging lower to 2.0157%.
Substantial retail numbers brought out the bulls on Tuesday but curiously, the momentum struggled to stay on course into the close. While tech faired much better, the Dow gave up most of the day’s gains leaving behind the uncertainty of a shooting star pattern near price resistance. Perhaps the rising dollar with the ten, twenty, and thirty-year bonds rising are beginning to show signs of risk-off that I mentioned yesterday. However, with another round of retail with LOW and TGT this morning followed by results from NVDA after the bell, the bulls can reignite momentum. That said, I still believe it wise to wise to watch closely for a possible pullback to test support levels.
Markets opened flat Tuesday and rallied slowly until 2 pm on strong economic news. At that point, they slowly sold off into the close. This left us with Bullish Engulfing candles in the SPY and QQQ, both with upper wicks, and a Gravestone Doji-type candle in the DIA. On the day, SPY gained 0.39%, DIA gained 0.19%, and QQQ gained 0.73%. The VXX gained slightly to 20.19 and T2122 remains in the mid-range at 59.66. 10-year bond yields rose again to 1.644% and Oil (WTI) was flat at $80.78/barrel.
As mentioned, before the open, October Retail Sales and Exports came in much stronger than expected. Industrial Production also came in strong with only a slightly higher than expected increase in September Business Inventories. Socks rallied on this news. In related news, the retail sector got off to a good start on Q3 earnings as HD and WMT (both before the open) and then LZB (after close) all easily beat on both the revenue and earnings lines. The good news in retail reports has continued this morning with easy beats on both lines from BIDU, LOW, TGT, and TJX so far. (TGT beat revenue estimates by $2 billion for Q3.) LOW has also increased estimates for Q4 after posting 2.2% same-store sales growth (analysts had expected a 1.4% decline). The story seems to be that the consumer is in a “buy, buy, buy” mode.
During the day Tuesday, the electric vehicle industry made news as recent listing LCID passed F and GM in market capitalization. This resulted from a gain of almost 24% on the day. (LCID went public through a reverse merger and the stock has been parabolic since mid-October.) While not as ridiculously high as TSLA (over $1.2 trillion), the $89 billion market value tops rival NIO ($71 billion). LCID announced Monday evening a sizable increase in purchase reservations (17,000 now vs. 13,000 in Q3). They also announced it has a 20,000-vehicle production target for 2022, which would amount to approximately $2.2 billion in revenue.
Tuesday evening Treasury Sec. Yellen sent a letter to Speaker of the House Pelosi saying that she now estimates the US will hit its debt limit on Dec. 15. This is nearly two weeks later than the forecast made in October (Dec. 3), when the decision to suspend the debt ceiling was pushed back to December. The reason cited for the change of date is that the $1 trillion Infrastructure Law has funded some programs at a lower level than originally expected and slightly reduced spending. The increase in the debt limit has been tied to President Biden’s (and Democrats) Social Spending bill. The House is expected to vote on the Social Spending Bill this week and the Senate will take up the bill after returning from the Thanksgiving recess (about Nov. 29).
Overnight, Asian markets were mixed. South Korea (-1.16%) was an outlier as Australia (-0.68%), India (-0.56%), and Japan (-0.40%) were really the leaders to the downside. Meanwhile, Shenzhen (+0.67%), Shanghai (+0.44%), and Taiwan (+0.40%) led to the upside. In Europe, markets are also mixed, but on smaller moves as of mid-day. The FTSE (-0.33%), DAX (+0.12%), and CAC (+0.07%) are typical of the continent in early afternoon trading. As of 7:30 am, US Futures are pointing toward a mixed and flat open. The DIA is implying a -0.06% open, the SPY is implying an unchanged open, and the QQQ implies a +0.14% open at this hour. 10-year bond rates are unchanged and Oil (WTI) is down seven-tenths of a percent in early trading.
The major economic news scheduled for release Wednesday includes Oct. Building Permits and Oct. Housing Starts (both at 8:30 am), Crude Oil Inventories (10:30 am), and a slew of Fed speakers (Williams at 9:10 am, Bowman at 11 am, Waller at 12:40 pm, Daly at 12:40 pm, and Bostic at 4:10 pm). Major earnings reports scheduled for the day include BIDU, BILI, BV, IQ, LOW, MTOR, TGT, TJX, and ZIM before the open. Then after the close, BBWI, CSCO, CPRT, HI, YY, NVDA, TTEK, VSCO, and ZTO report.
Mortgage rates have continued to spike in the last week and as a result, refinance demand was down again, this time down 5% on the week. The less rate-sensitive new home purchase mortgage applications rose 2% week-on-week. Still, the great earnings out of the Retail Industry is likely to be the driver for markets early. Remember that the short-term trend is now bullish in the SPY and QQQ and the pullback trend is being challenged in the DIA. However, that longer-term strong bullish trend remains in place and we sit near all-time highs.
Watch your current positions before looking to add any new trades. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.
Ed
Swing Trade Ideas for your consideration and watchlist: RMO, PLUG, NCTY, AEM, BA, CHPT. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
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With the uncertainty of retail sales numbers out this morning, the market struggled to find direction yesterday. The pop and drop pattern left behind would raise the possibility of a lower high at resistance if the bears were to happen to find some inspiration. However, with analysts suggesting a solid retail sales number is likely yesterday may prove only to be a rest before stretching to new highs. That said, anything is possible, and with earnings, inspiration to fuel the bulls market momentum could suffer.
