On Wednesday, markets gapped modestly higher at the open (up 0.26% in the SPY, up 0.23% in the DIA, and up 0.33% in the QQQ).  However, then the Bears took over and slowly sold off in a wavy move that eventually took us to the lows of the day at 2:15 p.m.  Then the Bulls stepped in to drive an hour-long rally that took the SPY and QQQ to the highs of the day (and the DIA back into the morning gap at 3:15 p.m.).  At that point, we saw a modest selloff in the last 45 minutes of the day in all three major index ETFs.  This action gave indecisive candles in all three.  The SPY printed a black body Doji or small-body Spinning Top candle.  The QQQ gave us a long-legged, black-bodied Doji. Finally, the DIA printed a black-body Hammer-type candle. This happened on above-average volume in the DIA and SPY, as well as slightly less-than-average volume in the QQQ.

On the day, the market was split with five of the sectors in the green and 5 in the red as Utilities (-1.83%) way out front leading the other sectors lower.  Meanwhile, Energy (+2.26%) way, way out in front (by 1.5%) leading the rest higher.  At the same time, the SPY gained 0.04%, DIA lost 0.18%, and the tech-heavy QQQ gained 0.23%.  VXX fell hard to close at 23.97 and T2122 jumped back up but remained in the oversold territory at 12.24.  10-year bond yields spiked again to 4.607% while Oil (WTI) also spiked up to end the day at $93.68 per barrel.  So, Wednesday was another whipsaw day that seems to have been largely influenced by the impending government shutdown (and its effect on markets).  We saw a modest gap up, a long and slow selloff, a sharp rebound, and then one last modest leg down.  After all of that, markets ended the day not very far from their Tuesday close. 

The major economic news reported Wednesday was limited to August Durable Goods Orders which came in better than expected at +0.2% (compared to a forecast of -0.5% and far better than the July reading of -5.6%).  At the same time, August Core Durable Goods Orders came in even better at +0.4% (versus a forecast and July reading of +0.1%).  Later the EIA Weekly Crude Oil Inventory Report showed a greater-than-expected drawdown of stocks at -2.170-million-barrels (compared to a forecasted -1.320-million-barrels and the prior week’s -2.135-million-barrels). 

In Autoworker contract talks and strike news, the UAW threatened to expand its strike against the Big 3 Automakers on Friday, if significant progress is not made in the meantime.  The UAW President will announce the next steps in a streamed videocast at 10 a.m. Eastern Friday.  (So far, only about 12% of UAW members have gone on strike.)  Later, on Wednesday night, the ex-President talked at UAW members (not to them) when he counter-programmed the GOP Presidential debate by speaking at a non-union auto parts supplier in Detroit.  The UAW was not involved in his visit and he was not scheduled to speak to UAW leaders. 

In stock news, Reuters reported that the META executive leading the company’s AI Chip program is leaving the company at the end of the month.  In related news, META unveiled a new AI assistant to help Facebook users create images, etc.  At the same time, LCID opened its new plant in Saudi Arabia on Wednesday.  (The Saudi government committed to buy 100,000 vehicles from LCID over the next decade.)  The facility will serve the whole Middle East producing 155,000 cars per year.  Later, in a twist, cryptocurrency exchange Kraken announced it is planning to offer trading of US-listed stocks and ETFs.  Kraken has filed for FINRA licensing as a broker-dealer and is now targeting a launch date in 2024.  At midday, VLKAF (Volkswagen) took a major hit with an IT outage in Germany that shut down production of cars across the whole group of brands including Porsche and Audi.  Elsewhere, in one of the largest real estate deals so far this year, WFC announced it is investing $550 million in retail real estate in New York City’s 20 Hudson Yards building.  (Half a billion doesn’t go as far as it used to as the investment only gets WFC the 5th-7th floors of the building.)  At the same time, NYC shares surged in volatile trading after a tender offer from Bellevue Capital Partners.  (NYC stock closed up 28.62% after trading in a 44% range on the day.)  Later, NEE stock took an 8.23% loss on the day (massive for a utility) after the CEO attributed poor recent company performance to higher interest rates.  PTON jumped 30% higher in after-hours trading following the company announcement that it had signed a 5-year partnership with LULU.  (The companies agreed to become the exclusive partner of the other, with LULU being the exclusive apparel provider to PTON and PTON being the exclusive digital fitness content provider to LULU.) 

