Another Day Another Gap

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Markets gapped higher on Tuesday, following through on Monday’s rally.  However, after the gap and initial rally, markets faded the gap the remainder of the day.  At day end, the SPY closed up 0.17%, the DIA closed dead flat and the QQQ up 0.02%.  While all three printed new all-time highs during the day, only the SPY and QQQ closed at new high closes, and even then, just barely.  The VXX gained very slightly but it remains extremely low at 14.12.  Meanwhile, the T2122 has climbed back near, but not in overbought territory at 76.02.

The main news on the day came from the Fed.  They announced that US Household Debt is now at the highest level in 12 years.  This, along with climate change, severe weather, and the coronavirus are all risk factors impacting economic forecasts.  Chairman Powell again rejected the idea of negative rates.  However, while he was testifying, President Trump (as is his norm) repeated his demand that the Fed go to negative rates and then blamed Powell for the afternoon selloff in the US markets.  Meanwhile, market analysts blamed the tiny intraday pullback on over-extension and possibly too much prior nonchalance about the coronavirus impact as more companies are warning of its impact. 

In other news, the Federal Trade Commission announced that in a 5-0 decision, they have chosen to investigate how previous acquisitions of small companies by the largest tech companies were used to amass market power, consumer data, and market monopoly.  However, just hours later, President Trump met with the CEOs of the Trillion Dollar Club (MSFT, AMZN, GOOG, and AAPL).  He lauded those four companies, calling them MAGA (his campaign slogan).

On the coronavirus front, the count of confirmed cases now stands at 45,000 and the death tolls is over 1,100.  In terms of impact, Hilton closed all 150 of their hotels in China, UA estimates a mild $60 million impact in Q1, and AAL extended their cancelation of all flights to/from China.  Also making news was a cruise ship stranded at sea (not allowed to dock in several countries), but overnight Cambodia allowed it to dock.  In addition, the W.H.O. said that even with governmental fast-tracking, the public should not expect a vaccine until at least next year, let alone wide availability of any such vaccine.

Overnight, Asian markets were in the green.  Once again, Europe has followed Asia as we see green across the board.  As of 7:30 am, U.S. futures are again pointing to another gap higher of between three-tenths and half a percent.

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Major economic news on Wednesday is limited to Fed Chair Powell’s Senate testimony (10 ma) and Crude Oil Inventories (10:30 am). However, there will also be another Fed speaker during pre-market hours.  In terms of earnings, CME, CVS, GPN, IPG, IQV, TAP, MCO, and NBL all report before the open.  Meanwhile, AMAT, CDNS, CF, CSCO, CTL, EFX, EQIX, IFF, MGM, MRO, NTAP, REG, TRIP, and WELL report after the close.

The DIA sits at potential resistance for a second straight day.  However, in general, the bulls continue to see nothing but the upside.  The trend remains clearly bullish, and we are a little less extended than yesterday.  Don’t get complacent, expecting the bulls to run every day forever. Remember to keep locking in profits.  Don’t let a profitable position go South on you. 

Ed

Swing Trade Ideas for your consideration and watchlist: HCA, SC, MNST, AVY, ZBH, FAST, BLL, YNDX, ALL, ITW. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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 Plans • Private 2-Hour Coaching

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

Record Highs Continue

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Record Highs

Shaking off any and all concerns of potential economic impacts from the coronavirus buyers pushed up the SP-500 and Nasdaq setting new record highs.  How long this can continue is anyone’s guess but traders should be very careful not to become complacent over-trading a rally that is already quite extended.  Although the price action of MSFT appears, parabolic buyers didn’t hesitate to push the stock up making the company the biggest company in the world by valuation yesterday.  With a big day of Fed speak, more than 100 companies reporting and the New Hampshire caucus anything is possible.

Yum Taco’s!

Asian markets closed mixed but mostly higher overnight as Chinese banks scramble to support business requiring huge capital injections due to the outbreak impacts.  European markets are bullish across the board on positive earnings results.  US Futures indicate another gap up open and more new records as the rally continues to extend with no concern of future virus related impacts.

