As bond yields modestly pulled back, the bulls staged an exuberant celebration rushing back into stocks, suggesting inflation, rate increases, and the slowing economic reports no longer matter. Perhaps we will find out this week as Powell testifies in Congress and the indexes deal with overhead resistance and the current downtrends. Nevertheless, I suspect the big point price swings will continue, so plan carefully as we rally into levels that could harbor entrenched bears. Enjoy the ride but be prepared for maybe a wild one!
Asian markets mostly gained overnight after China released modest economic growth targets over the weekend. European markets trade mixed this morning with modest gains and losses after the Friday surge of buying. However, U.S. futures appear a bit more unsure as we head to the open. They currently suggest a very slight bearish open as they ponder the gravity of Powell’s pending testimony in Congress on Tuesday.
Economic Calendar
Earnings Calendar
Earnings season is beginning to slow down, but we still have a relatively busy week of reports. Notable reports for Monday include AVAV, CVGW, CIEN, RIDE, NTNX, TCOM, & WW.
News & Technicals’
A slew of foldable devices has hit the international market this year as electronics giants, mainly Chinese, look to catch up to Samsung in a smartphone category it pioneered. However, analysts have questioned how big the foldable category can get, given the devices’ high price and lack of apparent uses right now. Nevertheless, last month Chinese vendors Honor and Oppo launched their foldable smartphones.
Sen. Mark Warner, D-Va., said Sunday he is introducing a broad bipartisan bill that will outline an approach to banning or prohibiting foreign technology like TikTok. Warner said he is working on the bill with Sen. John Thune, R-S.D., and that he is concerned over the type of content Americans see on the platform. Warner’s bill comes after the U.S. House Foreign Affairs Committee voted Wednesday to advance a bill granting President Joe Biden the authority to ban TikTok.
Veeva Systems announced in December that it would move its customer management software off of Salesforce’s platform and onto its home-brewed technology in 2025. That will reduce revenue for Salesforce, which has contractually not been allowed to compete with Veeva in the life sciences sector. On Wednesday, Veeva said it plans to demonstrate the technology in May.
The bulls closed last week with an exuberant celebration as the bond yields subsided modestly. The SPY and QQQ regained their 50-day moving average supports; however, they left the question of the overhead resistance and the current downtrend, as did the IWM. We also have the complication of the DIA with a substantial overhead resistance of price and technicals that could serve as a bearish moving average squeeze. Perhaps this week, we will find out if we can continue to ignore the economic slowdown and rising interest rates by breaking to new highs or if the bears have regrouped for an attack at resistance levels. With the big point price swings of late, anything is possible as Powell heads to the hill to be grilled by Congress.
Markets diverged at the open Thursday. The SPY gapped down 0.52%, QQQ gapped down 0.92%, but DIA gapped slightly to the upside by 0.16%. After the open, all three of the major indices led a slow rally until 1:30 pm. At that point, the bulls stepped in to really stoke the rally for half an hour. Then from 2 pm, markets ground sideways in a very tight range until about 3:15 when another leg of the rally started taking us to the highs of the day at 3:40 pm. However, we did see profit-taking in the last 20 minutes. This action gave us large-body, white candles with small upper wicks in all three major indices. The QQQ and SPY printed a Bullish Engulfing Signals (SPY engulfing a Doji), and the DIA gave us a Morning Star-type candle. The SPY and DIA both retested their T-lines (8ema) and closed just below that level.
On the day, eight of the 10 sectors were in the green with Utilities (+1.32%) leading the way higher and the Financial Services (-0.61%) lagging behind the other sectors. At the same time, the SPY was up 0.74%, the DIA was up 1.04%, and QQQ was up 0.83%. The VXX fell 3.61% to 11.23 and T2122 climbed higher into the midrange to 42.73. 10-year bond yields spiked over the key 4% level to 4.062% and Oil (WTI) was up 0.33% to $77.95 per barrel. So, overall, Thursday saw a gap down and, after that, it was a bullish market all day long. This all happened on less-than-average volume across the board.
In economic news, the Weekly Initial Jobless Claims came in slightly below expectation at 190k (compared to a forecast of 195k and the previous week’s reading of 192k). At the same time, Q4 Nonfarm Productivity printed far below projection at 1.7% (versus a forecast of 2.6% but at least better than the prior quarter value of 1.4%). This was mainly a result of the Q4 Unit Labor Cost coming in twice as high as expected at 3.2% (compared to the forecast of 1.6% and the Q3 reading of +2.0%). After the close, Atlanta Fed President Bostic (non-voter) ruled out supporting any return to aggressive FOMC rate hikes and also touted a pause in hikes by summer. He told a roundtable that “right now, I am firmly in the quarter-point move camp.” Meanwhile, Fed Governor Waller’s (voter) post-market videoconference presentation was canceled after that Zoom call was “Porn Bombed.” However, some of his remarks were pre-released, and said he supports raising the projected terminal rate of the Fed Funds to 5.1%-5.4%.
In stock news, WMT announced it had 32 Walmart Healthcare Centers at the end of 2022, is opening 17 new ones this year and plans to add 28 new healthcare centers in 2024. Elsewhere, F recalled 98,500 Ranger trucks over the replacement of airbag inflators. However, F also said it will restart production of the F-150 Lightning electric truck on March 13 (after F had halted that production in early February following a battery fire). Meanwhile, BX defaulted on a $562.5 million bond Thursday that was backed by a portfolio of offices and stores in Europe. In the crypto space, a number of major cryptocurrency companies (including COIN) dropped SI as their banking partner Thursday after SI’s most recent earnings report cast doubt on the company’s ability to stay afloat. In other downbeat news, Bloomberg reported that C is cutting hundreds of jobs (just less than 1% of its total workforce). After the close, the state of NV released news that it has approved a new $330 million tax abatement for TSLA after it had said it will invest $3.6 billion in the state to expand its Gigafactory complex in that state. In executive news, the Wall Street Journal reported after the close that the CEO of WMT (McMillon) plans to stay in that role for at least three more years. Finally, the Biden Administration is expected to announce another $400 million aid package to Ukraine today. The package is expected to include HIMARS (made by LMT), GMLRS rockets (made by NOC), and ammunition for the Bradley fighting vehicle (made by BAESY).
In stock legal and regulatory news, GOOGL has won an appeal to the US 9th Circuit Court where users of “Chrome Incognito Mode” had sued for $5 billion in damages as a class action when it made public that this mode does not make browsing private and anonymous. The trial will go on in November, but the class-action status was denied, which will severely limit the number of claims and greatly reduce any plaintiff award. Elsewhere, a US Bankruptcy judge criticized the SEC for its “vague doubts” about a proposed purchase of defunct crypto lender Voyager Digital by Binance. However, even if the judge approves the $1.3 billion purchase, the deal can’t proceed until the SEC approves it and the SEC has said Voyager Digital’s lending business involves the sale of unregistered securities. Meanwhile, the US 2nd Circuit Court of Appeals ruled that the founder of APO cannot revive a conspiracy lawsuit accusing his co-founder (and others) of conspiring to destroy his reputation. At the same time, across the pond, Reuters reported that sources tell it that MSFT will get EU approval for the long-delayed acquisition of ATVI. Finally, the seven major US railroads (CP, CSX, KSU, UNP, NSC, BRKB’s subsidiary BNSF, and CNI) agreed to join a voluntary “Close Call Reporting System” after the notoriety brought by the NSC crash and chemical spill in East Palestine OH. This move was aimed at avoiding mandatory reporting regulations from the NTSB or Transportation Dept.