In stock government, legal, and regulatory news, controversial hedge fund Citadel has decided to fight the SEC, refusing to turn over employee “off books” private messages in apps like WhatsApp and Signal.  The fund (known as the biggest buyer of order flow from brokers) is threatening to sue the SEC to avoid disclosing the (probably damning) information.  CG, APO, KKR, BX, and others were served notice to turn over employee “off books” communications at the same time.  Several large banks paid significant fines for such collusion.  Elsewhere, WASH agreed to pay a civil penalty of $9 million to the Dept. of Justice to settle charges of discriminatory lending.  At the same time, the Dept. of Justice sued EBAY, claiming the company was violating the Clean Air Act by selling harmful products, including devices to defeat vehicle emissions controls.  (The case could theoretically lead to billions in fines with a penalty of nearly $6,000 for each of 343,000 such devices the government claims were sold through EBAY.)  Later, the US Senate advanced a bill aimed at allowing banks to finance legal marijuana ventures.  The bill now moves to the Senate floor for debate.  In auto news, HYMTF (Hyundai) and Kia are recalling 3.37 million vehicles over the risk of engine fires according to the NHTSA.  Later, a CA federal court ruled in favor of QCOM dismissing a consumer suit alleging the chipmaker’s exclusive contracts with phone makers artificially inflate phone prices.  By midday, Epic Games appealed to the US Supreme Court to review its AAPL antitrust case, in hopes of overturning lower-court rulings.  In other AAPL news, after the close, AAPL was ordered to face a private antitrust lawsuit brought by payment card issuers accusing the company of stifling competition for its Apple Pay Mobile Wallet, enforcing a monopoly in the US over the iPad, iPhone, and Apple Watch tap-to-pay market.  (The suit alleges that unlike the GOOGL Android platform, which lets users choose between the GOOGL Wallet, Samsung Wallet, and others, AAPL forces its users to use the AAPL wallet.)  Also after the close, a CA federal judge refused to overrule the Santa Barbara County Supervisors who had denied XOM the permits needed to replace a pipeline that has been ruptured since 2015 with a fleet of 25,000 tanker trucks (which would have allowed XOM to reopen its closed offshore platform).  Finally, the judge randomly assigned to hear the FTC antitrust case against AMZN has recused himself without citing a reason.  The case was reassigned, based on rotation, to a judge nominated by President Biden.  However, the FTC has asked the case to be assigned to yet another judge who is already hearing smaller private antitrust cases against AMZN.

After the close, MU reported beats on both the revenue and earnings lines. Meanwhile, WOR missed on revenue while beating on earnings.  However, CNXC, FUL, and JEF all missed on both the top and bottom lines.  It is worth noting that FUL also lowered its forward guidance.

Overnight, Asian markets were mixed but leaned toward the red side. Taiwan (+0.27%) was the biggest mover among the five green exchanges while Japan (-1.54%), Hong Kong (-1.36%), and New Zealand (-1.23%) were by far the biggest losers among the seven exchanges in the red.  In Europe, we see a similar story taking shape at midday with just five of 15 bourses in the green (led by Russia +1.16%).  The CAC (+0.24%), DAX (+0.01%), and FTSE (-0.39%) lead the region on volume in early afternoon trade.  Meanwhile, in the US, Futures are pointing to a mixed and mostly flat start to the day as of 7:30 a.m.  The DIA implies a +0.08% open, the SPY is implying a +0.01% open, and the QQQ implies a -0.16% open at this hour.  At the same time,  10-year bond yields have spiked again to 4.641% and Oil (WTI) is off a quarter of a percent to $93.45 per barrel in early trading.   

The major economic news scheduled for Thursday includes Q2 GDP, Q2 GDP Price Index, and Weekly Initial Jobless Claims (all at 8:30 a.m.), August Pending Home Sales (10 a.m.), and Fed Balance Sheet (4:30 p.m.).  Fed Chair Powell speaks at 4 p.m.  The major earnings reports scheduled before the opening bell is limited to ACN, KMX, and JBL.  Then after the close, NKE reports. 

In economic news later this week, on Friday, August PCE Price Index, August Goods Trade Balance, August Personal Spending, August Retail Inventories, Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflations Expectations, Michigan 5-year Inflation Expectations are reported and Fed member Williams speaks.

In terms of earnings reports later this week, on Friday, CCL reports.

In miscellaneous news, an interesting event took place in China on Wednesday.  Regional lender Shengjing Bank agreed to sell $24 billion worth of assets (including mostly non-performing loans and corporate bonds) to a government entity.  Given the state of China’s real estate market, the move raised eyebrows.  Elsewhere, a US Senate staffer leaked to Reuters that the MSFT email server security flaw (made public in July) allowed Chinese hackers to steal 60,000 emails from the State Department.  Meanwhile, data shows us that US oil prices continue to rise in large part due to oil producers continuing to ship more oil abroad and draw down US stocks despite lower US demand.  (It is more profitable to ship and sell oil abroad than it is to sell in the US.)  In spite of that dynamic, US gasoline inventories rose over a million barrels last week, as refineries have plenty of oil supply. This took place in the face of what was expected to be a gasoline drawdown of half a million barrels, based on falling retail sales.  So, we have plenty of oil and gasoline.  It is just cheaper to ship the oil abroad and the market allows the industry to keep raising fuel prices (consumers reduce the demand but only do so slowly). In other words, prices are stickier than demand.  Finally, the House GOP remains at square one, working through 700 proposed amendments and four ridiculous partial funding bills that are dead on arrival anyway. This is due to Speaker McCarthy remaining subservient to a radical minority of his party refusing to do anything bipartisan.  McCarthy and his handful of MAGA Congressmen have told sources that they think a shutdown will gain them more concessions. He has even decided to change the subject, talking about non-issues by saying he wants to “sit down with the President to secure the border.” In the meantime, both sides of the aisle acted as grownups in the Senate and have advanced a compromise 45-day CR to fund the government.

