Monday began with enthusiasm gapping higher but then quickly faded into a low-volume consolidating session ending in mixed results. The Mag7 stocks garnered the majority of yesterday’s energy pushing the QQQ toward an all-time high breakout as the SPY squeaked out a small win adding to its seven-week run. Today traders will have a few notable earings as well as a Housing Starts and Permits report to find inspiration. The attacks in the Red Sea risk affecting the global supply chain so keep an eye on oil as it seems particularly sensitive to the situation.
During the night Asian markets closed mostly higher with only the HSI moving lower after Japan kept its rate policy unchanged creating a steep decline in the yen. European markets trade mixed but mostly lower this morning as they monitor the G7 meeting of finance with central bank officials. However, U.S. futures continue to pump the premarket higher working to achieve the headlines of the Nasdaq and SP-500 all-time highs.
Economic Calendar
Earnings Calendar
Notable reports for Wednesday ACN, FDS, FCEL FDX, SCS. WOR.
News & Technicals’
The Red Sea, a vital waterway for global trade, is under threat from Iran-backed Houthi militants who have launched a series of attacks on ships in the area. The attacks have coincided with the ongoing war between Israel and Hamas, raising fears of a wider regional conflict. As a result, several major shipping lines, including BP and Maersk, have halted their services through the Red Sea, disrupting the supply chain of goods and commodities. To counter the Houthi threat, the U.S. and its allies have initiated Operation Prosperity Guardian, a maritime security operation that aims to protect the ships and deter further attacks. The operation is an extension of the U.S. naval force in the Red Sea, which has been facing increasing challenges from the Houthi rebels.
Tesla, the electric car maker, is reportedly raising the hourly wages of some of its employees at its Nevada battery plant by 10% or more, according to CNBC. The company, which has faced labor disputes and unionization efforts in the past, may be trying to appease its workers and prevent them from seeking a collective bargaining agreement in the U.S. The wage hike, which was revealed in internal documents obtained by CNBC, could affect thousands of workers at the Gigafactory, where Tesla produces batteries and powertrains for its vehicles.
Enphase Energy, a solar company that produces microinverters, announced that it will cut 10% of its staff as part of a restructuring plan. The company has been struggling with low demand for its products, as high-interest rates have made solar installations less attractive. Enphase’s stock price has plummeted 53% this year, reflecting its poor performance. The company expects to incur $16 million to $18 million in costs related to the layoffs and the impairment of some of its assets.
The stock market indexes ended Monday with mixed results in a calm low-volume consolidating session. That said the S&P 500 and the Nasdaq added small gains to its seven-week winning streak thanks mostly to the push in the Mag7 stocks. Interest rates rose a bit, but the 10-year Treasury yield stayed below 4% and close to its July low. Today traders will look for inspiration in the Housing Starts and Permits report coming in before the bell and some Fed speeches in the afternoon. We also have a few notable earnings reports that could add a bit of price volatility. In this parabolic condition plan carefully as a pullback could begin at any time so try to avoid the fear of missing out chaising already extended names.
On Friday, markets were essentially dead all day but bookended by volatility. SPY gapped down 0.50%, DIA gapped down 0.41%, and QQQ opened 0.11% higher. At that point, all three major index ETFs waffled sideways in a fairly tight range. SPY spent its day along the opening level. DIA spent most of the day inside its morning gap. Meanwhile, QQQ floated sideways above its gap-up open level. Then the last 10 minutes of the day saw huge volatility as a 5-minute burst higher followed immediately by a 5-minute plummet lower, both on heavy volume, took the market out not far from where it started the day. This action gave us a gap-down Doji in the SPY, a gap-down white-bodied Spinning Top in the DIA, and a small white-bodied candle with an upper wick in the QQQ. QQQ gave us an all-time high close with both the large-cap index ETFs closing within a percent of their own all-time high closes.
On the day, nine of the 10 sectors were in the red with Utilities (-1.64%) way out front leading the way lower while Technology (+0.17%) lagged behind the other sectors. At the same time, the SPY lost 0.57%, DIA lost 0.19%, and QQQ gained 0.48%. The VXX gained 3.33% to close at 16.14 and T2122 dropped down to just outside its overbought territory to close at 79.52. 10-year bond yields fell again to 3.921% and Oil (WTI) was up slightly to close at $71.79 per barrel. So, on Friday, the large caps relieved some over-extension while the QQQ kept melting higher. This was punctuated by volatility that was likely caused by triple witching options expiration day. This happened on heavier-than-average volume in DIA and QQQ while volume in SPY was average. It is also worth noting that last week was the seventh-straight strongly bullish week in a row in all three major index ETFs. So, we are due for at least a rest.
The major economic news reported Friday included the NY Fed Empire State Mfg. Index which came in far below expectations at -14.50 (compared to a forecast of +2.00 and a November value of +9.10). Later, November Industrial Production (month-on-month) came in a tick lower than predicted at +0.2% (versus a forecast of +0.3% but well above the October reading of -0.9%). On a year-on-year basis, Nov. Industrial Production was lower but well up from one year ago at -0.39% (compared to the 2022 reading of -0.96%). Later the S&P Global Mfg. PMI was reported lower at 48.2 (versus a forecast of 49.3 and a prior reading of 49.4). At the same time, S&P Global Services PMI came in higher than anticipated at 51.3 (compared to a forecast of 50.6 and the prior value of 50.8). This combined into an S&P Global Composite PMI of 51.0 (up from the prior reading of 50.7).
In Fed talk news, on Friday NY Fed President Williams pushed back against rate cuts, saying “we aren’t really talking about rate cuts right now.” Williams went on to tell CNBC it was “premature” to speculate about cuts at this time. However, later, Atlanta Fed President Bostic said he believes the FOMC will begin reducing rates during the third quarter of 2024. Bostic told Reuters, “I’m not really feeling that this is an imminent thing.” Still, he then went on to say, “The risk that inflation is going to spike has really, I think, declined significantly. It is not zero, but it is lower.” He also told the interviewer that he expects a soft landing, saying “no one is talking to me as if large job losses are imminent.” Lastly, he indicated that his current outlook call for two quarter-point rate cuts in 2024 and that this is less than the three cuts envisioned by many colleagues.
In stock news, on Friday, NIO announced they will launch a cheaper brand of their electric vehicles to Europe in 2025. At the same time, Bloomberg reported that HCSG and ELV are in a bidding war, competing to buy CI’s Medicare Advantage unit. Later, in an interview with Bloomberg, BLK said it is adapting to the Fed’s recent shift toward easing in 2024 by moving its fixed-income bond investments toward longer-duration positions. At the same time, PLTR announced it had received a $115 million contract extension from the US Army. Elsewhere, FSR said it had begun the final over-the-air software update for their electric vehicles in 2023. Later, the Wall Street Journal reported that DOCU is in the early stages of exploring a sale. Potential bidders were said to be both private equity as well as technology firms. After the close, Reuters reported that KKR had purchased a $7.2 billion portfolio of recreational vehicle loans from BMO. (The price of the deal was not disclosed.) After the close, Bloomberg reported that China’s ban on AAPL phones by government agencies/contractors has accelerated and expanded. It said the new policies forbid people from bringing any such phones or devices to their offices. The article said the policy also included “other foreign device makers” but none were specifically mentioned.
