Tuesday gave us a modest gap lower at the open (down 0.10% in the SPY, up 0.01% in the DIA, and down 0.23% in the QQQ).  At that point, we saw a little follow-through by the Bears that bottomed out at about 10:40 a.m.  Then the Bull stepped in to rally us until shortly after 11 a.m.  From there, the Bears led a long, slow, wavy decline right into the close on the SPY and DIA.  Meanwhile, the QQQ ran back and forth between the late morning high and the Friday closing level.  This action gave us black-bodied candles with very little wick in the SPY and DIA (with the DIA crossing back just below its T-line and 50sma).  Meanwhile, the QQQ printed a white-bodied Spinning Top candle.

On the day, nine of the 10 sectors were in the red with only Energy (+0.10%) hanging onto green territory while Basic Materials (-0.1.93%) and Industrials (-1.74%) led the way lower.  At the same time, the SPY lost 0.43%, DIA lost 0.55%, and QQQ gained 0.13%.  VXX gained two-thirds of a percent to close at 21.35 and T2122 plummeted back down to the other side of the mid-range to just outside the edge of oversold territory at 21.48.  10-year bond yields shot up to close at 4.266% while Oil (WTI) gained another 1.39% to close at $86.74 per barrel. This all happened on extremely low volume (not much more than half of the 50-day average) in all three of the major index ETFs.  So, the Bears had control on the day, but it sure felt like just a tepid pullback after last week’s pre-holiday rally. 

The major economic news reported Tuesday was limited to July Factory Orders, which came in down but better than expected at -2.1% (compared to a forecast of -2.5% but much worse than the June reading of +2.3%).

In Fed news, Fed Governor Waller said Tuesday that the latest economic data was giving the FOMC space to wait and see whether it needs to raise rates again.  He went on to note that he currently sees nothing that would force the Fed to raise the cost of short-term borrowing again.  Waller said, “we have to wait and see if this inflation trend is continuing … I want see a couple of months continuing along this trajectory before I say we’re done doing anything.”  (For what it’s worth, the market is pricing in only an 8% chance of a rate hike in just over two weeks at the September meeting and just over a 40% chance of a hike at any of the three remaining scheduled 2023 meetings.)  Later in the day, the NY Fed said that it believes the neutral rate (neither restrictive or stimulative), known as R-star had fallen in Q2.  The Fed analysis pegged 0.57% as the R-star for Q2, down from 0.68% in Q1.  It is worth noting that analysts add the Fed target of 2% inflation to that R-star.  In this case, it would mean a 2.57% rate would be neutral for the economy.  Since the Fed currently has rates at 5.25% to 5.50%, that means the Fed is being very restrictive.

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In stock news, on Tuesday, WBD announced that the Hollywood writer’s strike will hit the company’s 2023 profits.  The company expects the impact to be $300 million – $500 million for 2023 reducing earnings to $10.5-$11 billion.  Elsewhere, STLA said that its testing shows that 24 of the company’s existing internal combustion engines work, without modification, on new e-fuels.  (E-fuels are synthetic fuels that blend existing standard fuels with carbon that has been captured and hydrogen created from sustainable electric sources like wind, solar, and nuclear.)  At the same time, UAL announced that it had resumed flight departures after a computer issue had forced them to have the FAA ground all non-departed flights earlier in the day.  By midday, MA denied reports that the company is planning to increase the fees charged merchants when a credit card is processed.  This came after the Wall Street Journal reported it had obtained documents and sources claiming that both MA and V have plans to raise those fees in October and April respectively.  After the close, Reuters reported that the head of GM manufacturing said that current UAW demands “have significant costs attached that would threaten our ability to maintain our manufacturing momentum.”  Also after the close, ENB announced they had agreed to acquire 3 utilities from D for a total purchase price of $14 billion ($9.4 billion in cash and $4.6 billion in assumed debt).  In the early evening, AAPL announced it had extended its deal with soon-to-IPO ARM in a deal that extends until 2040.  (AAPL uses ARM chips in all of its phones, tablets, and computers.  During the evening, COIN announced it would be launching a new lending platform aimed at large institutional investors.  (A regulatory filing shows that COIN has raised $57 million to fund the development and launch of this new platform.)