With that background, it looks like traders are undecided but leaning bearish in the premarket. All three major index ETFs are printing small, indecisive, but definitely black-bodied candles in the early session. Perhaps we are waiting on the GDP or Jobless Claims for a clue. All three remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend clearly remains headed lower with retests of the August and June lows either accomplished or being the apparent next target for the Bears. In terms of extension, as I said, all three major index ETFs are far below their T-line (8ema), with QQQ obviously stretched furthest, and the T2122 indicator is still in its oversold range. This tells us we are in need of a bounce or at least a pause to relieve the pressure. However, we must remember the market can remain oversold (or overbought) longer than we can stay solvent while betting against it.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

Markets gapped down on Tuesday (down 0.73% in the SPY, down 0.63% in the DIA, and down 0.73% in the QQQ).  All three major index ETFs followed through the first hour before then trading sideways in a tight range until 1:15 p.m.  At that point, all three took another leg lower for 30 minutes before trading sideways along the lows for the last 2.25 hours of the day.  This action gave us gap-down, black-bodied candles with small wicks on both ends across the SPY, DIA, and QQQ.  All three remain stretched below their T-line (8ema) and 50sma, with the DIA falling down through its 200sma on the day.  This happened on a bit below-average volume in the QQQ, right at average volume in the SPY, and a bit above-average volume in the DIA.

On the day, all 10 sectors were in the red with Utilities (-2.65%) way out front leading the other sectors lower.  Meanwhile, Healthcare (-0.45%) held up much better than the other sectors.  At the same time, the SPY lost 1.47%, DIA lost 1.16%, and the tech-heavy QQQ lost 1.50%.  VXX spiked to close at 25.04 and T2122 cropped back to the low end of the oversold territory at 3.47.  10-year bond yields spiked above four-and-a-half percent to 4.55% while Oil (WTI) also gained almost one percent to end the day at $90.54 per barrel.  So, the day started off bearish and step-by-step continued that way for the rest of the day.  This took us back to a state of being over-extended to the downside.

The major economic news reported Tuesday included Building Permits, which were up but still a touch below expectations at 1.541 million (compared to a forecast of 1.543 million and the prior reading of 1.443 million).  That amounted to a 6.8% increase while the forecast called for a 6.9% increase.  Later, the September Conf. Board Consumer Confidence came in a touch low at 103.0 (versus a forecast of 105.5 and well down from the prior value of 108.7).  At the same time, August New Home Sales also came in light at 675k (compared to the forecast of 700k and well down from the July 739k number).  That was a decline of 8.7% month-on-month versus the July number which was a 8.0% increase over June.  Then, after the close, the API Weekly Crude Oil Stock report showed a 1.586-million-barrel build (compared to a forecasted drawdown of 1.650 million barrels and much increased from the previous week’s 5.250-million-barrel drawdown.

In Autoworker contract talks and strike news, President Biden joined the UAW picket line on Tuesday.  During remarks over a bullhorn, he was asked whether autoworkers deserved a 40% raise.  He answered “Yes.”  On the same trip, Biden met with auto suppliers impacted by the strike where MEMA (auto supplier trade group) asked him to provide federal assistance to ensure the viability of the idled parts suppliers.

In stock news, QCOM announced Tuesday that it has entered into a multi-year partnership with Japanese IT company NTT to develop a 5G ecosystem that promotes the adoption of 5G and “AI over 5G” in Japan.  At the same time, the CEO of FWONA (which owns 83% of SIRI) proposed that the radio unit of FWONA be spun off and then merged with SIRI.  Later, FSR closed up 9.60% (after trading in a volatile 20% range) after reaffirming its plan to increase vehicle deliveries to 300 per day later this year (and saying it had already produced 5,000 of its SUVs).  Elsewhere, LILM announced it has begun assembly of its jet-powered electric VTOL jet.  This comes just two months after successful tests of a full-scale prototype in Germany.  At the same time, MMM agreed to pay $10 million for violating sanction restrictions on sales to Iran. Later, ICPT received an unsolicited $19/share cash bid from Alfasigma.  This was an 82% premium on the price at the time but ICPT closed up more than 79% on the news.  At the same time, TGT reported that it would close nine stores across four states on Oct. 21, citing organized retail theft rings that were threatening employees, customers, and inventory shrinkage. 

In stock government, legal, and regulatory news, the Financial Times reported that TSLA (along with several European carmakers) is the subject of an EU probe into whether its cars (built in China) are receiving unfair subsidies.  Later, JPM paid $75 million to the US Virgin Islands to settle a lawsuit over the bank’s ties to Jeffrey Epstein.  Elsewhere, the FTC and 17 states filed suit against AMZN over alleged antitrust violations that allowed the giant to dominate large segments of online retail.  The case was assigned to Reagan-appointed judge Coughenour.  Later the Canadian government announced it will review the proposed merger between BG and Viterra (a company backed by GLCNF).  That merger would create another grain giant, close to the scale of competitors ADM and Cargill.  However, it would make a 3-way grain triopoly.  After the close, a federal judge in AM has overturned a jury verdict of $176.5 million against LLY in favor of TEVA over infringement on three patents.  Meanwhile, a federal district judge in Atlanta ruled in favor of a venture capital fund (backed by JPM, BAC, etc.) and against the conservative anti-diversity plaintiff that had charged the fund was acting illegally because it considered the racial identity of award recipients.  (This will be appealed as it was brought by the same group that was behind the anti-affirmative action decision by the Supreme Court earlier this year.)  Also after the close, the SEC announced that HYZN has agreed to pay $25 million to settle charges of fraud (without admitting guilt, naturally).  Finally, after the close, the FCC announced it would reintroduce “net neutrality” regulations to prohibit T, VZ, CMCSA, and others from blocking websites, slowing internet speeds, or charging higher prices for access to different websites.  This is a huge deal and has been fought tooth and nail by the big telecom and cable companies while it will be cheered by AMZN, NFLX, and other major content platforms.  The FCC will vote Oct. 19 on whether to solicit public comment (which is when the opponent media blitz will begin).

