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)

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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 2^nd 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.

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

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

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

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

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

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

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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

Whipsaw was the word of the day on Wednesday as we gapped higher at the open (up 0.68% in the SPY, up 0.46% in the DIA, and up 1.26% in the QQQ).  Then, after 25 minutes of finding their feet, the bears stepped in to drive a strong selloff that took all three major indices to the lows of the day (which was down 0.6% from the prior close) at noon.  From there, the bulls stepped in to lead a long, slow, steady rally that got us back to the opening level by 3:30 pm.  Finally, the last 30 minutes saw more selling in all three indices of note.  This action gave us black-bodied, indecisive, Spinning Top candles in the SPY and DIA as well as a black-bodied Hammer candle in the QQQ.  All three major indices remain below their T-line (8ema), but are close enough now that there is no question of over-extension at this point.

On the day, six of the 10 sectors were in the green as Energy (+1.78%) led the way higher (by eight-tenths of a percent) and Communication Services (-0.71%) lagged the other sectors.  At the same time, the SPY was up 0.53%, the DIA was up 0.35%, and QQQ was up 0.87%.  The VXX fell 3.52% to 11.79 and T2122 has climbed back into the mid-range at 45.40.  10-year bond yields fell again, this time to 3.888% and Oil (WTI) jumped 2.27% higher to $75.63 per barrel.  So, overall, we saw a back-and-forth day where we gapped up, faded the gap and continued the same distance lower, and then reversed course again to end up just below where we opened.  If that doesn’t say “INDECISION,” then I don’t know what does.  All this took place on a greater-than-average volume, in fact, much larger-than-average in the DIA.

In economic news, the second estimate of Q4 Gross Domestic Product came in lower than expected at +2.7% (compared to a forecast of +2.9% and the Q3 final reading of +3.2%).  This gave bulls the energy to gap higher at the open on the theory that slower Q4 growth will tell the Fed their measures are working and they can go with a smaller hike during their March meeting.  At the same time, the second estimate of the Q4 GDP Price Index came in above expectation at +3.9% (versus the forecast of +3.5% but still improved from the Q3 value of +4.4%).  Meanwhile, Weekly Initial Jobless Claims came in lower than expected at 192k (compared to a forecast of 200k and even slightly down from the prior week’s 195k number). Again, this all pointed to a goldilocks scenario in the bulls’ eyes.  GDP was falling, but still growing, inflation was trending in the right direction, and yet fewer than expected jobs are being lost.  To bulls, this suggests an economy that is not in serious trouble and a Fed policy that is still doing the job.

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In stock news, BA announced it will stop production of its F/A-18 fighter jet in 2025.  BA said this will free up resources to focus on winning the race to build the pentagon’s 6^th generation fighter contract and building the MQ-25 autonomous refueling tanker.  (LMT and NOC are also competing for the sixth-generation fighter contract.)  Meanwhile, HUM announced it will exit the employer-based insurance business entirely to focus on government-backed programs such as Medicare and direct-to-individual insurance like medicare supplement insurance.  Later, NEM said it sees significant value created for its shareholders in a deal and is in talks to buy NCMGF.  Several of NEM’s competitors have said they are not interested in NCMGF, but the company still rejected NEM’s initial bid (which NEM said it is open to sweetening).  Elsewhere, NFLX said Thursday that it has cut the prices of its subscription plans in some countries in order to boost the number of subscribers.  The Wall Street Journal reported those cuts were in countries in sub-Saharan Africa, Latin America, the Middle East, and Asia.

In stock legal and regulatory news, NVS agreed to pay $30 million to healthcare plans and consumers to settle claims that it schemed to delay the US launch of generic drugs that would compete with its name-brand Exforge hypertension drug.  This was part of a broader $245 million settlement.  Meanwhile, a federal judge in Detroit moved more toward SBUX and dealt a blow to the NRLB ruling against the company.  The judge narrowed his previous “cease and desist” order barring the company from firing pro-union employees.  Originally, the order applied nationwide, but the just has now narrowed this to only cover a single store (in essence allowing SBUX to fire any pro-union employees elsewhere).  This is critical since 280 SBUX stores have unionized in the last two years out of 9,000 US locations.  Elsewhere, after the close, the FAA reported that BA has halted the delivery of 787 Dreamliner jets while it investigates a fuselage component.  (BA has not delivered a 787 since January 26 and there is no timeline available for the resumption.)  Finally, the US Dept. of Justice has asked a federal judge to sanction GOOGL after it claimed the company destroyed evidence by deleting internal corporate communications that had been subpoenaed as part of its antitrust case against GOOGL (related to internet search business).

