Investors grew nervous Tuesday bringing out the bears as another day passed with no progress on the debt ceiling negotiations with the June I deadline looming. The DIA suffered a little technical damage by failing its 50-day morning average and though the SPY, QQQ and IWM experienced some selling no technical damage was created. Today we have a light morning economic calendar with the release of the FOMC minutes this afternoon. We have a few more earnings events to keep traders guessing with the possible market-moving NVDA report coming after the bell.
As we slept Asian markets declined across the board led by Hong Kong down 1.62% as another wave of pandemic infections breaks out in China. European markets are also decidedly bearish this morning despite the decline in U.K. inflation to 8.7%. U.S. futures suggest a bearish open as debt negotiation uncertainty moves ever closer to the deadline with little to no progress. Plan for possible big moves as the news and rhetoric spew from Washington.
Economic Calendar
Earnings Calendar
Notable reports for Wednesday include ANF, AEO, ADI, APPS, CRMT, DY, GES, KSS, MOD, NVDA, WOOF, PLAB, PLCE, PATH, SNOW, and SPLK.
News & Technicals’
The U.K. economy has shown resilience in the face of Brexit uncertainty, but inflation has been a persistent challenge. In April, however, inflation fell sharply to 8.7% year-on-year, the lowest level since December 2021. This was mainly due to lower prices for clothing, footwear, and household goods, as well as a base effect from the spike in energy prices a year ago. Some analysts believe that inflation will continue to decline in the coming months, as weak consumer demand and tighter monetary policy take their toll. The Bank of England, which has raised interest rates four times since November 2022, may have to revise its inflation forecast downward in its next report.
The U.S. government is facing a looming deadline to raise the debt ceiling and avoid a default that could have consequences for the global economy. Treasury Secretary Janet Yellen warned that the Treasury Department will run out of cash by June 1 unless Congress acts soon. However, House Republicans questioned the urgency of her warning and accused her of using scare tactics to pressure them into a deal. President Joe Biden and House Speaker Kevin McCarthy met on Monday to try to break the impasse, but they still have several sticking points to resolve. These include Republican demands for changes in energy policy, welfare programs, and pandemic relief spending.
The U.S. stock market closed lower on Tuesday, as investors grew nervous about the possibility that debt negotiations could fail to reach a deal by June 1. President Biden and House Speaker McCarthy met on Monday to try to reach a deal, but they did not announce any breakthrough. The uncertainty weighed on market sentiment, especially in Europe, where luxury goods makers also suffered from China’s crackdown on excessive consumption. The only bright spot was the energy sector, which benefited from higher oil prices. Bond yields and the dollar also rose slightly, reflecting the risk-off mood. Today traders will have to deal with Mortgage Apps, Petroleum Status, Fed speak, bond auctions, and the FOMC minutes.
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).
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.
🎯 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
While waiting for a debt ceiling deal the major indexes chopped in a narrow range with the Dow, particularly volatile with sharp whipsaws through the day. Lowe’s reported a disappointing quarter this morning but we still have several notable reports today to inspire the bulls or bears. We also face PMI, New Home Sales, and Richmond MFG numbers with more Fed member talk while debt ceiling pontificating continues. Expect some sharp big point moves in this emotionally charged market environment.
Asian markets turned mostly lower overnight led by selling in China down 1.52% as real estate default worries reemerge. European markets trade mostly lower this morning while monitoring debt ceiling negotiations. With political wrangling continuing along with earnings and economic data pending, U.S. futures suggest a modestly bearish open.
Economic Calendar
Earnings Calendar
Notable reports for Tuesday include A, AZO, BJ, DKS, INTU, PANW, LOW, TOL, URBN, VFC, VIPS & WSM.
News & Technicals’
Lowe’s Cos Inc, one of the largest home improvement retailers in the United States, has cut its full-year sales and profit forecasts for 2023, as demand for its products wanes amid high inflation and a shift in consumer spending patterns. The company reported a decline in net sales and comparable sales for the first quarter, missing analysts’ expectations. Lowe’s attributed the weak performance to adverse weather conditions, falling lumber prices, and lower spending on discretionary items such as appliances and tools. The company now expects its full-year comparable sales to drop by 2% to 4%, compared to its previous guidance of flat to down 2%. It also lowered its full-year adjusted earnings per share range from $13.60-$14.00 to $13.20-$13.
JPMorgan Chase CEO has warned that some banks could face trouble, especially in certain markets and sectors. He said that commercial real estate is the area most likely to cause problems for lenders, as remote workers are reluctant to return to offices and high inflation forces consumers to cut back on spending. He said that banks need to be prepared for interest rates to rise far higher than most expect, and that credit is already tightening up as banks try to retain capital. Dimon made these remarks during his bank’s investor conference on Monday.
