Talk that the U.S. may block Chinese firms from using cloud-computing services engaged the bears on Wednesday but once again the desire to buy up a handful of tech giants reduced the bearish impact. Not surprisingly the Fed minutes add to the odds of more rate hikes on the way with core inflation remaining well above the committee’s 2% target. Today we have a busy day of economic reports that could prove to be market moving along with a very light day of earnings to find inspiration. Volume could remain light as we wait for the big bank’s reports to kick off 3rd quarter’s earnings still a week away.
Asian markets extended the selloff with Hong Kong leading the way down 3.02% in reacting to the future rate increases from the Fed. European markets are also decidedly bearish this morning with red across all indexes. With a busy morning of economic reports ahead, the U.S. futures suggest a bearish open with the bears showing a bit more vigor in the tech sector than we have seen for some time.
Economic Calendar
Earnings Calendar
Notable report for Thursday is LEVI after the bell.
News & Technicals’
Meta, the company formerly known as Facebook, has launched a new text-based messaging app called Threads. The app is designed to look and feel like Twitter but with some key differences. Users can sign up with their Instagram usernames and follow the same accounts they already follow on Instagram. This could give Threads an edge over Twitter, which has been struggling with various problems since it was acquired by Tesla CEO Elon Musk. Threads aim to offer a simpler and more engaging way to communicate with friends and influencers.
The world economy is facing a serious threat of recession as commodity prices plunge to their lowest levels in a year. The S&P GSCI Commodities index, which tracks the prices of 24 major commodities, has fallen by more than 25% since last November, reflecting weak demand and oversupply. Commodities such as oil, copper, iron ore, and soybeans are vital for industrial production and consumption, and their falling prices signal a slowdown in global growth and trade. Market watchers warn that the commodity slump could trigger a vicious cycle of deflation and debt.
OpenAI, the artificial intelligence research company, is facing a legal challenge from two authors who accuse it of using their books to train its chatbot, ChatGPT, without permission. ChatGPT is a conversational agent that can generate natural language responses based on user input. The authors, Paul Tremblay and Mona Awad claim that ChatGPT can produce “very accurate summaries” of their novels, “A Head Full of Ghosts” and “Bunny”, respectively. They argue that this implies that ChatGPT was trained on their copyrighted works, which would constitute an infringement of their intellectual property rights.
On Wednesday, stocks fell as reports of a U.S. plan to block Chinese firms from using cloud-computing services increased geopolitical tensions and reduced risk appetite after the holiday break. The sector performance and the lagging of small-caps showed a slight preference for defensive sectors, which will be tested by the economic and inflation indicators in the coming days. The June jobs report on Friday, the June consumer price index (CPI) report and the second-quarter earnings season next week will be the main events to watch. Analysts expect core CPI to drop from 5.3% in May to 5.0% (year-over-year) in June. These employment and inflation data will have a significant impact on the market expectations for the Fed’s actions and the stock- and bond-market behavior as the summer goes on.
Markets gapped down in all three major index ETFs (down 0.44% in the SPY, down 0.49% in the DIA, and down 0.43% in the QQQ). However, at that point, the QQQ immediately recrossed the gap on its way to the highs of the day at about 10:40 am. It then spent the rest of the day wandering around just above the Monday close. SPY also recrossed the gap, but more slowly, reaching the prior close at 10:40 am and then spending the whole day in the top half of the gap (not far below the Monday close). For its part, DIA also spent the whole day inside its gap never quite closing it or retouching the open level. This action gave us gap-down, white-bodied candles with upper wicks in all three major index ETFs.
On the day, nine of the 10 sectors were in the red with Utilities (+0.61%) leading the way higher while Basic Materials (-2.01%) by far (1.2% worse than any other) the biggest losing sector. At the same time, SPY lost 0.15%, DIA lost 0.37%, and QQQ was dead flat -0.00%. The VXX gained 1.33% to close at 25.07 and T2122 dropped back out of the overbought territory into the top end of the mid-range at 73.60. 10-year bond yields spiked up to 3.936% while Oil (WTI) jumped up 3.04% to $71.91 per barrel. So, Wednesday was another day of consolidation where the bears could not follow through on the opening gap lower but the bulls could not break out to new highs either. This all happened on well-below-average volume in the SPY and QQQ while DIA volume was not far below-average.
In major economic news Wednesday, May Factory Orders came in well below forecast at +0.3% (compared to a forecast of +0.8% but exactly in line with the April reading of +0.3%). This was the cause of the big gap lower and I do not know why forecasts had called for the value to increase so dramatically…but it certainly did not. Nonetheless, Factory Orders did increase, albeit at a slow pace. However, the big economic news on the day was the FOMC June Meeting Minutes. Those minutes caused momentary volatility, but in the end, were a nothing burger. The notes revealed that almost all Fed members were in favor of a pause and also that in their economic projections that they believe (two) additional hikes in the federal funds rate will be needed during 2023. After the close, the API Weekly Crude Oil Stocks report showed a drawdown of 4.382-million-barrels (versus a prior week’s 2.408-million-barrel drawdown). At the same time, New York Fed President Williams told a moderated panel discussion that the Fed was correct to pause in June, there was still more work to do, and the markets have heard the message that hikes will resume (and there will likely be two quarter-point hikes in the second half of 2023). He also said that it was a small minority of Fed members who diverge from the more common public FOMC stance.
In stock news, shares of KNX (one of the largest US trucking companies) fell 3.29% on Wednesday after a volatile session. The company warned that Q2 results will be lower than previously expected due to “persistently soft demand.” However, in Auto news, TM announced their June car sales were up 14.9% from the same month a year ago. At the same time, STLA unveiled a new “medium” vehicle size platform which will include 26 models across all its brands (Jeep, Chrysler, Ram, Peugeot, Alfa Romeo, Citroen, and Opel). A bit later, GM announced that their Q2 auto sales had risen 19% from Q2 2022. Elsewhere, UPS and the Teamster Union both accused the other of walking away from negotiations. Time remains with the current contract set to expire July 31 but the Teamsters have already voted to authorize a strike if no deal is reached before that date. (UPS says it is still confident a deal will be reached in time.) Up in Canada, some Canadian advertisers have begun to pull their advertisements from META in response to the company’s removal of Canadian news from the platform (which itself was in response to a Canadian law passed saying companies must pay Canadian publishers for their content). There was no word on ads being pulled from GOOGL (which followed META’s lead in solidarity) yet. After the close, BAC followed suit with its big bank competitors raising its dividend by 9% after passing the Fed stress test last week.
In stock legal and regulatory news, on Wednesday afternoon the FTC ruled that six companies who make cannabis-ingredient products must cease packaging and marketing their foods that are too similar to well-known brands. Specifically, the FTC ruled “Stoneoes” and “Double Stuff Stoneos” are too similar to Oreos. Other familiar snacks that had been targeted by pot copycats were Doritos, Cheetos, Jolly Rancher, and Nerds candies. Elsewhere, the US Interior Dept. approved the construction of DOGEF’s 30-gigawatt wind farm offshore near Atlantic City, NJ. Then, late in the day, GM announced it could face compliance challenges under the US EPA’s proposed vehicle emissions rules (as well as other state and federal regulations). It is worth noting that the EPA proposals would not even start to take effect until 2030 and won’t be fully in place until 2032. At the same time, AMZN, AAPL, GOOGL, META, MSFT, and BKNG said Wednesday that they will fall into the EU’s new criteria making them a “Gatekeeper” and as a result will be forced to comply with tougher rules. These rules include making messaging platforms interoperable and letting users decide what apps are pre-installed on devices. Meanwhile, JBLU announced after the close that it will not appeal the US judge’s decision that requires an end to its alliance (defacto merger) with AAL.
