Friday was another big tech-buying party as the sharp rally pushed the SP-500 up 0.9% in just two trading days. With the FRC takeover by JPM as regional bank worries continue, an FOMC rate decision Wednesday, and Apple’s earnings slated for Thursday afternoon expect another week of emotionally charged price swings. Goldman is warning that the CTA’s could be ready to sell off as much as 200 billion of stock holdings. If that occurs expect some big point moves as fear can trigger a rush for the door to protect gains. Buckle up it could be a wild week ahead!
With some Asian markets closed for Labor Day the Nikkei lead the buying by 0.92% with Australia also in a bullish mood. European markets trade mixed but mostly higher this morning with modest gains and losses as banking worries continue. With manufacturing data pending and a slew of earnings U.S. futures trade mixed and flat this morning perhaps suffering from buying hangover after the buying party last week as we wait on the FOMC decision.
JPMorgan Chase, the largest bank in the US, has acquired First Republic Bank, the fourth bank to fail this year, in a deal brokered by the Federal Deposit Insurance Corporation (FDIC). The deal will allow JPMorgan to assume all the deposits and most of the assets of First Republic, which had about $229 billion in total assets and $104 billion in total deposits as of April 13, 2023. First Republic’s 84 offices in eight states will reopen as branches of JPMorgan today. The FDIC said the deal avoids the agency having to use its emergency powers and minimizes disruptions for customers and loan borrowers. The takeover follows the collapse of Silicon Valley Bank and Signature Bank in March, which sparked fears of a wider banking crisis.
Charlie Munger, the vice chairman of Berkshire Hathaway and a legendary investor, has sounded a warning on the U.S. commercial property market, which he said is facing trouble due to bad loans and falling prices. Munger told the Financial Times that U.S. banks have made many risky loans to commercial property owners, such as office buildings and shopping centers, that may not be able to repay them as the demand for such properties declines amid the pandemic and changing consumer habits. Munger said that while the situation is not as bad as the 2008 financial crisis, it still poses a threat to the stability of the banking system and the economy. He also said that Berkshire Hathaway has been cautious about investing in banks because of these uncertainties.
The indexes continued their sharp rally on Friday, with the SP-500 adding 0.8% to its 2.0% surge on Thursday and ending the week with a 0.9% gain. Amazon’s warning of slowing growth in its cloud-computing segment was no match for hungry bulls willing to buy up the tech giants seemly at any cost. First Republic Bank, which plunged 49% on Friday and 95% for the week was taken over by JPM in a deal late Sunday yet more regional banks suffering massive outflows are still in question. Today trades face a possible hangover from Friday’s buying party as well as PMI, ISM, Construction Spending, and a slew of earnings reports. The FED’s May rate decision comes Wednesday afternoon and next tech giant Apple will report Thursday afternoon this week so plan on price volatility as we wait.
Thursday belonged to the Bulls as we opened higher (gapping up 0.57% in the SPY, up 0.37% in the DIA, and up 1.27% in the QQQ). After that, a long, steady rally kicked in, carrying all three major indices to new highs all day long. This action gave us gap-up, large white-bodied candles in the DIA, SPY, and QQQ. In fact, all three indices printed their largest gains in months as all three major indices also crossed back above their T-line (8ema). In fact, if you were a little loose with the definitions, you could even say the SPY and DIA printed Morning Star signals while the QQQ printed a Bull Kicker signal. However, again this happened on less-than-average volume.
On the day, all 10 sectors were in the green with Consumer Cyclical (+2.27%) leading the way higher and Energy (+0.28%) lagging behind the other sectors. At the same time, the SPY gained 1.99%, DIA gained 1.58%, and QQQ gained 2.72%. VXX fell 4.34% to 39.43 and T2122 popped out of the oversold territory and into the mid-range at 59.12. 10-year bond yields rose to 3.526 while Oil (WTI) gain 0.61% to $74.77 per barrel. So, the cumulative effect of strong earnings, especially in the big tech names, overcame fear over regional banks and recession…at least for a day.
In economic news, Preliminary Q1 GDP came in far short of expectations at +1.1% (compared to a forecast of +2.0% and a Q4 GDP of +2.6%). In addition, the GDP Price Index (Preliminary) came in hotter than expected at +4.0% (versus a forecast of +3.7% and a Q4 value of +3.9%). This tells us that the +1.1% GDP number is actually artificially high due to inflation. If you are a “glass half empty” kind of person, you’d say that means we’re heading into stagflation…inflation is higher than expected and growth is smaller than expected. However, personally, I choose to look at this as the Fed is going to see GDP growth slowing quickly and believe that they have done enough to ease inflation with the rest just being a matter of time. At the same time, Weekly Initial Jobless Claims came in below expectations at 230k (compared to a forecast of 248k and the prior week’s 246k reading). Then after the close, the Fed reported its Balance Sheet had shrunk slightly from $8.593 trillion to $8.563 trillion. The Reserve Balances of Banks with the Fed also shrunk from $3.165 trillion to $3.132 trillion.
In stock news, LYFT said Thursday that it will lay off “about” 1,072 employees (26% of its workforce) in the first step of new CEO Risher’s cost-cutting program. At midday, JNJ announced it will indemnify its newly-formed consumer health unit Kenvue of all costs and liability related to talc litigation in the US and Canada. (As reported here in previous days, JNJ intends to IPO Kenvue while retaining vast majority ownership.) Elsewhere, HMC announced it is investing about $3 billion in a partnership formed with another Japanese company to produce batteries for electric vehicles and homes. In an unrelated announcement, HMC announced $2.7 million in funding for environmental and conservation education initiatives in the US. Meanwhile, Reuters reports that META has merged its advertising, business messaging, and commerce departments into one division as part of the broader cost-cutting program. There was no word on any related staff reductions yet. Executives at large drugmakers told Reuters Thursday that they are searching for acquisition and ramping up research spending as their future profit pipelines are drying up (current drugs will face patent sundown). The companies cited are MRK, AZN, ABBV, LLY, and BMY. Finally, the USDA reported that flooding in the upper Midwest (due to record winter snowfalls that are now melting) will wreak havoc on the Mississippi River. This will halt barge traffic for weeks to come. (60% of US grain exports and a similar percentage of US fertilizer shipments normally use that waterway in their supply chain. This will cause shippers to find alternate, more costly transportation such as rail and trucking.
In stock legal and regulatory news, MA reported that it is under investigation by the US Dept. of Justice related to its practices on US debit cards and its competition against other payment networks for those accounts. (V revealed a similar probe in January.) Meanwhile, a US Appeals Court ruled in favor of META, rejecting the appeal of states Attorneys General who had sought to revive an antitrust case against the social media giant. The court stated the reason for the ruling was that the states had waited too long to file suit. Finally, when pushed on the matter of FRC, both the White House and Treasury Sec. Yellen told reporters that they, the FDIC, Fed, and state bank regulators in several states are keeping a close eye on the bank’s finances. Even after repeated questions, both the White House Press Sec. and Treasury Sec. Yellen did not offer an opinion on whether FRC depositors of amounts greater than $250,000 should be covered in the event of a bank run. However, they did say they have a track record of acting swiftly and decisively on such matters.
