On Friday, stocks gapped a bit higher with SPY gapping up 0.43%, DIA gapping up 0.46%, and QQQ gapping up 0.25%.  Markets then ground sideways until 10 am, when volatility kicked in as Fed Chair Powell’s Jackson Hole prepared remarks led to some knee-jerking and then a 45-minute selloff that reached the lows of the day in all three major index ETFs about 5 minutes after 11 am.  However, the Bulls stepped in at that point, giving us a long, wavy rally that lasted until 3:30 pm when the SPY, IDA, and QQQ all hit their high of the day. Then we saw modest profit-taking the last 30 minutes across the board.  This action gave us indecisive, white-bodied, Bullish Harami Spinning Top candles in all three of the major index ETFs.  QQQ managed to close just above its T-line (8ema), while SPY closed just below its T-line, and DIA did not quite reach its T-line, even at the high of the day. 

On the day, nine of the 10 sectors were in the green with Technology (+0.81%) and Energy (+0.78%) leading the way higher Communications Services (-0.10%) being the only sector left in the red. At the same time, the SPY gained 0.70%, DIA gained 0.72%, and QQQ gained 0.78%.  VXX dropped 4.35% to 24.20 and T2122 climbed back up to the edge of oversold territory at 19.47. 10-year bond yields pulled back slightly to close at 4.231% while Oil (WTI) gained 1.27% to close at $80.05 per barrel.  This happened on slightly above-average volume in all three of the major index ETFs.  So, the volatility and bearish sentiment lasted about 45 minutes and then the day belonged to the Bulls heading into the weekend.  DIA has now taken out its uptrend (stretching back to October 2022).  QQQ is right at (and retesting) its uptrend line stretching back to January.  SPY remains the only one of the major index ETFs still above and not yet retesting its bullish trend stretching back to mid-October 2022.   

The major economic news reported Friday included August Michigan Consumer Sentiment, which came in a bit below expectations at 69.5 (compared to a forecast of 71.2 and the July reading of 71.6).  At the same time, August Michigan Consumer Expectations were also a bit low at 65.5 (versus the 67.3 forecast and the July 68.3 value).  In terms of forward-looking survey results, the August Michigan Inflation Expectations (over the next 12 months) were high at 3.5% (compared to the forecast of 3.3% and the July reading of 3.4%).  Finally, the August Michigan 5-year Inflation Expectation was 3.0% (versus the 2.9% forecast but in line with the July 3.0% value).

In Fed Speaker News, Fed Chair Powell’s Jackson Hole speech was the big news.  In his prepared remarks (released minutes prior to his speech, Powell said “It is the Fed’s job to bring inflation down to our 2% goal, and we will do so.”  His remarks continued, “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”  Still, he also left room for a continued pause in hikes in September by saying, “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”  Elsewhere, on the sidelines of the conference, Cleveland Fed President Mester also bolstered the hawk message, saying “We’ve come a long way, but you know, we don’t want to be satisfied because inflation remains too high.”  She continued, “We need to see more evidence to be assured that [inflation is] coming down in a sustainable way and in a timely way.”

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The other major central banker speaking Friday was European Central Bank President Lagarde.  She called for EU rates to be “higher for longer.” The ECB President said, “In the current environment, this means – for the ECB – setting interest rates at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our 2% medium-term target.”  Lagarde also went on to warn central bankers to fear wage increases “That could make inflation more persistent if expected wage increases are then incorporated into the pricing decisions of firms, giving rise to what I have called ‘tit-for-tat’ inflation.”  Interestingly, that argument seems to run contrary to both research and common sense.  In the US, by far the largest component of inflation in recent months has been the rise in the cost of shelter (rent and house prices), followed by the rise in energy prices, both of which are not driven by wages according to BLS data.  Finally, recent reports from economic researchers have said the main culprit behind inflation since 2019 has been the backlog of orders caused by the pandemic and the resulting cascade of supply chain issues.  In short, supplies fell much more sharply than demand around the world and stayed that way for two years.  So, Lagarde seems to be arguing that workers should accept stagnant wages and whatever inflation that comes every year, in order to avoid giving companies an excuse to raise prices even more than the wage increases they might demand. 

In stock news, on Friday ERIC announced that it forecasts $1 billion in patent cross-licensing revenue from its licensing agreements with Chinese phone maker Huawei.  At the same time, C reported that net outflows from its equity funds have continued.  C says there were $6.1 billion in outflows from equity funds during the week that ended August 23.  Elsewhere, RAD shares plunged Friday when the Wall Street Journal reported that it is getting ready to file for Chapter 11 bankruptcy.  (RAD closed down 51.04%.)  Later, Bloomberg reported that BA is close to restarting the delivery of 737 MAX jets to China after a four-year pause following the deadly crashes in 2019 and 2020.  By late afternoon, Reuters reported that BB had received an acquisition offer from private equity firm Veritas Capital.  (BB closed up more than 18% on the day.)  Meanwhile, UAW workers voted overwhelmingly (97% in favor) to authorize a strike against GM, F, and STLA any time after the current contract expires on September 14.  (As of now, the negotiations between the union and “Big 3” are contentious and not making much progress according to media reports.  Some economists say a strike on all three would cost the economy $500 million per day.)   Late in the day, Reuters reported that TWNK is exploring a sale after receiving takeover interest from major snack food makers.  This news caused a massive spike in the price of TWNK at 2:40 pm.  On the day, TWNK pulled back to close up 21.73%. 

In stock legal and regulatory news, on Friday the MA Supreme Court reversed a lower court ruling in a blow to HOOD.  The decision gives MA state regulators a significant victory in their enforcement action against the online broker, by ruling that the broker does have fiduciary responsibility.  (This was central to the MA case, which claims that HOOD breached its fiduciary responsibility by encouraging inexperienced investors to place risky trades via gamification.)  Elsewhere, AZN joined the other major pharma companies by filing suit against the US over Medicare drug price negotiation plans.  At the same time, the SEC reported that MMM has agreed to pay $6.5 million to settle the charges that it had violated the Foreign Corrupt Practices Act by bribing Chinese officials to curry favor.  Later the SEC also reported that WFC has agreed to pay $35 million in penalties to settle charges that the company overcharged its customers for advisory fees.  Late Friday evening, the FTC suspended its challenge of AMGN’s $27.8 billion acquisition of HZNP.  This pause is effective until September 18 and will give the agency time to consider whether it should settle the case rather than continue a lengthy court fight.  (AMGN may have offered some compromise since it announced “it would be pleased if its commitment were honored.”) Finally, on Sunday, MMM tentatively agreed to pay $5.5 billion to settle 300,000 lawsuits claiming defective MMM earplugs caused permanent hearing loss among US military veterans. The settlement would stop the need for MMM’s once-court-blocked attempt to avoid liability by shifting it to a subsidiary that was then declared bankrupt.

