Monday’s price action relieved some of last week’s selling pressure as markets bounced back with the Dow leading the buying while the other indexes suffered from low volume. However, bad economic data from China overnight could reverse a significant portion of yesterday’s gains at the open. Investors will also have a slew of earnings reports and International Trade numbers to find inspiration as the looming inflation data looms on the horizon. With stocks priced near and even above perfection expect considerable volatility as weakening economic conditions bring a rise to a rapidly restricting liquidity condition.
Asian markets traded mixed overnight as China’s trade numbers fall more than expected as their economy continues to struggle with contraction. European markets trade bearishly this morning with worries of pending inflation data and sinking Italian banks. U.S. futures are under pressure this morning with banks seeing weakness, and bad Chinese trade data suggesting a gap down open ahead of earnings results.
United Parcel Service (UPS), the world’s largest package delivery company, has revised its revenue outlook for 2023, citing slower growth in e-commerce demand and a more generous labor contract for its workers. The company now expects to generate about $93 billion in consolidated revenue in 2023, down from its previous estimate of about $97 billion. The lower forecast reflects the challenges that UPS faces in maintaining its profitability and market share in the highly competitive and dynamic e-commerce sector.
Lucid Motors, a leading electric vehicle maker, reported disappointing financial results for the second quarter of 2023, missing both revenue and delivery targets. The company generated only $150 million in revenue, below the average analyst estimate of $170 million. It also delivered only 1,200 units of its flagship Air electric luxury sedan, falling short of the expected 1,500 units. The company blamed the lower-than-expected performance on supply chain disruptions and production challenges amid the global chip shortage and the COVID-19 pandemic. However, the company also announced that it had raised $3 billion in a private placement in May, which extended its cash runway by about a year, until 2025. The capital raise was seen as a positive sign by some investors, who believe that Lucid has strong growth potential and a competitive edge in the electric vehicle market.
China’s trade activity slowed down sharply in July, indicating a weakening of both domestic and global demand amid the ongoing COVID-19 pandemic and geopolitical tensions. The country’s exports fell by 8.1% year-on-year in July, while imports dropped by 11.2%. Both figures were worse than the market expectations of a 3.5% decline in exports and a 6.8% decrease in imports. The trade surplus also narrowed to $42.8 billion from $51.5 billion in June. The data showed that China’s trade with its major partners, such as the US, the EU, Japan, and ASEAN, all contracted in July. Among the few higher-value export categories that saw a significant increase in the first seven months of the year were cars and suitcases, which rose by 28.9% and 25.6% respectively. However, these gains were offset by the sharp declines in other sectors, such as textiles, garments, footwear, and furniture. The trade data suggested that China’s economic recovery from the pandemic was losing momentum and that the country faced increasing challenges from both external and internal factors.
Markets bounced back on Monday with the Dow leading the way although the SPY, QQQ & IWM delivered a lackluster performance on a choppy low volume day. Investors appear to be giving a nod to the uncertainty ahead in the U.S. inflation data that will be released on Thursday morning. Bond yields also edged up slightly, with the 10-year U.S. yield rising by about 0.03% to 4.09%, as the VIX pulled back relaxing some of last week’s market fears. Today investors face a big day of earnings as well as the International Trade numbers coming in before the bell.
The mixed bag of jobs data only inspired the bulls early on Friday with the hope the data will back off the Fed, however, the fact that the jobs market is beginning to reflect the slowing economy kept the bears active into the close. With the economic calendar light on data today the focus will likely turn back to earnings results for inspiration and a possible relief rally. However, be careful with the thought we will zoom back to new highs as we have entered a sessional period when the market struggles for liquidity not to mention that the bears have now woke up and smell blood in the air. They may not give up as easily as they have most of this summer.
Overnight Asian markets traded mixed but mostly lower with Chinese inflation data on the horizon. European markets trade decidedly bearish in a choppy morning session waiting also on inflation data. However, here in the U.S. futures seem to have fewer worries about inflation suggesting a bullish open ahead of the next round of earnings reports. Plan for price volatility with thoughts of CPI and PPI data later this week.
Siemens Energy, a leading global energy company, faced a major setback in its financial performance as it reported a net loss of around 4.5 billion euros for the year. The main reason for this loss was the 2.2 billion euro impairment charge related to its wind turbine subsidiary Siemens Gamesa, which suffered from quality problems and project delays. The CEO of Siemens Energy, Christian Bruch, admitted that the company had been too hasty in launching new platforms into the market, resulting in costly failures that could take years to resolve. He also said that the company was working hard to improve its quality standards and customer satisfaction. Siemens Energy’s shares dropped sharply after the announcement of the disappointing results.
Aramco, the world’s largest oil producer, saw its net profit plunge by nearly 40% in the second quarter of 2021, as the global oil demand was still recovering from the impact of the Covid-19 pandemic. The company reported a net profit of 112.81 billion riyals ($30.07 billion), down from 48.4 billion recorded in the same period last year. However, the profit was slightly higher than the analyst’s expectations of 29.8 billion riyals. Carole Nakhle, an energy expert, said that Aramco’s financial position was still strong, despite the lower results, and that it was in line with the overall industry trend. Aramco also announced that it would pay a dividend of $18.8 billion for the second quarter, in line with its commitment to pay $75 billion for the year.