After the close, AMZN, HTHIY, MDLZ, X, WY, MHK, RSG, AJG, SKX, CC, GFL, RMD, ATR, SKYW, ALSN, DXCM, PINS, ACA, BZH, PEAK, MTX, EHC, ERIE, and AEM reported beats on both the revenue and earnings lines. Meanwhile, TMUS, INT, HIG, AMGN, EMN, LPLA, HUBG, CINF, DLR, SM, and SNAP missed on revenue while beating on earnings. On the other side, INTC, DNZOY, COF, GILD, LHX, PFG, FE, ATVI, SSNC, COLM, SAM, SGEN, and SSB all beat on revenue while missing on earnings. Unfortunately, OLN, CSL, and FLSR missed on both the top and bottom lines. It is worth noting that MDLZ, SKX, ATR, and ALSN all raised their forward guidance. However, INTC and HUBG both lowered their forward guidance. Finally, it is worth noting that INTC reported the largest quarterly loss in company history.
Overnight, Asian markets leaned heavily to the green side. Japan (+1.40%), Shanghai (+1.14%), Taiwan (+1.09%), and Shenzhen (+1.09%) led the region higher. In Europe, the bourses are mostly in the red in late-morning trade. The CAC (-0.62%), DAX (-0.19%), and FTSE (-0.22%) are leading the region modestly lower going into lunch. In the US, as of 6:45 am, Futures are pointing toward a modestly red start to the day. The DIA implies a -0.29% open, the SPY is implying a -0.31% open, and the QQQ implies a -0.26% open at this hour. At the same time, 10-year bond yields are back down to 3.481% as money seeks safe harbor and Oil (WTI) is up just less than four-tenths of a percent to $75.02/barrel in very early trading.
The major economic news events scheduled for Q1 Employment Cost Index, March PCE Price Index, and March Personal Spending (all at 8:30 am), Chicago PMI (9:45 am), and Michigan Consumer Sentiment (10 am). Major earnings reports scheduled for the day include AON, ARCB, ARES, AVTR, BLMN, CCJ, GTLS, CHTR, CVX, CL, DAN, XOM, FMX, GNTX, IMO, JKS, LAZ, LYB, NYCB, NWL, NHYDY, NVT, POR, SAIA, and TRP before the open. There are no reports scheduled for after the close.
So far this morning, XOM, CVX, SONY, MBGAF (Daimler), KMTUY (Komatsu), ELUXY (Electrolux), CRI, BBVA, CL, TRP, BLMN, POR, and NVT all reported beats on the revenue and earnings lines. Meanwhile, LYB, GTLS, and CCJ missed on revenue while beating on earnings. On the other side, AON, NWL, ARES, CHTR, and APELY beat on revenue while missing on earnings. Unfortunately, ARCB and LAZ missed on both the top and bottom lines.
With that background, it looks like the large caps are going back to test their T-lines (8ema) as support early this morning. If the Bulls are going to follow through on Thursday’s strong candles, they’ll need to work for it after AMZN reported a blowout quarter but then put a damper on the party by warning about cloud services growth. That combined with INTC getting slaughtered (worst quarterly loss ever) has the big tech names (long the market leaders) feeling a little blu (make that red) this morning. However, that is tempered a bit by yet another record quarterly profit from XOM. Over-extension is not a problem based on either the T-line or the T2122 indicator. Interestingly, the Fedwatch tool tells us that confidence in a 0.25% rate hike by the Fed next week has resurged since yesterday morning. We are now back up to an 85% probability of that, with the other 15% probability being “no hike.” Beyond next week, markets see very little (21%) chance of an additional increase this year and most are actually betting on rate decreases sometime in the Fall. (That would be against what the Fed has repeatedly said, but that is what the Fed Fund Futures tell us.) Right now, the Bulls have work to do (resistance to overcome) but the ball is in their court. Finally, don’t forget it’s Friday. Get your account ready for the weekend news cycle.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
With earnings as the focal point indexes surged on Thursday as investors averted their eyes from the regional banking crisis. Unfortunately, the situation seems to have worsened for FRC over the last 24 hours and some suggest an action by the Fed may be required as soon as this weekend. The very bullish reaction to the initial AMZN and INTC earnings seems to have tempered after the conference calls. Today we have fewer earnings events but have several potential market-moving economic reports highlighting the Feds favored core PCE number before the bell. Buckle up it could be a wild Friday session.
Asian market surged higher in overnight trading as Japan keeps monetary policy unchanged weakening the Yen. However, European indexes see only red this morning after a 0.1% GPD number with sinking bank prices raising concerns. With bank worries back in focus this morning and tempered excitement from after-the-bell earnings reports U.S. futures point to bearish open.
Amazon, the e-commerce giant and cloud leader, reported its first quarter earnings for 2023 on Thursday, April 28. The company beat analyst expectations on both revenue and profit, posting $127.4 billion in revenue and $3.2 billion in profit, or 31 cents per share. However, the company also warned of a slowdown in its cloud segment AWS, which grew 16% year-over-year, compared to 37% in the same period last year. Amazon’s online retail business also saw no growth in the first quarter, as shoppers became more cautious and less reliant on e-commerce amid the pandemic. Amazon’s stock rose 9% in after-hours trading following the earnings release.
Intel, the semiconductor giant, and PC chip leader, reported its first-quarter earnings for 2023 on Wednesday, April 27. The company reported the largest quarterly loss in its history, losing $2.8 billion, or 66 cents per share, compared to a profit of $8.1 billion, or $1.98 per share, a year ago. Revenue fell nearly 36% year over year to $11.7 billion, as the company faced fierce competition from rivals like AMD and Nvidia, as well as supply chain challenges and a global chip shortage. Intel also lowered its full-year guidance, expecting to lose $2.30 per share on revenue of $65 billion to $68 billion. Intel’s stock dropped 5% in after-hours trading following the earnings release.
The U.S. stock market earnings as the focal point, and tech companies have been delivering strong results that have boosted investor confidence and key indexes. Microsoft and Alphabet surprised the market with their earnings yesterday, and META followed suit today with a beat that sent its shares up 14%. The earnings season is not over yet, and Amazon could be the next big mover when it reports later today. The U.S. economy, however, is slowing down, according to the GDP report released this morning. This suggests that the Fed will not raise rates much more, but also that it will not cut them soon either, as inflation remains high.
Markets diverged at the open on Wednesday, as SPY gapped up 0.15%, DIA opened 0.07% higher but QQQ gapped up 1.13% on the strong tech earnings from Tuesday night. All three major indices then ground sideways for 30 minutes. Then the whipsaw began. All three made a 15-minute selloff followed by a rally for an hour and 40 minutes, reaching the highs of the day at about 12:10 and then a protracted selloff that took us to the lows of the day at 3:50 pm before bouncing the last 10 minutes. This action gave us large, black-bodied candles again but this time with larger upper wicks and smaller lower wicks. And, once again, this happened on less-than-average volume in the SPY, DIA, and QQQ.
On the day, eight of the 10 sectors were in the red with Utilities (-2.06%) leading the way lower and Technology (+0.40%) holding up better than the other sectors. This is very odd on a down day in the market. At the same time, the SPY lost 0.42%, DIA lost 0.71%, and QQQ gained 0.58%. VXX fell 2.5% to 41.22 and T2122 dropped further into the oversold territory at 7.96. 10-year bond yields rose to 3.441% (again, odd for a day when the large-cap indices fell) while Oil (WTI) plummeted another 3.62% to $74.30 per barrel. So, fear over regional banks (based apparently exclusively on FRC Q1 deposit withdrawals) overrode generally strong earnings by major companies. The market just seems skittish, perhaps waiting on the Fed’s favorite inflation index PCE Price Index on Friday (ahead of the FOMC meeting next week).