Shell, the British oil giant, is facing an over at its annual general meeting on Tuesday. A group of climate-focused investors, led by the Dutch activist group Follows This, has proposed a resolution that urges Shell to align its emissions targets with the Paris Agreement and cut its carbon footprint by 45% by 2030. The resolution has been backed by some of Shell’s largest shareholders, including Dutch pension managers MN and PGGM. Shell, which reported record profits of $39.9 billion for 2022, has rejected the resolution and said it is already committed to becoming a net-zero emissions business by 2050.
The major indexes chopped in a narrow range Monday, with the S&P 500 rising just 0.02%, as markets tread water while debt-ceiling negotiations continue. Fed officials continued to talk hawkishly yesterday adding uncertainty leave markets searching for any indications of whether June will bring another hike or a pause. Traders today will have a few more notable earnings reports, PMI, New Home Sales, Richmond MFG numbers along with more Fed speak and of course the debt ceiling drama to navigate.
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.)
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.
🎯 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
With the deadline drawing near the rhetoric and political gobblygook woke up the bears on Friday as bond yields continue to rise adding pressure to a stressed regional banking sector. Despite the bearish move, no technical damage occurred in the indexes. This the market faces some big economic reports, lots of political wrangling over the debt ceiling, and few market-moving earnings reports. That said, we could experience some big point moves in the market and I would not rule out substantial head fakes and whipsaws to keep traders and investors guessing.
Asian markets traded mostly higher overnight after China leave loan rates unchanged with the tech-heavy HSI leaning the way up 1.17% at the close. However, European markets are taking a more cautious approach this morning as they monitor the debt ceiling negotiations trading slightly bearish this morning. With a light day of earnings and a morning filled with Fed speakers, U.S. futures suggest a flat open to begin another week as we wait and hope for a deal out of Congress and some potential market-moving economic report later this week.
Economic Calendar
Earnings Calendar
Although earnings season is winding down we will still have some substantial market-moving reports over the week. Notable reports for Monday include GLBE, HEI, NDSN, & ZM.
News & Technicals’
The leaders of the Group of Seven (G7), an intergovernmental organization of wealthy Western nations have issued a joint statement that signals their intention to balance their economic ties with China and their security concerns over its actions. The statement says: “We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying.” This follows the remarks of U.S. Treasury Secretary Janet Yellen, who urged the G7 countries to cooperate in addressing the challenges posed by China at a meeting earlier this month. Some analysts, such as Goldman Sachs economists Hui Shan and Andrew Tilton, expect more measures to come from the G7, especially with the Committee on Foreign Investment in the United States (CFIUS), a body that reviews foreign investments for national security risks.
Meta, the parent company of Facebook, has been hit with a record-breaking fine by the European Data Protection Board (EDPB) for violating the privacy rights of its EU users. The EDPB, which oversees the implementation of the General Data Protection Regulation (GDPR) in the bloc, has ordered Meta to pay 1.2 billion euros ($1.3 billion) for transferring EU user data to the U.S. without adequate safeguards. The EDPB has also given Meta five months to stop any future data transfers to the U.S. and six months to cease processing any EU user data that was previously transferred in breach of GDPR. Meta said it would appeal the decision and the fine, claiming that it was “singled out” and that the ruling “sets a dangerous precedent” for other companies.
Rising bond yields added pressure to the already stressed regional banking sector and the political gamesmanship on the debt ceiling woke up the bears on Friday. However, other than some possible bearish candle patterns no technical damage was created. According to Goldman’s report, the CTA”s are maxed out but that doesn’t necessarily mean selling in the market if corporate buy-backs and retail continue to buy. But, beware, if the profit-taking begins the sell side could quickly gain some momentum so be prepared. With more political wrangling, some big economic reports, Fed speak, and a few random market-moving earnings reports throughout the week the potential for big price swings traders will have to stay on their toes and be ready for just about anything.
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.”
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.
🎯 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
With disappointing economic data and Fed speakers remaining hawkish on their battle with inflation but in a late-day surge investors whipsawed the indexes with the Dow reversing more than 350 points from low to high in the last 30 minutes of the day! The SPY broke out above resistance to joining the QQQ while the DIA and IWM remain range bound after the 2-day rally. Only a handful of the tech giants provide the majority of the rally. Today with a light earnings calendar the focus will likely be on the economic calendar dominated by Fed speakers including Jerome Powell.