After the close, AIR, COST, and MLKN all reported beats on both the revenue and earnings lines.  The AIR and COST numbers were quarter-on-quarter increases, but despite its own “beats” the MLKN numbers were actually down almost 15% quarter-on-quarter.  Nonetheless, MLKN also raised its forward guidance.

Overnight, Asian markets were mixed but leaned toward the green side with only four of 12 exchanges in the red.  Hong Kong (+0.83%) was by far the biggest mover as the other moves in either direction were for less than half of a percent.  In Europe, we see a similar mixed picture taking shape at midday.  Greece (-1.52%) is the largest loser and Russia (+0.66%) is the biggest gainer.  However, as usual, the CAC +0.05%), DAX (-0.12%), and FTSE (-0.21%) lead the region on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a green start to the day.  The DIA implies a +0.27% open, the SPY is implying a +0.36% open, and the QQQ implies a +0.35% open at this hour.  At the same time, 10-year bond yields have backed up a bit again to 4.505% and Oil (WTI) is up another 1.42% to $91.69 per barrel.

The major economic news scheduled for Wednesday is limited to the August Durable Goods Order (8:30 a.m.) and EIA Weekly Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled before the opening bell are limited to PAYX.  Then after the close, CNXC, FUL, JEF, MU, and WOR report. 

In economic news later this week, on Thursday, we get Q2 GDP, Q2 GDP Price Index, Weekly Initial Jobless Claims, August Pending Home Sales, Fed Balance Sheet, and Fed Chair Powell speaks.  Finally, on Friday, the August PCE Price Index, August Goods Trade Balance, August Personal Spending, August Retail Inventories, Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year inflation expectations, Michigan 5-year Inflation Expectations are reported and Fed member Williams speaks.

In terms of earnings reports later this week, on Thursday, CAN, KMX, JBL, and NKE report.  Finally, on Friday, CCL reports.

In miscellaneous news, the Wall Street Journal reported that the tentative deal struck between Writers and Hollywood studios will allow the studios to train AI models on the work of the writers, although the writers would be compensated for the work trained upon.  (This may well leave writers vulnerable to replacement.  Studios have done similar things with actors, recording a day or two of lower-tier actors from many angles at scale rate and then using CGI trained on those recordings to produce realistic “cast of thousands” effects in many future movies.)  In related news, the Writers Guild union called for their strike to end today with a member vote on the tentative deal still pending.  Elsewhere, Reuters reported that OpenAI is in talks with institutional investors about selling existing shares at a price that values the company between $80 and $90 billion.  (For reference, earlier this year, OpenAI got an investment that valued the company at $30 billion.)  If completed, this would make OpenAI one of the most valuable private companies.  Finally, House Speaker McCarthy and his MAGA-placating approach have continued to make little (no) progress toward avoiding a government shutdown. Luckily, on the other side of the building, the Senate is working in a bipartisan fashion (led by both Majority Leader Schumer and Minority Leader McConnell) to move forward a short-term continuing resolution to fund the government through Nov. 17.  A procedural vote on this passed 77-19 and this CR also includes $6 billion for disaster relief and $6 billion in additional support for Ukraine.  Late Tuesday, moderate GOP members of the House said they are now willing to invoke a seldom-used “discharge vote” procedure to force a House vote on a CR negotiated between the moderate GOP members and Democrats.  Having the GOP Governance Caucus (Anti-burn it all down MAGA group) do the work of governing allows McCarthy to continue kowtowing to 20 extreme-right members while actually keeping the government operating. However, it’s unsure what that discharge vote might mean for McCarthy’s Speakership.

In late-breaking mortgage news, in China, police have placed the founder of the troubled China Evergrande Group in “police control.”  This is the latest indicator that a liquidation of the company may be in the cards and comes a day after creditors gave the company until October 30 to submit a debt restructuring deal to avoid their moving for that liquidation.  Back in the US, the Mortgage Brokers Assn. reports that the average rate for a conforming, 30-year, fixed-rate loan rose to 7.41% this week (up from 7.31% the week before).  As a result, new home loan applications fell 2% week-on-week (and were down 27% versus the same week last year).  At the same time, applications for loan refinancing fell 1% week-on-week (down 21% over the same week in 2022).