In mortgage news, the demand for mortgages dropped last week as interest rates rose. The average cost of a 30-year, fixed-rate, conforming mortgage rose dramatically from 6.75% to 6.85% (and closing points rose to 0.65 from 0.64) on the week. This included a brief stay over 7%. As a result, overall mortgage applications fell by 4.4%. This was made up of a 5% drop in new-purchase loan requests and a 4% decrease in refinance loan applications. Interestingly, the average loan size requested fell to the lowest level since January at $423,500. (The latter fact may say something about home prices and the housing market in general if it becomes a trend.)
Overnight, the nearly unanimous Fed feeling that rates will indeed need to rise twice more in 2023 apparently caught global markets off guard. Asian markets were all well into the red with the lone exception of India (+0.51%). Hong Kong (-3.02%), Taiwan (-1.73%), and Japan (-1.70%) led the region lower as Treasury Sec. Yellen arrived in Beijing to work on bilateral policy and trade issues between the two largest economies. Meanwhile, in Europe, we see the same picture taking shape at midday. Only Russia (+0.70%) is in the green while the CAC (-1.83%), DAX (-1.16%), and FTSE (-1.38%) lead the region lower. In the US, as of 7:30 am, Futures are pointing toward a gap down to start the day. The DIA implies a -0.39% open, the SPY is implying a -0.37% open, and the QQQ implies a -0.38% open at this hour. At the same time, 10-year bond yields are rising again to 3.975% and Oil (WTI) is positive by four-tenths of a percent at $72.10 per barrel in early trading.
The major economic news events scheduled for Thursday include ADP Nonfarm Employment Change (8:15 am), May Imports/Exports, May Trade Balance, and Weekly Initial Jobless Claims (all at 8:30 am), June Services PMI and June S&P Global Composite PMI (both at 9:45 am), June ISM Non-Mfg. PMI and May JOLTs Job Openings (both at 10 am), and EIA Crude Oil Inventories (11 am). There are no major earnings reports scheduled for before the open. However, after the close, LEVI reports.
In economic news later this week, on Friday, June Nonfarm Payrolls, June Avg. Hourly Earnings, June Participation Rate, and June Unemployment Rate are reported.
In terms of earnings reports, there are no major earnings reports scheduled for Friday.
In miscellaneous news, Reuters reported Wednesday that Cyber Insurance premiums dropped 10% in June compared to June 2022. This dramatically reverses the sharp increase in prior months and comes despite the major global MOVEit hack and ransom attacks. Elsewhere, the China Daily newspaper quoted a former Vice Commerce Minister (who now heads a state-owned thinktank) as saying that the Chinese rare earth export restrictions were a warning shot and are “just the start” ahead of Treasury Sec. Yellen’s visit, which starts today. Meanwhile, META launched its competitor for Twitter, called Instagram Threads on Wednesday night. In a geopolitical tidbit, the President of Belarus Lukashenko told the press that Wagner Group leader Prigozhin had left his country and, interestingly, returned to his home base of St. Petersburg Russia. Finally, after the Fed Minutes, the CME FedWatch Tools shows there is an 88.7% probability of a quarter-point rate hike on July 26.
With that background, it looks like all three major index ETFs are looking to open lower again today. However, only the DIA is back to a retest of its T-line (8ema) so far this morning and all three of the major index ETFs are giving us very small candles. So, either the market is sleeping in today, waiting on the morning data dump, or just unsure of direction at this point. So, the pullback in an uptrend continues, at least as of this point. Again, on a holiday-shortened week at the start of a new quarter, do not expect heavy volume as many traders have taken the week off. We could see reallocation or new money coming into the market. However, I would be surprised if the action was heavy. As far as extension goes, none of the three major index ETFs is too far from their T-line and the T2122 indicator has dropped back outside of its overbought territory. So, there is room to run in either direction if either the bulls or bears can gain momentum. Beware of volatility around the ADP and Weekly Jobless Claims (as well as maybe the JOLTs) reports as traders try to read through to tomorrow’s June Payrolls data.
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
Markets barely moved on Monday with weak PMI and ISM manufacturing data with Construction spending edging higher in low volume session with many traders extending their holiday. It is possible the low volume could extend today and throughout this week due to travel issues and extended vacations. With a light day of economic data, the FOMC minutes will likely be the highlight and there are no earnings today. Strikes, possible UPS strikes, and renewed Chinese tensions add a bit of uncertainty in this short week of trading.
As we slept Asian markets saw red across the board with Hong Kong leading the selling down 1.57% on disappointing services activity numbers. European markets are also feeling bearish this morning as economic sentiment deteriorates. With no earnings and a light day on the economic calendar U.S. futures point to a bearish open waiting on the FOMC minutes.
Economic Calendar
Earnings Calendar
There are no confirmed earnings reports for today.
News & Technicals’
A strike by Canadian longshore workers is disrupting the flow of trade and causing congestion at two major ports. The workers, who are members of the International Longshore & Warehouse Union and Canada’s Longshore Division, are in a dispute with the British Columbia Maritime Employers Association over wages and working conditions. The association says the negotiations are on hold while they consult with federal mediators. According to CNBC, the strike has left about $19 billion worth of goods stranded off the coast of Vancouver and Prince Rupert, and this figure is likely to rise. VesselsValue, a maritime data provider, warns that the strike will also affect the efficiency and speed of vessel operations, as more ships are waiting to enter or leave the ports. Vancouver is one of Canada’s main container ports, handling about half of the country’s containerized cargo.
A potential strike looms at United Parcel Service, the world’s largest package delivery company, as the Teamsters union accuses the firm of abandoning the talks over a new contract. The union, which represents about 340,000 UPS workers, said on Wednesday that the company had presented an offer that was unanimously rejected by the union’s national negotiating committee. The union also said that UPS had told them it had nothing more to offer and that no further negotiations were planned. The union said it was disappointed and frustrated by UPS’s stance and that it was ready to take action if necessary.
China has canceled a planned visit by the EU’s top diplomat, Josep Borrell, amid rising tensions over trade and human rights. Borrell was supposed to meet with Chinese Foreign Minister Qin Gang next week, but Beijing scrapped the trip without giving a clear explanation. The move comes as U.S. Treasury Secretary Janet Yellen is preparing to visit Beijing on Thursday, in a bid to ease the strained relations between the world’s two largest economies. China also announced new export controls on two metals that are vital for the production of semiconductors and electronics, potentially affecting the global supply chains of these industries.
Equities barely moved on Monday as stock and bond markets closed early before the Tuesday holiday. The session was quiet as traders likely extended their holiday and we should not be surprised if the low volume is present today do the all the airline troubles travelers have experienced this week. Sector performance was mostly similar, except for the consumer discretionary sector which rose thanks to a surge in Tesla shares after the electric carmaker reported better-than-expected delivery and production numbers. Interest rates edged higher, following their recent upward trend in reaction to a series of strong economic data and what they mean for the Fed’s future policy.
