Markets gapped down Friday, opening 0.62% lower in the SPY, down 0.60% in the DIA, and down 0.96% in the QQQ.  However, that was the last we saw of the Bears on the day.  The Bulls met the gap down with a slow, steady rally that recrossed the gap and hit the highs of the day at about 3:50 pm.  The last 10 minutes saw modest profit-taking in all three major index ETFs.  This action gave us white-bodied candles with essentially no lower wick and a small upped wick in the SPY, DIA, and QQQ.  None of the index ETFs came close to challenging their T-line and only the DIA came near its 50sma.  This all happened on above-average volume in the QQQ, and a bit below-average volume in the SPY and DIA.

On the day, seven of the 10 sectors were in the green with Energy (+0.84%) out front leading the way higher while Communications Services (-0.42%) lagging behind the other sectors.  At the same time, the SPY gained 0.05%, DIA gained 0.02%, and QQQ lost 0.13%.  VXX fell 2.54% to close at 25.71 and T2122 climbed but remains deep into the oversold area at 8.04.  10-year bond yields recovered during the day but still fell to 4.251% while Oil (WTI) climbed 1.26% to close at $81.40 per barrel.  So, the Bears gapped us down only to be met by all-day buying.  This might have been profit-taking after a strongly bearish week, which saw SPY down 2.05%, DIA down 2.23%, and QQQ down 2.21%.  (The last 10 minutes might also be related to options expiration.)       

There was no major economic news reported Friday.  However, the Fed did publish data indicating that US banks did reduce lending in the week ending August 9.  Overall bank credit fell from $17.25 trillion to $17.23 trillion.  This was the second consecutive weekly drop.  This included a decline in “loans and leases” falling from $12.15 trillion to $12.13 trillion and industrial loans also fell from $2.75 trillion to $2.74 trillion.  At the same time, Reuters released a survey of economists (taken August 14-18) found that a strong majority feel the Fed is done raising rates.  The same poll found a slim majority believing the FOMC will not start cutting rates until at least the end of March.  99 of 110 economists say the Fed will not hike rates in September, which is in line with current Fed Futures that show 89% of traders agree with the economists. 

Related to foreign attempts to unseat the Dollar as the world’s default (and reserve) currency. The BRICS group will hold a meeting in South Africa this week.  Ahead of this, the Fed released research showing that in the 20 years ending in 2019, 95% of all international trade in the Americas region was invoiced in Dollars.  The same goes for 74% of Asian region trade and 79% of trade in the rest of the world (not including the EU, which uses the Euro).  In addition, coming into this week’s BRICS meeting, there’s no obvious competitor to the Dollar yet.  China’s Yuan is not a reliable candidate due to the fact the Chinese will not let their currency freely float with markets.  Other BRICS countries don’t have the economic scale to make their currencies feasible as a Dollar alternative.  In addition, trading US dominance of world markets for the dominance of China or India is something that would take a lot of thinking, convincing, and guts.  The British would love to reclaim global reserve currency status for the pound, but they are too small economically and have massive historical baggage from their colonial past. This leaves the Euro, which is seen as too politically fragmented (especially related to their various economic and fiscal policies) and are unlikely to be supported by China and India.  The last potential substitute is that there has been some talk of a gold-backed digital currency. However, that would take a massive effort and coordination to create a completely new currency, with the problem of managing the various country’s gold reserves (such that participants trust each other) on top of the creation and coordination of an agreed safe cryptocurrency (which many of the BRIC countries have opposed to date). The bottom line is just ahead of the BRICS meeting in Johannesburg, no public progress has been made on others finding a replacement for the US Dollar.

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In stock news, Reuters reported Friday that some of the world’s largest consumer goods companies are already experimenting with using artificial intelligence to develop marketing and advertising content.  UL, NSRGY (Nestle), and MDLZ were among the examples mentioned and the article also said they would be using data from WMT, AMZN, and KR to train their AI models. On Saturday, TSLA began notifying employees whose personal information had been disclosed in a data breach that happened back in May.  (TSLA is only notifying employees because the AG of ME posted that it found two former TSLA employees had misappropriated that data in lawsuits filed Friday.  The breach affected nearly 76,000 employees’ data.)

In stock legal and regulatory news, during the day Friday, US Senator Vance from OH (headquarters location of CLF which made a bid for X) again publicly urged X not to even entertain offers from foreign buyers.  As you will remember, CLF was the first bidder to buy out X, followed by private company Esmark, and then MT (a Luxembourg-based company).  Vance said he would pursue ways to ensure the company “stayed American.”  Then, after the close Friday, the FDA approved a new dosage of REGN’s Eylea eye disease drug.  On Saturday, GM announced it would cut its Cruise Robotaxi fleet in San Francisco by 50% temporarily.  This comes hours after the CA Dept. of Motor Vehicles announced it has opened an investigation into several Cruise-involved crashes within the last week.  After the investigation, GM will need to address the findings prior to resuming full-scale operations.  (This reduced the number down to 50 Cruise robotaxis operating during the day and 150 in the evenings.)

