On Thursday, the major indices diverged greatly at the open.  The SPY gapped up 0.92%, QQQ gapped up a massive 2.29%, but the DIA opened flat (down 0.02%).  SPY immediately faded half of its gap higher and then went through wild fluctuations until noon.  At that point, a volatile rally took over for the rest of the day but ended on a down wave the last 15 minutes.  Meanwhile, QQQ followed up its gap higher by fading a third of the gain in the first hour before rallying strongly back above the open by 11 am.  From there, it rode waves slightly bullishly to the highs of the day at 2 pm.  QQQ then had a significant selloff and recovery before taking profits for the last 15 minutes of the day.  However, after its flat open, DIA sold off, ground sideways, and sold off again, reaching the lows of the day at about noon.  From that point, the mega-cap index ETF rode a wavy rally back to break even before taking profits on those last 15 minutes.  This action left us with three indecisive Doji candles (a gap-up Dojis in the QQQ and SPY as well as a flat Doji in the DIA.

On the day, eight of the 10 sectors were in the red with Technology (+2.45%) way out front leading the market higher and Energy (-2.04%) and Communication Services (-1.92%) lagging far behind the other sectors.  At the same time, the SPY gained 0.86%, DIA lost 0.08%, and QQQ gained 2.43%.  VXX fell 2.34% on the day to end at 37.07 and T2122 climbed but remains in the oversold territory at 14.52. 10-year bond yields spiked up to 3.819% while Oil (WTI) plummeted 3.31% to end the day at $71.88 per barrel.  So, Thursday was the Tech Bulls’ Day, with NVDA (+24.37%) and AMD (+11.16%) pulling the rest of the QQQ and SPY upward on the promise of AI-based chip sales after the NVDA report. However, fear of a US Debt Default pulled downward against that exuberance, weighing most heavily on the stodgy, mega-cap DIA.  It is worth noting that QQQ had above-average volume, DIA had average volume, and SPY had just below-average volume for the session.    

In major economic news Wednesday, Q1 GDP was revised upward to +1.3% (versus a forecast of +1.1% and the Q4 reading of +2.6%).  However, the Q1 GDP Price Index also was revised up slightly to +4.1% (compared to an expected +4.0% and the Q4 value of +3.9%).  At the same time, Initial Weekly Jobless Claims came in far below the expected number at 229k (versus the forecast of 250k but still more than the prior week’s 225k).  Later, April Pending Home Sales were reported at dead flat +/-0.0% (as compared to a forecast of +0.5% but much better than the March reading of -5.2%).  After the close, Bank Reverse Balances with the Fed were reported at $3.251 trillion (down $29 billion from last week’s $3.280 trillion value).

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In stock news, Nippon Steel continued its talks with the Management of TECK about taking a stake in the coking coal miner, despite the GLNCY bid (opposed by TECK mgmt.) to buy TECK.  At the same time, CMI has decided to brave debt ceiling risks to price an IPO for its filtration unit.  This new IPO will begin trading Friday.  Meanwhile, ILMN saw the Chair of its board voted out as activist investor Icahn (Chair of IEP) led an investor revolt.  However, two of Icahn’s board nominees failed to be elected and the CEO also retained his seat.  Elsewhere, the CEO of F (Farley) told an MS investor conference “I think we see the Chinese as the main competitor, not GM or Toyota” … “The Chinese are going to be the powerhouse.”  Interestingly, on the same day, F struck a deal with TSLA to allow F electric vehicle owners access to the TSLA supercharger network as of early 2024.  On a day when AI reigned in the market, MSFT President Smith told a Washington DC audience that deep fakes are the biggest AI concern.  “We’re going have to address the issues around deep fakes. We’re going to have to address in particular what we worry about most foreign cyber influence operations, the kinds of activities that are already taking place by the Russian government, the Chinese, the Iranians,” he said. He went on to call on President Biden to use an Executive Order to force federal agencies that use or deal with AI in any way to adopt and comply with a framework developed by the US NIST in 2020. Smith also called for the creation of a new federal agency dedicated to regulating AI.

In stock legal and regulatory news, in the afternoon, German authorities announced that they received serious indications of possible data protection violations by TSLA.  They cited 100gb of confidential TSLA customer and former/current employee data (including names, social security numbers, salaries, bank details, addresses, email, phone numbers, etc.) leaked to German newspaper Handelsblatt.  TSLA European HQ has been notified of the investigation and the matter has also been reported to the EU over GDPR violations.  Elsewhere, the US State Dept. followed up on MSFT’s report Wednesday by Thursday announcing that Chinese hackers had targeted both US and Western countries’ governments and public infrastructures. The report went on to say that FTNT products had been compromised and were being used by the Chinese “Volt Typhoon” group of attacks.  Later, a US district judge refused to dismiss a case, ruling that BAC must face allegations that it failed its responsibility by permitting unauthorized transactions on CA unemployment and disability benefit cards.  (BAC paid $225 million to settle cases brought by two US agencies over very similar matters in 2022.)  After the close, the New York City Banking Commission voted to freeze NYC deposits in COF and KEY after the two banks failed to file plans to eliminate discrimination from their operations.

In debt ceiling news, mid-morning Thursday, Representative Hern (head of GOP caucus) told Reuters the he believed it likely a debt-ceiling deal would be done by Friday afternoon.  He said “I think it’s some of the finer points they are working on right now,” … “You are likely to see a deal by tomorrow afternoon.”  (That makes sense as Speaker McCarthy has promised his conservative faction three days to read the deal.  So, a Friday afternoon deal gives them the normal 3-day weekend off to “read” the deal with a vote on Tuesday.)  By mid-day, Reuters sources inside the negotiations said the two sides were just $70 billion apart and they were edging close to a deal.  However, the source also said what is likely to emerge is just a “slimmed-down version” of an agreement rather than the hundreds of pages of detail the full bill will require. A second source in the room told Reuters that top-line numbers will be hammered out allowing both sides to declare victory while the fine details of what actually gets cut and what gets funded at what level) will all be worked out in future appropriations bills.  If that is true, it begs the question of why the hell the Congress (GOP) took us through this entire song and dance.  If there is no budget now, will be no budget after the deal (because this is not about a budget it’s about permissible debt), and the plan all along has been for Congress to actually budget by releasing appropriations at a line-item, fine-detail level…then this whole debt ceiling fiasco was just a publicity stunt for conservative lawmakers.  They could have done the same thing without all of the drama.