In stock government, legal, and regulatory news, Reuters reported Friday that XOM’s income tax rate has dropped more than 3% over the last 5 years due to massive deductions passed by the Trump Administration. In fact, accelerated depreciation deductions lowered its rate to 2.5% in last year. At the same time, the Dutch vehicle authority said that no recall of TSLA vehicles is currently planned in Europe despite the concerns that caused the massive US recall. Later the NHTSA said it has started an investigation into NSANY (Nissan) related to 455k vehicles over engine failure reports where vehicles have lost power while in motion, raising safety concerns. Elsewhere, Republicans in the House of Representatives subpoenaed BLK and STT in their effort to prove corporate ESG policies violate antitrust laws. (BLK responded by saying “Having already produced more than 7,700 documents and 91,000 pages, a subpoena was not necessary but we understand this is the Committee’s practice, and we will continue to cooperate.” Meanwhile, STT said, “We remain confident that we have not violated any anti-trust laws.” After the close, Reuters reported that FDA investigators found quality control lapses at MRNA’s main factory, including equipment issues on machines used in the production of COVID-19 vaccines. The inspections were in September and disclosed Friday as part of a Freedom of Information request. Later, on Friday evening, a US court struck down the FTC’s order against ILMN’s purchase of Grail (a cancer diagnostic test maker). The three-judge panel ordered reconsideration of the deal. Finally, Friday night, Reuters reported that ATVI will pay $50 million to settle a 2021 lawsuit by a CA regulator that alleged the company discriminated against women employees. (The company paid $18 million to settle similar claims brought by the US EEOC.)
Overnight, Asian markets leaned toward the red side with only three of 12 exchanges in the green. Shenzhen (-1.13%) and Hong Kong (-0.97%) were by far the biggest movers in the region. In Europe, markets are mixed but also lean toward the red at midday. The CAC (-0.28%), DAX (-0.30%), and FTSE (+0.59%) lead a region with six bourses in the green and nine in the red in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a start to the day on the green side of flat. The DIA implies a +0.18% open, the SPY is implying a +0.22% open, and the QQQ implies a +0.09% open at this hour. At the same time, 10-year bond yields are down a bit to 3.911% and Oil (WTI) is up three-quarters of a percent to $71.97 per barrel in early trading.
There is no major economic news scheduled for Monday. There are also no major earnings reports scheduled for before the open. Then, after the close, HEI reports.
In economic news later this week, on Tuesday we get Nov. Building Permits, Nov. Housing Starts, TIC Net Long-Term Transactions, and the API Weekly Crude Oil Stocks. Then Wednesday, Q3 Current Account, Conf. Board Consumer Confidence, Nov. Existing Home Sales, and EIA Crude Oil Inventories are reported. On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q3 GDP, Q3 GDP Price Index, Philly Fed Mfg. Index, and the Fed Balance Sheet. Finally, on Friday, Nov. PCE Price Index, Nov. Core PCE Price Index, Nov. Durable Goods, Nov. Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, Michigan 5-year Inflation Expectations, and Nov. New Home Sales are reported.
In terms of earnings reports later this week, on Tuesday, ACN, FDS FDX, SCS, and WOR report. Then Wednesday we hear from GIS, TTC, WGO, MU, and MLKN. On Thursday, KMX, CCL, CTAS, PAYX, AIR, NKE and WS report. There are no earnings reports on Friday.
In positive miscellaneous news, Quiver Quantitative reported Friday that the Fed pivot during 2024 will unlock an enormous $6 trillion in cash currently stashed in money markets and short-term bonds. The analyst suggests that this could be the driver for another leg of rally as “dry powder” is put to work seeking higher returns. BLK data shows that this has been the case in post-hike periods. In other somewhat hopeful news (in terms of keeping consumers, the engine of the economy, above water), gasoline prices have reached a new low since early 2021. In addition, mortgage rates are heading in the same downward direction, albeit much more slowly than gas, which could help home buyers.
In negative miscellaneous news, mining magnate Friedland (who founded IVPAF and IVN.TO) told Bloomberg Friday that copper prices need to reach $15,000/ton before mining firms will build new mines to expand the supply. He expects demand from new cleaner energy transitions to increase copper prices to $9000 per ton in 2024. (Up from the current $8470/ton.) However, according to Friedland, this is nowhere near what is needed to justify expanding operations. Elsewhere, in the wake of recent Houthi missile attacks, shipping giants AMKAF (Maersk) and HLAGF (Hapag-Lloyd) have suspended shipping through the Red Sea (meaning also through the Suez Canal). This means shipping routes become longer, slower, and more expensive as ships are now being routed around the horn of Africa instead. (It is worth noting, that prior to the Israel-Hamas war, 12% of global trade passed through the Red Sea.) In late-breaking news, oil giant BP joined the list of companies rerouting all shipments away from the Suez Canal and Red Sea to reduce risk (at the cost of greatly increased shipping expense and time).
In last-minute news, overnight Japan’s Nippon Steel announced it had agreed to buy X for $14.9 billion. That amounts to $55 per share. X has skyrocketed in premarket trading but remains $5 below the offer price at this point. Elsewhere, LUV has agreed to pay a $35 million fine and $115 million in passenger compensation for last December’s massive spate of thousands of flight cancellations which left two million passengers stranded.
With that background, it looks like all three major index ETFs are looking to move modestly higher in premarket action. The SPY and QQQ are giving us very small, white-bodied candles so far in the early session. However, DIA is printing by far the largest and black-bodied candle, having faded most of its premarket gap up. All three remain well above their T-line (8ema) this morning. So, overall, the Bulls remain well in control of both the longer-term trend and the short-term trends. In terms of extension, none of the three major index ETFs are too far extended above their T-lines. However, the T2122 indicator sits just barely outside of its overbought range. This could mean the Bulls need more rest and consolidation to avoid exhaustion. However, strictly speaking both the Bulls and Bears have some room to run if they gather the momentum to do so.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 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
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
Friday’s market was light and choppy as investors seemed to rest after seven straight weeks of buying pushing equity charts into parabolic patterns. That said, there is still nothing in the price action that would suggest the bears are waking up but we should not be surprised if profit-taking begins at any time. With light earnings an economic calendar and the gap up open suggested in the futures market watch for the possibility of a pop-and-drop as Asian and European markets pull back slightly.