In China market news, the country’s securities regulators announced a package of measures aimed at propping up their stock markets.  These include cutting trading costs, changing rules to encourage share buybacks, extending trading hours, and increasing financial standards (which would, over time, increase the attractiveness and health of listed companies).  The regulator spokesman answered a question by saying they did not know yet whether a reduction in stamp duties (fees for loans, leases, and securities trades) would take place as had been discussed recently.  Most analysts applauded the moves but said it would not be anywhere near enough to overcome major concerns over the Chinese economy. Then to top this off, Monday the Chinese Central Bank cut its one-year loan rate by less than expected (down 10 basis points instead of the 15 basis-point cut that was expected (down to 3.45%). It also made no changes to the 5-year loan rate and the analyst consensus was that they would reduce that rate by 15 basis points. Most importantly, the PBOC did nothing at all to the long-term mortgage rates (which is what the property sector and public felt needed relief). As a result, the Chinese stock markets were not impressed with these actions and are still hoping for more and bigger government stimulus.

After the close Friday, PANW missed on revenue while beating on earnings.  That beat was a surprise since the market had been very worried since the company said they would announce earnings after the market close on a Friday.  (That was announced August 2 and the stock was down almost 16% since that timing was released.)  PANW was up as much as 10% in after-hours trading following the report.

Overnight, Asian markets were mixed.  Hong Kong (-1.82%), Shenzhen (-1.32%), and Shanghai (-1.24%) led the region lower.  Meanwhile, Thailand (+0.44%), India (+0.43%), and Japan (+0.37%) paced the gainers.  However, in Europe, we see green across the board at midday.  The CAC (+1.18%), DAX (+0.74%), and FTSE (+0.53%) are leading the region higher in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.34% open, the SPY is implying a +0.49% open, and the QQQ implies a +0.63% open at this hour.  At the same time, 10-year bond yields are spiking back up to 4.298% and Oil (WTI) is jumping up 1.32% to $82.32 in early trading.

There is no major economics news scheduled for Monday.  There are also no major earnings reports scheduled for before the opening bell.  However, after the close, FN, LU, NDSN, and ZM report.

In economic news later this week, on Tuesday we get July Existing Home Sales and API Weekly Crude Oil Stocks Report.  We also hear from Fed members (Goolsbee twice and Bowman).  Then 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.  Fed Chair Powell also speaks and the Jackson Hole Conference continues.

In terms of earnings reports, on Tuesday, BIDU, BJ, CSIQ, CTRN, COTY, DKS, IQ, LOW, M MDT, SCSC, LZB, TOL, and URBN report.  Then 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, US Treasury Bond yields were on a massive roller-coaster last week. Not only did the 10-year bond yield close at its highest level since 2007, but they also then crashed by the largest amount in history.  Bloomberg quoted a bond market analyst as saying the reason is pretty simple.  He said, “Given rising real yields and ambitious valuation levels in particular for US stocks, the risk-reward looks better for bonds.”  Elsewhere, the US Dollar booked its fifth straight week of gains (its longest winning streak in 15 months).  Finally, the drought in Panama is causing more supply chain problems.  Previously, the draft depths of ships had been reduced.  Now, the number of ships allowed to transit the Panama Canal has been reduced from 36 to 32 per day.  The wait time, prior to transit, for the largest ships has risen to 17 days as ships stack up (and partially unload to reduce their draft). 

In late-breaking news, Bloomberg released investor survey data (from 602 professional and retail traders they surveyed). The data shows that two-thirds believe it is still unclear that the Fed has done enough to fight inflation. However, more than half also say traditional Fed indicators (like the job market and price index data) will not be the driver when the Fed moves to cut. Instead, they feel the driver will be financial market turmoil that will prompt a Fed rate cut. At the same time, about 80% of respondents say they expect a recession in the EU within the next 12 months. I am not sure how this survey squares with the current Fedwatch Futures data that shows 89% of traders see no rate hike in September and only about a third even expect another hike at all in 2023.

With that background, it looks like the Bulls are in control so far in the premarket. All three major index ETFs show a premarket gap up and then are giving us white-bodied candles so far in the early session. However, none of them are close to retesting their T-line (8ema) yet. The short-term trend remains bearish with all three well below their T-line. Of course, the long-term trend is still hanging on to a bullish course but it has been pushed 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, we have room to move either direction, but are still due for a pause or bounce soon. 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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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 Thursday, markets started the day a bit higher (gapping up 0.24% on the SPY, up 0.33% in the DIA, and up 0.39% in the QQQ).  However, that was essentially the last we saw of the Bulls for the day.  After that open, the DIA managed to grind sideways in a very tight range until 11 am.  Then it sold off in waves, closing on the lows.  After its gap, the SPY sold off slowly until noon, had a very weak one-hour bounce, and then also sold off all the way into the close.  QQQ immediately sold off harder than the other two major index ETFs for the first hour.  At that point, it modestly bounced until 1 pm before it also sold off hard the rest of the day.  This action gave us large black-bodied candles with tiny wicks in the SPY, DIA, and QQQ.

