Tuesday was the Bull’s day.  After strong earnings from the big banks, we saw a very modest gap lower (down 0.06% in the SPY, down 0.05% in the DIA, and down 0.16% in the QQQ).  However, the two large-cap index ETFs immediately started to rally steadily.  The SPY kept up a 45-degree rally all day long.  Meanwhile, the DIA rallied more sharply until noon and then traded sideways the rest of the way.  For its part, QQQ continued lower for 10 minutes after the open and then ground sideways for an hour, but then it rallied strongly all the way into the close.  There was a small amount of profit-taking in the last 15 minutes of the day in all three major index ETFs.  This action gave us large, white-bodied candles in all three with the QQQ having more wick on both ends than the other two.  It is worth noting that DIA finally broke through the resistance level that had held it down all year while the SPY and QQQ were already at new highs for the year.

On the day, eight of the 10 sectors were in the green with Financial Services (+1.41%) leading the way higher and Utilities (-0.42%) lagging behind the other sectors.  At the same time, the SPY gained 0.73%, DIA gained 1.07%, and QQQ gained 0.82%. The VXX fell 1.63% to 23.48 and T2122 climbed higher into the overbought territory to 94.01.  10-year bond yields fell to 3.783% while Oil (WTI) spiked 2.06% to close at $75.68 per barrel. So, Tuesday saw markets drive higher all day following the strong morning earnings.  This happened on less-than-average volume in the SPY, average volume in the QQQ, and higher-than-average volume in the DIA. 

The major economic news on Tuesday, June Retail Sales (month-on-month) came in below expectation at +0.2% (compared to a forecast of +0.5% and a May reading of +0.5%).  At the same time, June Industrial Production (month-on-month) also came in below what was anticipated at -0.5% (versus a forecast calling for dead flat +0.0% but in line with May’s -0.5%).  This resulted in a very low June Industrial Production (year-on-year) growth of -0.43% (compared to a forecast of +1.10% and the May value of +0.03%). Later, May Business Inventories were reported as expected at +0.2% (versus a forecast of +0.2% and the April reading of +0.1%).  May Retail Inventories came in lower than predicted at -0.1% (compared to a forecast of +0.0% but did not fall as much in April’s -0.2% number).  Then after the close, API Weekly Crude Oil Stocks did not show as big of a drawdown as expected at -0.797 million barrels (versus a forecast of -2.250 million barrels but still far below the prior week’s inventory build of 3.026 million barrels.

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In stock news, the US announced another $1.3 billion in defense aid for Ukraine.  This included significant orders for LHX and AVAV products.  At the same time, WMG has announced it has partnered with TikTok in a broad deal that was the first of its kind, to license WMG music.  Elsewhere, PFE announced it has partnered with venture capital firm Flagship Pioneering to invest $100 million to develop 10 new drugs.  At the same time, META released a commercial version of its artificial intelligence model Llama 2.  Later, MSFT announced a 50% premium for its Office suite with access to a new AI Co-Pilot.  The charge will be $30 per month, per user for the Office 365 Co-Pilot.   In the Auto space, carmaker STLA announced it has secured long-term semiconductor supply contracts with IFNNY, NXPI, ON, and QCOM worth $11.2 billion and running through 2030.  Meanwhile, TDOC told Reuters it is expanding its partnership with MSFT with plans to use the tech giant’s artificial intelligence to automate clinical documentation on its telehealth platform.  In the defense space, LMT raised its full-year guidance on strong sales and profit outlooks from weapons contracts.  After hours, AUR announced it plans to sell $600 million of Class A stock in a private placement to raise capital.  (AUR shares fell 10% in post-market trading on the news.)  Also after hours, Reuters reported that the AAL pilots union has warned that the ratification of the recently agreed contract deal is now in jeopardy after the UAL pilots union got a better deal.  (The AAL deal raises pilot pay 42.5% over four years while the UAL pilot deal offers cumulative pay increases of 34.5% – 40%. The ratification vote is scheduled to start next week.)

In stock legal and regulatory news, the NHTSA announced it has opened another investigation of TSLA following another deadly crash in CA, this time of a 2018 TSLA Model 3 which was operating under “Full Self Driving” mode.  In other TSLA news, in Germany, TSLA faced a grilling from the public in a q-and-a session meant to ease citizens’ minds about the impact of the electric carmaker’s plant expansion to become the largest TSLA factory in the world.  (The plant now makes 5,000 cars per week and is expecting to double capacity and then double again to 1 million cars per year.  The current largest car plant in Germany is VLKAF’s Wolfsburg plant which has the capacity to make 800k cars per year, but now produces 400k a year.)   Back in the US, 22 Republican Congressmen (mostly from the MAGA caucus) wrote and published an open letter to the FTC urging the agency to drop its objections to the MSFT purchase of ATVI, calling the opposition an egregious example of rejecting sound antitrust policy.  (Sound policy would apparently mean not opposing mergers.)  At the same time, YUM’s Taco Bell brand won its bid to bust the trademark on the term “Taco Tuesday” (which had been held by the much smaller and private Taco John’s chain).  Meanwhile, the FTC spearheaded 101 federal and state law enforcement agencies on a crackdown on telemarketing robocalls with one of the main targets being FLNT.  (FLNT previously agreed to pay a $2.5 million fine while three other firms agreed to a total of $15.7 million in fines.)  In lawsuits going the other way news, JNJ added its name to the list of pharmaceutical companies suing the US government in a bid to prevent the US from negotiating drug prices for Medicare.  (All of those cases may have a steep hill to climb since in every instance the companies sell the drugs in question in smaller quantities at lower prices to other countries than what is charged to Medicare.)  After the close, T made a court filing saying that it no longer intends to immediately remove lead cable in the ground in Lake Tahoe that it had previously agreed to remove.  The telecom company says it will now do further analysis before deciding.  (This move mentioned and pushed back against the recent Wall Street Journal article discussing the risks of lead cables to groundwater.)

After the close, AIR, PNFP, and HWC all reported beats on both the revenue and earnings lines.  Meanwhile, OMC reported a miss on revenue while beating on earnings.  On the other side, IBKR and WAL both beat on revenue while missing on earnings.  Unfortunately, JBHT missed on both the top and bottom lines.  The biggest surprises were huge upside revenue shocks from the financials (76% upside from IBKR, 71% upside from WAL, and 80% upside from PNFP). 

