The bull ran hard Thursday on better-than-expected economic data surging through resistance with no regard to the uncertainty that lies before the market today. It would seem that the market has full confidence that the big banks will report strong enough to support current prices and that the pending economic data will also be rosy. If they are correct look for more upside but watch for possible whipsaws from this short-term extended condition. However, if the data disappoints be prepared for a substantial bear attack that could quickly change market sentiment. Anything is possible so plan carefully.
Asian markets closed green across the board overnight responding to the bullish U.S. prices surge on better-than-expected inflation data. European markets trade with modest gains this morning as they wait and hope for bullish bank reports to support current market pricing. However, after yesterday’s buying spree the U.S. futures point to a slightly bearish open but that could all change as investors react to all the market-moving data ahead.
Economic Calendar
Earnings Calendar
The day the market has been waiting for is here, the kick-off of 2nd quarter earnings begins today. Notable reports for Friday include JPM, BLK, C, PNC, WFC, & UNH.
News & Technicals’
The health of Europe’s commercial real estate market is causing concerns among investors. Some are questioning whether it could be the next sector to blow. Following March’s banking crises, fears have arisen of a so-called “doom loop,” in which a potential bank run could trigger a property sector downturn. According to Morningstar Direct data, European funds invested directly in real estate recorded outflows of £172 million ($215.4 million) in February. Some analysts now see real estate stocks falling by 20%-40% by next year. However, it’s important to note that the situation is not the same across all countries in Europe. Some countries are doing better than others. For example, according to a report by Savills, the UK commercial property market is expected to grow by 3% in 2023. It’s also worth noting that the real estate market is cyclical and downturns are not uncommon. However, these downturns are usually followed by periods of growth.
Chinese President Xi Jinping’s signature foreign policy idea, the Belt and Road Project, was announced in 2013. The ambitious plan aimed to build infrastructure trade links across Eurasia and beyond. However, observers say that a decade after the project’s rollout, it is losing steam. Xi reportedly invited President Vladimir Putin to travel to China for the third Belt and Road Forum this year in an attempt to inject new momentum into the massive endeavor.
The bull ran hard on Thursday as producer price index (PPI) inflation data surprised to the downside. The PPI came in at 2.7% YoY for March, well below last month’s 4.9% reading. This comes after headline U.S. consumer price index (CPI) inflation in March also moved lower for the ninth consecutive month. In addition, jobless claims inched higher this week, up to 239,000, another sign that the labor market may be starting to soften. Markets are still pricing in about a 70% probability of a 0.25% Fed rate hike at its May meeting, although they expect a pivot to rate cuts by the second half of the year*. In our view, the Fed likely has one additional rate hike ahead of it, followed potentially by a longer pause in its rate-hiking cycle. However, today is a big day of data that could keep the bullish party going or dramatically shift sentiment. Prepare for a wild morning of price gyrations and watch out for big point whipsaws from these short-term overbought conditions.
The better-than-expected CPI brought out the bulls with a big gap up open but investors exhaled closing the indexes lower as rising bond yields raised recession concerns. Adding to the uncertainty looking forward both Jerome Powell and Warren Buffett warned that more banking troubles are likely on the horizon. Expect some price volatility this morning as investors react to the PPI and Jobless Claims figures but don’t be too surprised if low-volume chop rules the rest of the day as we wait for the huge day of market-moving data Friday morning.
Asian markets traded mixed overnight reacting to the Fed’s warning of recession as a result of the banking crisis. European markets also trade mixed this morning as recession uncertainty weighs on investors’ minds. At the time of writing this report U.S. Futures trade near the flatline ahead of jobless numbers and producer inflation data after the Fed signaled a recession on the horizon.
Economic Calendar
Earnings Calendar
Just one more day to wait until we begin 2nd quarter’s earnings with several big banks ramping up the volatility. Notable reports for Thursday include DAL, FAST, FRC, & PGR.
News & Technicals’
SoftBank sold $7.2 billion worth of shares in Alibaba via prepaid forward contracts. Three years ago, SoftBank maintained a nearly 25% stake in Alibaba worth over $100 billion. SoftBank and its Vision Fund have been posting huge quarterly losses amid a slowdown in the tech sector that has hammered valuations.
According to a survey by the International Association of Credit Portfolio Managers, 81% of fund managers see defaults picking up in the next 12 months, compared with 80% in the survey last December. For North American corporates, 86% of respondents see defaults rising, while 91% see defaults rising in Europe.
Oil traded near a five-month high as falling US inventories and surging Chinese imports added to signs of a tightening global market. West Texas Intermediate futures held above $83 a barrel after gaining 4.4% over the past two days.
According to Federal Reserve documents released Wednesday, the fallout from the U.S. banking crisis is likely to tilt the economy into recession later this year. Though Vice Chair for Supervision Michael Barr said the banking sector “is sound and resilient,” staff economists said the economy will take a hit.
Stocks opened higher on Wednesday, as investors exhaled after the latest read on inflation failed to produce any worrisome surprises. That enthusiasm faded somewhat as the trading day went on, with the S&P 500 closing 0.4% lower while the Dow shed 38 points. Interest rates responded by moving lower, with the 10-year Treasury yield falling back near 3.4%, while shorter-term rates fell more amid some relief on the Fed rate-hike outlook. Today traders will get more inflation data from the PPI report and the data on the jobs front with the jobless claims. Shortly after attention will turn to the big bank earnings Retail Sales and Industrial Production figures out Friday morning.
Markets gapped higher on Wednesday after good CPI data. SPY gapped up 0.52%, the DIA gapped up 0.50%, and the QQQ gapped up 0.64%. However, again we saw divergence at that point with the large-cap indices meandering sideways for an hour before selling off for 45 minutes, recrossing the gap in the process. Meanwhile, QQQ had faded the gap-up within 20 minutes of the open and then kept heading lower until 11:15 am. At that point, all three major indices put in a long, slow rally that lasted until just after 2 pm. Then, the selloff was on with the bears driving prices lower the rest of the day. This action gave us large-body, black candles in all three major indices. This included an Evening Star signal in the SPY, a Dark Cloud Cover in the DIA, and a big, black, outside day candle in the QQQ. QQQ also crossed back below its T-line while the other two major indices held above their own 8ema.