In economic news, March Durable Goods orders increased far more than expected at +3.2% month-on-month (compared to a forecast of +0.7% and the February reading of -1.2%). At the same time, the Preliminary March Goods Trade Balance showed a lower-than-expected deficit at -$84.60 billion (versus the forecast of -$89.00 billion and well better than the February value of -$91.99 billion). In addition, the Preliminary March Retail Inventories grew more than expected at +0.4% (compared to a forecast of +0.1% and a February reading of -0.1%). Later in the day, the EIA Weekly Crude Oil Inventories reported a much greater-than-expected drawdown of 5.054-million-barrels (versus a forecast for a 1.486-million-barrel drawdown and even more than the prior week’s 4.581-million-barrel inventory reduction). As with the API report numbers on Tuesday evening, this was the fourth drawdown in the last five weeks.
In stock news, early Wednesday, the UK officially blocked the MSFT purchase of ATVI. This caused ATVI to gap down 9% and end the day down 11.45%. Later, STLA offered 33,500 US employees (2,500 salaried and 31,000 hourly) voluntary buyout packages. At the same time, a Jefferies analyst reported that LOW is revamping its stores in an attempt to focus on rural America. The refresh is apparently aimed at imitating TSCO. Elsewhere, Reuters reported that TSN told employees Wednesday it is planning to eliminate 10% of corporate jobs (about 600) and 15% of executive roles. Just before the close, it was reported that US bank regulators are considering downgrading their assessment of FRC. This would potentially limit FRC’s ability to borrow from the Fed. This comes after the FDIC has given the bank weeks to reach private deals to shore up its finances but FRC has been unable to reach such deals. Meanwhile, after the close, the CEO of BMY stepped down and it was announced he will be replaced with current COO Boerner on November 1. (BMY reports Thursday.)
In stock legal and regulatory news, an NRLB Administrative Judge ruled Wednesday that TSLA supervisors had broken US Labor Law by ordering employees at a Florida TSLA Service Center not to discuss pay, working conditions, or other complaints with higher-level management. A “cease and desist” order was immediately filed with any fines to be determined later in the process. Elsewhere, DIS filed a federal lawsuit against Florida Governor DeSantis over his effort to exert control over DIS theme parks in that state. (DeSantis had his hand-picked board vote to throw out a long-term legal contract DIS signed with the prior board, outsmarting the Governor’s effort to take control of the board and punish DIS for speaking out against his cultural agenda.) Later, UBER won when a panel of US Circuit Court of Appeals judges ruled that UBER drivers are not exempt from a law requiring them to take legal disputes to private arbitration rather than join class-action lawsuits. (This means UBER drivers around the country cannot join a class-action suit brought charging that they were misclassified as contractors and are due overtime pay and work-related expense reimbursement.)
After the close, META, PXD, AFL, WM, PPC, ORLY, MKL, EBAY, KLAC, LSTR, RHI, NOW, WCN, CACI, CLS, NOV, EW, MTH, TNET, MEOH, AB, MAT, CCS, ALGN, NLY, TROX, PLXS, FIX, TER, IEX, ROKU, ENSG, CMPR, NLY, MYRG, ACHC, AVB, ROL, HELE, EQT, TDOC, SUI, BMRN, WSC, PTC, GGG, SLM, MAA, TYL, CHDN, COLB, FBIN, KALU, MORN, and NEU all reported beats on both the revenue and earnings lines. Meanwhile, MOH, ACGL, ICLR, AXS, SAVE, STC, ESI, and SNBR all missed on revenue while beating on earnings. On the other side, RJF, URI, AR, CHE, OII, and AWK all beat on revenue while missing on earnings. Unfortunately, CHRW, TA, CP, and ASGN all missed on both the top and bottom lines. It is worth noting that CACI, ALGN, and TER raised their forward guidance. However, IEX lowered its guidance.
Overnight, Asian markets were mixed. Thailand (-0.82%), Singapore (-0.36%), and Australia (-0.32%) paced the losses while Shanghai (+0.67%), India (+0.57%), and Hong Kong (+0.42%) led the gainers. Meanwhile, in Europe, we see a similar picture taking shape at midday. The CAC (+0.30%), DAX (+0.09%), and FTSE (-0.02%) lead the region on volume and market cap while the smaller exchanges have made larger moves. In the US, as of 7:30 am, Futures are pointing toward a gap higher to start the day. The DIA implies a +0.47% open, the SPY is implying a +0.61% open, and the QQQ implies a +0.93% open at this hour. At the same time, 10-year bond yields are up slightly to 3.454% and Oil (WTI) is flat at $74.25/barrel in early trading.
The major economic news events scheduled for Thursday include Preliminary Q1 GDP and Weekly Jobless Claims (both at 8:30 am), and March Pending Home Sales (10 am). The major earnings reports scheduled for the day include AOS, ABBV, MO, AAL, AIT, ARCH, AMBP, AZN, BAX, BFH, BMY, BC, CRS, CARR, CAT, CBRE, CNP, CHD, CMS, CNX, CMCSA, CROX, CRF, DQ, DPZ, DTE, LLY, EME, FIS, FAF, FCFS, FCN, GOL, HOG, HAS, HP, HSY, HTZ, HGV, HON, IP, IPG, IQV, KDP, KEX, LEA, LII, LECO, LIN, LKQ, HZO, MA, MRK, NEM, NOC, ORI, OSK, PATK, PTEN, BTU, PNR, DGX, RS, ROK, ROP, SPGI, SNY, SNDR, SIRI, SAH, SO, LUV, SAVE, SRCL, STM, FTI, TXT, TTE, TSCO, TPH, VLO, VLY, VC, GWW, WST, WEX, WTW, WIT, and XEL before the open. Then, after the close, ATVI, AEM, ALSN, AMZN, AMGN, ATR, ACA, AJG, BZH, COF, CSL, SS, SINF, COLM, DXCM, DLR, EMN, EHC, ERIE, FLSR, FE, GFL, GILD, HIG, PEAK, HUBG, INTC, LHX, LPLA, MTX, MHK, MDLZ, OLN, PINS, PFG, RSG, RMD, SGEN, SKX, SKYW, SM, SNAP, AWN, SSNC, TMUS, X, WY, and INT report.
In economic news later this week, on Friday, Q1 Employment Cost Index, March PCE Price Index, March Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.
In terms of earnings reports later this week, on Friday, AON, ARCB, ARES, AVTR, BLMN, CCJ, GTLS, CHTR, CVX, CL, DAN, XOM, FMX, GNTX, IMO, JKS, LAZ, LYB, NYCB, NWL, NHYDY, NVT, POR, SAIA, and TRP report.
So far this morning, CAT, VLO, MRK, HON, OSTK, HSY, KEX, NOC, AZN, CMCSA, KDP, TAL, OSK, PTEN, SO, AOS, LIN, STM, TXT, IP, CNP, ROP, LII, PNR, CHD, DGX, FCFSCNX, RS, ROK, XEL, CBRE, BC, AIT, TPH, LEA, WEX, LKQ, BFH, CBZ, FIS, WST, TTE, WTW, SRCL, CROX, HOG, SPGI, and BAX all reported beats on both the revenue and earnings lines. Meanwhile, AAL, BMY, SNY, CMS, FAF, ASX, BCS, NEM, DTE, and MBLY all missed on revenue while beating on earnings. On the other side, LLY, HAS, IQV, ARCH, VC, FTI, and VLY all beat on revenue while missing on earnings. Unfortunately, LUV, DQ, TSCO, SAH, and HZO missed on both the top and bottom lines. It is worth noting that LLY HSY, BAX, ROP, PNR, and WST raised their forward guidance. However, HZO lowered its forward guidance.