After the close, DELL, AVGO, HPE, VMW, VSCO, COO, and VVX all reported beats on both the revenue and earnings lines. Meanwhile, COST and JWN both missed on the revenue line while beating one earnings. On the other side, MRVL beat on revenue while missing on earnings. There were no major misses on both the top and bottom lines. It is worth noting that AVGO and COO both raised their forward guidance. However, DELL, VVX, and MRVL lowered their forward guidance.
Overnight, Asian markets were mixed but leaned to the green side. India (+1.57%), and Japan (+1.56%) were far and away the biggest winners on the day. Meanwhile, Thailand (-0.36%), New Zealand (-0.27%), Malaysia (-0.13%), and Singapore (-0.09%) were the only red in the region. In Europe, we see a heavily green lean at midday. Only Greece (-0.55%), and Switzerland (-0.05%) show any red, while the FTSE (+0.15%) also lags a bit. The DAX (+1.11%) and CAC (+0.83%) lead the region higher in early afternoon trade. As of 7:30 am, US Futures are pointing toward a modest gap higher to start the day. The DIA implies a +0.29% open, the SPY is implying a +0.41% open, and the QQQ implies a +0.46% open at this hour. At the same time, 10-year bond yields have backed off slightly (but remain above the key 4% level) at 4.013%, and Oil (WTI) is off half a percent to $77.78/barrel in early trading.
The major economic news events scheduled for Friday are limited to Feb. Services PMI and S&P Global Composite PMI (both at 9:45 am), and ISM Non-Mfg. PMI (10 am), and we hear from 2 Fed speakers (Bostic at 11:45 am and Bowman at 3 pm). Major earnings reports scheduled for the day are limited to HIBB before the opening bell. There are no major earnings reports after the close.
So far this morning, HIBB missed on both the revenue and earnings lines. It also lowered its forward guidance.
In late-breaking news, while the Fed has recently pushed back against the idea of a rate hike pause anytime soon and raising expectations for the terminal rate slightly, Europe continues to look for more dovish central bank policy. However, overnight a member of the ECB Governing Council pushed back just a bit against the widespread belief that the ECB’s terminal rate will be under 4%. However, he only pushed a tiny bit, saying “market bets for euro-area interest rates peaking at 4% may prove accurate if inflation remains elevated.” In much less cheery news, XOM now faces a lawsuit filed by the US EEOC (Equal Employment Opportunity Commission) after a black employee found another noose, the fifth to be found at the same facility. The suit alleges that XOM has failed to investigate previous the nooses and has failed to do enough to prevent other such events.
With that background, it looks like the bulls are retesting the T-line in all three major indices this morning in the premarket. If we open right here, we would be breaking the downtrend line in all three, but that does not mean a bullish trend would be started until we put in a high and a higher low. So, be leery of FOMO and chasing new bullish trades too early. There is no problem of extension according to T2122, or, of course, the T-line. As I see it, the QQQ has support just at the bottom of the premarket candle with plenty of room above before hitting the next potential resistance, SPY has a little room to move before hitting resistance at about $400 and change, and DIA has room to run up to about $336 before resistance. Remember the intraday reversals (like yesterday’s “gap and rally”) and don’t forget that its Friday. So, take profits, pay yourself, and prepare your account 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
The large-cap indices opened the day flat and then whipsawed their way sideways, having made no real progress by 12:45 pm. However, the QQQ opened flat and then whipsawed its way South, reaching the lows of the day by 11:45 am before swinging back to reclaim most of the lost ground by 12:15 pm. All three of the major indices then got into lock-step at 12:45 pm and sold off until 3 pm only to bob along not far up off the lows the rest of the day. This action gave us Spinning Top type candles in the SPY, DIA, and QQQ, with the QQQ having the largest (black) body candle. The SPY and QQQ had above-average volume while the DIA had a lower-than-average number of shares traded.
On the day, six of the 10 sectors were in the red with Utilities (-1.34%) leading the way lower and Energy (+1.63%) holding up better than the other sectors. At the same time, the SPY was down 0.37%, the DIA was up 0.13%, and QQQ was down 0.80%. The VXX rose almost 1% to 11.65 and T2122 climbed slightly to just outside the edge of the oversold territory to 20.78. 10-year bond yields spiked to 3.996% and Oil (WTI) was up 0.82% to $77.68 per barrel. So, overall, Wednesday was an indecisive day filled with whipsaws.
In economic news, February Manufacturing PMI came in a bit below expectation at 47.3 (compared to a forecast of 47.8 but better than the January value of 46.9). Just a few minutes later, the Feb. ISM Manufacturing PMI also came in below expectation at 47.7 (versus a forecast of 48.0 but slightly better than the January reading of 47.4). At the same time, Feb. ISM Mfg. Prices came in significantly hotter than expected at 51.3 (compared to a forecast of 45.1 and a January value of 44.5). Although these were not earth-moving indicators, they did show a modest slowdown in the economy while the inflation indication is not good. Then the EIA Weekly Crude Oil Inventories came in with a larger build than forecast to +1.165 million barrels (versus a forecast of +0.457 million barrels but far, far better than the prior week’s build of 7.648 million barrels and even much better than Tuesday night’s API report of +6.203 million barrels). This build in inventories offset record oil exports of 5.629 million barrels for the week. Finally, the Fed speak was mixed on Wednesday. Minneapolis Fed President Kashkari (voter) said he is leaning toward increasing his policy path (adding more rate hikes) but also that he had not made a final decision prior to the March meeting. However, Atlanta Fed President Bostic released an essay later in the day that said he still feels the 5%-5.25% range would be adequate despite the recent high inflation readings. The news from Bostic was that he now feels the Fed Funds Rate will need to be kept at that level into 2024.
In stock news, Reuters reported Wednesday afternoon that US electric vehicle makers are seeing a drop in demand across the board. The company cited sources at TSLA, RIVN, NKLA, FSR, and LCID as well as noting very public price cuts by TSLA. It was quite interesting that the article did not mention the big auto brands GM, F, and STLA although the implication was that the slowdown was industry-wide. In unrelated EV auto news, TSLA CEO Musk announced part 3 of his “TSLA Master Plan.” He said the plan is to eventually cut the cost of vehicle production in half. However, the focus of the plan was on “sustainable energy” and working with Musk’s other companies to replace the existing power grid with renewables and TSLA batteries. Elsewhere, GOOGL’s Waymo self-driving unit laid off 137 employees in its second round of job cuts for 2023. Meanwhile, LLY announced it will cut list prices for its most commonly prescribed insulin products by 70% and will begin offering $25/mo. insulin as of Q4 this year. (They currently sell at around $275.) In labor news, DAL pilots have ratified a new contract offering them a cumulative 34% pay increase. AAL and UAL pilots have been conducting “informational pickets” amidst claims the companies are dragging out negotiations after publicly promising “industry-leading contracts” at the same time they have offered less than the DAL deal. This is all part of a war for talent as the major airlines plan to hire over 8,000 new pilots in 2023 alone.