Berkshire Hathaway, the diversified conglomerate led by billionaire investor Warren Buffett, reported a strong increase in its operating earnings and net income in the second quarter of 2021, as the economy rebounded from the effects of the Covid-19 pandemic. The company’s operating earnings, which reflect the performance of its core businesses, rose by 6.6% to $10.043 billion, compared with $9.42 billion in the same quarter last year. The company’s net income, which includes the changes in the value of its stock portfolio, surged to $35.91 billion, a sharp contrast to the $43.62 billion loss it suffered in the second quarter of 2020 when the stock market crashed due to the coronavirus outbreak. Berkshire also increased its cash pile to $147.377 billion at the end of June, near a record high and much higher than the $130.616 billion it had at the end of March. The company has been looking for attractive acquisition opportunities to deploy its cash but has faced stiff competition from private equity firms and other investors.
The U.S. credit-rating downgrade was the main topic of discussion for most of this week, but Friday the focus shifted back to the economy with the latest jobs data. Although the market was slightly up in early-Friday trading, investors interpret the employment figures as a mixed bag of results showing signs of slowing down. The bond market is reacting to the Fed policy implication, with 10-year yields falling near 4.1% after reaching 4.2% on Thursday. The T2122 shows it has relieved a significant amount of the short-term overbought condition however with the sharp rise in the VIX the emotion can create some big price whipsaws. With a light day on the economic calendar, earnings reports will take center stage and a possible relief rally but be careful because we are entering a typically difficult time for the market seasonally.
Markets opened modestly higher Friday, with the SPY gapping up 0.41%, DIA gapping up 0.32%, and QQQ gapping up 0.53%. At that point, all three major index ETFs gave us a 20-minute rally (follow through) followed by a 20-minute selloff to fade the gap, and then a steady rally that took us to the highs of the day at 12:45 pm. However, then the Bulls headed out the door and the Bears lead a stronger, steady selloff that drove all the way into the close. This action gave us large, black-bodied candles with sizable upper wicks in the SPY, DIA, and QQQ. It also produced Bearish Engulfing signals in the SPY and DIA. All three major index ETFs also retested and failed their T-line during the day as well as falling through a minor support level.
On the day, six of the 10 sectors were in the red with Utilities (-0.76%) again leading the way lower while Basic Materials (+0.20%) and Communications Services (+0.18%) were the only sectors appreciably in the green. At the same time, the SPY lost 0.45%, DIA lost 0.38%, and QQQ lost 0.47%. The VXX climbed 3.57% to 25.83 and T2122 again climbed toward the center of the mid-range to 48.25. 10-year bond yields fell to 4.042% while Oil (WTI) jumped 1.34% to close at $82.64 per barrel. This happened on slightly above average volume in the QQQ and DIA as well as average volume in the SPY. So, we ended the week on a fourth-straight down-day in the SPY and QQQ, resulting in the worst week since March.
The major economic news reported Friday included the July Average Hourly Earnings, which came in above expectations at +4.4% year-on-year (compared to a forecast of +4.2% but in line with the June reading of +4.4%). The July Average Hourly Earnings month-on-month was also a bit above what was anticipated at +0.4% (versus the June +0.3% but again right in line with the June value of +0.4%). At the same time, July Nonfarm Payrolls were reported below the predicted level at +187k (compared to a +200k forecast but just above the June reading of +185k). On the private side, July Private Nonfarm Payrolls were also light at +172k (versus a forecast of +179k but well above the June value of +128k). The July Participation Rate remained steady at 62.6% (with the forecast and June reading also being 62.6%). This all resulted in a July Unemployment rate that fell to 3.5% (compared to a forecast of 3.6% which was also the June value). What all of this Payroll data means is that a soft landing seems more likely as job addition is declining but remains positive even as recent data has shown inflation is falling. Apparently, the Fed has (at least so far) threaded the needle.
In stock news, shipping giant Maersk warned Friday, saying there has been a steep decline in demand for global sea shipping containers. This implies importers and exporters like LOW, WMT, TGT, HD, UL, ADM, QCOM, NKE, PG, etc. could also be suffering significant demand declines. Elsewhere, GOOGL said Friday that is has unloaded 90% of its position in HOOD, leaving the online ad giant with 612k shares. At the same time, Reuters reported YELL’s Friday bankruptcy filing is now considering a sale of assets and real estate as part of its reorganization. Meanwhile, AMZN announced it will dip into the finance market by offering a credit card in Brazil in partnership with MA. Then, after the close, GM said it will be adding headcount in 2024. Also after the close, AAPL, HPE, and SSGFF all halted shipments to India after PM Modi ordered all imports of electronics to require a license (in order to discourage foreign purchases instead of Indian-manufactured products).