Overnight, Asian markets leaned to the green side.  Japan (+1.24%) was by far the leader to the upside while Singapore (+0.64%) and Australia (+0.55%) followed.  On the downside, Taiwan (-0.65%) led the four red exchanges lower.  Meanwhile, in Europe, stocks are in the green as only two of the 15 bourses are in the red at midday.  The FTSE (+1.50%) is far-and-away the leader after a massive reduction in inflation. Thile the CAC (+0.27%) and DAX (-0.04%) lag behind.  In the US, as of 7:30 am, Futures are pointing toward the day starting just on the green side of flat.  The DIA implies a +0.09% open, the SPY is implying a -0.02% open, and the QQQ implies a +0.11% open at this hour.  At the same time, 10-year bond yields are down to 3.764% and Oil (WTI) is just on the green side of flat at $75.87 per barrel in early trading.    

The major economic news events scheduled for Wednesday include Preliminary June Building Permits and Preliminary June Housing Starts (both at 8:30 am), and EIA Crude Oil Inventories (10:30 am).  The major earnings reports scheduled for before the opening bell include ALLY, ASML, BKR, CFG, ELV, FHN, GS, HAL, MTB, NDAQ, NTRS, and USB.  Then, after the close, AA, COLB, CCI, DFS, EFX, IBM, KMI, LVS, LBRT, NFLX, STLD, TSLA, UAL, WTFC, and ZION report.   

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Philly Fed Mfg. Index, June Existing Home Sales, and the Fed’s Balance Sheet.  Then Friday, there are no major economics news scheduled. 

In terms of earnings reports, on Thursday, we hear from ABT, ALFVY, AAL, BX, DHI, EWBC, FITB, FCX, GPC, INFY, JNJ, KVUE, KEY, MAN, MMC, NEM, NOK, PM, POOL, SAP, SNA, SNV, TSM, TRV, TFC, WBS, COF, CSX, ISRG, KNX, PPG, and WRB.  Finally, on Friday, AXP, ALV, AN, CMA, HBAN, IPG, RF, ROP, and SLB report. 

In miscellaneous news, the UK reported 7.9% annual inflation as of June, which is the worst among major economies.  However, that number is down sharply from 8.7% on an annual basis in May.  As a result, UK government borrowing costs also dropped abruptly today and the UK market now sees it less likely that the BoE will deliver another half-percent hike in August as had been expected.  Elsewhere, in the US, YELL (the country’s third-largest less-than-truckload freight carrier) faces a strike by 22,000 teamsters as soon as next week.  This comes after the company failed to make $50 million in contractually-required benefits contributions.  (YELL is on the edge of bankruptcy again, for the fifth time since 2009, after getting lenders to agree to a waiver in June.  YELL had proposed operational changes that were rejected a few weeks ago by the union, which had previously already made concessions on wages, hours, and some benefits.  As an aside, YELL was formed by consolidating large and small trucking companies and has never (dating back to the 1980s) been good at the process of combining.  In recent years, the company has bought non-union firms with the apparent goal of continuing to get more Teamster concessions.  Now 8,000 of the company’s 30,000 employees are non-union.

So far this morning, ASML, ELV, USB, BKR, MTB, FHN, SDVKY, CBSH, NDAQ, and CVNA have all reported beats on both the revenue and earnings lines.  Meanwhile, VLVLY beat on revenue while missing on earnings.  On the other side, HAL, CFG, and WDS all missed on revenue while beating on earnings.  It is worth noting that ASML and ELV both raised their forward guidance.

With that background, it looks like markets are again pausing ahead of economic data and earnings, even after receiving a number of good earnings reports this morning. All three major index ETFs are looking at very small, inside-day, candles at this point. As has been the case all year, DIA looks the weakest of the three while SPY and QQQ are seemingly pausing at the top of their year-long rallies. However, SPY was the laggard Tuesday. All three remain above their T-line and are, so far at least, just giving us a strong uptrend. As far as extension goes, we have been up a very long number of consecutive candles in the QQQ and it is getting a little stretched from its T-line (8ema). However, the two large-cap indices are fine in that regard and have had recent pullback days. The T2122 indicator is again well up into the overbought region. Just remember that markets can stay extended longer than we can stay solvent predicting the reversion to the mean.

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

See you in the trading room.

Ed

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

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

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

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

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

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

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

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

Monday saw stock open flat and mixed (down 0.04% in the SPY, down 0.12% in the DIA, and up 0.23% in the QQQ).  However, at that point, all three major index ETFs got in sync and the Bulls led a very slow, steady rally all the way up to 3:30 pm.  Then the last 30 minutes of the day saw modest but steady profit-taking.  This action gave us white-bodied candles in the SPY, DIA, and QQQ.  Specifically, the SPY and DIA both printed Bullish Engulfing candles with upper wicks.  Interestingly, the DIA closed right up against the resistance level it has failed multiple times (including Monday) since mid-June.   Meanwhile, the QQQ could be seen to have completed a Doji Continuation (Sandwich) signal.

On the day, seven of the 10 sectors were in the green with Technology (+1.21%) in the lead and Communications Services (-2.28%) far and away the worst-performing sector.  At the same time, the SPY gained 0.35%, DIA gained 0.20%, and QQQ gained 0.93%. The VXX fell very slightly to 23.87 and T2122 climbed back up into the low end of the overbought territory at 83.72.  10-year bond yields fell to 3.811% while Oil (WTI) also dropped 1.76% to close at $74.10 per barrel.  So, Monday saw follow-through on the strong week and strong premarket earnings.  However, then it was time to lock in profits and get ready for the weekend news cycle. This happened on less-than-average volume in the QQQ and DIA and very-low volume in the SPY.

The major economic news on Monday was limited to NY Fed Empire State Mfg. Index came in above expectations coming in at a barely positive (barely indicating improving conditions relative to overall economic conditions) at 1.10 (compared to a forecast of -4.30 but lower than the June reading of 6.60).  In economic speak news, Treasury Sec. Yellen did an interview with Bloomberg Monday morning (speaking from India where she was attending a G-20 Finance Ministers meeting).  Yellen said, “For the United States, growth has slowed, but our labor market continues to be quite strong. I don’t expect a recession.”  Later she also said, “The most recent inflation data were quite encouraging.”  After being asked, Yellen she expects a new executive order restricting investment in three Chinese sectors (semiconductor, quantum computing, and artificial intelligence).  Elsewhere, the NY Fed released its monthly survey of Consumer Expectations, which looked at the credit markets.  In June, the Fed found consumers were finding it tougher to borrow as credit application rejection rates rose to 21.8% (the highest level since June 2018).  Drilling down, auto loan applications had a 14.2% rejection rate, new mortgages were refused 13.2% of the time, and 20.8% of mortgage applications for refinancing were turned down.