On the day, seven of the 10 sectors were in the red with Consumer Cyclical (-1.77%) leading the way lower while Industrials (+0.32%) held up best. At the same time, the SPY lost 0.39%, DIA lost 0.09%, and QQQ lost 0.88%. VXX gained 0.61% to 42.90 and T2122 fell back out of the overbought territory to 72.44. 10-year bond yields fell to close at 3.402% while Oil (WTI) was up 2.11% to $83.24 per barrel. So, markets liked the CPI data falling more than expected, following the Fed’s preferred path. However, as soon we got the three-week-old Fed takes from the day following the SBNY bank, the bears roared as (at that time) Fed members said they expected the banking crisis to push the economy into recession sometime this year. This happened on less-than-average volume in the large-cap indices and slightly above-average volume in QQQ.
In economic news, the March Consumer Price Index came in below expectations at 5.0% year-on-year (versus a forecast of 5.2% and the February reading of 6.0%). This was the ninth consecutive monthly decline. Later in the morning, the EIA Crude Oil Inventories came in above expectation with a build of 0.597-million-barrels (compared to a forecasted drawdown of 0.583-million-barrels and far higher than the prior week’s 3.739-million-barrel drawdown). Then at 2 pm, the March Federal Budget Balance was larger than anticipated at -$378.0 billion (versus a forecast of -$302.0 billion and significantly worse than the February reading of -$262.0 billion). At the same time, the FOMC Minutes basically followed Fed Chair Powell’s remarks from the March 22 press conference. There was a broad consensus to raise rates by a quarter percent at that point. However, the terminal level of the Fed Funds Rate was also tamped down by the banking crisis going on then. Four of the regional Fed Presidents did not want any hike. The other big news was that Fed Staff (not the voters) put forth that their base case was then expecting a “mild recession later this year” given their assessment of the impact of the banking turmoil on available credit. Elsewhere, San Fran Fed President Daly told an audience Wednesday that more rate hikes may not be needed to tame inflation, saying “there are good reasons to think that policy may have to tighten more to bring inflation down.”
In stock news, a day prior to competitor DAL’s earnings report, AAL announced it is forecasting profits below market expectations. AAL specifically cited high labor and fuel costs. In other transport news, GOOGL got some bad press when some of their Waymo self-driving vehicles pulled over due to heavy fog in San Francisco Tuesday night, causing traffic problems during rush hour. Meanwhile, WBD announced it is combining HBO Max and Discovery+ content to create a new streaming service called “Max” as the company attempts to compete with DIS, NFLX, AMZN, and PARA. At the same time, the world’s largest luxury brand (LVMH, not US-listed) reported a 17% rise in sales in Q1 and specifically notes a strong rebound in the Chinese market. In the electric market, an industry insider reported Wednesday that TSLA is about to launch a third generation of its home battery pack, named Powerwall 3. (No pricing or specs were yet available since the equipment has not yet been approved for connection to the electric grid.) Elsewhere, EMR agreed to buy NATI for $8.2 billion ($60/share). Elsewhere, the Teamsters union told UPS it won’t begin national contract negotiations as (previously scheduled to start next week) until after regional supplemental contracts are completed. 30 supplemental contracts remain unsettled and the national contract expires July 31.
In stock legal and regulatory news, across the pond, the Swiss parliament rejected the Swiss government’s $121 billion aid package that had been part of UBS’s buyout of failing CS. (That government commitment cannot be overturned, but the vote signals that the large house of parliament is not happy with the deal.) Meanwhile, the US Dept. of Labor (in cooperation with other federal agencies) sent a letter to meat companies TSN, JBSAY, and 16 other meat companies Wednesday, ordering those companies to inspect their supply chains in order to root out illegal child labor. The letter said the Dept. of Agriculture is exploring enforcement mechanisms and will take action in the near future. At the same time, US Senator Wyden called for an investigation by Congress and the Administration following a Reuters report that Russia is using facial recognition technology based on chips from NVDA and/or INTC to identify and detain political dissenters. Russian customer records showed that NVDA products continued to arrive in Russia at least through Oct. 31, 2022. (NVDA responded by saying that if it finds a customer who violated US Export Laws, it will cease doing business with that customer.) Elsewhere, a Del. Superior Court Judge imposed sanctions on FOX for withholding evidence in the $1.6 billion defamation case brought against it by Dominion Voting Systems. No fine dollar amount was mentioned, but the cost of added legal work by Dominion following newly the disclosed information will be borne by FOX. In banking news, head of the National Economic Council (and former Fed Vice-chair) Brainard told reporters Wednesday the banking crisis now has eased in terms of deposit outflows. However, she also called for stronger stress testing (liquidity) requirements that include regional banks. Finally, CO became the first state to pass “right to repair” legislation for farmers on Wednesday. The bill will force farm machinery makers like DE and CNHI to provide manuals, diagnostic equipment, and parts to farmers who want to repair (or have local mechanics repair) their farm machinery. Other states are now expected to follow suit and similar legislation may impact other consumer electronics (like phones, tablets, Mac computers, etc.).
In miscellaneous news, Wednesday evening, CNBC reported that a Univ. of Florida finance professor (Lopez-Lira) told them that he used Chat-GPT to predict the next day’s market directions (based on analyzing all news headlines). Reportedly, the results were “much better than random chance.” The professor’s paper has not yet been peer-reviewed. However, Lopez-Lira said his research suggests AI could be trained to predict stock movements. (For what it is worth, this research was done using the older ChatGPT 3.5 model. The professor found less than a 1% chance the model could have achieved the results it attained by mere chance.) Elsewhere, Bloomberg announced overnight that it will integrate a “ChatGPT-style” AI into its Bloomberg Trading Terminal. No timeline was mentioned.
Overnight, Asian markets were mixed in very uneven trading. Shenzhen (-1.21%) and Taiwan (-0.80%) were by far the largest losers. Meanwhile, South Korea (+0.43%) was the biggest gainer. Still, the green exchanges outnumbered the red exchanges in the region. Over in Europe, we see a similarly mixed picture taking shape, but most of the bourses lean toward the green side at midday. The CAC (+0.93%), DAX (-0.08%), and FTSE (+0.01%) lead on volume as usual in early afternoon trading. In the US, as of 7 am, Futures are pointing toward a flat to green start to the morning (ahead of PPI data). The DIA implies a +0.01% open, the SPY is implying a +0.10% open, and the QQQ implies a +0.24% open at this hour. At the same time, 10-year bond yields are back up to 3.424% and Oil (WTI) is down half a percent to $82.86/barrel.
