Last week’s bounce substantially improved the technical picture in the DIA and SPY. However, the bulls still have a lot of work to clear overhead resistance levels in the QQQ and IWM. With a busy week of earnings and economic data, anything is possible, but possible traders will have to stay focused and flexible with big price swings. Buying the dip works only if the market moves higher. Remember, the market will top at some point in time, and buying the dip will prove painful. Plan your risk carefully and keep in mind gap up opens near resistance levels can run into entrenched bears. Be careful not to chase.
Asian markets opened the week mixed with modest gains and losses by the close of the session. European markets trade with modest gains this morning, starting the week with a modicum of caution., The U.S. futures point to bullish open with a light day of earnings and economic data as bulls try to inspire enough buying to break through resistance levels. Volatility is likely to remain high and watch for the possible a pop and drop near resistance.
Economic Calendar
Earnings Calendar
We start the week off with 38 companies listed on the earnings calendar with several unconfirmed. Notable reports include API, CRMT, XOG, & NDSN.
News & Technicals’
We have a pretty busy week on the earnings calendar this week, along with housing numbers, durable goods, GDP, and Personal Income to keep traders busy as we wrap up May. As you plan forward, remember that following Monday, the market is closed for Memorial Day. Bitcoin continues its wild fluctuations dropping to 32,000 but trying to start the week positive this morning. Treasury yields are drifting lower this morning, with the 10-year slipping to 1.617% and the 30-year dipping to 2.315%. The Nobel prize-winning economist Robert Shiller believes there is a bubble forming. He says he’s most worried about housing, crypto’s, and stocks calling it a “wild west” mentality among investors.
Last week’s relief rally substantially improved the indexes’ technical picture, but there are still questions to be answered. Rallying to reclaim support levels and break downtrends is the first step, and now we need some proof the bulls can hold them as support. Substantial overhead resistance still exists in the QQQ and IWM. In last week’s bounce, the T2122 indicator moved near overbought levels, and with the futures pointing to a bullish open, we should watch for the potential of a pop and drop pattern. The VIX closed on Friday just above a 20 handle, holding above its 50-day average and price support. So though the technical picture has improved, there are still questions to be answered. I would not rule out the possibility of a rally to end the week that could even make new record highs. However, we can also not rule out the possibility that the bears could defend resistance highs. Stay focused and avoid chasing with the fear of missing out.
Markets gapped higher at the open on Friday, but then traded slowly lower all day, closing near the lows in the SPY and QQQ. The DIA closed as an indecisive Doji candle. On the day, SPY was flat (-0.08%), DIA was just positive (+0.15%), and QQQ was down 0.55%. The VXX fell to 39.48 and T2122 rose up to just outside the overbought territory at 77.19. 10-year bond yields were down slightly to 1.623% and Oil (WTI) shot up 3.13% to $63.88/barrel. Bitcoin ended a tumultuous week on a major down leg, losing 10.26% on the day as China’s State Council concluded they should crack down on bitcoin mining.
After the close Friday, FOMC voter and San Francisco Fed Pres. Daly told Bloomberg that she expects the temporary factors that are leading to inflation “will persist the rest of this year, but will start to roll off at the beginning of next year.” She went on to say that Fed policy is in a good place right now and that policy makers need to be patient and not start tightening too soon. However, on Sunday Bloomberg also reported that the Chinese government is now decreasing infrastructure spending in a bid to reduce the commodity price bubble caused, in-part, by their massive expansion over the last 6-7 months. The report said this did not spell disaster for commodity bulls, since the US expansion is taking up slack with its larger stimulus plans. However, they did say that industrial metals cycles tend to coincide with China’s credit cycle. Which could mean good news in months to come for business input costs (reduced inflation)..
On Saturday, CNBC reported that for the first time in 25 years the ratio of worker pay to corporate profits has started to budge. In other words, the massive layoffs from the global pandemic have caused a situation where companies need to compete for labor in a way not seen since the 1990s. As a result, worker pay grew 3% in the first quarter. However, according to analytics from MCO, the ratio of compensation to profits still remains at the level of the late 1960s. That said, MCD, UA, BAC, and CMG are among the companies saying they will raise wages on average (sometime over the next several years). MCO says this will not impact corporate profitability in the short-term, but if the trend continues it could have an effect in 2023 or 2024.