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In stock news, FSR announced it plans to produce 100 limited edition electric SUVs for the Indian market, with deliveries scheduled to being during Q4.  In other EV news, MULN announced they have received a 30-truck order from Newgate Motor Group in Ireland.  Elsewhere, GM executive told Reuters that the carmaker simply can’t make and deliver cars fast enough to keep up with demand at dealerships.  On Monday, the GM President for North America told the news outlet, “At this particular point in time, we could just about sell every product that we can build.”  A week after a Wall Street Journal article identified VZ and T as being among several telecom giants that are guilty of abandoning huge networks of lead cables in the ground across the country, analysts downgraded both companies’ stock on the risk they will be required to pay for the cleanup.  As a result, the whole sector fell sharply with VZ (-7.50%) and T (-6.69%) leading the way.   At midday, MAR signed a 20-year licensing deal with MGM which will allow Marriott rewards members to redeem points to book stays at MGM resorts.  Meanwhile, F announced that they are slashing prices on the F-150 Lightning trucks (by 17%) in hopes of gaining market share amid the current EV price wars.  The move comes after F sales of electric vehicles fell 2.8% in June and also about 36 hours after TSLA said it had produced the first of its long overdue Cyber trucks.

In stock legal and regulatory news, BKI announced it will sell its “Optimal Blue” unit for $700 million in the hope of addressing FTC antitrust concerns.  (The $700 million price tag was much lower than expected in this previously-hinted move.)  The FTC said back in March that it will oppose the ICE’s $11.7 billion acquisition of BKI over monopolistic pricing power concerns.  Elsewhere, the FDA approved a therapy (to treat respiratory syncytial virus) developed by a partnership from SNY and AZN for toddlers and infants.  At the same time, the TSLA board of directors agreed to return $735 million to settle a shareholder lawsuit claiming they had grossly overpaid themselves.  Across the pond, the MSFT appeal of the UK block on the acquisition of ATVI has been placed on hold for two months to “give the parties more time to resolve the issue out of court.”  Back in the US, TSLA filed suit against London-listed CAP-XX, claiming the company violated two patents owned by a TSLA subsidiary.  Meanwhile, a group of individual plaintiffs asked the US Supreme Court to temporarily halt the MSFT acquisition of ATVI after the 9th District US Court of Appeals rejected the FTC bid to get the same injunction at the end of last week.  After the close, the FTC and US Dept. of Justice sued FLNT for allegedly operating massive “consent farms” to trick nearly 1 million people into providing personal information and consent to receive telemarketing calls.  (These farms used deceptive ads promising free rewards from AMZN, WMT, and others as well as interviews for non-existent jobs in order to gain consent.)  At the same time, the CA Supreme Court ruled against UBER saying the company must face a lawsuit claiming it should have covered UberEats driver’s work-related expenses.  Finally, the FAA began an investigation of a UAL flight (flying a BA 767-300 jet) that lost its emergency evacuation ramp prior to landing in Chicago.  (The flight originated in Zurich, Switzerland and the ramp was found in a neighborhood near O’Hare airport.)

So far this morning, BAC, LMT, MS, NVS, PNC, BK, and SYF have all reported beats to both the revenue and earnings lines.  (SCHW reports at 8 am.)  The big banks in particular showed tremendous quarter-on-quarter growth with BK giving the market 87% revenue growth and 20% earnings growth, BAC delivering 72% revenue and 21% earnings growth, and PNC showing 45% revenue growth.  It is worth noting that PNC did lower its forward guidance. 

Overnight, Asian markets were mostly in the red.  Hong Kong (-2.05%) was by far the biggest loser, followed by Taiwan (-0.61%) and South Korea (-0.43%).  Meanwhile, in Europe, the bourses are mostly green at midday.  While leading on volume, the CAC (-0.01%), DAX (-0.07%), and FTSE (+0.07%) are lagging the smaller exchanges on their moves. It should be noted that Russia (+1.13%) is the biggest gainer in early afternoon trade.  In the US, as of 7:30 am, Futures point toward a start to the day just on the red side of flat.  The DIA implies a -0.01% open, the SPY is implying a -0.05% open, and the QQQ implies a -0.11% open at this hour.  At the same time, 10-year bond yields are lower again to 3.768% and Oil (WTI) is up a half of a percent to $74.52 per barrel in early trading.

The major economic news events scheduled for Tuesday include June Retail Sales (8:30 am), June Industrial Production (9:15 am), May Business Inventories and May Retail Inventories (both at 10 am), and API Weekly Crude Oil Stocks (4:30 pm).  The major earnings reports scheduled for before the opening bell include Tuesday, we hear from BAC, BK, SCHW, LMT, MS, NVS, PNC, PLD, and SYF.  Then, after the close, AIR, IBKR, JBHT, and WAL report.  

In economic news later this week, on Wednesday, Preliminary June Building Permits, Preliminary June Housing Starts, and EIA Crude Oil Inventories are reported.  Thursday, we get Weekly Initial Jobless Claims, Philly Fed Mfg. Index, June Existing Home Sales, and the Fed’s Balance Sheet.  Then Friday, there are no major economics news scheduled.   

In terms of earnings reports, on Wednesday, ALLY, ASML, BKR, CFG, ELV, FHN, GS, HAL, MTB, NDAQ, NTRS, USB, AA, COLB, CCI, DFS, EFX, IBM, KMI, LVS, LBRT, NFLX, STLD, TSLA, UAL, WTFC, and ZION report.  On Thursday, we hear from ABT, ALFVY, AAL, BX, DHI, EWBC, FITB, FCX, GPC, INFY, JNJ, KVUE, KEY, MAN, MMC, NEM, NOK, PM, POOL, SAP, SNA, SNV, TSM, TRV, TFC, WBS, COF, CSX, ISRG, KNX, PPG, and WRB.  Finally, on Friday, AXP, ALV, AN, CMA, HBAN, IPG, RF, ROP, and SLB report. 

In miscellaneous news, GS cut its estimate of the probability of a recession within the next 12 months to just 20%.  GS Chief Economist Hatzius said “The main reason for our cut is that the recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession.”   Elsewhere, delayed filings with the SEC showed that BRKB reduced its holdings of ATVI from 6.7% to 1.9% during Q1.  (This was before recent MSFT victories that have the company inching closer to closing the acquisition of ATVI.)  Meanwhile, Bloomberg reported that CUBI (PA-based regional bank) has become the darling bank of the crypto industry, serving hundreds of digital-asset companies since Silvergate Capital, SBNY, and Silicon Valley banks failed in March.  This includes several crypto exchanges, market-makers, and stablecoin issuers.  There was no word on whether Fed or other regulators have (yet) expressed any interest in CUBI.