On the Calendar

On the Tuesday earnings calendar, we have a busy day with more than 100 companies reporting quarterly results.  Notable reports include AKAM, AN, DENN, DBD, D, EXAS, EXC, GT, GRPN, HAS, HILT, LPX, LYFT, MAS, MLCO, NNN, ONDK, TGNA, UAA, VIRT & WU.

Action Plan

The bulls continue to shake off coronavirus concerns and the obvious economic impacts pushing the SP-500 and Nasdaq to new record highs on Monday.  While the absolute breadth index (T2101) remains in a month over month downtrend select, large market cap companies continue to lift the indexes.  The relentless buying without regard to valuation is very reminiscent of the 1999 tech bubble though the economic particulars are very different.  A report yesterday suggested GDP may fall by as much as 50% due to the outbreak impacts on the economy in the coming months.  However, in the short-term earnings continue to inspire the bulls to buy.  Yesterday, MSFT rose to the top, becoming the biggest company by valuation in the world pushing the chart into the parabolic territory. 

Along with a big day earnings report, we have several Fed speakers, including comments from Jerome Powell at 10:00 AM Eastern.  Although we are unlikely to learn anything new for the chairman, any inclination of dovishness or hawkishness can move the market so stay focused on price action for clues.  On the campaign front, the Democrats are hoping to shake off the Iowa debacle, gain some momentum in the New Hampshire caucus today.  So far, the field remains split and there is no clear front runner as voting begins.  The results of the contest could have market impacts for traders to consider on Wednesday morning.  Futures indicate yet another gap up open to record highs.  How long this continues is anyone’s guess, but be very careful not to chase or become complacent.

Trade Wisely,

Doug

Bulls Liking the Blue Sky

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Markets ran down at the open Monday, but almost immediately the bulls stepped in.  After that rebound and run up into the highs at 10:45am, there was a sideways grind in a tight range until 3pm.  At that point, the bulls stepped back in again to drive higher right into the close.  It seemed to be the big tech names that led the market higher, with beautiful candles from AMZN, MSFT, AMD, NVDA, and GOOG. For the day, the SPY was up 0.75%, the DIA up 0.60%, and the QQQ up 1.21%.  Of these, both the SPY and QQQ gave us new all-time high closes.  All three printed Bullish Engulfing signals.  This all implies new higher-highs Tuesday.

On a light news and earnings day, the coronavirus continued to be the top story.  The death toll has now exceeded 1,000 with 43,000 confirmed cases.  In terms of impact, CNBC reported that their survey of economists is indicating that the US GDP for the first quarter will likely be reduced to 1.2% due to the impacts of this virus.  (That’s down almost an entire percent from Q4.)

It is of note that the number of new cases reported Tuesday in Hubei Province has held relatively stable at about 2,500.  This may indicate the spread is slowing, which would be great news.  However, both the W.H.O. and the Chinese government are cautious not to show optimism. They say that they are looking for stabilization outside the quarantine regions of China within a few weeks, but inside the quarantine zone, they expect the outbreak may take longer to subside.

In related news, some Chinese plants reopened for the first time in weeks on Tuesday.  This was a relief for global supply chains in industries like auto and electronics.  Still, the ramp-up time for individual plants or even regions is unknown.  Obviously that time will depend on how many employees return and whether virus preventative measures might hinder productivity.  Typical ramp-up takes 1.5 weeks to get back to normal productivity.  As a possible indication for this instance, Bloomberg reported sources at the Foxconn iPhone plant in Zhengzhou said that only 10% of the workforce returned on their first day back open. 

In other news, details from President Trump’s proposed 2021 budget filled the news void.  His $4.8 Trillion plan lines up with his campaign priorities but also abandons the pledge to eliminate budget deficits in 10 years.  I will skip the details because as is typical of budgets, particularly in election years, this one has no chance of passing the House, who has the final say, as is.  This is more of a set of campaign bullet points and negotiation tactics, as will be the responses.   