Overnight, Asian markets were nearly green across the board.  Only Malaysia (-0.02%) remained in the red while Japan (+1.73%), Shanghai (+1.13%), and Shenzhen (+1.01%) led the region strongly higher.  In Europe, we do see green across the board at midday.  The CAC (+0.69%), DAX (+0.51%), and lagging FTSE (+0.07%) lead the region higher on volume in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.25% open, the SPY is implying a +0.18% open, and the QQQ implies a +0.29% open at this hour.  At the same time, 10-year bond yields are up slightly to 4.239% and Oil (WTI) is off fractionally to $79.72 per barrel in early trading.

There is no major economic news scheduled for Monday.  There are no major earnings reports scheduled for before the opening bell.  Then, after the close, HEI reports. 

In economic news later this week, on Tuesday we get Conference Board Consumer Confidence, JOLTs Job Openings, and API Weekly Crude Oil Stocks Report.  Then Wednesday, ADP Nonfarm Employment Change, Q2 GDP, Q2 GDP Price Index, July Goods Trade Balance, July Retail Inventories, July Pending Home Sales, and EIA Crude Oil Inventories are reported. On Thursday, we get Weekly Initial Jobless Claims, July PCE Price Index (year-on-year), July PCE Price Index (month-on-month), July Personal Spending, August Chicago PMI, and the Fed Balance Sheet.  Finally, on Friday, August Average Hourly Earnings (month-on-month), August Average Hourly Earnings (year-on-year), August Nonfarm Payrolls, August Private Nonfarm Payrolls, August Participation Rate, August Unemployment Rate, August S&P US Mfg. PMI, August ISM Mfg. Employment, August ISM Mfg. PMI, and August ISM Mfg. Prices are reported.

In terms of earnings reports later this week, on Tuesday, BMO, BNS, BBY, BIG, CTLT, CHS, DCI, SJM, NIO, PDD, AMWD, HPE, HPQ, YY, and PVH report.  Wednesday, we hear from PDCO, CHWY, COO, CRWD, FIVE, GEF, OKTA, PSTG, CRM, VEEV, and VSCO.  On Thursday, ASO, CAL, CPB, CM, CIEN, DG, GCO, GMS, HRL, BEKE, OLLI, PSNY, SIG, TITN, UBS, ARMK, AVGO, DELL, LULU, NTNX, and VMW.  On Friday, DDL reports.

In miscellaneous news, CNBC reported Saturday that with 9 million open jobs (in June) and only 5.8 million unemployed workers, a serious imbalance exists. Economists have suggested easing immigration policy to help address the problem, which an economist from the Cato Institute (Libertarian) estimates is costing the US “something like $1 trillion a year” in lost GDP.  (The current immigration process takes about 5 years for a person to legally enter the US and join the workforce.)  However, a survey taken by that same institute found Americans are split on easing immigration restrictions.  As you probably expected, that split is largely along political lines.  Elsewhere, CNBC also reported Saturday that AMZN is expanding its biometric authorization process.  The company already has 200 Whole Foods Market stores that allow customers to have cards on file and then authorize payments by scanning their palms.  AMZN says it will expand that number to 500 stores by year-end. Finally, it seems a primary driver of Asian (and probably European) markets are Chinese measures announced Sunday. China reduced the tax on stock trades, eased restrictions on executives selling shares, and lowered deposit ratios for margin trading. All the moves were to encourage more trading in Shanghai, Hong Kong, and Shenzhen. However, while there was a pop, many investors were looking for stronger action to actually stimulate the Chinese economy.

With that background, it looks like the Bulls are retesting the T-line (8ema) in all three major index ETFs in the early session. The QQQ candle is showing some bullishness (not just a modest gap higher) while the two large-cap index ETFs are much smaller premarket candles. The bulls still have a lot of work ahead of them since in addition to the 8ema, the 50sma remains overhead (we are still looking at a Blue Ice Failure pattern in all three). There is also a number of levels created by previous swing points to overcome. In other words, the Bears have the momentum. As far as extension goes, none of the major index ETFs are too far extended from their T-line and the T2122 indicator is sitting right at the upper edge of the oversold territory. So, both sides have room to run but the Bulls obviously have more slack if they could manage a rally.

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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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

Markets diverged a bit at the open following NVDA’s blowout results the night before.  SPY gapped up 0.38%, DIA gapped down 0.11%, and QQQ gapped up 0.94%.  DIA did its best to catch up by rallying sharply the first 30 minutes of the day.  However, QQQ was already throwing the mega-caps a curve by reversing and selling off hard at that same time.  Things got back in sync at 10 am as all three major index ETFs then went on to sell off the rest of the day, closing very near the low of the day.  This action gave us large, black, Bearish Engulfing candles in the SPY and QQQ.  Both of those index ETFs also crossed back below their T-line (8ema) in the process.  For its part, DIA failed a retest of its own T-line on a large, black-bodied candle with a large upper wick.  DIA also fell down out of its four-day consolidation.  All three also retested and failed their 50sma, thus giving us a Blue Ice Failure pattern (with the exception that only QQQ has enough space left down to its 200sma to qualify as a Blue Ice Failure).  

On the day, all 10 sectors were in the red with Technology (-2.17%) and Consumer Cyclical (-1.92%) way out front leading the way lower with Financial Services (-0.32%) and Communications Services (-0.35%) holding up better than the other sectors. At the same time, the SPY lost 1.39%, DIA lost 1.10%, and QQQ lost 2.14%. VXX popped up 4.12% to 25.30 and T2122 dropped back down into the oversold territory to 10.06.  10-year bond yields jumped back up to close at 4.241% while Oil (WTI) was flat to close at $78.88 per barrel.  This happened on slightly above-average volume in the QQQ and average volume in the SPY and DIA.  So, the profit-taking off the opening pop was dramatic and lasted all day Thursday.  DIA has now taken out its uptrend (stretching back to October of 2022).  QQQ is right at (and retesting) its uptrend line stretching back to January.  And SPY remains the only one of the major index ETFs still above and not yet retesting its bullish trend stretching back to mid-October 2022.     

The major economic news reported Thursday included July Durable Good Orders, which came in lower than expected at -5.2% (compared to a forecast of -4.0% and even worse than the June reading of -4.4%).  This included July Core Durable Goods Orders that were reported better than expected at +0.5% (versus a forecast of +0.2% which was also the June value).  At the same time, Weekly Initial Jobless Claims were reported at 230k (versus a forecast of 240k and the previous week’s 240k number).  Later, after the close, the Fed Balance Sheet continued to show its slow reduction as it shrank from $8.146 trillion to $8.139 trillion.  In related news, it is also worth noting that the St. Louis Fed said Thursday that the Fed may need to stop shrinking its balance sheet at least temporarily.  Since the government has issued $1 trillion in bonds since June, money market funds have been holding back on their purchases of bonds.  That leaves the Fed as the other major potential buyer.

