It was all Bears, all the time on Thursday with the market gapping lower at the open (down 0.66% in the SPY, down 0.34% in the DIA, and down 1.03% in the QQQ).  At that point, all three major index ETFs ground sideways, with a modest bearish trend up until 1:30 p.m.  However, at that point, the news broke that the GOP members of the House had again rejected House Speaker McCarthy’s attempt to pass either a continuing resolution or a Defense Appropriations bill.  In response, McCarthy adjourned the House for the week, which makes a government shutdown on October 1 a high-probability event.  For the market, the route was on.  All three major index ETFs sold off hard and steadily the rest of the day, led lower by the QQQ.  All three closed near their low of the day. This action gave us gap-down, large, black candles with now lower wicks and only small upper wicks.  SPY broke down through any potential support from the August lows and now sits on the late-June lows.  DIA sits right at its August low and QQ still has about 0.9% before reaching that milestone.  All three could also be seen as Head & Shoulders patterns near, at, or just past the neckline.  This happened on well-above-average volume in the QQQ and just-above-average volume in the SPY and DIA.

On the day, all 10 sectors were in the red with Basic Materials (-2.19%) surprisingly out in front with Technology (-1.96%) next in line leading the other sectors lower.  At the same time, the SPY lost 1.65%, DIA lost 1.09%, and the tech-heavy QQQ lost 1.83%.  VXX gained 7.70% to close at 22.81 and T2122 dropped down to the low end of the oversold territory at 2.55.  10-year bond yields spiked up to 4.494% (a 16-year high) while Oil (WTI) sat basically flat on the day at $89.58 per barrel.  So, what happened?  It’s hard to tell if it was follow-through to the Fed’s hawkish tone or early morning rumblings of another GOP failure on the appropriations front (which first hit during premarket) that caused the gap lower.  Either way (or even if it was something else), the Bears started the day in charge and the best markets could do was tread water.  However, when Republicans definitely failed to support the Speaker’s move and he sent the House home in reaction, the bottom fell out, and the Bears got to stretch their legs the last couple hours of the day.

The major economic news reported Thursday included the Q2 Current Account (difference between imports and exports), which came in better than expected (but still a sizable deficit) at -$212.1 billion, compared to a forecast of -$221.0 billion and even slightly better than the Q1 reading of -$214.5 billion.  At the same time, Weekly Initial Jobless Claims also came in better than was expected at 201k (versus a forecast of 225k and the prior week’s value of 221k).  We also got the Sept. Philly Fed Mfg. Index, which came in worse than expected at -13.5 (compared to a forecast of -0.7 and much worse than the previous reading of +12.0).  The Sept. Philly Fed Employment Index improved a bit but remains negative at -5.7 (versus a -6.0 previous value).  Later, August Existing Home Sales were reported at 4.04 million (compared to a forecast of 4.10 million and the previous reading of 4.07 million).  This was a decline of 0.7% month-on-month, which is slightly better than the July decline of 2.2%.

In stock news, WMT is considering another significant expansion, looking to move into the healthcare sector.  Reports have emerged that talks are underway between WMT and private primary senior care provider ChenMed, which operates 100 health facilities across 15 southeastern states. Then at mid-morning, Rupert Murdoch announced he would step down as chair of FOXA and NWSA in November, naming his oldest son Lachlan as his successor. Elsewhere, GOOGL was in damage control mode Thursday, telling Reuters it does not foresee any change in its relationship with AVGO. This came after a media report said that GOOGL sources had said the company was considering dropping AVGO as a supplier of AI chips as early as 2027 (over a price dispute) and has already been working with MRVL to replace AVGO.  In acquisition news, CSCO announced it is acquiring SPLK for $157 per share ($28 billion) in an all-cash deal.  At the same time, MMP received shareholder (unit holder) approval for its acquisition of OKE for $19 billion.  Later, GFS was awarded a 10-year, $3.1 billion Dept. of Defense contract.  At the close, Reuters reported it has confirmed that CX is in talks with Mexican banks in a bid to refinance its $3 billion credit facility.  After hours, WBD announced it has expanded its UK studio production capacity by more than 50%.

In stock government, legal, and regulatory news, EU’s antitrust regulators announced they will decide whether to permit WHR to sell its European appliances business to Turkish firm Arcelik.  (Arcelik would own 75% with WHR retaining 25% ownership if the deal is approved.)  Later, the FAA followed the European lead and issued an alert to warn airlines that unapproved parts may be installed in the GE CF6 jet engines.  These fraudulent and unapproved parts may be present in thousands of jet engines globally.  At mid-afternoon, a US federal judge rejected moves by eight big banks to force cities to pursue claims individually.  The judge ruled that BAC, C, JPM, MS, WFC, GS, BCS, and RY must face a class-action suit brought by several cities over the bank’s alleged collusion to drive up interest rates on the cities’ municipal bonds.  After the close, the EPA announced that soil sampling near two PA towns indicates that there is “no immediate threat to the health of people nearby that would warrant a government response.”  This was in connection to testing done after a Wall Street Journal article outlining the paper’s investigation found lead-coated telecom cables buried near two towns in PA.  (VZ and T both initially said they would remove those cables but then declined and hired outside testing agencies once the removal cost was discovered.) 

In Autoworker contract talks and strike news, the UAW is expected to expand its strike against the Big 3 automakers at Noon today.  Sources told Reuters that while all the parties remain at the bargaining table as of last night, GM had offered nothing but a restatement of its earlier offer on Thursday.  F said it remains at the table with no other comment.  STLA offered no comment at all Thursday but had said Wednesday that its Tuesday offer dealt with subcommittee demands (nonfinancial issues).

Overnight, Asian markets leaned toward the green side.  Only Japan (-0.52%), India (-0.34%), and South Korea (-0.27%) were in the red.  Meanwhile, Hong Kong (+2.28%), Shenzhen (+1.97%), and Shanghai (+1.55%) surged to lead most of the region higher.  In Europe, we see the opposite picture taking shape at midday. Only four bourses, led by Greece (+1.47%), are in the green.  On the other side, the CAC (-0.55%) and the DAX (-0.19%) lead the 11 down exchanges lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.05% open, the SPY implies a +0.17% open, and the QQQ implies a +0.37% open at this hour.  At the same time, 10-year bond yields a down a bit to 4.478% and Oil (WTI) is back up by 1.08% to $90.57 per barrel in early trading.