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It is also worth noting that S shot higher in after-hours trading last night on rumors that a Federal Court has approved the T-MUS merger.

Overnight, Asian markets were in the green.  Europe has followed Asia so far today as we see green across the board.  As of 7:30 am, U.S. futures are pointing to another gap higher of between three-tenths and half a percent.

On Tuesday, Fed Chair Powell begins two days of Congressional testimony at the same time as the JOLTS report (10 am).  In the afternoon there will be a trio of other Fed speakers. On the earnings front, D, EXC, HAS, HLT, MLM, MAS, OMC, UA, and UAA all report before the open.  After the close, AKAM, AMCR, AIZ, PEAK, UDR, and WU will report.

The bulls continue to see only the bright side.  While the DIA sits at potential resistance, the other two major indices are in “blue sky.”  The trend remains clearly bullish, but we remain extended, especially in the QQQ.  As always, stick with the trend and remember that Mr. Market can stay too far on any one side longer than we can be right while early.  Just don’t let profitable positions go South on you.  Keep taking profits, using prudent hedges, and reducing risk. 

Ed

Swing Trade Ideas for your consideration and watchlist: TDOC, ZBH, ERI, AAXN, ZEN, LITE, JNJ, SPLK, PEN. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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 Plans • Private 2-Hour Coaching

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

Bearish Candle Patterns

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Bearish Candle Patterns

In reaction to weekend uncertainty, profit-takers dominated the price action leaving behind some potentially bearish candle patterns on the DIA, SPY, and IWM.  The QQQ held up as the strongest index, while the poor under-loved IWM proved the weakest printing a lower high.  As concerns, economic impacts, and supply chain issues begin to weigh on the market; we have a very big week of earnings reports that continue to provide short-term inspiration to the bulls.  Expect the volatile price action to continues and remain flexible as anything is possible as we sort through the uncertainty.

Asian market closed mixed with China finding the inspiration to rally with the government fronting 10 billion to help virus victims with medical costs.  European markets are modestly lower across the board as the outbreak continues to expand, and the UK reports four new cases.  US futures are trying to put on a brave face but as I write this report, the open appears relatively flat.

On the Calendar

On the Monday earnings calendar, we have just over 100 companies fessing up to results today.  Notable reports include AGN, BIP, ELY, DVA, RE, FRT, JCOM, L, MELI, OMF, PSEC, QSR, STE, & VOYA.

Action Plan

Friday saw a pullback on weekend worries printing evening star patterns no the DIA, & SPY.  The QQQ holds up as the strongest index with help from some big techs like MSFT and AMZN while IWM continues to prove the weakest index leaving behind a lower high on Friday.  Over the weekend, the outbreak death toll rose to 908, with more than 40,000 confirmed cases.  Some businesses will resume work today, but many have extended closures until March 1st raising serious supply chain concerns for may US Business.  However, the market may once again choose to ignore that as traders react to more than 500 earnings reports scheduled for this week.  Tuesday and Wednesday at 10 AM Eastern Jerome Powell speak and of course, could move markets if there is anything new gleaned from his comments.

Instead of the wild futures driven gaps we witnessed last week, the pre-market activity is taking a much more subdued approach this morning as concerns of economic impacts from the outbreak grow.  Technically speaking, there is a reason for traders to be a bit pensive with possible bearish patterns printed on the index charts at or very near price resistance highs.  What comes next is anyone’s guess!  Will we take our queues from the big week of earnings events or will the virus impacts take center stage.  One thing for sure traders should plan for more volatility, remain flexible, and guard against over-trading. 

Trade Wisely,

Doug

Bear Signals and Virus Fear

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Markets took some profits on Friday as the US followed the pattern of Asia and Europe for the day.  The QQQ and SPY ended the day as Doji candles after some volatility, but the DIA printed a large-body black candle to print an Evening Star signal.  The SPY was down 0.53%, the DOA down 0.87%, and the QQQ down 0.43%.  As a result, the VXX climbed slightly to 14.38 while the T2122 fell again to 33.94 (still not oversold).