Markets gapped strongly higher on Friday (opening up 0.75% in the SPY, up 0.61% in the DIA, and up 1.01% in the QQQ). From that point, all three major index ETFs gave us a slow, modest rally right up until 3:55 pm when we saw profit-taking the last 5 minutes across the board. This action gave us gap-up, white-bodied candles in all the major index ETFs. The DIA is candle was a Spinning Top, while the SPY and QQQ candle bodies were larger. SPY broke out of the mid-June candle bodies while DIA and QQQ have not quite gotten to a retest of those prior highs.
On the day, Friday, all 10 sectors were in the green with Technology (+1.25%) leading the way higher while Communications Services (+0.44%) lagged behind the other sectors. At the same time, SPY gained 1.18%, DIA gained 0.79%, and QQQ gained 1.54%. The VXX fell 1.46% to close at 25.00 and T2122 climbed even further into the overbought territory at 97.03. 10-year bond yields remained flat at 3.841% while Oil (WTI) climbed slightly to $70.64 per barrel. This all happened on just average volume in the DIA and greater-than-average volume in both QQQ and SPY.
The major economic news on Friday started with the Fed’s preferred inflation measure showing a significant reduction in inflation. The May PCE Price Index came in at 3.8% year-on-year (compared to a forecast of 4.6% and the April reading of 4.3%). The month-on-month version of that May PCE Price Index showed a 0.1% increase which was well below the +0.5% expected and even well below the April +0.4% value. The May Core PCE Price Index also came in below expectation but not by nearly as much at 4.6% (compared to a 4.7% forecast and a 4.7% April value). So, overall, inflation is coming down more than anticipated and that was what the Bulls latched onto…gapping stocks higher. At the same time, May Personal Spending also came in well below what was anticipated at +0.1% month-on-month (versus the forecast calling for +0.2% and the April reading of +0.6%). Later, Chicago PMI was lower than expected at 41.5 (versus a forecast of 44.0 and better than the May reading of 40.4). Finally, the Michigan Consumer Sentiment Survey reported a better-than-expected feeling of 61.5 (above the forecasted 61.3 and well above the May value of 55.4).
On Monday, the DIA gapped down 0.22%, the QQQ gapped up 0.16%, and SPY opened down 0.06%. From there, the large-cap index ETFs put in a slow, modest but steady rally only broken by DIA profit-taking the last 10 minutes of the shortened day. At the same time, QQQ was more like a roller coaster but also ended modestly higher. This action gave us a gap-up white-bodied Doji in the QQQ, along with white-bodied candles in the SPY and DIA. On the day, nine of the 10 sectors were in the green with Consumer Cyclical (+0.91%) leading and only Healthcare (-0.96%) in the red. The SPY gained 0.12%, DIA gained 0.06%, and QQQ gained 0.24%. Meanwhile, the VXX fell 1% to 24.74 and T2122 dropped slightly but remains deep in overbought territory at 95.83. This all happened on very low volume even for a 3.5-hour market day.
In major economic news Monday, Jun Mfg. PMI came in exactly as expected at 46.3 (down from the May value of 48.4). Later, ISM Manufacturing PMI came in a bit low at 46.0 (compared to a forecast of 47.2 and a May reading of 46.9). However, June Mfg. Price Index also came in lower than expected at 41.8 (versus a forecast of 44.0 and a May reading of 44.2). So, overall June Manufacturing was reported in line to slightly below expectations. However, probably the biggest Monday news was that Saudi Arabia announced they will extend their voluntary oil production cuts for at least another month, through August, with the potential to continue on indefinitely. Russia was quick to follow suit. The effect of these cut extensions was offset by reduced US Manufacturing activity and the holiday-shortened day when many traders were not around at all. However, it is likely to be reflected Wednesday.
In stock news, on Friday, F announced they have signed an initial agreement to sell its Saarlouis Germany plant to a group including Chinese electric vehicle company BYDDY. Elsewhere, TSP stock plummeted when the self-driving startup said Friday, they are considering selling the company’s US operations in order to focus on the Asia-Pacific geography. At the same time, the CEO of SHEL’s renewables business left the company Friday just weeks after the SHEL CEO announced the company will focus on oil and gas (the more profitable units). Meanwhile, DIS’s ESPN business unit laid off 20 on-air personalities mid-day Friday. At the final bell Friday, AAPL closed with more than a $3 trillion market cap for the first time ever. After the close, JPM, WFC, GS, MS, and C all announced they have raised the Q3 dividends after sailing through the Fed stress test. On Saturday, UAL awarded 30,000 frequent flier points to all passengers that suffered delays due to plane shortages. UAL CEO Kirby also claimed that the airline would need to reduce flight schedules due to the planes that could not fly (since they do not comply with FAA 5G interference protections). Later Saturday. TLSA announced it had beaten analyst expectations by delivering 466,140 vehicles and producing 479,700 during Q2. This was a 10% increase compared to Q1 and 83% higher than Q2 of 2022.
In stock legal and regulatory news, the FTS amended its complaint against WMT on Friday, alleging the giant allowed scam artists to use WMT money transfers to defraud consumers. Elsewhere, the European Commission has demanded that German ga importer UNPRF divest its Dutch business before it will receive regulatory approval of Germany’s bailout of the company. On this side of the pond, the US Federal Housing Finance Agency said it was considering limiting the ability of the biggest banks to use Federal Home Loan Banks as a financial backstop. Meanwhile, BRKB-owned BNSF won an appeal of an earlier $228 million award in a case that found the railroad had unlawfully collected the fingerprints of truck drivers. The Appeals Court ruled that the company had violated the law but also that the company was entitled to a jury-decided award to the plaintiffs (as opposed to the $5,000 per infraction that was assigned by the lower court). Later, a Federal Judge ruled Friday afternoon that PPC, SAFM, TSN and several smaller companies must face antitrust litigation which accuses them of price fixing to inflate chicken prices. On Saturday, Bloomberg reported that the FTC is going to bring an antitrust suit against AMZN for its marketplace and related to that platform giving preference to AMZN products.
Overnight, Asian markets leaned heavily toward the downside with only two of the 12 exchanges managing modest green numbers. Meanwhile, Hong Kong (-1.57%), Shenzhen (-0.91%), and Shanghai (-0.69%) led the rest of the region lower. In Europe, we see the same picture taking shape with only Portugal (+0.26%) in the green at midday. The CAC (-0.62%), DAX (-0.51%), and FTSE (-0.54%) lead the region lower in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward the same type of start to the day. The DIA implies a -0.46% open, the SPY is implying a -0.46% open, and the QQQ implies a -0.55% open at this hour. At the same time, 10-year bond yields are up to 3.859% and Oil (WTI) is up 2% to $71.19 in early trading.
The major economic news events scheduled for Wednesday include May Factory Orders (10 am), FOMC June Meeting Minutes (2 pm), API Weekly Crude Stocks Report (4:30 pm) and Fed speaker (Williams at 4 pm). There are no major earnings reports scheduled for Wednesday either before the open or after the close.
In economic news later this week, on Thursday we get ADP Nonfarm Employment Change, May Imports/Exports, May Trade Balance, Weekly Initial Jobless Claims, June Services PMI, June S&P Global Composite PMI, June ISM Non-Mfg. PMI, May JOLTs Job Openings, and EIA Crude Oil Inventories. Finally, on Friday, June Nonfarm Payrolls, June Avg. Hourly Earnings, June Participation Rate, and June Unemployment Rate are reported.
In terms of earnings reports, on Thursday LEVI reports. Then on Friday, again there are no major earnings reports scheduled.