Related to the virus, new US infections continue to fall. The totals rose to 33,896,660 confirmed cases and deaths are now at 604,087. However, the number of new cases is falling again and are back down to an average of 25,083 new cases per day (the lowest number since June). Deaths are still plateauing or falling more slowly, but are now down to 553 per day (the lowest number since July 2020). The CDC announced that 25 states have now vaccinated at least half of their adult population. This comes as 61% of the adult population has received at least one shot and almost 50% of adults are fully vaccinated.
Globally, the numbers rose to 167,589,687 confirmed cases and the confirmed deaths are now at 3,479,788 deaths. The trends are better again as we have seen a slowing in the rate of increase now that India has passed its peaked. The world’s average new cases are falling quickly now, but remain at 592,614 new cases per day. Mortality, which lags, is also falling, but remains at 12,088 new deaths per day. The Japanese government is decrying a slow uptake in vaccination, even in the main cities planned to host the summer Olympics. Less than 2% of the population is vaccinated and even Tokyo is seeing less than a third of the number of daily vaccinations the government has deemed necessary.
Asian markets were mixed overnight on modest moves, but leaned slightly to the green side. Shenzhen (+0.62%) led to the upside and South Korea (-0.38%) led to the down side. In Europe we see a similar story taking shape as of mid-day. All 3 of the large exchanges are in the green so far, but most of the smaller exchanges are on the red side. The FTSE (+0.18%), DAX (+0.44%), and CAC (+0.02%) are all slightly green at this point in their day. As of 7:45 am, US Futures are all in the green. The DIA is implying a +0.28% open, the SPY implying a +0.43% open, and the QQQ implying a +0.62% open. Oil is higher in premarket by 1.40%.
The major economic news scheduled for Monday is limited to two Fed speakers (Brainard at 9 am and Bostic at noon). There are no major earnings reports before the open. However, after the close NDSN reports.
Markets look to be opening inside the range of the last few days. The bulls seem to have the premarket momentum, but there are no new revelations driving the move. It remains a case of reopening expansion enthusiasm versus fear that overheating will cause the Fed to pump the breaks. With a very strong quarter of earnings just behind us and high expectations for strong profits in the current quarter, the bulls have the general momentum. However, there is resistance overhead and we are coming off one hell of a bull run. So, this is a “climbing the wall of worry” situation…meaning we seem to be later in the cycle.
As always, keep locking in your profits when you achieve your trade goals and maintain discipline by following your trading rules. Stick with the trend and respect support and resistance levels (but don’t just assume they will hold). Consistency is the key to long-term trading success. So, keep hitting singles and doubles rather than swinging for the fence.
Ed
Swing Trade Ideas for your consideration and watchlist: KHC, INSG, MARA, INTC, XHB, INO, SPCE, F, SRPT, DDD, RIOT. 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
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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
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
We all enjoy a nice relief rally but keep your eyes focused on the overhead price resistance levels because that will reveal if the bulls have what it takes to plow through bearish defenses. I wouldn’t expect smooth price action with the VIX holding a 20-handle and still above its 50-day average. Though the DIA and SPY hold bullish trends, the QQQ and IWM remain uncomfortably below significant resistance levels. Plan your risk carefully as we slide into the weekend.
Overnight Asian markets ended the week with a mixed and choppy session, with Taiwan surging 1.6%. European markets trade mixed with modest gains or losses as they wait on economic data. Ahead of PMI and Housing data, U.S. futures point to bullish open as bonds pull back slightly.
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have a lighter day of reports with just 14 companies listed. Notable reports include BAH, BKE, DE, DSX, FL, & VHC.
News & Technicals’
A nice relief rally began yesterday as the buy the dip traders satisfied their appetite, lifting tech and crypto. The U.S Treasury calls for stricter cryptocurrency compliance with IRS suggesting it poses tax evasion risk. Janet Yellen proposes a global minimum corporate tax rate of 15% and says discussions should continue to be ambitious to push the rate even higher. Israel and Hamas agree to a cease-fire; however, both sides seem very skeptical about it holding as they sling insults back and forth at each other. Treasury yields are drifting slightly lower this morning, with the 10-year dropping to 1.618% and the 30-year coming in at 2.323% ahead of PMI and housing data.