Overnight Asian markets mostly declined with only South Korea squeaking out a positive close on defense sector gains. European markets trade mostly in the red this morning with only the FTSE higher after five straight weeks of gains. U.S. Futures, however, wants to keep the buying party going into the new week but after seven consecutive weeks of gains and a holiday just around the corner profit-taking could begin at any time.
Economic Calendar
Earnings Calendar
The only notable report for Monday is HEI.
News & Technicals’
Nippon Steel, the largest steelmaker in Japan, is eyeing to acquire United States Steel, the second-largest steel producer in the U.S., in a deal that could be worth more than 1 trillion yen ($7.01 billion), according to the Nikkei newspaper. The report, which was published on Monday, did not receive any confirmation from Nippon Steel, as its spokesperson refused to comment on the matter. The report said that Nippon Steel views the U.S. as a promising market that can compensate for the shrinking demand in Japan, where the population and the economy are aging. The report also said that Nippon Steel intends to make U.S. Steel a fully owned subsidiary, as part of its global expansion strategy.
Southwest Airlines, the largest domestic carrier in the U.S., agreed to pay a $35 million fine and a $140 million settlement to end a federal probe into its massive flight disruptions in December 2022. The airline had canceled thousands of flights and left more than 2 million travelers stranded over the holidays, due to a combination of bad weather, staffing shortages, and operational issues. The settlement will mostly be used to reimburse future passengers, as the U.S. Department of Transportation wants to encourage Southwest to prevent such chaos from happening again. The government said that this was the biggest penalty it has ever levied on an airline for breaking consumer protection laws.
The former head of the Federal Deposit Insurance Corporation (FDIC), Sheila Bair, has warned that the Fed is fueling a false sense of optimism in the markets by signaling possible rate cuts in 2024. Bair, who oversaw the FDIC during the worst financial crisis since the Great Depression, criticized Fed Chair Jerome Powell for being too soft on inflation and fostering a climate of “irrational exuberance” among investors. She argued that the Fed should focus more on keeping inflation under control, rather than stimulating the economy with lower interest rates.
The equity markets mostly chopped on Friday perhaps needing a rest as after seven straight weeks of rally producing parabolic patterns but no sign of the bears or profit-takers stepping up just yet. Small-cap stocks outperformed the rest, surging over 5% this week and about 11% in December, as investors became more hopeful about the economic recovery, and a Fed rate pivot next year. Interest rates held steady Friday, as bond yields held near July lows. Today we have a very light day of data with only one notable earnings report coming after the bell and the Housing Market Index report on the economic calendar. Traders should bear in mind with Christmas next Monday volume could begin to quickly decline by mid-week as folks extend holiday vacations.
Markets gapped higher at the open on Thursday. The SPY gapped up 0.44%, DIA opened 0.31% higher, and QQQ gapped up 0.40%. At that point, SPY wobbled sideways around that opening level, visiting the highs of the day again at 1 p.m. At the same time, QQQ sold off and then bounced back to the open level at about 12:50 p.m. DIA actually trended modestly higher all morning reaching the high of the day at about 12:50 p.m. From there, all three major index ETFs sold off sharply reaching the low of the day at 2 p.m. Then all three rallied the remainder of the day. This action gave us gap-up, indecisive Doji or Spinning Top candles in all three. All remain well above their T-line (8ema). The action also left the DIA at another all-time high and all-time high close, QQQ within 1.3% of its all-time high, and SPY within 1.7% of its all-time high.
On the day, eight of the 10 sectors were in the green with Basic Materials (+2.65%) and Energy (+2.47%) out in front leading the way higher while Consumer Defensive (-0.79%) lagged behind the other sectors. At the same time, the SPY gained 0.32%, DIA gained 0.43%, and QQQ lost 0.09%. The VXX fell another 0.57% to close at 15.62 and T2122 ticked down but remained in the top end of its overbought territory to close at 97.90. 10-year bond yields fell again to 3.921% and Oil (WTI) spiked another 3.15% to close at $71.65 per barrel. So, on Thursday, the market was very stretched and the Bulls needed rest. However, we gapped higher again at which time markets became undecided as traders realized the market was very stretched. This all came on above-average volume in the DIA and QQQ, as well as average volume in the SPY.
The major economic news reported Thursday included Weekly Initial Jobless Claims, which came in lower than expected at 202k (compared to a forecast of 220k and the prior week’s 221k). Meanwhile, Weekly Continuing Claims rose to 1,876k (versus a forecast of 1,887k and the previous week’s 1,856k). At the same time, Nov. Export Price Index came in better than expected a -0.9% (compared to the -1.0% forecast and the October reading of -0.9%). On the other side, the Nov. Import Price Index also fell less than predicted at -0.4% (versus a forecast of -0.8% and October’s -0.6%). At the same time, November Retail Sales remained strong at +0.3% (compared to a forecast calling for -0.1% and October’s -0.2%). Later, October Retail Inventories were right in line with the anticipated at -0.9% (versus a forecast of -0.9% and much better than the September +0.4%). At the same time, Oct. Business Inventories were better than we predicted at -0.1% (compared to a 0.0% forecast and a Sept. +0.2%). Finally, after the close, the Fed Balance Sheet actually GREW by $3 billion this week as it was reported at $7.740 trillion (versus the prior week’s $7.737 trillion).
After the close, COST, LEN, and NASB all reported beats on both the revenue and earnings lines. Meanwhile, SCHL missed on both the top and bottom lines. It is worth noting that LEN raised its forward guidance while SCHL lowered its own guidance. It is also worth noting that COST announced a special $15/share dividend for holders of record on 12/28 to be payable on 1/15/24.
In stock news, on Thursday, GM fired nine executives and 900 employees (24% of its workforce) from the Cruise autonomous taxi unit amidst a continuing investigation of safety following an Oct. 2 incident where one of the taxis ran over and dragged a pedestrian 20 feet. At the same time, C announced it would close its municipal business unit (which underwrites loans to state and local governments). Meanwhile, INTC announced a new line of high-end AI products to be released in 2024, which they claimed were more powerful than the current pure performance leader from NDVA. Later, T announced they would add RIVN electric vehicles to their corporate fleet in 2024. (Financial details were not disclosed.) Elsewhere, a coalition of Nordic institutional investment funds sent a letter to TSLA on Thursday, “expressing concern” that the company has refused to enter into collective bargaining, specifically with Swedish mechanics. (The letter stopped short of threatening to divest but that may be implied given the large funds involved and the region’s social and economic climate.) Later, Reuters reported that WH franchise operators are expressing concern that the hostile takeover bid launched by CHH could hurt their business. (80% of the franchisees surveyed said the merger would hurt their individual business.) Late in the day, BP announced it had restarted a gasoline pipeline in WA state. The pipeline had been closed after it leaked 25,000 gallons on Sunday. After the close, GM announced it would lay off 1,300 workers at two MI plants in January.