In miscellaneous news, on Friday, Russian Foreign Minister Lavrov announced the expected, saying “I don’t see what arguments there can be by those who would like to continue the Black Sea initiative.” However, Lavrov was quick to add, “If the Black Sea Initiative ceases to operate, we will provide grain deliveries of a comparable or larger size to the poorest countries at our own expense, free of charge.” Elsewhere, the WHO (World Health Organization) is widely reported to be very near labeling one of the most widely-used artificial sweeteners (aspartame) to be potentially cancer-causing. More than 6,000 consumer food products contain aspartame. The most widely cited of these are Diet Coke (KO) and Diet Pepsi (PEP). On Monday, China imposed restrictions on the export of two metals (germanium and gallium) that are critical to the production of semiconductors. (China is the only major source of gallium, accounting for 94% of global production and also the world’s largest producer of germanium.) This tit-for-tat move related to semiconductors comes a couple of days prior to the visit of Treasury Sec. Yellen to China for talks. Finally, Japan announced Monday that they intend to go ahead with plans to dump 1 million tons of radioactive waste water from the Fukushima Daiichi Nuclear Power Plant cleanup (that has now been diluted and filtered to remove “most” radiation) into the ocean. The US has said they are accepting of the move, but all the regional nations (China, both Koreas, Indonesia, Malaysia, and the Philippines are objecting strenuously.
With that background, it looks like all three major index ETFs are looking to open lower today. The SPY and especially the DIA are printing black candle bodies in premarket being near their lows of the early session. QQQ is much more indecisive so far this morning. All three remain above their T-line (8ema) meaning this is at most a pullback in the uptrend, at least as of this point. This is the start of a new quarter. So, do not be surprised if we see funds that were late to the party continue reallocations or see fun inflows as FOMO grips the individual traders who compared their accounts to the major indices over the holiday. Also, remember the old Trader’s Almanac rule of thumb that markets are sad (bearish) when they have to come back to work after extra time off. As far as extension goes, none of the three major index ETFs is too far from their T-line. However, the T2122 indicator remains well up into its overbought territory. So, while there is some room to move higher (and keep in mind that markets can remain extended longer than we can remain solvent betting on mean reversion), the bears do have the benefit of more slack to run. Finally, even though many Fed speakers (including Chair Powell) have spoken multiple times since the June FOMC Meeting, the release of minutes this afternoon may cause some volatility. Just be aware.
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, markets opened just on the red side of flat with the SPY gapping down 0.11%, DIA opening 0.05% lower, and QQQ gapping down 0.13%. However, at that point, there was a modest divergence. SPY immediately recrossed its gap, ground sideways in a tight range until 11 am, rallied until 1 pm, sold off back to the prior close at 2 pm, and then drifted back to the highs of the day at the close. At the same time, DIA immediately recrossed its gap, rallied until 12:30 pm, and then drifted just a bit lower in a tight range the rest of the day. However, QQQ continued lower until 10:50 am, rallied hard back to the prior close by 11:30 pm, and slowly drifted lower the rest of the day. This action gave us large white-body candles in the large-cap index ETFs and a black-bodied Doji Harami in the QQQ. The DIA (and maybe the SPY is you squint) could also be seen as a Doji Continuation Signal (Sandwich).
On the day, all 10 sectors were in the green with Financial Services (+1.34%) leading the way higher (after banks aced the stress test) while Technology (+0.07%) lagged behind the other sectors. At the same time, SPY gained 0.39%, DIA lost 0.75%, and QQQ lost 0.20%. The VXX gained 2.17% to close at 25.37 and T2122 climbed back higher into the overbought territory at 94.32. 10-year bond yields fell to 3.842% while Oil (WTI) gained 0.37% to close at $69.82 per barrel. So, Thursday saw divergence with QQQ (which has led all year) showing weakness and indecision at the same time the large-cap ETFs continued to move higher. The question is whether this might be a result of quarter-end profit-taking in the leading tech names, simply a result of the big banks acing the Fed stress tests, or the portent of a trend change. This happened on just less-than-average volume in the DIA and less-than-average volume in both QQQ and SPY.
The major economic news on Thursday, overnight Fed Chair Powell said the US bank sector was “strong and liquidity is very, very high.” However, he also said, “we are very reluctant to say if the sector’s turmoil was over … (because) our job is to worry about things.” He went on to maintain a more hawkish stance toward Fed policy. Powell said, “The committee clearly believes that there’s more work to do, that there are more rate hikes that are likely to be appropriate.” Later (once the sun came up in the US), Q1 GDP was revised much higher to an unexpectedly strong +2.0% (compared to a preliminary reading of 1.3% and a forecast of +1.4% but still weaker than the Q4 +2.6%). At the same time, the Q1 GDP Price Index came in lower than expected at 4.1% (versus the forecast of 4.2% but still above the Q4 reading of 3.9%). So, the economy remained strong and inflation was not rising quite as fast as expected. The Weekly Initial Jobless Claims came in well below what was anticipated at 239k (compared to a forecast of 266k and the previous week’s value of 265k). So, the labor market remains very strong. Later, May Pending Home Sales fell more than projected at -2.7% (versus a forecast of -0.5% and the April value of -0.4%). Finally, after the close, the Fed Balance Sheet showed to have fallen $21 billion on the week from $8.262 trillion to $8.341 trillion as the Fed continues to reduce its asset holdings. Overall, the bears could only spin this news negatively in the sense that it means the Fed has more work to do…and that may mean a slow-down later. On the other hand, the bulls (and realists in my mind) would say that so far, we have seen no recession, the economy remains resilient, and the labor market remains strong. Yet inflation has fallen, even if at a slower pace. Elsewhere, despite Powell’s comments overnight, later Atlanta Fed President Bostic reiterated his belief that the path of inflation will allow the central bank to not raise rates again this year. Bostic said, “We have reached a level of the nominal federal funds rate that should be sufficient to move inflation toward the 2% target over an acceptable timeframe.”
In stock news, CGC completed the sale of its California facility on Thursday for $61.10 million. This is the company’s fifth such deal since April 1 and is part of the company’s attempt to improve its balance sheet. Elsewhere, Reuters reported that SNAP has hit 4 million paid subscribers ($3.99/mo.) a milestone since the launching its member service one year ago. At the same time, Reuters also reported that VLKAF (Volkswagen) is in talks to adopt the TSLA standard for their electric vehicle plugs. In other auto news, TM announced that their May sales jumped 10% from the same month in 2022. This was mostly driven by hybrid sales which were up 26%. Later, SPCE completed its first commercial space flight, which topped out at just under 53 miles altitude. (SPCE says it has a backlog of 800 customers willing to pay between $250k and $450k to make the flight.) Meanwhile, OSTK announced that after buying the intellectual property of bankrupt BBBY, it will rebrand itself as Bed Bath and Beyond despite not bidding on the defunct retailer’s store locations. Late in the day, CVX announced it is offering to sell several oil and gas properties located in NM and TX. The move comes after the oil giant agreed to buy shale firm PDCE last month (which operates in the same region) and continues the CVX trend of divesting properties in West TX and NM).