With that background, it looks like the Bulls are going to make a run to start the day. The QQQ seems set to gap up to retest its T-line (8ema) and the DIA is not far behind at this point in the premarket. Over-extension is not a problem based on T-line but we are well oversold according to the T2122 indicator. Interestingly, the Fedwatch tool tells us that confidence in a 0.25% rate hike by the Fed next week continues to fade a bit. We are now down to a 76% probability of that, with the other 24% probability being “no hike.” Right now, the chart tells us the bias has flipped bearish after uptrends were broken. However, we aren’t far from the consolidation range, and with good earnings to give them energy, the bulls are not likely to give in easily.
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
Wednesday was not the day most would have expected as regional bank woes offset earnings from the tech giants that beat estimates. Today could be as volatile with a huge round of earnings and economic reports while the banking uncertainty continues to worry markets not to mention depositors! META results will keep the tech sector inspired as we wait for AMZN after the bell today to report their results. Pops, drops, and whipsaws are likely as so continue to expect challenging price action as details emerge and banking worries simmer.
As we slept Asian markets saw mostly modest gains as the new Bank of Japan chief takes the reins. European markets trade mixes and near the flatline even as Barclays eases bank fears beating expectations. Once again U.S. futures shrug off the banking issues pointing to a substantial gap up open as earnings inspire the fear of missing out with a premarket pump. Plan for another wild day as market-moving data rolls out.
Meta, the social media giant formerly known as Facebook, surprised investors with a strong earnings report for the first quarter of 2023. The company reported an unexpected increase in revenue of 12% year-over-year, after three consecutive quarters of declines due to regulatory pressures and user backlash. Meta also raised its guidance for the second quarter, projecting revenue growth of 15% to 18%, well above analysts’ estimates. The stock jumped 8% in after-hours trading, extending its 2023 rally of 35%. Meta attributed its performance to the growth of its virtual reality and augmented reality products, as well as its e-commerce and advertising businesses.
Samsung, the world’s largest maker of memory chips and smartphones, suffered a sharp drop in profit in the first quarter of 2023 due to the persistent slump in the chip market and weak demand. The company reported an operating profit of 640 billion Korean won (roughly $478.55 million), a 95% decline from 14.12 trillion won a year earlier, marking its worst quarterly result since the first quarter of 2009. Samsung’s memory chip business, which accounts for more than half of its revenue, saw its profit plunge by 71% as prices for DRAM and NAND chips continued to fall amid oversupply and sluggish demand from data center and smartphone customers. Samsung’s mobile division, however, posted a 40% increase in profit thanks to the launch of its latest flagship smartphone, the S23 series, which feature improved cameras and battery life.
Investors are facing a huge amount of confusion as they grapple with the conflicting signals of recession risk and inflation fears, according to a strategist. Bob Parker, senior advisor at International Capital Markets Association, said the market was struggling to reconcile the possibility of a global economic slowdown in 2023 with the rising prices of commodities and consumer goods. “I think the big theme in markets at the moment is confusion,” Parker told CNBC’s “Squawk Box Europe” on Thursday. He added that investors were unsure whether to buy cyclical stocks that benefit from economic growth or defensive stocks that offer protection in a downturn. Giles Keating, director at Bitcoin Suisse, echoed Parker’s sentiment and said there was a general pessimism about the outlook for the world economy.
The U.S. stock market ended the day mixed as regional bank woes offset the positive impact of strong earnings from tech giants. The Dow and the S&P 500 moved lower with their 50-day average support near, while the Nasdaq gained ground boosted by earnings estimate beats. First Republic’s stock plunged nearly 30% following reports that the Fed may limit its borrowing capacity due to its shrinking deposits. The bank had reported a 40% drop in deposits in the first quarter a day earlier. Today we have a huge day of earnings that includes AMZN after the bell as well as market-moving GDP, Jobless Claims, and Pending Home Sales economic reports. Watch for pops, drops, and whipsaws, and don’t rule out the possibility of a SPY and DIA 50-day morning average test particularly if banking concerns persist.
On Tuesday, the bears had their day. The SPY and QQQ were in sync, as both those indices gapped lower at the open (down 0.49% in the SPY and down 0.51% in the QQQ). At that point, both began selling off in a slow, steady fashion for the rest of the day. Meanwhile, the DIA held up better, gapping down 0.11% at the open. It then ground sound sideways until 11:20 am. From that point, DIA joined the other major indices by selling off in a slow, steady way for the remainder of the day. All three major indices closed very near their lows of the day. This action gave us three large, black-bodied candles in the SPY, DIA, and QQQ. All the major indices dropped out of their recent consolidation ranges and at least the SPY and QQQ have broken their uptrends dating back to mid-March.
On the day, all 10 sectors were in the red with Technology (-2.48%) leading the charge lower (but it was a broad-based selloff) and Utilities (-0.34%) holding up better than the other sectors. At the same time, the SPY lost 1.57%, DIA lost 1.01%, and QQQ lost 1.89%. VXX spiked higher by 8.46% to 42.29 and T2122 dropped all the way down well into the oversold territory at 11.72. 10-year bond yields plummeted to 3.396% while Oil (WTI) fell 2.12% to $77.09 per barrel. So, despite good earnings reports from major companies, markets seemed to focus on the FRC 40% deposit outflow in Q1 that had been reported Monday night as well as that company exploring asset sales to reduce the bank’s liabilities. As a result, the bears had their way all day. However, this move happened on less-than-average volume in all three major indices.
In economic news, March Building Permits came in much better than the Preliminary number reported last week (better than expected) but still down significantly from the blowout number in February. The reading was 1.430 million (compares to a forecast of 1.413 million but well below the February value of 1.550 million). This amounted to a 7.7% decrease compared to February, that was significantly better than the preliminary number which was down 8.8%. Later Conference Board Consumer Confidence came in at 101.3 (compared to a forecast of 104.0 and the previous reading of 104.0). This was the lowest reading since July 2022. Meanwhile, March New Home Sales blew away expectations at 683k (versus a forecast of 630k and a February reading of 623k). This was a one-year high and amounted to a 9.6% month-on-month increase when only a 1.1% increase was anticipated. Finally, after the close, the API Weekly Crude Stock Report showed a much larger than expected drawdown of 6.083 million barrels (compared to a forecast of a 1.667-million-barrel drawdown and following last week’s 2.675-million-barrel draw of crude stocks). This was the second consecutive drawdown as well as the fourth in five weeks.
In stock news, MBGAF (Mercedes) launched what it said will be its last new internal combustion engine car. The next generation E-class will be available in early 2024. In other auto news, GM announced it will end the production of its first-generation electric vehicle Chevy Bolt later in 2023 as the company shifts to focus more on zero-emission trucks and SUVs. In addition, LCID announced it has begun “public road testing” of its next model, a large SUV called Gravity. The Gravity is not scheduled for release until 2024. Meanwhile, the Wall Street journal reported that GPS is eliminating hundreds of jobs (reportedly more than the 500 eliminated in September). Elsewhere, Reuters reported that BIIB said Tuesday that it will “pause or discontinue” four studies focused on potentially lucrative drugs as part of its cost-cutting plan. For most businesses, cost-cutting is great. However, in biotech, company value is usually tied closely to its drug pipeline and eliminating studies on new potential drugs thins the potential revenue streams.