In stock government, legal, and regulatory news, the FDA approved an MDT treatment for atrial fibrillation (irregular heartbeat), which is a major market niche. At the same time, Italian police seized $94.5 million from UPS over alleged tax fraud and illegal labor practices. Later, the NRLB released a complaint against SBUX, alleging the coffee company closed 23 stores to discourage unionization as well as eight stores that had recently unionized. This is now subject to a lawsuit. At the same time, the FTC announced it would issue its decision on the KR acquisition of ACI for $24.6 billion on January 17. However, sources reported that the agency is already working on a lawsuit that will be filed to stop that deal as soon as early January. Later, the FDA issued a warning to CHWY and four other companies for selling (and in some cases making) unapproved animal antibiotics. At the same time, the NHTSA announced it was opening an investigation into 447k VLKAF (Volkswagen) Golf and Audi A3 cars over fuel leaks. (Some of these cars were subject to a 2016 recall that was supposed to solve the issue.) Elsewhere, a judge in San Francisco ruled Thursday that Elon Musk must testify again in the SEC investigation of his $44 billion takeover of Twitter.
Overnight, Asian markets were mixed but mostly in the green. Hong Kong (+2.38%) and India (+1.29%) led the gainers while Shanghai (-0.56%) and Shenzhen (-0.35%) paced the losses. In Europe, we see a similar picture taking shape with 10 of the 15 exchanges in the green at midday. The CAC (+0.60%), DAX (+0.28%), and FTSE (-0.28%) lead the region higher in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward another green start to the day. The DIA implies a +0.26% open, the SPY is implying a +0.24% open, and the QQQ implies a +0.33% open at this hour. At the same time, 10-year bond yields continue to fall and are at 3.902% while Oil (WTI) is up a half of a percent to $71.97 in early trading.
The major economic news scheduled for Friday includes NY Empire State Mfg. Index (8:30 a.m.), Nov. Industrial Production (9:15 a.m.), S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI (all at 9:45 a.m.). The major earnings report scheduled for before the open is limited to DRI. There are no major earnings reports scheduled for after the close.
In miscellaneous news, the International Energy Agency (IEA) revised the 2024 oil demand forecast Thursday, increasing the projected demand for oil upward by 130k barrels per day in the US. In total, the IEA increased the global demand forecast by 1.1 million barrels per day. This revised forecast reflected a more positive outlook on the US economy. (This was the proximate cause of Thursday’s spike in oil prices.) At the same time, the US average mortgage rate fell below 7% for the first time in four months. Meanwhile, Bloomberg reported that US car dealer inventory of electric vehicles grew to a 114-day supply. (This compares to a 71-day supply of cars overall and a 53-day supply of EVs one year ago.)
In geopolitical news, the European Union began formal talks with Ukraine over that country’s admission into the EU. This was a surprise decision and well ahead of the planned schedule. However, Putin-lackey Victor Orban of Hungary vetoed a critical EU aid $55 billion aid package for Ukraine. This comes the same week as Republicans blocked another attempt to pass more US aid to Ukraine over their domestic political agenda. As one result of the loss of outside support for Ukrainian sovereignty and democracy, Russia’s Putin told a 4-hour live Q/A panel that Ukraine’s support is crumbling, his forces remain on the offensive on all fronts, and he has no intention of ending the war until he has conquered all of Ukraine, disarmed then, and installed a neutral (read Russia obedient) government. In Israel, the defense minister told the press that the war will continue for about seven months according to their projections. Having already extracted a 30-40:1 retribution, and now publicly ruled out both the Palestinian Authority (from the West Bank), Hamas, and foreign troops as post-war governance for the area, the options in Gaza are bleak. (Only annihilation, subjugation, annexation, or diaspora come to my mind.) So, it seems Autocracy is all the rage on the political right across the world.
So far this morning, DRI missed on revenue (slightly = 0.4%) while beating on earnings (significantly = 9.7%).
With that background, it looks like all three major index ETFs are looking to follow through on again. All three major index ETFs opened the premarket a bit higher. However, they are printing small, indecisive (Doji-like) candles so far in the early session. All three remain well above their T-line (8ema) this morning. So, overall, the Bulls remain well in control of both the longer-term trend and the short-term trends. In terms of extension, all three major index ETFs remain extended above their T-lines. The T2122 indicator also remains in the top of its overbought range. This means the Bulls need rest and consolidation to avoid exhaustion in order to keep the rally healthy. We just have to remember that the market can remain stretched too far in either direction a lot longer than we can stay solvent betting on a reversal that hasn’t happened yet. Also remember this is Friday, payday, and a two-day weekend news cycle lies ahead. So, prepare your account by taking profits, hedging, buying insurance, and/or lightening up positions. And keep in mind that chasing a bull after he’s been running is a good way to get gored.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 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
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
Jerome Powell gave a nod to the market and bulls celebrated as they held rates steady but suggested three cuts in 2024. Bond yields plunged as did the dollar on the FOMC decision spiking commodity prices, real estate, and utilities. As parabolic as the indexes appear the celebration could continue today with an ECB rate decision pending. We will also look for bullish or bearish inspiration in the Jobless Claims, Retail Sales, and a handful of notable earnings including the very parabolic Costco at record highs. Plan carefully with indexes so extended in the short term a profit-taking wave could begin at any time.
Asian markets traded mostly higher with only the Shanghai and Nikkei exchanges seeing modest declines. European market trade is decidedly bullish across the board this morning as they wait on ECV and Bank of England rate decisions. U.S. Futures want to keep the party going this morning pointing to another gap up open ahead of earnings and economic reports.
Economic Calendar
Earnings Calendar
Notable reports for Thursday COST, JBL, & LEN.
News & Technicals’
The Federal Reserve (Fed) decided to keep its key interest rate unchanged on Wednesday, for the third time in a row and signaled that it will lower its rate in 2024 and beyond. The Fed said that the inflation rate has moderated and the economy has remained stable, and therefore it was appropriate to maintain the benchmark overnight borrowing rate in a range of 5.25%-5.5%. The Fed also projected that it will cut its rate at least three times in 2024, by 0.25% each time. This is less than what the market expects, which is four rate cuts, but more than what the Fed had previously suggested. The Fed’s outlook reflects its balance between supporting the economic recovery and controlling the inflationary pressures.
Treasury yields dropped to their lowest levels in months on Thursday, as investors reacted to the Federal Reserve’s guidance on the future of interest rates. The Fed said on Wednesday that it will keep its interest rate unchanged for now, but signaled that it will start cutting its rate in 2024 and beyond. The Fed’s outlook reflected its balance between supporting the economic recovery and controlling the inflationary pressures. The market responded by lowering the yields on the 10-year and the 2-year Treasury bonds, which are influenced by the Fed’s policy. The 10-year yield fell below 4% for the first time since August, while the 2-year yield declined by more than 14 basis points. The yields had already fallen sharply on Wednesday, after the Fed’s announcement. The lower yields indicate that investors are expecting lower interest rates and slower economic growth in the future.