In stock legal and regulatory news, UBS lost its bid to have a lawsuit thrown out of court in London. The suit will now proceed and claims UBS is liable for $500 million lost by two exiled Chinese businessmen when UBS forced them to sell Hong Kong shares at the height of a market rout in 2015. Elsewhere, for the second time in two days, the FDA Advisory Board recommended that the FDA approve a respiratory virus vaccine. This time the recommendation was for GSK’s competitor to the PFE vaccine recommended Tuesday and this time by a stronger 10-2 vote. In other health-related news, BMY won a dismissal of a $6.4 billion lawsuit that had claimed the company had defrauded investors by delaying the submission of information to the FDA (and which delay allowed BMY to avoid paying shareholders in CELG the $6.4 billion as part of a contingency clause in the company purchase). Meanwhile, OSHA announced it has opened an investigation into a death that occurred Tuesday at the MPC refinery in Texas City, TX. Elsewhere, a Delaware judge has thrown out a shareholder lawsuit against the MCD board claiming it was wrong to let former CEO Easterbrook keep $125 million in severance when he was fired for having a relationship with one of his employees.
After the close, CRM, SPLK, VEEV, SNOW, ADV, AEO, and OKTA all reported beats to both the revenue and earnings lines. Meanwhile, PSTG and AAN both missed on revenue while beating on earnings. On the other side, AIMC, AGL, CANO, LNW, and ERIE all beat on revenue while missing on earnings. Unfortunately, GEF, JAZZ, and CODI missed on both the top and bottom lines. It is worth noting that CRM, AGL, and OKTA raised their forward guidance. However, SPLK, PSTG, VEEV, and AAN lowered their forward guidance. (CRM is also notable for its big beats despite the fact they laid off more than 8,000 employees early this year, claiming they were unprofitable and fearing the economic climate.)
Overnight, Asian markets were mixed but leaned to the red side on mostly modest moves. Hong Kong (-0.92%), India (-0.74%), and Singapore (-0.62%) paced the losses while South Korea (+0.62%) and Malaysia (+0.36%) were the only appreciable gainers. In Europe, we see a similar picture taking shape at midday. The FTSE (-0.15%), DAX (-0.47%), and CAC (-0.04%) are typical of the region with 4-5 smaller exchanges in just into the green in early afternoon trade. As of 7:30 am, US Futures are pointing toward a mixed start to the day. The DIA implies a +0.18% open, the SPY is implying a -0.39% open, and the QQQ implies a -0.57% open at this hour. At the same time, 10-year bond yields have crossed above the key 4% level to 4.038% and Oil (WTI) is up 0.37% to $77.99/barrel in early trading.
The major economic news events scheduled for Thursday include Q4 Unit Labor Cost, Q4 Nonfarm Productivity, and Weekly Initial Jobless Claims (all at 8:30 am). We also hear from Fed members Waller (4 pm) and Kashkari (6 pm). Major earnings reports scheduled for the day include AER, AMRX, BUD, BBY, BIG, BILI, BURL, CPG, GMS, HRL, KR, M, PDCO, SFM, STGW, and TD before the opening bell. Then after the close, AVGO, COO, COST, DELL, HPE, MRVL, JWN, VVX, and VSCO report.
In economic news later this week, on Friday, Services PMI, S&P Global Composite PMI, and ISM Non-Mfg. PMI are reported. In terms of earnings later in the week, on Friday, HIBB reports.
So far this morning, BBY, M, BURL, TD, PDYPY, SQM, CNQ, AER, and AMRX have reported beats on both the revenue and earnings lines. Meanwhile, BUD, BIG, PDCO, and BILI missed on revenue while also beating on earnings. On the other side, GMS and CPG beat on revenue while missing on earnings. Unfortunately, HRL and STGW missed on both the top and bottom lines. It is worth noting that BBY, HRL, BILI, and AMRX have all lowered their forward guidance.
In late-breaking news, TSLA took a beating overnight after Elon Musk’s “Master Plan Part 3” was long on platitudes, vagueries, and promises while being short on details, timing, and concrete steps. For example, he did not mention the long-promised (more than 2 years) $25k TSLA model. However, he did say the company has agreed to build a new plant in Mexico to build “the next generation of TSLA vehicles” (which implies the CA and TX plants have less of a role in the company’s future).
With that background, it looks like the bears want to keep pushing in the leading SPY and QQQ indices while the lagging DIA is looking to consolidate. The trend remains bearish and extension is not a problem yet in terms of T-line (8ema) or the T2122 indicator. As I see it, the SPY and especially QQQ have a little way to fall into their next support, but the DIA has minor support just below the premarket price. Respect the trend (the trend is the trend until it ends) and be aware of the potential for intraday whipsaw like we saw yesterday. Also remember the data dump at 8:30am if you are playing in the premarket.
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 investors reacted to earnings and economic reports piling up, evidence of a slowing economy, the indexes produced a rollercoaster ride of whipsaws, leaving more questions than answers by the close of day. On the positive side, the indexes held near technical and price support levels but did so with substantial uncertainty as the 10-year bond topped 4%. Expect more volatility this morning with jobs and productivity numbers before the bell to set the stage for the day. We could be setting up for a significant market move soon, but it could go in either direction, so plan carefully.
Asian markets struggled with direction overnight, closing mixed as investors grappled with the impacts of pending rate increases. European markets trade with modest losses this morning after posting an 8.5% inflation number suggesting the ECB has a lot of work ahead to curb the rising costs. At the time of writing this report, U.S. futures suggest a mixed open with potential market-moving economic data capable of changing everything by the open.
Tesla CEO Elon Musk took the stage to present his “Master Plan Part 3” for the company at its 2023 Investor Day in Austin. The company’s manufacturing leader, Tom Zhu, revealed that as of Wednesday, Tesla had produced 4 million cars. The presentation was long on vision and a review of prior achievements but short on specifics about new Tesla products or services.
Inflation in the eurozone eased slightly to 8.5% in February, even as the ECB signaled that the interest rate hiking cycle might not end. Core inflation rose to an estimated 5.6% in February from 5.3% in January. Goldman Sachs said earlier this week that they were raising rate hike expectations for the ECB.
Salesforce beat expectations across the board. In addition, the company is expanding its share buyback program after introducing it last year. Salesforce announced layoffs during the quarter as activists pushed it to become more profitable.