In stock legal and regulatory news, TSLA filed suit in China against Chinese chip designer Bingling, claiming the company violated its intellectual property rights.  (Bingling specializes in chip design related to battery efficiency optimization.) Later, the NHTSA announced a decision that 52 million airbag inflators should be recalled.  (The agency had first called for the recall in May, but the maker, Arc Automotive, refused.)  This would impact 12 automakers, including GM, F, STLA, TSLA, TM, HYMTF, MBGAF, BMWYY, VLKAF, and models from 2000 through early 2018.  The next step will be a public hearing in October to compel the recall.  After the close, the Wall Street Journal reported that the FTC is planning to file an antitrust suit against AMZN later this month after the e-commerce giant refused to offer concessions related to its pricing and rules requiring third-party sellers to use “Fulfillment by Amazon” to avoid fees.

On Monday evening, ZS posted beats on both the revenue and earnings lines.  The company also raised its forward guidance.  So far this morning, CNM reported in-line revenue but missed on the earnings line by a penny.  At the same time, EXPR missed on both the top and bottom lines.

US mortgage demand fell last week to a 27-year low, even as interest rates fell slightly.  Total applications for new home purchase loans fell two percent for the week (and were 28% lower than one year prior).  Meanwhile, refinancing applications were down five percent week-on-week (and were 30% lower than the same week in 2022).  This all took place while the average rate for a 30-year, fixed-rate, conforming loan dropped from 7.31% to 7.21% (with closing points also decreasing from 0.73 to 0.69).

Overnight, Asian markets were mixed but leaned toward the downside.  Japan (+0.62%) was, by far, the biggest gainer.  Meanwhile, Australia (-0.78%) and South Korea (-0.73%) were by far the biggest losers on the session.  In Europe, things are more dicey at midday with only Belgium (+0.09%) hanging onto green territory.  On the other side, the CAC (-0.71%), DAX (-0.40%), and FTSE (-0.66%) lead the rest of the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing to a modestly red start to the day.  The DIA implies a -0.19% open, the SPY is implying a -0.22% open, and the QQQ implies a -0.27% open at this hour.  At the same time, 10-year bond yields are back down to 4.244% while Oil (WTI) is off a third of a percent to $86.38 per barrel in early trading.

The major economic news scheduled for Wednesday includes July Imports, July Exports, and July Trade Balance (all at 8:30 a.m.), August S&P Global Composite PMI and August S&P Global Services PMI (both at 9:45 a.m.), August ISM Non-Mfg. Employment, August ISM Non-Mfg. PMI, and August ISM Non-Mfg. Price Index (all at 10 a.m.), Fed Beige Book (2 p.m.), and API Weekly Crude Oil Stock Report (4:30 p.m.).  The major earnings reports scheduled for before the open are limited to CNM.  However, after the close, AEO, PLAY, and GME report.   

In economic news later this week, on Thursday, Weekly Initial Jobless Claims, Q2 Nonfarm Productivity, Q2 Unit Labor Costs, EIA Crude Oil Inventories, and Fed Balance Sheet are reported.  We also have 3 Fed speakers (Harker at 10 am, Williams at 3:30 pm, and Bowman at 4:55 pm).  Finally, on Friday there are no major economic news reports.

In terms of earnings reports later this week, on Thursday, we hear from ABM, DOOO, DBI, KFY, SAIC, TTC, DOCU, and RH.  On Friday, KR reports.