The major economic news scheduled for Friday includes S&P US Mfg. PMI, S&P US Services PMI, and S&P Global Composite PMI (all at 9:45 a.m.).  There are no major earnings reports scheduled for Friday, either before the opening bell or after the close. 

In miscellaneous news, Bloomberg reports that Canada is ready to change oil markets in 2024.  The completion of their internal Trans-Mountain pipeline will allow Canada to expand its daily oil output by 600k barrels piped directly to the port of Vancouver and WA state.  Then, overnight, MCD announced it is raising the royalty fees charged to its new franchisees for the first time in 30 years.  Beginning January 1, all new MCD restaurants will pay 25% more, up from 4% to 5% of sales back to the corporation. (The increase does not affect existing restaurants.  For reference, 95% of the 13,400 MCD restaurants are franchises.)  Finally, the proximate reason for China’s stock surge today is that the country’s leadership leaked to the press that is it considering relaxing the country’s rules on foreign ownership in publicly traded companies.  (Now, total foreign ownership is limited to 30%, and single-entity foreign ownership is capped at 10%.)  You see, China has a problem.  With corruption widespread (and the fighting of corruption creating headlines that make the perception of corruption even worse than the amount that does exist), the propensity for government leaders (and whole groups of company executives) to “just vanish,” and limits on the amount of ownership/control that non-Chinese can have, China is finding it hard to draw in new investors from abroad…despite a potential market of more than a billion people.  So, the loosening of foreign ownership restrictions is a first step toward addressing the issue and drawing in new capital to help jumpstart the country’s floundering post-COVID recovery.

With that background, the premarket is giving us small, gap-up, and white-bodied candles so far. There is nothing in that early session action that would indicate a significant shift from the uber-Bearish move of the last two days. All three major index ETFs remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with a retest of the August and June lows as the apparent next target for the Bears. With that said, the SPY and QQQ are far below their T-line (8ema) and the T2122 indicator is now at the low end of its oversold range. This tells us we are very stretched, with the possible exception of the stodgy, mega-cap DIA. So, we should see a pause or relief bounce soon. Add to that the fact that this is Friday and you could very well see some Bullish action as the Shorts take profits heading into the weekend. Either way, you should prepare your own account for the weekend, taking profits where you have them, perhaps lightening up, and hedging individual positions or the whole portfolio’s Deltas.

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.

🎯 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

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.

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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

Wednesday was a typical Fed Day.  Everybody seemed to be waiting on the FOMC.  The SPY gapped up 0.29%, DIA gapped up 0.27%, and QQQ gapped up 0.27%.  From there, SPY traded sideways in a tight range until 2 p.m.  Meanwhile, DIA drifted very, very slowly higher until 2 p.m.  QQQ took the opposite course selling off until 11:30 a.m. and then trading sideways back at Tuesday’s closing level until 2 p.m.  At 2 p.m., Mr. Market was disappointed by the Fed statement, jerking lower for 5 minutes only to recover over the next 30 minutes.  However, once Fed Chair Powell began speaking, it was “Katy bar the door” as all three major index ETFs sold off sharply and steadily right into the close.  This action gave us large black Bearish Engulfing candles in the SPY and QQQ.  The DIA printed a black-bodied candle with a large upper wick.  All three also failed a retest of their t-line (8ema).  This all happened on below-average volume in the SPY and QQQ with average volume in the DIA.

On the day, seven of the 10 sectors were in the red with Technology (-1.40%) way out in front leading the rest lower.  Meanwhile, Communication Services (+0.27%) held up better than the other sectors.   At the same time, the SPY lost 0.92%, DIA lost 0.22%, and the tech-heavy QQQ lost 1.44%.  VXX gained 3.77% to close at 21.18 and T2122 fell only slightly and remains at the low end of the mid-range at 23.21.  10-year bond yields spiked up to 4.395% while Oil (WTI) fell 1.02% to end the day at $90.27 per barrel.  So, again it was a typical Fed Wednesday where we saw price largely drift sideways until 2 p.m., followed by a fast knee-jerk, slow recovery, and then another strong move.  Just don’t be surprised if there is another reaction at the open or early Thursday after Mr. Market has had a night to sleep on it and get his emotions in check. 

The major economic news reported Wednesday included EIA Weekly Crude Oil Inventories which saw a drawdown of 2.135 million barrels.  This was interestingly far less of a draw than the API reported Tuesday night and was just slightly less than the forecast of 2.200 million barrels.  However, it was down sharply compared to the prior week’s 3.954-million-barrel inventory build.  With that said, the big show Wednesday was the Fed.  As expected, the FOMC kept the Fed Funds Rate unchanged at 5.25% – 5.50%.  The “Dot Plots” were also released showing the current Q3 Fed Funds Rate estimate is 5.6% (which is a bit odd since we are sitting well below that and there is not another FOMC meeting in Q3).  One year out, the Q3 projection is 5.1% (which is greatly increased from the prior prediction of 4.6%).  However, that implies two rate cuts between now and the end of 2024.  This is what really spooked markets as the prior plots implied four cuts next year.  Two years out, again we see a major revision upward in the forecast to 3.9% (up from 3.4%).  Three years out the Fed average forecast is for 2.9%, which is down from the previous 3.1%.  Then the Long-Term Fed Funds Rate Projection is 2.5%, which is unchanged from the previous forecast.  Also buried in the Fed report was a significant increase in the Fed expected GDP for 2023, up from 1.0% in June to now expected 2.1% growth this year.  They also expect far less unemployment than they previously did.  In June they expected unemployment to top out at 4.5% in 2024, now they see 4.1% as the terminal unemployment rate.  (We are currently at 3.8% unemployment.) 

The Fed statement still implied one more rate hike this year and stiffened the hawkish “higher for longer” stance.  Then during his press conference, Chair Powell said that a soft landing is not the base case.  He said, “No, I would not do that … I’ve always thought that the soft landing was a plausible outcome … I do think it’s possible.”  Still, regardless of his words, the data released absolutely screams “soft landing” with higher GDP estimates, reduced unemployment expectations, and projected rate cuts (new cycle) starting in a year or less.  So, the bottom line is that the Fed did exactly what was expected, holding rates steady.  They also reinforced what they said they were going to do…keep rates higher longer.  Finally, they told us they are very nearly done raising rates and see us having the softest of landings, just as we have seen in the economy.  (Yet the market took the news poorly because it was hoping for rate cuts to come early in 2024 and continue steadily that year.)