In stock legal and regulatory news, BTI agreed to pay more than $635 million to the US government after its subsidiary pleaded guilty to conspiring to violate sanctions against selling products to North Korea from 2007-2017. Elsewhere, the US Bureau of Ocean Energy Mgmt. said it has finalized the designation of 10 million acres in the Gulf of Maine for potential offshore wind development. A 45-day public comment has begun and approval could come later this year. Companies such as AGR and RWEOY have expressed interest in developing projects in the designated area. Meanwhile, the EU has singled out 19 tech giants as companies subject to the region’s new online content rules. This includes the usual suspects (GOOGL, MSFT, AAPL, META, AMZN, SNAP, PINS, BABA, etc.). Later, Reuters reported that ALB and SQM have begun talks with the government of Chile after the state announced they are nationalizing the lithium mining industry in their country. (ALB and SQM are the world’s largest lithium miners.) Theoretically, ALB has a contract to operate in Chile until 2043 but the SQM contract ends this year. Finally, The Governor of CO signed the nation’s first “right to repair” law into existence Tuesday. The law requires farm machinery makers (such as DE and CNHI) to provide diagnostic tools, manuals, and parts to farmers who want to repair the machinery they own (as opposed to only being allowed to use exorbitant manufacturer repair services).
After the close, GOOGL, GOOG, MSFT, CB, V, UHS, CMG, OI, ILMN, JNPR, BYD, BXP, NEX, MTDR, CSGP, HA, JBT, LRN, UMBF, and PACW all reported beats on both the revenue and earnings lines. Meanwhile, TXN, TX, WIRE, ENPH, and ENVA all missed on revenue while beating on the earnings line. On the other side, AGR, RUSHA, and EQR beat on revenue while missing on earnings. Unfortunately, TFII and WFG missed on both the top and bottom lines. It is worth noting that V, OI, CSGP, and LRN all raised their forward guidance. However, NEX and ENPH lowered their forward guidance. Major surprises included TX (95% upside surprise on earnings), WFG (185% downside surprise on earnings), OI (55% upside earnings surprise), ILMN (300% upside earnings surprise) , WIRE (20% upside earnings surprise), JBT (31% upside earnings surprise), LRN (20% upside earnings surprise), UMBF (46% upside revenue surprise), and PACW (74% upside revenue surprise).
Overnight, Asian markets were mixed on modest moves in both directions. Malaysia (-0.77%), New Zealand (-0.76%), and Japan (-0.71%) paced the losses. Meanwhile, Hong Kong (+0.71%), Shenzhen (+0.33%), and India (+0.25%) led the gains. In Europe, the bourses are mostly in the red on divergent trading at midday. The CAC (-1.06%), DAX (-0.75%), and FTSE (-0.42%) are leading the region lower in early afternoon trade. As of 7:30 am, US Futures are pointing to a mixed and divergent start to the day. The DIA implies a -0.09% open, the SPY is implying a +0.04% open, and the QQQ implies a +0.79% open at this hour. At the same time, 10-year bond yields are close to flat at 3.396% and Oil (WTI) is off a third of a percent to $76.82/barrel in early trading.
The major economic news events scheduled for Wednesday include March Durable Goods, March Goods Trade Balance, and Preliminary March Retail Inventories (all at 8:30 am), and EIA Crude Oil Inventories (10:30 am) are reported. The major earnings reports scheduled for the day include ALLE, AMT, APH, ADP, AVY, BA, BOKF, BSX, CVE, GIB, CME, CSTM, DOV, ETR, EVR, FSV, FTV, GD, GPI, HES, HLT, HUM, NSP, MHO, MAS, NSC, ODFL, OTIS, OC, PAG, BPOP, PRG, RCI, RES, R, SLGN, TMHC, TEL, TECK, TDY, TMO, TNL, UMC, VRT, WNC, WAB, and WFRD before the open. Then, after the close, ACHC, AFL, ALGN, AB, AWK, NLY, AR, ACGL, ASGN, AVB, AXS, BMRN, CHRW, CACI, CP, CLS, CCS, CHDN, CMPR, FIX, EBAY, EW, ESI, EQT, FBIN, GGG, HELE, ICLR, IEX, KLAC, LSTR, MKL, MAT, MTH, META, MEOH, MAA, MOH, MYRG, NOV, ORLY, OII, PPC, PXD, PLXS, PTC, RJF, RHI, ROKU, ROL, NOW, SNBR, STC, SUI, TDOC, TER, TNET, TROX, TYL, URI, WCN, WSC, and WM report.
In economic news later this week, on Thursday, we get Preliminary Q1 GDP, Weekly Jobless Claims, and March Pending Home Sales. Finally, on Friday, Q1 Employment Cost Index, March PCE Price Index, March Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.
So far this morning, HUM, GSK, TMO, GD, PAG, ADP, TEL, GPI, OTIS, BSX, ASAZY, AMT, GIB, OC, UMC, MAS, DOV, WAB, HLT, TMHC, CME, TDY, VRT, NAVI, TNL, ALLE, PRG, SF, and TKGSY all beat on both the revenue and earnings lines. At the same time, BA, ETR, CSTM, and WFRD all beat on revenue but missed on earnings. On the other side, RCI, AVY, TLSNY, DASTY, SLGN, EVR, and WNC all missed on revenue while beating on earnings. Unfortunately, CVE, TECK, ODFL, and RES all missed on both the top and bottom lines. It is worth noting that AMT, ALLE, WNC, and HLT all raised their forward guidance. Meanwhile, AVY is the only one to lower their forward guidance. Major surprises included a 30% downside surprise on BA earnings, a 26% upside surprise on OC earnings, a 75% downside surprise on TLSNY revenue, a 38% upside surprise on UMC earnings, a 34% upside surprise on MAS earnings, a 35% upside surprise on TMHC earnings, a 41% upside surprise on VRT earnings, a massive 407% upside surprise on NAVI revenue (and a 21% upside earnings surprise), a 24% upside earnings surprise by EVR, a 32% upside surprise on PRG earnings, and a 131% upside surprise on WNC earnings (so much for regional bank issues).
With that background, it looks like the markets are trying to start the day inside of yesterday’s ugly candles. All three major indices are below their T-line and the T-line is descending. Over-extension is not a terrible problem based on T-line (although QQQ was a little stretched last night, the premarket candle is helping a lot) but we are oversold according to the T2122 indicator. Interestingly, the Fedwatch tool tells us that confidence in a 0.25% rate hike by the Fed next week is fading a bit. We are now down to an 80% probability of that, with the other 20% probability being “no hike.” Right now, the chart tells us the bias has flipped bearish after uptrends were broken yesterday, and since we have formed that lower low. However, we aren’t far from the consolidation range, and with good earnings to give them energy, the bulls are not likely to give in easily.
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
As we waited on big tech reports worries of regional bank failures reemerged creating a cautious mood on Tuesday. However, after the bell bullish earnings results from the tech giants generated big after-market gains in the sector with NASDAQ futures pointing to a huge gap up this morning. This bull/bear battle could provide significant price volatility today as we toss in another huge round of earnings and economic events to keep investors guessing. Watch for the potential of intraday whipsaws particularly if the regional bank rout continues today.
Surprisingly even after strong tech earnings Asian markets closed mostly lower as banking worries overshadow earnings results. European markets also trade red across the board this morning favoring the regional banking woes over the tech bullish results. However, U.S. futures are going a different route, celebrating the tech reports suggesting a bullish gap up and shrugging off financial sector concerns.
The U.S. economy is facing a challenge from the banking sector, which has been hit by a crisis since the beginning of the year. The crisis has mainly affected small banks, which are the main source of credit for small businesses and households. As these banks reduce their lending, the impact will be felt by the average Americans who rely on them. However, the economy is still expected to show positive growth in the first quarter, thanks to the strong consumer spending that drives most of the economic activity. The future outlook will depend on how well the consumers can cope with the credit crunch.