In stock legal and regulatory news, the UK Competition Appeal Tribunal rejected the UK Competition and Markets Authority (regulator) bid to delay an appeal of the MSFT purchase of ATVI. As a result, the appeal will go ahead as originally scheduled at the end of July. Elsewhere, AAPL will defend itself against EU Antitrust charges based on music streaming as originally alleged by SPOT. The oral hearings will take place today. At the same time, a US court approved the CNNWQ (Cineworld) to restructure its debt which should allow the company to emerge from bankruptcy in July. Meanwhile, the US Supreme Court threw out a $96 million award that had been given to MEI in its case against its former European distributor. Out in San Francisco, arguments were completed Thursday in the FTC bid for a temporary restraining order against MSFT proceeding with its acquisition of ATVI (while FTC litigation continues). No timeline has been given for a decision. In related news, the government of Canada weighed in on the deal agreeing with the FTC and UK Competition Authority. Ottawa sent a letter to the court hearing the FTC request for a restraining order stating they believe the deal will lessen competition and should be halted until the FTC can prove its case. In military news, the US State Dept. announced the approval of the sale of 24 F-35 fighter jets to the Czech Republic for $5.62 billion. The contractors for these planes are LMT, RTN, and BA. Late in the day, the FDA approved BMRN’s gene therapy for hemophilia A. The company said it expects about 2,500 patients in the US to be eligible to receive the treatment based on the approval. (However, it is priced at $2.9 million per patient.)
After the close, NKE beat on revenue while missing by a penny on earnings. It is worth noting that NKE also lowered its forward guidance.
Overnight, Asian markets were mixed again but leaned to the bullish side. Malaysia (-0.84%) was the only significant loss with four other exchanges being just on the red side of flat. On the bullish side, Thailand (+1.59%), India (+1.14%), and Shenzhen (+1.02%) were the leaders among the seven gainers with only Australia (+0.12%) moving less than half of a percent. Meanwhile, in Europe, with the exception of Russia (-0.31%) we see nothing but green at midday. The CAC (+1.15%), DAX (+1.17%), and FTSE (+0.70%) lead the region higher in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a strong start to the day at this point. The DIA implies a +0.31% open, the SPY is implying a +0.39% open, and the QQQ implies a +0.50% open at this hour. At the same time, 10-year bond yields are surging to 3.876% and Oil (WTI) is just on the red side of flat at $69.81 per barrel in early trading.
The major economic news events scheduled for Friday are limited to May PCE Price Index and May Personal Spending (both at 8:30 am), Chicago PMI (9:45 am), and Michigan Consumer Sentiment (10 am). The only major earnings report scheduled for Friday is STZ before the open. There are no reports scheduled for after the close.
Do not forget that US markets are only open for a half-day on Monday and are closed Tuesday for the Independence Day holiday.
In miscellaneous news, the Fed said Thursday that 57 firms (41 banks and 15 service providers) have been certified to use the “FedNow” instant payments system when it launches in late July. This includes JPM, BK, USB, and WFC among major banks. Elsewhere, a former PFE employee and his friend were charged with insider trading related to PFE stock and the COVID-19 vaccine. On the inflation front, preliminary data showed that Eurozone inflation fell more than expected in June to 5.5%. This news comes just three days after ECB President Lagarde said inflation was too high and is set to remain there for too long as she announced an unexpected rate hike. In other European news, the Netherlands formally joined President Biden’s export restrictions of semiconductor chipmaking equipment to China. This primarily affects ASML which is the leader in chip lithography equipment. (ASML announced Friday that it does not expect the restrictions to have a material impact on its 2023 financial projections.) Finally, union workers at the SPR Witchita KS plant (the primary fuselage supplier to BA) have approved a new deal. This ends the two-week strike with production to resume on July 5.
So far this morning, RAD and GBX reported beats to both the revenue and earnings lines. Meanwhile, MKC and AYI both reported misses on revenue while beating on earnings. On the other side, MSM beat on revenue while missing earnings by a penny. It is worth noting that RAD and GBX both raised forward guidance. (There were no guidance reductions at least as of yet.) RAD (+51%) and GBX (+70%) were the only major surprises reported and significantly neither came against reduced forecasts.
With that background, it looks like all three major index ETFs are looking to move higher to start the last day of the quarter. All three of their premarket candles have large, white bodies and tiny wicks at this point. However, it is early and PCE data lays ahead before the open. Remember that this is the end of the quarter, which may mean window dressing and moves like AAPL pushing for a $3 trillion valuation (which it is very near anyway). In addition, with a half-day market on Monday and the holiday on Tuesday, many money managers plan to take Monday off. Again, this gives them extra temptation to sneak out early today to stretch the off-time into a mini vacation. The point is that volumes may die in the afternoon or even all day long with prices drifting higher into the weekend. (Remember the Trader’s Almanac rule of thumb that markets are happy (bullish) the day before long weekends and sad (bearish) when they have to come back to work after extra time off. As far as extension goes, none of the three major index ETFs is too far from their T-line. However, the T2122 indicator has climbed back up well into its overbought territory. So, while there is some room to move higher (and bear in mind that markets can remain extended longer than we can remain solvent betting on mean reversion), the bears do have the benefit of more slack to run. Remember to pay yourself on payday…take the profits you can and prep your account for the weekend (and perhaps 4-day) 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 bulls were unable to follow through on the Tuesday rebound in a mixed and choppy day though energy, health care, and utilities enjoyed some buying activity. With the 2nd quarter coming to an end watch for the possibility of some end-of-quarter window dressing but keep in mind earnings, Fed uncertainty, and the coming holiday could produce choppy low-volume price action in the afternoons. However, price volatility is likely with GDP, Jobless Claims, and Housing numbers pending.
Asian markets mostly declined as we slept with the tech-heavy Hong Kong exchange leading the selling down 1.24% on the day. However, European markets are working to extend yesterday’s relief rally with only the FTSE struggling with a slight decline. U.S. futures point to a bullish open ahead of market-moving economic data that could quickly improve or reverse market conditions.
Economic Calendar
Earnings Calendar
Notable reports for Thursday include AYI, GBX, LNN, MKC, NKE, PAYX, PRGS, RAD, SMPL, & SGH.
News & Technicals’
The Federal Reserve’s annual stress test revealed that all 23 of the U.S. banks that participated in the exercise could withstand a severe recession and maintain their lending activities. However, the test also showed a wide range of loan loss rates among the banks, depending on their exposure to different types of loans. Credit cards were the most vulnerable to defaults, resulting in a high loss rate of 14.7% for Capital One, while Charles Schwab had the lowest loss rate of 1.3% due to its focus on brokerage services. The stress test results could pave the way for some banks, such as JPMorgan Chase and Wells Fargo, to announce higher dividends and share buybacks on Friday after the market closes.
A massive healthcare fraud scheme that targeted programs for the elderly and disabled was busted by the Department of Justice, which announced charges against 78 people for their involvement. The DOJ said the fraudsters submitted $2.5 billion in false claims and used the proceeds to fund lavish lifestyles, buying expensive cars, jewelry, and yachts. Some of the defendants allegedly exploited telemedicine services to make fraudulent claims, while others allegedly billed for prescription drugs that were not medically necessary or not provided at all.
The market had a mixed and choppy day on Wednesday, with the S&P 500 barely moving, the Dow losing 73 points, and the Nasdaq rising 0.3%. Some sectors that benefit from economic growth, such as consumer discretionary, communication services, and energy, outperformed others that are more defensive, such as utilities, consumer staples, and health care. The 10-year Treasury yield stayed around 3.75%, in nearly a 100 basis point inversion with 2-year bonds. This morning all eyes are focused on the pending GDP, Jobless Claims, & Home Sales numbers with a smattering of earnings as we wind down the quarter. Expect some price volatility this morning keeping in mind we could see some end-of-quarter window dressing. However, we could also see volumes begin to decline as traders head out to extend their holiday.