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In Fed Speak news, Philly Fed President Harker told CNBC Thursday morning that he doubts the FOMC will need to raise rates again.  Harker said, “Right now I think that we’ve probably done enough.”  He went on to say, “I’m in the camp of let the restrictive stance work for a while, let’s just let this play out for a while, and that should bring inflation down.”  However, Harker was not ready to predict when the Fed might start cutting rates. Just a bit later, Boston Fed President Collins said something very similar when she told Yahoo Finance, “We may be near, we could even be at a place where we would hold and not raise rates further … But certainly, additional increments are possible, and we need to look holistically and be really patient right now and not try to get ahead of what the data will tell us as it unfolds.”  (Both did their interviews on the sidelines of the Jackson Hole Central Banker Conference.)  Both of them also seemed to embrace the recent bond yield rate spikes as something that could help the Fed by increasing longer-term borrowing costs and therefore cooling the economy.

In stock news, TMUS said Thursday that it will be cutting 5,000 jobs (about 7% of its workforce).  The company cited rising costs, cheaper phone plan offerings, and the competitive phone market.  Elsewhere, MA will end its partnership with crypto exchange Binance (which had covered four countries).  In other finance news, the Wall Street Journal reported that a group of funds (led by BLK) that have lent money to WE are exploring the possibility of a Chapter 11 bankruptcy filing.  At the same time, RY announced it would be cutting 1,800 jobs as a cost-cutting measure.  In auto industry news, STLA announced it is expanding its “manufacturer-approved pre-owned vehicle” sales program to the US.  (The program started in Europe in 2019.)  Meanwhile, GOOGL said Thursday that it will provide more information on targeted ads and give researchers more access to data in order to come into compliance with new EU online content rules.  After the close, HE plummeted as much as 24% after announcing it was suspending its dividend after subsidiaries were forced to draw $370 million from their revolving credit lines in the wake of the massive Maui fires.  Also after the close, LMT was awarded a $2.7 billion contract by the US Navy to build 35 additional CH-53K helicopters.  At the same time, GM announced it has agreed to increase the pay of workers at its OH battery plant by an average of 25%.  In addition, Reuters reports that AMZN is in talks with DIA over a potential streaming deal with DIS’s ESPN unit.

In stock legal and regulatory news, late Wednesday night, the SEC made a court filing saying that investors who lost money (victims) when Elon Musk tweeted about taking TSLA private will soon begin receiving payouts, recouping 51.7% of their losses.  At the same time, the TX Public Utilities Commission announced that TSLA will provide the state with two “virtual power plants” (drawing power from people who have TSLA Powerwall batteries and compensating them for the electricity).  Elsewhere, Reuters reported that SAVE has agreed to pay up to $8.25 million to settle a class action suit over hidden carry-on baggage fees.  At the same time, WHR agreed to pay $11.5 million to the US Consumer Protection Product Safety Commission over failure to report glass cooktops that could turn themselves on posing burn and fire hazards.  Later, the NHTSA told Reuters that it would resolve its two-year investigation into TSLA Autopilot in a public announcement soon.  The spokesman declined to describe what that resolution will be or exactly when “soon” will come.  Meanwhile, starting today, the big tech names will be forced to comply with the new EU Digital Service Act which imposes stricter rules on content moderation, user privacy, and transparency.  These include META, AAPL, and GOOGL. (AMZN is fighting its inclusion on the list of companies covered in court.)  Failure to comply could result in fines of up to 10% of total global sales per infraction.  After the close, a US District Court judge dismissed a lawsuit against GOOGL that had been brought by the Republican National Committee which had claimed the tech giant had maliciously marked RNC mass emails as spam.  Also after the close, TD said it expects to be fined and other non-monetary penalties from US authorities over a money laundering investigation.

After the close, AFRM, INTU, MRVL, JWN, ULTA, and WDAY all reported beats on both the revenue and earnings lines.  Meanwhile, GPS missed on revenue while beating on earnings.  It is worth noting that AFRM, INTU, and WDAY raised their forward guidance. 

Overnight, Asian markets were mostly red.  Japan (-2.06%) and Taiwan (-1.72%) were way out front leading 10 of the region’s 12 exchanges lower.  In Europe, the opposite picture is taking shape at midday.  14 of the 15 bourses in the region are squarely in the green while the CAC (+0.74%), DAX (+0.56%), and FTSE (+0.49%) lead the region higher in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing to a green start to the day here as well.  The DIA implies a +0.34% open, the SPY is implying a +0.26% open, and the QQQ implies a +0.10% open at this hour.  At the same time, 10-year bond yields are up slightly to 4.249% and Oil (WTI) is up just over one percent to $79.86 per barrel in early trading.

The major economic news scheduled for Friday includes Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Inflation Expectation, and Michigan Consumer 5-year Inflation Expectations all at 10 am.  Fed Chair Powell also speaks at 10:05 am as the Jackson Hole Conference continues.  There are no major earnings reports scheduled for the day (either before the open or after the close).

In miscellaneous news, both the TX and Central State electric grids warned customers of potential power outages as the brutal heatwave continues to pound much of the US.  Both grid operators urged voluntary power conservation to avoid rolling outages.  In other news, the BRICS group invited some more oil to the party as they formally asked Saudi Arabia, Iran, and UAE to join.  Rounding out the new countries invited were Argentina, Egypt, and Ethiopia. 

As mentioned above, Fed Chair Powell speaks just after 10 am Eastern this morning.  Markets are very likely to parse through every word and facial gesture he delivers looking for a clue to the path for interest rates.  (This is especially true after two dovish statements from Fed members delivered in interviews on the sideline of the conference Thursday.)  If you want to get a little wonky, see if Powell addresses an abstract metric known as “R*” (R-star).  This is not the target interest rate, but instead, it is the rate at which Fed policy is theoretically neutral (neither restricts or stimulates the economy).  Since 2019 that rate has been 2.5% and prior to that the R* was 3.5% going back until 2015.  While Powell will be the main show on Friday, EC President Lagarde also speaks at 3 pm Eastern.  (This will be her first public remarks since the EC’s July rate hike.) 

With that background, it looks like the premarket is modestly bullish after Thursday’s big bearish candles. None of the major index ETFs have done enough premarket work to be retesting their T-lines (8ema) or 50sma. So we are still looking at a Blue Ice Failure pattern in all three with huge Bearish Engulfing candles in the SPY and QQQ (which could both also be working on Dreaded-h patterns (the opposite of a J-hook). In other words, the Bears have all the chart patterns in their favor this morning. So, the short-term downtrend break is back in question for the SPY and QQQ, while DIA has resumed its own move lower. As far as extension goes, none of the major index ETFs are too far extended from their T-line but the T2122 indicator is back down well into the oversold territory. So, both sides have some room to run but the Bulls obviously have more slack if they could manage a rally. Finally, don’t forget it is Friday with the Jackson Hole Conference continuing Saturday (although we do not EXPECT much news then). We also have the long weekend news cycle. So, prepare your account for the weekend by taking some money off the table (it is Payday after all) and moving stops, hedging, or lightening up your positions.