First Republic is on the brink of collapse and needs a lifeline from its big bank peers. CNBC has learned that the bank’s advisors are trying to persuade other U.S. banks to buy its bonds at inflated prices, even if it means taking a hit of billions of dollars. The alternative is worse: If First Republic goes under, the other banks will have to pay about $30 billion in fees to the Federal Deposit Insurance Corporation (FDIC). The advisors hope that by shoring up First Republic’s balance sheet, they can attract new investors who are willing to buy its stock.
The quarterly earnings season brought good news for three big companies on Tuesday. Microsoft delivered strong results on both the top and bottom lines, driven by the robust growth of its cloud services, especially Azure. The company also provided positive guidance for the next quarter. Alphabet, which owns Google, also beat the estimates on revenue and earnings and revealed a huge $70 billion share repurchase plan. The company was able to reduce its expenses and increase its online ad revenue in a tough market. Chipotle also impressed investors with its earnings and revenue, which were higher than what Wall Street expected. The restaurant chain achieved high growth in same-store sales, even though it hiked its menu prices by around 10% from a year ago.
Investors were in a cautious mood on Tuesday, as FRC plunged nearly 50% leading many regional banks lower, and raising worries of a remerging crisis in the sector. However, the earnings reports of some of the biggest technology companies, such as Microsoft and Alphabet, beat estimates lifting bullish hopes in that sector as futures surge heading toward the Wednesday open. The VIX rallied and the T2122 pulled back sharply finally reliving some of the overbought pressure in the indexes. Today we have another huge round of earnings events with META after the bell as well as the market-moving economic report Durable Goods, International Trade and Petroleum Status. Expect considerable volatility as bank worries and slowing economic growth battles the bullish reaction to better-than-expected tech results.
The large-cap indices both opened flat on Monday and then spent the rest of the day wandering back and forth within a one-half of one percent range. Both the SPY and DIA closed toward the top end of their range, crossing back above their T-line (8ema). Meanwhile, QQQ also opened flat and meandered sideways for an hour. However, at 10:30 am, QQQ saw a selloff that lasted until noon (at which point it was down 0.9% on the day). Then the bulls stepped in to drive a long, slow rally that lasted the rest of the day. This action gave us three indecisive candles with white, small candles in SPY and DIA as well as a black-bodied Spinning Top (which failed a retest of the T-line) in the QQQ. This happened on far lower-than-average volume in all three major indices.
On the day, six of the sectors were in the green with Energy (+1.59%) by far the strongest and Communications Services (-0.69%) the weakest sector. At the same time, the SPY gained 0.10%, DIA gained 0.19%, and QQQ lost 0.21%. VXX fell by a half of a percent to 38.99 and T2122 remained flat in the mid-range at 62.42. 10-year bond yields fell to 3.496% while Oil (WTI) rose to $78.69 per barrel. So, Monday was another clearly indecisive day where traders seemed unsure whether to give more credence to better-than-feared earnings or signs of economic slowdown. And, while the probability of a quarter-point rate hike next week is 91%, that is not a certainty. As a result, markets waffle sideways.
In stock news, FOX stock took a massive hit midday before recovering by 2.25% over the afternoon. This came after FOX’s midday firing of their number one-rated host, Tucker Carlson. Elsewhere, LCID replaced three directors, effective immediately, at its shareholder meeting amid a 46% drop in share price since the end of January. After the close, FRC reported earnings. However, the larger story is that the regional banks said deposits fell by 35.5% during Q1. The bank said it also plans to reduce its workforce by 20%-25% during Q2. Meanwhile, JNJ priced its consumer unit spinoff IPO (KVUE) at $20-$23/share. JNJ will continue to own 92% of KVUE after the IPO. After the close, TSN closed a Nebraska pork processing plant after a weekend fire kept the facility closed. The company is shipping hogs to other facilities in order to avoid supply disruptions. Also after the close, AMZN delivery drivers in southern California joined the Teamster Union Monday. Finally, Reuters reports that GM and Samsung will announce Tuesday that they plan to build a new joint-venture battery manufacturing plant in the US. This will be the fourth battery plant GM has begun in the last year.
In stock legal and regulatory news, cancer victims had their chance to urge a US judge to dismiss JNJ’s second attempt to be granted bankruptcy for a subsidiary that was created to avoid legal liability from its talc products (which have been found to contain asbestos). Lawyers for the 38,000 lawsuits against JNJ argued that the company has stripped away much of the subsidiary’s funding since the first bankruptcy attempt was denied and the move is a blatant move to force plaintiffs to accept the company’s offered settlement. Elsewhere, a lawyer for the San Francisco’s public school system began trial against MO claiming the company helped create a crisis of vaping addiction among teenagers. MO faces thousands of similar cases and the other primary target of the suits (Juul, which MO was a major investor in) settled for $2.7 billion rather than continue to trial. Later, a US Appeals Court ruled AAPL cannot ban links to outside payment platforms, upholding a ruling in an antitrust case brought by Fortnite game maker Epic Games. However, the appeals court ruled in AAPL’s favor on nine other matters, saying AAPL’s App Store rules do not violate antitrust laws. After the close, the European Commission put forward a new draft of its patent rules (draft is to be released Wednesday). The new rules will make it easier for patent holders of mobile technology technologies (AAPL, MSFT, MSI, NOK, SSNLF) to sue for patent infringement. (The draft needs to be approved by both the EC and EU countries before they become law.) Meanwhile, HRB and SQ agreed to dismiss with prejudice (it can’t be refiled) HRB’s lawsuit against SQ over use of the name “Block.”
In miscellaneous news, Canada announced new rules Monday that will force airlines with flights departing or landing in Canada to compensate all passengers for flight delays in essentially all cases other than snowstorms. The burden of proof that there was no way to avoid the delay is now shifted to the airlines, rather than the passenger. Democratic Senators introduced a bill Monday to prohibit members of Congress (and their immediate families) from owning individual stocks. The bill is likely dead on arrival since a very similar bill was introduced and defeated in 2022 and a Republican Senator introduced a similar bill named after former House Speaker Pelosi and aimed at purely political ends back in January.
After the close, CLF, WHR, AMP, CNI, FRC, BRO, CDNS, ARE, SSD, CADE, and RRC all beat on both the revenue and earnings lines. Meanwhile, CCK, CHX, and AAN missed on the revenue line while beating on earnings. On the opposite side, NBR beat on revenue while missing on earnings. Unfortunately, PKG missed on both the top and bottom lines. It is worth noting that CNI raised its forward guidance while PKG and CHX both lowered their guidance.
Overnight, Asian markets were mostly in the red. Hong Kong (-1.71%), Taiwan (-1.64%), and Shenzhen (-1.48%) led the region lower. Meanwhile, New Zealand (+0.83%) was by far the biggest gainer in Asia. In Europe, we nearly have red across the board at midday. Only Switzerland (+0.47%) is in the green while the CAC (-0.64%), DAX (-0.16%), and FTSE (-0.31%) are leading the charge lower in early afternoon trade. In the US, as of 7:30 am, Futures are also pointing toward a lower start to the day. The DIA implies a -0.29% open, the SPY is implying a -0.49% open, and the QQQ implies a -0.42% open at this hour. At the same time, 10-year bond yields are falling again at 3.441% and Oil (WTI) is down 0.71% to $78.20/barrel in early trading.