In energy news, the EIA Weekly Crude oil Inventories saw stockpiles grow for the ninth-straight week.  The report showed an inventory build of 7.648-million-barrels (compared to a forecast of a 2.083-million-barrel build).  Crude inventories have grown by over 60 million barrels so far in 2023.  In addition, refineries operated at 85.9% capacity over the week, down slightly from the prior week and well below the 90% average capacity for this time of year.  Meanwhile, due to the reduced refining, the week saw a drawdown of gasoline inventories by 1.856-million-barrels (versus the forecast of a 0.108-million-barrel build and far less than the prior week’s 2.317-million-barrel build).  However, distillate (diesel and heating oil) inventories rose by 2.698 million barrels (compared to a forecast of a drawdown of 1.126 million barrels and the prior week’s drawdown of 1.285 million barrels).

In miscellaneous news, the USDA released its forecast calling for a 26.8% fall in egg prices during 2023.  The primary factor was that the agency is not seeing a rebound in bird flu after massive culling efforts in 2022.  Meanwhile, a group of Republican states has filed suit against the SEC, challenging the SEC requirements that investment funds reveal how they vote on shareholder ballots (like pay packages).  In the crypto space, the SEC and NY State’s top financial regulator both opposed Binance buying bankrupt crypto lender Voyager.  Both announced the grounds for their opposition is the ”unregistered offer and sale of securities,” which essentially declares crypto to be a security and is just another step in government opposition to cryptocurrencies.  Finally, the Biden Administration announced it will nominate former MA exec Ajay Banga to head the World Bank.

After the close, INTU, BKNG, MELI, ADSK, VICI, LYV, CHE, SWN, RHP, CWK, KWR, LUNMF, ACA, FTCH, SATS, EIX, and OPEN all reported beats on both the revenue and earnings lines.  Meanwhile, FND, PRI, BWXT, INT, CENX, and ZEUS all missed on the revenue line while beating on earnings. On the other side, SQ, PBA, ASR, SEM, ATSG, and SPNT all beat on revenue while missing on earnings.  Unfortunately, WBD, CE, BECN, OII, CVNA, and ACCO missed on both the top and bottom lines.  It is worth noting that CE, FND, ACCO, and ATSG lowered their forward guidance.  However, CHE and OII both raised their forward guidance.

Overnight, Asian markets were mostly in the red.  Japan (+1.29%) and South Korea (+0.53%) were the only appreciable green in the region.  Meanwhile, Hong Kong (-1.68%), Thailand (-1.12%), and Shenzhen (-0.81%) led the rest of the region lower.  In Europe, we see a similar picture taking shape at midday.  The FTSE (+0.21%) is among the handful of green bourses while the DAX (-0.60%) and CAC (-0.57%) are more typical and lead the region lower in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a gap lower to start the day.  The DIA implies a -0.57% open, the SPY is implying a -0.63% open, and the QQQ implies a -0.90% open at this hour.  At the same time, 10-year bond yields are up to 3.912% again and Oil (WTI) is up a half of a percent to $75.80/barrel in early trading.

The major economic news events scheduled for Friday include the January PCE Price Index and January Personal Spending (both at 8:30 am), Michigan Consumer Sentiment and January New Home Sales (both at 10 am).  Fed member (non-voting, hawk) Mester also speaks at 10:15 am.  The major earnings reports scheduled for the day include CM, GTLS, CNK, EOG, EVRG, FMX, FYBR, GTN, DINO, IEP, and LAMR before the opening bell.  Then after the close, CRC reports.

So far this morning, FYBR, EVRG, CRI, GTN, and PNM have all reported beats on both the revenue and earnings lines.  Meanwhile, CM, LAMR, and GTLS have missed on revenue while beating on earnings.  On the other side, CNK and DINO both beat on revenue while missing on earnings.  There are no major reports that have reported misses on both lines.  (FMX, IEP, and SSP report closer to the open.)  It is worth noting that CRI has lowered its forward guidance.