Though we experienced a nice relief rally, the bulls still need to show the willingness to follow through, clearing overhead price resistance levels. The tech giants provided a significant portion of the rally, but a quick look at the charts shows they are still in downtrends. The QQQ was able to get above its 50-day average, so the test now is, can it hold it as support? This morning bond rates are softening slightly, which could be very helpful to the struggling tech sector. The VIX closed the day above its 50-day average and a 20 handle. We should continue to expect significant price volatility and should not rule out the possibility of reversals as we approach price resistance levels. Be careful not to chase as you plan your risk heading into the weekend.
Markets gapped up on better than expected (lower) new Jobless Claims and then the bulls followed-through with the exception of a brief break at noon and another the last half-hour of the day. This left us with a second strong bullish candle in a row and broke the string of losses, but the market is also coming into one of the areas of resistance caused by the action the last two weeks. On the day, SPY gained 1.04%, DIA gained 0.57%, and QQQ gained 1.93%. The VXX lost 5.5% to 40.03 and T2122 rose at bit to 63.56. 10-year bond yields fell to 1.632% and Oil (WTI) fell over 2% to $62.05/barrel.
At the end of the trading day Treas. Sec. Yellen announced that the US has proposed a global minimum corporate tax of 15% to the OECD (Org. for Economic Cooperation and Development). Treasury officials later told the press that the OECD meeting had featured “earnest talks” toward a global minimum tax. The idea is to prevent companies for shifting earnings to hide from taxes as the many major companies do now. Earlier in the day, the Treasury Dept. had announced a stricter crackdown on cryptocurrency usage and said it would require reporting of all transfers worth $10,000 or more. Also separately, the Fed announced it would take the next step in developing its own digital currency this summer (in a move seen as catch-up to the Chinese who have been testing a Chinese Cryptocurrency for over a year).
In the wake of the Colonial Pipeline mess, after the Close Thursday, it was reported that one of the largest insurance companies in the US has paid hackers $40 million in ransom. In a story broke by Bloomberg, it was revealed that CNA paid the massive ransom to regain control of their computer network in late March. Bloomberg said the company would not confirm the ransom paid, but did confirm the hack and said it was a different hacker group (at least in name) than the one that shutdown Colonial. Welcome to the new age.
Related to the virus, new US infections continue to fall. The totals rose to 33,833,181 confirmed cases and deaths are now at 602,616. However, the number of new cases is falling again and are back down to an average of 28,735 new cases per day (the lowest number since June). Deaths are still plateauing or falling more slowly, but are now down to 573 per day (the lowest number since July 2020). The CDC reported that vaccinations rates have fallen over 46% from their peak, but at the same time 38% of American adults are fully vaccinated. However, Dr. Fauci (NIH) reiterated Thursday that we will need booster shots, but that we don’t know yet how soon and suggesting the amount of time between vaccination and booster may actually vary by vaccine.
Globally, the numbers rose to 165,912,336 confirmed cases and the confirmed deaths are now at 3,446,477 deaths. The trends are better again as we have seen a slowing in the rate of increase now that India has passed its peaked. The world’s average new cases are falling quickly now, but remain at 623,846 new cases per day. Mortality, which lags, is also falling, but remains at 12,296 new deaths per day. JNJ announced Thursday that its vaccine has joined PFE, MRNA AZN, and 3 others in a study being conducted by the UK. That study is looking to identify the best seasonal booster shots as follow-on to initial vaccination. The EU also reached a deal on when and how to give Covid-19 Vaccine Passports, which is expected to enable an increase in travel across Europe. While India has now passed 26 million cases, a new focus is on a deadly, post-covid infection called “black fungus” that attacks people with weakened immune systems in that region and that their government is just now starting to track.
Asian markets were mixed overnight, but leaned to the green side. India (+1.81%), Taiwan (+1.62%), and Japan (+0.78%) led the gainers while Malaysia (-0.83%) and Shenzhen (-0.81%) paced the losses. In Europe, markets lean even more heavily to the green side, but on modest moves so far today. The FTSE (-0.06%), DAX (+0.20%), and CAC (+0.50%) are typical with outliers like Greece (-4.03%), Denmark (+1.24%), and Norway (+1.41%). As of 7:30 am, US Futures are pointing to a positive open. The DIA is implying a +0.34% open, the SPY implying a +0.31% open, and the QQQ implying a +0.28% open.