The major economic news events scheduled for Thursday are limited to March PPI and Weekly Initial Jobless Claims (both at 8:30 am). The major earnings reports scheduled for Thursday include DAL, FAST, INFY, and PGR before the open. There are no major earnings reports scheduled for after the close.
In economic news later this week, on Friday, March Retail Sales, March Import/Export Price Indexes, March Industrial Production, Feb. Business Inventories, Michigan Consumer Sentiment, and Feb. Retail Inventories are reported.
In terms of earnings reports later this week, on Friday, BLK, C, JPM, PNC, UNH, and WFC report.
So far this morning, FAST beat on both the revenue and earnings lines. Meanwhile, DAL beat on revenue while missing on earnings. Unfortunately, INFY missed on both the top and bottom lines. (PGR is scheduled to report at 8:15 am.)
With that background, at least before the PPI data release, traders seem to be continuing their “wait and see” stance. All three major indices are starting to form tiny Bull Harami-type inside candles, staying within the recent consolidation range. Little has changed in the large-cap indices. The 3ema is still above the 8ema, which is above a rising 17ema, which is above the 50sma and that is above the 200sma. The QQQ has nearly the same bullish moving average stack. However, the QQQ 3ema has fallen below the T-line, perhaps giving an indication that the bullish trend has cracks. We also have to recognize that all three major indices are sitting on a potential support level. Over-extension does not appear to be a problem either in terms of the T-line or T2122 indicator. So, the consolidation continues, but the bullish trend has not yet broken. New data or news could change that picture in a heartbeat. However, this is what the chart tells us now. So, again, putting aside fear and prediction, the chart is telling us to maintain a long bias on a swing trading horizon while keeping 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
Ahead of inflation readings investors saw fit to push the indexes into price resistance levels with the Vix showing no fear of the pending data. The T2122 indicator stretched into the short-term overbought range adding some risk of a quick market reversal should the CPI numbers disappoint. Plan for some substantial price volatility after the open as we hear from more Fed members and wait for the FOMC minutes. Anything is possible so plan carefully.
Asian markets closed mostly higher overnight with only the Australian index suffering losses. European markets appear to have substantial confidence in a softer CPI reading this morning seeing nothing but green. U.S. futures also suggest a bullish open ahead of the key inflation data but as soon as the data is revealed it could get much better if inflation indeed declined, however, if the opposite occurs, prepare for a bear attack.
Economic Calendar
Earnings Calendar
Notable reports for Wednesday include APOG, BBBY, & SPWH.
News & Technicals’
According to Chris Harvey at Wells Fargo & Co., the resilience of US equities this year will be short-lived. He expects the S&P 500 to suffer a 10% correction in the next three to six months. That would take the American stock benchmark to around 3,700, which is near the November lows. However, Wells Fargo maintained its year-end price target of 4,200 — or about 2% above Monday’s close.
According to John Flood, a partner at Goldman Sachs Group Inc., this week’s lull in the US stock market is likely to end with Wednesday’s consumer price index report. He wrote in a note Tuesday that investors should expect the S&P 500 to drop at least 2% should the year-over-year inflation rate come in above the previous reading of 6%. However, stocks are likely to go higher if CPI meets or trails 5.1%, which happens to be the consensus estimate from economists in a Bloomberg survey.
The U.S. Environmental Protection Agency has proposed new tailpipe emissions limits that could require as much as 67% of all new vehicles sold in the U.S. by 2032 to be all-electric. This would surpass President Joe Biden’s previous commitment to have EVs make up roughly 50% of cars sold by 2030 and accelerate the country’s clean energy transition. According to Kelley Blue Book data, EV sales accounted for only 5.8% of all the 13.8 million new vehicles sold in the country last year, an increase from 3.1% the year before.
Stocks closed higher on Tuesday as investors await U.S. inflation readings and the start of earnings season later this week. After moving substantially lower in March, government bond yields have stabilized more recently. For example, the 2-year Treasury yield is back above 4.0% after falling to 3.75% over the past few weeks. Market forecasts for a 0.25% rate hike at the Federal Reserve’s May meeting have now increased to a 70% probability. The VIX continues to show no fear and the T2122 indicator has reached the bearish reversal zone adding to the risk of today’s CPI report. Anything is possible so expect volatility and possible big-point whipsaws as we wait for the FOMC minutes this afternoon.
On Tuesday, markets opened flat in all three major indices. At that point, we saw a divergence with the SPY meandering slightly lower until 10:45 am and then starting a long, slow, and modest rally. At the same time, the DIA just started a long, slow, modest rally after the open. Meanwhile, QQQ sold off until 11 am and bobbed around until noon when it also started a slow, steady rally. However, a selloff in the last 30 minutes gave back most of the day’s gains. This action gave us small-body, indecisive candles in both the SPY and DIA, as well as a Bearish Harami candle in the QQQ. Again, this all happened on very low volumes in all the major indices.
On the day, nine of the 10 sectors were in the green with Basic Materials (+1.70%) leading the way higher while Technology (-0.30%) lagged and was the only sector in the red. At the same time, the SPY gained 0.03%, DIA gained 0.28%, and QQQ lost 0.64%. VXX fell almost 1% again to 42.64 and T2122 climbed into the extreme end of the overbought territory at 96.46. 10-year bond yields climbed to close at 3.43%. Meanwhile, Oil (WTI) was up 2.19% to $81.49 per barrel. So, on Tuesday we divergence as Technology languished while the rest of the market slowly rallied, only to give back most of the progress during the last half hour of the day.
In economic news, on Tuesday, NY Fed President Williams (FOMC voter) toed the company line by saying that future the interest rate path will be data-dependent. However, he also said that one more hike in May and then a pause is a “reasonable starting point.” He went on to say that as of now, “the banking system has really stabilized” and that, while the Fed will watch for negative shocks, “right now we’re not seeing any of those effects.” In a separate event, the NY Fed released a report predicting the Fed’s path for shrinking its balance sheet will take several more years. (And I guess the Fed ought to know what the Fed’s going to do better than anybody.) The report forecasts that the Fed balance sheet will only have shrunk from $8.7 trillion to about $6 trillion by the summer of 2025 and will then hold steady for about a year. Elsewhere, Chicago Fed President Goolsbee (FOMC voter) urged “prudence and patience” (caution) by his fellow FOMC members so that the Fed doesn’t raise rates too aggressively. After the close, the API Weekly Crude Stocks Report showed an unexpected inventory build of 0.377 million barrels (compared to a forecasted drawdown of 1.300 million barrels and far different than the prior week’s 4.346-million-barrel drawdown).