One year into the Russian War of Expansion against Ukraine, the war drags.  The Russians continue to be willing to take hundreds of thousands of casualties (by most estimates more than 100,000 dead).  On the other side, the West (and the US in particular) seems only willing Ukraine enough military aid to check the Russians.  (As opposed to decisively throwing them out such that they will not come back after regrouping.)  In terms of the business impacts go, according to US News and World Reports, these are the biggest losses.  PM generated 8% of its revenue from Russia and Ukraine prior to the war and that has taken a hefty hit.  PEP was generating 4.4% of total revenue from those two countries prior to the 2022 invasion.  MCD lost 4.2% of its revenue and also took a significant haircut on the assets it sold at fire sale prices to exit Russia.  Less obvious losers are MHK (which lost 4.3% of its revenue which came from Russia and Ukraine), EPAM (which used to generate 4% of revenue from the two countries, CCL (which previously got 3.5% of its revenue from Russia and Ukraine), PVH (lost 3.6% of its revenue), and WAB (which lost 3.5% of its revenue from those two countries).  The biggest corporate winners from the war are LMT, RTX, NOC, and GD, all of which have received new multi-billion dollar orders for everything from Javelin missiles (LMT), to HIMARS rocket systems (LMT), to Stinger missiles (RTX), to Stryker fighting vehicles (GD), to Abrams tanks (GD), to heavy-caliber ammunition (GD), to drones (AVAV).

With that background, it looks like the bears want to gap markets back lower in all three major indices. Still, this leaves all three major indices basically in a consolidation area of the recent downtrend. (At least at the current premarket prices.) Extension is not a problem either in terms of T2122 or the T-line. We’re sitting at a potential support level at the moment. However, all three major indices also face resistance just above after the last few days. The trend remains bearish in the short term while the basic character of the market has been “chop and thrash back-and-forth” in recent weeks. Yesterday, in particular, was a whipsaw day on the intraday chart. So, continue to show some caution and remember that it’s Friday (payday). So, lock in some profits where you can 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.

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

On Wednesday, markets opened just on the green side of flat.  All three major indices say 20 minutes of modest rally followed by 45 minutes of a slightly stronger selloff.  However, at 10:40 am, a slow, steady rally took over the market that eventually took us to new highs by 2 pm.  Unfortunately, after buying the rumor all morning, traders sold the news after the Fed Minutes release.  This selloff took us back down to new lows by 3 pm where we stayed until a bounce that last 15 minutes.  This action is giving us black-bodied, indecisive Spinning Top candles in the SPY, DIA, and QQQ. 

On the day, six of the 10 sectors were in the red as Energy (-0.60%) led the way lower and Consumer Cyclical (+0.50%) held up better than the other sectors.  At the same time, the SPY was down 0.12%, the DIA was down 0.22%, and QQQ was up 0.07%.  The VXX fell 2.86% to 12.22 and T2122 has climbed but remains well into the oversold territory at 13.72.  10-year bond yields have fallen slightly to 3.916% and Oil (WTI) is down 3.23% to $73.89 per barrel.  So, we saw a “wait and see” open (despite good earnings reports) and then a slow, but steady rally into the Fed Minutes.  However, at that point, we sold off to take all three major indices out near the lows.  All this took place on a little below-average volume.

In economic news, the FOMC Minutes from the Feb 1 meeting was the only show in town Wednesday.  As mentioned, their release moved markets lower, despite us not learning anything we didn’t know before the release.  All participants expressed that they welcomed the signs of moderating inflation leading up to the meeting.  However, the sentiment that “substantially more evidence of progress on inflation” would be required before they were confident inflation was on a downward path toward 2%.  The vast majority favored a 25-basis-point hike (which is what they announced).  However, three members (including non-voters uber-hawk Bullard and Mester) were in favor of a continuation of 50-basis-point hikes (or at least said they could support a 0.50% hike).  We knew those two had been in favor of a 50-basis-point hike prior to the minutes because they flat-out told us as much last week.  With that said, the minutes also gave us a clue that there was concern over financial stability, both from increasing rates too quickly and potentially from the upcoming Federal Debt Ceiling showdown.  The most heated exchanges were related to the risk of recession with a few attendees seeing an “increased likelihood” of recession while the majority pointed to the labor market which has remained hot implying that businesses still see demand and are working to hold onto or in some cases increase their number of employees and also pointed to excess savings, even noting that some local governments have “sizable budget surpluses.”