Though Japanese stocks reached their highest level since 1990 Asian markets closed mixed with Hong Kong down 1.40%. European markets trade green across the board this morning as G-7 leaders commit to more Russian sanctions. U.S. futures suggest a modest open on Friday with Jerome Powell’s comments following committee member comments likely to dominate today’s market sentiment.
Economic Calendar
Earnings Calendar
We have a very light day on the earnings calendar. Notable reports for Friday include DE & FL.
News & Technicals’
Leaders in the G-7 have committed to more Russian sanctions. “We will starve Russia of G-7 technology, industrial equipment, and services that support its war machine,” the G-7 said in a statement released late Friday. The G-7 added, “We will continue our joint effort to support Ukraine’s repair of its critical infrastructure, recovery, and reconstruction.” The United Kingdom separately imposed further sanctions on Russia’s diamonds, an industry worth $4 billion in exports in 2021.
The Walt Disney Co. has scrapped its plans to build a new campus in Lake Nona, Florida, and relocate 2,000 employees from California to work in digital technology, finance, and product development. The company cited “changing business conditions” as the reason for the decision. The move comes amid a bitter feud between Disney and Florida Gov. Ron DeSantis over a state law that bans classroom lessons on sexual orientation and gender identity in early grades. Disney filed a First Amendment lawsuit against DeSantis and other officials last month. The new campus was expected to cost $1 billion and create 13,000 jobs over the next ten years.
Investors whipsawed the indexes on Thursday, despite the uncertainty over Fed rate comments and the debt-limit talks in Washington. Hotter-than-expected jobless claims and a very weak economic outlook in the Philly Fed report started the day sharply lower but surged sharply higher in the last 30 minutes of the day with the Dow moving more than 350 points from low to high. The good news is that the late-day surge finally broke the resistance in the SPY with the tech giants doing most of the lifting. However, the DIA and IWM remain range bound although looking improved with the 2-day rally. We have a light day on the earnings calendar and the economic calendar will be dominated by Fed speakers with Jerrome Powell speaking at 11:00 AM Eastern.
Markets started the day dead on Thursday (“gapping” up 0.06% in the SPY, up 0.11% in the QQQ, and down 0.25% in the DIA). The large-cap indices both then proceeded to be dead money for 30 minutes. However, the Bulls had other plans in the QQQ as a strong rally kicked in at the open and did not let up until noon. After their 30-minute wake-up call, the SPY and DIA followed QQQ higher until 11 am before resting for an hour. From noon until 2 pm all three major indices sold off a bit (with DIA even crossing back through its open to new lows at 2 pm). Yet the Bulls would have none of this and led a strong rally across the board the last two hours of the day, taking all three of the major indices out very near the highs. This action gave us large, white-bodied candles in the SPY and QQQ with essentially no lower wick and a tiny upper wick. Meanwhile, the DIA printed a white-bodied candle with a longer lower wick and a tiny upper wick.
On the day, six of the 10 sectors were in the green with Technology (+1.83%) leading the way higher as Communications Services (-0.71%) lagged behind the other sectors. At the same time, the SPY gained 0.96%, DIA gained 0.43%, and QQQ gained 1.86%. VXX fell another 4% to 34.90 and T2122 climbed back up outside of the oversold territory to 75.61. 10-year bond yields spiked up to 3.651% (as a flood of money came out of bonds) while Oil (WTI) fell 1.18% to end at $72.03 per barrel. So, Thursday saw the large caps unsure but the “big dog” tech names like NFLX, NVDA, AMD, AMZN, and AAPL dragged the rest of the market to new highs. This happened on close to average volume in all three major indices.
In economic news, Weekly Initial Jobless Claims came in below expectations at 242k (compared to a forecast of 254k and the prior week’s 264k number). However, it must be noted that three-quarters of the decline from last week was due to the stopping of massive fraudulent claims coming from the state of MA. At the same time, the Philly Fed Manufacturing Index came in better than expected (but still negative) at -10.4 (versus a forecast of -19.8 and far better than the April reading of -31.3). Later in the morning, April’s Existing Home Sales were just shy of the anticipated value at 4.28 million (compared to a forecast of 4.30 million but well below the March value of 4.43 million). This represented a 3.4% month-on-month decline. After the close, the Fed Balance Sheet was reported at $8.457 trillion, which is down $46 billion from one week ago. Meanwhile, Bank Reserve Balances at the Federal Reserve were up to $3.280 trillion (from last week’s $3.225 trillion).