With that background, it looks like the Bulls are gapped us up in the premarket. However, so far in the early session, we are seeing black-bodied, “inside day” candles in all three major index ETFs. (This means that the premarket open was the early session high so far.) All three remain well below their T-line (8ema) and 50sma. The morning gap also did not give the DIA enough energy to retest its 200sma so far this morning. So, for now, the short-term trend is clearly remains headed lower with retests of the August and June lows as the apparent next target for the Bears (except in the SPY where those two targets have already been achieved). In terms of extension, as I said, all three major index ETFs are far below their T-line (8ema) and the T2122 indicator is also in the low end of its oversold range. This tells us we remain stretched and are in need of a bounce or at least a pause to relieve the pressure. However, we must remember the market can remain oversold (or overbought) longer than we can stay solvent betting against it.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

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

Monday was another lackluster day in the market.  The SPY gapped down 0.24%, the DIA gapped down 0.28%, and the QQQ gapped down 0.23%.  The three major index ETFs then vacillated back and forth across their opening gaps until 11:15 a.m., when the Bulls moved the SPY and QQQ back up above the Friday closing level and they traded sideways in a tight range until 3:55 p.m.  Meanwhile, the DIA continued its meandering in the morning gap until 3:55 p.m.  However, the strongest candle of the day for all three was the last 5-minutes which took all three out on their highs of the day.  This action gave us a large, white-body Marubozu (shaved head) in the SPY, a white-bodied Piercing Candle in the QQQ, and what could be seen as a large-body, white Hammer in the DIA.  This all happened on less-than-average volume in all three major index ETFs.

On the day, seven of the 10 sectors were in the green with Energy (+1.20%) way out front leading the other sectors higher.  Meanwhile, Communications Services (-0.93%) was by far the biggest laggard sector.  At the same time, the SPY gained 0.42%, DIA gained 0.12%, and the tech-heavy QQQ gained 0.47%.  VXX was just on the green side of flat to close at 22.90 and T2122 climbed but remains in the oversold territory at 14.13.  10-year bond yields spiked above four-and-a-half percent to 4.531% while Oil (WTI) was just on the red side of flat to end the day at $89.88 per barrel. So, in the first 90 minutes of the day markets were undecided. They then made a small move higher only to be undecided again until the last 5 minutes.  All-in-all, it was a nothing day that did not change the support or resistance levels and did not show much of a change in sentiment.  At best it gave us a little relief from Bearish over-extension.

There was no major economic news reported Monday.  However, MCO (Moody’s) warned that a government shutdown would be bad for the US creditworthiness and the US credit rating would come under pressure.  In the process, MCO essentially issued a stern warning to Congress (in a way to the House GOP since they have decided to not reach across the aisle in the hope of a much more conservative Budget).  MCO is the only rating agency that still gives the US its top credit rating.

In Autoworker contract talks and strike news, less than a day after it ratified its new contract with F (by 54% for versus 46% against), Unifor (Canadian version of UAW) announced that its next negotiation target is GM Canada.  (The F contract provides the reinstatement of defined benefit programs, double-digit percentage raises, and a one-time $10,000/employee bonus.)  Meanwhile, in the US, after the close, F announced it will stop construction work on its planned $3.5 billion battery plant in MI.  The company cited its uncertainty about the ability to remain competitive while locked in contract negotiations.  The UAW responded by calling the move a “thinly veiled threat to cut jobs.”

In stock news, OpenAI announced that its ChatGPT engine now has voice and image interaction capabilities similar to AAPL’s Siri and AMZN’s Alexa services.  These are likely to be quickly added to the MSFT AI assistants built into Office, Bing, and other MSFT products.  SPOT is also using this to translate content into different languages.  Later, analysts began reporting inside information indicating that TSLA will be revising its Q3 delivery numbers in the next few days.  The analysts expect about a 2.5% cut in the number of vehicles actually delivered in Q3.  At the same time, MSTR announced that it has recently purchased another $147.3 million worth of Bitcoin bringing their Bitcoin holdings to $4.68 billion. Elsewhere, PFE announced it has restarted production at its NC plant that was damaged by a tornado on July 19.  PFE says it will have all of the plant restarted by year-end but will continue to see lower-than-previous production until mid-2024.  At the same time, QCOM denied published reports that it is closing its Shanghai China R&D facility.  QCOM admitted it will be reducing headcount but will not close the facility.  Over in Europe, NSANY (Nissan) announced that all new vehicles it sells in Europe will be fully electric by 2030.  After the close, COST announced it is now offering its members access to a $29/visit online primary-care visit, a $72/visit virtual checkup (including a standard lab panel), and a $79 online therapy session.  The service is available in all 50 states.  COST won’t accept health insurance since the service is primarily aimed at uninsured Americans.

In stock government, legal, and regulatory news, a German court ruled that NFLX is infringing on an AVGO patent related to high-efficiency video encoding.  The court then issued an injunction requiring that NFLX quit using the technology in question.  (This could reshape NFLX service performance and/or result in a deal very favorable to AVGO.  Elsewhere, MGM has been named in a class-action lawsuit filed Friday.  The suit alleges the name, address, email address, date of birth, social security number, driver’s license number, and other personal information of MGM loyalty program members were taken by hackers as a result of lax security (no encryption) during the Sept. 7 cyberattack.  At the same time, a subsidiary of DB has been fined $25 million by the SEC for misstating ESG reporting (greenwashing).  Later, the NHTSA said that TM recalled nearly 22k Tundra and Tundra hybrid trucks due to wrongly labeled carrying capacities.  Meanwhile, YELP has asked a judge to disqualify a law firm from defending GOOGL because the firm previously represented YELP on matters related to the YELP suit against GOOGL.  After the close, the NHTSA announced it opened an investigation into a JBLU flight on Monday that experienced severe turbulence, injuring 7 of the passengers and one of the flight crew.  Also after the close, AAL filed an appeal of the court ruling requiring it to end its “alliance” with JBLU.  (JBLU previously said it would not appeal in order to protect its $3.8 billion acquisition of SAVE.)