Wednesday’s price action was a rollercoaster ride of whipsaws that marked a new low for the week, but in the indexes, while technically resolving nothing. Though the economic data continues to signal a slowing economy, the VIX shows investors have little fear as the recession evidence grows. The good news is that index price support levels held by the end of the day, with Dow making the most effort to rally as the first day of March trading came to a close. I believe the indexes are setting up for a significant market move, but the question is in which direction? Plan carefully with Jobless Claims and Productivity & Costs report before the bell setting the stage for another day likely to produce challenging volatility.
Markets opened basically flat on Tuesday. The DIA sold off for 5 minutes while the other two major indices stayed held ground during that time. Then all three of the major indices wandered up and down in a tight range until noon. From noon until 2 pm, all three made a modest rally and this was matched by a two-hour selloff from 2 pm into the last 5 minutes of the day. That last 5 minutes saw the strongest selling of the day. This action gave us Inverted Hamer candles in the SPY and QQQ, with the QQQ failing a retest of its T-line (8ema). However, DIA gave us a black-bodied, Marubozu (shaved head) candle with no wicks and closing on the lows. The QQQ had average volume, the SPY a little greater than average volume, and the DIA less-than-average volume for the session.
On the day, seven of the 10 sectors were in the red with Utilities (-1.63%) leading the way lower and Basic Materials (+0.55%) holding up better than the other sectors. At the same time, the SPY was down 0.37%, the DIA was down 0.76%, and QQQ was down 0.13%. The VXX fell 2.04% to 11.54 and T2122 dropped back down to the edge of the oversold territory to 19.92. 10-year bond yields were flat at 3.924% and Oil (WTI) was up almost 1.5% to $76.81 per barrel. So, overall, Monday was an indecisive day in the SPY and QQQ with the last leg being a bearish move. However, the DIA was decisively bearish all day.
In economic news, the January Goods Trade Balance grew as it came in at -$91.50 billion (up from -$89.67 billion in December). January Retail Inventories also grew, coming in at +0.2% (compared to +0.1% in December). Later in the morning, the Feb. Chicago PMI came in worse than expected at 43.6 (versus a forecast of 45.0 and the January reading of 44.3). Shortly thereafter, the Conference Board Consumer Confidence also came in low at 102.9 (compared to a forecast of 108.5 as well as the January value of 106.0). For those traders reading between the tea leaves, the increase in Retail Inventories, contraction value in the Chicago PMI, and decrease in Consumer Confidence (leading indicator) could be signs of a slowing economy…which a bull could read as an excuse for the Fed to not hike as much in March. Then, after the close, the API Weekly Crude Oil Stocks were reported much higher than expected yet again at +6.203 million barrels (versus a forecast of +0.440 million barrels but improved over the prior week’s +9.895 million barrels).
In stock news, AMAT unveiled a new semiconductor chip manufacturing tool Tuesday. AMAT stock jumped on the news and main competitor ASML gapped lower. During the afternoon, GS told an investor conference that it is considering “strategic alternatives” for its consumer business. (GS CEO Soloman and President Waldron both signaled the company is backing away from Main Street after the company had previously halted its unsecured lending and folded consumer business units into other divisions.) Analysts really pressed GS execs hard at the event and the CEO seemed flustered. At the same time (but at a different event), CVX CEO Wirth said we could see consolidation among the 5 huge oil major players (CVX, XOM, BP, SHEL, and TTE). However, he expects severe antitrust hurdles before it happens. Meanwhile, the Wall Street Journal reports that APO is in talks to buy ARNC. Later, Reuters reported that V and MA have both pushed back projects and slammed the breaks on partnerships with crypto firms after the bankruptcies of FTX and BlockFi in 2022. Then, after the close, the US Postal Service announced that it plans to buy 9,250 electric Transit vans from F starting later this year. Their main competitor, GM, also announced after the close that it will lay off 500 salaried workers. Finally, also after the close, NVAX announced it is slashing spending and raised doubts about the ability of the company to remain solvent.
In stock legal and regulatory news, a US Federal District Judge sentenced GLNCY to pay just over $700 million ($428.5 million fine and $272 million forfeiture) after the company’s guilty plea in a decade-long scheme of bribing foreign officials. While the fine met the plea agreement the company made with prosecutors, it was 15% below the US sentencing guidelines. Later, the US Labor Dept. threw out exemptions put in place by the Trump Administration which had allowed Federal Contractors to be exempt from anti-discrimination laws. Elsewhere, the Biden Administration announced on Tuesday that it will require companies winning funds from the $52 billion CHIPS Act to share “excess profits” in exchange for the tax credits and subsidies. The Commerce Dept. plans to begin accepting applications for the funds in March and the main beneficiaries are expected to be INTC, AMD, NVDA, TSM, TXN, ADI, SWKS, MCHP, and MU. Meanwhile, the FDA Advisory Board voted 7-4 to recommend a respiratory virus drug from PFE be authorized for older adults in the US.
After the close, ROST, A, URBN, FRG, FSLR, GO, BGS, ICFI, IHRT, MASI, VZIO and VRSK all reported beats to both the revenue and earnings lines. Meanwhile, HPQ, AMC, RKT, JXN, EXPI, RIVN, and CPNG missed on revenue while beating on the earnings line. On the other side, SWX beat on revenue while missing on the earnings line. Unfortunately, MNST, COMP, and EDR missed on both the top and bottom lines. It’s worth noting that EDR raised its forward guidance while IHRT and GO both lowered their forward guidance.
Overnight, Asian markets were mixed but leaned heavily to the green side on very uneven moves. Hong Kong (+4.21%), Shenzhen (+1.11%), and Shanghai (+1.00%) led the gainers. Hong Kong’s jump came after a bunch of economic data indicated that China was reopening much faster than expected. For example, the official PMI hit the highest level since 2012. Meanwhile, in Europe, we see green across the board at midday with the sole exception of Portugal (-0.58%). The FTSE (+0.88%), DAX (+0.58%), and CAC (+0.69%) are leading the region higher in early afternoon trade. As of 7:30 am, US Futures are pointing to a modestly green start to the day. The DIA implies a +0.16% open, the SPY is implying a +0.21% open, and the QQQ implies a +0.36% open at this hour. At the same time, 10-year bond yields are up to 3.94% and Oil (WTI) is down 0.70% to $76.53/barrel in early trade. (That’s odd that oil did not get the memo indicating China demand is roaring back.)
The major economic news events scheduled for Wednesday, include Mfg. PMI (9:45 am), ISM Mfg. PMI (10 am), and EIA Crude Oil Inventory (10:30 am). Major earnings reports scheduled for the day include ANF, BHG, CLVT, CLH, DLTR, DCI, DY, FWONK, HGV, HZNP, JACK, KSS, LSXMA, LOW, EYE, NIO, ODP, PBR, QRTEA, RY, SGRY, VST, WB, and WEN before the opening bell. Then after the close, AAN, ADV, AGL, AEO, CANO, SQM, CODI, ERIE, GEF, JAZZ, LNW, OKTA, PFG, CRM, SNOW, SPLK, and VEEV report.