Adobe’s quarterly earnings for the fourth fiscal quarter beat the market’s forecasts, but its outlook for fiscal 2024 fell short of the projections. The software company said that it is waiting for a verdict from the U.S. Department of Justice on its proposed purchase of Figma, a design platform.
Jerome Powell spoke and the bulls celebrated moving stocks sharply higher into parabolic new record highs. The Fed decided to keep policy rates unchanged while lowering its forecasts for inflation and policy rates in 2024. Bond yields moved sharply lower as did the dollar which spiked precious metals and other commodities. The Russell 2000 Index outshined on the day, gaining over 3%, however, continues to lag way behind the other indexes despite the nearly 14% increase in a month. The sectors that performed well were the utilities and real estate sectors, which are sensitive to interest rates, both increasing by over 3%. Today the ECB will make its rate decision along with Jobless Claims, Retail Sales, Import/Export Prices, Business Inventories, and Natural Gas reports supplying bullish or bearish inspiration. There is also a handful of notable earnings to keep traders guessing. Although the celebration is likely to continue in the short term keep in mind a substantial market pullback should be expected in the near future so plan carefully.
Wednesday saw a dead market all morning and then a rocket ship in the afternoon. SPY opened 0.07% higher, DIA opened just 0.01% higher, and QQQ gapped up 0.22%. However, after that, all three major index ETFs just waffled sideways until 2 p.m. At that point, there was a market-wide shot straight up until 3:05 p.m. (reaching new all-time highs in the DIA) when we saw 20 minutes of profit-taking. Then the rally started again and lasted into the close where we went out near (SPY and QQQ) or at (DIA) the highs. This action gave us large, white-bodied candles with very small lower wicks and no (or tiny) upper wicks. All three major index ETFs remain well above their T-line (8ema). DIA is at an all-time high close and within 4 cents of its all-time intraday high reached in the afternoon. Meanwhile, SPY is within 2% of its own all-time high and now sits at the high since the first couple of days of 2022. QQQ is sitting at its high since Dec. of 2021 and within 1.5% of its all-time high. In short, the bulls have been on a wild and parabolic run for the last five days.
On the day, all 10 sectors were in the green with interest-sensitive Utilities (+3.72%) way, way out in front leading the way higher while Communications Services (+0.99%) lagged well behind the other sectors. At the same time, the SPY gained 1.37%, DIA gained 1.45%, and QQQ gained 1.27%. The VXX fell another 1.19% to close at 15.71 and T2122 spiked back up to the very top of its overbought territory to close at 98.44. 10-year bond yields plummeted to 4.026% and Oil (WTI) jumped 1.73% to close at $69.80 per barrel. So, on Wednesday, the market waited for the Fed. Then traders heard exactly what they expected and had hoped for. This led to a wild rally in the last two hours of the day. These moves were on volume as, for once in the last week, all three major index ETFs were at average volume.
The major economic news reported Wednesday included November PPI (month-on-month), which came in better than expected at 0.0% (compared to a forecast of +0.1% but higher than the October reading of -0.4%). At the same time, November Core PPI (month-on-month), came in even better than predicted at 0.0% (versus a forecast of +0.2% but in line with the October value of 0.0%). Later, EIA Weekly Crude Oil Inventories showed a much bigger drawdown than anticipated at -4.259 million barrels (compared to a forecast of a drawdown of -0.650 million barrels and just shy of the prior week’s -4.632 million barrels). However, the big news of the day was the Fed.
In Fed news, the FOMC held the Fed Funds Rate flat (as expected) for a third straight meeting at 5.25%-5.50% in a unanimous vote. The Dot Plots show a current Fed Funds Rate projection of 5.40% for yearend (down two-tenths of a percent from the end of September). One year out, the projections is for a Fed Funds Rate of 4.6% (down half a percent from the late September projection). Two years out, the dot plot projects 3.6% (down three-tenths of a percent from the September forecast). Three years out, the Fed projects a Fed Funds Rate of 2.9% (in line with the September projection). Finally, the long-term projection is for a Fed Funds Rate of 2.5%, which was also in line with the September long-term forecast. This implies three quarter-point rate cuts in 2024, four more in 2025, and three in 2026. (It is worth noting that 17 or 19 FOMC members project those three quarter-point rate cuts in 2024.)
In terms of Fed Chair Powell’s Press Conference, he indicated the tightening is likely over with FOMC talks of cuts starting to come into view. Specifically, in answer to a question Powell said “That’s us thinking we’ve done enough,” adding rate increases are “not the base case anymore.” Powell said, “Inflation has eased from its highs, and this has come without a significant increase in unemployment. That’s very good news.” Later, in answer to a question, he said “Recent indicators suggest that growth in economic activity has slowed substantially from the outsized pace seen in the third quarter. Even so, GDP is on track to expand around 2.5% for the year as a whole.” In explaining how the Fed has been able to beat down inflation without causing a recession (how we got a soft landing), Powell said, “This inflation was not the classic demand overload, pot-boiling over kind of inflation that we think about. It was a combination of very strong demand, without question, and unusual supply-side restrictions, both on the goods side but also on the labor side, because we had a [labor force] participation shock.” (This seemed to indicate that since Covid was a primary force in inflation, restricting supply while the government ensured demand by helping people…or giving handouts if you’re on that side…inflation was easier to bring back in line while past unmet demand, from Covid supply restrictions, helped prop up the economy.)
In stock news, on Wednesday, Bloomberg reported that SNAP now has 7 million subscribers for its $3.99 Snapchat+ service launched in July 2022. At the same time, SON announced a $50/ton price increase for its uncoated recycled paperboard. Later, TSLA’s problems in Sweden continued to mount as the Swedish Transport Workers Union revealed Wednesday that their members would stop collecting waste at TSLA locations in Sweden in sympathy strikes on behalf of TSLA workers. GOOGL’s venture capital arm (Google Ventures) has hired a “general partner” to specifically focus on AI startups and projects. Later, GOOGL announced price cuts for its new Gemini AI model. The price has been cut to just 25%-50% of the June announced price.) At the same time, SBUX got some good labor news as a third-party investigation found that the company did not engage in a “union-busting playbook.” However, the report found there were many things the company “can do better” in labor relations. Later, ETSY announced it would cut 225 jobs (11% of the workforce) in its restructuring plan. Elsewhere, Reuters reported that DIS and CMCSA have increased advertising spending on the META Instagram platform (by as much as 40%) in the weeks since the two companies (among many others) halted spending on Elon Musk’s X and Musk told them to “Go F themselves.” At the same time, LCID announced it has assembled more than 800 cars at its new Saudi Arabia plant during the plant’s focus on training new employees. Later, C said they will pay most of the bonuses due to employees who agree to depart (thus avoiding the need for one layoff) as the company undergoes a major restructure that eliminates an entire layer of management. At the same time, Reuters reported that BP has been able to “claw back” more than $40 million from its former CEO Looney after the oil giant determined he had misled the board over personal relationships with colleagues. (Looney was fired Wednesday after admitting a relationship with a subordinate a few months ago.) Later, GM CEO Barra reiterated that the company still plans to end the production of internal combustion vehicles by 2035, despite recent delays in EV projects. Meanwhile, PFE closed at a 10-year low after the company revised down its 2024 sales forecast to $5 billion below analyst consensus. PFE said the reduction reflects “a more conservative and reliable” forecast of its Covid vaccine business.