In stock news, BABA demonstrated its generative AI model named Tongyi Qianwen (which means “truth from a thousand questions”) Tuesday and promised the company will integrate the model into all of the company’s apps soon. This public demo came just hours before the Chinese government published draft rules covering the way that generative AI services should be managed. Meanwhile, F said it will invest $1.3 billion to retool a Canadian plant to transform the SUV assembly plant into one that produced multiple models of electric vehicle as well as battery packs. Completion of the plant conversion is scheduled for late 2024. In other EV news, HMC announced Tuesday that its goal is to become one to the world’s top three EV manufacturers by 2030. To get there, the company will invest $18 billion and expects to produce more than 3.64 million electric vehicles per year by the end of the decade. Elsewhere, Reuters reported that multiple sources tell it ERJ will sign a deal to sell 20 jets to a Chinese airline during this week’s trip to China by Brazilian President Lula da Silva. At the same time, GLNCY revised its unsolicited bid for TECK, adding a cash component. TECK management responded that the offer was largely unchanged and rejected it as still decreasing the value to TECK shareholders.
In stock legal and regulatory news, the US Dept. of Energy proposed reducing the credit (rating) automakers get for electric vehicles towards meeting government fuel economy requirements (CAFÉ or Corporate Avg. Fuel Economy). For example, under the new rules, an F-150ev which currently is credited at 237.1 mpg would only be rated at 67.1 mpg. This would mean F would need to sell a much higher percentage of hybrid and electric vehicles to maintain an average above the standard. For reference, STLA paid just $152 million for missing the standard in both 2016 and 2017. However, the NHTSA more than doubled the fines for missing CAFE standards in 2022. Elsewhere, in India, a group of startups asked an Indian court to suspend the new GOOGL “in App billing fee system” (scheduled to go live on April 26) until it can be reviewed by the Indian antitrust body. Meanwhile, a US appeals court gave MRNA a win by affirming the decision to throw out an ABUS lawsuit over patent infringement related to MRNA’s COVID-19 vaccines. At the same time, a group of video gamers has filed a new legal challenge to the MSFT acquisition of ATVI. This came after a US judge rejected an earlier version of the suit last month. After the close, a US appeals court ruled a lawsuit against HPQ alleging shareholders were defrauded should be revived, overruling a lower court’s dismissal. (The SEC has already fined HPQ $6 million over the practices in question in September 2020.)
In miscellaneous news, BAC reported Tuesday evening that its clients pulled roughly $2.3 billion from equities markets last week. That was the second consecutive week of overall stock market outflows according to the BAC note. This week’s equities outflow was led by money leaving real estate sector stocks (-$451 million). Interestingly, at nearly the same time, BX announced it had raised $30.4 billion for its latest global real estate fund. Elsewhere, Bitcoin climbed above $30,000 Tuesday, for the first time since June 2022. This puts Bitcoin up 82% on the year. This comes as G7 members are discussing cryptocurrency standards and how they should be regulated ahead of the next G7 meeting at the end of June. Meanwhile, the EIA released a forecast saying that US electricity use will fall 1% in 2023 (down from a record high in 2022) mostly due to a warm winter. In addition, the Dept. of Energy said the use of coal in electric generation is set to fall significantly again this year. In 2022, 20% of electricity was generated through burning coal, and this year that is on track to be 17%. Finally, BA took over the top spot (for the first time since mid-2018), delivering slightly more planes in Q1 (3 more jets) than its main competitor EADSY (Airbus).
Overnight, Asian markets were mixed but there was more green on the board than red. Hong Kong (-0.86%) had by far the biggest losses. Meanwhile, Japan (+0.57%), India (+0.51%), and Australia (+0.47%) led the majority of the region higher. In Europe, the bourses are mostly green at midday. The CAC (+0.45%), DAX (+0.30%), and FTSE (+0.64%) lead nine other exchanges higher in early afternoon trade while only three of the smaller markets are in the red. In the US, as of 7:00 am, Futures are pointing toward a flat to mildly green start to the day (ahead of major data). The DIA implies a +0.23% open, the SPY is implying a +0.16% open, and the QQQ implies a +0.03% open at this hour. At the same time, 10-year bond yields are back up to 3.451% and Oil (WTI) is on the red side of flat at $81.49/barrel in early trading.
The major economic news events scheduled for Wednesday include March CPI (8:30 am), EIA Crude Oil Inventories (10:30 am), March Federal Budget Balance and the FOMC Meeting Minutes release (both at 2 pm). There are no major reports scheduled for Wednesday.
In economic news later this week, on Thursday, March PPI and Weekly Initial Jobless Claims are reported. Finally, on Friday, March Retail Sales, March Import/Export Price Indexes, March Industrial Production, Feb. Business Inventories, Michigan Consumer Sentiment, and Feb. Retail Inventories are reported.
In terms of earnings reports later this week, on Thursday, we hear from, DAL, FAST, INFY, and PGR. Finally, on Friday, BLK, C, JPM, PNC, UNH, and WFC report.
In mortgage news, interest rates fell to a two-month low last week, causing homebuyer mortgage demand to rise. Specifically, the national average 30-year, fixed-rate, 20% down, mortgage rate fell from 6.40% to 6.30% last week. (Loan origination points also fell from 0.59 to 0.55.) As a result, demand for new purchase mortgages jumped 8% on the week. It is worth noting that demand for refinance loans was flat on the week, and overall mortgage demand was still far lower than it was one year prior. Also, even though the weekly average was reported, it was a sharp one-day decline mid-week that likely drew the increased application volumes.
With that background, at least in the premarket, once again it looks like the market is in “wait and see” mode. The large-cap indices are both just on the green side of flat while the Tech-heavy QQQ is just on the red side. However, the 3ema is still above the rising T-line (8ema), which is above a rising 17ema, which is above the 50sma and that is above the 200sma in all the major indices. So, any way you slice it, the trend remains bullish and we can best be described as in a pullback or Bull Flag inside that bullish trend. (With that said, we do have to recognize we are sitting on potential support in the QQQ, and up against a potential resistance level in the DIA and SPY.) Over-extension is certainly not a problem in terms of the T-line. However, the T2122 indicator is deep into the overbought territory. It’s absolutely true that new data or news could change the picture in a heartbeat. However, that is what the chart tells us now. So, putting aside fear and prediction, the chart is telling us to maintain a long bias and 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
Indexes closed mostly higher on Monday with a surge in the last minutes of the day climbing a wall of worry with key inflation data just ahead and big bank earnings looming on Friday. Volume was low with prices spending most of the day in a small chop zone with the tech giants enjoying the majority of the buyer’s attention. Today we will hear from several Fed speakers with little else to as we wait on the CPI data before the bell on Wednesday. Plan for another day of hurry-up and wait while keeping an eye out for whipsaws.