In China news, last week, while US Commerce Sec. Raimondo was visiting, China unveiled the latest Huawei smartphone.  A Canadian analyst firm acquired and tore one down. What they found was that China has made a massive leap in capability.  The Huawei phone uses a Chinese-made 7nm chip that was created using UEV (extreme ultraviolet lithography).  Prior to this, the most advanced chip China was known to create was 14nm and even the top Western companies only began using UEV lithography in 2019.  7nm still only yields 50% (half the chips made are bad), but this all means China is only one generation behind the West (TSM and INTC for example) rather than previous expectations that China was 3-4 generations behind.  It also means that the sanctions dating back to 2020, and greatly expanded by President Biden, have either been circumvented or made irrelevant by Chinese internal development. Elsewhere, overnight China announced it will increase its support of the property sector. This caused Chinese property developer stocks to spike higher with Evergrande up 83% and Sunac China Holdings up 68%.

In miscellaneous news, Oil settled at a 10-month high on Tuesday after both Russia and Saudi Arabia announced they are extending their voluntary supply cuts through the end of the year.  (Markets had expected another 1-month extension…not the 3-month extension announced.)  The continued strength of the US Dollar also helped oil, as bond rates rose again Tuesday (on a post-holiday flood of investment-grade corporate bonds that took away Treasury buyers and thus drove up bond yields).  Elsewhere, Turkey’s President Erdogan ended his talks with Russia’s Putin with any public progress on resuming the “Grain deal.”  Still, Erdogan said it would soon be possible to revive the deal and get Ukrainian grain to market. 

With that background, it looks like the Bears are looking to start the shortened week with a move lower. DIA even retested its T-line (8ema) in the premarket. However, it has the strongest early session candle bouncing up off the level while the other two major indices are giving us indecisive gap-down candles so far. The trend remains bullish with all three major index ETFs above a rising T-line, 17ema, and 50sma. 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 midrange (or just outside of overbought territory if you prefer). So, both sides have the room to run, if they can muster 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 Friday, markets opened higher, gapping up 0.62% in the SPY, up 0.62% in the DIA, and up 0.67% in the QQQ.  However, that was the last we saw of the Bulls with all three major index ETFs selling off until about noon.  (QQQ had faded its morning gap by 10:35 am while SPY and DIA faded their own gaps by 11:50 am.)  From that low of the day at noon, the SPY and DIA drifted slowly and slightly higher the rest of the day (closing back inside the opening gap area) as QQQ rode waves sideways and did not quite reach the Thursday close level at the end of the day.  This action gave us a gap-up, inside day, black-body Spinning Top in the DIA.  At the same time, we got a gap-up, black-bodied candle in the SPY.  Meanwhile, the QQQ printed a gap-up, Dark Cloud Cover signal.  All three remain above their T-line (8ema) and did not even retest those levels.  The same goes for the DIA not retesting its 50sma, but to be fair, DIA is not far above either average. 

On the day, seven of the 10 sectors were in the green with Energy (+1.96%) far out front leading the way higher while Communications Services (-0.88%) lagged behind the other sectors.  At the same time, the SPY gained 0.19%, DIA gained 0.34%, and QQQ lost 0.11%.  VXX dropped 1.35% to 21.21 and T2122 climbed back up to the edge of the overbought territory at 76.92. 10-year bond yields pulled back slightly to close at 4.18% while Oil (WTI) gained 2.89% to close at $86.05 per barrel. This happened on modestly below-average volume in all three of the major index ETFs.  So, the bullish trend of the week continued but it felt tepid with a strong gap in one direction and then trading the rest of the day that went back the other way. 