On the day, nine of the 10 sectors were in the red again with Consumer Cyclical (-1.40%) once more leading the way lower and Energy (+0.83%) holding up much better than any other sector.  At the same time, the SPY lost 0.76%, DIA lost 0.78%, and QQQ lost 1.09%.  VXX gained another 4.81% to close at 26.38 and T2122 dropped even further into the oversold area at 2.86.  10-year bond yields continued to climb to 4.284% while Oil (WTI) climbed to close at $80.39 per barrel. This all took place on slightly less-than-average volume again across all three major index ETFs.  So, the Bulls opened us higher.  However, after that, it was all Bears all the time the rest of the day, even picking up speed in the afternoon.          

The major economic news reported Thursday included Weekly Initial Jobless Claims that came in just a bit below expectation at 239k (compared to a forecast of 240k and the prior week’s 250k reading).  At the same time, the Philly Fed Manufacturing Index was reported dramatically higher than predicted at +12.0 (versus the -10.0 forecast and even further above the July value of -13.5). However, the Philly Fed Employment Index came in well below anticipated at -6.0 (compared to a forecast of -0.7 and even the July reading of -1.0).  Then, after the close, the Fed’s Balance Sheet showed another reduction of $62 billion, down to $8.146 trillion from $8.208 trillion.

The NY Fed released survey results Thursday afternoon.  The survey found that, at least as of just before the late-July Fed meeting, big banks and money managers believed the July rate hike would be the last one for this tightening cycle.  The survey also showed that most “Primary Dealers” believe we will see Fed rate cuts starting in April, while money managers think the cuts will begin in March of 2024.  Furthermore, the big banks expect the Fed to stop reducing its Balance Sheet when it reaches $6.75 trillion (now at $8.146 trillion as reported above and falling at a rate of about $50-$75 billion per week).

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In stock news, Blue Shield of CA made major waves by announcing it will stop using CVS to manage its pharmacy benefits program and will instead work with AMZN and other firms.  (CVS lost 8.14% on the day on this news.)  Elsewhere, PFE announced that its updated COVID-19 vaccine does show “neutralizing activity” against the Eris subvariant in addition to the (still dominant) Omicron variant.  Not to be outdone, MRNA announced the results of an initial study which showed their updated COVID-19 vaccine is “effective” against Omicron, Eris, and Fornax variants.  In the afternoon, troubled electric carmaker MULN launched a $25 million stock buyback program in an effort to boost the stock price and avoid being delisted.  At the same time, private trucking company Estes Express submitted a $1.3 billion bid to purchase the freight terminals of bankrupt YELL.  Meanwhile, F and its partners (a consortium of South Korean firms) announced they will build a $900 million battery factory in Quebec.  In the late afternoon, Bloomberg reported that GS is on a hiring spree, having hired several hundred new staff to address concerns identified by the Fed.  Twitter (“X”) was in trouble yet again Thursday after ads from ADBE, GILD, and several other brands were run beside “pro-Nazi” content.  ADBE and GILD have suspended advertising on X after the latest in the social media platforms series of blunders.

In stock legal and regulatory news, the union for striking Hollywood Writers sent a letter urging the FTC to investigate DIS, AMZN, and NFLX on antitrust grounds.  The Writers Guild of America told FTC Chair Khan that those three companies have amassed too much power in the streaming media industry and are now effectively an oligopoly.  At the same time, GOOGL’s YouTube unit defeated a racial bias lawsuit that had been filed by black and Hispanic content creators.  A US District Judge in San Francisco threw out the case, saying the claims did not come close to suggesting discrimination.  Elsewhere, Reuters reported that US Customs has begun increased inspections of car parts being imported from China in an effort to identify and stop the import of any products produced by supply chains involving forced (Uyghur) labor.  At midday, TSLA notified Core Lithium it will sue the Australian miner in seven days unless the two sides reach a mutual agreement. This comes after the two companies failed to reach an agreement on supply quantities and prices prior to a mutually agreed prior date.  Late in the day, C was subpoenaed by the US House Judiciary Committee (GOP) over alleged data sharing with the FBI without the appropriate legal process prior to that disclosure.  This is part of the effort by the GOP members of the committee to help the January 6 defendants by using subpoena power to provide extra discovery for their defenses. 

After the close, AMAT, GLOB, KEYS, and ROST reported beats on both the revenue and earnings lines.  However, FTCH missed on both the top and bottom lines.  It is worth noting that AMAT and ROST raised forward guidance.  On the other side, KEYS and FTCH lowered their guidance. 