In stock legal, regulatory, and government news, AMZN was cited again Friday by the Dept. of Labor OSHA agency for more hazardous conditions including unreasonable worker quotas and improper medical care. OSHA said it has recommended $15,615 in new penalties (maximum allowed by law) against the AMZN Logan Township, NJ warehouse. (AMZN has 15 days to pay or appeal the fines.) Elsewhere, COIN asked a federal judge to throw out the SEC’s lawsuit that accused it of violating securities laws by trading cryptocurrency the SEC classifies as securities. During the afternoon, the FDA approved the first oral postpartum depression treatment from SAGE and BIIB. (The injectable version required a two-day IV drip.) The condition affects 1 in 8 mothers and could become a major revenue generator based on convenience when the pills hit the US market by year-end. Meanwhile, after the close, the major banks released the amounts they expect to be charged as part of the “special assessment” to replenish the FDIC deposit insurance fund. JPM expects $3 billion, WFC projects $1.8 billion, BAC anticipates $1.9 billion, GS expects $400 million, PNC is planning on $468 million, MS expects $270 million, TFC projects $460 million, and C anticipates $1.5 billion. Finally, the antitrust case against GOOGL brought by the Dept. of Justice and 38 states was narrowed Friday as the judge threw out some claims. This was a significant win for GOOGL, with the case alleging the GOOGL search engine results favor GOOGL and disadvantage competitors like YELP and EXPE heading to trial on September 12.
So far this morning, DK, ELAN, KKR, THS, and VTRS all reported beats on both the revenue and earnings lines. Meanwhile, BRKB and CCO beat on revenue while missing on earnings. On the other side, HSIC missed on revenue while beating on earnings. It is worth noting that THS raised its forward guidance. It is also worth noting that BRKB missed on earnings while still reporting a record quarterly profit.
Overnight, Asian stocks were mixed in modest trading. South Korea (-0.85%), Shenzhen (-0.83%), and Shanghai (-0.59%) paced the six losing exchanges. On the other side, Taiwan (+0.90%), Singapore (+0.53%), and India (+0.41%) led the six gainers. Meanwhile, in Europe, the bourses are leaning heavily to the red side at midday. The CA (-0.48%), DAX (-0.65%), and FTSE (-0.65%) lead the region lower with only Russia (+1.47%) appreciably higher in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward an open on the green side of flat. The DIA implies a +0.14% open, the SPY is implying a +0.24% open, and the QQQ implies a +0.39% open at this hour. At the same time, 10-year bond yields are surging higher to 4.107% and Oil (WTI) is down one percent to $82.00 per barrel in early trading.
The major economics news scheduled for Monday is limited to two Fed speakers (Harker at 8:15 am and Bowman at 8:30 am). The major earnings reports scheduled for before the opening bell include BRKB, BTNX, CCO, DK, ELAN, HE, HSIC, KKR, THS, TSN, and VTRS. Then, after the close, ACM, AEL, ARKO, BKD, CBT, CE, COMP, CTRA, CAPL, PLUS, WTRG, ICUI, IFF, ITUB, JELD, KMPR, KD, MTW, MRC, OKE, PLTR, PARA, PRI, PRIM, RNG, SWKS, and STRL report.
In economic news later this week, on Tuesday we get June Imports, June Exports, June Trade Balance, and API Weekly Crude Oil Stocks Report. Then Wednesday, EIA Crude Oil Inventories are reported. On Thursday, we get July CPI year-on-year, July CPI month-on-month, Weekly Initial Jobless Claims, July Federal Budget Balance, and the Fed Balance Sheet. Finally, on Friday, July PPI month-on-month, Preliminary Michigan Consumer Sentiment, Preliminary Michigan Consumer Expectations, Preliminary Michigan 5-year Inflation Expectations, and the WASDE Ag report are delivered.
In miscellaneous weekend news, late Friday night META CEO Zuckerberg announced that the new Twitter competitor Threads will have new search and web features within a few weeks. Then on Saturday, Fed Governor (and voter) Bowman (a hawk) said she expects more rate hikes. Bowman went on to say, “We should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled.” Elsewhere Saturday, BRKB released record-breaking Q2 results, which showed a 6.6% increase in earnings (versus Q2 of 2022) to $10.043 billion and a $17 billion increase in cash on hand (to nearly $150 billion). Again, this was BRKB’s biggest quarterly profit ever. However, they missed on earnings. Meanwhile, WFC announced Saturday that its system glitch, which had caused many customers’ direct deposits to not be credited to their accounts, had been fixed and account balances were now corrected. (The issue had begun Thursday when WFC began getting social media backlash once again.)
With that background, it looks like markets are giving us a gap-up, black-bodied candle in all three major index ETFs this morning. (Meaning they are well off the pre-market highs.) Inside candles for sure, but trying a modest premarket move. The DIA retested (and failed) its T-line in the early session with the other two just hanging out inside Friday’s candle. All three remain below their T-line (8ema) and the short-term trend is bearish. However, the longer-term trend remains Bullish. As far as extension goes, all of them are close to T-line and T2122 is dead-center in its mid-range. So, both sides of the market have plenty of room to run…if they can find momentum. We only have Fed speakers in terms of scheduled news today. In fact, this should be a light news week until CPI on Thursday.
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.
🎯 DickCarp: 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.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
On Thursday, the Bears started off looking for follow-through to Wednesday’s black candle by opening lower (gapping down 0.47% in the SPY, gapping down 0.31% in the DIA, and gapping down 0.66% in the QQQ). However, the Bulls met the lower open with a slow, meandering rally that lasted until early afternoon when a modest selloff took over and drove into the close. This action gave us white-bodied candles in all three major index ETFs with the DIA and SPY both printing Spinning Top candles with a larger upper wick than lower wick. For its part, the QQQ printed a white-bodied Inverted Hammer-type candle with no lower wick. This happened on less-than-average volume in all three of the major index ETFs.