In stock news, UL has hired MS in a new effort to sell its Q-tips and other personal care brands.  At the same time, French supermarkets announced they would be pressing suppliers to cut prices by up to 5%.  Reuters reports this move is expanding in Europe and companies like the aforementioned UL, PEP, KO, and other food and consumer goods companies will face pricing pressure going forward.  Later, Reuters reported that a consortium including KKR and APO is looking to buy the GreenSky Lending unit from GS.  The transaction is now expected to be in the $500 million range, which is a significant haircut from the $2.4 billion GS paid to buy it in September 2021.  At the same time, QCOM announced it is now entering the WIFI Router market.  (It was already a major supplier to the companies in that market.)  In the announcement, QCOM said it has orders in place from CHTR for this new line of products. Elsewhere, BAC announced it is raising the company’s minimum wage to $23/hour effective in October, with a target of raising it to $25/hour by 2025.  (This was a $1/hour increase over the company’s current minimum of $22/hour.)  Later, AMZN announced it plans to hire 250k extra holiday workers for its distribution and delivery units.  By mid-afternoon, it was announced that WDC is considering a split (splitting its hard drive unit from its flash memory business) of the company based on calls from activist investors Elliott Investment Mgmt.  At the same time, it emerged that WDC is also in merger talks with the owners of Kioxia (formerly Toshiba’s flash memory division).

In stock government, legal, and regulatory news, a federal judge in New York rejected an NFLX dismissal motion and ordered the company to face a defamation lawsuit from a Manhattan prosecutor portrayed in one of their crime dramas.  Later, a federal court in TX dismissed the shareholder case against TSLA related to a toxic workplace causing financial harm to the plaintiffs.  However, it was dismissed for evidential deficiencies without prejudice, meaning the plaintiffs can amend the suit and resubmit it later. Later, Bloomberg reported that XOM is lobbying President Biden and other administration officials to allow hydrogen derived from natural gas to be eligible for environmental tax credits available under the 2022 Inflation Reduction Act.  (Those credits are currently reserved for solar, wind, battery minerals, and “pure” hydrogen projects.  Elsewhere, GE filed suit against a supplier (AOG Technics) who was implicated in a scandal over fake components and forged certifications identified by the EU Aviation Safety Agency.  At the same time, RYAAY (Ryanair) has been notified that Italy’s antitrust agency has opened an investigation of the company over potential abuse of a dominant market position.  Later, AZN was sued in the US by a former senior director who claimed the company had refused to pay $189k in owed bonuses and stock options because she worked from home more than two days per week.  In the “you can’t make this stuff up” department, attorneys who sued TSLA board members, forcing them to return $700 million in excess pay have now filed with the court seeking $229 million ($10,690/hour) in attorney fees.  After the close, AMZN said it would be dropping a planned new fee for merchants who do not use its shipping services in the face of an expected FTC lawsuit.

In Autoworker contract talks and strike news, Canadian Unifor union workers will vote on the tentative deal reached with F on Saturday.  Meanwhile, in the US, UAW strikes are expanding with 190 union workers going on strike against an MBGAF (Mercedes) supplier in AL.

After the close, KBH reported beats on both the revenue and earnings lines.  It also raised its forward guidance.  Meanwhile, FDX missed on revenue while beating quite significantly ($4.55/share actual vs. $3.70/share consensus estimate) on earnings.

Overnight, Asian markets were nearly red across the board with only Thailand (+0.42%) staying in the green.  Meanwhile, South Korea (-1.75%), Japan (-1.37%), and Australia (-1.37%) led the region lower.  In Europe, we see the same picture taking shape at midday.  Only Greece (+0.11%) is in the green while the CAC (-1.56%), DAX (-1.20%), and FTSE (-0.71%) lead that region lower.  In the US, as of 7:30 a.m., Futures are pointing to a down start to the day.  The DIA implies a -0.52% open, the SPY is implying a -0.77% open, and the QQQ implies a -1.02% open at this hour.  At the same time, 10-year bond yields are spiking to 4.441% and Oil (WTI) is down two-thirds of a percent to $89.08 per barrel in early trading.

The major economic news scheduled for Thursday includes Q2 Current Account, Weekly Jobless Claims, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 a.m.), August Existing Home Sales (10 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for Thursday include DRI and FDS before the open.  Then, after the close, there are no earnings reports scheduled.

In economic news later this week, on Friday, S&P US Mfg. PMI, S&P U Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Friday, there are no major earnings reports scheduled

The following long paragraph is about dysfunctional government.  Skip it if you prefer.  I feel this is important to the market because stock markets tend to go down in the face of dysfunctional government, including shutdowns, and the credit rating of the US is directly related to downgrades from rating agencies likely…which affects bonds and then markets as well.  At any rate, in the Senate Majority Leader Schumer had to use a fairly rare procedural maneuver Wednesday night to sidestep culture war obstructionist Senator Tuberville’s non-filibuster hold on government business.  (Tuberville did not fight Schumer’s move because the move relieved pressure he had been getting from colleagues in his own party while still allowing him to continue his farce blockage).  The move by Schumer let the Senate vote on the appointment of a new Chair of the Joint Chiefs of Staff (Air Force General Brown), which they confirmed by a vote of 83-11.  Two other high-profile positions (Commandant of the Marine Corps and Army Chief of Staff) are expected to be voted on today using the same procedural move, with similar results expected.  However, more than 300 other senior military officers (unit and base commanders in many cases) remain blocked (leaving their positions filled by “acting commanders” due to the anti-governance Senator. The Senate rules allow any single obstructionist Senator to halt governance for any even completely unrelated reason.  Meanwhile, in the House, after the close, Speaker McCarthy said he will try again today to pass the Defense Appropriations bill (which failed its vote on Tuesday).  It appears McCarthy thinks he has now placated the 5 extremists from his party who voted against the bill Tuesday.  (As opposed to compromising with the other party to gain a broad consensus, because party is more important than country.  Besides the job of Congress is not to pass laws in the interest of all the people, but instead to rule over the opposing party and take as much as you can from “their side” while blaming them for doing what you’re doing.)  The fear, of course, is that if those 5 were bought off, that in itself is a good incentive for another tiny group to bolt (or threaten to do so) in order to get their share of the appeasement. Another example of the tyranny of the minority. And with that taking place, there are eight business days left for the House to pass a continuing resolution to avoid a government shutdown (or, in a less likely scenario, pass 12 appropriations bills, get them through the Senate, reconcile the two versions, pass the revisions in both Houses and get President Biden’s signature). 