Overnight, Asian markets were nearly red across the board with only Australia (+0.03%) barely hanging on to green.  Hong Kong (-2.05%), Shenzhen (-1.75%), and Shanghai (-1.00%) led the region lower.  In Europe, we see a similar picture taking shape at midday with only Russia (+0.64%) appreciably in the green.  Meanwhile, The CAC (-0.81%), DAX (-0.77%), and FTSE (-0.80%) are leading the region lower in early afternoon trade.  In the US, as of 7:30 am, Futures are also pointing to a red start to the day.  The DIA implies a -0.18% open, the SPY is implying a -0.33% open, and the QQQ implies a -0.61% open at this hour.  At the same time, 10-year bond yields are down sharply to 4.223% and Oil (WTI) is off a quarter of a percent to $80.19 per barrel in early trading.

There is no major economics news scheduled for Friday.  The major earnings reports scheduled for before the opening bell include DE, EL, VIPS, XPEV, and PANW.  Then, after the close, there are no major reports scheduled.

So far this morning, DE and EL reported beats on both the revenue and earnings lines.  Meanwhile, VIPS missed on revenue while beating on earnings.  However, XPEV missed on both the top and bottom lines.  It is worth noting that DE raised its forward guidance while EL, VIPS, and XPEV all lowered their guidance.

In miscellaneous news, JPM reported Thursday that hedge funds have slowed down their exit from value and small-cap stocks in the last month.  The study said the flow of funds moving from value to growth stocks in the last month (as “AI fever” hit) has now drawn mostly ended.  This report seems reasonable as the “high growth” QQQ names are down 6.54% since the first of the month.  Elsewhere, China’s largest developer and the world’s most heavily indebted real estate company, China Evergrande, filed for Chapter 15 bankruptcy protection in NY on Thursday.  (Chapter 15 is the foreign entity equivalent to Chapter 11.)  Finally, the Texas electric grid operator (ERCOT) issued a voluntary power conservation request for Thursday, saying it expected to hit its tenth record high demand of the summer in the late afternoon and evening.  NRG (which also serves parts of TX) also requested customer electric conservation for the same reason. 

In late-breaking news, Bitcoin plummeted 9% between 5:30 pm and 5:35 pm Thursday night.  The news came a few hours after SpaceX disclosed it had written down its Bitcoin holdings by $373 million.  The main cryptocurrency recovered about half of the losses by 9:30 pm.  Elsewhere, Reuters reported that last night President Biden approved the sending of F-16 fighters from Denmark and the Netherlands to Ukraine.  These planes will eventually be replaced by F-35 jets from LMT.

With that background, it looks like the Bears are still in control so far in premarket. We see black-body candles trading near the lows of the early session in all three major index ETFs at this point. The trend remains bearish with all three below their T-line (8ema). QQQ and DIA are getting close to their next potential support level this morning. However, SPY still has air below it until it reaches potential support. Of course, the long-term trend is still hanging on to a bullish course but it is being pushed hard by the Bears over the last three weeks. As far as extension goes, we are getting extended below the T-line (8ema) in al three with the SPY and QQQ being especially stretched. The T2122 indicator also remains very oversold, but not yet quite pegged to the bottom of its range. So, we are do for a pause or bounce soon. However, remember the market can remain too extended a lot longer than we can remain solvent betting on a reversal that has not happened yet. Also keep in mind that this is Friday, payday. So, take some profits off the table and prepare your account for the weekend news cycle by lightening up, hedging, or buying some insurance for 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.

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

Markets started the day just on the Bearish side of flat (gapping down 0.10% in the SPY, down 0.13% in the DIA, and down 0.13% in the QQQ).  At that point, we saw a modest divergence with DIA rallying sharply for 20 minutes to reach the highs of the day before slowly meandering back down the rest of the day.  Meanwhile, the SPY and QQQ meandered sideways with a very modest Bullish trend until shortly after 11 am.  Then the SPY and QQQ sold off briskly until 1 pm and ground sideways until 3 pm before resuming their move lower.  All three of those major index ETFs went out very near their lows of the day.  This action gave us black-bodied candles with upper wicks in all three. 

On the day, nine of the 10 sectors were in the red with Consumer Cyclical (-1.25%) leading the way lower and Utilities (+0.26%) being the only sector to hang on to the green territory.  At the same time, the SPY lost 0.73%, DIA lost 0.53%, and QQQ lost 1.06%.  VXX gained 1.61% to close at 25.17 and T2122 dropped slightly, further into the oversold area at 5.54.  10-year bond yields continued to climb to 4.27% while Oil (WTI) was down 2.22% to close at $79.19 per barrel. This all took place on less-than-average volume again across all three major index ETFs.  So, the Bears put in some work, following through to the downside after a tepid early attempt to reverse the downtrend by the Bulls.          