On the day, seven of the 10 sectors were in the red with Utilities (-2.14%) way, way out in front (by 1.5%) leading the way lower while Energy (+1.02%) held up far better (by almost three-quarters of a percent) than other sectors. At the same time, the SPY lost 0.29%, DIA lost 0.21%, and QQQ lost 0.16%. The VXX fell slightly to 24.96 and T2122 climbed toward the center but remains in the lower half of the mid-range at 41.32. 10-year bond yields spiked to 4.187% while Oil (WTI) jumped 2.84% to close at $81.78 per barrel. So, on Thursday we saw an opening gap follow through by the Bears, a “slow but steady” rebound rally by the Bulls that recrossed that gap, and then a “slow but steady” selloff that took us back down into the gap by the close. All three major index ETFs remain at minor potential support levels that were tested during the day.
The major economic news reported Thursday included Weekly Initial Jobless Claims, which came in exactly as predicted at 227k (compared to a forecast of 227k and higher than the prior week’s 221k). At the same time, Preliminary Q2 Nonfarm Productivity (quarter-on-quarter) came in much higher than expected at +3.7% (versus a forecast of +2.0% and a Q1 decline of 1.2%). Meanwhile, the Preliminary Q2 Unit Labor Cost was reported much lower than anticipated at +1.6% (compared to a forecast of +2.6% and less than half of the Q1 reading of +3.3%). Later, the July S&P Global Composite PMI was reported just as predicted at 52.0 (versus a 52.0 forecast and down a bit from the June value of 53.2). At the same time, the July S&P US Services PMI came in slightly low at 52.3 (compared to a forecast of 52.4 and the June reading of 54.4). After that, June Factory Orders were a bit better than expected at +2.3% (versus a forecast calling for +2.2% and far above the +0.4% in May). The July ISM Non-Mfg. Employment Index came in a bit low at 50.7 (compared to the 51.1 forecast and the June value of 53.1). Simultaneously, the July ISM Non-Mfg. PMI was also light at 52.7 (compared to a 53.0 forecast and a June reading of 53.9). Finally, after the close, the Fed’s Balance Sheet showed another reduction. The week ended at $8.207 trillion down $36 billion from the previous week’s $8.243 trillion.
In stock news, HAS announced plans to sell its eOne film and TV studio to LGF by the end of the year for about $500 million. Elsewhere, Reuters reported that two sources tell it TSLA executives met with India’s Commerce Minister to discuss plans to build a plant in India. At the same time, MRNA announced a forecast of as much as $4 billion in revenue in 2023 from its COVID-19 vaccine when sales shift from government to private markets and expects further growth in 2024. Meanwhile, Teamsters began the vote on their tentative deal with UPS. The 340,000 workers will continue voting until August 22 as union leaders are urging members to accept the deal. (Local Teamster leaders voted 161-1 to support and “sell” the deal to their union members.) After the close, JPM announced it is expecting to pay nearly $3 billion to replenish its share of the FDIC insurance deposit fund once FDIC rules are finalized. Also after the close, NKLA announced it has received enough shareholder support to allow it to increase the number of shares it can issue to raise much-needed capital. At the same time, Reuters reported that KKR is in advanced talks to buy Simon & Schuster from PARA for $1.65 billion.
In stock legal, REGN told Reuters it expects an approval decision from the FDA during Q3 related to a higher-dose version of its blockbuster Eylea drug. This comes after the FDA has completed an inspection of REGN’s contract manufacturer (CTLT) for the new dosage. Elsewhere, securities regulators in MA have opened an investigation into major financial firms using AI technology in interactions with customers. The investigation will include JPM and MS. Later, TEVA announced it has agreed to pay US hospitals $126 million (over 18 years) to settle claims that marketing of its opioid drugs raised the operating costs of hospitals. The agreement also includes TEVA supplying another $49 million of the overdose drug naloxone. At the same time, HYMLF (Hyundai) and KIMTF (Kia) recalled 91,000 2023-2024 cars over a fire risk. Simultaneously, a panel of US judges denied GOOGL’s request to pause a TX antitrust lawsuit against the online ad giant. This came after TX got the case transferred back from NY to a TX court known as “the rocket docket.”
After the close, ABNB, AMZN, AMGN, AAPL, ACA, ATSG, TEAM, SQ, BKNG, BWXT, COIN, DVA, DKNG, DBX, EOG, GEN, ICFI, LNT, MTZ, MODV, MSI, OPEN, PBA, POST, RKT, RYAN, SYK, and VTR all reported beats on both revenue and earnings. Meanwhile, AL, BGS, BIO, ED, CTVA, FND, FTNT, MCHP, MNST, ZEUS, and SWN all missed on revenue while beating on earnings. On the other side, AES, AGL, EXPI, GDDY, GILD, OTEX, TPC, and RBA all beat on revenue while missing on earnings. Unfortunately, COLD, REZI, RMD, and WERN missed on both the top and bottom lines. It is worth noting that ABNB, COLD, DVA, DKNG, DBX, MODV, MSI, and POST all raised their forward guidance. However, AMN, MTZ, and OPEN all lowered their guidance.