With that background, the premarket is telling us the rout is continuing with Bears on the warpath. All three of the major index ETFs gapped down to start the early session and have followed through with strong bearish moves. All three remain below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with a retest of the mid-to-late-August low in the cards for SPY today with DIA headed in that direction and QQQ probably still a day or so away from such a retest. In terms of extension, the premarket move has all three major index ETFs stretched below their T-line (although QQQ is clearly the most stretched). However, the T2122 indicator is still just in the lower side of its mid-range. So, it is not extremely clear whether we are stretched enough to see a reversal soon.

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.

🎯 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

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

On Tuesday, stocks gapped modestly lower at the open (down 0.21% in the SPY, down 0.21% in the DIA, and down 0.34% in the QQQ).  At that point, all three major index ETFs followed through to sell off sharply until 10:45 a.m.  However, then we saw some divergence as the two large-cap index ETFs continued in a much slower selloff until 12:50 p.m.  Meanwhile, the QQQ began to rally at 10:45 a.m. and kept it up until 2 p.m.  SPY and QQQ reached their high of the day at 2:45 p.m. while DIA did not quite make it up to the levels of the open.  The last 75 minutes of the day saw all three swing lower and then back higher. This action gave us a black-bodied, long-legged Doji in the SPY, a black-bodied, long-legged Doji in the DIA, and a white-bodied Spinning Top in the QQQ.  All three remain below their T-line (8ema) and 50sma. Perhaps more importantly, all three also dropped just below a potential support level. This all happened on below-average volume in all three major index ETFs.

On the day, nine of the 10 sectors were in the red.  Utilities (-0.59%), Energy (-0.58%), and Industrials (-0.52%) were out in front leading the market lower, as Communication Services (+0.26%) was the only sector to hang onto green territory.   At the same time, the SPY lost 0.21%, DIA lost 0.29%, and QQQ lost 0.21%.  VXX fell 0.49% lower to close at 20.41 and T2122 fell again but remained in the low end of the mid-range at 24.58.  10-year bond yields spiked again to close at 4.365% while Oil (WTI) fell slightly to end the day at $91.66 per barrel.  So, again it was a typical pre-Fed Tuesday where the price whipped back and forth but ended up not changing much.  Everyone is still just waiting on the Fed decision.  However, this time around, the entire market thinks (well 99.0% according to the Fed Futures) they already know the Fed decision.  So, if we are actually waiting on the Fed verbiage and tone of Fed Chair Powell’s statement.

The only major economic news reported Tuesday included Preliminary August Building Permits, which came in above expectations at 1.543 million (compared to a forecast of 1.440 million and a July reading of 1.443 million).  This amounted to a 6.9% increase over the prior month.  At the same time, August Housing Starts were lower than predicted at 1.283 million (versus a forecast of 1.440 million and a previous month 1.447 million).  This was the lowest level since June 2020 and that also amounted to an 11.3% decrease month-on-month.  Finally, after the close, the API Weekly Crude Oil Stocks report showed a larger drawdown than was anticipated at -5.250 million barrels (compared to a forecast of -2.667 million barrels and an increase of 1.174 million barrels last week).

In stock news, MS debuted an AI Investing assistant designed to help investment advisors sift through over 100,000 research reports.  At the same time, NIO announced it plans to sell $1 billion in senior convertible notes.  The market seems to believe most will be converted into shares, diluting existing stockholders.  As a result, NIO dropped more than 17% on the day.  At the other end of the financial strength spectrum, MSFT increased its quarterly dividend by 10% to $0.75/share.  Elsewhere, on Tuesday, HBI announced it was exploring strategic alternatives for the company’s Champion brand.  Later, DIA announced that it expects to make $10 billion in profits from theme park operations up from $2.2 billion a decade ago. At the same time, DIS said it plans to invest $60 billion to expand its theme parks globally as well as to build a DIS brand cruise line.  (That is double what was spent on that business unit in the prior 10 years.)  Later TGT, announced they will hire 100,000 workers for the holiday season and will begin holiday promotions in October.  Reuters reported that the hacking group that breached MGM and before that CZR had also hacked 3 other clients of OKTA.  The article reported that the hackers gained access to MGM’s OKTA identity management account and used it to gain other credentials to further their attacks.  At the same time, INTC held an event where it highlighted that its upcoming new line of CPUs will allow consumers to run their own AI applications rather than buying those as a service from a cloud-computing company.  INTC did not explain what need or application would require on interest consumers in running their own AI models.  However, if they want to, INTC’s line of chips due out in December will be able to do so on the low end of that spectrum.

In stock government, legal, and regulatory news, in Europe, GOOGL made a last-ditch effort to overturn a $2.6 billion EU antitrust fine (imposed for abuses of its shopping service). The company told the 15-judge panel of Europe’s top court that the European Commission had failed to prove GOOGL’s actions were anti-competitive and anyway the fines themselves were abusive and undermined competition by hurting GOOGL.  Later, the IRS approved MULN’s “qualified manufacturer” status, meaning customers who purchase one of two MULN models will qualify for up to $7,500 in tax credits per cargo van bought.  Elsewhere, the SEC and Dept. of Justice have begun investigating whether CS misled investors about its financial health prior to its Swiss-state-backed rescue buyout by UBS.  Reuters reported the two agencies have requested documents from both CS and UBS as well as current and former directors.  At the same time, the CEO of CBOE resigned after a late-August outside investigation found he failed to disclose “personal relationships” with his colleagues.  Later, the Wall Street Journal reported that the Dept. of Justice is investigating perks TSLA CEO Musk has received from the company (including designing a proposed house for him).  The article claims employees were the source of the allegations, including the former CFO.  Meanwhile, LLY announced they are suing 10 medical spas across the US which LLY alleges are selling products claiming to contain the active ingredient in its Mounjaro diabetes drug (which is expected to be approved for weight-loss use later this year).  Later, a federal judge in NY ruled that DASH, GRUB, and UBER can sue New York City over its law capping how much they could charge restaurants for delivering meals.

In Autoworker contract talks and strike news, Reuters reported that UAW workers are bracing for more strikes as talks between the union and Big 3 automakers show no sign of significant progress.  However, in hopeful news, F announced late last night that it had reached a tentative deal with its Unifor Canadian auto workers.  The deal still must be ratified by union members and neither the company or the union released and contract details.  (Although it beggars belief that the Canadian and US unions don’t talk.  So, the reason for the obfuscation is not clear.)