The major economic news reported Wednesday included Preliminary July Building Permits, which came in slightly below expectations at 1.442 million (compared to a forecast of 1.463 million and a June reading of 1.441 million).  On a month-on-month basis, this was actually a +0.1% move (versus a forecast of -1.7% and June’s 3.7% fall).  At the same time, July Housing Starts were reported above the predicted amount at 1.452 million (compared to the 1.448 million forecast and the June value of 1.398 million).  On a month-on-month basis, that was a strong +3.9% (versus a forecast of +2.7% and vastly better than June’s -11.7%).  Later, July Industrial Production was a matter of what timeframe you are considering.  On a month-on-month basis, Industrial Production rose more than anticipated at +1.0% (compared to a forecast of +0.3% and June’s 0.80% decline).  However, on a year-on-year basis, July Industrial Production was a bit worse than expected at -0.23% (versus a -0.10% forecast but still significantly better than June’s 0.78% decline).  At midmorning, the EIA Weekly Crude Oil Inventory saw a much bigger drawdown than predicted at -5.960 million barrels (compared to a forecast of -2.320 million barrels and far worse than the prior week’s inventory build of 5.851 million barrels).  The EIA also said that US Oil Production reached a new three-year high of 12.7 million barrels per day on average produced last week.

The July Fed Meeting Minutes came out Wednesday.  They showed a divided FOMC, with “some” members citing the risks of pushing rates too far even as “most” members still prioritizing the fight against inflation over the potential for economic harm.  For example, “a couple” participants called for leaving rates unchanged again in July.  Still, the vote was unanimous to raise a quarter point.  Later, the committee discussed risk management steps that might bear on future rate decisions.  In summary, the minutes showed the group was committed to following the course they had been indicating to markets for some time.  However, at least the written verbiage they want to put out will continue to say everything is “data dependent.”  With that said, they may have tipped their hand as to how the group is leaning when it was agreed that future moves will be dictated by the data which will “help clarify the extent to which the disinflation process was continuing.”  In addition, both staff economists and the committee members now seem to see a potential “soft landing” taking shape.

SNAP Case Study | Actual Trade

In stock news, GM invested $60 million in another battery startup (Mitra Chem), which specialized in using AI to optimize the design and creation of lithium-ion battery parts.   Elsewhere, Bloomberg reported that BAESY is in talks to acquire BALL’s aerospace division for more than $4 billion.  At the same time, MULN announced that it will debut its ultra-high-performance FIVE RS crossover vehicle on August 20.  (The FIVE RS will reportedly do 0-60mph in less than 2 seconds and will have a top speed over 200mph.)  Later, Reuters reported that MT is now considering entering the bidding for X and has brought in investment bankers to help prepare an offer.  After the close, BX (along with a private company and Canada’s second-largest pension fund) struck a deal with BAC. The deal will allow them to buy $1.5 billion worth of solar and wind plants to capitalize on the 2022 Biden green energy funding in the Inflation Reduction Act.  As part of the deal, a private company (Invenergy Renewables) will sell BAC $580 million of tax credits and put the money toward 14 projects being led by AEP.  Overnight, the Wall Street Journal reported that GOOGL’s Health Science unit (Verily) is planning more cost-cutting after losing more money than expected in the last year.  The details are unknown but Verily laid off 200 workers and discontinued some products earlier this year.  At the same time, Reuters reports that TSN is now planning to sell its Chinese poultry business according to three sources.  That unit has $1.1 billion in annual sales revenue.  Also overnight, BAESY did agree to buy BALL’s aerospace unit but for a higher-than-expected $5.55 billion in cash.  Finally, early today Reuters reported that STLA is investing more than $100 million in CA lithium extraction company Controlled Thermal Resources.  (BRKB has struggled to extract lithium in the same area due to large concentrations of silica in the brine from which lithium is extracted.  Controlled Thermal has the technology to remove the silica and other undesirable elements prior to the extraction process.)

In stock legal and regulatory news, Bloomberg reported that V is facing an investigation by the Dept. of Justice over how much it charges merchants for the technology used to safeguard cardholder data.  (That service is called “tokenization” and it replaces the card number used with a computer-generated token.)  The DOJ is investigating the validity of charging merchants more for not using the new tokenization service it offers.  (MA reached a settlement in December with the FTC over the same practice the DOJ investigating V over.)  At the same time, a lawsuit was filed against SBGI, by its bankrupt subsidiary, accusing SBGI of siphoning off $1.5 billion from the bought-out firm, causing the bankruptcy.  Elsewhere, INTC announced it has abandoned the proposed purchase of TSEM after being unsuccessful in getting Chinese authorities to approve the deal.  As a result of killing the deal, INTC owes TSEM $353 million.  At the same time, the NHTSA announced that TM is issuing a recall for 168k 2022-2023 hybrid pickup trucks over a potential fuel leak fire hazard.  In Europe, the Czech government passed a law that will charge multinationals a 15% minimum profit tax for companies with greater than $817.50 million in sales in two of the last four years.  (This is aimed at preventing multinationals from moving profits to a country of the least taxes.)  Back in the US, the state of TX approved the TSLA standard for charging networks in that state to qualify for federal funds.  Meanwhile, officials from seven states wrote to FTC Chair Khan opposing KR’s proposed $24.6 billion acquisition of ACI.  At the same time, Reuters reported that ALL has agreed to pay $90 million to settle a class action suit brought by shareholders who had accused the insurer of lowering underwriting standards (poor risk management) to boost sales growth.  At the close, the FDA announced it has approved a bone disorder treatment from IPSEY.  The drug will have an estimated cost of $400,000 per year and this gives the company a lead over REGN which has a treatment for the same disease still listed as experimental.  After the close, 16 people who witnessed the 2022 Buffalo NY grocery store mass shooting filed suit against three firearms retailers and GOOGL (where the defendant live-streamed the shooting on YouTube).  Also after the close, the FTC approved the EQT acquisition of QMCO for $5.2 billion (announced in September 2022).