After the close, THO reported beats on both the revenue and earnings lines.  However, despite being significant sales and earnings beats, the numbers showed a quarter-on-quarter decline of 28%.  So far this morning, FERG beat on both the revenue and earnings lines.  However, UNFI missed on revenue while beating on earnings.  It is worth noting that FERG raised its forward guidance while UNFI lowered guidance.  (SNX and CTAS report closer to the opening bell.)

Overnight, Asian markets were nearly red across the board with only Malaysia (+0.15%) hanging onto green territory.  Meanwhile, Hong Kong (-1.48%), South Korea (-1.31%), Japan (-1.11%), and Taiwan (-1.07%) led the rest of the region lower.  In Europe, we see a similar picture taking shape at midday.  Only Greece (+0.40%) and Denmark (+0.26%) are in the green while the CAC (-0.78%), DAX (-0.73%), and FTSE (-0.01%) lead the region lower.  In the US, as of 7:30 a.m., Futures are pointing toward a down start to the day.  The DIA implies a -0.39% open, the SPY is implying a -0.46% open, and the QQQ implies a -0.54% open at this hour.  At the same time, 10-year bond yields are back down to 4.493% and Oil (WTI) is off two-thirds of a percent to $89.08 pre barrel in early trading.

The major economic news scheduled for Tuesday includes Building Permits (8 a.m.), Conference Board Consumer Confidence and August New Home Sales (both at 10 a.m.) and API Weekly Crude Oil Stock report (4:30 p.m.).  We also have another Fed speaker (Bowman at 1:30 p.m.).  The major earnings reports scheduled before the opening bell are limited to CTAS, FERG, SNX, and UNFI.  Then after the close, AIR, COST, and MLKN report. 

In economic news later this week, on Wednesday, August Durable Goods, and EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Q2 GDP, Q2 GDP Price Index, Weekly Initial Jobless Claims, August Pending Home Sales, Fed Balance Sheet, and Fed Chair Powell speaks.  Finally, on Friday, the August PCE Price Index, August Goods Trade Balance, August Personal Spending, August Retail Inventories, Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflations Expectations, Michigan 5-year Inflation Expectations are reported and Fed member Williams speaks.

In terms of earnings reports later this week, on Wednesday, we hear from PAYX, CNXC, FUL, JEF, MU, and WOR.  On Thursday, CAN, KMX, JBL, and NKE report.  Finally, on Friday, CCL reports.

In miscellaneous news, Bloomberg reported that the major exchanges quietly changed the waiting period between listing and options being allowed to trade.  The waiting period was reduced from four to two days after listing to chase the volume.  (Options trading volume has more than doubled since 2019.)  Elsewhere, Reuters reported Monday that the SEC has collected WhatsApp, Signal, and other messaging service communications for thousands of major investment firm employees.  The report said the “illegal off-channel” communication investigation is expanding.  CG, APO, KKR, TPG, and BX, are among the listed companies involved in the expansion.  Meanwhile, financial services firm AON released a report saying that the pension plans of the largest US companies are the healthiest they have been in 12 years after years of record corporate profits.  The report said the average “funded ratio” of S&P 500 companies was 102% as of last Thursday.  (This is the highest ratio since prior to 2011.)

In late-breaking mortgage news, industry analyst Insider Intelligence reported this morning that META Threads is struggling to grow.  The report said Threads ranks above only Tumblr among the social media platforms in terms of US users.  In politics, Congress returns from the 4.5-day weekend they were given when the right-wing part of the GOP caucus killed Speaker McCarthy’s move for a continuing resolution last Thursday.  McCarthy said yesterday that the House will vote again on a 45-day CR and budget bills today with a government shutdown looming Saturday.  Elsewhere, President Biden will join the UAW on the picket line today (with the former President expected Wednesday so that he can counter-program the next GOP debate instead of participating).  Elsewhere, a senior AAPL VP will be testifying today in the GOOGL antitrust trial.  Sr. VP Cue will testify about how and why AAPL chose GOOGL as its default search engine for iPhones.

With that background, it looks like the Bears are gapping us down in premarket. So far in the early session, we are seeing small-bodied, white, indecisive, “inside day” candles in all three major index ETFs. All three remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with retests of the August and June lows as the apparent next target for the Bears (except in the SPY where those two targets have already been achieved). In terms of extension, as I said, all three major index ETFs are far below their T-line (8ema) and while the T2122 indicator is also in its oversold range, it has climbed up off the extreme end of that 20-point span. This tells us we remain a bit stretched, but the bounce Monday reduced the pressure at least a little.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

Markets gave us a rest or modest rebound on Friday.  The SPY gapped up 0.27%, the DIA opened almost flat at +0.03%, and the QQQ gapped up a respectable 0.55%.  At that point, all three major market index EFS ground sideways for 30 minutes before putting in a modest morning rally that reached the highs of the day at about 11:40 a.m.  Then all three wobbled sideways for an hour.  However, the afternoon saw major whips in both directions, ending the day on the steepest selloff of the day in the last 30 minutes.   This action gave us black-bodied candles with significant upper wicks and tiny lower wicks.  All three major index ETFs remain extended below their T-line (8ema).  The DIA is also approached but not yet testing its 200sma.  This all happened on basically average volume in the SPY, DIA, and QQQ.