The big story on the day seemed to be a complete reversal by the Fed from what was told to the financial press just two days earlier.  On Friday, the Fed reported to Congress that the coronavirus presents a new risk to the US economic outlook and they warned of disruptions to global markets.  Specifically, the Fed reported, “Because of the size of the Chinese economy, significant distress in China could spill over to U.S. and global markets through a retrenchment of risk appetite, U.S. dollar appreciation, and declines in trade and commodity prices.” 

On Tuesday and Wednesday, both Fed speakers and the President’s Chief Economic Advisor Larry Kudlow had said the virus would not have a significant impact on the US economy.  This reversal may help explain the profit-taking on Friday.

Over the weekend, the virus has continued to spread and has surpassed the SARS outbreak of 2003 in terms of impact.  The number of confirmed cases has now reached over 40,000 and deaths now exceed 900.  One of those deaths was in the US.  In terms of impacts, there is serious scrambling going on throughout the Auto and Electronics industries as the vast majority of those supply chains run through China.  In other words, you can’t make a car in Detroit, Berlin, Japan or Mexico if the parts have not arrived from China.

Overnight, Asian markets were in the red.  Europe is mixed at this point, but most of the major bourses are red…the FTSE being the striking exception.  As of 7:45 am, U.S. futures are flat, sitting on either side of the break-even line.

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There is no major economic news for Monday.  However, there are a couple of Fed speakers during the day.  Earnings are also light for the day, but AGN, QSR, L, DO, IVC, and AVYA report before the Open.  After Monday’s close, CHGG, MELI, RNG, XPO, APPS, ELY, MESA, MOH, IIVI, JCOM, RE, RPD, VRNS, DVA, BLKB, VOYA, FLDM, FRT, ICMB, and PYX all report.

Markets took some profits Friday, but the bulls have been resilient and relentless for a long time now.  The trend remains clearly bullish, but we are still a bit extended and there is no new impetus with light earnings and no planned economic news Monday.  Perhaps the rumors of President Trump’s election-year budget (apparently going to expand tax cuts) will be the driver today. 

Again, the bias is on the long side, but the candle patterns are on the bearish side. I think we need to remain cautious.  At the very least take a look at bearish setups or hedges. I know I sound like a broken record on the topic, but nobody ever went broke taking profits and reducing risk.  Plan the trade, make the trade come to you and then trade the plan.

Ed

Swing Trade Ideas for your consideration and watchlist: PLCE, FTK, SLCA, SLM, KSU,DKS, CROX, KLAC, SWKS, QRVO, ZM. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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 Plans • Private 2-Hour Coaching

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

Wild Ride

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Wild Ride

What a wild ride the market has delivered this week, recovering to new record highs amid a mixture of earnings results, the Presidents acquittal, and a virus outbreak that continues to expand.  After such a strong rally, we should not be surprised to see some profit-taking as we head into the uncertainty of the weekend.  Let’s hope the very big gaps left behind can hold as support if tested by the bears.  It could make for a very volatile pullback should those gaps start to fill.  If your currently holding gains, it may not be a bad idea to capture at least some of them before the weekend.

Asian markets closed mixed overnight as China’s trade data was delayed, and the outbreak expanded to more than 31,000 confirmed cases.   European are seeing only red this morning but so far, losses are rather moderate.  US Futures currently point to a gap down of nearly 100 points ahead of the Employment Situation number and a lighter day of earnings reports.  Although the bears are indicating some pressure this morning, I would not expect the bulls to give up easily.

On the Calendar

On the Friday earnings calendar, we get a nice break with just over 40 companies reporting results.  Notable reports included ABBV, AVTR, FE, HMC, & MSG.