In Fed talk, Fed Governor Jefferson (also Vice-Chair nominee) told a conference that inflation may be slowing but it is too early to judge the full impact of the rapid rate increases the Fed instituted in the last 15 months. He said “By some measures, progress has been slowing” and “Outside of energy and food, the progress on inflation remains a challenge,”. However, Dallas Fed President Logan seemed to be in the other camp, saying “The data in coming weeks could yet show that it is appropriate to skip a meeting.” However, uber-hawk St. Louis Fed President Bullard told the Financial Times “(the slow progress on taming inflation) may warrant taking out some insurance by raising rates somewhat more to make sure that we really do get inflation under control.”
In stock news, Reuters reported Thursday that in the wake of the failures of SBNY, SVB, and FRC, banks now see social media as a serious threat rather than a potential marketing channel. Reuters says banks, especially the majors like JPM and C, have set up teams to monitor social media, contact any complaining customers to resolve issues quickly, and also nip any reputational risks in the bud. (Unstated, but implied, is the big banks using bots to post counter-messaging to any concerns over liquidity.) In a related story, SCHW (who was a brokerage mentioned among the bank deposit run stories) raised $2.5 billion through a debt offering on Thursday. Elsewhere, the NYSE and NASDAQ said they will nullify premarket trades of CDW (made between 4 am and 4:22 am Eastern) after share prices briefly plunged 96%. Meanwhile, Reuters reported SONY is considering spinning off its finance unit in an IPO just three years after taking full control of that line. Also, in the afternoon, META shared new details on its AI work, including a custom AI chip being developed in-house. The company claimed it has been developing AI chips since 2020 and their chips use a fraction of the electricity of market-leading NVDA’s AI chips. In political spat news, DIS has canceled plans to build a $1 billion office campus in Florida, announced the closing of a luxury hotel there, and also canceled the relocation of 2,000 high-paid employees (averaging $120k) to that state amidst the company’s fight with the Florida Governor. The fight is over the Governor’s retaliation against the company for publicly stating opposition to his 2022 cultural agenda law. The impact on DIS of these decisions is unknown although it has already lost its self-controlled zoning and tax district and will spend a large amount suing the state for breaking related contracts. On the FL side of the equation, these moves will cost the state billions of dollars in lost taxes, jobs, and development in the next few years.
In stock legal and regulatory news, a US district judge issued a temporary restraining order preventing AMGN from closing its $27.8 billion purchase of HZNP until after the suit brought by the FTC to block that deal has been heard in court. Meanwhile, the US Supreme Court refused to take up an appeal of a lower court decision to throw out a lawsuit against GOOGL. The case challenged the so-called “Section 230” liability protection of social media companies for content posted by their users. This caused a sigh of relief across all major tech names. In another case, the Supreme Court ruled 9-0 against AMGN in its bid to revive patents in an infringement case the company had brought against SNY and REGN. Elsewhere, GOOGL agreed to pay the state of WA $39.9 million to settle a lawsuit claiming the company had misled users about its location tracking practices. (The company had previously paid $391.5 million to settle a suit from 40 states last November and another $80+ million to settle with AZ in October over the same issue.) Later, the NHTSA announced that F is recalling 422k SUVs because the video from rearview cameras may fail even after a prior recall repair. This recall includes 2020-2023 Ford Explorers and Lincoln Navigators.
After the close, AMAT, ROST, FTCH, and GLOB all reported beats on both the revenue and earnings lines. Meanwhile, DXC, FLO, and CVCO all missed on revenue while beating on earnings. Unfortunately, QFIN missed on both the top and bottom lines. There were no guidance changes announced.
Overnight, Asian markets leaned heavily to the green side. Hong Kong (-1.40%), Thailand (-0.77%), and Shanghai (-0.42%) were the only red in the region. Meanwhile, New Zealand (+1.03%), South Korea (+0.89%), and Japan (+0.77%) led the more numerous gainers. In Europe, we see a similar story taking shape at midday. The CAC (+0.65%), DAX (+0.57%), and FTSE (+0.43%) lead all but three bourses higher with only Denmark (-0.53%) showing any appreciable loss in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward a very modest green start to the day. The DIA implies a +0.12% open, the SPY is implying a +0.17% open, and the QQQ implies a +0.05% open at this hour. At the same time, 10-year bond yields are flat at 3.65% and Oil (WTI) is up 1.14% to $72.76/barrel in early trading.
The major economic news events scheduled for Friday is limited to hearing from three Fed speakers (Williams at 8:45 am, Bowman at 9 am, and Chair Powell at 11 am). The major earnings reports scheduled for the day are limited to DE, CTLT, and FL before the open. There are no earnings reports scheduled for after the close.