The major economic news scheduled for Friday is limited to Mfg. PMI and Services PMI (both at 9:45 am) and April Existing Housing Sales (10 am). Major earnings reports before the open include BAH, DE, FL, and VFC. Then after the close there are no major reports.
The bulls are looking to follow up on the strong run they have made since the open Wednesday (which to be fair was at a nasty gap-down level). However, we are just now clawing back to the level we were at a week ago and there remains resistance overhead. While yesterday’s news of the Biden administration wanting to clamp down on tax cheats and proposing a global minimum corporate tax don’t seem to be major market threats, the fear of losing an “easy Fed” remains a cloud that is hanging over the bulls head. So, in that sense, our fight back to the all-time highs remains “climbing the wall of worry.”
Don’t forget it’s Friday. So, consider what you need to do to protect against weekend headline risk. You don’t want to get caught like those longs who ran into the Colonial pipeline news 2 weekends ago. As always, keep locking in your profits when you achieve your trade goals and maintain discipline by following your trading rules. Stick with the trend and respect support and resistance levels (but don’t just assume they will hold). Consistency is the key to long-term trading success. So, keep hitting singles and doubles rather than swinging for the fence.
Ed
Swing Trade Ideas for your consideration and watchlist: LAZR, IQ, IRM, XL, NOK, INO, CSCO, INSG. 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 index charts have taken some technical damage, the DIA and SPY finding the energy to hold at their respective 50-day averages provide hope that a relief rally may soon follow. However, the damage in the QQQ and IWM is much more significant and will require substantial effort by the bulls to reverse the current downtrends and overhead price resistance levels. The elevated VIX suggests we should expect challenging price volatility as the bulls and bears battle for control. Inexperienced traders will likely find this environment very costly due to the speed and range of the point moves, overnight reversals, and whipsaws that are likely to occur.
Asin markets traded mixed but mostly lower overnight though Japan’s exports surged in April. European markets are currently green across the board this morning after the Fed talks of tapering. On the other hand, U.S. futures point to a bearish open though will off the overnight lows ahead of Jobless Claims and the Philly Fed numbers.
Economic Calendar
Earnings Calendar
Today we have just 39 companies listed on the calendar, but several of them have not confirmed their reports. Notable reports include AMAT, BJ, CSIQ, DECK, HRL, KSS, RL, PANW, & ROST.
News & Technicals’
Facebook is facing some court challenges that could lead to a ban on its EU-U.S. data transfers. Blocking their transatlantic data flow will have profound implications for other U.S. tech giants. Bitcoin plunges 30% and at one point touched 30,000 yesterday, which constitutes a 50% haircut from recent highs. Hamas says it sees a cease-fire possible in the coming days, but this fight has gone on for decades and is unlikely to find a resolution anytime soon. The 10-year Treasury yield dipped this morning to 1.663%, and the 30-year fell to 2.371% after investors digested the FOMC minutes, where there were hints that the committee might begin pulling back on debit purchases.
Yesterday’s sell-off created some technical damage in the index charts, but there was also a few rays of hope, with the DIA and SPY finding at least some temporary support at their 50-day moving averages. Unfortunately, the QQQ and IWM are under this critical psychological level but managed to hold the price supports of last week’s selling. Recovery, however, could be challenging with both technical and price action resistance levels overhead blocking the potential relief rallies. The VIX closed well below its high of the day but remained quite elevated above a 22 handle so expect considerable price action volatility to continue. Experienced day-traders will likely have the upper hand in this environment, while swing traders may find the quick whipsaws and complete overnight reversals very challenging.
Markets did a classic gap-and-reverse on Wednesday as the bears gapped all 3 major indices significantly lower and then the bulls slowly rallied all day. All 3 indices printed strong white candles, but only the QQQ managed to completely close the gap. On the day, SPY lost 0.28%, DIA lost 0.52%, and QQQ gained 0.11%. The VXX rose almost 5% to 42.35 and T2122 fell down close to the oversold territory at 26.45. 10-year bond yields rose to 1.674% and Oil (WTI) fell over 3% to $63.40/barrel.