Asian markets mostly rallied during the night with the Bank of Korea holding rates steady. European markets see nothing but green this morning as they resume their holiday break with mining stocks leading the way. U.S. futures suggest a modestly bullish open with Fed speakers ahead and waiting on market-moving inflation data and the kick-off of earnings season.
Economic Calendar
Earnings Calendar
We have a very light day as we build up to the big bank reports on Friday. Notable reports for Tuesday include ACI and KMX.
News & Technicals’
Warren Buffett recently told Nikkei that he is considering additional investment in Japan’s five major trading houses. Berkshire Hathaway has raised its stakes in all five trading houses to 7.4%. As a result, shares of Mitsubishi Corp. rose 2.1% in Japan’s afternoon trade, Mitsui & Co. gained 2.7%, and Itochu Corp climbed 3%. It seems that investors are optimistic about the future of these companies and their growth potential.
On Tuesday, Chinese regulators released draft rules designed to manage how companies develop generative artificial intelligence products like ChatGPT. The Cyberspace Administration of China’s draft measures lay out the ground rules that generative AI services have to follow, including the type of content these products are allowed to generate. For example, the content generated by AI needs to reflect the core values of socialism and should not subvert state power, according to the draft rules. It seems that China is taking steps to regulate AI development and ensure that it aligns with the country’s values and goals.
Yesterday, the stock market opened lower but then spent most of the day moving up and down around the same level climbing the wall of worry. The S&P 500 index ended up 0.1% higher and the Dow Jones Industrial Average increased by 100 points. It was a quiet start to the week as investors waited for this week’s inflation report. Short-term interest rates were slightly higher, which means that people expect the Federal Reserve to keep raising interest rates. Long-term interest rates didn’t change much because people are still unsure about how well the economy will do in the future. Plan for more of the same today as we hear from Fed members ahead of the CPI report Wednesday morning. There is little else no the earnings and economic calendars to inspire today so plan for another day of low-volume price action.
Markets gapped lower on Monday, in a divergent manner. The SPY opened down 0.62%, DIA gapped down 0.29%, and QQQ gapped down 0.90%. However, after that open, the bulls stepped in to lead a long, slow, rally that steadily took us higher until 3 pm. At that point, we saw a sideways grind in a very tight range for the last hour in all three major indices. This action gave us a white-bodied candle that bounced up off the T-line (8ema) in the SPY. DIA also printed a white-bodied candle with tiny wicks on each end. Meanwhile, the QQQ printed a white-bodied candle that started below the T-line, had a larger lower wick, and closed back above the 8ema on an overall inside day candle. With that said, you can definitely see that the DIA (and perhaps the other major indices) are in a Bull Flag pattern.
On the day, eight of the 10 sectors were in the green with the Industrials (+01.13%) leading the way higher while Healthcare (-0.07%) lagged and was the only sector more than a few ticks into the red. At the same time, the SPY gained 0.10%, DIA gained 0.32%, and QQQ lost 0.06%. VXX fell almost 1% to 43.06 and T2122 climbed back into the overbought territory at 87.79. 10-year bond yields climbed strongly all day to close at 3.421% while Oil (WTI) was down more than a percent to $79.80 per barrel. So, on Monday we saw a significant gap lower, met by all-day buying in what turned out to be a bear trap. All of this happened on well less-than-average volume in all three major indices.
In stock news, AMC reported all-time high US Easter weekend revenue, saying that 3.6 million people bought movie tickets over the three days. Meanwhile, Chinese (and Warren Buffett-backed) electric car maker BYD launched a new suspension system in an effort to take the brand upscale. The system will be similar to the Porsche and Mercedes Benz luxury ride control features. In M&A news, TECK again rejected the unsolicited $22.5 billion bid from GLNCY, telling its shareholders the offer was an illusion and management’s restructuring plan is the only viable option. However, PXD shares rose on reports that XOM has held preliminary talks about buying the company. (PXD is the third-largest Permian Basin oil producer after CVX and COP). Elsewhere, workers at a TSN poultry plant went on strike demanding better working conditions. (Since TSN announced it will close that plant in May, many employees have left, which leaves the remaining employees in tougher conditions and long hours.) Finally, it was reported Monday that global personal computer sales plunged in Q1. AAPL took the biggest hit with the sale of Macs dropping more than 40% during the quarter. This was far worse than the next-worst-hit Dell whose sales fell 31% in the first three months of 2023.
In stock legal and regulatory news, it didn’t take long for TSLA to be hit with a class-action lawsuit after reports surfaced at the end of last week that TSLA employees were sharing images and video recorded by TSLA cars from 2019 to 2022. No dollar amount has yet been assigned to the case. Elsewhere, BIDU sued AAPL (as well as relevant app developers) over fake copies of BIDU’s AI “Ernie bot” being sold through the AAPL App Store. Meanwhile, the US CFTC announced GS has agreed to pay $15 million to the US Commodity Futures Trading Commission over charges GS had failed to make proper disclosures and communicate fairly with swap customers. At the same time, the FTC opened a new front in its fight to stop ICE from buying BKI. This time the FTC has asked a federal court for a preliminary injunction to halt the deal while its internal administrative process moves forward. (ICE and BKI had planned to proceed with the deal after an April 28 vote, despite the FTC opposing it.)
In miscellaneous news, Reuters reports that solar panel installers like SPWR and RUN are bracing for an expected steep drop-off in demand in CA. The state has new solar reimbursement rules taking effect this week (April 15) which will reduce the electric reimbursement rates significantly. Meanwhile, in banking news, Bloomberg reported Monday that there are signs that the banking system issue is easing. Specifically, in the last week of March, the Federal Home Loan Bank system (known as the “lender of next-to-last resort”) had a sharp decline in home loans it issued. For that week, FHLB loaned $37 billion, a sharp decline from the record $304 billion it had loaned just two weeks earlier. This signals that the member banks had less of a need for liquidity. The report also noted that FHLBs had issued far fewer bonds that week, just $19.8 billion, well down from the $151 billion issued the week SIVB was put into receivership. Both of these are signs that loan-originating banks are not as strapped for cash and fell they have the liquidity to underwrite loans on their own.