The major economic news events scheduled for Tuesday include Building Permits (9:30 am…which is an hour later than normal), Conf. Board Consumer Confidence and March New Home Sales (both at 10 am), and API Weekly Crude Oil Stocks (4:30 pm). The major earnings reports scheduled for the day include MMM, ABB, ALFVY, ADM, ARCC, ABG, BIIB, CNC, GLW, DHR, DOW, FISV, GEHC, GE, GM, GEO, HAL, HUBB, IVZ, JBLU, KMB, LH, LTH, MCD, MCO, MSCI, NEE, NTRS, NVS, OMF, PCAR, PEP, PII, PHM, RTX, ST, SHW, SPOT, SCL, THC, TRU, UBS, UPS, VZ, and XRX before the open. Then, after the close, GOOGL, AGR, BXP, BYD, CMG, CB, CSGP, WIRE, ENVA, ENPH, EQR, GOOG, HA, ILMN, JBT, JNPR, MTDR, MSFT, NEX, OI, RUSHA, TX, TXN, TFII, UHS, V, and WFG report.
In economic news later this week, on Wednesday, March Durable Goods, March Goods Trade Balance, Preliminary March Retail Inventories, and EIA Crude Oil Inventories are reported. On Thursday, we get Preliminary Q1 GDP, Weekly Jobless Claims, and March Pending Home Sales. Finally, on Friday, Q1 Employment Cost Index, March PCE Price Index, March Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.
So far this morning, GM, ADM, GE, PEP, RTX, DOW, NVS, MMM, DHR, ABB, MCD, SHW, THC, HAL, FISV, GLW, PHM BIIB, PII, JBLU, IVZ, MCO, ST, TRU, and GEHC have all reported beats on both the revenue and earrings lines. Meanwhile, VZ, UPS, ABG, XRX, and MSCI all reported misses on revenue while beating on earnings. On the other side, CNC, UBS, LH, OMF, SCL, GEO, and BKU all beat on revenue while missing on earnings. Unfortunately, SPOT and ARCC missed on both the top and bottom lines. It is worth noting that GM has raised its forward guidance and, so far, there have been no lowered guidance reported. Notable surprises include GE with an 108%, GM with a 40%, DOW with a 57%, XRX with a 133%, MCO with a 29%, and PHM with a 32% upside surprise on earnings. Meanwhile, SPOT had a 26% downside surprise on earnings. On revenue, UBS had a 41%, IVZ had a 31%, OMF a 21%, BKU a 74% upside surprise. There were no notable downside revenue surprises.
With that background, it looks like the uncertain consolidation wants to continue in the DIA with yet another test of the flat T-line (8ema) likely in the cards today. However, SPY and QQQ look a little more bearish as they seem to be preparing to retest the lows of the last week this morning. However, it is not a huge bear move (at least yet) and still can’t be classified as anything more than a modest pullback. Over-extension is obviously not a problem in terms of the T-line or the T2122 indicator. Meanwhile, even though the Fedwatch tool tells us that there is an 89% probability of a quarter-point hike by the Fed next week, the market just isn’t sure and seems leery. Right now, the chart tells us to maintain a long bias, but expect consolidation to continue as the 3ema has crossed below the 8ema in all three major indices. Also, keep a sharp eye out for trend breaks.
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
Friday saw an essentially flat open as the SPY gapped 0.10% higher, the DIA gapped 0.09% higher, and the QQQ gapped 0.13% lower. From that point, both large-cap indices chopped sideways in a fairly tight range, ending the day inside the tiny opening gap. Meanwhile, the QQQ did something similar but with stronger magnitude swings than the large-caps and ending up on the bullish side of the opening gap. This action gave us indecisive Doji candles in the SPY and DIA (both of which retested their T-lines all day and ended right on that average) and a white-bodied Spinning Top candle in the QQQ that also retested its T-line (8ema) but failed to break above. The moving averages are still stacked bullish (3ema > 8ema > 17ema > 50sma > 200sma) in all three major indices with the 3ema, 8ema, and 17ema all rising in the large-cap indices while the 3ema is falling slightly in the QQQ.
On the day, the sectors were split 50/50 with Healthcare (+1.20%) by far the strongest and Basic Materials (-1.52%) by far the weakest sectors. At the same time, the SPY gained 0.08%, DIA gained 0.05%, and QQQ gained 0.10%. VXX fell almost 2% to 39.20 and T2122 remained flat in the mid-range at 65.10. 10-year bond yields rose a bit to close at 3.568% while Oil (WTI) rose three-quarters of a percent to $77.95 per barrel. So, Friday was clearly an indecisive day where trader seemed to ponder better than feared earnings, a seemingly resolute and unfazed Fed, and signs of economic slowdown or maybe even mild recession ahead. This all happened on average volume in the QQQ with lower-than-average volume in the two large-cap indices.
In economic news, Preliminary Manufacturing PMI came in slightly above expectation Friday at 50.4 (compared to a forecast of 49.0 and a March reading of 49.2). (This puts this indicator right at flat since anything above 50.0 indicates growth and anything below this level indicates contraction.) At the same time, Preliminary Service PMI also came in slightly above the anticipated value at 53.7 (versus a forecast of 51.5 and a March reading of 52.6). Again, this indicates just a bit of growth in the services sector. Meanwhile, the S&P Global Composite PMI (also preliminary) was reported at 53.5 (slightly better than the forecast of 52.8 and the March reading of 52.3). These all show very modest economic growth in the US and the world (if the data can be believed). Finally, the Fed’s “Inflation Expectations Index” (a new very broad-based tool the Fed developed in 2020) fell to its lowest level in almost two years as of the end of last quarter. The IEI stood at 2.22% down from 2.31% at the end of December and below all readings going back to June 30, 2021, when it was at 2.18%.
In stock news, Reuters reported Friday that LLY will release results of an Alzheimer’s drug trial before the end of June. The company told Reuters it expects Medicare to reverse course and fully cover the currently experimental drug (implying the trials went very well). Rival drugs from BIIB and ESAIY are also scheduled to release studies in the next few months. In other healthcare news, SWAV shares soared on Friday amid rumors that BSX is looking to takeover the medical device maker. Elsewhere, China’s aviation regulator published a report telling its domestic airlines they can now take delivery of BA 737 MAX jets, subject to newly prescribed training. This could be very positive for BA, which has 130 737 MAX jets finished and awaiting delivery to Chinese airlines. Meanwhile, for the second time in a week, WMT sold off another of its online fashion brands to a private retailer. This is part of a WMT push to improve margins after having bought the brand (Eloquii) in an attempt to compete with AMZN online. In South America, Chile (the world’s second-largest producer) announced that it will be nationalizing its lithium industry. This move will hit ALB and SQM hard and may have ripple impacts on TSLA (major customer of both SQM and ALB). Finally, in it pays to be the boss news, GOOGL reported late Friday night that CEO Pinchai received $226 million in compensation (including $218 million in stock grants) in 2022 even as the company eliminate 12,000 jobs in January.
In stock legal and regulatory news, the Wall Street Journal reported Friday that the Fed may end the exemption that allowed midsized (regional) banks such as SIVB and SBNY to hide losses on securities they hold. This would reverse the Trump-era loosening of Fed banking regulation. At the same time, Treasury Sec. Yellen proposed guidelines that would force more nonbank entities (financial institutions that 2019 rules allowed to avoid Dodd-Frank Act reporting and regulation) posing systemic risk to be subject to supervision. Elsewhere, a US federal judge in Seattle ruled in favor of AMZN related to a consumer class-action lawsuit that accused the company of scheming to curb competition via the “Fulfillment by Amazon” program which then caused consumers to pay more than a free market would have. (Appeal is expected.) Meanwhile, a CA jury found that a TSLA autopilot feature did not fail in the first case involving that feature. The jury could be a good sign as TSLA continues to roll out more advance “Full Self-Driving” features. In other auto legal news, F defeated an appeal by consumers who had claimed the company cheated on fuel economy tests for Ranger and F-150 trucks. At the same time, NLST won a $303 million federal jury verdict in TX against SSNLF (Samsung) over computer memory patent infringement. In an old case, PARA has agreed to pay a $167.5 million settlement to former CBS stock shareholders related to the 2019 merger of Viacom and CBS.