In economic news later this week, on Thursday, we get Q4 Nonfarm Productivity, Q4 Unit Labor Cost, and Weekly Initial Jobless Claims. Finally, on Friday, Services PMI, S&P Global Composite PMI, and ISM Non-Mfg. PMI are reported.
In terms of earnings later in the week, on Thursday, we hear from AER, AMRX, BUD, BBY, BIG, BILI, BURL, CPG, GMS, HRL, KR, M, PDCO, SFM, STGW, TD, AVGO, COO, COST, DELL, HPE, MRVL, JWN, VVX, and VSCO. Finally, on Friday, HIBB reports.
So far this morning, RY, DY, CLVT, WEN, ACIW, HZNP, and GOLF have all reported beats to both the revenue and earnings lines. Meanwhile, LOW, ODP, NIO, BHG, DCI, WB, and EYE have all missed on the revenue line while beating on earnings. On the other side, KSS, QRTEA, ANF, HGV, and QRTEB beat on revenue while missing on the earnings line. (There were no misses on both lines reported so far today.) It is worth noting that KSS, NIO, and EYE lowered their forward guidance. However, ODP raised its forward guidance.
In mortgage news, interest rates increased for the third straight week. As a result, mortgage demand also dropped for the third straight week after spiking earlier this year as rates had dropped. Last week saw the slowest mortgage demand in 28 years. The national average rate for a 30-year, fixed-rate, conforming loan hit 6.71% with an increase in points to 0.77 (up from 0.75). This caused refinance applications to fall 6% and new home purchase applications to also fall the same 6% on the week.
With that background, it looks like the bulls want to make another modest move back up toward the T-line (8ema) in all three major indices again this morning. However, over-extension is not a problem in terms of the T-line and the T2122 indicator is just at the edge of oversold territory. So this is not the result of being stretched to the downside. Regardless, all three major indices remain in a downtrend. In addition, all three indices have minor potential support below as well as resistance above. Respect the trend (the trend is the trend until it ends) and be aware of the potential support and resistance.
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
Tuesday’s early bullish hopes faded before the open, with disappointing economic numbers inspiring the bears as slowing economic conditions raise recession worries among investors. Though we have primarily tried to ignore the clues of a stressed consumer, the compounding impacts are becoming more evident as LOW adds to the chorus of retail companies uncertain about the path ahead. With the majority of 1st quarter earnings in the rearview poor economic numbers will be harder to ignore as we face another rate increase later this month. Plan for overnight reversal and significant intraday whipsaws to continue as the uncertainty grows.
While we slept, China reported a pickup in factory activity, with the tech-heavy HSI surging 4% while the ASX declined slightly. However, the European market’s trade decided bullish this morning, hoping to relieve the recent selling. With several pending and potentially market-moving economic reports and a bevy of retail earnings, U.S. futures push for a positive open, hoping to relieve the recent downturn and hold technical index supports.
Lowe’s sales in its fiscal fourth quarter fell short of Wall Street’s expectations. The home improvement retailer issued a conservative outlook as the sector comes under pressure from a shift in consumer spending.
General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits. The cuts affect about 500 positions, according to a person familiar with the plans, announced Tuesday internally.
In November, Rivian reaffirmed its full-year guidance of an adjusted loss before income, taxes, depreciation, and amortization of $5.4 billion. For 2023, Rivian forecast vehicle production of 50,000 vehicles. That would be roughly double last year’s amount but below analysts’ expectations of around 60,000. Rivian is focusing on ramping up its R1 truck and SUV production and an electric delivery van it builds for Amazon, its largest individual shareholder.
The Tuesday pre-market pump faded before the beginning of trading as disappointing economic numbers that point to a slowing economy and an inflation-stressed consumer change their spending habits. As we kick April trading, worries of a pending recession continue to grow amongst traders and investors, breaking recent index uptrends. Still, I would not expect the bulls to give up easily, and after testing technical support, now would be the time to step up and defend. Unfortunately, they face another round of economic reports with PMI Mfg., ISM Mfg, Construction Spending, and mortgage and petroleum data. Once again, they are working to pump up the pre-market, so expect the wild intraday whipsaws to continue as the bulls and bears battle for directional control of the indexes.
After mainly ignoring the terrible durable goods report, the bulls surged higher by more than 350 Dow points, only the quick reverse taking most of it back in a considerable intraday whipsaw. The good news is last Friday’s index lows held as support, but facing another big day of earnings and economic data on this last trading day of February, expect more of the same wild volatility. A recession seems inevitable, with slowing economic reports stacking up evidence of changing consumer habits and record credit card debt with more rate increases on the way. So, plan your risk carefully as we slide into March and the market comes to grips with the challenging path forward.
Asian markets closed mostly higher but with modest gains and losses after Japan’s factory output fell. European markets edge slightly higher this morning despite the accelerating inflation in France and Spain. U.S. futures, once again, pump higher, the premaket facing a big day of earnings and economic data, but anything is possible by the open on this last trading day of February.
A bill to revise legal protections that have shielded TikTok from U.S. sanctions is expected to pass a key House committee on Tuesday, paving the way for a broader ban on the popular short video app. Sponsored by House Foreign Affairs Committee Chairman Mike McCaul, the bill would strip longstanding protections from companies that transfer Americans’ “sensitive personal data” to entities or individuals based in, or controlled by, China. The bill would likely pass the Republican-controlled House easily. However, its fate in the Democratic majority Senate is unclear.
After the U.S. shot down an alleged Chinese spy balloon this month, China’s defense ministry declined a call with its U.S. counterpart, according to statements from both sides. Chinese culture is why, said Shen Yamei, deputy director and associate research fellow at state-backed think tank China Institute of International Studies’ department for American studies. The default U.S. view is quite different.
Ukraine President Volodymyr Zelenskyy acknowledged Monday that the situation is deteriorating around Bakhmut. Russian forces and private military contractors belonging to the Wagner Group have been trying to capture Bakhmut for months as they look to cut Ukraine’s supply lines in Donetsk. On Monday, one Russian official claimed Russian forces now controlled all roads into Bakhmut, stopping Ukrainian supplies of ammunition and forces into the city.
We kicked off the week with a considerable intraday whipsaw, but despite the bearish reversal, the bulls defended last Friday’s index lows as support. TGT squeaked out an earnings beat this morning but appeared to have the same slowing consumer concerns as HD and WMT. We not only have a big day of earnings reports but also face several economic reports, including trade, PMI, Housing prices, and Consumer Confidence. Reversal and intraday whipsaws seem likely to continue to stay focused on support and resistance levels as the big point range of price swings on the last trading day of the month.
On Monday, markets gapped higher at the open (up 0.89% in the SPY, up 0.78% in the DIA and up 1.11% in the QQQ). All three major indices then shopped sideways for just over an hour. However, at that point, a slow selloff took hold for the rest of the day with price closing not far up off the bottom in all three. This action left us with gap-up, black-bodied, indecisive Spinning Top candles in the SPY, DIA, and QQQ. All three very nearly touched their T-line (8ema) at the high of the day. In addition, the SPY closed up above its 50sma…but just barely above. This all happened on less-than-average volume in all the major indices.