Markets started the day slightly lower on Wednesday with the SPY gapping down 0.25%, DIA down 0.11%, and QQQ down 0.48%. All three major index ETFs spent the first 45 minutes grinding sideways in a tight range. At that point, the SPY started a rally that recrossed the gap and reached the high of the day at 12:20 pm. From there, a sharp selloff crossed the gap once again by 1 pm, and then price wobbled sideways until a rally in the last 5 minutes took SPY out above the prior close. Meanwhile, QQQ was more volatile, rallying sharply from 10:15 to 10:55 am then selling off sharply until 11:30 am, rallying up to the highs of the day at 12:20 pm, selling very hard back down into the gap by 1 pm, and then grinding sideways the rest of the afternoon. However, DIA had a mid-day bump but ground sideways along the lows almost all day. This action gave us a white-bodied Spinning top (larger body) candle in the SPY, a white candle with a larger upper wick in the QQQ, and a black-bodied Dragonfly Doji in the DIA. Both SPY and QQQ held above their T-line (8ema) after a retest while DIA failed to even retest its T-line after gapping down below it.
On the day, five of the 10 sectors were in the red with Utilities (-1.34%%) way out front leading the market lower while Energy (+0.68%) held up better than other sectors. At the same time, SPY gained 0.05%, DIA lost 0.18%, and QQQ gained 0.20%. The VXX dropped 3.65% to close at 24.83 and T2122 dropped back to just inside the edge of the overbought territory at 80.10. 10-year bond yields fell to 3.716% while Oil (WTI) gained 2.13% to close at $69.14 per barrel. So, overall, the day was much ado about nothing. After a gap lower, the leading index ETFs recovered quickly rethought the rebound, and then drifted. Meanwhile, the laggard mega-cap DIA spent the day on the South side of the open without really participating in the rebound. This happened on less-than-average volume in all three major index ETFs but the QQQ was much closer to an average volume day than the other indices.
The major economic news on Wednesday included Preliminary May Trade Goods Balance, which came in a bit better than expected at -$91.13 billion (compared to a forecast of -$92.90 billion and much better than the April reading of -$97.10 billion). At the same time, Preliminary May Retail Inventories were reported as dead flat at +0.0% (versus the April reading of -0.3%). Later the EIA Weekly Crude Oil Inventories showed a much bigger drawdown than was expected at -9.603-million-barrels (compared to a forecast calling for -1.757-million-barrels and well more than the prior week’s -3.831-million-barrels). In Fed-speak, FOMC Chair Powell spoke at a Conf. in Portugal on Wednesday saying that “more restriction is coming.” He went on to say that he would not take “moving at consecutive meetings off the table.” Later, during questions he said he did not expect a recession, clarifying that “There’s a significant possibility that there will be a downturn … it’s not the most likely case, but it’s certainly possible.” An interesting aside is that Powell told the conference that the US would not hit the Fed’s 2% inflation target until 2025. Then, after the close, the Fed announced that all 23 major US banks passed its annual stress test. Despite $541 billion in projected loan losses across the group, the Fed projects that even during a severe global recession (including a 40% decline in real estate prices) the banks would be able to continue to provide credit and maintain their capital requirements. Under that severe scenario, the largest banks saw their capital levels drop to 10.1% while large regional banks’ capital levels fell to the 6%-8% level.
In stock news, in what seemed an odd announcement STLA said it had partnered with an ad agency specifically to reach out to black customers. (I see nothing odd about targeting any demographic. However, a press release of doing so just seems weird.) Later in the day, STLA placed a MI plant on “critical status” which the union contract allows the company to require mandatory overtime. This move is intended to allow the company to stockpile Jeep/Dodge inventory ahead of a potential strike in September. Elsewhere, for the second time this week, TRI announced they have reached a deal to buy a company, this time acquiring Imagen (a digital content management company) for an undisclosed price. At the end of the day, ORCL announced it has modified its database software (primary product) to allow it to run on processors made by startup chip company Ampere (founded by former INTC executives). This move is intended to allow ORCL to boost cloud computing performance in order to better compete with AMZN and MSFT in that market. After the close, UPS announced it was working with law enforcement after some of their Canadian shipper customers were hit with cyber phishing attacks disguised as text messages from UPS. Also after the close, as part of the stress test announcements, Fed Vice Chair for Bank Supervision Barr said banks are expected to announce revisions to their dividend and buyback plans after the close on Friday.
In stock legal and regulatory news, ATVI announced Wednesday that it is adding to its staff in the EU (Spain), following through on one of the promises made to gain EU approval of the MSFT acquisition of the company. This came after ATVI said it would be reassessing its growth plans in the UK after that country blocked the acquisition and as the CEOs of the two companies testified in the US as part of the FTC lawsuit to block the deal. Speaking of which, the CEOs of MSFT and ATVI both told a San Francisco Federal court that ever making ATVI games exclusive to MSFT hardware would not make any strategic sense. ATVI CEO Kotick told the court that if MSFT did ever do that, they would have a revolt on their hands from the 100 million monthly active users. In other Tech news, NVDA tried to head off rumored additional restrictions on chip sales to China. The CFO of NVDA said Wednesday that any additional export restriction on sales of chips to China would cause a “permanent loss of opportunities for the US chip industry” (mean NVDA). Elsewhere, a US district judge dismissed a case against AMZN which had alleged the e-commerce giant had sold “suicide kits” to teenagers. At the same time, JOBY received FAA approval for flight testing of the company’s “electric air taxi” vehicles. Meanwhile, SOLVY reached a $393 million settlement with the NJ Dept. of Environmental Protection related to drinking water pollution with “forever chemicals” from the company’s NJ plant.
After the close, MU, WOR, and BB beat on both the revenue and earnings lines. At the same time, CNXC beat on revenue while missing on earnings. However, FUL missed on both the top and bottom lines. It should be noted that MU lowered its forward guidance. The only major surprise was a 40% upside earnings shock from WOR. Finally, it is worth noting that MU was upbeat about the current quarter and said that the recent chip glut is beginning to ease. This came after a crash in computer and phone sales had caused the company’s (and the industry’s) inventories to build.
Overnight, Asian markets were mixed. Hong Kong (-1.24%) was by far the biggest loser followed by South Korea (-0.55%). The gainers were led by Thailand (+0.86%), India (+0.82%), and New Zealand (+0.64%). Meanwhile, in Europe, 13 of the 15 bourses are in the green at midday. The CAC (+0.81%), DAX (+0.22%), and FTSE (-0.24%) are typical of the performance spread in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a higher start for the day. The DIA implies a +0.30% open, the SPY is implying a +0.28% open, and the QQQ implies a +0.33% open at this hour. At the same time, 10-year bond yields are back up to 3.745% and Oil (WTI) is up almost six-tenths of a percent to $69.95 per barrel in early trading.
The major economic news events scheduled for Thursday include Q1 GDP, Q1 GDP Price Index, and Weekly Initial Jobless Claims (all at 8:30 am), and May Pending Home Sales (10 am). We also hear from two Fed speakers, Chair Powell (2:30 am) and Bostic at 3 pm. The major earnings reports scheduled for Thursday include AYI, GBX, MKC, MSM, PAYX, and RAD before the open. Then, after the close, NKE reports.
In economic news later this week, on Friday, May PCE Price Index, May Personal Spending, Chicago PMI, and Michigan Consumer Sentiment are reported.