Overnight, Asian stocks leaned toward the green side on modest moves. India (+0.70%), Shenzhen (+0.67%), and Hong Kong (+0.61%) paced the gainers while Singapore (-0.35%), Taiwan (-0.21%), and South Korea (-0.10%) were the only losers in the region. Meanwhile, in Europe, the bourses are more mixed with eight markets in the red and seven in the green at midday. The CAC (+0.15%), DAX (-0.30%), and FTSE (-0.30%) lead on volume while Russia (+1.34%) is the only exchange to move more than a percent in either direction in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a modestly higher start to the day. The DIA implies a flat open, the SPY is implying a +0.16% open, and the QQQ implies a +0.27% open at this hour. At the same time, 10-year bond yields are flat at 4.188% and Oil (WTI) is up another 0.28% to $81.78 per barrel in early trading.
The major economics news scheduled for Friday includes July Avg. Hourly Earnings, July Nonfarm Payrolls, July Participation Rate, July Private Nonfarm Payrolls, and July Unemployment Rate (all at 8:30 am). Major earnings reports scheduled for before the opening bell include ADV, AMR, AXL, AMRX, BSAC, BBU, BEPC, BEP, CLMT, CNK, CRBG, D, ENB, EVRG, FLR, FYBR, GTES, GLP, GTN, GPRE, LSXMK, LSXMA, LYB, MGA, OMI, PAA, PAGP, PPL, QRTEA, TU, TIXT, TNC, and XPO. There are no reports scheduled for after the close.
So far this morning, AMRX, CNK, CRARY, CRBG, ENB, FLR, FYBR, GTN, KUBTY, MGA, OMI, PNM, QRTEB, and WPP all reported beats on both the revenue and earnings lines. Meanwhile, EVGR, LYB, QRTEA, TIXT, and XPO reported misses on revenue while beating on earnings. On the other side, Unfortunately, ADV, BEP, PNM, and TU missed on both the top and bottom lines. It is worth noting that GTN also lowered its forward guidance.
In miscellaneous news, Bloomberg reported Thursday that S&P 500 companies may be tipping their hand on economic prospects. Their data shows that major companies have increased capital expenditures (expansion) by 15% in Q2 while buyback program spend is down. Elsewhere, Saudi Arabia announced it is extending its 1 million barrel per day oil production cut again, this time through the end of September. Finally, it is worth expanding on the two big reports from Thursday night. AMZN blew past analyst expectations reporting double-digit growth and gave rosy guidance. Meanwhile, AAPL beat analyst expectations but reported sales that were down one percent year-over-year. The company’s main product (iPhones) revenues are down from even earlier in the year (a third consecutive decline) while predicting similar results for the current quarter.
With that background, it looks like markets are trying a modest premarket move. However, the candles of all three major index ETFs are black-bodied, indicating we have fallen down off the premarket highs. All three may try to retest their T-line (8ema) from below today with DIA doing so now. Once again the large-cap indices (SPY and DIA) are also testing a support level. (QQQ’s premarket move higher has it up away from its support level.) As far as extension goes, all of them are close to T-line and T2122 is in the mid-range. So, both sides of the market have plenty of room to run…if they can find momentum. Don’t forget we get July Payrolls data before the opening bell. So volatility remains likely. Also, keep in mind that it’s Friday, Payday. So, take some money off the table to pay yourself and prepare your account for the weekend news cycle.
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.
🎯 DickCarp: 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.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
The Bears finally had their day thanks to the Fitch downgrade of the US credit rating. The SPY gapped down 0.84%, DIA gapped 0.46% lower, and QQQ gapped down 1.19%. After that open, the Bears followed through until noon in all three major index ETFs. At that point, SPY and QQQ meandered sideways the rest of the day. Meanwhile, DIA sold off very slightly from noon for the rest of the day. However, all three major index ETFs did bounce up off the lows in the last 30 minutes. This action gave us gap-down, large black-bodied candles in the SPY and QQQ. At the same time, DIA printed a gap-down black-bodied Spinning Top-type candle. All three also closed below their T-line (8ema).
On the day, all 10 sectors were in the red with Technology (-2.81%) way out in front (by almost a percent) leading the way lower while Consumer Defensive (-0.06%) was barely in the red and held up better than the other sectors. At the same time, the SPY lost 1.39%, DIA lost 0.97%, and QQQ lost 2.19%. The VXX shot higher by more than 9% on the day to 25.02 and T2122 dropped but remains in the mid-range at 37.02. 10-year bond yields climbed to 4.082% while Oil (WTI) dropped 1.98% to close at $79.76 per barrel. So, on Wednesday we saw the first significant Bearish move in a long time. (First in four weeks in the DIA.) However, there was no major technical damage done. It was definitely a Bearish day but unless there is follow-through, support has not been taken out.