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In stock news, Reuters reported that the CEO of MKC told them during an interview that the company is seeing pushback from retailers on price increases for its products.  Specifically, WMT and KR (two largest grocery chains) were mentioned as fighting any increase in prices.  Elsewhere, Reuters also reported that CMCSA took advantage of the recent “AI craze” to sell more than 11 million shares of BZFD so far in the month of February. This came after BZFD has announced it was partnering with OpenAI on ads.  Later, Bloomberg reported that AAPL has made a breakthrough in non-invasive (no blood sample) glucose monitoring.  This would allow the phone maker to compete with current blood or prick required solutions from ABT, PODD, DXCM, and TNDM.  At the same time, INTC announced a cut to its dividend by 65% (to the lowest level since 2007) in an effort to save cash.  INTC has been losing ground to AMD in key markets, had many delayed and mediocre product launches in the last year and is currently facing the worst semiconductor market in a decade coming off the boom pandemic years of high sales and higher prices.  Meanwhile, after the close, TM announced it has accepted union demands for the largest base salary wage hike in 20 years as well as an increase in bonuses.  Shortly after the TM announcement, HMC said it also has agreed to a deal with unions.  However, the HMC deal was only for a 5% pay increase.  Finally, in early evening, GOOGL told “cloud employees and contractors” that they will be sharing desks (on alternate days) in order reduce real estate costs at its five largest locations.  Workers will be in-office two days per week (Monday/Wednesday or Tuesday/Thursday) which is actually down from the currently required 3 days in-office.  There was no word on the amount of expected savings or whether the workers will be 33% more productive on their two days in-office.

In stock legal and regulatory news, CRL shares plunged Wednesday after news broke that the company was subpoenaed by the US Justice Dept. in relation investigations of Cambodian supplier of monkeys for research.  At the same time, AMZN completed its purchase of One Medical (primary care provider) a day after receiving FTC approval for the deal.  Elsewhere, the US Supreme Court ruled that HLX is liable to pay overtime for an oil rig supervisor who earns $200k per year.  The 6-3 majority ruled the person was being paid at a daily rate of $963 and was not on salary. The ruling could have serious implications for corporations employing non-contract staff.  Meanwhile, NSC made several announcements Wednesday that it will take responsibility for the cleanup (as had been ordered Tuesday by the EPA.  After the close, the CDC advisory panel recommended a BVNRY monkeypox vaccine be approved for use in all adults at risk.  Such recommendations usually lead quickly to approval and if approved this would give BVNRY an advantage over EBS whose smallpox vaccine was competing for that market but which causes severe side effects.  Finally, in non-specific corporate news, the NLRB ruled that laid-off workers cannot be required to sign confidentiality or any other (non-compete) agreements that could deter them from exercising their rights to find other employment as a condition for receiving severance pay.  This overturned a pair of Trump-era rulings that had made non-compete and confidentiality contracts a valid condition for receiving severance.

In energy news, after the close the API Weekly Crude Stocks Report came out.  This week saw another very large and unexpected rise in stocks.  The report said crude oil inventories grew 9.895 million barrels (compared to a forecast of a 1.233-million-barrel build and following on the heels of the prior week’s 10.507-million-barrel build).  The report also saw a 0.894-million-barrel build in gasoline inventories as well as a 1.374-million-barrel increase in distillate (diesel and heating oil) stocks.  This report followed a day when crude prices fell 3.3% on fears of upcoming Fed rate hikes and a weakening of the China rebound.  In addition, the Fed minutes also supported a strengthening dollar which rose against sterling, the yen and euro.  (A stronger dollar reduces the price of nearly all dollar-denominated commodities.)

After the close, NVDA, PXD, EBAY, APA, CTRA, PARR, FIX, PDCE, RXT, ANSS, MYRG, CCRN, TDOC, PK, RUN, EXR, COKE, KALU, ICLR, VMI, OGS, STN, SUI, and SM all reported beats on both the revenue and earnings lines. Meanwhile, DVA, NTAP, CAKE, CDE, DVA, GSM, WES, and UCTT reported misses on revenue while beating on earnings.  On the other side, MOS, OPAD, ETSY, CPE, CHDN, CHRD, BTG, DOOR, RYI, and PR all beat on revenue while also missing on earnings. Unfortunately, ATUS, SNBR, FNF, VAC, MATV, and OUT missed on both the top and bottom lines.  It is worth noting that RYI raised its forward guidance.  However, NTAP, VAC, OPAD, RXT, UCTT, and SUI all lowered their forward guidance.