In stock government, legal, and regulatory news, the NHTSA released documents Wednesday announcing that TSLA will recall more than 2 million of its vehicles (nearly all of them on the road) to fix a faulty Autopilot system that is supposed to ensure drivers are paying attention. The agency said the faults were design faults and may result in foreseeable misuse of the system (which could impact TSLA liability in many liability cases). At the same time, ABNB announced it would pay $621 million to settle outstanding Italian income tax obligations for 2017-2021. ABNB did not admit to tax evasion and will not try to recoup this money from its Italian hosts. This comes after a judge ordered the seizure of ABNB’s Ireland headquarters over alleged tax evasion last month. (2022-2023 were not covered by the agreement and remain outstanding issues.) At midday, Bloomberg reported that its sources indicate AAPL will be hit with an EU antitrust order forcing the company to change the way it blocks App providers from steering customers toward non-AAPL subscription options. This came from a four-year investigation after SPOT had initiated antitrust claims. (If AAPL fails to comply, it could be fined 10% of global annual sales.) After the close, UBS announced that it would pay (on behalf of its acquired CS) $10 million to settle SEC charges of providing prohibited mutual fund services. This came after that company was barred from providing the services after a NJ court found it had violated the law.
After the close, ADBE and NDSN reported beats on both the revenue and earnings lines.
Overnight, Asian markets were mostly green. Only Japan (-0.73%), Shenzhen (-0.62%), and Shanghai (-0.33%) were in the red. Meanwhile, Australia (+1.65%), Thailand (+1.54%), and South Korea (+1.34%) led the gainers. In Europe, 14 of the 15 bourses are in the green at midday with only Russia (-0.01%) barely in the red. The CAC (+1.18%), DAX (+0.58%), and FTSE (+1.85%) lead the continent higher in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a green start to the day. The DIA implies a +0.32% open, the SPY is implying a +0.34% open, and the QQQ implies a +0.43% open at this hour. At the same time, 10-year bond yields have fallen back below the key 4% level to 3.941% and Oil (WTI) is up 1.66% to $70.61 per barrel in early trading.
The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Nov. Retail Sales, Nov. Import Price Index, and Nov. Export Price Index (all at 8:30 a.m.), Oct. Business Inventories and Oct. Retail Inventories (both at 10 a.m.), and the Fed Balance Sheet (4:30 p.m.). The major earnings report scheduled for before the open is limited to JBL. Then, after the close, , COST, LEN, and SCHL report.
In economic news later this week, on Friday, NY Empire State Mfg. Index, Nov. Industrial Production, S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI are reported.
In terms of earnings reports later this week, on Friday, DRI reports.
In miscellaneous regulatory news, the US Commodity Futures Trading Commission voted on Wednesday to approve Crypto exchange and brokerage Bitnomial to also become its own trade clearinghouse. This unanimous bipartisan (two GOP and two Dem board appointees) approval was the first vertical integration of brokerage, exchange, and clearinghouse ever approved by the board. Elsewhere, the SEC voted 4-1 to adopt new clearing rules for the US bond market. The rules require more bond repo trades to be run through clearinghouses, targeting hedge funds and prop trading firms that have become huge players in bond markets but have not been regulated until now. This has resulted in massive leverage, debt-based trade known as “basis trades” that have created large systemic risk like bank leverage trading in 2007. At the same time, the Nuclear Regulatory Agency granted permission for a new type of nuclear reactor Wednesday, the first such approval in 50 years.
In geopolitical news, NATO increased its 2024 budget by 13% to $2.70 billion. At the same time, over in UAE, the COP28 climate summit ended with an agreement and statement widely seen as weak and ineffective. This can be surmised, without even reading the statement, from the fact that oil-producing countries hailed the agreement as historic. While the agreement calls for the reduction in consumption of fossil fuels in an orderly fashion, it sets no global targets, let alone country-specific targets other than the platitude of wanting the world to be at zero by 2050 “in keeping with science.” The statement also calls for the tripling of renewable energy capacity by 2030 globally but again lacks individual country targets or timetables. In the meantime, fossil fuels now account for 80% of global energy and the figure continues to grow. The demonstration reactor will be built in TN and is the first low-pressure, molten salt reactor (Thorium fueled) allowed, although there was a similar design built at the Oakridge TN DOE facility decades ago before being abandoned when the industry convinced the DOE to only allow high-pressure, water-cooled, reactors.
So far this morning, ABM and REVG reported beats on both the revenue and earnings lines.
With that background, it looks like all three major index ETFs are looking to follow through on Wednesday’s Fed move. All three major index ETFs opened the premarket higher and are putting in a small, white-body, indecisive (Doji-like) candle so far in the early session. All three remain well above their T-line (8ema) this morning. So, overall, the Bulls remain well in control of both the longer-term trend and the short-term trends. In terms of extension, all three major index ETFs are now extended far above their T-lines, although QQQ is the most stretched. The T2122 indicator has also jumped back to the very top of its overbought range. This means the Bulls need rest and consolidation to avoid exhaustion and keep the rally healthy. We just have to remember that the market can remain stretched too far in either direction a lot longer than we can stay solvent betting on a reversal that hasn’t happened yet.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 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
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
Markets opened the day mixed and mostly flat on Tuesday. SPY opened down 0.08%, the DIA gapped up 0.18%, and QQQ opened dead flat. Then, after 10 minutes of just gaining their footing, all three major index ETFs rallied higher at best (QQQ) in a good way and at worst (DIA) in a melt-up fashion. This action gave us white-body candles with lower wicks and no upper wicks except in the DIA. This took all three to new highs since January 2022 and within 1% to 3.5% of the all-time highs. Obviously, all three remain above their T-line (8ema). However, this all happened on far less-than-average volume in the SPY, DIA, and QQQ index ETFs.
On the day, five of the 10 sectors were in the green and five in the red with Healthcare (+0.67%) out in front leading the way higher while Energy (-1.39%) lagged well behind other sectors. At the same time, the SPY gained 0.46%, DIA gained 0.47%, and QQQ gained 0.80%. The VXX fell another 2.87% to close at 15.90 and T2122 fell out of its overbought territory to end in the upper part of the mid-range at 71.47. 10-year bond yields fell a bit to 4.204% and Oil (WTI) dropped another 3.55% to close at $68.79 per barrel. So, on Tuesday the bulls again proved unphased by unchanged CPI data (did not fall but was not expected to fall) and continued to rally modestly higher. Some may call it a “melt higher.” The lack of volume may be a larger symptom or, quite possibly, a wait for the Fed on Wednesday afternoon.