The major economic news reported Friday included August Average Hourly Earnings which rose a bit less than expected at +4.3% (year-on-year), compared to a forecast of +4.4% and the July reading of +4.4%.  It is worth noting that the month-on-month Avg. Hourly Earnings also came in a bit below forecast at +0.2% versus both a forecast of +0.3% and the July value of +0.3%.  At the same time, August Nonfarm Payrolls grew more than predicted at +187k (compared to a forecast of +170k and the July reading of +157k).  Meanwhile, August Private Nonfarm Payrolls were reported much stronger than anticipated at +179k (versus a forecast of +150k and a July value of +155k).  The August Participation Rate increased to 62.8% (compared to the forecast and July numbers which were both 62.6%).  This drove a jump in the August Unemployment Rate to 3.8% (from the forecast and July readings which were both 3.5%).  Later the August S&P US Mfg. PMI came in at 47.9 (better than the 47.0 forecasted but lower than the July 49.0 value).  Then the August ISM Mfg. PMI was better than expected at 47.6 (versus a forecast of 47.0 and a July reading of 46.4).  At the same time, the August ISM Mfg. Price Index was reported well above predicted at 48.4 (compared to a 43.9 forecast and a 42.6 July reading).  So, to summarize, wages grew by slightly less than expected and jobs were also up much more than expected.  However, a pop in participation led to a pop in the unemployment rate.  Bloomberg characterized this as a “controlled cooling.”  Meanwhile, manufacturing was better than anticipated but still contracting both in the US and globally.

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In stock news, on Friday, the Wall Street Journal reported that Saudi Aramco is now strongly considering issuing a $50 billion secondary before the end of the year. If done, this would essentially double the world’s largest oil company’s outstanding shares.  This seems a bit odd since the company just increased dividend payouts by $10 billion in August.  However, the $50 billion will be used to bolster the Saudi sovereign wealth fund (which is a major investor in US markets).  Later, HOOD announced it would buy a block of stock formerly owned by Sam Banman-Fried (disgraced “wunderkind” indicted on crypto fraud and conspiracy charges).  The block was seized by the US government in November and is now held by the US Marshal Service.  The sale will be for $605.7 million or $10.96/share.  Elsewhere, entertainment stocks took a hit Friday as a major contract dispute between DIS and CHTR (second-largest cable TV provider) over the television distribution fees of their deal.  Later, TSLA announced a new, restyled Model 3 in China with a higher price.  At the same time, TSLA slashed the price of its premium vehicles, which include the “Full Self-Driving” software, by 14%-21%.  After the close, the New York Times reported that META may allow Facebook and Instagram users in Europe to pay in order to avoid getting advertisements on its platform. 

In stock legal and regulatory news, on Friday, the NHTSA announced that F will recall 169k vehicles to replace rearview cameras, update software on some cameras left in place, and will take a $270 million charge as a result.  Later, the FTC approved the AMGN $27.8 billion acquisition of HZNP.  This comes after the FTC ended its lawsuit to block the deal.  To obtain the agreement, AMGN agreed not to bundle its own drugs with those from HZNP.  Elsewhere, HUM joined the list of big pharma companies who are suing the US government.  In this case, HUM does not want Medicare to claw back billions of dollars of overcharges after audits found prescriptions for medications for conditions that are not even listed in the patient’s medical records.  HUM claims the rule allowing the clawbacks is “arbitrary and capricious.”  The Biden Administration says the clawbacks will save $4.7 billion over 10 years.  At the end of the day, NVS also sued the Dept. of Health and Human Services, hoping to prevent Medicare from negotiating drug prices for its 66 million enrollees.  One of NVS’s top-selling drugs (Enestro) was on the list of 10 drugs Medicare announced it would be negotiating prices on (as opposed to just accepting whatever the drug maker wants as it is now).  After the close, the US government sued EIX for negligence that led to a 2020 fire near Los Angeles, which burned 180 square miles.

In major IPO news, ARM revised its filing and is now pricing the much-anticipated chip stock between $47 and $51 per share.  Although this IPO is expected to raise around $5 billion, with SoftBank retaining 90.6% of the stock.  (The IPO underwriters do have the option to up to an additional $735 million of the stock, which would reduce SoftBank’s stake to 89.9%.)  FWIW, ARM is the architecture AAPL chose when it replace INTC chips with so-called AAPL-designed chips and ARM is the only real competitor to the x86 chip architecture used by the industry leaders INTC and AMD.  