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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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

It was the Bulls Day on Wednesday.  SPY opened 0.24% higher, DIA opened 0.15% higher and QQQ gapped up 0.32%.  At that point, all three major index ETFs followed through with a steady rally until almost 2 pm.  Then all three traded sideways the rest of the day with a slight profit-taking trend.  This action gave us gap-up, large-body, white candles in all three.  The SPY crossed back above its T-line (8ema) and with a tiny tick on top is now just below its 50sma.  The QQQ also crossed back up through its T-line but had a slightly larger upper wick than the SPY.  QQQ is also just below its 50sma and you might even say it tested the 50 at the high of the day.  DIA is still in more of a sideways consolidation than a rebound rally like the other two majors.

On the day, all 10 sectors were in the green with Technology (+1.08%) way out front leading the way higher followed by Financial Services (+1.20%) while the lagging sector was Energy (+0.11%).  At the same time, the SPY gained 1.08%, DIA gained 0.52%, and QQQ gained 1.58%.  VXX was down 3.34% to close at 24.30 and T2122 climbed back out of the oversold territory into the lower half of the mid-range at 39.42.  10-year bond yields plummeted lower to close at 4.194% while Oil (WTI) fell 1.48% to close at $78.46 per barrel.  This happened on well-below-average volume in all three of the major index ETFs.  So, the rally relationship has resumed, with QQQ and SPY leading the market higher while DIA lags again.  The question is whether or not this is just a relief rally in the month-long pullback.  Either way, Wednesday belonged to the Bulls.      

The major economic news reported Wednesday included Building Permits, which came in slightly above expectation at 1.443 million (compared to a forecast of 1.442 million and a July reading of 1.441 million).  This amounted to a 0.1% month-on-month increase versus the July value which itself was down 3.7% from June.  Later, the Preliminary August S&P US Mfg. PMI came in light at 47.0 (compared to a forecast calling for 49.3 and a July reading of 49.0).  At the same time, the Preliminary August Services PMI was reported at 51.0 (versus a forecast of 52.3 and a July value of 52.3).  In addition, the Preliminary S&P Global Composite PMI was 50.4 (compared to a 52.0 forecast and a 52.0 July value).  After that, the July New Home Sales came in higher than expected at 714k (versus a 705k forecast and a 684k June reading).  This amounted to a 4.4% increase in July, which was better than the +0.2% increase anticipated and far better than June’s decline of 2.8%.  Later, the EIA Weekly Crude Oil Inventories followed the API report from Tuesday night, showing a 6.135-million-barrel drawdown (compared to a predicted 2.850-million-barrel draw and even the prior week’s 5.960-million-barrel drawdown of inventory.

In Russian news, Putin’s unofficial warlord Yevgeny Prigozhen was killed along with the other co-founder of Wagner Private Military Company (Dmitry Utkin).  Most saw this plane crash coming as the inevitable result of Wagner’s June uprising against Putin.  Still, it is notable. Elsewhere, Reuters reported Wednesday that Russian central bank authorities are working on a presidential decree that may give that country’s retail investors a way to unblock their frozen assets held in overseas accounts.  The scheme would allow foreign investors to buy the assets held abroad (3.5 million Russians hold almost $16 billion in foreign accounts that are now frozen).  The idea is that non-Russian investors would buy the frozen Russian account assets (presumably at a discount) in exchange for assets held in non-frozen accounts that can be repatriated to Russia.  It’s unclear whether Western sanctions would now (or could be made to) block this move.  (One would think this to be the case, otherwise, the Russian oligarchs surely would have done this 18 months ago.) It is also unclear if there is some sort of unmentioned reciprocal agreement at play allowing Western business assets frozen in Russia to be released.

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In stock news, research firm Antenna reported that NFLX continued its strong growth in new subscribers in July (not as strong as June’s record increase, but still 2.6 million is a significant gain in subscribers for a month).  NFLX was up 3.48% on the day of that news.  At the same time, a Business Insider report said TSLA cut its production targets in Germany by 13% (with plans to cut it more later).  The current rate of output is now 4,350 per week from the TSLA Berlin plant.  Simultaneously, Reuters reported that NVO has chosen TMO as a second contract manufacturer for its hit weight loss drug Wegovy.  In the early afternoon, JNJ announced its Janssen division would be closing down much of its vaccine research and development operations.  (The JNJ COVID-19 vaccine did not perform as well as competitors from PFE and MRNA.)  Later, the UAW announced workers at the major F Louisville plant have voted to authorize a strike with three weeks left before the current labor contract expires.  In other auto industry news, GM said they are halting production at their Ft. Wayne assembly plant for a week as they continue to wrestle with part supply issues.  (GM blamed the shortage on a lack of railcars and truck drivers which led to a massive buildup of partially completed vehicles at the plant.)  In M&A news, private company Esmark announced it has rescinded its offer to buy X for $35/share.  In a statement, Esmark said it will respect the USW Steel Workers Union position (the union is supporting CLF buying X for a lower $7.3 billion total price).  After the close, GM announced it was cutting 940 jobs in AZ and would cease its IT operations in that state to reduce costs.  (80-90 of these layoffs come from the self-driving software team.)  At the same time, Reuters reported that a new supplier quality problem has been identified related to 737 MAX production.  The new problem will delay near-term deliveries of those planes and is likely to impact annual production goals.  AAPL announced after the close that it supports the CA state “Right to Repair” bill as currently written, specifically citing that the bill “protects consumer safety, device security, and manufacturers intellectual property rights.”  (This almost assuredly means the bill has been transformed into something worthless to consumers and non-AAPL repair businesses.)

In stock legal and regulatory news, OSHA said Wednesday that it’s investigating a chemical spill at a lithium battery plant owned by GM and South Korea’s LG Energy.  This is one of six open OSHA investigations into that plant’s operations.  (In a possibly related case, after the close, Bloomberg reported that the joint venture is working on a deal to give employees at that plant a 33% raise plus back pay.)  At mid-morning, drugmaker Mallinckrodt (MNKKQ) told Reuters it expects to file for a second bankruptcy in the next few days.  This comes after the drugmaker reached a deal with victims who had agreed to accept $1 billion less in their settlement with the company over opioid distribution practices.  Later, a court in Kenya ordered META into mediation in the company’s dispute with 184 content moderator employees and two contractors who were suing the company for unfair dismissal (because they were organizing a union).  The court ruled META has 21 days to reach an agreement to resolve the dispute with the plaintiffs.  In the afternoon, Reuters reported that UAL has agreed to a $30 million settlement after one day of trial in a case related to their treatment of a quadriplegic man in a vegetative state.  Late in the day, a coalition of environmental activist groups sent a letter to the SEC, pushing to stop Brazilian meatpacker JBSAY from being listed (issuing an IPO) on the NYSE.  After the close, GS, JPM, MS, and UBS agreed to pay $499 million to settle an antitrust lawsuit from investors, which had accused them of conspiring to stifle competition through their stock lending practices.  Also after the close, the FCC announced it would be releasing the public comments made in a bid to deny the broadcast license renewal of the FOX TV station in Philadelphia.  Comments made by the grassroots group “The Media and Democracy Project” have asked for denial based on FOX’s false and harmful information (lies) about the 2020 election. FOX dismissed the petition as frivolous and without merit, but the petitioners mentioned FOX’s $787.5 million defamation case settlement brought by Dominion Voting System and FOX internal communications released related to that case that proved the company knew the results of the election were valid but repeatedly lied about it anyway and knew that could lead to something like the January 6 riot attempting to stop official vote counting.  At the same time, an FDA panel of independent experts voted against the approval of an MDT blood pressure treatment device. 