After the close, ULTA, MRVL, WDAY, RH, LGF.A, and DECK all reported beats on both the revenue and earnings lines.  Meanwhile, COST, GPS, and ADSK all missed on revenue while beating on earnings.  It is worth noting that DECK lowered its forward guidance.  The surprises included a 200% upside earnings shock from LGF.A, a 106% upside earnings surprise from GPS, and a 33% upside earnings shock from DECK.

Overnight, Asian markets leaned to the green side, but the biggest mover was toward the red.  Hong Kong (-1.93%) and New Zealand (-1.09%) showed the only appreciable losses on the day.  Meanwhile, Taiwan (+1.31%) and India (+0.97%) led the more numerous green exchanges higher to end the week.  In Europe, the bourses are mostly green on modest moves at midday.  Greece (+1.45%) is the exception to the rule with the CAC (+0.22%), DAX (+0.10%), and FTSE (+0.20%) leading the region higher in early afternoon trade.  In the US, as of 7:30 am, Futures point toward a modest green start to the day.  The DIA implies a +0.15% open, the SPY is implying a +0.19% open, and the QQQ implies a +0.36% open at this hour.  At the same time, 10-year bond yields are retreating to 3.789% and Oil (WTI) is up nine-tenths of a percent to $72.49/barrel in early trading.

The major economic news events scheduled for Friday include April Durable Goods Orders, April Goods Trade Balance, April PCE Price Index, April Personal Spending, and April Retail Inventories (all at 8:30 am), and Michigan Consumer Sentiment (10 am).  The major earnings reports scheduled for the day are limited to BIG, BAH, and HIBB before the opening bell.  There are no reports scheduled for after the close.  

So far this morning, KT, PDD, and BAH reported beats on both the revenue and earnings lines.  However, BIG and HIBB both missed on the top and bottom lines.  It is worth noting that HIBB has lowered its forward guidance.  Notable surprises include an 82% downside earnings shock from BIG and a 76% upside earnings surprise from PDD (which also delivered 187% earnings growth for the quarter).

In miscellaneous news, after-hours Thursday, CNBC reported that JPM is developing a “ChatGPT-like” AI named “IndexGPT” to give investment advice to its customers.  The US Supreme Court dealt a blow to the EPA’s ability to regulate pollution by ruling in favor of a couple who had sued to fight the designation of their lakefront property as Wetlands.  The ruling put new rules (written by the conservative majority) on the Clean Water Act which Bloomberg says will make it harder to stop pollution done on private property.  Finally, META has offered to “limit use of other businesses’ advertising data” for its own Facebook Marketplace offerings in a proposed concession to the British Competition and Markets Authority (anti-trust watchdog).  Using the product/price offerings, advertising, and sales (order click) data from other companies that use META as an advertising platform had always been a primary strategy of the company.  While doing it less to UK businesses is a step in the right direction, this is not final and was not a META commitment to any other country.

With that background, it looks like the Bulls are frisky again this morning with price now at the highs of the overnight trading in the SPY, QQQ, and DIA. SPY appears to be crossing back above its T-line (if premarket price holds) while QQQ is pulling away from its own 8ema to highs not seen in more than 13 months. Of course, DIA has the most work to do and must break its downtrend and deal with a resistance level immediately if the bulls are going to take it higher. Extension is not a problem in SPY obviously. DIA is also good in that department if premarket trends hold. However, QQQ is getting extended from its T-line to the upside. The T2122 indicator tells us the market remains oversold. With all of this said, we have to remember that this is the Friday before a 3-day weekend and there is still a lot of potential for politicians to throw a wrench into market works (drama for drama’s sake) related to the Debt Ceiling. (Not only today but over the long weekend as well.) So, be careful and position your account for the day and the long news cycle ahead. Take profits, move stops, lighten up, and consider the appropriate hedges.

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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Markets gapped lower on Wednesday (down 0.40% in the SPY, down 0.21% in the DIA, and down 0.60% in the QQQ).  The bears then followed through for an hour in all three major indices.  At that point, all three then ground sideways near the lows for 4.5 hours.  However, at that point, the Bulls stepped in to rally strongly for 25 minutes only to see a selloff the last 25 minutes of the day.  This action gave us a gap-down black-bodied Spinning Top in the SPY, a gap-down white-bodied Doji-type candle in QQQ, and a gap-down black-bodied large candle (with small wicks at each end) in the DIA.  This all happened on above-average volume in the QQQ and just less-than-average volume in the two large-cap indices.

On the day, nine of the 10 sectors were in the red with Basic Materials (-1.72%) out in front leading the way lower as Energy (+0.13%) was the only sector in the green and, again, held up considerably better than the others.  At the same time, the SPY lost 0.72%, DIA lost 0.79%, and QQQ lost 0.51%.  VXX gained 4.03% on the day to end at 37.96 and T2122 fell but remains in the mid-range at 39.79. 10-year bond yields spiked up to 3.746% while Oil (WTI) climbed 1.71% to end the day at $74.16 per barrel.  So, Wednesday was the Bears’ Day as markets were spooked by fear of default grew (for the most part on GOP posturing and messages to the press, but certainly not helped by Treasury Sec. Yellen).  However, it is notable that a handful of the tech “big dogs” did resume trying to hold the market up tech names were holding up markets (NFLX, AMZN, and META in particular).    

The only economic news Wednesday, EIA Weekly Crude Oil Inventories showed a huge and unexpected 12.456-million-barrel drawdown of inventory (compared to a forecasted 0.920-million-barrel drawdown and the prior week’s 5.040-million-barrel build of inventory).  This was in addition to a 1.6-million-barrel release from the strategic petroleum oil reserves during the week.  So, the draw was actually more than 14 million barrels.  In addition, Treasury Sec. Yellen spoke during the day, answering questions on a variety of topics.  On the topic of inflation, she said that “inflation has come down very meaningfully” and went on to cite headline inflation as having fallen more than four percent from the peak and gas prices down more than $1.50 a gallon.  On labor, she said (that the US labor market) “is a bit less hot” and has seen a big rise in participation but also “the labor market remains tight.”  Related to bank consolidation, Yellen said greater concentration among big banks is undesirable, going on to say that diversity (between small, mid-sized, and big banks) is vital with each group serving a different need in the market.  So, while she had said a few days ago that there may be more consolidation in the banking sector, she opposes consolidation among the big banks (JPM, C, BAC, WFC, GS, MS).  Elsewhere, (and contrary to conventional wisdom) Fed Governor Waller said that while an inverted yield curve in the context of stable inflation usually points to a bad economic outlook…the current yield curve may signal better times ahead.  He told a University of CA economic conference “What you’re seeing in the inversion is not so much fears about bad economic outcomes in the future, but belief and trust that we’re going to bring inflation back down and rates will be lower in the future once we do that,”.  (Whether you believe him, you believe he really believes that, or whether it is true…you be the judge.)