So far this morning, GIS beat on both the revenue and earnings lines.  This was a very modest upside surprise on modest 4% growth.  In other morning news, US mortgage demand increased despite interest rates rising.  The US average for a 30-year, fixed-rate, conforming loan rose from 7.27% to 7.31%.  Despite this, refinancing applications jumped 13% compared to the prior week.  The number of new home purchase loans also increased 2% on the week.  Meanwhile, across the pond, the Bank of England has a rate hike pause back in play as a possibility after the UK reported its August CPI fell from 6.8% to 6.7% defying forecasts that had predicted an increase to 7%.

Overnight, Asian markets leaned heavily to the red side.  Only Singapore (+0.04%) and South Korea (+0.02%) were able to hang onto green while India (-1.15%), Thailand (-0.99%), and Japan (-0.66%) led the rest of the region down.  However, in Europe we are seeing the opposite picture taking shape at midday.  Only Russia (-0.58%) and Greece (-0.34%) are in the red.  Meanwhile, The FTSE (+0.77%), DAX (+0.60%), and CAC (+0.42%) lead the 13 green bourses higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.21% open, the SPY is implying a +0.19% open, and the QQQ implies a +0.12% open at this hour.  At the same time, 10-year bond yields have backed down just a bit to 4.347% and Oil (WTI) is off by two-thirds of a percent to $90.64/barrel in early trading. 

The major economic news scheduled for Wednesday include EIA Weekly Crude Oil Inventories (10:30 a.m.), FOMC Rate Decision, FOMC Statement, FOMC Q3 Interest Rate Projection, Q3 1st Year Interest Rate Projection, Q3 2nd Year Interest Rate Projection, Q3 3rd Year Interest Rate Projection, and Q3 Long-Term Interest Rate Projection (all at 2 p.m.), and the Fed Chair Press Conference (2:30 p.m.).  The major earnings reports scheduled for Wednesday include GIS before the open.  Then, after the close, FDX and KBH report.

In economic news later this week, on Thursday, Q2 Current Account, Weekly Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, August Existing Home Sales, and Fed Balance Sheet.  Finally, on Friday, S&P US Mfg. PMI, S&P U Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Thursday, we hear from DRI and FDS.  Finally, on Friday, there are no major earnings reports scheduled.

In miscellaneous news, CART opened Tuesday at $41.38 after pricing its IPO at $30 (a 39% opening gain).  However, the stock sold off the rest of the day to close at $33.70.  In good news, former IN Congressman Buyer was sentenced to 22 months in prison for insider trading.  This trading did not happen while he was in Congress, but his ties to Washington are likely why he was hired by TMUS as a consultant, gained info on their plans to buy Sprint and traded ahead of the news.  Elsewhere, the Institute of International Finance said global debt hit a record $307 trillion in Q2.  This was a $10 trillion increase over year-end 2022 and a $100 trillion increase over the last decade.  The US, Japan, Britain, and France accounted for the largest increases with China, India, and Brazil having the largest increases among emerging markets.  Finally, the in-fighting among the GOP in the House continues.  Speaker McCarthy tried to open debate on revisions to the $886 billion fiscal defense appropriations bill (widely seen as the easiest of the 12 needed funding bills).  However, five of the hardline MAGA GOP members voted against the motion, causing it to fail 214-212.  Those 5 and about 15 of their colleagues are demanding $120 billion (about 12% overall) is guaranteed to be cut out of domestic spending.  However, there are also calls (GOP and Democrat) to increase the $886 billion military spending budget, which would increase the required domestic spending cuts to achieve the same total budget.  With that giant task ahead, there are 7 business days left to resolve all 12 appropriations bills or pass a continuing resolution to avoid a government shutdown.

With that background, markets are little moved again and trading indecisively this morning. All three major index ETFs gapped up to start the early session, but have traded in a very tight range when they traded at all in the premarket. All three remain below their T-line (8ema) but DIA is getting close to a retest from below. So, for now, the trend of the last two weeks continues to be choppy. If you are looking at a very short timeframe, the momentum has switched from bearish to bullish and back several times during that period. In the mid-term the trend is bearish. A longer outlook shows a bullish long-term trend. The premarket session is just up off the obvious potential support levels that were just below the SPY, QQQ, and DIA on the close Friday. In terms of extension, none of the major index ETFs are far from their T-line and the T2122 indicator is now in the lower side of its mid-range. So, there is plenty of slack for either the Bulls or the Bears to make a move.

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.

🎯 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

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

The market was flat on Monday.  Both the SPY and DIA opened flat.  Meanwhile, QQQ gapped down 0.34% at the open.  From there all three did a very modest morning rally and an equally modest afternoon selloff.  This action gave us indecisive candles across all three major index ETFs.  The SPY printed a white-bodied Spinning Top with a larger upper wick than the lower, the DIA printed a black-body Doji, and QQQ printed what might be seen as a white-bodied, Inverted Hammer.  All three closed little changed and stayed below their T-line (8ema) and 50sma.  All three also held onto the support level that they were sitting on at the close of Friday. This all happened on far-below-average volume in all three major index ETFs.

On the day, five of the 10 sectors were in the green (and red) with Energy (+0.41%) out in front leading half of the market higher, while Consumer Cyclical (-0.75%) led half lower than other sectors.  At the same time, the SPY gained 0.06%, DIA was dead flat +0.00%, and QQQ lost 0.04%.  VXX fell 0.82% lower to close at 20.51 and T2122 fell back but remained in the mid-range at 32.69.  10-year bond yields fell again to close at 4.307% while Oil (WTI) rose another 1.82% to end the day at $92.40 per barrel.  So, in a sense, it was a typical pre-Fed Monday where everyone was just waiting on the Fed decision.  This time around, the entire market thinks (well 99.0% according to the Fed Futures) they already know the Fed decision.  So, if we are waiting on the Fed, it would be waiting to see the verbiage and tone of Fed Chair Powell’s statement.

The only major economic news reported Monday was July TIC (Treasury International Capital) Net Long-Term Transactions.  This measures the difference between long-term foreign securities purchased by US citizens and the US long-term securities bought by foreign investors.  “Long-Term” is a bit of a misnomer here in as much as TIC includes all stocks, bonds, derivatives, options, swaps, currency, and even bank transactions.  It also does not measure the length of hold or even the intended length of the hold. So, TIC is really just a measure of the flow of money into and out of the US.  In other words, it is measuring how the world (including the US) views the US as an investment relative to the entire rest of the world. For July, TIC came in at its lowest level since December of 2021 but was still positive at +$8.8 billion (compared to a forecast of +$116.5 billion and a June reading of +$186.0 billion).  Therefore, in July, the world continued to view the US as the best place to invest money.