Action Plan

After the wild week of bullishness, I was expecting to see the Friday morning futures pushing to extend higher to finish the week strong.  However, the delay in China’s trade data seemed to bring some attention back to issues surrounding the outbreak.  Death numbers rose to 636, and confirmed cases grew over 31,000.  Confirmed cases on the quartered cruise ship are now over 40 as testing continues.  I have to image news like this will continue to affect all travel-related stocks negatively.  As of right now, business is scheduled to resume in China on Feb. 10th, but with the outbreak continuing to expand, could we see another extension by the government this weekend?

The sharp recovery rally this week set new record highs in the DIA, SPY, and QQQ, but also left behind some very big gaps which provide weak levels of price support.  If a pullback begins, that could cause some considerable volatility if price slips into the gaps.  With the uncertainty of the weekend ahead, a little selling pressure could quickly bring out profit-takers.  Plan your risk carefully into the weekend, and remember never to allow greed to prevent you from taking a profit.  Have a great weekend, everyone!

Trade Wisely,

Doug

Profit-Taking Friday?

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The bulls continue their surge Thursday.  The SPY and DIA both gapped higher and then just vacillated the rest of the day, closing very near the open.  The QQQ gapped higher, but found some follow-through as TSLA rebounded after Wednesday’s profit-taking.  The SPY ended 0.34% higher, the DIA 0.30% higher, and the QQQ 0.86% higher.  All three were new all-time high closes.  The VXX fell slightly to 14.09 and the T2122 fell back to 67.15 (out of the overbought region).

We received generally good economic data (Weekly Jobless Claims were below estimates again and Unit Labor Costs were in-line, while Q4 Nonfarm Productivity was below expectation) on the day.  Added to this was generally good earnings.  Together these factors seemed to override any coronavirus fears for the bulls. 

On the coronavirus front, the number of patients continues to grow.  The tally now sits over 31,000 confirmed cases and 636 deaths.  In terms of impacts, it was announced that airlines around the world have now canceled 50,000 flights to or from China (including Hong Kong).  However, an independent economic data provider about China, called China Beige Book (not to be confused with the periodic US Beige Book Report produced by the Fed) forecasts that while there will be a GDP drag on China, the long-term outlook remains stable.

After hours Thursday, EBAY was taking a beating after ICE said they have decided to stop exploring a buyout of the auction website.  MYAD was down a whopping 30% after missing on both the top and bottom lines.  However, UBER also spiked on a smaller than expected loss and PINS soared 17% after beating estimates. 

Overnight, Asian markets were mixed, but generally in the red.  For a change of pace, China was the lone green spot in that region. However, Europe is showing red across the board at this point in their day.  As of 7:45 am, U.S. futures are all pointing toward a gap lower of a modest one-third of one percent.

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Friday’s major economic news includes Jan. Avg. Hourly Earnings, Jan. Nonfarm Payrolls, and Jan. Unemployment Rate (all at 8:30 am).  While earnings are light on Friday, we will hear from ABBV, CBOE, and FE.

The bulls have been relentless all week.  However, globally, Friday seems like a profit-taking day.  Maybe the rest of the world wants to lock in gain before the long weekend news cycle just as we suggest.  The trend remains clearly bullish, but we are a bit extended and there is that weekend headline risk to consider. 

So, again I think we need to remain nimble, hedged or cautious.  Don’t let profitable positions go South on you when you aren’t looking.  I know I sound like a broken record on the topic, but nobody ever went broke taking profits and reducing risk.  Plan the trade, make the trade come to you and then trade the plan.

Ed

No Swing Trade Ideas for your consideration and watchlist on Friday If you have tickers you want to discuss, be sure to come to the trading room at 9:10am Eastern and we’ll give them a look. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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 Plans • Private 2-Hour Coaching

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

Massive Short Squeeze

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Massive Short Squeeze

With a massive short squeeze, the bulls managed not only managed set new records but chose to ignore the possible outbreak impacts.  With the virus now spread to more than 28,000 and the possibility China will have to extend business closures, it will be interesting to see what comes next.  The President acquitted Chinese tariff cuts, and a huge day of earnings and economic reports would suggest price volatility continues and that anything is possible.