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In stock news, sadly, TGT announced it is removing some LGBTQ-themed products from their stores “in order to safeguard stores and employees” as well as because of the pressure from groups opposed to such products.  At the same time, C announced it’s scrapping the idea of selling its Mexican unit (Banamex) after failing to find a buyer at what it believed was a fair price.  Instead, C intends to spin off that unit in an IPO in 2025.  Meanwhile, the largest shareholder of FRPT (Jana Partners) said it intends to pursue a proxy fight (July annual meeting) as it will seek to replace four board members.  The announcement came as Jana heavily criticized management and the board’s supervision of them.  Later, Bloomberg reported that AAPL is preparing to introduce a new interface for all its “iProducts” with a smart display that will appear on locked devices.  (Bloomberg said it will be announced at AAPL’s June 5 Developer Conference.)  Elsewhere, META has begun the next round of its previously announced elimination of 10,000 jobs.  This round of layoffs is focused on business teams (marketing, program management, content strategy, corporate communications, etc.).  This is the last batch of layoffs of the 10,000 announced in March.

In stock legal and regulatory news, UK anti-trust watchdog said Wednesday that both DB and C have admitted to anti-competitive behavior (exchanging sensitive UK bond data in order to fix prices).  The agency also announced that it has provisionally found five banks had breached rules (were part of the ring) but that HSBC, MS, and RY had not yet admitted their guilt.  Elsewhere, the Biden Administration urged the Supreme Court to reject an appeal by AAPL and AVGO stemming from their loss of a district-level appeal of a $1.1 billion judgment in a patent infringement case.  (Separate cases against MSFT, SSNLF, DELL, and HPQ are still pending over the infringement of the same patents.)  The original ruling was for AAPL to pay $837.8 million and AVGO to pay $270.2 million.  At the same time, Bloomberg reported that the US prosecutors are reviewing stock trading evidence against former FRCB employees.  Meanwhile, Reuters reported that the FTC is investigating whether ABT, British company Reckitt (who owns Mead Johnson), and NSRGF (Nestle) over collusion in bidding on state contracts for baby formula (WIC programs).  After the close, MSFT filed an appeal of the UK anti-trust watchdog’s April decision to prohibit the company’s acquisition of ATVI.  (The US FTC had previously also blocked the deal and MSFT has appealed that decision as well.)

In debt ceiling news, in the morning, House Speaker McCarthy said the sides “were far apart” (which hit the markets).  On the other side, the White House criticized Republicans for holding the full faith and credit of the United States hostage.  At the same time, Treasury Sec. Yellen also reiterated that she expects the country will be unable to pay its bills as of June 1, but said it is hard to estimate the exact date.  Meanwhile, she has instructed Treasury to stop paying any bills without a definite due date.  Speaker McCarthy also said he accepts Yellen’s default deadline as true (some of his GOP Congressional colleagues had questioned the legitimacy of that date Tuesday).  For their part, GOP negotiators rejected the Biden Administration’s proposals to set corporate and billionaire tax minimums (which would raise revenue) or to expand the ability to negotiate cheaper drug prices (which would significantly reduce military, Medicare, and Medicaid spending).  (The latter seems odd for a group screaming about cutting spending, but these negotiations are about making political points and not about making sense or positive change.) Speaker McCarthy also increased the pressure slightly by saying the House now plans to adjourn for a full week on Thursday (rather than the previously planned Friday).  However, Congress can be recalled.  At the end of the day, both President Biden and Speaker McCarthy told reporters that progress had been made Wednesday and that was very positive, with negotiations continuing Wednesday night.  Unfortunately, by mid-evening, Moody’s disagreed and put the US AAA credit rating on “negative watch” which is typical prior to a rating reduction.  This immediately hit DJIA Futures and if lowered increases the cost of governance by raising bond rates.

After the close, NVDA, AEO, ENS, SPLK, GES, MOD, PLUS, and SNOW all reported beats on both the revenue and earnings line.  (The first clean sweep of companies with more than $500 million in quarterly revenue in quite a while.)  It is worth noting that NVDA and SPLK both raised their forward guidance.  However, AEO and SNOW both lowered their own guidance.  Among the earnings surprises were a 200% upside surprise (SNOW), 92% upside surprise (SPLK), 75% upside surprise (GES), 40% upside surprise (MOD), and a 32% upside surprise (ENS).  The largest revenue surprise was a 10.3% upside surprise from NVDA.

Overnight, Asian markets leaned heavily toward the red side.  Once again, Hong Kong (-1.93%) led the region lower with Australia (-1.05%) next among the losers.  On the plus side, Taiwan (+0.82%) was the standout. All other moves in the region were half of a percent or less in both directions.  In Europe, we see a mixed market at midday.  The largest mover is Norway (+1.02%) to the upside while the CAC (-0.28%), DAX (-0.12%), and FTSE (-0.27%) lead the region on volume as usual in early afternoon trade.  In the US, as of 7:30 am, Futures point to a VERY mixed start to the day.  The DIA implies a -0.32% open, the SPY is implying a +0.57% open, and QQQ implies a +1.90% open at this hour.  At the same time, 10-year bond yields are up to 3.761% and Oil (WTI) is down 2% to $72.86/barrel in early trading.

The major economic news events scheduled for Thursday include Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, and Weekly Initial Jobless Claims (all at 8:30 am), April Pending Home Sales (10 am), the Fed Balance Sheet and Bank Reserve Balances with the Fed (both at 4:30 pm).  The major earnings reports scheduled for the day are limited to AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, and TITN before the open.  Then, after the close, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY report. 

In economic news later this week, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported.

In terms of earnings reports later this week, on Friday, BIG, BAH, and HIBB report.