In stock news, on Monday AAPL announced that it has received a promising number of pre-orders for its iPhone 15 (10%-12% stronger than the iPhone 14).  That’s both good and bad.  It shows demand but has also forced AAPL to push back the first deliveries into November to avoid seeming to trickle out the phones.  At the same time, GEHC has received a $44 million grant from the Gates Foundation to develop AI-assisted ultrasound technology.  Later, CLX reported it has been fighting with operational issues caused by a mid-August cyberattack.  The company said the attack caused significant damage to its IT infrastructure and forced the company’s automated order processing system offline. The company warned investors to expect a substantial impact on quarterly results.  Elsewhere, the Wall Street Journal reported that TSLA and Saudi Arabia are in the early stages of talks over the opening of a TSLA plant in the Kingdom.  (CEO Elon Musk then denied the report.) Later, C announced they are getting into blockchain by launching “Citi Token Services” to offer digital asset solutions to institutional customers.  At the same time, M announced it will be hiring 38,000 full and part-time workers for the holiday season. (This is down from the 41,000 M hired in the 2022 holiday season and far below the 76,000 in 2021.)  After the close, NSC launched a program to compensate homeowners in East Palestine OH who sell their houses and experience a reduction in value after the Feb. 3 train derailment and chemical spill.  Also after the close, SAN announced it would merge divisions and make a significant leadership reorganization, including the reduction of management layers and job cuts.  Monday evening, a regulatory filing showed that the CEO of SQ was stepping down from her post on Oct. 2 and Chairman Jack Dorsey will take over at least temporarily.  Finally, CART priced its IPO at $30 (top of the estimated range) and will begin trading today.

In stock government, legal, and regulatory news, NVO shares dropped Monday after a MarketWire report claiming the company failed an FDA inspection of its NC plant, with quality control lapses cited in the report.  Later, LYFT agreed to pay a $10 million fine as part of a settlement with the SEC.  The case involved the undisclosed pre-IPO sale of $424 million in shares.  Elsewhere, the FDA approved a GSK treatment for adults with myelofibrosis and anemia.  (GSK acquired the treatment by buying SRRA for $1.9 billion in 2022.)  This will make GSK an immediate competitor in one $2.4 billion market as well as treating two other diseases (markets).  At the same time, the Brazilian telephone regulator approved VIV’s capital reduction plan (which now needs the approval of shareholders).  Near the close, it was reported that Taiwan had approved TSMs’ $4.5 billion investment (working capital) into its AZ chip fab.  However, Investing.com reported that TSM is having trouble finding skilled chip plant workers for its new AZ plant.  As a result, TSM is shifting focus toward a $8.6 fab plant it is building in Japan.  Meanwhile, a federal judge ruled SBUX must face a lawsuit claiming the coffee chain’s “fruit beverages” actually do not contain fruit.  After the close, MS was sued for $750 million by private equity lenders that claimed MS defrauded them in an investment in a high-speed rail company.

In Autoworker contract talks and strike news, F is set for more bad news on the labor front.  The company’s 5,600 Canadian union workers contract expired Monday night at midnight.  Unifor (Canadian version of UAW) said they will remain at the table, but the likelihood of a strike increases each hour.  In other tangentially related news, 44k union workers for Hyundai (HYMTF) in South Korea have approved a new contract (by a vote of 58.8% for and 41.1% against).  The contract provides those workers a one-time bonus, a 12% per year pay increase, and new performance-based bonuses.  Back in the US, GM told 2,000 non-striking workers in KS the company expects to lay them off later this week due to a lack of parts.  In MI, a parts supplier to the Big 3, told state officials it expects to close 4 plants for a month, laying off 300 workers.  At the same time, X shut down one of its plants (Granite City) due to the lack of demand from the automakers, laying off 1,000 workers.  Meanwhile, STLA negotiators told the press that Monday’s talks were “constructive.”  Then, early today, Unifor said it has received a substantial offer from F and is extending the strike deadline by 24 hours to give time for more talks.  In the US, the UWA said it will definitely strike additional plants if “serious progress” is not made by Friday.  On the company side, STLA said it could close 18 US facilities (10 Mopar distribution centers among them) under the new contract (although none has been agreed yet).  However, STLA said it could also bring in new investments and repurpose the Illinois plant (closed in February) into a mega-hug for Mopar distribution.

So far this morning, AZO beat on both the revenue and earnings lines.  This included quarter-on-quarter growth of 6.4%.

Overnight, Asian markets were decidedly in the red on modest moves.  Only Hong Kong (+0.37%) was able to stay in the green.  Meanwhile, Japan (-0.87%), Shenzhen (-0.73%), and Singapore (-0.69%) paced the losses.  In Europe, we see a much more mixed picture at midday.  Russia (-1.34%) and Greece (-1.13%) are the only movers of more than one percent while nine of the 15 bourses are in the green.  The CAC (+0.30%), DAX (-0.06%), and FTSE (+0.15%) lead the region on volume.  In the US, as of 7:30 a.m., Futures are pointing toward a start just on the green side of flat.  The DIA implies a +0.07% open, the SPY is implying a +0.09% open, and the QQQ implies a +0.08% open at this hour.  At the same time, 10-year bond yields are back up to 4.319% and Oil (WTI) is up yet another 1.03% to $92.42 per barrel in early trading.

The major economic news scheduled for Tuesday includes Preliminary August Building Permits and August Housing Starts (both at 8:30 a.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  The major earnings reports scheduled for Tuesday are limited to AZO before the open.  Then, after the close SCS reports.

In economic news later this week, on Wednesday, we get EIA Weekly Crude Oil Inventories, FOMC Rate Decision, FOMC Statement, FOMC Q3 Interest Rate Projection, Q3 1st Year Interest Rate Projection, Q3 2nd Year Interest Rate Projection, Q3 3rd Year Interest Rate Projection, Q3 Long-Term Interest Rate Projection, and the Fed Chair Press Conference.  On Thursday, Q2 Current Account, Weekly Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, August Existing Home Sales, and Fed Balance Sheet.  Finally, on Friday, S&P US Mfg. PMI, S&P U Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Wednesday, GIS, FDX, and KBH report.  On Thursday, we hear from DRI and FDS.  Finally, on Friday, there are no major earnings reports scheduled.