In terms of earnings reports, on Friday, STZ reports.
In miscellaneous news, SPCE is set to launch its first commercial space flight via a rocket released from a jet on Thursday. The flight will take three passengers 50 miles above New Mexico. Elsewhere, AAPL printed another record high close Wednesday. This brought the company enticingly near a $3 trillion market cap at $2.98 trillion. (The company briefly reached the $3 trillion mark intraday on January 3, 2022, but has never closed above that level.) So, watch that as something traders push for and as a news event today. Finally, Fed Chair Powell again warned that tighter monetary policy was on the way in an overnight (2:30 am) presentation in Europe. For what it is worth, the CME Fed Watch Tool now shows an 82% probability of a quarter-point hike in July as of now.
So far this morning, RAD and GBX reported beats to both the revenue and earnings lines. Meanwhile, MKC and AYI both reported misses on revenue while beating on earnings. On the other side, MSM beat on revenue while missing earnings by a penny. It is worth noting that RAD and GBX both raised forward guidance. (There were no guidance reductions at least as of yet.) RAD (+51%) and GBX (+70%) were the only major surprises reported and significantly neither came against reduced forecasts.
With that background, it looks like all three major index ETFs are looking to move higher again, at least early. The DIA is crossing back above its T-line in premarket action and all three are printing strong white-body candles so far this morning. However, it is early and the GDP data coming at 8:30 am could throw a wrench into the works. Remember that we have only two days left until the month and quarter end. So, there could be some window dressing going on. In addition, with the holiday on Tuesday, many money managers plan to take Monday off…which provided extra temptation to sneak out early to stretch the off-time into a real rest. My point is that volumes may die even more and prices may drift into the weekend. In terms of extension, none of the three major index ETFs is far from their T-line and the T2122 indicator has dropped back to just the lower edge of its overbought territory. Therefore, we have room to run 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.
🎯 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
Yesterday’s better-than-expected economic data inspired the bulls but it may also be a double-edged sword that inspires the Fed hawks and raises the odds of rate increases. That said, the QQQ and SPY charts enjoyed a nice relief rally that held trend and price support levels. The DIA and IWM also rallied but remained challenged by significant overhead resistance. Today we have a few more earnings, potential market-moving economic reports, and another speech from Jerome Powell to add a dose of uncertainty as to what comes next.
Asian markets closed mixed with modest gains and losses while Japan continued its breakout rally surging 2.02%. European markets are breaking their losing streak this morning despite the warnings from the ECB that more rate hikes are on the way to combat inflation. U.S. futures however seem to be taking an wait and see approach this morning suggesting a mixed flat open ahead of earnings and economic data that could set the direction for the day.
Economic Calendar
Earnings Calendar
Notable reports for Wednesday include BB, GIS, FUL, KFY, MU, FIZZ, & WOR.
News & Technicals’
The European Central Bank (ECB) has been tightening its monetary policy in response to the soaring inflation in the eurozone, which reached a record high of 4.9% in November. The ECB raised its key interest rate to 3.5% earlier this month, the fifth increase since July 2022, when it started to lift rates from the historic low of 0%. However, ECB chief economist Philip Lane cautioned that the market should not expect a rapid reversal of the restrictive policy, as the inflation outlook remains uncertain and the economic recovery is uneven. He told CNBC on Tuesday that the timing and speed of policy normalization would depend on the evolution of inflation and growth in the coming months.
Google has faced an internal backlash over a drag show that was scheduled to take place as part of its Pride celebrations. The show, which was organized by a group of LGBTQ+ employees and allies, was met with resistance from some co-workers who signed a petition to cancel the event. The petitioners argued that the drag show was offensive and disrespectful to Christians, and accused Google of discriminating against their religious beliefs, according to CNBC. Google has since decided to distance itself from the show, which is still open to the public, and instead invited its employees to join a social gathering at its offices.
A federal watchdog has warned that a huge amount of Covid aid money may have been lost to fraud. The Small Business Administration (SBA), which administered two major relief programs for small businesses affected by the pandemic, may have disbursed more than $200 billion to fraudulent applicants, according to the inspector general. This would amount to 17% of the total $1.2 trillion that the SBA distributed through the Economic Injury Disaster Loan program and the Paycheck Protection Program. The inspector general blamed the massive fraud on the lack of adequate internal controls and oversight, as the SBA rushed to deliver the loans amid the crisis.
Tuesday’s economic data, durable goods orders, consumer confidence, and new home sales in May were better than expected bringing out the bulls, and raising the odds of future rate increases to reach the Fed’s 2% target. The S&P 500, Nasdaq, and Russell 2000 all rose by more than 1% while big tech kept up their momentum gaining more than 1.5% on weaker-than-average volume. That said the DIA and IWM remain under significant price resistance while the tech giants almost exclusively keep the SPY and QQQ trends bullish. Today traders will have a few more earnings reports, trade, inventory, and oil numbers along with more comments from Jerome Powell to keep them guessing. Remember we could see possible end-of-quarter window dressing and/or declining volume as traders shut down early this week to extend the holiday. Watch for whipsaws around data points with a possible choppy light volume filling as we make our way toward the weekend.
Tuesday was a Bullish day for markets as the SPY gapped up 0.21%, QQQ gapped up 0.43%, and DIA opened dead flat. From there, all three major index ETFs gave a slow, steady rally until 2:30 pm. The last 90 minutes of the day saw the SPY, DIA, and QQQ grind sideways in a tight range and then take profits in the last 10 minutes. This action gave us large white candles with tiny wicks that crossed back above the T-line (8ema) in all three. (DIA barely crossed above.) In the process, you could see the price as having broken a (tight) downtrend line in the SPY, DIA, and QQQ. This happened on less-than-average volume in the SPY and QQQ and significantly less-than-average volume in the DIA.
On the day, eight of the 10 sectors were in the green with Consumer Cyclical (+2.17%) and Technology (+1.98%) leading the way higher while Healthcare (-0.18%) was the laggard on the day. Meanwhile, SPY gained 1.10%, DIA gained 0.60%, and QQQ gained 1.72%. The VXX lost 2.50% to close at 25.77 and T2122 jumped back up into the overbought territory at 87.88. 10-year bond yields climbed to 3.766% while Oil (WTI) dropped 2.28% to close at $67.80 per barrel. So, the bulls were in charge all day on Tuesday with only some very late profit-taking keeping us from closing on the highs. As has been the case all year, once again, DIA was the laggard.
The only major economic news on Tuesday, Building Permits came in a bit above the expected value at 1.496 million (compared to 1.491 million forecast and well above the previous value of 1.417 million). That was a month-on-month increase of 5.6% (versus the anticipated +5.2% but far above the prior value of -1.4%). Later, May Durable Goods Orders were better than anticipated at +1.7% (compared to a forecast of -1.0% and even increased from the April reading of +1.2%). Then the Conference Board Consumer Confidence indicator came in well above expectation at 109.7 (versus a forecast of 104.0 and well above the May value of 102.5). At the same time, May New Home Sales were reported well above what was predicted at 763k (compared to a forecasted 675k and the April reading of 680k). That was a 12.2% increase versus April’s +3.5% month-on-month growth. Finally, after the close, the API Weekly Crude Oil Stocks report showed a larger-than-expected drawdown of 2.408-million-barrels (compared to an expected draw of 1.467-million-barrels and well more than the prior week’s 1.246-million-barrel drawdown).