In miscellaneous news, on Sunday, BBBY filed for bankruptcy after failing to raise the money required to save the company. The filing requested permission to auction off assets even as the firm’s 480 stores are expected to remain open until the assets are liquidated. However, at the time of the filing, BBBY had stopped paying for the severance of laid-off workers. So, it is unknown if there will be willing employees to keep the doors open. Elsewhere, CMCSA fired the CEO of its NBCUniversal unit Sunday after he admitted having an inappropriate relationship with a woman at the company. Meanwhile, overnight, Bloomberg reported than hedge funds have placed the biggest futures short position in history on 10-year bonds (1.29 million contracts). On its face, this would be a big bet that the US will see a mid-term recession. However, the article quotes a Treasury Market analyst as saying this could be a bit misleading since hedge funds will often buy cash treasuries and then short the treasury futures in order to arbitrage the difference in price.
Overnight, Asian markets were mixed but leaned to the downside. Shenzhen (-1.16%), South Korea (-0.82%), and Shanghai (-0.78%) paced the losses while New Zealand (+0.83%), India (+0.68%), and Taiwan (+0.15%) led the gainers. In Europe, the bourses are also mixed but are leaning modestly toward the green at midday. The DAX (+0.03%), CAC (-0.02%), and FTSE (-0.05%) lead the region with many of the smaller exchanges moving slightly more to the upside in early afternoon trade. In the US, Futures are pointing toward a modestly lower start to the day. The DIA implies a -0.14% open, the SPY is implying a -0.10% open, and the QQQ implies a -0.03% open at this hour. At the same time, 10-year bond yields are falling to 3.539% and Oil (WTI) is off three-tenths of a percent to $77.64/barrel in early trading.
There are no major economic news events scheduled for Monday. The major earnings reports scheduled for the day include KO, CS, GTX, and PHG before the open. Then, after the close, AAN, ARE, AMP, BRO, CDNS, CNI, CHX, CLF, CCK, FRC, NBR, PKG, RRC, SSD, and WHR report.
In economic news later this week, on Tuesday we get Building Permits, Conf. Board Consumer Confidence, March New Home Sales, and API Weekly Crude Oil Stocks. Then Wednesday, March Durable Goods, March Goods Trade Balance, Preliminary March Retail Inventories, and EIA Crude Oil Inventories are reported. On Thursday, we get Preliminary Q1 GDP, Weekly Jobless Claims, and March Pending Home Sales. Finally, on Friday, Q1 Employment Cost Index, March PCE Price Index, March Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.
In what BUD hopes will end the recent conservative indignation and boycott over a (small by BUD standards) Bud Light line advertising campaign featuring a “trans online influencer”, the company has taken action related to the incident. BUD placed the Bud Light VP of Marketing and her boss on leave. Sales figures show that Bud Light sales fell 10.7% the week following the uproar. However, there was a somewhat corresponding uptick in other BUD brand sales. BUD stock has fallen 1% over the weeks since the campaign made news, meaning that no impact from the uproar is apparent in the market value of the company at least yet. In unrelated news, TAP took a hit over the weekend as Belgium customs destroyed thousands of Miller High Life beers. Like the American conservatives, Belgium apparently (suddenly) took offense that Miller High Life labels itself “the Champagne of beers.” (Although what that has to do with Belgium, as opposed to France, or why the outrage manifested itself now, after decades of Miller using that slogan, beats me.)
So far this morning, KO, CS, and PHG all reported beats on the revenue and earnings lines. Meanwhile, GTX beat on revenue while missing on earnings. Oddly, the biggest shock was a 43.2% upside revenue surprise from CS (despite it having been sold to avoid failing during the quarter). PHG also had a 26% upside surprise on earnings but GTX had a 38% downside surprise on the same line.
With that background, it looks like all three major indices have climbed back to flat and will be thinking about retesting their T-lines this morning. The consolidation or modest pullback seem to remain underway. Even though more than 90% (according to Fedwatch) of the market is sure there will be just a quarter-point hike at the next Fed meeting a week from Wednesday, uncertainty still abounds. Over-extension is obviously not a problem in terms of the T-line or the T2122 indicator. SPY and QQQ seem to be testing a potential support level but DIA does not have that obvious level helping it below. Right now, the chart tells us to maintain a long bias but be wary of weakening bulls and keep an eye out for trend breaks.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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Indexes remained stuck in the recent trading range as equities lacked momentum as investors worry how the slowing economic conditions may affect the pending tech giant’s earnings. The reports Tuesday afternoon from MSFT and GOOG may well inspire to finally break this frustrating chop zone. However, the question remains will it be a bullish or bearish inspiration? Plan for more chop as traders ponder the outcome with several market-moving economic reports tossed in for added uncertainty.
Asian market primarily declined during the night as lackluster economic growth and geopolitical concerns weigh on investors’ minds. European markets trade flat to slightly lower this morning as bond yields and pending earnings cloud the path forward. U.S. futures also indicate a slightly bearish open as we wait to see if the big rally in the tech giants can be justified by the pending earnings. Plan for some big price moves once the data is reviled but until then expect more choppy uncertain price action.
Economic Calendar
Earnings Calendar
Notable reports for Monday include AGNC, ARE, BOH, CDNS, CLF, CO, CR, FRC, PKG, PHG, PCH, RRC, WSBC, & WHR.
News & Technicals’
More and more countries are calling for trade to be carried out in other currencies besides the U.S. dollar. For instance, Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America. In a conference in Singapore in January, multiple former Southeast Asian officials spoke about de-dollarization efforts underway. The UAE and India are in talks to use rupees to trade non-oil commodities in a shift away from the dollar. Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar. However, it’s worth noting that despite these efforts, the U.S. dollar remains dominant in global forex reserves even though its share in central banks’ foreign exchange reserves has dropped from more than 70% in 1999.
Bed Bath & Beyond has filed for bankruptcy protection and has begun a “limited sale and marketing process for some or all of its assets”. The company’s 360 Bed Bath & Beyond and 120 buybuy BABY stores will remain open for the time being as it works to liquidate assets. The struggling home goods retailer has been warning of a potential bankruptcy since early January.
Swiss authorities brokered a controversial 3 billion Swiss franc deal over the course of a weekend in late March between UBS Group AG and Credit Suisse. The acquisition is expected to be consummated by the end of this year. However, the full absorption of Credit Suisse’s business into UBS Group is expected to take around three to four years.
On Friday, equities lacked momentum with the S&P 500 closing up about 0.1% and the Dow adding 22 points. The focus remained on incoming earnings results, as worries of slowing economic conditions and how that may affect the pending earnings of the tech giants. The bond market also saw modest moves on the day, with 10-year Treasury yields ticking slightly higher, remaining just below the 3.6% mark. The consumer staples, health care, and utility sectors were among the leaders of the day, while financials, technology, and commodity-related sectors were laggards. Today could see more directionless chop as we wait for MSFT and GOOG reports Tuesday after the bell which may finally break the indexes from this frustrating trading range.