On the day, seven of the 10 sectors were in the red with Consumer Defensive (-0.45%), Consumer Cyclical (-0.43%), and Financial Services (-0.42%) leading the other sectors lower.  Meanwhile, Technology (+0.33%) and Energy (+0.25%) held up better than the other sectors.  At the same time, the SPY lost 0.22%, DIA lost 0.29%, and the tech-heavy QQQ gained 0.01%.  VXX gained a quarter of a percent to close at 22.87 and T2122 climbed but remains in the low end of the oversold territory at 4.95.  10-year bond yields fell down to 4.438% while Oil (WTI) gained 0.78% to end the day at $90.33 per barrel.  So, the first half of the day was the pause and modest bounce we might have expected after two strong days of bearish move.  However, then afternoon volatility took over with the Bears getting the best of the action.

The major economic news reported Friday was limited to Preliminary S&P Global Mfg. PMI which came in better than expected at 48.9 (compared to a forecast of 48.0 and the previous reading of 47.9).  However, while better than anticipated, the value below 50 indicates contraction.  At the same time, the S&P Global Services PMI came in a bit below the predicted at 50.2 (versus a forecast of 50.6 and the prior value of 50.5).  Just the opposite of Manufacturing, although the value was below expectation, a reading above 50 indicates expansion in the Services sector.  In addition, the S&P Global Composite PMI was reported at 50.1 (compared to a prior value of 50.2) 

In stock news, investing.com reported Friday that TSLA is in negotiations with the Indian government over opening a battery factory in that country.  At the same time, in non-strike news, SLTA announced it will invest $508 million into their plant in Brazil, in particular in new product development.  Elsewhere, MGM announced it has lost over $52 million in revenue due to the cyberattack suffered more than a week ago.  (This does not include cost to mitigate, instead referring only to lost sales.)  Later, AMZN said it would begin placing ads in Prime Video streaming shows in 2024, selling ad-free access for an extra fee on top of the Prime charge. In other AMZN news, the company said it would hold another two-day “Prime Day” to start on October 10 after previous successes.  After the close, BX announced it was canceling the planned conversion of Class A shares as less than 20% of the needed shares were tendered for conversion.  Meanwhile, GT announced it will cut 700 jobs in its Asia Pacific region, selling 100 retail stores in the process.  After the close, the EEOC sued UPS for disability discrimination in the company’s hiring practices.  After the close, the Wall Street Journal reported that RAD is negotiating with creditors over the terms of its bankruptcy and will liquidate 400-500 stores.  (RAD operates 2,330 stores in 17 states.)  Also after the close, Reuters reported that ORCL has prepaid $104.1 million for CPU chips from startup Ampere Computing according to ORCL’s regulatory filing Friday.  Ampere builds chips based on the newly-IPOed ARM architecture.  Finally, the UK competition watchdog agency signaled Friday that they are willing to approve the MSFT acquisition of ATVI.  This was the final hurdle to the $69 billion deal closing.

In stock government, legal, and regulatory news, a UK-based retail conglomerate (Frasers) has asked a NY court to compel MS CEO Gorman to provide evidence in a UK lawsuit against MS.  (The suit revolves around a $1 billion option position margin call on Frasers.)  Elsewhere, the NHTSA announced Friday they have opened a new investigation into 240k F 2018-2021 EcoSport vehicles over consumer complaints of oil pump failures causing a loss of power while in motion.  At the same time, Politico reported that the FTC will file its long-awaited antitrust suit against AMZN on Tuesday. Later, GS agreed to pay a $6 million fine to the SEC for providing inaccurate and/or incomplete trading data regarding 163 million transactions over a decade.  ($0.036 per error seems like a pretty sweet deal for GS, but what do I know.)  At the same time, private broker/dealer Citadel (famous for buying orders) agreed to pay the SEC $7 million for illegal short sales.  By mid-afternoon, an auto industry group told Reuters that carmakers do not intend to “immediately comply” with an MA law requiring them to share vehicle data with independent repair shops, despite the NHTSA reversing course and saying it was safe for carmakers to do so.  This leaves auto manufacturers open to the possibility of state and federal (FTC) action.

In Autoworker contract talks and strike news, the UAW reported that it had made real progress in talks with F.  However, the union said there was no negotiation progress in talks with GM and SLTA.  As a result, the union expanded its strike to include 38 parts and distribution facilities of GM and STLA across 20 states.  This will increase the number of striking workers from 12,700 to 18,300.  (3,500 of the 5,600 newly striking people work for GM.)  After the UAW invited him, President Biden announced he would visit the picket line Tuesday.  (The leading GOP candidate then said he would visit MI on Wednesday to address autoworkers.)  Later, in a META live event, UAW President Fain detailed the progress that had been made with F including progress on pay, job tiers, profit sharing, and cost of living increases.  (That last issue was significant since the UAW says GM and STLA have not offered any cost-of-living increases over the next contract.  Of course, that is just the UAW side of that issue.)  Then on Sunday, the Canadian union Unifor (Canadian version of UAW) announced its members had voted to approve the tentative agreement the union reached with F last week.