After the close, A, HRB, JKHY, NU, and LRN all reported beats on both the revenue and earnings lines.  However, SQM missed on both the top and bottom lines. It is worth noting that A also lowered its forward guidance. So far this morning, JD, TCEHY, and TJX reported beats on both the revenue and earnings lines.  Meanwhile, EAT, PFGC, and TGT missed on revenue while beating on the earnings line.  It is worth noting that TGT cut its full-year guidance.

Overnight, Asian markets were mixed but leaned toward the red side.  Shenzhen (+0.61%), Thailand (+0.61%), and Taiwan (+0.42%) led the gainers.  Meanwhile, Malaysia (-1.06%), New Zealand (-0.95%), and Australia (-0.68%) paced the losses.  However, in Europe, the bourses are leaning strongly to the downside at midday.  The breadth of losses is wide with Finland (+0.31%) being the only appreciable green while the CAC (-0.05%), DAX (-0.07%), and FTSE (-0.13%) are typical of modest losses and lead the region lower 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 +0.27% open, the SPY is implying a +0.21% open, and the QQQ implies a +0.18% open at this point.  At the same time, 10-year bond yields are climbing again at 4.302% and Oil (WTI) is 1.12% to $80.25 per barrel in early trading.

The major economics news scheduled for Thursday includes Weekly Initial Jobless Claims, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 am), and the Fed Balance Sheet (4:30 pm).  The major earnings reports scheduled for before the opening bell include ARCO, BILI, DOLE, NICE, TPR, and WMT.  Then, after the close, AMAT, FTCH, GLOB, KEYS, and ROST report.

In economic news later this week, on Friday, there is no significant economic news scheduled.

In terms of earnings reports, on Friday, DE, EL, VIPS, XPEV, and PANW report.

In miscellaneous news, the National Futures Assn. approved COIN to sell crypto futures to us investors on Wednesday.  (75% of all global cryptocurrency transactions are done using futures.  However, US investors have not been able to participate in that market until this approval.)  Meanwhile in Washington, as Congress headed home for summer recess there was no movement on the Appropriations bills, which could lead to a government shutdown.  However, an interesting development was hinted at.  House Speaker McCarthy floated the idea of a continuing resolution, kicking the can down the road until December or January.  Democrats, especially in the Senate, were very supportive of the idea.  The “why?” is the interesting part.  Speculation is that some people believe pushing off the decisions until later may see legal developments having weakened one faction’s support from the base and made them more amenable to compromises.  It’s pure speculation, but it might make sense since nothing else is likely to change between the two sides whether the deadline is in 30 days or five months. 

So far this morning, BILI, NICE, and WMT all reported beats on both revenue and earnings.  Meanwhile, DOLE missed on revenue while beating on earnings.  However, TPR and ARCO missed on both the top and bottom lines.  It is worth noting, the BILI and TPR have lowered their forward guidance.  At the same time, WMT raised its forward guidance.

With that background, it looks like markets are looking to give us a modest gap-up, but indecisive start to the morning. The SPY and QQQ are giving us the strongest (white-bodied) premarket candles but that is not saying much. The trend remains bearish with all three major index ETFs below their T-line (8ema). None of the three major index ETFs have a potential support level immediately below at this moment. Of course, the long-term trend is still hanging on to a bullish course but it is being pushed by the Bears over the last three weeks. As far as extension goes, we are starting to get a little bit extended below their T-line (8ema) and the T2122 indicator remains very oversold, but not yet quite pegged to the bottom of its range. So, both sides have some slack to work with. However, the Bulls have much more room to run and we may be in need of a pause or pullup.

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

Tuesday saw markets gap down again with SPY opening down 0.44%, DIA opening down 0.45%, and QQQ opening down 0.32%.  After that open, the Bears were able to follow through to the downside for the first hour.  At that point, all three major index ETFs meandered sideways in waves not far up off the lows until 3 pm.  From there, all three sold off in the last hour, reaching new lows for the day.  This action gave us gap-down, large-body, black candles in all three major index ETFs.  DIA printed what can easily be seen as an Evening Star signal that broke through the recent support level.  Meanwhile, QQQ printed a Bearish Harami that failed its T-line.  SPY did not print a signal, but definitely took out recent lows and at best (from a Bullis standpoint) could be seen as right at the potential support level now..