After the close, ADSK, GES, NTAP, NVDA, SNOW, and SPLK all beat on both the revenue and earnings lines.  It is worth noting that ADSK, GES, NVDA, and SPLK all also raised their forward guidance.  It is also worth noting that there were some major surprise beats on earnings with NVDA surprising by 29.2%, SPLK surprising by 57.8%, GES surprising by 84.6%, and SNOW surprising by 120%.  However, the most notable beat of the day was NVDA’s 170% jump in sales (year-on-year) resulting in a 27% beat on revenue…driven by AI processing demand (whose division sales more than doubled). NVDA also expects AI-related demand to continue increasing, more than doubling again in 2024. That is likely to drive markets (especially QQQ and SPY) this morning.

Overnight, Asian markets were mostly green on the back of the AI rally.  Hong Kong (+2.05%), South Korea (+1.28%), and Taiwan (+1.17%) led the region higher.  Only New Zealand (-0.60%) and India (-0.29%) were in the red.  In Europe, we see a very similar picture taking shape at midday.  Only Russia (-0.76%) and Finland (-0.05%) are in the red, while the CAC (+0.46%), DAX (+0.36%), and FTSE (+0.35%) lead the region higher.  In the US, as of 7:30 am, Futures are pointing toward a mixed open.  The DIA implies a flat open of -0.02%, the SPY is implying a +0.64% open, and the QQQ implies a +1.27% open at this hour.  At the same time, bonds are back up a bit to 4.214% and Oil (WTI) is up fractionally to $79.04 per barrel in early trading.

The major economic news scheduled for Thursday includes July Durable Goods Orders and Weekly Initial Jobless Claims (both at 8:30 am), Fed Balance Sheet and Bank Reserve Balances with the Fed (both at 4:30 pm).  The Central Bankers Jackson Hole Conference also starts at 8 am.  The major earnings reports scheduled for before the opening bell include BURL, DLTR, NTES, WOOF, RY, TD, and WB.  Then, after the close, GPS, INTU, MRVL, JWN, ULTA, and WDAY report. 

In economic news later this week, on Friday, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer Inflation Expectation, and Michigan Consumer 5-year Inflation Expectations are reported.  Fed Chair Powell also speaks as the Jackson Hole Conference continues.

In terms of earnings reports, there are no earnings reports scheduled for Friday.

In miscellaneous news, retail industry analyst Susquehanna reported that big retailers have already returned to a cost-cutting focus by going back to a just-in-time inventory model.  Susquehanna analyzed the last 20 years of ocean container ship imports into the US looking for trends. They found that the “big 4” big box retailers (WMT, TGT, HD, and LOW) all reduced their inventories by more than 4% in Q2, which was the largest reduction since 2015.  The analyst is predicting (based on discussions with retailer management) Q3 pre-holiday inventory builds will be larger than last year’s 6% quarter-on-quarter increase but far less than the 14% average from pre-COVID years.

In late-breaking news, Turkey surprised markets this morning with an unexpectedly large rate hike of 7.5%, bringing that country’s main rate to 25%.  The Dollar fell against the Turkish Lira almost immediately.  Elsewhere, privately-held Subway (sandwich shops) sold itself to privately-held Roark Capitol.  Roark already owned Dunkin Donuts, Baskin-Robbins, Sonic, Arby’s, Buffalo Wild Wings, and a host of other restaurant industry brands.  Finally, Bloomberg reported that China has a major $9 trillion “off the books” debt problem.  It seems that this is the amount of debt held by Chinese local governments through state-owned companies set up to borrow on behalf of province and local government entities.  The problem is that the local governments have not been able to raise enough income (tax revenue) to pay the interest on that $9 trillion in hidden debt.  So, banks are unwilling to lend to those entities and investors are not buying bonds issued by those financing companies.  If there were a default by any of those shadow funding agencies, China’s entire $60 trillion financial system would be at risk of collapse.

So far this morning, BURL, DLTR, FRO, RY, and SN all reported beats on both the top and bottom lines.  Meanwhile, NTES and WB missed on revenue while beating on earnings.  On the other side, WOOF and TD beat on revenue while missing on the earnings line.  It is worth noting that WOOF lowered its forward guidance.   

With that background, it looks like the premarket is giving us a similar feel as the Wednesday normal session. SPY and especially QQQ gapped higher and will open with significant gains. Meanwhile, DIA is stuck in the mud and not participating. It is interesting that all three of their premarket candles are indecisive candles (after the gaps from the two broader ETFs). SPY and QQQ are above their T-line (8ema) while DIA remains just below its own T-line. The morning gap will also see the QQQ well up above its 50sma and the SPY retesting its 50sma from below. So, the short-term downtrend has been broken in the SPY and QQQ, but the DIA remains in just a consolidation. Of course, the much longer-term trend is still bullish since last year but that has been pushed hard recently by the Bears. As far as extension goes, the morning gap may have QQQ a little extended above its T-line but the other two are not far from that average. The T2122 indicator is also back in its mid-range, so there is plenty of room to move in either direction, say it with me, if we 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.

🎯 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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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

On Tuesday, the SPY and QQQ gapped up while the DIA opened flat.  SPY opened 0.39% higher, QQQ opened 0.70% higher and DIA opened up only 0.01%.  However, at that point, all three major index ETFs spent the rest of the day in a slow downtrend.  (It is worth noting that QQQ’s downtrend was more volatile and roller-coaster-like than the large caps, but all three made the same slow trip lower.)  This action gave us large-body, black candles in all three.  The SPY printed a Dark Cloud Cover candle that failed a retest of its T-line (8ema).  QQQ also failed a retest of its 8ema but failed to did not print a candle signal.  For its part, the DIA did not even get close enough to test its T-line again but did print an Evening Star signal.

On the day, seven of the 10 sectors were in the red with Financial Services (-0.92%) out front leading the way lower while Utilities (+0.30%) held up better than the other sectors.  At the same time, the SPY lost 0.27%, DIA lost 0.50%, and QQQ lost 0.14%. VXX was basically flat to close at 25.14 and T2122 climbed slightly gain but remained well into the oversold area at 10.00.  10-year bond yields rebounded after they opened lower to close at 4.332% while Oil (WTI) fell 0.58% to close at $80.25 per barrel.  This happened on a well-below-average volume in all three of the major index ETFs.  So, volatility reigned in the morning, but the Bulls took over for the second half of the day.      