Asian markets rally to close green across the board in reaction to the Chinese tariff cuts overnight.  European markets are also in rally mode this morning with gains across all indexes.  US Futures point to more new record highs with Dow once again set to gap up more than 100 points at the open.  Once again, be very careful chasing the open.  Plan your trading carefully.

On the Calendar

On the Thursday earnings calendar, we have our biggest day this week, with more than 210 companies reporting.  Notable reports include UBER, ATVI, MT, BIDU, BLL, BDX, BMY, CAH, DNKN, EL, EXPO, FCAU, FTNT, HBI, IQ, K, MPW, NYT, NLOK, PENN, PM, PINS, SPGI, SNY, SKX, TTWO, TPR, TMUS, TWTR, TSN, WWE, WYNN, XYL, & YUM.

Action Plan

A soaring day in the market as bulls stage a relentless push once again breaking records.  After the bell, the Senate voted to acquit the President of all charges and this distraction is now in the rearview.  During the night, China announced it would cut tariffs on hundreds of US goods by half a gesture they say is an attempt to improve the trade relations between the two countries.  Numbers on the Coronavirus continue to grow rapidly with now more than 28,000 confirmed cases and 563 deaths.  Japan reported ten more people on the quarantined cruise ship have tested positive bring the total to 20 cases.  Over the last 3-days, the market has done a good job of ignoring the potential economic impacts of the outbreak; one has to wonder how much longer that can continue. 

Tariff cuts, earnings and economic reports will provide plenty of opportunities for price volatility to continue today.  The T2122 indicator went from oversold or overbought in just 3-days of trading, indicating just how emotionally charged and volatile price action has become.  After such a strong run, it might be wise to consider taking some profits rather than chasing stocks that appear very extended or pushed up against resistance levels.  Futures this morning are once again pointing to a gap up open, and it’s very easy to feel the fear of missing out and find yourself wanting to chase.  Consider your risks carefully as the bulls continue to stretch stocks far from support levels.

Trade Wisely,

Doug

Those Bulls Keep Running

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Once again, the bulls ran wild on Wednesday.  Markets gapped up by almost a percent and then proceeded to run higher in the SPY and DIA.  The QQQ also gapped higher, but then faded the gap, mostly due to a sharp pullback by TSLA after its parabolic move Monday and Tuesday.  The SPY closed up 1.15%, the DIA up 1.67% and the QQQ also closed up 0.33%.  This made for new all-time high closes in the SPY and QQQ again.  It is worth noting that the major indices (including the VXX) are a bit extended from their moving averages.  In addition, the T2122 closed at 88.05 which is in overbought territory.

As usual, the coronavirus story continues to be the top story.  Confirmed cases are now over 28,000 and deaths have hit 563.  In related news, YUM China has closed 30% of its stores due to the outbreak.  TSLA also closed it dealerships in China and announced the delay in delivery of the vehicles that have already been sold there.  In addition, Japan has quarantined a CCL cruise ship for two weeks after 20 passengers have tested positive.

In a potentially related story, China announced that it will cut in half the retaliatory tariffs placed on US goods (in response to the US tariffs).  In some cases that means going from 10% to 5% and in others from 5% to 2.5%.  Analysts seem mixed on what to make of the move.  Some feel this is a sign of improving relations and more proof that President Trump’s trade war worked.  Others suspect this is a goodwill gesture in front of China not meeting the import quotas announced as part of Phase One of that deal.  In either case, markets are taking it as good news.

After hours Wednesday, markets saw a number of earnings beats.  Among these were CINF, CTSH, FMC, FOX, FOXA, MET, and QCOM.  On the other side, AVB, LNC, and ORLY all posted misses.