In miscellaneous news, the GOP proposal for a continuing resolution that includes an 8% cut in domestic program budgets lasted all of about 18 hours.  On Monday, 10 far-right MAGA Congressmen that Speaker McCarthy needs to pass such a resolution announced they oppose the idea altogether.  McCarthy can only afford to lose 8 votes unless he can get Democratic support.  Elsewhere, the US military is asking for the help of the public to locate a F-35 fighter that crashed in SC after the pilot ejected. (Am I the only one worried that the DoD can’t find it on its own…or they didn’t think to stick an AAPL airtag in the thing while operating in the US?)  Overnight, the debris field was found about two hours Northeast of the Charleston Joint-Service Base.

With that background, markets are little moved again and trading indecisively this morning. All three major index ETFs gapped up to start the early session, but have traded in a very tight range when they traded at all in the premarket. All three remain below their T-line (8ema) but DIA is getting close to a retest from below. So, for now, the trend of the last two weeks continues to be choppy. If you are looking at a very short timeframe, the momentum has switched from bearish to bullish and back several times during that period. In the mid-term the trend is bearish. A longer outlook shows a bullish long-term trend. The premarket session is just up off the obvious potential support levels that were just below the SPY, QQQ, and DIA on the close Friday. In terms of extension, none of the major index ETFs are far from their T-line and the T2122 indicator is now in the lower side of its mid-range. So, there is plenty of slack for either the Bulls or the Bears to make a move.

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.

🎯 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

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

On Friday, it was all Bears, all the time in the stock market on a triple-witching day.  The SPY gapped down 0.73%, DIA gapped down 0.49%, and QQQ gapped down 0.37%.  However, that was just the start.  All three major index ETFs continued to sell off until 1:35 p.m.  After that, all three ground sideways, along the lows and in a tight range, the rest of the day.  This action gave us gap-down, large, black candles in all three major index ETFs.  The SPY, DIA, and QQQ all crossed down and closed back below their T-line (8ema) and 50sma.  This happened on above-average volume in the SPY and just below-average volume in the DIA and QQQ.

On the day, all 10 sectors were in the red with Technology (-1.60%) out in front leading the rest of the market lower, while Utilities (-0.36%) held up better than other sectors.  At the same time, the SPY lost 1.55%, DIA lost 1.09%, and QQQ lost 1.71%. VXX shot 3.87% higher to close at 20.68 and T2122 fell back to the mid-range at 42.36.  10-year bond yields rose again to close at 4.336% while Oil (WTI) rose another 1.15% to end the day at $91.20 per barrel.  So, the Bears ended the week showing some strength.  At the same time, we should realize just like Thursday closed just below a potential level of resistance, Friday closed just above a level of potential support.

The major economic news reported Friday included the August Export Price Index (covering items sold), which came in much higher than expected at +1.3% (compared to a forecast of +0.4% and a July reading of +0.5%).  Interestingly, the August Import Price Index (covering inputs or products bought) rose only +0.5% (versus a forecast of +0.3% and a July value of +0.1%).  At the same time, the NY Fed Empire State Mfg. Index coming in far above predicted (but still weak), at +1.90 (compared to a forecast of -10.00 and very far above the August reading of -19.00).  Later, August Industrial Production (month-on-month) was reported stronger than anticipated at +0.4% (versus a forecast of +0.1% but well below the July reading of +0.7%).  On an annual basis, the August Industrial Production (year-on-year) was +0.25%, compared to a July value of -0.04%.  At mid-morning, Michigan Consumer Sentiment was reported below expected at 67.7 (versus a forecast of 69.1 and a previous reading of 69.5).  At the same time, Michigan Consumer Expectations came in slightly above predicted at 66.3 (compared to a forecast of 66.0 and a prior value of 65.5).  In addition, the Michigan Consumer 1-year Inflation Expectation was DOWN significantly to 3.1% (versus a forecast and previous reading of 3.5%).  The same was true for the Michigan Consumer 5-year Inflation Expectations, which came in a 2.7% (compared to a forecast and prior reading of 3.0%).

In stock news, on Friday, PLNT shares plunged as the board ousted its CEO.  At the same time, Auto industry analysts reported Friday that for 2023 China’s new car sales are expected to be 25% electric, up from only 4% five years ago.  This has helped TSLA and Chinese EV-makers like BYDDY.  (It is worth noting that Chinese automakers traditionally have a 5% profit margin but that has been compressed to 3% in the last 3 years.  Regardless, the low margins typically make them by far the least expensive options for Chinese buyers.)  However, this large adoption of EVs poses a major issue for F and GM.  With no major existing EV offerings in China, those companies are seeing serious market share erosion.  Elsewhere, a day after it was reported NXST is in talks with DIS about purchasing the Mouse House’s ABC, FX, and Nat. Geographic units, media mogul Byron Allen made his own $10 billion bid to buy those units.  At the same time, the CEO of NSC made the media rounds Friday in continuing attempts to recover public reputation following the February derailment and contamination event in East Palestine OH.  The CEO pledged the railroad is going to enhance safety across its network, implementing recommendations from external consultants the company hired to evaluate its rail operations.  The PR blitz included providing that small Ohio town a $4.3 million new water treatment plant after tests have had residents using bottled water since February.  Later, VLO announced it had authorized a $2.5 billion share repurchase plan with no expiration date.

In stock government, legal, and regulatory news, AAPL moved to soothe the concerns of the French and Belgian governments (who took action against the iPhone Model 12 over excessive radiation levels).  AAPL said it will release a software update that will reduce the radiation to acceptable levels.  Later, EU antitrust regulators announced they had set an October 19 deadline for a decision on allowing or blocking the PFE $43 billion acquisition of SGEN.  Elsewhere, the FBI leaked (and later the hackers confirmed) that “Scattered Spider” (a sub-group of the ALPHV ransomware gang) is responsible for the cyber-attack that has crippled MGM for almost a week.  (ATMs, slot machines, room keys, and many other electronic systems have been paralyzed at MGM hotels and casinos.)  This is the same group suspected to have attacked (and been paid a $15 million ransom) by CZR recently.  However, Scattered Spider has made no claim of responsibility for that attack.  Later, the FAA reduced minimum flight requirements at NYC airports through October 2024 to give airlines another year (after already having been given a six-month grace period).  This grace period will help DAL and JBLU the most as they had been the ones unable to meet the requirements and at risk of losing gates and landing slots.  However, the added leeway may give other airlines additional scheduling flexibility as well.  Later, the state of CA filed suit against XOM, CVX, SHEL, BP, COP, and the industry trade group American Petroleum Institute. The suit accuses the firms of causing tens of billions of dollars in damage to the state (environment and climate-related disasters which cost the state untold sums).  The suit also accuses the defendants of deceiving the public about the dangers of fossil fuels for decades. Reuters reported that the only response from defendants, so far, is that the courtroom, and in particular a state jurisdiction courtroom, is not the right venue to address climate change.