With that background, it looks like markets are again unsure ahead of economic data, even after we received blowout earnings reports this morning. All three major index ETFs are looking at very small, inside-day, black candles at this point (ahead of data). As has been the case all year, DIA looks the weakest of the three while SPY and QQQ are seemingly pausing at the top of their year-long rallies. All three remain above their T-line and are, so far at least, just giving us a pullback within an uptrend. As far as extension goes, QQQ may be getting a little stretched from its T-line (8ema) but the two large-cap indices are fine in that regard. However, the T2122 indicator has climbed back up to the bottom of the over-bought region. So, once again, there is room to run (available buyers/sellers) in either direction. Nonetheless, also note that volume has been decreasing as a trend. There is a chance that means the big pool of traders is drying up now that we are three weeks into the new quarter.

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

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

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

Markets started the day higher again Friday, gapping up 0.23% in the SPY, up 0.48% in the DIA, and up 0.16% in the QQQ).  At that point, the QQQ rallied hard the first hour while the SPY and DIA were flat over that period.  This was the cue for the Bulls to take off early for the weekend.  The Bears were in control the rest of the way and it was just a matter of degrees.  The QQQ sold off more steeply, SPY sold off slowly, and DIA sold off sharply for 30 minutes before grinding sideways inside the opening gap from 11 am all the way into the close.  This action gave us a gap-up Shooting Star-type candle in the QQQ, a gap-up, black-bodied Spinning Top in the SPY, and a gap-up, small black-bodied Spinning Top in the DIA.  All three major index ETFs remain quite comfortably above their T-line (8ema) and while DIA failed to break through resistance again, no significant technical damage was done.

On the day, eight of the 10 sectors were in the red with Energy (-2.52%) way out front leading the way lower and Healthcare (+0.73%) holding up by far the best among the sectors.  At the same time, SPY lost 0.06%, DIA gained 0.36%, and QQQ lost 0.02%.  The VXX fell 1.20% to 23.92 and T2122 dropped back out of the overbought territory but remains in the top end of the mid-range at 70.83.  10-year bond yields shot back up to 3.846% while Oil (WTI) dropped 2.05% to close at $75.31 per barrel.  So, Friday saw follow-through on the strong week and strong premarket earnings.  However, then it was time to lock in profits and get ready for the weekend news cycle.  This happened with above-average volume in the QQQ, average volume in the DIA, and below-average volume in the SPY.

The major economic news on Friday, June Export Price Index fall much more than was expected at -0.9% (compared to a forecast of -0.2% but not as much as the May value of -1.9%).  At the same time, the June Import Price Index also fell more than expected at -0.2% (versus the forecast of -0.1% but not as far as the May reading of -0.4%).  So, even though this is meant to help explain whether the June Import Dollars and Export Dollars again are a result of higher prices or more goods, we can get a read-through on inflation from those indexes.  And the indexes imply inflation is falling.  Then later, the Preliminary July Consumer Sentiment came in much higher than expected at 72.6 (compared to a forecast of 65.5 and a June reading of 64.4).  Simultaneously, the Preliminary July Consumer Expectations also came in much better than anticipated at 69.4 (versus the 61.8 forecast and the June value of 61.5).  The same survey also gave us a Preliminary July Inflation Expectation also came in slightly above projected at 3.4% (compared to a forecast of 3.3% and a June reading of 3.3%).  (FYI, those are consumer-anticipated inflation over the next 12 months.)  Those survey results tell us the consumer is feeling much better about the present and future but also has slightly raised inflation expectations.

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In stock news, LILM announced a $192 million financing package that includes a $75 million public stock offering and a $42 million private placement.  The stock offering is expected to close on July 18.  Elsewhere, MULN announced Friday that it has sent more than 350 Class 1 electric vehicles to its MS plant for final assembly.  In addition, the company reports 300 other Class 1 vehicles will also arrive at that plant for final assembly during the second half of 2023. At the same time, AAL and JBLU announced Friday that they will stop selling tickets on each other’s airline on July 21 as they wind down the “alliance” agreement in compliance with a court order.  Meanwhile, LLY said they have agreed to buy privately-held Versanis for $1.93 billion.  (Versanis drugs eat fat cells without impacting appetite.)  At the same time, Reuters reported that SAN is expanding its US investment banking operations including hiring 50 new bankers to compete with JPM, GS, MS, and others.  North of the border, Canadian pot company CGC has signed agreements with lenders to reduce its debt by $336 million in the next six months and reduced its interest rates in the process.  (CGC debt as of March 31 was $985 million.)  At the end of the day, Reuters reported that MLTX is exploring a sale.  However, no potential buyer was mentioned.  On Saturday, TSLA announced it completed the first “Cybertruck” after two years of delays.  (Mass production is set to begin at the end of the year.)  Also on Saturday afternoon, UAL announced it has reached a preliminary 4-year deal with pilots.  The deal includes a 40% pay increase over the four years.  On Sunday, ABOS announced that their Alzheimer’s drug has passed an early-stage safety test and will now advance to a larger trial.

In stock legal and regulatory news, on Friday, MSFT submitted a large proposal to the UK Competition and Markets Authority related to its ATVI acquisition.  The watchdog then extended its decision deadline from July 18 to August 29.  Elsewhere, DIS asked a judge to dismiss a lawsuit filed by Florida’s “State Oversight Board” (on behalf of Gov. DeSantis) which seeks to throw out deals made between DIS and the previous (pre- DeSantis takeover) board.  Late in the day Friday, CNBC reported crypto exchange Binance is planning to lay off between 1,500 and 3,000 employees due to the ongoing US Dept. of Justice investigation.  This comes a week after a rash of executives left the company.  CNBC reports sources tell it the probe is likely to end in a consent decree or settlement that will fundamentally change the company’s business model.  A Binance spokesman disputed the numbers but not the story.  Meanwhile, the US Virgin Islands filed a $190 million claim (including $150 million in penalties) against JPM related to the bank’s facilitation of Jeffrey Epstein’s sex trafficking.  (JPM paid $290 million in May to settle a similar claim made by survivors.)  Later, a US 5th Circuit Court of Appeals judge temporarily blocked a lower court injunction that had prohibited Biden Admin officials and agencies from contacting any social media company (META, GOOGL, Twitter, etc.) in relation to the posting of misleading or false information about matters of public health and welfare (general misinformation) especially related to vaccines.  Finally, late Friday a US Appeals Court denied the FTC appeal requesting an injunction against the closing of the MSFT purchase of ATVI.