So far this morning, LNVGY (Lenovo), MDT, CM, NTES, and AMWD all reported beats on both the revenue and earnings lines.  Meanwhile, RY, TD, DLTR, and GCO beat on revenue while missing on earnings.  On the other side, TITN missed on revenue while beating on earnings. Unfortunately, BBY and BURL missed on both the top and bottom lines.  It is worth noting that DLTR and GCO both lowered their forward guidance.  The biggest surprises came from RY (110% upside revenue surprise), CM (130% upside revenue surprise), AMWD (64% upside earnings surprise), BBY (50% downside earnings surprise), GCO (45% downside earnings surprise), and NTES (31% upside earnings surprise).

With that background, it looks like the Bulls are on fire in the QQQ, which is near the premarket highs and appears as if it will challenge a breakout above the recent (Monday) highs. At the same time, it looks like SPY is headed back up to retest its T-line as resistance. However, DIA continues its move lower despite being up off of its premarket lows. Of course, all this is before the data dump at 8:30 am. Extension is not a problem in SPY obviously. However, DIA is starting to get a little stretched to the downside and, if it opens where it is now, QQQ will be a bit stretched to the upside. The T2122 indicator is now well into oversold territory. So, we have a divided market with the mega-cap DIA perhaps showing the fear of a debt default while NVDA’s blowout report has the tech-heavy QQQ in “buy, buy, buy” mode. This may be a sign of very short-term rotation into “risk on” mode. However, be careful that bad GDP, Jobless Claims, or word from the debt ceiling negotiations does not rain (hard) on that parade.

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

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

Tuesday saw a gap lower to start the day (down 0.40% in the SPY, down 0.28% in the DIA, and down 0.50% in the QQQ).  At that point, all three major indices ground sideways until noon, with the DIA even actually recrossing its gap in a modest bullish trend.  However, at noon, the Bears stepped in to lead a selloff that lasted until 2:30 pm before grinding sideways into the close near the lows.  This action gave us larger, black-bodied candles with more upper wick and small lower wick.  The DIA failed a retest of its T-line (8ema) and crossed back below its 50sma.  Meanwhile, the SPY crossed back below its own T-line.  This happened on less-than-average volume in all three of the major index ETFs.

On the day, nine of the 10 sectors were in the red with Technology (-1.44%) out in front leading the way lower as Energy (+0.67%) was the only sector in the green and held up considerably better than the others.  (This was likely due to the warning from Saudi Oil Minister for oil speculators to “watch out,” which oil markets took to indicate more production cuts might be on the way soon.)  At the same time, the SPY lost 1.12%, DIA lost 0.69%, and QQQ lost 1.27%.  VXX gained 1.90% on the day to end at 36.49 and T2122 fell but remains in the mid-range at 39.79.  10-year bond yields fell a bit to 3.698% while Oil (WTI) climbed 2.40% to end the day at $73.78 per barrel.  So, Tuesday saw a pullback in the QQQ and SPY as well as retesting of the recent lows in the DIA.  It was notable that none of the “big dog” tech names were holding markets up Tuesday with only AMD (+0.11%) even slightly in the green.    

The only economic news Tuesday, Building Permits came is extremely low at 1.147 million (compared to a forecast of 1.416 million and the prior reading of 1.430 million).  This was a massive miss of nearly 20%.  Later in the morning, Preliminary May Mfg. PMI came in below expectation at 48.5 (versus a forecast of 50.0 and an April value of 50.2).  However, at the same time, Preliminary May Services PMI came in stronger than had been anticipated at 55.1 (compared to a forecast of 52.6 and an April reading of 53.6).  The Preliminary S&P Global Composite PMI also came in significantly stronger than expected at 54.5 (versus a forecast of 50.0 and an April value of 53.4).  Finally, after the close, the API Weekly Crude Stocks Report showed a large and unexpected drawdown of 6.799-million-barrels (compares to a forecast of a 0.525-million-barrel inventory build and the prior week’s 3.690-million-barrel build).  

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In debt ceiling news, the political drama continued Tuesday.  GOP Congressmen publicly “expressed doubt” on whether June 1 was a real deadline (as opposed to an artificial date set by the White House to put pressure on the GOP).  This implies the GOP side may be less likely to worry about it.  Meanwhile, GOP Speaker McCarthy said Tuesday that “negotiators are nowhere near (a deal)” and that “a deal must be reached by Friday to avoid default” (the latter based on McCarthy promising his party conservatives 3 full days to read any agreed deal before a vote) … but he also added, “there was still time.”  For their part in the drama, Congressional Democrats did two things Tuesday.  First, they introduced a bill to expand Social Security by raising taxes on the wealthy.  Secondly, they began circulating a “discharge petition” which would bring a vote on increasing the debt ceiling to the floor.  They have 213 signatures as of Tuesday evening and need 218 to force the vote (regardless of House Speaker McCarthy’s feelings on the matter).  Meanwhile, the White House said talks continue and tried to stay “above the fray.” At the end of the day, very few people believe there will be a default.  However, any deal before the deadline would mean one side or the other caved.  So, expect more of the same drama and a last-minute deal. For what that is worth, The Financial Times reported that the combination of this news (and in particular the GOP portions) was the cause behind the down day on Wall Street. 

In stock news, climate activists repeatedly attempted to storm the stage at SHEL’s shareholder meeting after their resolution (calling for SHEL to set more ambitious climate strategy) only got 20% of the shareholder votes.  Despite an overall week tape, the regional banks had a good day Tuesday with PACW (+7.74%), ZION (+4.63%), WSFS (+4.35%), and BKU (+4.32%) leading the group higher.  Elsewhere, AAPL announced a deal with AVGO to expand their relationship (AAPL already accounts for 20% of AVGO revenue) to supply AAPL with 5G chips for their phones.  Later UBER announced it is partnering with GOOGL (Waymo division) to offer driverless cars for ride-hailing and food delivery in the 180 square miles around Phoenix AZ.  At the same time, WH was halted briefly Tuesday after it was announced CHH is seeking to buy WH.  It is unclear at this point what WH management or board feels about the idea.  After the close, Elon Musk attempted to rev up a bidding war as he said TSLA will decide on the location of a new factory before the end of this year.