The major economic news reported Tuesday was limited to July Existing Home Sales which came in a bit below expectation at 4.07 million (compared to a forecast of 4.15 million and a June reading of 4.16 million).  That corresponded to a 2.2% decrease month-on-month coming after a 3.3% month-on-month decline in June.  (Curiously, at the same time, the median home price rose 1.9% to $406,700, just the fourth time the average has topped $400,000.)  Then, after the close, the API Weekly Crude Oil Stocks Report showed a smaller-than-expected draw on inventories at 2.418 million barrels (versus a forecast calling for a drawdown of 2.900 million barrels but much less than the prior week’s 6.195-million-barrel drawdown). 

In Fed speak, Richmond Fed President Barkin told Reuters Tuesday that the Fed needs to be aware of the possibility that the US economy may accelerate rather than slow in the coming months.  If it does, that would have implications for the FOMC’s fight against inflation.  He noted that US Retail Sales were stronger than expected in July and Consumer Confidence is also rising.  Barkin said, “The reacceleration scenario has come onto the table in a way that it really wasn’t three or four months ago.”  He went on to say, “If I got convinced that inflation was remaining high and demand was giving no signal that inflation was going to come down, that would make the case (for further tightening of monetary policy).”  Related to bond rates, Barkin told Reuters, “It doesn’t strike me that having a 10-year (bond) rate over 4 percent is somehow wildly inappropriate.” 

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In stock news, META announced a new AI model that can transcribe and translate 100 languages on Tuesday morning.  The model (SeamlessM4T) offers speech recognition as well as all the speech-to-text, text-to-speech, text-to-text, and speech-to-speech translation modes.  In other META news, the company rolled out a web-based version (pre-announced a day earlier) of Instagram Threads.  Later, IBM announced it had agreed to sell its weather business to private equity firm Francisco Partners for an undisclosed amount.  (The Wall Street Journal previously reported IBM was seeking to sell the unit at a $1 billion valuation.)  Elsewhere, VMW (in the process of being bought by AVGO) announced it has partnered with NVDA to launch a set of tools that will allow customers to create their own AI applications on NVDA hardware running in their own data centers (as opposed to buying AI processing from cloud vendors like MSFT and AMZN).  In the afternoon, industry watchers said that TSLA’s 13,900 new insurance registrations in China last week added to the 14,000 from the week prior and 12,800 the week before suggests a strong August sales pace for TSLA, at least in China.  In M&A drama news, CLF demanded Tuesday afternoon that X reveal all of its buyout offers.  X has previously rejected CLF’s $7.3 billion cash-and-stock offer and has also received offers (that we know of) from MT and private firm Esmark.  Just after the close, the Teamsters announced their 340,000 UPS workers had approved the new 5-year contract recently agreed between the union and company.

In stock legal and regulatory news, some AAL Pilots are fighting their union in the hope of extending their flying careers.  The union opposed the bill in Congress (championed by airlines) that would raise the retirement age from 65 to 67.  However, some pilots are going around their union (with the help of airlines) to lobby Congress on behalf of the bill.  (An airline industry group says the law could “save” the industry 5,000 pilots over the next two years.  Critical amidst an industry-wide pilot shortage.)  At midday, the US Dept. of Justice announced that NMR had agreed to pay a $35 million fine, pay $808k in restitution, and take responsibility in written form in order to avoid prosecution for lying to customers about bond prices.  (NMR had previously been fined $1.5 million and paid $20.1 million in restitution in a civil settlement with the SEC for the same fraud.)  At the same time, the US Consumer Finance Protection Bureau filed suit against CURO, alleging the lender had pushed 10,000 struggling borrowers to simply refinance their short-term loans to increase their fees.  Later, a “reverse discrimination” lawsuit was filed against GCI, but five current and former employees who claim the newspaper publisher discriminates against white staff in order to fulfill diversity goals.  (No damage figure was provided.)  At the same time, Bloomberg reported that FORG will be acquired by private equity firm Thoma Bravo after the US Dept. of Justice declined to challenge the deal.  Later in the afternoon, MO filed a complaint with the US International Trade Commission seeking to ban the import of rival Juul products, which MO claims infringe on two of its patents.  Then, the US Interior Dept. approved a 704-megawatt wind farm off Rhode Island to be owned and operated jointly by DOGEF and ES.  At the close, the US Dept. of Health and Human Services awarded $1.4 billion in grants, including $326 million for REGN to develop next-generation therapies and vaccines for future COVID-19 variants.

In volatility news, Vietnamese electric vehicle maker VFS (VinFast) continued its massively volatile ride in the six days since its IPO.  On Tuesday, VFS closed up almost 109%after having been up more than 167% at one point in the session.  At the same time, SRE fell almost 50% Tuesday while FN climbed 31.58% by the close.

After the close, LZB, TOL, and URBN all reported beats on both the revenue and earnings lines.  It is also worth noting that TOL raised its forward guidance.

Overnight, Asian markets were mixed but leaned toward the green side.  Taiwan (+0.85%), New Zealand (+0.75%), and Japan (+0.48%) led the more plentiful gaining exchanges.  Meanwhile, China is still on the struggle bus with Shenzhen (-2.14%) and Shanghai (-1.34%) pacing the losers.  In Europe, stocks are mixed with more of the bourses in the red than in the green at midday.  The CAC (-0.14%), DAX (-0.03%), and FTSE (+0.64%) are typical of the spread with only Switzerland (+1.00%) moving more than a percent in early afternoon trade.  In the US, as of 7:30 am, markets are looking to open just on the green side of flat so far.  The DIA implies a +0.13% open, the SPY is implying a +0.13% open, and the QQQ implies a +0.06% open at this hour.  At the same time, 10-year bond yields have backed down strongly again to 4.259%, and Oil (WTI) is down 1.52% to $78.42 per barrel in early trading.

The major economic news scheduled for Wednesday includes Building Permits (8 am), Preliminary August S&P US Mfg. PMI and Preliminary August S&P Global Composite PMI (both at 9:45 am), July New Home Sales (10 am), and EIA Crude Oil Inventories (10:30 am).  The major earnings reports scheduled for before the opening bell include ANF, AAP, ADI, BBWI, DY, FL, GRAB, KSS, LANC, PTON, and WSM.  Then, after the close, ADSK, GES, NTAP, NVDA, SNOW, and SPLK report.

In economic news later this week, on Thursday, we get July Durable Goods Orders, Weekly Initial Jobless Claims, Fed Balance Sheet, and Bank Reserve Balance with the Fed.  The Central Bankers Jackson Hole Conference also starts.  Finally, on Friday, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer Inflation Expectation, and Michigan Consumer 5-year Inflation Expectations are reported.  Fed Chair Powell also speaks as the Jackson Hole Conference continues.

In terms of earnings reports, on Thursday, BURL, DLTR, NTES, WOOF, RY, TD, WB, GPS, INTU, MRVL, JWN, ULTA, and WDAY report.  Finally, on Friday, there are no earnings reports scheduled.