In miscellaneous news, the widespread (and seemingly correct) belief that the Fed is delivering the goldilocks scenario hoped for from the beginning of rate hikes.  Even notorious Fed critic Mohamed El-Erian has changed his tune, telling Bloomberg “You cannot get in the way right now of the soft-landing narrative—that narrative is building momentum.”  He also said Friday, that at this point if the Fed tries to reach its 2% target too soon, it could end up “breaking something”.  (Indicating, he is now in the “slow and less frequent rate increases” camp.)  Elsewhere, the Actors Guild joined Writers last week to create the first simultaneous strikes in that industry in 60 years.  Media company executives like DIS CEO Iger the workers simply were not being realistic and that they were already paying actors for their likenesses.  (Extra and lower-tier actors are paid for a day’s work to be scanned and then the company owns their likeness forever for AI and CGI use in any future productions.  The entertainment company’s point is that TV is dying, streaming is not profitable on its own, and the fragmented nature of the media space now means that companies cannot afford to pay employees more.  On Sunday, former PARA head Diller said this strike could well lead to catastrophe in the sector for companies like NFLX, DIS, PARA, WBD, etc.  His point was that with so many options available to consumers, viewership (ad revenue) lost may be very hard to regain.

Overnight, Asian markets were mixed.  Shanghai (-0.87%), Shenzhen (-0.63%), and New Zealand (-0.62%) paced the losses.  Meanwhile, India (+0.75%) and Thailand (+0.71%) led the gainers.  In Europe, stocks are leaning to the red side (with the one notable exception of Belgium being up a huge 3.11%) at midday.  The CAC (-1.22%) leads the losses with the DAX (-0.45%) and FTSE (-0.28%) being more typical in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a modestly red start to the day.  The DIA implies a -0.24% open, the SPY is implying a -0.12% open, and the QQQ implies a +0.025% open at this hour.  At the same time, 10-year bond yields are down to 3.787% and Oil (WTI) is off 1.17% to $74.50 per barrel in early trading.

The major economic news events scheduled for Monday are limited to NY Fed Empire State Manufacturing Index.  There are no major earnings reports scheduled for before the opening bell or after the close.  

In economic news later this week, on Tuesday we get June Industrial Production, June Retail Sales, May Business Inventories, May Retail Inventories, and API Weekly Crude Oil Stocks.  Then on Wednesday, Preliminary June Building Permits, Preliminary June Housing Starts, and EIA Crude Oil Inventories are reported.  Thursday, we get Weekly Initial Jobless Claims, Philly Fed Mfg. Index, June Existing Home Sales, and the Fed’s Balance Sheet.  Then Friday, there is no major economics news scheduled.    

In terms of earnings reports, on Tuesday, we hear from BAC, BK, SCHW, LMT, MS, NVS, PNC, PLD, SYF, AIR, IBKR, JBHT, and WAL.  Then Wednesday, ALLY, ASML, BKR, CFG, ELV, FHN, GS, HAL, MTB, NDAQ, NTRS, USB, AA, COLB, CCI, DFS, EFX, IBM, KMI, LVS, LBRT, NFLX, STLD, TSLA, UAL, WTFC, and ZION report.  On Thursday, we hear from ABT, ALFVY, AAL, BX, DHI, EWBC, FITB, FCX, GPC, INFY, JNJ, KVUE, KEY, MAN, MMC, NEM, NOK, PM, POOL, SAP, SNA, SNV, TSM, TRV, TFC, WBS, COF, CSX, ISRG, KNX, PPG, and WRB.  Finally, on Friday, AXP, ALV, AN, CMA, HBAN, IPG, RF, ROP, and SLB report. 

In geopolitical news, Russia killed the UN-brokered Black Sea Grain Deal just ahead of the previous agreement period expiration.  Global Wheat prices spiked 3.5% on that news. On Sunday, Putin had said that it the West unilaterally delivered all the promises made to get the original deal (helping promote and facilitate Russian grain and fertilizer sales) then Russia would immediately reconsider joining the deal.  The last ships covered by the deal left Odesa, Ukraine on Saturday.  Elsewhere, overnight China reported a Q2 miss on GDP but still printed a 6.3% annual growth rate.  The Q2 increase was +0.8% compared to the much bigger +2.2% GDP growth in Q1.  Beijing also said that unemployment in the 16-24 age group was at a record 21.3% in June, which is neither something China likes to admit nor is likely to accept without stimulus to try to head off unrest among that energetic age group.

With that background, it looks like markets are tepid or at least unsure in the premarket. Again, the DIA looks the weakest of the three major index ETFs and is sitting at the bottom of its early session candle. However, all three remain above their T-line and are, so far at least, just giving us a pullback within an uptrend. The only news this morning is that Fed NY Empire State Mfg. Index. That may cause minor volatility but I doubt it will create an earth-shattering change in markets. It seems more likely that traders will be waiting on the earnings from some more of the big boys this week for their next direction check. As far as extension goes, none of the three major index ETFs are stretched from the T-line and the T2122 indicator has fallen back into the top part of the mid-range. So, there is room to run (available buyers/sellers) in either direction.

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

See you in the trading room.

Ed

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

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

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

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

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

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

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

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

Markets all gapped higher again on Thursday (up 0.42% in the SPY, up 0.21% in the DIA, and up 0.86% in the QQQ).  However, at that point, we saw a bit of a divergence.  The QQQ again led us higher with a fairly strong and steady rally all day until we saw a little profit-taking in the last 15 minutes.  Meanwhile, the SPY ground sideways in a tight range along its opening level until 11:30, at which point it followed the QQQ with a steady rally that was only broken by profit-taking the last 15 minutes of the day.  On the other hand, DIA lagged again, grinding sideways in a tight range after the open until just after 10:30 am.  Then DIA sold off to retest the opening gap and spend the rest of the day meandering back and forth inside that gap area.  This action gave us gap-up white-bodied candles (more body than wick) in both the QQQ and SPY.  For its part, the DIA gave us a black-bodied Doji-type Harami that never came close to challenging the Wednesday highs.

On the day, all 10 sectors were in the green again with Technology (+2.05%) way out front leading and Industrials (+0.27%) again lagging well behind the other sectors.  At the same time, SPY gained 0.79%, DIA gained 0.08%, and QQQ gained 1.70%.  The VXX gained a half of a percent to 24.21 and T2122 climbed slightly and remains in the high end of the overbought territory at 95.99.  10-year bond yields plummeted again to 3.765% while Oil (WTI) popped another 2.05% to close at $77.30 per barrel.  So, again on Thursday, we saw the big tech names like NVDA (+4.74%) and GOOGL (+4.72%) stretch the market higher.  Meanwhile, the stodgy DIA was held up by MSFT (+1.62%) and CSCO (+1.56%) as the likes of WBA (-1.91%), TRV (-1.69%), and CVX (-1.34%) tried to drag the industrials lower.  This all took place on less-than-average volume in all three major index ETFs.