The major economic news reported Wednesday included the July ADP Nonfarm Employment Change, which came in well above expectations at +324k (compared to a forecast of +189k but also far less than the previous level, which was +497k but was revised down to +455k). Later, the EIA Weekly Crude Oil Inventories showed a much bigger than expected drawdown of 17.049 million barrels (versus a forecasted 1.367-million-barrel drawdown and the prior week’s 0.600-million-barrel draw). Elsewhere, there was also a parade of people from government and business who called the Fitch rating reduction either mistimed at best to flat wrong. These included Treasury Sec. Yellen who said the decision was “arbitrary and based on outdated data,” and former Treasury Sec. Summers (who is a fiscal hawk and opponent of recent Fed/Treasury actions) called the move “absurd … If anything, the data in the last couple of months has been that the economy is stronger than what people thought, which is good for the creditworthiness of US debt.” It also included many across the business world, such as JPM’s CEO Dimon who called the decision “ridiculous” but also said “it doesn’t really matter.” Others have commented that there have been no changes since the GOP Congress held the US debt ceiling hostage. (Implying the idea of doing it now when you didn’t do it in June is suspect.) Still, Fitch did it Tuesday night. (Personally, I think Fitch waited on, or at least took advantage of, the widely expected Trump Jan. 6 indictment to slip in the rating cut with less media attention. Not that it helped much.) Regardless, it is what it is, the US is still the largest economy and safest debt in the world, and we move on.
In stock news, AAL said Wednesday they have begun talks with both BA and EADSY (Airbus) over a potential order for at least 100 new narrow-body jets. (Bloomberg reported the order could end up over 200 jets over the next seven years.) Later, GM and EVGO celebrated the opening of the 1,000th fast-charging station installed by their collaboration project. (The first was installed in 2020 and their goal is 3,250 in major metro areas.) Elsewhere, TSLA has begun leasing office space in India, increasing the speculation the EV-maker will enter the Indian car market after CEO Musk recently had talks with Indian PM Modi. At the same time, XPEV (Chinese electric carmaker and direct TSLA competitor) shares fell when it was announced its VP of Autonomous Driving had resigned. Meanwhile, NTR (the world’s largest fertilizer producer) announced it has indefinitely paused plans to ramp up production and has halted work on a new “clean ammonia” project in LA. The announcement cited falling prices and, specifically, the resumption of exports of potash from Belarus (which had been blocked from exports by now-expired sanctions for supporting the Russian invasion of Ukraine). Later, CHK reported that it expects the cost to service oilfields to fall 5%-7% in 2024 due to falling demand causing prices to be lowered. (This roughly matches FANG’s similar expectation for reduced costs next year, reported last week.)
In stock legal, government, and regulatory news, GSK filed suit against PFE in US federal court on Wednesday alleging that PFE’s “RSV vaccine” violates four of GSK’s patents. Elsewhere, the UK antitrust regulator announced Wednesday that it is opening an investigation of the CCJ and BEP’s $7.9 billion acquisition of BAM’s (Westinghouse parent) nuclear power plant equipment maker. Meanwhile, plaintiffs against JNJ have urged a US judge to ban more bankruptcy claims by JNJ for at least six months. This comes after the same judge denied JNJ’s second attempt in the prior six months to file for bankruptcy of its LTL subsidiary (onto which it had transferred all talc liability). At the same time, the US Labor Board ruled in a 3-1 decision that business work rules may not interfere with employees’ rights to join unions. This ruling came against SRCL but now applies broadly. (The ruling prohibits rules against discussing work conditions, distributing union literature, and prohibiting social media posts by employees.)
After the close, ATUS, AEE, ANSS, APA, BTG, CCRN, CPE, CIVI, CLX, COKE, CTSH, CYH, CW, ETSY, EVH, GXO, HLF, HUBS, KGC, MKL, MCK, MELI, MGM, MKSI, MOD, NCR, NE, PYPL, QRVO, O, HOOD, SIGI, SHOP, SPNT, SNEX, TS, WCN, WTS, and Z all reported beats on both the revenue and earnings lines. At the same time, ALB, DOX, BKH, CHRW, CENT, CF, CAKE, CODI, HI, NGVT, LESL, LNC, MRO, MET, PK, CNXN, PSA, QCOM, SM, RUN, WMB and WSC all missed on revenue while beating on earnings. On the other side, AFG, CHRD, DASH, NTR, SPG, SBGI, TRIP, and ZG all beat on revenue while missing on earnings. Unfortunately, ATO, ET, FMC, GT, VAC, OXY, PR, PTVE, UFPI, and UGI missed on both the opt and bottom lines. It is worth noting that ALB, HUBS, QRVO, and SHOP raised their forward guidance. However, CCRN, NGVT, VAC, and NTR reduced their forward guidance.
Overnight, Asian stocks leaned heavily to the red side again. Only Shanghai (+0.58%) and Shenzhen (+0.53%) were in the green while Taiwan (-1.85%), Japan (-1.68%), and Thailand (-1.37%) led the region lower. Meanwhile, in Europe, we see a similar story starting to take shape at midday. Only Russia (+0.85%) and three smaller bourses are in the green while the CAC (-0.81%), DAX (-0.78%), and FTSE (-0.85%) lead the region lower in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a start to the day just on the red side of flat. The DIA implies a -0.11% open, the SPY is implying a -0.15% open, and the QQQ implies a -0.25% open at this hour. At the same time, 10-year bond yields are spiking to 4.145% and Oil (WTI) is off one-tenth of a percent to $79.41 per barrel in early trading.