In Autoworker contract talks and strike news, unless you’ve been hiding under a rock, you know the UAW began a “targeted strike” after the previous labor contract expired at midnight Thursday night. As of that time 12,000 of the union’s 146,000 workers (8%) went on strike at one plant each of the Big 3 automakers.  Late Friday, GM increased its offer to a 20% pay increase over 4 years and STLA boosted its offer to a 19.5% over the length of the next contract.  So far, the impacts on F, GM, and STLA have not been heavy.  Still, F laid off 600 of its non-striking workers at one plant because of a parts shortage caused by the strike.  GM told 2,000 workers at a KS plant it will likely shut this week due to a lack of parts from its striking plant.  The good news for the three stocks (and companies) is that they have been preparing for the strike for a year.  All three have huge lots filled with complete or nearly completed vehicles as well as substantial component stockpiles.  (That was a heavy lift for an industry that long ago went to just-in-time and demand-pull inventory models.)  So, the top industry analysts expect GM, F, and STLA to not have large-scale finished product or component shortages as long as the strike does not last months.  Meanwhile, the UAW has about $827 million in its “strike fund.”  Depending on how many of its 146k workers are on strike or laid off, that could be a big enough war chest to last quite a while.  If all 146k were striking, that would be 11 weeks of pay coverage.

Despite the strike, negotiations, never really stopped.  Over the weekend, on Saturday, STLA increased its offer to a 21% wage hike (10% immediate, the rest over four years), some inflation protection, and a partial end to wage tiers.  The UAW immediately rejected that offer saying that the Big 3’s executive pay has increased more than 40% in the last 4 years.  As an aside, the CEO pay of the Big 3 has all increased about 40% over the life of the last UAW contract.  (Other executive pay was not easily found.) All three CEOs now make 360-370 times as much as the most experienced UAW members.  For reference, a starting autoworker (lowest tier) for the Big 3 makes an average of just under $18/hour.  However, “temp workers,” which all three companies use but STLA in particular uses extensively, make just $15/hour.  That “temp worker” rate has not changed in 14 years.  At the experienced end of the spectrum, UAW members make $32.30/hour.  Back to the main topic. On Sunday, the UAW said the obvious that the number of plants under strike may expand.  At about the same time, the White House said it will be sending a team of negotiators to Detroit to help the sides reach a deal to end the strike.

After the close, mixed but leaned toward the red side.  Hong Kong (-1.39%), Taiwan (-1.32%), and South Korea (-1.02%) paced the losses while Japan (+1.10%) was by far the biggest gainer.  However, in Europe, we see red across the board at midday.  The CAC (-1.03%), DAX (-0.61%), and FTSE (-0.35%) are typical of the range and lead the region lower on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start to the day just on the green side of flat.  The DIA implies a +0.09% open, the SPY is implying a +0.06% open, and the QQQ implies a -0.01% open at this hour.  At the same time, 10-year bond yields are up to 4.343% and Oil (WTI) is up three-quarters of a percent in early trading.

The major economic news scheduled for Monday is limited to July TIC Net Long-Term Transaction (4 p.m.).  There are no major earnings reports scheduled for either before the open or after the close.

In economic news later this week, on Tuesday Preliminary August Building Permits, August Housing Starts, and API Weekly Crude Oil Stocks are reported.  Wednesday, we get EIA Weekly Crude Oil Inventories, FOMC Rate Decision, FOMC Statement, FOMC Q3 Interest Rate Projection, Q3 1st Year Interest Rate Projection, Q3 2nd Year Interest Rate Projection, Q3 3rd Year Interest Rate Projection, Q3 Long-Term Interest Rate Projection, and the Fed Chair Press Conference.  On Thursday, Q2 Current Account, Weekly Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, August Existing Home Sales, and Fed Balance Sheet.  Finally, on Friday, S&P US Mfg. PMI, S&P U Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Tuesday we hear from AZO and SCS.  Then Wednesday, GIS, FDX, and KBH report.  On Thursday, we hear from DRI and FDS.  Finally, on Friday, there are no major earnings reports scheduled.

In miscellaneous news, US oil prices hit the high of the year on Friday on what oil analysts say was China recovery optimism and tight supply (mostly from Russian and Saudi extended production cuts).  Elsewhere, Employment industry firm Challenger, Gray & Christmas told Reuters on Friday that their surveys of retailers have led them to predict the industry will high the fewest seasonal workers since 2008.  CG&C estimate the industry will hire 410k seasonal workers, compared to more than 519k in 2022 (and that itself was a 26% decline from 2021).  Finally, late Sunday night, House Republicans announced they have reached a deal on a continuing resolution that would fund the government for another month (through Oct. 31). The deal hammered out by the GOP alone (basically a deal between the small radical-right MAGA group and the rest of the GOP caucus) cuts domestic spending, enforces the MAGA immigration demands, and keeps defense spending as-is. The GOP has the votes to pass this in the House but it is very likely dead on arrival in the Senate. Even if passed and signed, it is still unclear what the implications to existing programs would be of the reduced domestic spending. So, I guess you could see this as progress. However, it is far from a “done deal” and there are 10 days left to avert a government shutdown.

With that background, markets are little moved but trading decidedly bearish this morning. All three major index ETFs gapped up to start the early session, but have traded lower across the whole premarket to give us black-bodied candles with almost no wick at least as of now. All three remain below their T-line (8ema) and seem to be picking up steam in the early session (perhaps in sympathy with Asian and European trading). So, for now, the trend of the last two weeks has been choppy. If you are looking at a very short timeframe, the momentum has switched from bearish to bullish and back several times during that period. A longer outlook shows a bearish mid-term and a bullish long-term trend. The premarket session is also testing the obvious potential support levels that were just below the SPY, QQQ, and DIA on the close Friday. In terms of extension, none of the major index ETFs are far from their T-line and the T2122 indicator is now at the top of its mid-range. So, there is plenty of slack for either the Bulls or the Bears to make a move.

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.

🎯 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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