In stock legal and regulatory news, in the wake of FOX’s $787.5 million defamation settlement, another pending defamation case, and more recent on-air “misreporting” (on homeless veterans, migrants, and a hotel) activist investors have filed a proxy resolution calling for the network to study using “on-air labels” to distinguish news from its notorious opinion content.  However, with Chairman Murdoch holding 42% of the voting shares, it is unlikely this resolution will pass.  At the same time, across the pond, EU antitrust regulators have closed an investigation into the video licensing policies of a trade group whose members include GOOGL, AMZN, AAPL, and META.  Elsewhere, the NTSB announced it will hold a two-day investigative hearing on June 22-23 over the NSC train derailment in East Palestine OH back in March.  Meanwhile, the state of CA has filed a request with the US EPA asking for permission to ban internal combustion-only vehicle sales in that state by 2035. The same request also asks the EPA to approve the state’s proposed increasingly stricter car emission standards starting in 2026. Finally, the Netherlands said late Tuesday that MMM had been notified that the company will be held financially responsible for the cleanup of “forever chemicals” in a Dutch river.  No dollar value or estimate is yet available but it is expected to be significant since the contamination includes ground and water with the river dispersing contamination over a large area.

After the close, VFC, TOL, A, PANW, and URBN reported beats on both the revenue and earnings line.  Meanwhile, INTU missed on revenue while beating on earnings.  It is worth noting that INTU and A lowered their forward guidance.  At the same time, TOL and PANW both raised forward guidance.  Surprises included +51% (TOL), +31% (VFC), and +20% (PANW) on earnings.

Overnight, Asian markets leaned heavily to the red side with Hong Kong (-1.62%), Shanghai (-1.28%), and Japan (-0.89%) leading the way lower.  There was no significant green among the Asian exchanges.  Meanwhile, in Europe, we see strong red numbers across the board at midday.  The CAC (-1.12%), DAX (-1.66%), and FTSE (-1.74%) lead the region lower with only Russia (-0.06%) near breakeven in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing to a down start to the day.  The DIA implies a -0.38% open, the SPY is implying a -0.34% open, and the QQQ implies a -0.29% open at this hour.  At the same time, 10-year bond yields are down to 3.68% but Oil (WTI) is up another one and two-thirds percent to $74.09/barrel in early trading. 

The major economic news events scheduled for Wednesday are limited to EIA Weekly Crude Oil Inventories (10:30 am), FOMC May Minutes (2 pm), and Treasury Sec. Yellen speaks (10:05 am).  The major earnings reports scheduled for the day are limited to ANF, ADI, BMO, BNS, DY, KSS, WOOF, XPEV, and UHAL before the open.  Then, after the close, AEO, ENS, PLUS, GES, MOD, NVDA, SNOW, and SPLK report.  

In economic news later this week, on Thursday, we get Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, Weekly Initial Jobless Claims, April Pending Home Sales, the Fed Balance Sheet, and Bank Reserve Balances with the Fed.  Finally, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported.

In terms of earnings reports later this week, on Thursday, we hear from AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, TITN, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY.  Finally, on Friday, BIG, BAH, and HIBB report.

In miscellaneous news, Bloomberg reported Tuesday what most traders have known for decades.  Corporate guidance is in inaccurate 70% of the time when it comes to the two numbers the market cares about most (revenue and earnings). Sandbagging is still the name of the game…beat and lower, beat and lower, rinse and repeat.  Finally, US mortgage demand dropped as expected as 30-year, fixed-rate, conventional mortgage rates crossed over 7% Tuesday.  For the week, the average rate was 6.69% showing the volatility.  The Mortgage Brokers Assn. reports applications for new home purchase loans fell 4% (down 30% from one year prior) and refinance applications dropped 5% (44% lower than on year ago).

So far this morning, ADI, WOOF, and DY have reported beats on both the revenue and earnings lines.  Meanwhile, BMO and BNS reported huge beats on revenue (112% and 110% upside surprises respectively) while missing on earnings. On the other side, KSS missed on revenue but beat on earnings (a 130% upside earnings surprise).  However, XPEV missed on both the top and bottom lines.  It is worth noting that XPEV also lowered its forward guidance.  (ANF reports later this morning.)

With that background, it looks like the Bears are trying to follow through on Tuesday’s down day and currently had premarket prices near their overnight lows. QQQ is retesting its T-line for support this morning while SPY and especially DIA fall further below their own 8ema. It is notable that the SPY premarket move would break its uptrend line and challenge its 17ema if the market session follows the early traders’ lead. However, QQQ remains in a bullish trend (the current move is nothing but a pullback or over-extension relief…yet). Extension from the T-line is not a problem in any of the major indices nor is the T2122 indicator (which remains in its mid-range). So, we have room to run if the bears want to stretch their legs. This is an area to be especially careful as it is looking like it could be at least a short-term trend break. Also, as mentioned above, none of the tech “big dog” names stepped up to hold markets yesterday. This was an uncommon occurrence of late and it is worth keeping an eye on. In short, be careful. The rally may have exhausted itself for at least a while.

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

Large-cap indices opened flat Monday and spent the day wobbling sideways in a fairly tight range.  The SPY spent most of the day on the plus side while the DIA spent nearly the whole day on the red side of breakeven.  Meanwhile, the QQQ opened flat only to immediately rally for 30 minutes before grinding sideways in a tight range the rest of the day. This action gave us a Doji in the SPY, a black-bodied Spinning Top in the DIA, and a Bullish Engulfing candle with a not insubstantial upper wick in the QQQ.  The QQQ and SPY remained above their T-line while the DIA failed that retest and closed below its own 8ema.  This all happened on very low SPY volume, as well as below-average volume in the DIA and QQQ.

On the day, eight of the 10 sectors were in the green (and a ninth just barely red) with Technology (+0.91%) out in front leading the way higher as Consumer Defensive (-1.01%) was by far the worst performing sector.  At the same time, the SPY gained 0.04%, DIA lost 0.39%, and QQQ gained 0.34%.  VXX was flat on the day at 35.81 and T2122 climbed a bit but remains in the mid-range at 65.43.  10-year bond yields spiked up to 3.717% (after being down a good chunk in premarket) while Oil (WTI) climbed a third of a percent to end the day at $71.81 per barrel.  So, Monday saw a great deal of uncertainty with a handful of big dog tech names (TSLA, AMD, GOOGL, and META) holding up the QQQ and by extension the rest of the market.   