The major economics news scheduled for Thursday includes the Weekly Initial Jobless Claims, Preliminary Q2 Nonfarm Productivity, and Preliminary Q2 Unit Labor Costs (all three at 8:30 am), July S&P Global Composite PMI and July S&P US Services PMI (both at 9:45 am), June Factory Orders, ISM Non-Mfg. Employment, and July ISM Non-Mfg. PMI (all three at 10 am), and Fed Balance Sheet (4:30 pm). Major earnings reports scheduled for before the opening bell include GOLF, WMS, APD, BUD, APG, APO, APTV, ARW, BALY, BHC, BCE, BDX, BV, BIP, BRKR, CNQ, FUN, CQP, LNG, CI, CLVT, COMM, COP, CEG, CMI, DQ, DLX, DNB, EPC, ENTG, EPAM, EXPE, FCNCA, FOCS, HAS, DINO, HGV, HII, H, ICE, IRM, ITRI, ITT, K, MMP, MDU, MIDD, MUR, NJR, ONEW, PZZA, PH, PBF, PNW, PBI, PRVA, PWR, REGN, SABR, SBH, SNDR, SRE, FOUR, SO, SAVE, STWD, TRGP, TGNA, TFX, TPX, TKR, BLD, TRMB, VC, VMC, WBD, W, WCC, WLK, and WRK. Then, after the close, AES, AGL, AL, ATSG, ABNB, LNT, AMZN, COLD, AMGN, AAPL, ACA, TEAM, BGS, BIO, SQ, BKNG, BWXT, ED, CTVA, DVA, DKNG, DBX, EOG, EXPI, FND, FTNT, GEN, GILD, GDDY, ICFI, MTZ, MCHP, MODV, MNST, MSI, ZEUS, OTEX, OPEN, PBA, PBR, POST, RMD, RBA, RKT, RYAN, SWN, SYK, TPC, VTR, and WERN report.
In economic news later this week, on Friday, July Avg. Hourly Earnings, July Nonfarm Payrolls, July Participation Rate, July Private Nonfarm Payrolls, and July Unemployment Rate are reported.
In terms of earnings reports, on Friday, we hear from ADV, AMR, AXL, AMRX, BSAC, BBU, BEPC, BEP, CLMT, CNK, CRBG, D, ENB, EVRG, FLR, FYBR, GTES, GLP, GTN, GPRE, LSXMK, LSXMA, LYB, MGA, OMI, PAA, PAGP, PPL, QRTEA, TU, TIXT, TNC, and XPO report.
In miscellaneous news, the relevant international standards body proposed its first set of rules for auditing company climate-related disclosures. (The new rules are intended to help auditors give investors reports free of “greenwashing” distortions.) Elsewhere, after the close, Fitch followed up its US long-term treasury downgrade by also reducing FNMA and Freddie Mac credit ratings. Just like US bonds, they lowered both ratings from AAA to AA+. (FNMA and Freddie Mac guarantee roughly 70% of US mortgages.) Meanwhile, in what is hopefully a sign, although the Bud Light boycott by outraged conservatives hurt sales of that brand, the company (BUD) beat on earnings and posted 6.4% revenue growth quarter-on-quarter as well as 2.2% revenue growth from the same quarter last year. The company did miss its previous revenue forecast for the quarter but only by 1.7%. So, hopefully, this shows folks that cancel culture, and culture wars in general, are bad and ineffective ideas. (Can’t we all just get along man? lol)
So far this morning, GOLF, ADDYY, WMS, APG, APTV, BDX, BRKR, CI, CEG, DLX, EPC, ENTG, EPAM, FCNCA, GEL, DINO, IRM, ITT, MIDD, MUR, NTDOY, REGN, SCMWY, TFX, BLD, and TRMB all reported beats on both the revenue and earnings lines. Meanwhile, AHEXY, APD, BUD, BALL, BV, FUN, CLVT, PBF, PRVA, SBH, and WRK missed on revenue while beating on earnings. On the other side, BCE, HAS, HII, PWR, and VC beat on revenue while missing on earnings. Unfortunately, BALY, COMM, COP, DQ, ONEW, SAVE, TKR, WBD, and WLK all missed on both the top and bottom lines. It is worth noting that APTV and WIX have raised their forward guidance. However, ENTG and WCC have both lowered guidance.
With that background, it looks like again we are trying to open a bit lower. Prices have recovered from the premarket lows to some extent, but we have also now come down off premarket highs. The bears will be looking to get follow through to their best candle in weeks as a premarket struggle at potential support is underway in all three major index ETFs. As far as extension goes, none of them are too far away from their 8ema (T-line) yet and the T2122 indicator is still in the mid-range. So, both sides of the market still have room to run if they can muster the momentum to do so. Also, keep in mind that despite yesterday’s candle, we were due for a pullback and the Bullish trend has not been broken yet. We do have some economic news both this morning and during the day, as well as Trump gets arraigned this afternoon (his last arraignment was a non-event for markets but generated plenty of news coverage). Any of those could potentially give the market a push one way or the other. Plus, remember the heavy earnings schedule, including AAPL and AMZN after the close…and we also get July Payrolls data on Friday. So, be ready for some volatility.