Overnight, Asian markets were mostly in the red.  Japan (+0.30%), India (+0.24%), and Taiwan (+0.01%) managed to hold onto green while Hong Kong (-2.06%), Shanghai (-0.71%), and Shenzhen (-0.67%) led the region lower.  In Europe, we see a similar picture taking shape with only four of the 15 bourses in the green at midday.  The CAC (-0.39%), DAX (-0.24%), and FTSE (+0.09%) are typical of the region in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a red start to the day.  The DIA implies a -0.09% open, the SPY is implying a -0.22% open, and the QQQ implies a -0.42% open at this hour.  At the same time, 10-year bond yields are up briskly to 4.23% and Oil (WTI) is off by a third of a percent to $85.27 per barrel.

The only major economic news scheduled for Tuesday is July Factory Orders (10 a.m.).  There are no major earnings reports scheduled for before the open.  Then, after the close, the only earnings report that might be considered major is ZS.  

In economic news later this week, on Wednesday we get July Imports, July Exports, July Trade Balance, August S&P Global Composite PMI, August S&P Global Services PMI, August ISM Non-Mfg. Employment, August ISM Non-Mfg. PMI, August ISM Non-Mfg. Price Index, Fed Beige Book, and API Weekly Crude Oil Stock Report.  Then Thursday, Weekly Initial Jobless Claims, Q2 Nonfarm Productivity, Q2 Unit Labor Costs, EIA Crude Oil Inventories, and Fed Balance Sheet are reported.  We also have 3 Fed speakers (Harker at 10 am, Williams at 3:30 pm, and Bowman at 4:55 pm).  Finally, on Friday there are no major economic news reports.

In terms of earnings reports later this week, on Wednesday, CNM, AEO, PLAY, and GME report.  Then Thursday, we hear from ABM, DOOO, DBI, KFY, SAIC, TTC, DOCU, and RH.  On Friday, KR reports.

In miscellaneous news, the National Federation of Retailers said that their surveys lead them to predict there will be record back-to-school spending of $135 billion this year. That is up $24 billion (a 21.8% increase over 2022).   Elsewhere, the industry group that represents large private hedge funds filed suit against the SEC on Friday, claiming the agency went too far in requiring them to disclose their expenses and preventing them from giving different investors different deals (sweetheart deals).  Oddly, the group filed suit in New Orleans, so there was probably some judge shopping going on there.  Finally, a reminder that we have 9 days until the current UAW contracts with F, GM, and STLA expire.  Given the nature of brinksmanship, expect a lot of stories on this topic and the possibility of a major strike over those 9 days.

In world economic news, Bloomberg reported Friday that US corporate profits are on the rise again for the second straight quarter. Profits rose 4.5% in Q2 according to data from the Bureau of Economic Analysis.  Their report showed US corporate profits grew from 13.8 percent to 14.3 percent of GDP in the second quarter.  So, in the US we are seeing what may be a “controlled cooling” with an extremely strong job market, and corporate profits on the rise.  (It is worth noting that GS has now lowered the probability of a US recession to 15%, down from 20% and far below the cycle-high probability of 60%.) However, in Europe, things are not as rosy. Inflation there is much worse than in the US and is remaining higher (stickier) due primarily to energy prices. At the same time, EU economic growth continues to be very weak leading many to start talking about potnetial “stagflation” in Europe.  Meanwhile, in China, the picture is grim.  The Chinese are now experiencing a banking sector that is under siege from a real estate crisis, and is also seeing widespread unemployment (especially among youth).

With that background, it looks like the Bears are looking to start the shortened week with a move lower. DIA even retested its T-line (8ema) in the premarket. However, it has the strongest early session candle bouncing up off the level while the other two major indices are giving us indecisive gap-down candles so far. The trend remains bullish with all three major index ETFs above a rising T-line, 17ema, and 50sma. 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 midrange (or just outside of overbought territory if you prefer). So, both sides have the room to run, if they can muster 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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

On Friday, 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.”

SNAP Case Study | Actual Trade

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.

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 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.

SNAP Case Study | Actual Trade

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.

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