The only economic news Monday was more talking…this time by four non-voting members of the Fed.  Before the open, St. Louis Fed President Bullard (uber-hawk) went further than he has before, saying the US economy has been “fairly robust so far (in 2023) … So, for that reason, I think we’re going to have to grind higher with the policy rate in order to put enough downward pressure on inflation.”  He went on to argue that he thinks two more rate hikes are needed in 2023, adding that he has previously wanted the Fed to make those kinds of moves.  This was quite unusual for a Fed member and contrary to his colleagues’ postures of needing to see more information.  Bullard has already made up his mind weeks and months in advance.  (Perhaps he has that freedom because he is not an FOMC voter this year.)  Later, in a virtual appearance San Francisco Fed President Daly said it would be a historical anomaly to get inflation back to 2% without unemployment going to at least 4%.  She went on to say, “Even three weeks in advance of the (next) meeting, it’s still a lot of time to collect information before we make a decision about what to do in June or what to do for the rest of the year.” (Daly is not a voter either in 2023.)  Meanwhile, Atlanta Fed President Bostic (not a voter either this year) indicated he is still in favor of a June pause, saying “Right now, absent a big change, I think I will be comfortable saying let’s just look and see how things play out.”  At the same event, Richmond Fed President Barkin said “I’m not going to prejudge June,” and “There is a plausible narrative whereby the Fed’s previous rate hikes, plus tighter credit standards amid strains in the banking sector, will cool demand and prices.”  (Barkin does not have a vote in 2023 either.) 

SNAP Case Study | Actual Trade

In stock news, F held an investor day to tout its plan to (profitably) ramp up its electric vehicle business.  However, the company also acknowledged a huge hurdle, saying that its cost structure is $7 billion higher than its competition (non-union TSLA).  Later, INTC told its own investor conference about its plan to shift toward AI chips which it will introduce in 2025 in order to better compete with NVDA and AMD.  (INTC currently has zero market share in the AI space after its AI chips have been delayed for years.)  In other news, M&A Advisory firm GHL announced Monday that it has agreed to be acquired by Japanese company Mizuho Financial Group for $550 million ($15/share, which was a 121% premium over GHL’s Friday close of $6.78).  Meanwhile, WMT has announced it has signed a deal with pet telehealth provider Pawp to allow WMT subscribers access to Vets via video and text without appointments.  (This is direct competition to a service offered by CHWY.)  Elsewhere, both PFE and NVO announced (separately) findings of studies that show their oral weight loss drugs are as effective as the LLY and NVO injectable weight loss drugs that have been so popular and newsworthy in recent months.  Later CVX announced it is buying PDCE in a stock and debt deal worth $7.6 billion.  After the close, TGNA announced a $300 million accelerated share repurchase program and a 20% dividend increase. 

In stock legal and regulatory news, WBA asked a US judge to vacate an arbitrator’s $642 million award to HUM over prescription drug reimbursements after the arbitrator found WBA has submitted millions of falsely-inflated drug prices for reimbursement. It was no surprise the HUM asked the judge to affirm the award.  Elsewhere, FCNCA has sued HSBC for hiring away more than 40 top employees of SBNY after FCNCA bought the holdings of SBNY from the FDIC.  The suit seeks $1 billion in damages, claiming the hiring was a planned scheme and the employees took major customers and trade secrets that allowed SBNY to secure major customers.  Meanwhile, MU announced midday on Monday that after the early morning ban by China, it expects a hit mid-to-high single-digit percentage range.  Two Korean firms SSNLF and SK Hynix (South Korea listed) are expected to pick up the market share unless the US can convince the Koreans to forego the revenue in an effort to punish China.  At the same time, a US judge has ruled the CEO of MMM must attend the mediation sessions aimed at resolving nearly 260,000 lawsuits alleging MMM military earplugs failed causing hearing loss.  After the close, a federal judge in Chicago dismissed some claims made against ABT in litigation over recalled baby formula.  The judge threw our claims of “only economic loss” related to the recall.

In miscellaneous news, the USDA just reported a third of the nation’s winter wheat crop is being abandoned (or will be) in the field.  This comes as farmers have decided it’s economically better to destroy the crop and file an insurance claim than to spend more money harvesting.  This is the highest percentage of a planted winter-wheat crop to be abandoned since World War One.  Elsewhere, the Wall Street Journal reported over the weekend that XOM has acquires 120,000 acres of AR land where it plans to produce lithium.  Meanwhile, the Biden Administration announced a deal that calls for CA, AZ, and NV states to all cut their water usage by about 13%.  The deal means that the Federal government will not need to impose severe restrictions on the states.  (The deal was made more palatable by massive snow and rainfalls this year.)    Finally, President Biden and House Speaker McCarthy did not reach a final debt ceiling agreement Monday.  However, game theory had suggested no deal would be reached with 10 days left until the deadline.  After their meeting, both men said they had a productive meeting and believe they will reach a deal before a default

After the close, ZM, NDSN, and HEI all reported beats on the revenue and earnings lines.  Meanwhile, LU missed on revenue while beating on earnings.  It is worth noting the ZM raised its forward guidance.

Overnight, Asian markets were mixed but leaned to the red side.  Shanghai (-1.52%), Hong Kong (-1.25%), and Shenzhen (-1.03%) led the region lower.  Meanwhile, in Europe, we see a similar picture taking shape at midday as the bourses lean to the red side.  The CAC (-0.82%), DAX (-0.27%), and FTSE (+0.22%) lead and are typical of the spread in the region in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a very modestly down open.  The DIA implies a -0.13% open, the SPY is implying a -0.11% open, and the QQQ implies a -0.11% open at this hour.  At the same time, 10-year bond yields are jumping again and are now at 3.748% while Oil (WTI) is up two-thirds of a percent to $72.54/barrel in early trading.  

The major economic news events scheduled for Tuesday include Building Permits (8 am), Preliminary May Mfg. PMI, Preliminary May S&P Global Composite PMI, and Preliminary May Services PMI (9:45 am), April New Home Sales (10 am), and API Weekly Crude Stocks Report (4:30 pm).  The major earnings reports scheduled for the day are limited to AZO, BJ, DKS, HIS, LOW, VIPS, and WSM before the open.  Then, after the close, A, INTU, PANW, TOL, URBN, and VFC report. 

In economic news later this week, on Wednesday, EIA Weekly Crude Oil Inventories, FOMC May Minutes, and Treasury Sec. Yellen speaking are on tap.  On Thursday, we get Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, Weekly Initial Jobless Claims, April Pending Home Sales, the Fed Balance Sheet, and Bank Reserve Balances with the Fed.  Finally, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported.