The major economic news on Thursday, June PPI came in better than expected at +0.1% (compared to a forecast of +0.2% but well above May’s -0.4% reading).  The May PPI data was also revised lower.  In addition, the “Core PPI” fell 0.2% in June.  At the same time, the Weekly Initial Jobless Claims came in below the anticipated level at 237k (versus a forecast of 250k and the prior week’s reading of 249k). Later in the day, The June Federal Budget Balance was reported as worse than expected at -$228.0 billion (compared to a forecast of -$175 billion but better than the May value of -$240 billion).  Overall, this was good economic data showing that inflation is slowly headed in the right direction, and yet the job market is holding up fine.  On the Fed front, San Francisco Fed President Daly reiterated her previous position that two more hikes will be needed this year.  She told a CNBC interview that she wants to start heading toward neutral as inflation gets closer to the 2% Fed goal.  However, she said, “It’s too early to say we have declared victory on inflation.”  Later, St. Louis Fed President (and Uber-hawk) Bullard announced he will be stepping down on August 14 in order to take a dean position at Purdue University.  This will be just under 3 weeks after the July Fed meeting and six weeks prior to the September meeting.  However, Bullard is not a voter this year.  Finally, last night Fed Governor (and voter) Waller said flat out what many Fed members have been implying and hinting at.  He said, “I see two more 25-basis-point hikes in the target (Fed Funds) range over the four remaining meetings this year as necessary to keep inflation moving toward our target.”

SNAP Case Study | Actual Trade

In sundry economic news, Bloomberg reports that in addition to it now looking much more likely that the US will avoid the long-feared recession, the same may be true on a global level.  At least this is one possible conclusion to be drawn from labor markets.  Bloomberg reports that Global job cuts in June were down 25% from May (reaching the lowest level since December) and have been down four of the last five months.  At the same time, the UN and EU are scrambling to save the Black Sea grain deal (allowing Ukrainian grain exports) after Putin has threatened to kill the agreement.  The current deal expires Monday (7/17) and the UN is considering giving in to Russian blackmail by reconnecting a Russian bank to the SWIFT payment network for grain and fertilizer transactions.  In a related story, India (the world’s largest exporter of rice, shipping 41% of global supplies) is currently considering a export ban on most varieties rice.  Bloomberg reports this is due to rising Indian domestic rice prices amidst a disruptive “El Nino” weather pattern.  Finally, after the close, the Fed announced that Bank borrowing from the Fed declined again (very slightly this time) for the week ending July 12.  Total Fed lending from its two backstop programs was $105 billion, down $320 million from the prior week.

In stock news, MITT made a stock-and-cash offer for WMC on Thursday.  The offer will disrupt the all-stock bid made on June 28 by Terra Property Trust.  (The MITT offer is equal to $9.88 per share, which was a 12% premium at the time of the offer and more than a 9% premium on the WMC closing price Thursday).  In other deal news, XOM announced that it has agreed to buy DEN for $4.9 billion in an effort to accelerate the XOM carbon dioxide sequestration (pumping CO2 into wells) program.  Elsewhere, GS announced it has sold off $1 billion in personal loans made by its consumer unit Marcus.  No details were provided, but GS booked $470 million in losses on those loans in Q1.   At the same time, GOOGL announced it is rolling out its “Bard” AI Chatbot to Europe and Brazil.  This news eased market fears over international regulatory hurdles and GOOGL stock soared 4.72% on the day.  In other news, Kelly Blue Book announced that registrations of TSLA Model Y vehicles (TSLA’s least expensive model) surged 103% between January and May.  Meanwhile, NKLA shares skyrocketed 61% on Thursday after the company announced it had entered a strategic partnership with hydrogen producer Bayotech, which has agreed to buy 50 of the NKLA truck produced in the next 5 years.

In stock legal and regulatory news, the NRLB announced Thursday that it received a complaint against AMZN for refusing to bargain with the union elected by workers at the e-commerce giant’s Staten Island, NY distribution center.  (AMZN challenged the election but lost the appeal to the NRLB in January.  However, AMZN spokesmen said this complaint was nothing new and the company will not recognize the union, at least until it has exhausted all legal challenges to the union’s election.)  Elsewhere, a Ninth Circuit Appeals Court opened a docket on the FTC appeal of the lower court ruling against providing an injunction preventing the closing of the MSFT acquisition of ATVI.  No date has yet been set for the hearing of the case.  At mid-morning, a US District Judge ruled blockchain company Ripple Labs did not violate SEC law by selling tokens on public exchanges.  Markets immediately saw this as a huge victory for cryptocurrency (against government regulation of the same). COIN shot 30% higher (ending the day up 24.49%) while MSTR spiked 13% (and ended up 11.69%).  Later, TM and the NHTSA announced that the Japanese car company has recalled 118k 2023 cars (110k in the US) due to a wiring defect in the driver-side airbag.  By mid-afternoon, the EPA announced it has fined CPE $1.3 million for excess emissions (from tanks, flares, and other equipment) at the company’s West Texas Permian Basin operations.  At the end of the market session, Reuters reported that the FTC has opened an investigation into MSFT-backed OpenAI over claims the AI company is putting consumer personal data and reputations at risk through its AI operations.  This is the first potential regulation of artificial intelligence, even if only in terms of potential fines for violating consumer privacy.

Overnight, Asian markets leaned heavily to the green side.  Only Shenzhen (-0.14%) and Japan (-0.09%) were in the read.  Meanwhile, Thailand (+1.60%), South Korea (+1.43%), and Taiwan (+1.30%) led the rest of the region higher.  In Europe, the bourses are mixed at midday with six exchanges in some shade of red and nine in the green to some degree.  The CAC (+0.26%), DAX (-0.22%), and FTSE (+0.25%) are typical and lead the way in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a mixed start near the flat line to the day.  The DIA implies a +0.42% open, the SPY is implying a +0.09% open, and the QQQ implies a -0.04% open at this hour.  At the same time, 10-year bond yields are bouncing back (early), up to 3.787% and Oil (WTI) is just on the red side of flat at $76.79 per barrel in early trading.