In stock news, BAC opened new branches in nine markets (across four states) on Tuesday, bringing its coverage to 3,800 branches spread over 39 states. (Among the major banks, this is second only to JPM which has branches in 49 states.) Elsewhere, STLA announced they are launching their own electric vehicle charging business unit to provide customers access to “partner’s charging networks.” At the same time, CIR announced it has accepted a $1.7 billion offer ($51/share plus debt) from KKR to take the company private. Meanwhile, TRI announced it has agreed to a $650 million all-cash deal to acquire legal startup Casetext (which has an AI assistant for use by legal professionals). Then, by mid-afternoon, Bloomberg was reporting that UBS plans to cut more than half of the CS workforce bringing the overall reduction of the combined company to 30% (10,000 jobs reduced). Later, SMNEY, ABBV, and SBGSY (Schneider Electric) were added to the global list of companies hit by the MOVEit hack (perpetrated by Russian state-sponsored hacking group CIOp). After the close, SPR and its machinist union reached a tentative deal to end a strike at the company’s Wichita, KS plant. Union members will vote on the deal Thursday. (SPR is the main supplier of fuselage assemblies for BA.) At the same time, the Wall Street Journal reported that Adalytics research has found that GOOGL video ads on other websites violated their promised standards (giving the company’s own internally-placed ads preference) 80% of the time. (This is a key complaint and could well be important to EU efforts to force GOOGL to divest of their ad network while selling ads of their own.) GOOGL disputed the findings.
In stock legal and regulatory news, the state of Washington announced they will be following other states in mandating that charging stations that participate in state programs must include a TSLA plug. Later, the Consumer Financial Protection Bureau fined ACIW $25 million for improperly electronically processing $2 billion in payment transactions without customer authorization. Elsewhere, hearings started Tuesday for JNJ’s second attempt to eliminate liability for talc cancer claims through the bankruptcy of the subsidiary onto which JNJ has transferred all liability. Cancer victims are fighting the filing as an obvious abuse of bankruptcy law. However, JNJ claims its recent $8.9 billion settlement offer (spread over decades) has the support of many of the 38,000 lawsuit-filing attorneys. Meanwhile, a US district judge in CA rejected AAPL’s bid to have a class action lawsuit thrown out. The suit alleges that AAPL of defrauded its shareholders by concealing the falling demand for iPhones in China (via comments made by CEO Cook shortly before an earnings report showed the demand had, in fact, dropped sharply). REGN stock plummeted Tuesday after the company received a “Complete Response Letter” from the FDA related to the company’s aflibercept drug. However, the letter was solely because the FDA is currently reviewing inspections of a third-party filler of prescriptions for the treatment…not due to any investigation into either REGN or the drug itself. However, late in the day, the FDA did decline to approve a new higher-dose version of REGN’s Eylea blindness treatment.
In partially explanatory news, there were rumors Tuesday and more reports overnight that the Biden Admin is considering adding more restrictions on the sale of chips to China. This led NVDA (which has developed lower-powered chips to circumvent current restrictions) to drop almost 3.5% yesterday. (It is worth noting that NVDA gets 20% of its revenue from sales to China.) AMD, which is the other super-power in creating AI chips was also down more than 3% on the day. The object of the potential restrictions is the artificial intelligence race and protecting the US (and MSFT as well as GOOGL) lead in that new technology. However, we should note that the same computational results can be obtained from a vast array of lower-end processors as opposed to a smaller array of higher-end ones…just in a much less efficient and more electric-intensive way.
In mortgage news, we saw a reversal of recent relationships last week. For a long time, it had been the norm that rates drove activity, particularly in home sales. This week, strong home sales drove rates. (Tuesday’s new home sales report showed May with a 12% increase in sales versus April and a 20% increase compared to May 2022.) Weekly mortgage applications for the purchase of homes were up 3% for the week as were applications for a refinance loan. This came despite the rate for a 30-year, fixed-rate, conforming loan increasing from 6.73% to 6.75%. (Closing points remained at 0.64%.)
In earnings news, after the close, JEF missed on both the revenue and earnings lines.
Overnight, Asian markets were mostly in the green, with Japan (+2.02%), Australia (+1.10%), and India (+0.82%) pacing the gains. Meanwhile, Thailand ( -0.76%), South Korea (-0.67%), and Shenzhen (-0.47%) were the only red in the region. In Europe, we see an even stronger picture taking shape at midday. Only Portugal (-0.05%) shows any red while the CAC (+0.86%), DAX (+0.82%), and FTSE (+0.66%) lead the continent higher in early afternoon trade. In the US, as of 7:30 am, Futures point to a modestly lower start to the day. The DIA implies a +0.02% open, the SPY is implying a -0.15% open, and the QQQ implies a -0.34% open at this hour. At the same time, 10-year bond yields have fallen again to 3.737% while Oil (WTI) is flat at $67.71 per barrel in early trading.
The major economic news events scheduled for Wednesday include Preliminary May Goods Trade Balance and May Preliminary Retail Inventories (both at 8:30 am), EIA Crude Oil Inventories (10:30 am), and Fed Bank Stress Test Results (4:30 pm). We also hear from Fed Chair Powell (9:30 am) and President Biden (on the economy) at 1 pm. The major earnings reports scheduled for Wednesday are limited to GIS and UNF before the open. Then, after the close, CNXC, FUL, MU, and WOR report.
In economic news later this week, on Thursday, we get Q1 GDP, Q1 GDP Price Index, Weekly Initial Jobless Claims, and May Pending Home Sales along with Fed speaker Bostic. Finally, on Friday, May PCE Price Index, May Personal Spending, Chicago PMI, and Michigan Consumer Sentiment are reported.
In terms of earnings reports, on Thursday, we hear from AYI, GBX, MKC, MSM, PAYX, RAD, and NKE. Finally, on Friday, STZ reports.
In miscellaneous news, a survey published Tuesday by NatWest found that US fund managers are factoring in greenhouse gas emissions and other climate risks into their debt investment decisions just as much as peers in Europe. This comes despite Republican efforts in many states and in the US House to make such considerations illegal in the US. In a related story, BLK CEO Fink told a conference he has simply stopped using the politically weaponized term “ESG” (which many on the far right have labeled “woke”). Instead, he talks to businesses his funds may invest in about decarbonization, corporate ethics, and responsibility without the term. In other news, ERCOT reported that electric use in TX reached an all-time high on Tuesday as the heatwave continued. ERCOT maintained its request for customers to limit usage but said it has enough resources to meet current demand at the moment. Elsewhere, the US Dept. of Transportation decided that the New York City plan to charge a “vehicle congestion toll” would not have a significant impact on the environment and therefore does not require an environmental study. Interestingly, it is Democratic lawmakers (from NJ, of course) who are fighting the toll as nothing but a money grab by NYC. (If/when implemented this would be the first of its kind toll in the US, similar to what is in place in London and Singapore.)
So far this morning, GIS reported a miss on revenue while beating on the earnings line. (UNF reports later at 8:10 am.)
With that background, it looks like all three major index ETFs are holding onto their T-line (8ema) during retests from above in the premarket. However, it’s still very early and none of the premarket candles are decisive with all of those ETFs printing Spinning Top type candles so far. From a higher-level view, all three seem to be trying to reverse the recent Bull Flag pullback pattern. In terms of extension, obviously (given the premarket retest), none of the three major index ETFs is too far from their T-line. However, the T2122 indicator is back up in the overbought territory with more than half of that range left above. So, both sides have room to run.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
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🎯 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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