Bitcoin had one hell of a roller-coaster day Wednesday. It suffered more than a 30% drop (from over $43,000 to $30,000) before putting in a 30% rally (from $30,000 back up over $42,000) and then finally settled closer to the top of the range ($38,900). While some analysts called this a capitulation, others explain the fall as a reaction to the recent reversal of acceptance of the cryptocurrency. For example, the IRS and DOJ have recently both launched investigations into the main cryptocurrency exchange, China warned their financial institutions not to provide services related to any cryptocurrency, and TSLA announced no longer accepting the would-be currency in payment for their products.
In the April FOMC Meeting Minutes released Wednesday, the Fed basically said what it has been saying for months. They are unconcerned about that they see as transitory inflationary pressures. Specifically, “there is no need to change policy now, but it might be appropriate to consider tapering at some point” was the consensus view. Markets did not react since this was a known position. However, some analysts say the minutes showed the Fed may reconsider if rapid progress continues. As always, the glass is either half full or half empty depending on your perspective.
Related to the virus, US infections are rising again after plateauing at a level above the fall level. The totals have risen to 33,802,324 confirmed cases and deaths are now at 601,949. The number of new cases is falling again and are back down to an average of 29,975 new cases per day (the lowest number since June). However, deaths are still plateauing at the new lower levels, now at 591 per day (the lowest number since July 2020). Dr, Fauci (NIH) told the press that infection rates are decreasing in all 50 states, down 18% nationally from one week ago. He told Axios that should the trend continue, it will be safe enough to resume indoor activities like dining soon. However, in answer to one question he reiterated that it is likely we will need a booster shot within a year of completing vaccination. JNJ announced Wed. evening that 100 million doses of its vaccine are held up in FDA inspection due to contamination problems at one of JNJ’s contract manufacturers (Emergent). No word on whether this is somehow related to JNJ falling behind promised delivery schedules to the EU.
Globally, the numbers rose to 165,629,929 confirmed cases and the confirmed deaths are now at 3,433,602 deaths. The trends are slightly better again as we have seen a slowing in the rate of increase no that India is believed to have peaked. The world’s average new cases are falling quickly now, but remain at 637,518 new cases per day. Mortality, which lags, is also falling, but remains at 12,360 new deaths per day. The UK is taking heat as it defends continuing to allow direct flights from India amid a 28% surge in cases of the Indian 617 variant. However, the number of cases is still just under 3,000 per day. As if semiconductor shortages were not bad enough already, Taiwan is now battling its worst outbreak (which pales in comparison to neighboring China, let alone the US). So far, businesses have not been ordered shut. However, that country is the world’s largest supplier of silicon semiconductors.
Asian markets were mixed overnight on mostly modest moves. New Zealand (+1.27%) and Australian (also +1.27%) were the largest movers with India (-0.83%) pacing the losses. In Europe, markets are broadly green with only Russia and Norway in the red. The FTSE (+0.21%), DAX (+0.52%), and CAC (+0.58%) are fairly typical of the continent at this point in the day. As of 7:30 am, US Futures are pointing to a mildly down open. The DIA is implying a -0.33% open, the SPY implying a -0.19% open, and the QQQ implying a flat -0.03% open.
The major economic news scheduled for Thursday is limited to Weekly Initial Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am). Major earnings reports before the open include BJ, CSIQ, HRL, KSS, WOOF, RL, and TCEHY. Then after the close, AMAT, DECK, ENS, FLO, and ROST report.
After the nasty gap-down, the bulls were in charge all day Wednesday. However, they came up just a bit shy of erasing the gap except the QQQ which just barely got the job done. All 3 major indices now sit just above support that may have held yesterday. It is very hard to trade a gap-and-fade market. It’s even harder when markets may be at a short-term swing point. So, be careful. With that said, it is likely to be Jobless Claims that call the tune this morning…or more to the point, how those claims can be inferred to impact inflation. This is because it remains the fear of losing an “easy Fed” that has powered the bears for some time now.