On the day, all 10 sectors were in the red with Financial Services (-1.85%) and Basic Materials (-1.84%) out front leading the way lower and Healthcare (-0.41%) holding up far better than the other sectors.  At the same time, the SPY lost 1.16%, DIA lost 1.01%, and QQQ lost 1.05%.  VXX gained 5.76% to close at 24.77 and T2122 dropped deep into the oversold area at 5.76.  10-year bond yields continued to climb to 4.217% while Oil (WTI) was down 1.85% to close at $80.97 per barrel. This all took place on less-than-average volume across all three major index ETFs.  So, the bears got a big tailwind overnight from the Fitch banking sector warnings and that was reinforced when Fed Member Kashkari advocated “significantly higher” capital requirements for banks (beyond even the just hinted and not yet proposed new ones from the Fed, FDIC and Comptroller of the Currency).           

The major economic news reported Tuesday included the July Export Price Index, which came in much higher than expected at +0.7% (compared to a forecast of +0.2% and far higher than the June reading of -0.7%).  At the same time, the July Import Price Index also came in high at +0.4% (versus the forecast of +0.2% and the June value of -0.1%). July Retail Sales also increased much more than predicted at +0.7% (compared to a +0.4% forecast and a June value of +0.3%).  However, the Preliminary August NY Empire State Mfg. Index was reported far lower than anticipated at -19.0 (versus a forecast of -1.0 and even worse compared to the July reading of +1.10).  Later in the morning, June Business Inventories came in lower than expected at +0.0% (versus the forecast of +0.1% and the May value of +0.2%).  At the same time, June Retail Inventories also came in lower than predicted at +0.3% (compared to a forecast of +0.4% and a May reading of -0.1%).  Then, at the close, the June TIC Net Long-Term Transactions (which is the difference between foreign securities bought by the US citizens versus US securities bought by foreigners…it measures whether money is flowing into or out of our markets) came in higher than expected at +$195.9 billion (compared to a forecast of +107.2 billion and far above the May value of +$23.6 billion).  Finally, after the close, the API Weekly Crude Oil Stocks Report showed a larger-than-expected inventory drawdown of 6.195 million barrels (versus the forecasted drawdown of 2.050 million barrels and much lower than the prior week’s 4.067-million-barrel inventory build).

In Fed-speak news, in addition to his statements calling for even stricter banking regulations, Minneapolis Fed President Kashkari said he was not ready to say the Fed is done raising rates.  Specifically, Kashkari said, “I’m seeing positive signs that say, hey, we may be on our way; we can take a little bit more time to get some more data and before we decide whether we need to do more.”  At the same time, he said the Fed is “a long way” from cutting rates, even though there is a possibility of cutting them next year “just to keep monetary policy at a stable point.”

SNAP Case Study | Actual Trade

In stock news, Reuters reported that sporting-related companies NKE, ADDYY, and DKS are scrambling to unload products at significant discounts after the US Women’s World Cup Soccer team failed to make the second round of the World Cup Soccer Tournament.  They reported that various retail analysts were seeing 25%-35% discounts on jerseys, t-shirts, sweats, and other branded apparel.  Elsewhere, BP announced they have invested in a start-up company that is seeking to use vapor from heavy industry locations to sharply reduce the production costs of zero-carbon hydrogen.  At the same time, financially troubled UP said Tuesday that it will give up to 95% of its common stock to investment firms in return for a $500 million lifeline.  The investors include DAL and two private equity firms.  Later, BLNK announced it will be expanding its Latin American electric charging network.  The company had previously committed to 2,100 EV chargers across eight countries in the region.  In unrelated news, TSLA launched two cheaper and shorter-range versions of its Model S and Model X cars.  (Both will have exactly the same hardware, but will use software to limit the range.  The shorter-range version will be about $10,000 less than their “full range” sister products.)  Late in the day, private firm Esmark said it had $7.8 billion of cash in the bank and was ready to close an acquisition of X (the all-cash offer was made Monday).  After the close, OXY announced it would be acquiring carbon-capture firm Carbon Engineering for $1.1 billion.  At the same time, drugmaker MNKKQ announced it is preparing to seek bankruptcy protection for the second time in three years after failing to make a $200 million settlement payment to opioid victims.  In addition, LUV announced it has reached a tentative agreement with the union representing over 17,000 transport of its workers who handle ramp, cargo, and provisioning operations.