On the day, eight of the 10 sectors were in the green with Consumer Cyclical (+0.79%) and Basic Materials (+0.77%) leading the way higher and Utilities (-0.50%) lagging behind the other sectors. At the same time, the SPY was up 0.34%, the DIA was up 0.29%, and QQQ was up 0.72%. The VXX fell 3.59% to 11.81 and T2122 climbed up out of the oversold territory to 39.22. 10-year bond yields fell back a bit to 3.928% and Oil (WTI) fell three-quarters of a percent to $76.75 per barrel. So, overall, Monday was a gap-up, indecisive day where the bears seemed to have more strength than the bulls after the first hour.
In economic news, January Durable Goods Orders came in below expectation at -4.5% (compared to a forecast of -4.0% and far below the December reading of +5.1%). The bulls took this as good news, probably under the theory that bad economic data may give the Fed a reason not to raise rates as much in March. However, later in the morning, January Pending Home Sales came in extremely hot at +8.1% (versus a forecast of +1.0% and a December value of +1.1%). This news may have helped the bears during the mid-morning start to the selloff. However, the staying power was not long-lived and seemed to dissipate quickly. Meanwhile, Treasury Sec. Yellen made a surprise trip to Ukraine. She called for a “fully funded and appropriately conditioned” (meaning funded by Russian asset seizures and conditioned to avoid/limit corruption) IMF bailout plan for Ukraine by the end of March. However, she did acknowledge a significant set of legal hurdles to accessing those assets being held in the US and Europe. Yellen also called for sanctions on the Russian uranium commodity, which had escaped sanctions thus far.
In stock news, PLTR announced they are cutting 2% of their workforce. (However, this only amounts to 75 jobs.) Elsewhere, car maker STLA announced it has purchased a 14.2% stake in MUX (a copper mine located in Argentina, whose largest shareholder is RIO). In other auto news, FSR told Reuters on Monday that it has increased orders for its “Ocean” sport utility EV and was on track to produce 42,400 vehicles in 2023. (The Ocean EV starts at $37,500 compared to TSLA Model Y which starts at $54,990.) At the same time, the Wall Street Journal reported PFE is in talks to buy cancer drugmaker SGEN. However, there are many hurdles for the deal to clear including a potential major antitrust review. Meanwhile, WMT, TGT, BABA, HD, LOW, COST, DLTR, IP, DOLE, and NKE are benefitting from plummeting ocean shipping prices (as the largest importers or exporters of containers). At its peak, the cost was $20,000 per TEU and now the price is $1,150. However, shipping firms (pink sheet listed) are now canceling voyages and storing containers in a frantic effort to prop up prices.
In stock legal and regulatory news, TD has agreed to pay $1.205 billion to a court-appointed receiver (who will pay back victims) related to an infamous Ponzi scheme 10 years ago. The bank avoided admitting to doing any wrong, but paid since it repeatedly ignored red flags and funneled all of Allen Stanford’s ill-gotten gains to his offshore accounts in Antigua. Elsewhere, Politico reported late Monday that the FTC is going to challenge the ICE (owner of NYSE) $13 billion deal to buy BKI. This move comes after many months of investigation of the pricing power ICE would gain in the mortgage data market. In Ohio, residents have asked a judge to block NSC from doing cleanup (destroying potential lawsuit evidence) related to the February 3 train derailment and chemical spill. This came after NSC had only allowed 2 days for the inspection of dozens of rail cars. However, NSC is also under a tight deadline due to a March 10 deadline from the EPA to clean up residues. Elsewhere, a Delaware court ruled that it will hold a hearing on April 27 regarding the conversion of APE (AMC Preferred shares) into AMC common shares. AMC soared on the news, which implies the stock may not be diluted 10-1 on March 14. (This extends the time for a long APE / Short AMC trade by 1.5 months.) Meanwhile, LYV has asked a US federal judge in CA to throw out a class action lawsuit related to the sale of Taylor Swift concert tickets. LYV claims that the ticket buyers (plaintiffs) had all repeatedly agreed to the terms of service which call for confidential arbitration. After the close, DDD agreed to pay $27 million to the US government to settle its violations of export restrictions to China.
After the close, UHS, RRC, WDAY, CAPL, ZM, HHC, MKSI, TTEC, HEI, HY, and WMK all reported beats on both the revenue and earnings lines. Meanwhile, OKE, ARKO, PRGO, TWI, PRIM, and ICUI all missed on revenue while beating on earnings. On the other side, DAR, ACHC, BMRN, and OVV all beat on revenue while also missing on the earnings line. Unfortunately, OXY and ARGO missed on both the top and bottom lines. It is worth noting that OKE and ALC both raised forward guidance. However, MKSI, TTEC, and BMRN all lowered their own forward guidance.
Overnight, Asian markets were mixed and leaned to the downside. Hong Kong (-0.79%), Taiwan (-0.71%), and India (-0.51%) paced the losses. Meanwhile, Shenzhen (+0.70%), Shanghai (+0.66%), and Australia (+0.47%) led the gainers. In Europe, we see the opposite picture at midday with most of the bourses in the green. The FTSE (-0.43%), DAX (+0.17%), and CAC (+0.13%) lead the way with all but three of the other exchanges modestly green in early afternoon trade. As of 7:30 am, US Futures are pointing toward a green start to the morning. The DIA implies a +0.32% open, the SPY is implying a +0.36% open, and the QQQ implies a +0.43% open at this hour.
The major economic news events scheduled for Tuesday include January Trade Goods Balance and Jan. Retail Inventories (both at 8:30 am), Chicago PMI (9:45 am), Conf. Board Consumer Confidence (10 am) and API Crude Oil Stocks Report (4:30 pm). Major earnings reports scheduled for the day include AHCO, ADT, AAP, AMWD, APG, AZO, BMO, BNS, BLDR, CHS, CCO, CLOV, CBRL, DQ, DK, XRAY, IGT, SJM, JLL, KTB, NFE, NXST, NCLH, OMI, PLTK, PRVA, SRE, FOUR, TGT, VRTV, and VTNR before the opening bell. Then after the close, A, AMC, BGS, COMP, CPNG, EDR, EXPI, FSLR, FRG, GO, HPQ, ICFI, IHRT, JXN, MASI, MNST, RIVN, RKT, ROST, SKWD, SWX, URBN, VRSK, and VZIO report.
In economic news later this week, on Wednesday, Mfg. PMI, ISM Mfg. PMI, and EIA Crude Oil Inventory are reported. On Thursday, we get Q4 Nonfarm Productivity, Q4 Unit Labor Cost, and Weekly Initial Jobless Claims. Finally, on Friday, Services PMI, S&P Global Composite PMI, and ISM Non-Mfg. PMI are reported.