The major economic news reported Tuesday included November CPI (month-on-month), which came in slightly above expectations at +0.1% (compared to a forecast of +0.0% and the October +0.0% reading). At the same time, November CPI (year-on-year) came in just as anticipated at +3.1% (versus a +3.1% forecast and down slightly from the October value of +3.2%). Simultaneously, the Nov. Core CPI (month-on-month) was reported as predicted at +0.3% (compared to the +0.3% forecast and a tick higher than October’s +0.2% reading). On a year-on-year basis, Nov. Core CPI was flat at +4.0% (versus the +4.0% forecast and October reading). Later, the November Federal Budget Balance showed a larger deficit than planned at -$314.0 billion (versus a -$301.1 billion forecast and far greater than the October $-67.0 billion deficit). Then, after the close, the API Weekly Crude Oil Stocks report showed a larger-than-expected drawdown of 2.349 million barrels (compared to a -1.500 million barrel forecasted draw and the prior week’s 0.594-million-barrel inventory build).
In Fed Rate news, Tuesday evening (a day after the CPI release) Fedwatch tells us 98.2% of traders are betting rates do not change Wednesday. Just 1.8% now expect a quarter-point hike on 12/13. For January (1/31), there is a 92.2% probability of no change, a 6.1% chance of a quarter-point rate cut, and a 1.7% chance of a 0.25% rate hike. The March 20 probabilities include 54.2% of the current rates, a 42.3% chance of a quarter-point reduction, a 2.6% chance of a half-percent cut, and a 1.0% probability of a quarter-point hike. Finally, in May (5/1), the probabilities include 0.5% of a quarter-point hike from our current rates, a 25.5% chance of the same rates we have now, a 48.7 chance of a quarter-point rate cut, a 23.9% probability of a half-percent cut, and a 1.4% chance of three-quarters of a percent rate cut from current levels.
In stock news, on Tuesday, SPWR entered into an amendment and waiver of its credit agreement with lenders. As part of the amendment, SPWR received $25 million of new revolving credit and existing lenders will also allow access to $25 million of existing credit that had been halted. (The deal requires the company to provide creditors with updated financial data every four weeks.) At the same time, Reuters reported that GM and KMTUY (Komatsu) have said they will jointly develop hydrogen fuel cells for electric mining trucks. Later, CHH “went hostile” in its bid to acquire WH. CHH went public with its cash and stock offer in October ($8 billion at the time but now down to $7.2 billion due to stock price declines). CHH, which owns about 2% of WH, is now in the process of selecting a slate of board candidates to propose against the current board in a proxy fight. At the same time, BA announced it delivered 56 airplanes in November, including 45 737 MAX, two 777 freighters, two 767s, six 787 Dreamliners, and one P-8 maritime patrol aircraft. Elsewhere, STLA announced its Fiat brand will begin selling a fully-electric version of its “500 model” car in 2024. At the same time, PFE said it expects to close its $43 billion deal to acquire SGEN this week. Later, Reuters reported that Type-2 Diabetes patients are having difficulty being reimbursed for multi-use drugs, specifically the massively popular weight loss drugs from NVO and LLY. This could pose a headwind for the companies as insurers UNH, CI, and others are now requiring prior authorization to cover the drugs. At the same time. Bloomberg reported that WBA has started early discussions about exiting its “Boots” UK pharmacy business. (WBA thought about this in the past but shelved the idea. Bloomberg reports internal discussions have just begun again.) Meanwhile, Reuters reported that LHX said it had suspended its acquisition activity (and mergers) “for the foreseeable future” as it seeks to strengthen its balance sheet. After the close, it was announced that the CVLY and ORRF boards had approved their merger in an all-stock deal, creating a bank with a valuation of $5.2 billion. The new bank will trade under ORRF.
In stock government, legal, and regulatory news, Reuters reported Tuesday that AMZN will defend its acquisition of IRBT at a closed EU hearing. This comes three weeks after EU antitrust officials said the deal would likely squeeze out other robot cleaners from AMZN’s online marketplace. At the same time, in front of a 15-judge panel, ILMN accused EU antitrust regulators of reaching beyond their remit in their investigation of ILMN’s $7.1 billion acquisition of Grail. Undaunted, the EU antitrust regulators counter-accused ILMN of trying to rewrite the EU merger rule book. (If ILMN loses this appeal, it has already said it will divest the already closed acquisition within one year.) In the US, the Dept. of Transportation said Tuesday it is launching a new regulatory effort that will eventually require carmakers to implement technology preventing intoxicated drivers from starting a car. At the same time, Reuters reported that AAPL has offered to let rivals access their “tap and go” mobile payments systems in an effort to settle EU antitrust charges and avoid massive fines. Later, a group of hedge funds filed suit in the US Fifth Circuit Court of Appeals against the SEC in a bid to vacate two new rules that require transparency of short-selling. Late in the day, a federal judge in VA ruled in favor of CSCO in a patent infringement claim from Centripetal Networks. A different judge in the same court had awarded Centripetal $2.75 billion in 2020, but a federal appeals court overturned the decision and forced a retrial. At the same time, AAPL announced it will now require a judge’s order before it will hand over customer push notification data to law enforcement. (Push notification data is very useful for geolocating a phone over time. In other words, tracking the phone’s past locations.) Up to this point, AAPL had been handing over that data upon request from any law enforcement agency. After the close, a Brazilian judge approved the bankruptcy of the operator of 140 SBUX stores in that country. Also after the close, AMZN asked a DE judge to dismiss a lawsuit brought by shareholders over the company’s Kuiper satellite launch contracts. The suit had alleged a conflict of interest as AMZN’s launch contracts were given to the former CEO’s Blue Origin company without considering alternatives such as Elon Musk’s SpaceX.
Overnight, Asian markets were mixed with the outnumbered exchanges in the red moving much more than the more numerous green exchanged. Shenzhen (-1.54%), Thailand (-1.16%), and Shanghai (-1.15%) paced the losses with Australia (+0.31%) and Japan (+0.25%) being the only appreciable gainers. In Europe, a different picture is taking shape at midday as all but two of the 15 exchanges are in the green. The CAC (+0.37%), DAX (+0.17%), and FTSE (+0.35%) lead the gainers while Finland (-0.30%) and Norway (-0.04%) are the only red on the board in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a very modest green start to the day. The DIA implies a +0.11% open, the SPY is implying a +0.11% open, and the QQQ implies a +0.17% open at this hour. At the same time, 10-year bond yields have fallen again to 4.181% and Oil (WTI) is up a third of a percent to $68.87 per barrel in early trading.