In miscellaneous news, accounting firm Ernst & Young reported that in 2022, for the first time ever, US oil and gas companies paid out more in earnings to shareholders than they spent on exploration and field development.  The E&Y report said the top 50 US oil and gas producers spent $58.8 billion on buybacks and dividends while only spending $55.1 billion on exploration and development.  The report predicted the trend will continue as well as seeing more money plowed into acquisitions rather than actual finding and producing oil and gas.  Elsewhere, Bloomberg reported Tuesday evening that bond sales by US financial institutions topped $2 trillion so far this year, reaching that milestone in the fastest time ever. This comes the same day that S&P downgraded 10 US regional banks, including KEY and CMA.  Finally, mortgage demand dropped to a 28-year low as interest rates spiked last week.  The national average rate for a 30-year, fixed-rate, conforming loan spiked to 7.31%.  This caused new purchase loan applications to fall 5% for the week while refinance applications dropped 3%.

So far this morning, ANF, DY, GRAB, and KSS all beat on both the earnings and the revenue line.  Meanwhile, BBWI missed on revenue while beating on earnings.  On the other side, AAP and PTON both beat on revenue while missing on earnings.  However, ADI and FL missed on both the top and bottom lines.  It is worth noting that ADI, FL, and PTON all lowered their forward guidance.

With that background, it looks like the market is tepid at this hour. While the premarket session opened higher, all three major indices are printing black candles in the early session and have fallen back near Tuesday’s closing level. The SPY and QQQ are failing another retest of their T-lines (8ema) on the early move. The short-term trend remains bearish. Also, on top of the normal resistance levels, all three major index ETFs have to climb through their T-lines AND their 50sma (where they are all flirting with a Blue Ice Failure pattern) to make a push. In other words, the Bulls have their work cut out for them at this point. With that said, the SPY and especially the QQQ are trying to reverse to break the downtrend. Of course, the much longer-term trend is still bullish since last year but that has been pushed hard recently by the Bears. As far as extension goes, there is no issue with extension below the T-line (8ema). However, the T2122 indicator remains oversold, although it isn’t pegged to the bottom of its range. So, once again we have room to move in either direction, but the relief pause or bounce may be here. Just remember the market can remain too extended a lot longer than we can remain solvent betting on a reversal that has not 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.

🎯 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

Monday gave us a morning roller-coaster. The SPY gapped 0.24% higher, DIA opened just 0.04% higher, and QQQ gapped up 0.40%.  The SPY and QQQ then rallied until 10:10 am.  Meanwhile, DIA only managed to grind sideways until 9:45 am.  Then, all three major index ETFs sold off steadily until 12 pm.  At that point, QQQ was back at the opening level, SPY had crossed back below Friday’s close, and DIA had fallen significantly below Friday’s close.  However, at noon, the Bulls stepped in to drive a strong, steady rally that lasted until a modest pullback in the last 15 minutes.  This action gave us a large, white-bodied candle in the QQQ which barely failed a retest of its T-line on the last-minute profit-taking.  For its part, SPY gave us a white Spinning Top candle.  Finally, the DIA printed a black Spinning Top candle.

On the day, six of the 10 sectors were in the red with Utilities (-0.66%) leading the way lower while Technology (+1.42%) was far out front, holding up better than the other sectors.  At the same time, the SPY gained 0.65%, DIA lost 0.13%, and QQQ gained 1.61%. VXX fell 2.64% to close at 25.03 and T2122 climbed slightly but remains deep into the oversold area at 8.66.  10-year bond yields spiked higher to close at 4.342% while Oil (WTI) fell 0.43% to close at $80.90 per barrel.  This happened in average volume in the QQQ and below-average volume in the SPY and DIA.  So, volatility reigned in the morning, but the Bulls took over for the second half of the day.      

There was no major economic news reported Monday.  However, Reuters did report that a “feud” between centrist and hardline Republicans in the US House has raised the risk of a government shutdown.  The “Freedom Caucus” are pushing for spending $120 billion less than the deal agreed in June between the President and House (taking another bite of the apple).  That group also announced its opposition to any stopgap measures to keep the government open.  Other Republicans are looking for spending on top of the June level for defense, veteran benefits, and border security.  If those two ideas were taken together, it would result in a 25% budget cut in the rest of the budget (including the infrastructure spending the President and Congress have been actively taking credit for recently).  The centrist group (who now call themselves the “Governing Republicans”) say the hardliners ignore the reality that Senate Democrats are not going to go along with their priorities.  As a result of this schism, GS reported Monday they now feel a shutdown is more likely than not.  Current funding ends on September 30 for all 12 appropriations bills and Congress does not return from recess until September 12.  At the same time, the National Federation of Independent Business released the results of its quarterly small business owner survey.  The survey found 52% believe the US is already in recession, which is actually down slightly from 55% in April.  However, 80% said the economy was “okay” or better, and most said their own business financial situation was “strong.”  More than half also said they were less concerned about the health of their own bank, which is a dramatic increase from 31% which had that opinion in April.

SNAP Case Study | Actual Trade

In stock news, NKLA announced it will be selling $325 million in notes that can be converted into stock. NKLA fell almost 23% on the news. Later, Investing.com reported that GS is looking into selling its investment advisory unit.  GS acquired the unit almost 5 years ago for $750 million. (That unit’s profit fell 60% in Q2, but this was partly driven by write-downs related to GS Consumer businesses.)  At the same time, MU pulled a quasi-extortion move by announcing its previously announced $100 billion (over two decades) investments into memory manufacturing plants in ID and NY won’t be possible without federal funding and tax credits for the two projects.  (MU has asked for billions of dollars in support from the CHIPS Act funds.)  By mid-morning, ESTE announced it has agreed to be acquired by PR for $4.5 billion, which comes to $18.64 per share. ESTE closed Friday at $16.23 and closed Monday at $18.94.  Elsewhere, Reuters has reported that WMT is investigating its supply chain based on credible reports that part of its apparel products are being made by Cambodian prison labor, which is illegal in both countries.  Other retailers, including UA and AHRO (Izod), may be using the same supplier according to the article.  Elsewhere, DD announced it has agreed to sell an 80.1% stake in the chemical giant’s Delrin Resin business for $1.8 billion.  (The buyer is a private company.)  At midday, UNP announced that two rail lines into the Los Angeles region have been closed due to washouts caused by flooding.  At the same time, Reuters reported C is now considering removing an entire level of management when the current leader of its largest division retires next year.  Later, META said it will soon launch a web-based version of its Instagram Threads to better compete against X (Twitter). Meanwhile, negotiations between the UAW and “Big 3” automakers are again getting tense.  The UAW reported Monday that STLA has threatened to move all Ram 1500 pickup production to Mexico unless they get an acceptable offer from the union.  For their part, STLA did not deny the report, instead saying “Product allocation for our U.S. plants will depend on these negotiations as well as a plant’s ability to meet specific performance metrics including improving quality, reducing absenteeism and addressing overall cost.”   After the close, SCHW said it plans to lower its headcount in order to cut costs.  (SCHW did not disclose the number of employees or the exact timing, although it did say it expects to realize a $500 million charge for the move in the second half of 2023.)