In terms of earnings later in the week, on Wednesday, ANF, BHG, CLVT, CLH, DLTR, DCI, DY, FWONK, HGV, HZNP, JACK, KSS, LSXMA, LOW, EYE, NIO, ODP, PBR, QRTEA, RY, SGRY, VST, WB, WEN, AAN, ADV, AGL, AEO, CANO, SQM, CODI, ERIE, GEF, JAZZ, LNW, OKTA, PFG, CRM, SNOW, SPLK, and VEEV report. On Thursday, we hear from AER, AMRX, BUD, BBY, BIG, BILI, BURL, CPG, GMS, HRL, KR, M, PDCO, SFM, STGW, TD, AVGO, COO, COST, DELL, HPE, MRVL, JWN, VVX, and VSCO. Finally, on Friday, HIBB reports.
So far this morning, TGT, BMO, AZO, AAP, APG, XRAY, IGT, KTB, PLTK, BLDR, CCO, FOUR, VTNR, and CLOV have all reported beats on both the revenue and earnings lines. Meanwhile, SRE, SJM, and NFE missed on revenue while beating on earnings. On the other side, BNS, OMI, ADT, NCLH, DORM, and FRO all beat on revenue while missing on earnings. Unfortunately, AHCO, AMWD, CHS, and DQ missed on both the top and bottom lines. It is worth noting that TGT, ADT, CHS, NCLH, and CLOV all lowered their forward guidance. However, CCO and KTB both raised their own forward guidance.
With that background, it looks like the bulls want to gap markets back up toward their T-lines (8ema) again this morning. This time, it is looking to be a less dramatic inside candle gap up. So, over-extension is not a problem either in terms of the T-line or T2122 indicator. Still, this leaves all three major indices in a downtrend. However, if they can reach yesterday’s highs again (and hold them) they will be testing that downtrend line. I see support just below (bouncing up off it in premarket) in the QQQ and SPY. However, I also see resistance just above in the DIA and probably in the SPY too. So, continue to respect trend and support and resistance. And beware of the recent tendency toward intraday reversals which might point toward a shorter/faster trade, longer/slower trade, and/or the ability to withstand the pressure (sized small enough).
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
Although it was good to see the bulls defend critical moving average supports in the SPY, QQQ, and IWM, the lower highs followed by, the lower lows add some uncertainty with the mixed technical and price patterns. On the earnings calendar, we have a retail theme this week that may have been complicated by the weakening looked forward provided by HD and WMT last week. The first thing today is a potential market moving Durable Goods, with consensus estimates suggesting a substantial decline. Plan for the whipsaws and overnight reversal continues as the bulls fight to defend supports and bears line up to defend resistance levels.
Asian markets moved modestly lower during the night as they grappled with higher rates and slowing consumer activity. However, European markets want to shake off last weeks selling with a decidedly bullish bounce this morning. U.S. futures also want to bounce this morning, pushing upward in the morning pump but with the Durable Goods report pending, anything is possible by the open. Watch for whipsaws this morning.
Economic Calendar
Earnings Calendar
The earnings calendar this week has a heavy retail theme. Notable reports for Monday include AAON, ACAD, AES, DAR, FSR, FRPT, GRPN, JRVR, TREE, LI, RIDE, OSH, OXY, PNW, RRC, TTEC, UHS, WDAY, & ZM.
News & Technicals’
The two top retailers issued cautious U.S. consumer outlooks for 2023 last week. Walmart said consumer spending would start the year strong but fade. Home Depot expects revenue to be flat this year but bolstered by home equity. The retail sector had its worst week since July 2022, yet the latest inflation and retail sales data show consumer spending to be stronger than economists forecast.
Several big economies are gearing up for the mass rollout of electric vehicles. As the number of EVs on the road increases, a workforce with the knowledge to fix and properly maintain them will be needed. There are concerns, however, that a skills gap may emerge in the near future, creating a big headache for both the automotive sector and drivers.
In a joint statement Sunday, Sunak and von der Leyen said they had “agreed to continue their work in person towards shared, practical solutions for the range of complex challenges around the Protocol on Ireland and Northern Ireland.” The U.K. may have left the EU on Jan 31, 2020, but the Northern Ireland Protocol has caused persistent disagreement ever since.
Mixed technical and price patterns could make for some uncertainty as the indexes try to bounce back from last weeks selling. Though the SPY and QQQ held above critical technical supports, they also confirmed downtrends inking lower highs and lower lows in price action. We will start the week with possible market-moving Durable Goods, then begin a big week of retail earnings data. Will they also foresee the same weakening in the consumer and a slowing economy in the last half of this year, like HD and WMT? If so, it would be wise to watch downtrends, and overhead resistance levels as the bulls work to defend the bears and may entrench themselves to fight for the downtrend. So stay sharp and expect the big price swings of late to continue.
Markets gapped lower at the open Friday (down 1.29% in the SPY, down 1.14% in the DIA, and down 1.76% in the QQQ). However, at that point, Mr. Momentum seemed to take off for the weekend. After that open, all three major indices traded the rest of the day in a tight range bobbing around above and below the open. This action gave us gap-down, indecisive Doji or Spinning Top candles in all three major indices. The SPY crossed below its 50sma and then both the SPY and QQQ retested their 200sma from above…and held (at least for the day). DIA is not far above (and looks headed toward) its own 200sma.
On the day, nine of the 10 sectors were in the red as Technology (-1.89%) led the way lower and Energy (+0.13%) held up better than the other sectors. At the same time, the SPY was down 1.07%, the DIA was down 1.07%, and QQQ was down 1.67%. The VXX climbed 3.90% to 12.25 and T2122 has dropped back down just into the oversold territory at 19.66. 10-year bond yields are back up to 3.947% and Oil (WTI) rose 1.50% higher to $76.52 per barrel. So, overall, on Friday we saw a strong gap lower at the open, but then indecision the rest of the day. All this took place on a greater-than-average volume.
In economic news, the January PCE Price Index (the Fed’s favorite inflation indicator) came in hotter than expected at 5.4% (compared to a forecast of 5.0% and the Dec. reading of 5.3%). At the same time, January Personal Spending also came in much hotter than expected at +1.8% (versus a forecast of +1.3% and the December value of -0.1%). This was the biggest monthly gain since March 2021. Together these two readings were seen as indications that inflation may still be increasing (or at least is not falling) and the consumer is spending like crazy. Both of those are more likely to lead the Fed to tighten more and faster, raising the probability of a half percent hike in March. Hence, our gap down to start the day. Later in the morning, the Michigan Consumer Sentiment came in slightly better than forecast at 67.0 (compared to an expectation of 66.4 and decently improved from the January value of 64.9). At the same time, January New Home Sales came in significantly better than expected at 670k (versus a forecast of 620k and a December value of 625k)
In stock news, on Friday META announced its own AI named LLaMA (short for Large Language Model Meta AI). The new AI is aimed at researchers and academia and is the first step in META figuring out how it can use AI in its products. Meanwhile, Reuters reported that several more companies are cutting dividend sizes in an effort to save cash. As of Friday, these include HBI and VFC. Elsewhere, Reuters also reported on food companies culling slow-selling product lines as another way to cut expenses. These companies include KHC, CAG, UL, K, and MDLZ and will affect product selection and especially different sizes (smaller and larger quantities) of the same products available at WMT (Sam’s Club) and COST. The food companies claim it will save them billions of dollars over the year. At the same time, sources have told Bloomberg that GM has cut the production of pickup trucks due to growing inventories at dealerships and despite a continued increase in car sales this month. This implies that, while sales are good now, GM is expecting a downturn. Finally, hedge fund mgr. and major TSLA investor Ross Gerber told Reuters he was ending his bid for a TSLA board seat two weeks after his very public announcement of running for a seat in order to “reign in” Elon Musk.