The major economic news events scheduled for Friday include June Import Price Index and June Export Price Index (both at 8:30 am), Preliminary July Michigan Consumer Sentiment and Preliminary July Michigan Consumer Expectations (both at 10 am). The major earnings reports scheduled for before the opening bell include BLK, C, ERIC, JPM, STT, UNH, and WFC.  There are no major earnings scheduled for after the close.    

So far this morning, JPM, WFC, BLK, and UNH all reported beats to both the revenue and earnings lines.  These were all “good beats” showing very strong quarter-on-quarter growth in revenue and earnings with the exception of BLK beating while having a 1.4% decline in revenue quarter-on-quarter.  Meanwhile, ERIC missed slightly on revenue at the same time they beat on earnings.  However, that was a “bad beat” on earnings since earnings were down 50% quarter-on-quarter for ERIC.  On the other hand, STT missed significantly on revenue while beating significantly on earnings and both of the numbers reported were quarter-on-quarter increases from Q1.     

In miscellaneous news, Reuters reported that US Small Businesses borrowing has not fallen off much.  In other words, the feared credit crunch does not appear to have materialized (at least yet) despite increasing rates and dire commentator predictions.  According to the National Federation of Independent Business, the average interest rate paid by small firms in June was 9.2% (up 1.4% from May).  However, the lending continues as 28% of surveyed small businesses said they regularly borrowed in June, roughly in line with May but far below the three-year high the survey reported in April.  Meanwhile, part of the strong rally in Oil (and other commodities) is the continuing crash of the US Dollar against major currencies.  The dollar sold off steadily all-day Thursday against the Euro, British Pound, Aussie Dollar, and even Canadian Dollar.  Elsewhere, the Republican focus on social culture wars continues as 13 GOP AGs warned the 100 largest US companies that they will sue those companies over any diversity policies those companies have in place.  The letter sent to the 100 singled out AAPL, GOOGL, MSF, and UBER specifically, but threatened all 100.  Finally, the WHO warned that aspartame (most widely-used artificial sweetener) may cause cancer in high doses.  However, the agency also said the topic needed more research and the sweetener should be safe in normal amounts.  This lessened the blow on companies like KO and PEP which use it in many products.

With that background, it looks like the Bulls are looking to close the week out strong. The DIA candle in particular is large and white after starting the early session down from Thursday’s close. However, note that the DIA is also right at a resistance level while the other two major index ETFs have broken through theirs earlier in the week. SPY is looking to gap up but is more tentative and for its part QQQ is looking to open higher but is a very indecisive premarket candle. Obviously, all three remain above their T-line (8ema) and the bias remains bullish across the market. Regardless, after the open settles out, do not be surprised to see some profit-taking after a strong week in all three major indices. Also, don’t forget that its Friday. So, pay yourself, move your stops, hedge, or do whatever you need to do to prepare for the weekend. All that said, do not be surprised if we drift while we wait. As far as extension goes, the SPY and QQQ are starting to get a bit stretched from the T-line. DIA remains fine in that regard. However, again, the T2122 indicator remains deep into that overbought territory. The old saying stands: “The market can remain overbought longer than we can stay solvent being right too early.” So, once again, if either the bulls or the bears did find the energy to run today, there is a slack available…there is just more slack available to the Bears.

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

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

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

On Wednesday, better-than-expected CPI numbers led to a gap higher (up 0.88% in the SPY, up 0.66% in the DIA, and up 1.15% in the QQQ).  At this point, the SPY and QQQ started a sideways meander centered on that opening level.  DIA started to grind sideways in a very tight range, which was interrupted by a sharp 45-minute selloff that started at about 11:25 am before continuing sideways inside the opening gap.  All three of the major index ETFs continued that sideways move right into the close.  This action gave us gap-up, indecisive candles, above the T-line (8ema) in all three.  The SPY and QQQ printed Dojis, with the SPY breaking out of June/July highs and QQQ closing right at its breakout level.  Meanwhile, the DIA printed a black-bodied Spinning Top that could be seen as failing the June high retest.

On the day, all 10 sectors were in the green with Basic Materials (+1.94%) way out front leading and Industrials (+0.07%) lagging well behind the other sectors.  At the same time, SPY gained 0.80%, DIA gained 0.27%, and QQQ gained 1.26%.  The VXX fell 5.50% to 24.07 and T2122 pulled back slightly but remains at the high end of the overbought territory at 95.60.  10-year bond yields plummeted to 3.861% while Oil (WTI) popped up 1.42% to close at $75.89 per barrel.  So, Wednesday saw a strong gap-up on the lower-than-expected CPI data.  However, after that, markets simply drifted sideways for the rest of the day.  This took place on above-average volume in the DIA and QQQ with slightly less-than-average volume in the SPY.

The major economic news on Wednesday started with the June month-on-month CPI, which came in below expectations at +0.2% (compared to a forecast of +0.3% but above the May reading of +0.1%).  At the same time, June year-on-year CPI was also below anticipated at +3.0% (versus a forecast of +3.1% and well below the May value of +4.0%).  Later, EIA Crude Oil Inventories showed a much larger build that projected at +5.946-million-barrels (compared to a +0.483-million-barrel forecast and the prior week’s drawdown of 1.508-million-barrels).  It may have nothing to do with what the Fed does in two weeks.  However, that data cannot credibly be spun as not showing progress on inflation.  On the Fed speaker front, Minneapolis Fed President Kashkari published an essay more related to supervision than rates.  He said that Central banks (in general) need to bring inflation back down and create anchored (stable) inflation expectations…adding that interest rates may need to raise further.  The rest of his essay was dedicated to ensuring the banking sector is strong enough to handle the potential additional increase in rates.  Kashkari said, “One way supervisors could ensure banks are prepared is to run new high-inflation stress tests to identify at-risk banks and size individual capital shortfalls.”  Elsewhere, Richmond Fed President Barkin sounded a hawkish note, saying “No matter how you cut it, inflation has been too high.”  Barking added that he agreed that overall demand was beginning to slow, but he wants to be “convinced” by incoming data that it will translate into lower inflation.

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In stock news, Reuters reported midday that NVDA is in talks to become the “anchor investor” in an IPO of Arm.  (Arm is a semiconductor designer whose architecture competes with the x86 platform used by INTC and AMD.  The ARM architecture is mostly used in cloud servers and high-end computing servers like those required for AI applications.) Elsewhere, LCID reported that its Q2 production dropped from Q1 while deliveries stayed flat. The LCID stock fell almost 12% on that news. Later, DPZ announced they have reached a deal allowing customers to buy their pizzas via the UBER and Postmates apps.  (DPZ shot 11.10% higher on that news.)  At the same time, Reuters reported that first-day sales of the AMZN Pride Day 6% (to $6.4 billion) from a year ago on heavy discounting according to Adobe Analytics.  Meanwhile, DIS announced after the close that it has extended the contract of CEO Bob Iger for two more years, through the end of 2026.   Also after the close, VSAT announced that there was a problem with the deployment of its “ViaSat-3 Americas” satellite that may well affect the performance of the satellite.  VSAT stock fell 20% in post-market trading on this news.