Overnight, Asian markets continue to rebound with green across the board again.  The same is true in most of Europe, with green everywhere except Russia and Athens at this point.  As of 7:30 am, U.S. futures are also pointing to another gap higher, this time by about four-tenths of a percent. 

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Thursday’s major economic news is limited to Weekly Jobless Claims and Q4 Nonfarm Productivity (both at 8:30 am).  However, there are a couple FOMC speakers during the day.  On the earnings front, among those reporting before the open are: ABMD, BLL, BMY, CAH, CI, EL, HBI, ICE, K, MAC, PM, REGN, SPGI, SNA, TPR, TWTR, TSN, VMC, WLTW, XYL, and YUM.

The bulls have been relentless this week and pre-markets are telling us to expect more of the same.  However, pay attention to what happened in TSLA on Wednesday.  The take-off of a jet plane is awesome.  However, if the jet runs out of fuel, it falls out of the sky like a rock and that too can throw you back in your seat.  Both long-term and short-term trends are clearly bullish.  However, I think we need to remain nimble, hedged or cautious here.  

Remember, nobody ever went broke taking profits and reducing risk.  We talked about this in the room yesterday afternoon where people were hesitant to take 30%, 50%, or even 100% profits off the table.  Yes you may be able to squeeze more out of a trade, but you can also give back those impressive gains in a heartbeat.

Ed

Sorry Rick is out sick today. So no Swing Trade Ideas for your consideration and watchlist now. I will pull together a list by 9:10am Eastern and present them in the room. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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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Ravenous Bulls

by
Ravenous Bulls

A mixed bag of earnings results and a growing outbreak now approaching 25,000 infected is no deterrent for the ravenous bulls as the QQQ leaps to new record highs yesterday and is once again gaping sharply higher this morning.  Let’s party like it’s 1999, but be careful chasing stocks already extended.  Plan your trades carefully at or near price support levels with a logical stop in place in case the music suddenly ends.  No one knows when that might be so follow your rules, avoiding those emotional mistakes that can prove very costly when we get caught up in the chase.

Asian markets were once again green across the board overnight, with China regaining another 1.25% after selling off 7% on Monday.  European markets and US Futures both turn higher after and unconfirmed Chinese TV report of a dug break-though for the corona outbreak.  Anything is possible with a big day of earnings and economic reports, so expect the wild price action to continue.

On the Calendar

On the hump day earnings calendar, we have a busy day with more than 160 companies stepping up to report.  Notable reports include ABB, AVB, BSX, ELY, CINF, COTY, ELF, ENR, FEYE, FLO, GM, GPRO, GRUB, HUM, IAC, IRBT, MRK, MET, OHI, ORLY, QCOM, RGLD, SAVE, SPOT, TWLO, YUMC, & ZNGA.

Action Plan

An early morning rally in the US Futures rally after a Chinese TV report of drug breakthrough for the coronavirus.  Even though the story is unconfirmed, this emotional market lept up nearly 300 points in early morning trading.  As of last night, there are nearly 25,000 confirmed cases and more than 490 deaths.  American and United announced overnight they are stopping flights to Hong Kong and Princess Cruise Line quarantines 3700 passengers after confirming 10 cases of the virus on board.  Disney reported is expects a 175 million impact for the closing of its parks in China, and analysts have started to adjust next quarter expectations on companies exposed to the virus outbreak.  NKE reported possible production delays due to their material supply chain from China is experiencing significant delays.

Despite the pending impacts, the US markets continue to rip higher with the QQQ setting a new record high yesterday.  If fact, it would seem that the ravenous appetite to buy already extended stock prices has increased.  Even stocks that appear to be in parabolic patterns such as TSLA continues to attract buyers with seemingly no concerns about price.  I am not saying the conditions are the same but the relentless buying is reminiscent of the tech run-up in 1999.  Though I risk sounding like a broken record, traders should guard themselves against chasing stock prices without regard to the last price support.  You don’t want to be the last person looking for a chair when the music stops.

Trade Wisely,

Doug