In stock legal and regulatory news, the FDA placed clinical trials of GILD blood cancer drug on hold.  (This comes a month after GILD had announced it was scrapping new late-stage trials of the drug on hold itself due to a lack of efficacy in earlier testing.)  GILD had acquired the drug as part of its $4.9 billion buyout of “Forty Seven Inc.” back in 2020.  Later, the NHTSA announced it opened an investigation into F over whether or not the company’s recall of 2022 Mach-E electric vehicles properly dealt with safety issues caused by high voltage contacts (which had been found to cause overheating that could lead to an abrupt loss of power while driving).  The NHTSA has received a dozen reports of the same problem on cars that had already undergone the F recall repair.  At the same time, the EU announced that it will require EU antitrust regulatory approval for the purchase of the German EEX exchange by NDAQ.  (This is notable because the deal falls under the normal threshold for antitrust review.)  In the UK, the British competition regulator finalized its approval of the AVGO $60 billion purchase of VMW.  (It has provisionally approved in July.)  Late in the afternoon, the US State Dept. approved the sale of $12 billion in military hardware to Poland.  BA and LMT will be the primary beneficiaries of the sale of 96 Apache AH-64E helicopters, 1,844 Hellfire missiles, and 508 Stinger missiles.  (No contract has been signed yet.)  Then, near the end of the day, the US 10^th District Court of Appeals upheld the dismissal of a shareholder lawsuit against SPR for misleading investors by withholding information about production cuts related to the two crashes of the BA 737 MAX.  After the close, AAPL won the dismissal of a lawsuit that had claimed the Apple Watch blood oxygen sensor exhibits “racial bias” toward people with darker skin tones.  Finally, also after the close, the US Dept. of Justice announced that TEVA will pay $225 million in fines and also divest a key generic cholesterol drug to settle price-fixing charges from the US Dept. of Justice.

After the close, FN and ZM reported beats on both the revenue and earnings lines.  At the same time, LU and NDSN both missed on revenue while beating on earnings.  On the other side, QFIN beat on revenue while missing on earnings.  It is worth noting that ZM raised its forward guidance while NDSN lowered guidance.

Overnight, Asian markets were green across the board. Thailand (+1.29%), Hong Kong (+0.95%), and Japan (+0.92%) led the region higher with India (0.01%) and Australian (+0.09%) lagging well behind.  In Europe, we see the same picture taking shape in the bourses at midday.  The CAC (+1.19%) and DAX (+1.06%) are more typical, with the FTSE (+0.68%) lagging in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a green start to the day.  The DIA implies a +0.19% open, the SPY is implying a +0.39% open, and the QQQ implies a +0.48% open at this hour.  At the same time, 10-year bond yields are down a bit to 4.318% and Oil (WTI) is off four-tenths of a percent to $80.40 per barrel in early trading.

The major economic news scheduled for Tuesday is limited to July Existing Home Sales (10 am) and API Weekly Crude Oil Stocks Report (4:30 pm).  We also hear from Fed members (Barkin at 7:30 am, Goolsbee at 2:30 pm, and Bowman at 2:30 pm). The major earnings reports scheduled for before the opening bell include BIDU, BJ, CSIQ, CTRN, COTY, DKS, IQ, LOW, M, MDT, and SCSC.  Then, after the close, LZB, TOL, and URBN report.

In economic news later this week, on Wednesday, Building Permits, Preliminary August S&P US Mfg. PMI, Preliminary August S&P Global Composite PMI, July New Home Sales, and EIA Crude Oil Inventories are reported.  On Thursday, we get July Durable Goods Orders, Weekly Initial Jobless Claims, Fed Balance Sheet, and Bank Reserve Balance with the Fed.  The Central Bankers Jackson Hole Conference also starts.  Finally, on Friday, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer Inflation Expectation, and Michigan Consumer 5-year Inflation Expectations are reported.  Fed Chair Powell also speaks at the Jackson Hole Conference which continues until Saturday.

In terms of earnings reports, on Wednesday, we hear from ANF, AAP, ADI, BBWI, DY, FL, GRAB, KSS, LANC, PTON, WSM, ADSK, GES, NTAP, NVDA, SNOW, and SPLK report.  On Thursday, BURL, DLTR, NTES, WOOF, RY, TD, WB, GPS, INTU, MRVL, JWN, ULTA, and WDAY report.  Finally, on Friday, there are no earnings reports scheduled.

In miscellaneous news, one of the largest IPOs ever was filed late Monday as Japan’s SFTBY (SoftBank) filed for the long-awaited stock offering of its Arm chip designer unit.  (You may recall Arm as having been a $40 billion acquisition of NVDA before the deal was scuttled on antitrust grounds.  Arm’s chip architecture is the main competitor of the x86 standard from INTC and AMD and is the basis for AAPL’s so-called “self-designed” chip used in Macs as well as by NVDA for its AI market cards.  Elsewhere, in a hopeful possible read-through to China, overnight the CEO of Australian mining giant BHP said in his earnings call that BHP had seen solid growth in demand from some sectors in China.  He mentioned steel demand from housing starts, infrastructure, automotive, and commercial property development as “pretty strong.”  (They still expect China to produce a billion metric tons of steel this year, for the fifth straight year.)  He went on to say, “In the near term, while the outlook for the developed world is uncertain, we expect China and India to remain relative sources of stability for commodity demand.” Finally, S&P followed Moody’s (two weeks ago) in downgrading 10 US Banks, including KEY and CMA.

So far this morning, BIDU, M, MDT, and IQ all reported beats on both the revenue and earnings lines.  Meanwhile, LOW, CSIQ, and BJ missed on revenue while beating on earnings.  On the opposite side, COTY beat on revenue while missing on earnings.  However, DKS missed on both the top and bottom lines.  It is worth noting that DKS, CSIQ, and COTY lowered their forward guidance.  Meanwhile, MDT raised its forward guidance.

With that background, it looks like the Bulls are in control again so far in the premarket. All three major index ETFs show a premarket gap up and then are giving us white-bodied candles in the early session. The SPY and especially QQQ are retesting their T-lines (8ema) from below but the DIA Bulls still have more work to do before reaching that level. The short-term trend remains bearish. However, the QQQ and SPY are trying to break that three-week trend. Of course, the long-term trend is still clinging to a bullish inclination but it has been pushed hard by the Bears over the last three weeks. As far as extension goes, the premarket move gets rid of any concern about overextension below the T-line (8ema). Meanwhile, the T2122 indicator remains quite oversold, but it is not pegged to the bottom of its range. So, again we have room to move either direction, but the overdue pause or bounce may be here. Just remember the market can remain too extended a lot longer than we can remain solvent betting on a reversal that has not 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.

🎯 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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