Despite the improved bank liquidity situation reported above, the NY Fed came out with a lagging report from March on Monday. The survey found that more than 58% of those responding reported that it is harder to get credit than it was in March 2022. That level was the highest on record but it is critical to remember this survey has only existed since mid-2013. (So, less than 10 years.) The less useful part of the survey found that 53% of those responding expect credit to be even harder to get a year from now and expressed a possibility that they may miss a debt payment within the next three months.
Overnight, Asian markets were nearly green across the board. Only Shanghai (-0.05%) was in the red while South Korea (+1.42%), Australia (+1.26%), and Japan (+1.05%) led the rest of the region higher. In Europe, we see the same picture taking place at midday with no red on the board at all. The CAC (+0.86%), DAX (+0.49%), and FTSE (+0.26%) are typical and leading the region higher in early afternoon trade. In the US, as of 7:30 am, Futures are pointing toward another mixed and nearly flat start to the day. The DIA implies a +0.12% open, the SPY is implying a +0.09% open, and the QQQ implies a -0.10% open at this hour. Meanwhile, 10-year bond yields a down a bit to 3.402% and Oil (WTI) is just on the red side of flat at $79.67/barrel in early trading.
The major economic news events scheduled for Tuesday are limited to the WASDE Ag Report (noon) and API Crude Oil Stocks Report (4:30 pm). However, we do hear from two Fed more members (Harker at 4 pm and Kashkari at 7:30 pm). Major earnings reports scheduled for the day are limited to ACI and KMX before the open. Again, there are no earnings reports scheduled after the close.
In economic news later this week, on Wednesday, March CPI, EIA Crude Oil Inventories, March Federal Budget Balance, and the FOMC Meeting Minutes are released. On Thursday, March PPI and Weekly Initial Jobless Claims are reported. Finally, on Friday, March Retail Sales, March Import/Export Price Indexes, March Industrial Production, Feb. Business Inventories, Michigan Consumer Sentiment. Feb, and Retail Inventories are reported.
In terms of earnings reports later this week, on Wednesday, there are no major reports. Thursday, we hear from, DAL, FAST, INFY, and PGR. Finally, on Friday, BLK, C, JPM, PNC, UNH, and WFC report.
In mixed-bag news, Warren Buffett told Nikkei that he has raised his holdings of Japanese company stocks by almost 50% since 2020 (up 2.4% from 5% of his overall portfolio). Buffett also said he is looking to increase his exposure to Japan, although no specific target companies were named. Meanwhile, Bloomberg reports that in Switzerland, lawmakers are beginning to scrutinize the government’s move that agreed to provide up to $120 billion in taxpayer money to support the UBS takeover of CS. (Swiss lawmakers really can’t do anything to stop the deal at this point. However, they expect to make political hay and apparently hope to revamp the country’s “too big to fail” rules.)
So far this morning, KMX missed on revenue while absolutely blowing away the earnings line (a 100% upside surprise on earnings). ACI (KR acquisition target pending regulatory approval) reports at 8:30 am.
With that background, at least in the premarket, it looks like the consolidation continues in the major indices. Perhaps traders are waiting on CPI data or need to hear from the big banks as earnings season starts again on Friday. The SPY, DIA, and QQQ all sit just below their rising 3ema and just above their rising T-line (8ema), thus indicating that the short-term bullish trend remains in play. In turn, those 8emas are all sitting above a rising 17ema, which indicates a longer-term bullish trend. Longer-term, all three of the 34emas are rising and the 50sma of the SPY and QQQ are sloping upward as well. Only the DIA has a falling 50sma. So, putting fear and prediction aside, the chart is telling us it is bullish. It is also not over-extended in terms of the T-line. However, the T2122 indicator is back in the overbought territory. Make of that what you will. Personally, I’ve never been good enough to pick a top or bottom. So, all I can do is trade with the trend and cautiously watch for breaks of the trendline. That’s what I’ll do here too.
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
Traders and investors alike are in for a busy week with key inflation data, FOMC minutes, retail sales, and the big bank earnings that officially begin the 2nd quarter silly season. The index charts remain challenged by overhead resistance levels but the bulls keep knocking on the door despite the low volume and uncertainty that lies ahead. Emotions will likely be very high this week so plan for possible big point moves, whipsaws, and overnight reversals as the market tries to guess the path forward amid all the market-moving data.
Asian markets begin the week mixed with modest gains and losses across the indexes as investors ponder slowing economies. However, European markets trade higher this morning trying to build off the bullishness that closed the indexes higher last Thursday. U.S. futures on the other hand seem less certain trading modestly and mixed as they ponder pending inflation data and the earnings season beginning on Friday as jobs data indicate the economy is slowing.
Economic Calendar
Earnings Calendar
We start the week light and ramp up the official 2nd quarter earnings kick-off on Friday with big bank reports. Notable reports for Monday include GBX, PSMT & TLRY.
News & Technicals’
According to the Labor Department’s report, nonfarm payrolls grew by 236,000 in March which is about in line with the Dow Jones estimate of 238,000. The unemployment rate fell to 3.5% from the previous month’s 3.6%. The March jobs report showed a resilient economy and moderate inflation which pushed stock futures and Treasury yields higher. However, the New York Stock Exchange was closed for Good Friday. “As such, the odds of another quarter-point rate hike in May should go higher as the data does not appear to justify a Fed pause,” he added.
Last week’s data hinted at a slowdown in job growth which caused U.S. government debt prices to be higher on Monday. The yield on the benchmark 10-year Treasury note slipped to 3.363% while the yield on the 30-year Treasury bond dipped to 3.581%. The 2-year note yield fell 4 basis points to 3.931%. Remember that prices move inversely to yields.
The U.S. Defense Department is launching an interagency investigation into the source and the damage potential of a trove of classified documents that were leaked onto social media over the past few days. According to reports, the documents contained sensitive information on not just Ukraine but also China, the Middle East, and Africa. They also revealed the rate of expenditure of Ukraine’s S-300 air defense systems and a timeline suggesting when they would be depleted – and that they are running dangerously low.