The major economic news scheduled for Wednesday include Nov. PPI and Nov. Core PPI (both at 8:30 a.m.), EIA Crude Oil Inventories (10:30 a.m.), Fed Rate Decision, Fed Statement, Current Q4 Interest Rate Projection, Q4 1st Year Projection, Q4 2nd Year Projection, Q4 3rd Year Projection, and FOMC Economic Projections (all at 2 p.m.), and the Fed Chair Press Conference (2:30 p.m.). The major earnings report scheduled for before the open is limited to ABM and REVG. Then, after the close, ADBE and NDSN report.
In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Nov. Retail Sales, Oct. Business Inventories, Oct. Retail Inventories, and the Fed Balance Sheet. Finally, on Friday, NY Empire State Mfg. Index, Nov. Industrial Production, S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI are reported.
In terms of earnings reports later this week, on Thursday, we hear from JBL, COST, LEN, and SCHL. Finally, on Friday, DRI reports.
In geopolitical news, Houthi rebels in Yemen took credit for a missile attack on a Norwegian oil tanker in the Red Sea. The group claimed it attacked (in support of Palestine) because the tanker was delivering oil to an Israeli oil terminal. Elsewhere, the US Departments of Treasury and State announced new sanctions on hundreds of people and entities in China, Turkey, and UAE as part of its crackdown on evading sanctions on Russia.
In miscellaneous news, Reuters reported Tuesday that in November global sales of fully-electric vehicles and electric hybrid vehicles rose 20% versus the prior year to a new record of 1.4 million vehicles. The report (citing market research firm Rho Motion) said the sales growth was strongest in North America and China which more than offset reduced sales in Europe. Of the 1.4 million cars sold, 70% were fully electric with the remaining 30% hybrid. This news runs counter to “conventional wisdom” that, given that F is cutting production plans for the F-150 Lightning by 50%, seems to say the demand for electric vehicles is falling. In other news, more leverage has entered the stock market as XXXX (4x leveraged S&P500 ETN) began trading earlier this month. (This ETN is run by BMO and is the first US foray into 4x leverage in the form of ETN.)
So far this morning, ABM and REVG reported beats on both the revenue and earnings lines.
With that background, it looks like all three major index ETFs are looking to start the day higher (ahead of PPI data anyway) but are doing so in an indecisive way as we still await the Fed this afternoon. All three major index ETFs opened the premarket slightly higher and are putting in a small, white-body, indecisive (Doji-like) candle so far in the early session. All three remain well above their T-line (8ema) this morning. The market seems to be waiting on the Fed. However, the market also thinks it knows what the news will be (no rate hike, no cut, but a promise of “higher for longer” and no promises to be led by future data). Overall, the Bulls remain well in control of both the longer-term trend and the short-term trend. So, even the indecision causes a drift higher. In terms of extension, none of the three major index ETFs is extended too far from its T-line although QQQ is getting close. The T2122 indicator has also dropped back out of its overbought territory into the upper end of the mid-range. So, both the Bulls and Bears have slack to run…if either of them can find the momentum.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 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.
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After an ever so slightly higher CPI reading the indexes melted higher on lower-than-average volume in a relentless pursuit of record highs. Interesting oil prices continued to fall on demand worries from a weakening consumer yet that has not translated into any other market sector. Things that make you say Hmmm? Today will be focused on the interpretation of Jerome Powell’s comments as Dovish or Hawkish with PPI, Petroleum Status, and a handful of earnings tossed in to add price volatility. With the market convinced the Fed will soon pivot big moves are possible if that sentiment is confirmed or denied so plan your risk carefully.
During the night Asian markets traded mixed but mostly lower as they monitor the FOMC decision. However, European markets trade cautiously bullish across the board ahead of the pending data. U.S. futures at the time of this report point to a higher open convinced the Fed will soon pivot from its inflation-fighting stance. We will find out at 2:30 PM Eastern as Jerome Powell takes the microphone.
The European Central Bank (ECB) is planning to reduce its balance sheet, which has grown significantly due to its bond-buying program to support the economy during the pandemic. The ECB’s balance sheet is currently over 8 trillion euros or about 75% of the eurozone’s GDP. The ECB wants to shrink its balance sheet gradually and carefully, to avoid disrupting the financial markets and the economic recovery. However, the markets are expecting the ECB to cut its interest rates next year, as inflation has fallen below the ECB’s target of 2%. Inflation dropped to 2.4% in November, and core inflation, which excludes volatile items such as food and energy, also declined. Money markets are betting on almost 150 basis points of rate cuts in 2022, which would lower the ECB’s key deposit rate from its record high of 4%. The ECB has raised its deposit rate 10 times since July 2022, when it became positive for the first time since 2011. The ECB faces a delicate balance between shrinking its balance sheet and easing its monetary policy, as it tries to achieve its inflation goal and support the eurozone’s growth.
The Bank of England (BoE) is likely to keep its interest rates unchanged on Thursday, as economists disagree on whether the BoE will need to cut rates in 2024. The market is almost certain that the BoE will not change its policy stance this week, based on the LSEG data, as the economic indicators since the BoE’s last meeting have been mixed. The real GDP growth was zero in the third quarter, which matched the BoE’s forecast, but the inflation and wage growth were lower than expected, and the domestic demand was weak. Barclays predicts that the BoE’s Monetary Policy Committee (MPC) will have a divided vote in favor of a hold, but will maintain a hawkish tone as it challenges the market’s expectation of “premature” rate cuts. The BoE faces a difficult balance between supporting the economic recovery and controlling the inflationary pressures.
The Federal Reserve (Fed) is expected to announce a policy shift on Wednesday, as it wraps up its last meeting of the year. The Fed is likely to signal that it will stop raising its interest rate, which it has done four times this year, and start preparing for the next phase of its monetary policy. The Fed will also release its updated forecasts on economic growth, inflation, and unemployment, which will reflect the impact of the pandemic, the fiscal stimulus, and the supply chain issues. The Fed Chair Jerome Powell will also hold his regular press conference, where he will explain the Fed’s decision and outlook. The market is anticipating that the Fed will start cutting its rate in May 2024, and continue to do so throughout the year, as the economy slows down and inflation eases. However, the Wall Street analysts and economists expect the Fed to be more careful and gradual in its rate cuts, as it balances the risks and uncertainties in the economy.
Stocks melted higher on lower-than-average volume after the November CPI inflation report, which came in just slightly higher than the market’s expectations. The rally was broad-based, with growth sectors, such as information technology, doing well along with cyclical sectors, such as materials and financials. The energy sector was a clear laggard, as the market worried about consumer demand which interestingly has not translated into any other consumer area. Today we have a handful of notable earnings but the market focus will be on the PPI, figures, Petroleum Status, and the FOMC decision and future projections. No one is expecting a rate increase but the market will likely react to how the Dovish or Hawkish Jerome Powell comments are interpreted during the 2:30 PM Eastern press conference. Anything is possible so plan your risk accordingly.