In terms of earnings reports later this week, on Wednesday, ANF, ADI, BMO, BNS, DY, KSS, WOOF, XPEV, UHAL, AEO, ENS, PLUS, GES, MOD, NVDA, SNOW, and SPLK report.  On Thursday, we hear from AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, TITN, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY.  Finally, on Friday, BIG, BAH, and HIBB report.

So far this morning, LOW, VIPS, AZO, and DKS all reported beats on both the revenue and earnings lines.  Meanwhile, BJ missed on revenue while beating on earnings.  On the other side, HIS beat on revenue but missed on earnings.  It is worth noting that LOW also lowered its forward guidance. It’s also worth noting that the largest surprises were 38% (VIPS) and 11% (AZO) upside earnings surprises.

In overnight news, the Saudi Oil Minister warned oil speculators to “watch out” ahead of the OPEC+ meeting.  He went on to say “They did ouch in April.  I don’t have to show my cards, I’m not a poker player … but I would just tell them to watch out.”  He made no clear implications, however, in the past, he has advocated for more investment in expanding production capacity.  So, he could, theoretically, be signaling he intends for OPEC+ not to cut production again or even to increase production quotas.  Elsewhere, Minneapolis Fed President Kashkari (voter in 2023) said last night that if the Fed does pause rate hikes in June, it should also signal that tightening isn’t over yet and the move is just a pause.  Finally, as mentioned above, the one thing both President Biden and Speaker McCarthy agreed on Monday evening was that “a default is off the table.”

With that background, it looks like markets are tepidly in the red this morning. DIA continues to be the weakest of the major indices and is retesting potential support this morning in the premarket. Meanwhile, QQQ and SPY continue to trend bullishly. The SPY does look to be doing a tiny pullback. However, the QQQ isn’t even pulling back and could best be described as consolidating at a potential resistance level at this point. Over-extension from the T-line is not a problem and consolidation will help the QQQ (which is currently the only major indice that is even a bit stretched). The T2122 indicator also continues to sit in its mid-range (telling us we have at least a little room left to run). With this all said, it does not pay to fight the tape and the trend remains bullish at the moment in the SPY and especially QQQ. DIA, on the other hand, is a choppy, slightly bearish mess. The one thing to keep in mind is that breadth of the rally is getting very thin. QQQ only had 19 (of 100) gainers and SPY had 201/500 gainers on Monday. This can be a sign of rally exhaustion.

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

Friday saw a very modest gap higher (up 0.24% in the SPY, down 0.03% in the DIA, and up 0.06% in the QQQ).   This led to a sideways grind until 11 am in all three major indices.  However, at that point we saw a sharp selloff across the board for 40 minutes.  From that point, the rest of the day saw an undulating sideways move the entire rest of the day in all three indices.  This action gave us indecisive, black-bodied Spinning Top candles in the QQQ, SPY, and DIA (although the DIA body was admittedly larger than the other two indices).  The DIA also closed just below its T-line (8ema) while the other two major indices remain comfortably above their own.  This all happened on average volume in the DIA and less-than-average volume in the SPY and QQQ.

On the day, seven of the 10 sectors were in the red with Consumer Cyclical (-1.15%) leading the way lower as Healthcare (+0.64%) held up better than the other sectors.  At the same time, the SPY lost 0.15%, DIA lost 0.23%, and QQQ lost 0.56%.  VXX gained 2.5% to 35.77 and T2122 dropped back to the center of the mid-range at 56.95.  10-year bond yields spiked up to 3.682% while Oil (WTI) fell a quarter of a percent to end the day at $71.67 per barrel.  So, Friday saw an intraday whipsaw that really amounted to an indecisive stalemate between the bulls and bears with the Bears having just a bit of the upper hand on the strength of a 40-minute mid-day selloff.  

The only economic news Friday was talking.  On the Fed front, Gov. Bowman again pleaded the case on behalf of banks.  She criticized the Fed for using the collapse of SIVB, SBNY, and FRC as a “pretext” for considering what she termed “radical reform of the bank regulatory framework…as opposed to targeted changes to address identified root causes of banking stress.”  She went on to say the new regulation being considered is simply “incompatible with the fundamental strength of the banking system.”  At the same time, NY Fed President Williams told a conference that he refuses to tie Fed policy to his recently published research that shows major global economies are still fundamentally in a low-interest rate world.  Later, Fed Chair Powell spoke and said that recent banking system troubles (causing tighter credit conditions) mean that “our policy rate may not need to rise as much as it would have otherwise to achieve our goals.”  He went on to give what Bloomberg called a clear signal he is open to pausing interest rate increases next month.  Powell said, “We’ve come a long way in policy tightening and the stance of policy is restrictive and we face uncertainty about the lagged effects of our tightening so far and about the extent of credit tightening from recent banking stresses … Having come this far we can afford to look at the data and the evolving outlook to make careful assessments.” 

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In other talking news Friday, Treasury Sec. Yellen told bank CEOs that more bank mergers may be necessary.  Specifically, she told Reuters “Pressures on U.S. regional bank earnings may lead to more concentration in the sector and regulators will likely be open to such mergers.”  Elsewhere, the proximate cause of the mid-day slump in markets was that GOP negotiators walked out of the Debt Ceiling talks.  However, on Friday evening (once the GOP had made their headlines), they returned to the table and negotiations resumed after a six-hour pause. Progress was reported over the weekend and another meeting between President Biden and Speaker McCarthy is scheduled for today after a call from the President (from Airforce One) to McCarthy which the Speaker called “productive.” At this point, it definitely seems like an agreement is a done deal but the two sides will wrestle for political points until the last minute. So, be prepared for news from the Monday meeting (likely bad news to stoke fear).

In stock news, the Wall Street Journal reported Friday that Samsung (which has a little over 27% of smartphone market share) has decided it will not change its default search engine from GOOGL to the MSFT Bing engine.  The company had been considering a switch for a couple of months.  (GOOGL earns $3 billion per year from its contract with Samsung, in addition to ad revenue.)  Meanwhile, CTLT slashed its forecast and again delayed the release of its quarterly results (the third postponement) after replacing several financial directors and naming a new CFO last month.  At the same time, Reuters reports that META will release a text-based app to compete with Twitter in June.  The news outlet reports META is already testing the service with influencers and content creators.  Elsewhere, the CEO of MS announced he will step down sometime in the next 12 months.  In the auto industry, TSLA began offering more discounts ($1,300 this time) on some Model 3 cars in the US and even heavier discounts in Europe.  Finally, in a funny story, the Wall Street Journal reported Friday that AAPL has issued an internal edict to employees forbidding them from using ChatGPT.  This is interesting because it comes less than a day after AAPL announced they are offering a ChatGPT app for iPhones and less than a week since the company hinted that it is working on its own AI offering (when it touted the fact it has been designing AI chips for years).  So, AI is good as a product to sell…just not good enough a product for “us” to use.