In stock legal and regulatory news, the 2nd US Circuit Court rules that a tiny ($11,000) fine, which OSHA had levied on WMT for requiring pallets of boxes to be improperly stored, causing serious injury to an employee. (The multiple appeals over a minuscule fine have been an attempt by WMT to avoid liability in a lawsuit filed by the employee.) Elsewhere, WBD filed a lawsuit against PARA over the streaming rights to the animated comedy show South Park. At the same time, the US CDC hit PFE, BNTX, and MRNA when it said Friday afternoon that there isn’t enough evidence to recommend multiple annual (ongoing) COVID-19 booster shots. This comes as the government funding for such shots has or is expiring and the companies had announced major increases in the price of those vaccines. Meanwhile, GS announced Friday that it expects to incur $2.3 billion more in losses from legal proceedings during the remainder of the year. However, a CA Judge dismissed an antitrust suit that had been filed against CSGP by a rival real estate firm. After the close, MS told Reuters that it was cooperating with investigations by the US District Attorney for the Southern District of NY into block trading practices. At the same time, BLK told reporters it was cooperating in SEC investigations into electronic communications among its investment advisors (i.e. using encrypted communications to collude).
In miscellaneous news, US equity funds suffered massive outflows in the seven days ending last Wednesday. Lipper data shows investors withdrew almost $7 billion during that week. Meanwhile, Lipper data shows that investors exited US bond funds as well as they withdrew $1.67 billion during the week. Elsewhere, the US Dollar closed Friday at a seven-week high after hotter-than-expected inflation data. This came as we saw the largest weekly gain (0.6%) by the Dollar since September. On Saturday, Warren Buffett sent out his annual BRKB shareholder letter. In it, he said the company will continue to hold “a boatload of cash and treasury bonds.” He went on to report BRKB earnings were down 54% year-on-year for Q4 and down 125% year-on-year for all of 2022 (to a net loss of $22.819 billion). So, if you think you had a rough trading year in 2022, consider that BRKB reported a $53.6 billion loss from investments and derivative trades. BRKB share repurchases were down from $27 billion in 2021 to $8 billion in 2022. No new plan for 2023 was announced, but BRKB is sitting on $130 billion in cash.
Overnight, Asian markets were red across the board. Australia (-1.12%), South Korea (-0.87%), Shenzhen (-0.73%), and Taiwan (-0.71%) led the region lower. Meanwhile, in Europe, with the lone exception of Greece (-0.53%), the entire region is strongly green at midday. The FTSE (+0.77%), DAX (+1.52%), and CAC (+1.57%) are typical and lead the region higher in early afternoon trade. As of 7:30 am, US Futures are pointing toward a modest gap higher. The DIA implies a +0.43% open, the SPY is implying a +0.50% open, and the QQQ implies a +0.61% open at this hour. At the same time, 10-year bond yields have climbed to 3.959% and Oil (WTI) is down by a fraction of a percent to $76.18/barrel in early trading.
The major economic news events scheduled for Monday are limited to Jan. Durable Goods Orders (8:30 am) and January Pending Home Sales (10 am). Major earnings reports scheduled for the day include AES, BRKB, WTRG, GLP, HSC, KOP, KOS, LI, PNW, and VTRS before the opening bell. Then after the close, ACHC, ARGO, BMRN, CAPL, DAR, HEI, ICUI, MKSI, OXY, OKE, OVV, PRGO, PRIM, RRC, TWI, TTEC, UHS, WDAY, and ZM report.
In economic news later this week, on Tuesday we get Jan. Durable Goods, Jan. Retail Inventories, Chicago PMI, Conference Board Consumer Confidence and API Crude Oil Stocks Report. The Wednesday, Mfg. PMI, ISM Mfg. PMI, and EIA Crude Oil Inventory are reported. On Thursday, we get Q4 Nonfarm Productivity, Q4 Unit Labor Cost, and Weekly Initial Jobless Claims. Finally, on Friday, Services PMI, S&P Global Composite PMI, and ISM Non-Mfg. PMI are reported.
In terms of earnings later in the week, on Tuesday, we hear from AHCO, ADT, AAP, AMWD, APG, AZO, BMO, BNS, BLDR, CHS, CCO, CLOV, CBRL, DQ, DK, XRAY, IGT, SJM, JLL, KTB, NFE, NXST, NCLH, OMI, PLTK, PRVA, SRE, FOUR, TGT, VRTV, VTNR, A, AMC, BGS, COMP, CPNG, EDR, EXPI, FSLR, FRG, GO, HPQ, ICFI, IHRT, JXN, MASI, MNST, RIVN, RKT, ROST, SKWD, SWX, URBN, VRSK, and VZIO. Then Wednesday, ANF, BHG, CLVT, CLH, DLTR, DCI, DY, FWONK, HGV, HZNP, JACK, KSS, LSXMA, LOW, EYE, NIO, ODP, PBR, QRTEA, RY, SGRY, VST, WB, WEN, AAN, ADV, AGL, AEO, CANO, SQM, CODI, ERIE, GEF, JAZZ, LNW, OKTA, PFG, CRM, SNOW, SPLK, and VEEV report. On Thursday, we hear from AER, AMRX, BUD, BBY, BIG, BILI, BURL, CPG, GMS, HRL, KR, M, PDCO, SFM, STGW, TD, AVGO, COO, COST, DELL, HPE, MRVL, JWN, VVX, and VSCO. Finally, on Friday, HIBB reports.
So far this morning, AES, KOS, HSC, and NE all reported beats on both the revenue and earnings lines. At the same time, VTRS missed on revenue while beating on the earnings line. On the other side, WTRG beat on the revenue line while missing on earnings. Unfortunately, LI missed on both the top and bottom lines. It is worth noting that HSC has also lowered forward guidance.
With that background, it looks like the bulls want to gap markets back up toward their T-lines (8ema) this morning. (At least prior to the durable good number.) Still, this leaves all three major indices basically in a downtrend although the premarket price is getting close to challenging the downtrend line (but certainly not starting a new uptrend at this point). Extension is not a problem either in terms of T2122 or the T-line. It looks like the bulls are trying to get back above a potential support level that was tested and appeared to fail Friday. Also, keep in mind that the norm recently has been to see large intraday swings. So, be prepared to weather such a whipsaw or look to shorter or longer trade horizons to handle that problem.
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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