If you’re trading this market, be very nimble, hedged and/or small. As always, keep locking in your profits when you achieve your trade goals and maintain discipline by following your trading rules. Follow the trend and respect support and resistance levels. However, don’t just assume they will hold. Consistency is the key to long-term trading success. So, keep hitting singles and doubles rather than swinging for the fence.
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
With the DIA and SPY cling to bullish trends, worrisome cracks have developed in the index charts. I use charts because I believe they me clues. However, to read those clues, we have to see the charts for what they are, not for what we want them to be. The QQQ and IWM are in failure patterns below their 50-day averages, and both the DIA and SPY show possible lower highs that are in striking distance of new lower lows. For years and market, sell-off offered an opportunity to buy the dip, and perhaps this one is no different, but I think it time to consider the possibility the market top is near.
Asian markets traded mostly lower overnight, with Australia falling a full 2%. European markets trade decidedly bearish this morning, and the U.S. futures, despite solid earnings results, point to bearish open as we wait for the FOMC minutes.
Economic Calendar
Earnings Calendar
On the Hump day earnings calendar, we have 31 companies fessing up to quarterly results. Notable reports include CSCO, ADI, JD, LB, LOW, SCVL, TGT, & TJX.
News & Technicals’
Though we saw solid earnings results yesterday, the market yawned and spent the day chopping in a very tight range intraday consolidation. This morning we have already heard from TGT and LOW with massive beats on expectations, but the bears seem to be making another attempt at control this morning. According to reports, about $270 billion has disappeared from the crypto markets, and bitcoin continues to slide south after the Musk tweet. One has to wonder at the validity of a currency that collapses after a company chooses not to use it to sell cars. Ahead of the FOMC minutes, the 10-year treasuries lifted to 1.66% this morning, and the 30-year rose to 2.385% as inflation worries persist. President Biden extended the grace period for Chinese companies to comply with new restrictions to June 11th versus the prior date of May 27th.
Some worrisome cracks are starting to show in the primary index charts. Both the QQQ and IWM show possible failures at their 50-day moving averages. The VIX, as of yesterday, is trying to hold a higher low, and the Absolute Breadth Indicator has trended lower since March of last year. Despite consistent reassurance from the Fed that the current inflation is transitory, worries persist that the market is overheating and may soon force the hand of the FOMC. Though the DIA and SPY continue to cling to bullish trends, price patterns in the charts are raising some concern. The DIA now shows a lower high and is within striking distance of last week’s low. The SPY is in a similar pattern and has a stronger overhead resistance than that of the DIA. Futures trade decided bearish this morning ahead of the Petroleum numbers, a 20-year bond auction, and the release of FOMC minutes. Caution flags are waving, so plan accordingly.
Markets opened mostly flat on Tuesday and then ground sideways until about 1:30 pm. From there, the bears had control right into the close. This left us with ugly candles as all 3 major indices closed near their lows and also completed something similar to an Evening Star pattern (without the gap-up star) in all three. On the day, the SPY lost 0.86%, the DIA lost 0.74%, and the QQQ lost 0.68%. The VXX rose about 1.5% to 40.45 and T2122 fell back into the mid-range at 55.83. 10-year bond yields were down slightly to 1.639% and Oil (WTI) fell over a percent to $65.46.
Better than expected earnings from big retailers were offset by a 9.5% drop in Housing Starts. In other news, it was leaked that AMZN is in talks to buy MGM, not for the casinos, but for the media content and as a counter-move to the agreed WarnerMedia merger with DISCA. It also came out Tuesday evening that the DISCA-WarnerMedia deal was structured so that it can easily be sold in the future. CNBC reports that AAPL, AMZN, and DIS might all be suitors to buy the merged group in the future.
In miscellaneous business news, Bitcoin fell below $40,000 for the first time in over 3 months. F also unveiled a new electric F-150 during a visit from President Biden. (The official unveiling will be Wed. evening.) This is just the latest of traditional carmakers moving to compete with the all-electric TSLA. QSR (Burger King) has thrown its hat in the ring of the Chicken Sandwich market with a new menu item launch. And RTX has announced it will cut office space by 25% as it is the latest company to realize that large portions of its work can be done remotely and at a lower cost.