In stock legal and regulatory news, a driver for startup Revel is suing TSLA over a crash at the end of January.  The driver claims his TSLA “suddenly and automatically” took accelerated, forcing the driver to need to crash the vehicle in order to get it to stop.  Elsewhere, EU antitrust regulators questioned MSFT competitors about the type of data their contracts with MSFT require them to turn over.  The watchdog asked if MSFT may have used the required data to go directly to the competitors’ customers. In somewhat related news, the same EU antitrust agency finalized its record fine of META (reported here last week) to be a whopping $1.3 billion for transferring EU customer data from European to US servers. Later, the US FDA approved a KRYS gene therapy used to treat skin disorders.  At the end of the day, the US Forest Service told a federal court it is not sure when it would be able to approve a land swap that would allow RIO and BHP to develop a new copper mine in AZ.  (Native American groups have opposed the swap and mine.)  The Biden Administration (Bureau of Land Mgmt.) on Friday issued a decision supporting a $6.6 billion pipeline proposed by ETRN.  (Earlier last week, Energy Sec. Granholm also had backed the pipeline.)  Meanwhile, a US judge ruled Friday that AAL must end its alliance with JBLU in a victory for the Biden Administration which had claimed their agreement would reduce competition and raise consumer prices.  Finally, the Wall Street Journal reports that the NHTSA is making an official demand and will take legal action against ARCW after the company refused the agency’s request that it recall 67 million airbag inflators after nine of them exploded during deployment, killing two people. While ARCW has been defiant, GM proactively recalled all vehicles with those inflators. However, this recall would cut across F, TM, STLA, VLKAF (Volkswagen), and HYMLF (Hyunda/Kia) and could threaten ARCW solvency.

Overnight, Asian markets leaned heavily toward the green side, with only three of the region’s exchanges in the red.  New Zealand (-0.88%) saw the worst of the losses as Hong Kong (+1.17%), Thailand (+0.95%), and Japan (+0.90%) led the region higher.  Meanwhile, in Europe, the bourses are leaning the opposite direction at midday.  The CAC (-0.35%), DAX (-0.33%), and FTSE (flat) lead the region lower with two notable exceptions (Greece +7.06% and Denmark +1.23%) in early afternoon trade.  (Greece skyrocketed as its ruling conservative party won the most seats in the Greek election and will now enter talks with other smaller parties about forming a government.)  In the US, as of 7:30 am, Futures are pointing to a start just on the red side of flat.  The DIA implies a -0.07% open, the SPY is implying a -0.10% open, and the QQQ implies a -0.15% open at this hour.  At the same time, 10-year bond yields are down 3.663% and Oil (WTI) is just on the green side of flat at $71.58/barrel.

The major economic news events scheduled for Monday are limited to just three Fed speakers (Bullard at 8:30 am, Barking at 10:50 am, and Bostic at 10:50 am). The major earnings reports scheduled for the day are limited to RYAAY and ZIM before the open.  Then, after the close, HEI, NDSN, and ZM report  

In economic news later this week, on Tuesday we get Building Permits, Preliminary May Mfg. PMI, Preliminary May S&P Global Composite PMI, Preliminary May Services PMI, April New Home Sales, and API Weekly Crude Stocks Report.  Then Wednesday, EIA Weekly Crude Oil Inventories, FOMC May Minutes, and Treasury Sec. Yellen speaking are on tap.  On Thursday, we get Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, Weekly Initial Jobless Claims, April Pending Home Sales, the Fed Balance Sheet, and Bank Reserve Balances with the Fed.  Finally, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported. 

In terms of earnings reports later this week, on Tuesday, we hear from AZO, BJ, DKS, HIS, LOW, VIPS, WSM, A, INTU, PANW, TOL, URBN, and VFC.  Then Wednesday, ANF, ADI, BMO, BNS, DY, KSS, WOOF, XPEV, UHAL, AEO, ENS, PLUS, GES, MOD, NVDA, SNOW, and SPLK report.  On Thursday, we hear from AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, TITN, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY.  Finally, on Friday, BIG, BAH, and HIBB report.

So far this morning, RYAAY beat on both the revenue and earnings line.  Meanwhile, ZIM missed on both the top and bottom lines.

In miscellaneous news, after the close Friday, the Fed reported that deposits at US banks edged lower on the week ending May 10, falling to $17.10 trillion (from $17.16 trillion the week prior).  At the same time, the Fed reported that bank-provided credit fell from $17.37 trillion to $17.32 trillion.  Meanwhile, at the G-7 Summit, President Biden changed course and approved the transfer of F-16 fighter-bomber jets (from US allies, not the US directly) to Ukraine.  The US will provide Ukrainian pilot training on the jets after having already trained two for the purposes of determining what topics would need to be covered and to what extent.  LMT and GD make the F-16 and it is now being speculated that orders will be placed to replace the jets given to Ukraine by US allies.  (The most recent sale of F16s averaged a price of $350 million per jet after add-ons, accessories, and spare parts were figured in…$4.21 billion for 12 jets in 2022.)  The number of jets to be provided is unknown, however, military analysts say 50 or more may be the fleet size required for combat effectiveness across all of Ukraine.  So, there is a strong potential for large orders of spare parts and maintenance supplies at the very least…and the possibility of large orders for F16 or F35 planes to replace the jets going to Ukraine.

With that background, it looks like traders are still undecided early on Monday. DIA seems to be retesting its T-line while the other two major indices are just sitting inside Friday’s candle just below their closes. SPY may be getting some support from the 2/2 and 5/1 highs level. Meanwhile, QQQ still has to deal with its next resistance level it failed Friday (which has caused multiple reversals back into early 2021. Over-extension from the T-line is not a problem although QQQ remains a bit stretched. The T2122 indicator also sits in its mid-range (telling us we have at least a little room left to run). With this all said, it does not pay to fight the tape and the trend remains bullish at the moment in the SPY and especially QQQ. DIA, on the other hand, is a choppy, slightly bearish mess.

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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