Overnight, Asian markets were mostly in the red.  Taiwan (+1.28%) and South Korea (+0.80%) were strong but the only green in the region.  However, Japan (-1.34%) and Singapore (-1.06%) led the region lower with the rest of the exchanges down less than half of a percent.  Meanwhile, in Europe, the regional bourses are mostly green at midday.  FTSE (-0.18%) is one of three exchanges in the red while the DAX (+0.63%) and CAC (+0.48%) lead the region higher in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.30% open, the SPY is implying a +0.54% open, and the QQQ implies a +1.00% open at this hour.  At the same time, 10-year bond yields are back up to 3.947% and Oil (WTI) is up 1% to $74.75/barrel in early trading.

The major economic news events scheduled for Thursday includes Q4 GDP, Q4 GDP Price Index, and Weekly Initial Jobless Claims (all at 8:30 am), and EIA Crude Oil Inventories (11 am).  The major earnings reports scheduled for the day include BABA, AMR, AEP, AMT, HOUS, AMBP, AAWW, BBWI, BHC, CBRE, CQP, LNG, COMM, DPZ, DTE, EME, AG, FCN, GPC, GFI, IRM, KDP, LKQ, MRNA, MODV, NTES, NEM, NICE, NOMD, OPCH, PZZA, PCG, PRMW, PWR, RCII, SPTN, SRCL, FTI, TFX, BLD, TAC, VIPS, W, and YETI before the opening bell.  Then after the close, ACCO, ATSG, ACA, ADSK, BALY, BECN, SQ, BKNG, BWXT, CVNA, CE, CGAU, CENX, CHE, CWK, EIX, ERIE, FTCH, FND, INTU, LYV, MTZ, MELI, OII, ZEUS, OPEN, PBA, PRI, RHP, SEM, SWN, VICI, WBD, and INT report.

So far this morning, BABA, LYG, GPC, PWR, BBWI, AMT, BLD, SHOO, MODV, DTE, AEP, CQP, EME, RCII, OPCH, FCN, PZZA, and SATS all reported beats on both the revenue and earnings lines.  Meanwhile, CBRE, VIPS, DISH, ARKAY, COMM, DPZ, IRM, TFX, OGE, PCG, and NICE all missed on revenue while beating on earnings.  On the other side, KDP, W, FTI, NEM, SPTN, NOMD, and GRAB have reported beats on revenue while missing on the earnings line.  Unfortunately, MRNA, NTES, LKQ, and PRMW have reported misses on both the top and bottom lines.  It is worth noting that VIPS, GPC, PWR, IRM, BLD, and GRAB have all raised their forward guidance.  However, BBWI, SPTN, RCII, and NOMD lowered their forward guidance.

In economic news later this week, on Friday, the January PCE Price Index, January Personal Spending, Michigan Consumer Sentiment, and January New Home Sales are reported.  In terms of earnings later in the week, on Friday, we hear from CM, GTLS, CNK, EOG, EVRG, FMX, FYBR, GTN, DINO, IEP, LAMR, and CRC.

In late-breaking news, Elon Musk met with CA Governor Newsom Wednesday.  As a result, the new TSLA Engineering Headquarters will be built in CA instead of in TX where the company Headquarters were moved in 2021 (in tax abatement wrangling).  Meanwhile, NY Fed President (and voter) Williams toed the company line last night.  In his evening presentation, he said it was important that the Fed remain committed to its 2% inflation goal.  (He did not speak to the most recent data, what he thinks would be the appropriate next hike, or where he sees the terminal Fed Funds rate reaching.)  At the same time, a PIMCO subsidiary has defaulted on $1.7 billion in mortgage loans. An industry analyst claims the value of the commercial properties (nationwide) covered by those loans had fallen 20% since the start of the pandemic in 2020. Finally, he CME Fed Watch Tool shows that fewer traders are betting on a quarter-point hike in March now. Still, the futures imply a 73% chance of a quarter-point hike with the odds of a half-point hike rising to 27%.

With that background, it looks like the bulls want to gap markets higher (back toward the T-line) in all three major indices. This is especially true in the QQQ when most of the T-line extension will be eliminated IF we open where premarkets sit now. All three major indices also have potential support levels not too far below. However, they also face resistance just above after the last few days of losses. The trend remains bearish in the short term while the basic character of the market has been “chop and thrash back-and-forth” in recent weeks. So, continue to show some caution.