Related to the virus, US infections are rising again after plateauing at a level above the fall level. The totals have risen to 33,774,945 confirmed cases and deaths are now at 601,330. The number of new cases is falling again and are back down to an average of 31,004 new cases per day (the lowest number since June). However, deaths are still plateauing at the new lower levels, now at 623 per day (the lowest number since July 2020). The CDC reported Tuesday that 60% of American adults have received at least one shot and just under 48% are fully vaccinated. This comes one day after new research showed that the PFE-BTNX and MRNA vaccines appear to be effective against the Indian 617 (double mutation) variant. So, great news on that front.
Globally, the numbers rose to 164,965,197 confirmed cases and the confirmed deaths are now at 3,420,858 deaths. The trends are slightly better again as we have seen a slowing in the rate of increase no that India is believed to have peaked. The world’s average new cases are falling quickly now, but remain at 650,594 new cases per day. Mortality, which lags, is also falling, but remains at 12,462 new deaths per day. The protests hoping to get the Tokyo Olympics cancelled continued to grow Tuesday, as only 1% of the Japanese population is fully vaccinated now. However, the head of the Intl. Olympic Comm. say the games will be held and safely. In that region, after recent outbreaks China has vaccinated 100 million people in just 9 days in Anhui and Lioning provinces. Meanwhile, in India, the country reported a record of over 4,500 deaths on Wednesday. For our part, the White House announced Monday that the US would share 80 million doses of vaccine with COVAX (the international vaccine sharing initiative) over the next six weeks, which are intended for poorer nations. This includes equal amounts of the PFE, MRNA, JNJ, and AZN vaccines.
Overnight, Asian markets were mostly in the red. Hong Kong (+1.42%) and South Koreas (+1.23%) bucked the trend. However, Australian (-1.90%), Japan (-1.28%), Indonesia (-1.27%), and Singapore (-1.22%) were more typical of the region. In Europe, markets are red across the board. The FTSE (-1.14%), DAX (-1.37%), and CAC (-1.13%) are typical of the continent. As of 7:30 am, US Futures are pointing to a nasty open. All 3 major indices are implying a one percent or larger gap down at this point in the morning.
The major economic news scheduled for Wednesday is limited to Crude Oil Inventories (10:30 am), FOMC April Meeting Minutes (2 pm), and a Fed speaker (Bostic at 11:35 am). Major earnings reports before the open include ADI, JD, LOW, TGT, TJX, VIPS, and ZIM. Then after the close SQM, CSCO, CPRT, BEKE, KEYS, LB, SNPS, and ZTO report.
The bears showed up again on Tuesday afternoon and look to get some follow-through at the open today. The impact of supply chains that have been focused on efficiency and short-term profit (just-in-time, low inventories throughout the entire supply chain) continues to wreak havoc. In addition to very short supply of many products (i.e. chips), the situation has created abundant opportunities for companies to use this excuse to flex pricing power. So, inflation fear will continue to weigh heavily on the market psyche and with very limited economic news scheduled that might change the narrative, the bulls will need to dig deep to reverse that momentum.
If you’re trading to the long side, be very nimble, hedged and/or small. As always, keep locking in your profits when you achieve your trade goals and maintain discipline by following your trading rules. Follow the trend and respect support and resistance levels. However, don’t just assume they will hold. Consistency is the key to long-term trading success. So, keep hitting singles and doubles rather than swinging for the fence.
Ed
Swing Trade Ideas for your consideration and watchlist: IQ, HBI, F, DHI, IBB, FIS, GM, MJ. 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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Futures perked up overnight, trying to shake off inflation jitters, but those pesky bonds are moving slightly higher this morning, mixing in some uncertainty. As solid earnings results from HD and WMT try to inspire the premarket bulls, we still have new permits, and housing starts to digest before the open. Though the DIA and SPY continue to cling to a bullish trend, the QQQ and IWM remain challenged by the overhead resistance of their 50-day averages. Keep in mind intraday whipsaw and pop and drop patterns are still possible as we attempt to challenge price resistance levels. Stay focused.
Overnight Asian markets enjoyed a bounce back with the NIKKEI, leading the up closing up more than 2%. European markets have also turned positive this morning. However, the concern is growing about a quickly spreading virus variant in the U.K. Fueled on the blowout earnings results, U.S. futures point to a bullish open ahead of new construction housing data. Remember, choppy price action is still possible ahead of the Wednesday release of the FOMC minutes. Be careful not to chase the open.