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.
🎯 DickCarp: 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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The debt downgrade to AA+ provided just enough encouragement to the bears to relieve some of the short-term overbought conditions in the indexes. Although it was the worst day for stocks in a while the bullish trends took no damage and prices continue to be stretched well above key moving averages. Today will be busy with economic reports and a slew of earnings events capped off by the highly anticipated reports from AAPL and AMZN after the bell. Plan for considerable price volatility and don’t be surprised to see a morning gap on Friday due to the big tech reports and market reaction.
While we slept Asian market traded mostly lower with only the Shanghai index squeaking out a 0.58% gain. European markets trade lower across the board this morning waiting on a Bank of England rate decision. U.S. futures point to bearish open ahead of a huge day of earnings and economic data making anything possible by the time the market opens. Plan your risk carefully!
JPMorgan Chase CEO Jamie Dimon dismissed the significance of the Fitch Ratings downgrade of the U.S. long-term credit rating in a CNBC interview on Wednesday. He argued that the market, not rating agencies, sets the interest rates for borrowing, so the downgrade “doesn’t matter that much”. He also expressed his frustration that some countries that rely on the U.S. for security and stability have higher credit ratings than the U.S., calling it “ridiculous”.
AMD, the U.S.-based chipmaker, sees India as a key market for its growth and innovation, according to its CTO Mark Papermaster. In an exclusive interview with CNBC on Thursday, Papermaster revealed that AMD plans to invest $400 million in India to expand its design capabilities and workforce. He said that the firm will build its largest design center in Bangalore and hire about 3,000 engineers in India. He added that the India design team is involved in almost every product that AMD develops.
Qualcomm, the leading maker of smartphone chips, posted better-than-expected earnings for the third quarter on Wednesday, but its revenue and outlook for the fourth quarter disappointed investors. The company’s revenue fell 9% year-over-year to $8.24 billion, missing analysts estimates of $8.28 billion. Qualcomm blamed the weak revenue on the slowdown in the smartphone industry, which affected its handset chip sales, which dropped 25% year-over-year to $5.26 billion.
On Wednesday, markets fell due to the short-term overbought condition with the encouragement debt downgrade. Indexes had their worst day in a while, partly because of the latest report on the labor market (ADP payroll report) that showed more job growth than expected for the month and the rising bond yields. Today investors have a huge number of earnings events to find inspiration including the highly anticipated reports from AAPL and AMZN after the bell. We also have a busy economic calendar with Jobless Claims, Productivity & Costs, PMI Composite, Factory Orders, ISM Services, and Natural Gas numbers to keep the traders guessing as to what comes next. Expect considerable volatility as the market reacts to all the data and watch for a Friday morning gap after the big tech reports.
Tuesday proved to be a choppy low-volume session though the Dow managed a bullish close while the other indexes traded in the red most of the day. While we had some good earnings reports after the bell the sentiment quickly shifted in markets here and around the world after Fitch downgraded the U.S. due to the rapidly growing debit. The downgrade could have serious economic consequences so expect considerable price volatility even as the administration tries to downplay the situation. ADP number will also be in focus this morning as well as a huge round of earnings events for traders to look for buy or sell inspiration.
Overnight Asian markets printed red tapes across the board on the Fitch downgrade of the U.S. with Hong Kong leading the selling down 2.47%. European markets are also decidedly bearish this morning in reaction to the U.S. rating downgrade. Ahead of a big day of earnings, the ramifications of the U.S. downgrade due to the rapidly growing national debt have the bears showing their teeth with the futures suggesting a bearish open.
The United States suffered a blow to its credit rating on Tuesday as Fitch Ratings downgraded the country from AAA to AA+. The rating agency cited the ongoing political gridlock over the debt ceiling as a reason for the move, saying that it undermined confidence in the country’s fiscal management. The downgrade came after months of warnings from Fitch, which had put the U.S. on negative watch in May. The news rattled the markets, as U.S. stock futures opened lower on Tuesday night.
The U.S. House of Representatives Select Committee on the Chinese Communist Party is probing the role of MSCI and BlackRock in enabling U.S. investments in Chinese companies that are subject to U.S. sanctions or restrictions. The committee sent letters to the two firms on Tuesday, requesting details on how they select, include, and monitor the performance of those companies in their indexes and funds. The committee said it was concerned about the potential risks and implications of such investments for U.S. national security and human rights.
All through the CAT earnings had the Dow edging high the other markets ended slightly lower on Tuesday in a choppy low-volume session. The VIX ended the day slightly higher and the T1222 indicator pulled back reliving some of the over-bought condition. The market seems to be waiting with great anticipation for the earnings from AAPL and AMZN Thursday afternoon. However, Fitch downgraded due to the rapidly growing U.S. debit after the bell yesterday engaged the bears around the world quickly shifting sentiment. The downgrade could have far-reaching economic ramifications despite the fact the administration is attempting to downplay its seriousness. Expect considerable price volatility as the market reacts to the light being shined on the rapidly growing national security threat of the massive U.S. debt and overspending.