Investors are in for a busy week of economic data. The latest consumer price index and producer price index data are due out Wednesday and Thursday, respectively. These will be key in determining if or when the Fed will pause or put an end to its rate-hiking campaign. The first batch of companies reporting first-quarter financial results will also be released this week. Tilray Brands kicks things off on Monday. The major banks – JPMorgan Chase, Wells Fargo, and Citigroup – will report on Friday. Plan for just about anything this week with so much uncertainty intraday whipsaws and big point overnight reversal is certainly possible.
Thursday saw a small gap lower at the open (down 0.17% in the SPY, down 0.09% in the DIA, and down 0.53% in the QQQ). After that open, all three major indices ground sideways to get their bearings for the first 30 minutes of the day. However, starting at 10 am in the SPY and QQQ as well as 11 am in the DIA, the bulls led a long, slow rally that lasted until 2:30 pm. From that point, the QQQ and SPY ground sideways in a fairly tight range. At the same time, DIA did a slow, shallow pullback. This action gave us a white Bullish Engulfing candle (that bounced up off its T-line) in the SPY, a white-bodied Spinning Top in the DIA, and a Bull Engulfing candle that crossed back up through its T-line in the QQQ.
On the day, seven of the 10 sectors were in the green with the Healthcare (+0.75%) group leading the way higher while Energy (-1.23%) lagged the other sectors. At the same time, the SPY gained 0.39%, DIA gained 0.02%, and QQQ lost 0.67%. VXX lost 1.76% to 43.48 and T2122 climbed but remains in the mid-range at 63.69. 10-year bond yields fell slightly again to 3.305% while Oil (WTI) was flat at $80.54 per barrel. So, on virtual Friday we saw a sideways to very modestly bullish session. All of this happened on well less-than-average volume in all three major indices.
In economic news Thursday, the Weekly Initial Jobless Claims came in much higher than expected at 228k (compared to a forecast of 200k but still far below the prior week’s 246k reading). Then on Friday, March Nonfarm Payrolls increased slightly less than was expected at +236K (compared to a forecast of +239k and far lower than the February reading of +326k). At the same time, March Private Nonfarm Payrolls increased far less than expected at +189k (versus the forecast of +215k and the February value of +266k). Meanwhile, the March Participation Rate came in a bit above expectation at 62.6% (compared to the forecast and previous reading of 62.5%). This all resulted in a better-than-expected March Unemployment Rate of 3.5% (versus the forecast and February value of 3.6%). (Of potential note, Black Unemployment fell to 5%, which is the lowest absolute level since 1972 and the narrowest gap to overall unemployment in over 50 years.) Finally, March Average Hourly Earnings also increased less than expected at +4.2% annualized (compared to a forecast of +4.3% and growing much slower than the Feb. increase of +4.6%). The bottom line is that the March Payrolls data came in about as well as the Fed could have hoped. Participation is up, but job increases are slowing and wage increases are slowing (without either falling off a cliff). This seems in line with the Fed’s stated path of one more quarter-point rate hike and then stable rates for the rest of the year. This should be good news for bulls and was followed by an increase in bond yields and the US dollar (which tend to indicate a move to a “risk on” stance).
In stock news Thursday, Reuters reported that between 2019 and 2022, TSLA employees shared private videos and images recorded by the cameras located in customer cars. (Many of these videos and images were reportedly highly invasive, showing customers in embarrassing situations and even naked.) TSLA responded by saying that customer car camera recordings remain anonymous. However, Reuters reported that several former employees said TSLA internal computer programs can and do routinely identify the locations and owners of the cars doing the recording. In other TSLA news, the company cut prices again over the weekend (this time by an average of 6%). This is TSLA’s fifth price cut in 2023. Elsewhere, WMT announced it has plans to launch a network of electric vehicle charging stations at many US stores by 2030. This will be in addition to 1,300 charging stations previously announced as part of the WMT partnership with VLKPY (Volkswagen). Meanwhile, Bloomberg reports that BA plans to increase the output of 737 jets to 38 per month by the middle of the year. (BA currently produces 31 of the 737 planes each month.) At the same time, HMC announced a recall of 563,000 CRV sport utility vehicles from 2007-2011 model years because rust may cause the frame to detach. In rumor news, the Wall Street Journal reported that NGG and D both are separately seeking to sell parts of their own natural gas pipeline networks, which combined could be worth $13 billion. Finally, in black eye news, Reuters reported that LUV CEO Jordan received a 75% compensation increase (mostly from bonus) even though he promised to cut executive bonuses after the 17,000 flight cancellations around Christmas and despite LUV stock falling more than 66% in the year preceding the raise.
In stock legal and regulatory news, the EPA proposed new rules on Thursday that would cause sweeping cuts in vehicle emissions. The rules will take effect starting in the 2027 model year with the last of the rules phased in by the 2032 model year. Later, HOOD agreed to pay $10.2 million in penalties to several individual states for platform outages in March 2020 as well as for deficient account review and approval processes prior to 2021. Meanwhile, a day after CMG sued SG for trademark infringement, SG has renamed its newest menu item (formerly known as the “Chipotle Chicken Burrito Bowl”). Elsewhere, the Treasury Dept. and MSFT reached a settlement over the tech firm’s violations of sanctions and export controls. MSFT agreed to pay a $3 million to settle 1,300 apparent sanction violations involving Cuba, Iran, Syria, and Russia. (The fine was so small because Treasury said the violations were not egregious and were self-reported.) At the same time, the US GAO denied LMT’s protest of the Army awarding a $7.1 billion helicopter contract (for a Blackhawk replacement) to TXT. On Friday, the Financial Times reported that the US Office of the Comptroller of Currency (Treasury Dept.) has scheduled an audit of JPM related to the company’s potential lack of “due diligence” performed as part of the bank’s acquisition of dozens of smaller companies in 2021 and 2022. This comes after the US Dept. of Justice filed fraud charges against the founder of financial aid company Frank for having defrauded JPM to the tune of $175 million. Finally, CNBC reported Friday that the Dept. of Labor (OSHA) has again found DG guilty of more than 180 serious workplace violations, including the blocking of fire exits. However, federal law only allowed OSHA to fine DG $245,544.
In money flow news, Fed data released Friday showed that bank deposit outflows have stabilized. Deposits at banks not among the 25 US largest banks were down just $1.1 billion the week ending March 22. That said, smaller bank deposits are still down $216 billion from their peak in December of 2022. Over the same period, deposits at the top 25 banks are down $96.2 billion. (Large bank deposits have fallen $519 billion from the high, which was $11.2 trillion dollars in February 2022.) A different way to look at this situation is that about $350 billion in new money poured into Money Market funds in the four weeks ending April 5. That took Money Market funds to a record total of $5.25 trillion. Over that same time, SPY is up 6%, DIA is up 4.77%, and QQQ is up 10.2%. So, money is flowing out of bank deposits and apparently into both stocks and money market funds at a significant clip. Big bank earnings reports starting at the end of this week may also give us better insight.