Asian markets traded mixed during the night as the investors reacted to Biden-Xi talks with China selling slightly and Hong Kong surged higher. Across the pond, European markets sport modest gains across the board. U.S. futures began the morning in the red, but the bulls went to work pumping the premarket, which has become all too typical of late. Of course, anything is possible with the dollar showing strength, so buckle up the ride is about to begin.
Economic Calendar
Earnings Calendar
We have a much lighter day on the earnings calendar with just 44 companies listed, and several are unconfirmed. Notable reports include HD, ARMK, DLB, DAVA, AQUA, JMIA, LZB, NTES, SE, SBLK, STNE, TDG, VREX, WMT, ZENV, ZEPP.
News & Technicals’
October retail sales are expected to increase by 1.5%, boosted by early holiday shopping and higher gasoline prices. Economists say the report will be essential to examine whether consumers are willing to spend, even as sentiment has weakened. In addition, the report should show that the effects of the Covid delta variant are fading, as parts of the economy are rebounding. Home Depot topped Wall Street’s estimates for its third-quarter earnings and revenue. Consumers were spending more when they visited, raising the average ticket by 12.9% to $82.38. President Joe Biden signed the more than $1 trillion bipartisan infrastructure plan into law Monday. The plan will put $550 billion in new money into transportation, broadband, and utilities. In addition, Biden made a case for Democrats’ $1.75 trillion proposals to invest in the social safety net and climate policy. Finally, Tesla CEO Elon Musk faces a potential tax bill of more than $10 billion on stock options granted in 2012. Musk started exercising the options Monday, exercising $2.5 billion in shares and selling $1.1 billion of those exercised options to pay the taxes. But he continued to sell the additional stock, and it’s likely those sales were unrelated to the stock option exercises he must complete by August. This means future stock sales are likely. Treasury yield fell in early Tuesday trading, with the 10-year slipping to 1.6094% and the 30 pulling back to 1.9790%.
The indexes struggled for direction yesterday, challenged by overhead resistance and facing the uncertainty of retail sales figures coming out before the bell this morning. We will also hear from HD and WMT before the bell, the only likely market-moving earnings reports today. Yesterday’s pop and drop in all four indexes set up possible lower highs, but with economists suggesting a solid retail sales number, it could be nothing more than a rest before reaching out for more new records. However, with the decline in earnings inspiration and seeing a rising dollar, there is a concern of fading momentum and a possible risk-off scenario forming. As a result, a noticeable shift of energy into traditional defensive sector stocks, hinting at a possible rotation toward safety. Stay with the overall trend but never forget how elevated this market has become. A longer-term consolidation or a pullback is not out of the question, so have a plan to protect your capital because it can begin with breakneck speed!
The worst consumer sentiment reading in more than ten years didn’t dissuade the bulls at all as they worked a nice Friday rally. Retail will be in focus this week, with earnings from WMT, TGT, and HD, as well as last month’s retail sales figures coming our way Tuesday morning. It will be interesting to see if inflation and supply chain issues hampered the early holiday sales events. With consumer debt hitting record highs, my guess is no, but we will soon find out. Although the indexes remain very elevated, stay with the trend because the bulls seem to have no inflation concerns and want the party to continue.
Overnight Asian markets closed with modest gains through China fell slightly even as their retail sales topped expectations. European markets currently trade with modest gains and losses, as if searching for inspiration. However, U.S. futures point to a bullish open, with the Dow suggesting a 100 point gap. Nevertheless, with new price resistance above, don’t rule out the possibility of a lower high or even a pop and drop pattern to occur if the bears find a reason to fight.
Economic Calendar
Earnings Calendar
We have a busy day on the Monday earnings calendar with nearly 300 companies listed, but many of them unconfirmed. Notable reports include AAP, AND, AXON, SCPR, IBIO, JJSF, LCID, MGIC, OTLY, PLBY, RXT, STAF, COOK, TSN, WMG, STAF, COOK, TSN, WMG, XSPA.
News & Technicals’
Consumers will be a big focus for markets in the week ahead, with government retail sales data Tuesday and earnings from Walmart, Target, and Home Depot, among others. In addition, investors are watching the meeting between President Joe Biden and China President Xi Jinping Monday night for signs of any warming of relations on trade and other issues. According to contracts signed by four states, Apple requires states to maintain the systems needed to issue and service credentials at taxpayer expense. The agreement, obtained through public record requests from CNBC and other sources, mainly portrays Apple as having a high degree of control over the government agencies responsible for issuing identification cards. Apple has “sole discretion” for critical aspects of the program. Last week, the European Commission, the executive arm of the EU, projected a GDP rise of 5% for both the EU and the euro area this year. Some EU nations have started to see a high number of Covid-19 infections recently, mainly in countries where vaccination rates are still relatively low. Austria and the Netherlands have imposed new social restrictions in the last few days. Treasury yields look lower this morning, with the 10-year falling to 1.546% and the 30-year dipping to 1.9232% in early morning trading.
The indexes enjoyed a Friday rally choosing to ignore the worst consumer sentiment reading in more than ten years. However, the VIX declined, and big tech rallied strongly to end a volatile week of price action. This week we have a big focus on retail with earnings from WMT, TGT, and HD with a reading on Retail Sales figures Tuesday morning. The SP-500 P/E Ratio eased slightly with last week’s selling but remained strongly overvalued at 98% above the historical average. The Buffett Indicator is a whopping 215% market value ratio to GDP, holding 72% above the historical average. That said, the bulls seem to have no concern with the premarket activity working to inspire prices higher. So stay with the trend and enjoy the party as long as it lasts!