Overnight, Asian markets were mixed with 5 in the red, 5 in the green, and 1 is unchanged.  Japan (+0.85%), Taiwan (+0.66%), and Singapore (+0.33%) pacing the gainers.  Meanwhile, Hong Kong (-1.82%), Shenzhen (-0.57%), and Shanghai (-0.54%) led the losses after fears of a liquidation of China Evergrande Group hit the Chinese markets late.  However, in Europe, we nearly see red across the board at midday with only Greece (+0.64%) hanging onto the green territory.  The CAC (-0.47%), DAX (-0.59%), and FTSE (-0.51%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start just on the red side of flat.  The DIA implies a -0.04% open, the SPY is implying a -0.05% open, and the QQQ implies a -0.07% open at this hour.  At the same time, 10-year bond yields have jumped back up to 4.491% and Oil (WTI) is just on the green side of flat at $90.10 per barrel in early trading.

The major economic news scheduled for Monday is limited to Fed Member Kashkari speaking after the close at 6 p.m.  There are no major earnings reports scheduled before the opening bell.  However, after the close, THO reports. 

In economic news later this week, on Tuesday we get Building Permits, Conference Board Consumer Confidence, August New Home Sales, API Weekly Crude Oil Stock report, and we have another Fed speaker (Bowman at 1:30 p.m.).  Then Wednesday, August Durable Goods, and EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Q2 GDP, Q2 GDP Price Index, Weekly Initial Jobless Claims, August Pending Home Sales, Fed Balance Sheet, and Fed Chair Powell speaks.  Finally, on Friday, the August PCE Price Index, August Goods Trade Balance, August Personal Spending, August Retail Inventories, Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year inflation expectations, Michigan 5-year Inflation Expectations are reported and Fed member Williams speaks.

In terms of earnings reports later this week, on Tuesday, CTAS, FERG, SNX, UNFI, AIR, COST, and MLKN report.  Wednesday, we hear from PAYX, CNXC, FUL, JEF, MU, and WOR.  On Thursday, CAN, KMX, JBL, and NKE report.  Finally, on Friday, CCL reports.

In miscellaneous news, on Friday, House Speaker McCarthy told reporters that he felt no need to reach across the aisle to Democrats, instead saying Republicans have a majority and can solve the budget crisis themselves.  Since he gave the House 4.5 days off this weekend, a government shutdown is now a virtual certainty.  The House returns Tuesday.  The Speaker says the House GOP will rewrite the 12 appropriations bills themselves by lumping them into 4 bills (although decoupling was the whole idea being appropriations bills on top of a total spending amount in the first place) in order to obtain a much more conservative budget prior to entering into negotiations with the Senate…previous agreements and votes during the debt ceiling negotiations in June, be damned.  At the same time, the Dept. of Commerce finalized rules aimed at preventing China from gaining any benefit from the $52.7 billion provided by the Chips and Science Act.  (The rules aim to stop China from benefitting from and research, workforce development…hiring people trained with those funds…or actual production.)  Elsewhere, BAC reported Friday that a record $19 billion was withdrawn from the stock market in the ending then.  At about the same time, the Treasury Dept. reported that over the last year, US household (not institutional) holdings of US bonds have increased from $1 trillion to $2.5 trillion.

In late-breaking news, the Hollywood Writers Union has reached a tentative deal with studios. The hold-up over the weekend had to do with writers being replaced by AI. However, it should be noted that the final contract language is still not written. So, there is still a possibility of disagreement and the union members still have to approve. Regardless, the Actor’s union still remains on strike. Elsewhere, AMZN announced early today that it will invest up to $4 billion into startup AI firm Anthropic (which is a direct competitor to OpenAI that MSFT has put billions into). AMZN will have an unspecified “minority ownership” of Anthropic which recently put out its own AI product named Claude 2. This move will better position AMZN to compete in the AI space with MSFT, GOOGL, and the lesser competitor META. Finally, a senior Japanese Bank (Nomura) executive has been barred from leaving China. He apparently is not under arrest but is not allowed to leave the country. Reportedly, the restriction is linked to a job this executive held prior to joining Nomura in 2018.

With that background, it looks like the Bears have maintained control over the weekend. Premarkets all gapped up modestly but have then sold back down to just below Friday’s closing level, giving us black candles in the early session. So far, that does not seem like a motivated Bear move but the upper hand is still on their side and is picking up a little steam as we start the day. All three major index ETFs remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with a retest of the August and June lows as the apparent next target for the Bears (except in the SPY where those two targets have already been achieved). In terms of extension, as I said, all three major index ETFs are far below their T-line (8ema) and the T2122 indicator is also now at the low end of its oversold range. This tells us we remain stretched, with the possible exception of the stodgy, mega-cap DIA. So, we should see a pause or relief bounce soon.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

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

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

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

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

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

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

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

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

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

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

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

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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