In stock legal and regulatory news, the EU antitrust watchdog granted conditional approval for AVGO’s $61 billion acquisition of VMW. The condition was altering the deal to help rival MRVL by ensuring interoperability of future products.  However, the UK competition agency and US FTC are also still reviewing the deal. Elsewhere, TSLA announced the US federal tax credits (now $7,500) for its Model 3 cars “are likely to be reduced on Dec. 31.” It provided no additional information and this could be just a marketing ploy.  Still, the US government is implementing more stringent battery rules in the hope of reducing both carbon emissions and dependence on China.  Meanwhile, it was made public Wednesday that META will appeal EU antitrust charges related to its classified advertisements.  (The appeal was announced in a closed-door meeting Friday, but made public yesterday.)  At the same time, ILMN was hit with a record $476 million fine by the EU for closing its takeover of test maker Grail before getting WU antitrust approval.  In leak news, Reuters reported that the NHTSA is close to reaching a decision on whether or not to allow GM to deploy 2,500 self-driving Cruise vehicles.  (Cruise vehicles are essentially Chevy Bolts without a steering wheel, gas, or brake pedals.)  Finally, on Wednesday evening the FTC filed an appeal to the ruling that denied the agency’s request for an injunction against the MSFT acquisition of ATVI.

After the close, MLKN reported beats on both the revenue and earnings lines.  However, both numbers were down (13% on revenue and 29% on earnings) from the same quarter of 2022. So far this morning, PEP, DAL, and WIT have all reported beats on both the revenue and earnings lines.  (Interestingly, these were not beats against lowered expectations and showed both revenue and earnings growth quarter-on-quarter.  In fact, it was a record amount of earnings for DAL.)  Meanwhile, CAG and FAST both missed on revenue while beating on the earnings line.  (For FAST, even though the Revenue was a miss, both numbers were increases quarter-on-quarter from the previous report.  However, the CAG miss on revenue actually showed Qtr.-on-Qtr. growth but the beat on earnings actually was a decline Qtr.-on-Qtr.)  It should also be noted that PEP raised its forward guidance while CAG lowered its guidance.  Note that PGR and CTAS report closer to the opening bell. 

Overnight, Asian markets were nearly green across the board.  Only Malaysia (-0.13%) showed any red while Hong Kong (+2.60%), Singapore (+1.99%), and Shenzhen (+1.61%) led the region in a broad and strong rally.  Meanwhile, in Europe, the bourses are mostly green at midday with only three spots of red among the 15 exchanges.  The CAC (+0.78%), DAX (+0.57%), and FTSE (+0.37%) are leading the continent higher in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward another move higher.  The lagging DIA implies at +0.15% open, the SPY is implying a +0.30% open, and the QQQ implies a +0.66% open at this hour.  At the same time, 10-year bond yields continue to fall and are at 3.826% while Oil (WTI) is up three-tenths of a percent to $75.97 per barrel in early trading.

The major economic news events scheduled for Thursday include June PPI and the Weekly Initial Jobless Claims (both at 8:30 am), June Federal Budget Balance (2 pm), and Fed Balance Sheet (4:30 pm).  We also have another Fed speaker (Waller at 6:45 pm).  The major earnings reports scheduled include CTAS, CAG, DAL, FAST, PEP, PGR, and WIT all before the opening bell.  There are no major earnings scheduled for after the close.      

In economic news later this week, on Friday, June Import Price Index, June Export Price Index, Preliminary July Michigan Consumer Sentiment, and Preliminary July Michigan Consumer Expectations are reported.      

In terms of earnings reports, on Friday, we hear from BLK, C, ERIC, JPM, STT, UNH, and WFC.      

In miscellaneous news, Reuters reported that the one-month moving average of open interest in VIX calls (in other words, the average of the number of existing options bets that the market will fall, driving the VIX up) was at a record high of almost 13.85 million at the end of June.  It fell to 13.71 on Wednesday afternoon.  The interesting thing is that this moving average was at a 3-year low in mid-June before skyrocketing by the end of the month as traders bet the Bulls could not keep running.  However, so far this month the Bulls have defied that logic.  Elsewhere, ocean temperatures (surface) off Florida reached nearly 97 degrees in some areas Monday according to the National Oceanic and Atmospheric Administration buoy data.  This is the highest temperature on record and poses a significant threat to the health of coral reefs, which in turn pose a risk to fishing grounds.  NOAA said that 70% of Florida’s coral reefs have already been bleached or have been eroded (i.e. have been lost) due to climate change impacts. No specific tickers impacted are available yet. Finally, in dollar news, after the CPI data Wednesday, the US Dollar plunged to a 15-month low.  This indicates that money managers now truly believe US interest rates are at or very near a peak.  (The dollar tends to be correlated with US interest rates.) For the record, the dollar is strongly down again Thursday against the Euro, British Pound, and Aussie Dollar.

With that background, it looks like the Bulls are trying to gap up into fresh air again in the SPY and QQQ. DIA is also positive but is only giving a Bullish Harami so far in the premarket session. It should be noted that all three of the major index ETFs are printing indecisive candles in this early session as traders wait on PPI and the rest of the new round of earnings. Obviously, all three remain above their T-line (8ema) with the June PPI data still an hour from being published. So, the bias is still bullish across the market. It looks like the Bulls are trying to add to the week’s nice gains so far. There may be some premarket volatility (and likely volatility near the open) from the PPI data but truthfully that is usually a lot less than the CPI number that always precedes it by a day. Either way, after the open settles out, eyes will turn toward the financials as the big boys report Friday. All that said, do not be surprised if we drift while we wait. Overall, the SPY and QQQ have broken out of recent highs and have some room to run before the next potential resistance level. However, the DIA has yet to get through and is just below the double-top it failed yesterday. As far as extension goes, only the QQQ (in premarket) is starting to get a bit stretched from its T-line. However, again, the T2122 indicator remains deep into that overbought territory. The old saying stands: “The market can remain overbought longer than we can stay solvent being right too early.” So, once again, if either the bulls or the bears did find the energy to run today, there is a slack available, just more of it available to the Bears.

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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