So far this morning, DE beat on both the revenue and earnings lines. Showing solid growth in revenue (+30% which was a 17.2% upside surprise) and earnings (+42%, which was a 12.6% upside surprise). However, FL missed on both the top and bottom lines. It is worth noting that DE also raised its forward guidance while FL lowered its guidance at the time of reporting. (CTLT was scheduled to report at 7 am but has been delayed for some reason.)
In miscellaneous news, after the close, the US and Taiwan reached a trade agreement covering customs procedures, regulatory practices, anti-corruption measures, as well as small business issues. The deal is not expected to impact any tariffs. This deal was really just a “make-up” deal because Taiwan had previously been excluded from the Indo-Pacific Economic Framework to avoid conflicts with China. Elsewhere, G7 countries unveiled new sanctions and export controls that target Russia. The measures added 70 entities to a blacklist prohibiting them from receiving any exports from G7 countries as well as 300 sanctions against individuals, entities, vessels, and aircraft considered facilitators. The Russian energy-extracting industry was also targeted. Meanwhile, in Kansas, a Wheat industry group announced the results of its survey of the state’s winter wheat crop. The survey expects Kansas (the largest wheat-producing state) to have the lowest crop yield since 2000. They expect a crop of 178-million-bushels (compared to a USDA forecast of 191.4-million-bushels and 2022’s 244.2-million-bushel winter wheat crop). If this new estimate is correct, expect pressure on food prices related to wheat despite the recent extension of the Russia-Turkey-Ukraine grain export deal.
With that background, it looks like DIA is pushing up against resistance at yesterday’s closing level. However, SPY and QQQ are looking to push higher this morning. In addition, all three major indices are up off the premarket lows and are now at the top of their premarket range. Just be aware that QQQ (the market leader) is close to retesting its next resistance level above and it is really a relative handful of massive tech names dragging QQQ (and the rest of the market) higher. Over-extension from the T-line is also a problem for QQQ and to a lesser extent for SPY. However, the T2122 indicator is still in (the top of) its mid-range telling us we have at least a little room left. All of this is taking place on a Friday after a nice up week (especially in QQQ). So, profit-taking and rest for the market seem in order. Don’t get caught off-guard by some Friday selling. Still, we can’t fight the tape and the trend remains bullish at the moment.
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.
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The bulls were energized on Wednesday triggering a short squeeze when both the President and Speaker came out with statements saying they are working together for a deal on the debt ceiling. Unfortunately, the rally didn’t break the trading range of the DIA, SPY, and IWM which has kept indexes trapped for more than one and a half months. Today along with WMT earnings we will get Jobless Claims, the Philly Fed numbers, Existing Home Sales, and more Fed member chatter to add the potential for price volatility.
Asian markets took a cue from the U.S. surge closing the day with gains across the board with the Nikkei leading the way up 1.60%. European markets are also decidedly bullish this morning reacting to the debit ceiling progress hopes. U.S. futures reversed overnight losses to once again suggest a bullish open ahead of potentially market-moving earnings and economic data.
The global debt has reached a near-record level of $305 trillion, according to the Institute of International Finance (IIF). This is an increase of $45 trillion since the start of the pandemic, driven by unprecedented fiscal and monetary stimulus measures. However, as central banks start to raise interest rates to curb inflation, the debt servicing costs have also risen, creating a “crisis of adaptation” for borrowers and lenders. The IIF warned that the high leverage in the financial system poses significant risks to financial stability and economic growth.
The tech giants are dominating the stock market in 2023, as they continue to grow their profits and expand their businesses. Apple, Alphabet, Amazon, and Microsoft have all increased their share prices by more than 30% since January, while Meta has more than doubled its value. These five companies are outperforming the rest of the market by a wide margin, as the Dow Jones Industrial Average has barely moved in the same period. The tech sector is showing its resilience or is this an irrational move indicating a growing tech bubble?
Target is facing a serious problem of organized retail crime, which is costing the company more money and putting its stores at risk. The company expects to lose $500 million more in 2023 than in 2022 because of theft and damage by criminal groups. Target’s CEO Brian Cornell said the company is taking steps to protect its products and employees and to keep its stores open for customers. Other retailers have also complained about the increase in retail crime and blamed online platforms that allow criminals to sell stolen goods.
The market saw a substantial short squeeze after lawmakers said they are nearing a debt ceiling deal. Both sides said they don’t want to miss the deadline of early June and are working hard to a compromise. The earnings season is wrapping up with reports from big retailers like Walmart and TJX companies later this week. We will also get data from Jobless Claims, Philly Fed, and Existing Home Sales with more Fed speakers throughout the morning. The big question for the day is; Can the bulls follow through with another day of bullishness as the data rolls out? Buckle up for another day where anything is possible!