Economic Calendar
Earnings Calendar
On the earnings calendar, we have a focus on big retail, with more than 40 companies reporting. Notable reports include HD, WMT, BIDU, DQ, IQ, M, NTES, SE, TTWO, TTM, & TCOM.
News and Technicals’
After a day of choppy rest with modest losses, the futures perked up overnight as they try to shake off last week’s inflation jitters. Home Depot reported blowout results early this morning as sales lept higher by 32.7%. The new virus variant that emerged in India could become the dominant strain in the U.K. in a matter of according to health officials. The U.K. is detecting a rapid spread of the new variant. Though futures try to push higher this morning, the same is true of the 10-Year Treasuries as they top 1.65%, with the 30-year rising to 2.368%. In a call with Netanyahu, Biden said the U.S. supports a ceasefire; however, the conflict between Israel and Hamas continues to escalate. More than 300 rockets have bombarded Israeli cities.
On the technical front, not much changed yesterday, with the SPY and IWM remaining under their 50-day averages. The DIA and SPY ended the day with only modest losses holding on to key supports though still challenged by overhead resistance. Earnings from HD and WMT are trying to inspire the bulls as we wait on the latest reading of building permits and housing starts. It will be interesting to see if the sharply rising materials costs have dampened new construction activity. As the futures rise, keep in mind that bonds are also moving higher this morning. Be careful not to chase and watch for the possible pop and drop near price resistance levels. Keep in mind that the T2122 indicator is nearing an overbought condition already, and the VIX yesterday held at a higher low. We should also not rule out the possibility of another day of chop as we wait on the FOMC minutes released Wednesday afternoon.
The violence of the last weeks selling and bounce likely left traders and investors a bit shell-shocked and rightfully concerned about what comes next! Markets hate uncertainty, and with rising inflation, the Fed’s following action certainly raises the bar on uncertainty. Toss in the growing instability in Israel, cybersecurity threats, higher taxes as just a few of the pending concerns, the stage is set for some very challenging price action. For now, calmer price action can be found in stocks sectors XLF, XLE, XOP, XLB & XLP.
Overnight Asian market trade mixed with the NIKKEI lower by nearly 1%. European markets trade lower across the board this morning with modest losses. Ahead of manufacturing and housing numbers, the U.S. futures point to a lower open and the uncomfortable possibility that the QQQ could fail at its 50-day average. Stay focused and flexible, ready to fast price action and intraday whipsaws.
Economic Calendar
Earnings Calendar
On the Monday earnings calendar, we have more than 190 companies listed on the calendar, but the vast majority listed are unconfirmed. Notable reports include TWNK, IBIO, RIDE, RYAAY, TME.
News & Technicals’
After bouncing back from last week’s sell-off is now facing a morning with futures suggesting a lower open and price resistance levels above, leaving behind a bit of uncertainty. According to a U.S Trade Representative and an EU Commission official, the European Union and the U.S. have started talks to end steel tariffs. The efforts to get Iran back on track with its nuclear deal could undercut the efforts to end the conflict between Israel and Palestinian militants. Reviving the deal means that Iran would receive Billions of dollars in sanctions relief that Tehran could use to fund Hamas. Treasury yields are pulling back slightly this morning, with the 10-year dipping to 1.617% and the 30-year slipping to 2.336%. I suspect today’s speech from Richard Clarida, Vice-Chair of the Fed, will have lots of eyes looking for future clues as investors try to balance an overheating market and the possibility of rising interest rates. Investors will also closely inspect the FOMC minutes released Wednesday afternoon.
Last week’s volatility likely left traders and investors a bit shell-shocked with the speed and violence of the selling. It also left behind some serious technical questions to be answered in the week ahead. The NASDAQ suffered the worst of the technical damage confirming a downtrend and now having to deal with its 50-day average as price resistance. The Russel suffered similar technical damage. The SPY successfully held at its 50-day average, bouncing strongly to end the week but now has price resistance above that could block the path higher. With inflation worries and the real possibility of Fed rate action, we should expect the wild price volatility to continue. Stay focused and plan your risk carefully.