Overnight, Asian markets were mixed but leaned toward the green side. Shenzhen (-0.80%) was by far the biggest loser on the day. Meanwhile, Thailand (+1.02%) was the biggest winner in the region, followed by South Korea (+0.87%) and Japan (+0.42%). In Europe, the bourses are closed for holiday on Monday. In the US, as od 7:30 am, Futures are pointing toward another mixed, flat open. The DIA implies a +0.08% open, the SPY is implying a -0.07% open, and the QQQ implies a -0.36% open at this hour. At the same time, 10-year bond yields are up from Thursday’s close to 3.368% and Oil (WTI) also up very slightly to $80.69/barrel. (For its part, Natural Gas is making a strong move, desperately trying to hang on to the $2 level after a year-long decline.)
The only major economic news events scheduled for Monday is a speech from Fed member Williams (4:15 pm). The major earnings reports scheduled for the day are limited to GBX before the open. There are no earnings reports scheduled after the close.
In economic news later this week, on Tuesday, we get the WASDE report, API Crude Oil Stocks Report and hear from two Fed members (Harker and Kashkari). Then Wednesday, March CPI, EIA Crude Oil Inventories, March Federal Budget Balance, and the FOMC Meeting Minutes are released. On Thursday, March CPI and Weekly Initial Jobless Claims are reported. Finally, on Friday, March Retail Sales, March Import/Export Price Indexes, March Industrial Production, Feb. Business Inventories, Michigan Consumer Sentiment. Feb, and Retail Inventories are reported.
In terms of earnings reports later this week, on Tuesday, KMX and ACI report. Then, on Wednesday, there are no major reports. Thursday, we hear from, DAL, FAST, INFY, and PGR. Finally, on Friday, BLK, C, JPM, PNC, UNH, and WFC report..
In under-the-radar geopolitical news, last week, the Chinese response to Taiwan’s President Tsai meeting with US House Speaker McCarthy included announcing plans Friday to begin stopping and inspecting ships in the Taiwan Strait. Taiwan’s response was to say “No you won’t” and advised ships and shipping lines to call the Republic of China (Taiwan) Coast Guard or Navy should they be radioed or obstructed by China. Shortly afterward, China said that its operation was a three-day military drill intended to demonstrate its ability to control the Strait. (Thus, limiting the escalation.) For its part, the US Administration has de-escalated the situation by simply saying this Chinese move was another ratcheting up of tensions (the same thing China said before the US officials met the Taiwanese leader).
So far this morning, GBX beat on both the revenue and earnings lines. It is worth noting that GBX revenue included a 34% upside surprise.
With that background, at least in the premarket, it appears stocked have pulled back in the last 30 minutes, to give us a very modest but red across-the-board opening bell. QQQ is now retesting its T-Line (8ema), with the SPY and DIA not far above their own T-lines. It looks as if the consolidation of last week is trying to continue. Overall, the price action still looks like nothing more than a modest consolidation (or small pullback in QQQ) in a bullish trend. However, you’d still be hard-pressed to look at these charts and say the bears are in control in any meaningful way. Obviously, being this close to the T-lines, overextension is not an issue now, either in terms of the T-line (8ema) or the T2122 indicator. Be cautious, but the last indications we received were bullish candles Thursday and Payroll data that will likely be seen as bullish (unless you are one of the “I don’t know why the sky isn’t falling yet” crowd).
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
Declining private payrolls and the shrinking services sector created a chop fest on Wednesday and traders ponder the economic slowdown and if that means a recession is just around the corner. Volume was low and looking at the VIX suggests no fear even though there is a record outflow to money market funds as investors look to protect capital. We will hear Jobless Claims numbers before the bell and comments from James Bullard later this morning with pending Employment Situation numbers on Friday when the market is closed. Anything is possible by Monday morning so plan carefully.
Asian markets traded mixed overnight after a surprise move from India to hold rates steady. However, European markets want to shake off the slowing economic conditions this morning seeing green across the board. U.S. futures on the other hand suggest a mixed open ahead of potential market-moving economic data and the pending Good Friday holiday closure.
Economic Calendar
Earnings Calendar
Notable reports for Thursday include LW, LEVI, RPM, STZ, WDFC.
News & Technicals’
Dave Burt, CEO of investment research firm DeltaTerra Capital, was one of the few skeptics who recognized the housing market was on the brink of collapse in 2007. He believes that an overlooked and unpriced climate risk could see history repeating itself. Burt said that “We think of this repricing issue as maybe a quarter of the size and magnitude of the [global financial crisis] in the aggregate but of course very, very damaging within those exposed communities.”
According to the latest projections for Social Security and Medicare, two of the three major trust funds may be insolvent in the next decade. Lawmakers may consider a host of changes to resolve those issues, from raising taxes to cutting benefits or both. Experts weigh in on what changes would be on their wish lists. Social Security’s woes largely come down to demographics. Since 2010, the program has been spending more on benefits than it has been bringing in from payroll tax revenues. By 2030, all baby boomers will be age 65 or older, according to the U.S. Census Bureau.
According to the new CNBC Supply Chain Survey, only about one-third of supply chain managers think warehouse inventories will return to normal before 2024. A little over one-quarter (27%) say companies are selling excess inventory on the secondary market because high storage prices are hitting the bottom line, with impacts to materialize in upcoming quarterly results. As expectations rise that Wall Street will revise earnings estimates lower in a weaker economy, almost half of those surveyed said the biggest inflationary pressures they are paying are warehouse costs, followed by rent and labor, and many are continuing to pass those costs on to consumers.
Wednesday’s price action was a low-volume chop fest as the declining ADP numbers and shrinking services sector added to worries of a slowing economy and possible recession. Before the market opens we will get the Jobless Claims number and will hear from James Bullard at 10 AM Eastern. Will it be enough to inspire a bullish or bearish move or will traders take the day to reduce risk ahead of the Friday Employment Situation report with the market closed for Good Friday? That raises the risk of a substantial Monday morning gap but the direction of the move is anyone’s guess so plan your risk carefully.
Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it. 