In stock legal and regulatory news, the White House and CFPB announced plans to regulate companies in the surveillance industry, including the data brokers that accumulate and sell consumer personal data.  The announcement specifically called out EXPGF, TRU, and EFX (consumer credit rating agencies) for selling “credit header information” such as names, addresses, and social security numbers.  This comes after the FTC sued (in late 2022) an Idaho company for selling cell phone geolocation data.  Elsewhere, the 4^th Circuit Court of Appeals ruled that WBA must face trial (it revived the lawsuit) for defrauding the US and the state of VA related to billing and eligibility of patients for expensive hepatitis C drugs.  (A lower court had dismissed the trial on the odd reasoning that WBA had violated federal law in its pre-authorization filings making the post-treatment billing irrelevant.  The Appeals Court rejected that idea.)  At the same time, Canada’s corporate ethics watchdog announced Tuesday that it is investigating RL over allegations the company uses forced labor (including Uyghur labor) in its Chinese production facilities.  Meanwhile, NY state fined CAR $275,000 for refusing to rent vehicles to people who do not have credit cards, even if they offered to pay a deposit.

After the close, A, HRB, JKHY, NU, and LRN all reported beats on both the revenue and earnings lines.  It is worth noting that A also lowered its forward guidance. So far this morning, JD, TCEHY, and TJX reported beats on both the revenue and earnings lines.  Meanwhile, EAT, PFGC, and TGT missed on revenue while beating on the earnings line.  It is worth noting that TGT cut its full-year guidance.

Overnight, Asian markets were nearly red across the board with only two of the twelve exchanges barely hanging onto green territory.  Meanwhile, South Korea (-1.76%), Japan (-1.46%), and Hong Kong (-1.36%) led the region lower.  In Europe, the picture is more mixed but still leans toward the red at midday.  The CAC (-0.07%), DAX (+0.05%), and FTSE (-0.48%) are leading the region lower with five green and 10 red bourses (Russia being down 2.11%) in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a flat start to the day.  The DIA implies a +0.01% open, the SPY is implying a -0.03% open, and the QQQ implies a -0.05% open at this hour.  At the same time, 10-year bond yields have pulled back a bit to 4.186% and Oil (WTI is flat at $80.97 per barrel in early trading.

The major economics news scheduled for Wednesday includes July Building Permits and July Housing Starts (both at 8:30 am), July Industrial Production (9:15 am), EIA Crude Oil Inventories (10:30 am), and FOMC Meeting Minutes (2 pm).  The major earnings reports scheduled for before the opening bell include EAT, JD, PDGC, TGT, TCEHY, TJX, and ZIM.  Then, after the close, AVT, SQM, CSCO, KE, STNE, and SNPS report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, and the Fed Balance Sheet.  Finally, on Friday, there is no significant economic news scheduled.

In terms of earnings reports, on Thursday, we hear from ARCO, BILI, DOLE, NICE, TPR, WMT, AMAT, FTCH, GLOB, KEYS, and ROST.  Finally, on Friday, DE, EL, VIPS, XPEV, and PANW report.

In miscellaneous news, China lowered its one-year and medium-term interest rates by 15 basis points to 2.5% on Tuesday.  Even as modest as it was, that was the largest cut in three years.  However, interest rates are far from China’s largest problems as another of China’s largest real estate developers is at risk of loan defaults and the country’s largest financial conglomerate (Zhongzhi Enterprise Group, often called China’s Blackstone) just missed payments on its investment products.  In addition, later Tuesday, it was reported that new bank loans fell to a 14-year low.  Elsewhere, Bloomberg reported that CS’s Annual Global Wealth Report found that global household wealth fell last year for the first time since the 2008 financial crisis.  Total net private wealth decreased by 2.4% to a total of $454.4 trillion in 2022. 

In late-breaking news, Nielsen reports that for the first time ever, TV (broadcast and cable) viewing dropped below 50% of all views.  At the same time, streaming media viewing rose to 39%.  Elsewhere, Bloomberg reports there is discontent in the ranks of senior management at GS.  Apparently, a large faction of senior GS managers want the CEO (Soloman) replaced.  Finally, China is going further in its efforts to prop up its economy by asking some of the largest investment funds in both the Shanghai and Shenzhen exchanges to be “net buyers of stocks.”  No carrot or stick was mentioned in the report.  Instead, it was just a request and exhortation, which may imply something in China that it doesn’t in other parts of the world.  China is also considering reducing the country’s “stamp duty” (which is a government fee for approval of loans, leases, insurance, and other financial contracts). 

With that background, it looks like traders are undecided this morning with small-body candles near Tuesday’s close level. The trend remains bearish with all three major index ETFs below their T-line (8ema). Only the SPY is sitting at a potential support level at this moment but the other two are not far above their own potential support. Of course, the long-term trend is still hanging on to a bullish incline but it is being pushed by the Bears over the last three weeks. As far as extension goes, none of the major index ETFs are too far from the T-line. However, the T2122 indicator is now oversold, but not yet quite pegged to the bottom of its range. So, both sides have some slack to work with. However, the Bulls have more room to run.

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