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

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

Markets were disappointed in lowered forward guidance from both WMT and HD on Tuesday.  This caused a gap lower at the open (down 1.02% in the SPY, down 1.05% in the DIA, and down 1.30% in the QQQ).  After 15 minutes of fading the gap (tempting the dip buyers), the bears took over for a long, slow selloff that lasted until 2:30 pm.  At that point, prices ground sideways in a tight range near the low for the last 90 minutes of the day.  This action gave us gap-down, big-bodied, black candles with little to no lower wick in all three major indices.  All three are well below their T-line (8ema) with the DIA crossing down through its 50sma and SPY coming down close above its own 50sma by the close. 

On the day, all 10 sectors were in the red as Consumer Cyclical Energy (-3.30%) led the way lower and Consumer Defensive (-0.65%) held up better than the other sectors.  At the same time, the SPY was down 2.01%, the DIA was down 2.08%, and QQQ was down 2.37%.  The VXX spiked higher by 7.8% to 12.58 and T2122 plummeted deep into the oversold territory at 7.52.  10-year bond yields spiked hard to 3.954% and Oil (WTI) is down fractionally to $76.05 per barrel.  So, on the day, we saw a gap lower, a small bull trap, and then an all-day selloff on average volume (just greater than average in the SPY, and just below average in the DIA and QQQ).

In economic news, the Manufacturing PMI came in slightly above expectation at 47.8 (compared to a forecast of 47.1 and the January reading of 46.9).  At the same time, the Services PMI came in above forecast too at 50.5 (versus the expected 47.2 and the January reading of 46.8).  Meanwhile, the S&P Global Composite PMI beat the expectations too at 50.2 (compared to a forecast of 47.5  and a January value of 46.8).  It is worth noting that any of these PMI reading above 50.0 indicates economic growth while numbers below 50 indicate contraction.  Later in the morning, January Existing Home Sales came in below expectations at -0.7% (versus a forecast of +2.0% but still better than the December reading of -2.2%).  This drop was the 12^th straight monthly decline and also reached the lowest level (annually-adjusted 4.000 million units) in 12 years.

SNAP Case Study | Actual Trade

In stock news, TSLA announced it has paused some plans to produce entire batteries in Germany and will instead carry out some of the steps in the US to take advantage of new US tax incentives.  Meanwhile, MSFT announced it will offer its PC games to the NVDA cloud gaming service.  This is seen as a move to appease critics of the MSFT acquisition of ATVI, as one of the grounds was that the AVTI game franchise “Call of Duty” would only be available via XBOX.  The deal with NVDA ensures Call of Duty will be available via XBOX, PCs, Macs, Chromebooks, Smartphones, and tablets.  At the same time, HSBC announced that it has cut the employee annual bonus pool by 4% to $3.4 billion, citing a global slump in demand for bankers to finance M&A deals.  Still, in the same release, HSBC also raised its CEOs pay by 14% to $6.7 million.  Then, after the close, Reuters reported that T is looking to sell its cybersecurity division in an attempt to pay down debt that it has lumbered under since the $108.7 billion purchase of Time Warner (which it has since sold) in 2018.  In similar news, C announced after the close that it has raised its CEO pay to $24.5 million (a 9% hike). Finally, AMZN is facing major pushback on its decision to force employees to return to the office as of May 1. Overnight, more than 5,000 employees signed a petition pushing CEO Jazzy to drop the return to office mandate. This came in addition, to thousands of internal office Slack system spam messages deriding the decision.

In stock legal and regulatory news, the EPA ordered NSC to clean up contaminated soil and water at the site of its East Palestine OH derailment wreck in early February.  It also ordered the company to send representatives to every public meeting with local residents after the company skipped the most recent one, citing fear for the safety of company employees.  Elsewhere, Swiss Financial Regulators are reviewing remarks made by the Chairman of CS.  Chairman Lehmann apparently told a Financial Times interview that the “outflows from the company (by customers) stabilized by December 1 (time of interview),” going as far as to say they had “flattened out” and partially reversed”.  However, the Swiss Regulator noted that customer outflows continued before, during, and after that interview.  Meanwhile, AMC shareholders (led by a public employee retirement system) have sued the company over issuing new shares without shareholder consent, in violation of state law.  Finally, the Biden Administration will not veto the US International Trade Commission ban on the US import of AAPL watches for infringing on patents owned by Alivecor.  (This refusal to veto is normal as Presidential vetoes of ITC rulings are rare.)

In energy news, CHK sold 2,300 wells and 172,000 acres of drilling rights (a portion of its Eagle Ford basin holdings) for $1.4 billion.  The deal is expected to close during Q2 2023.  Meanwhile, the March front-month Natural Gas future closed down again (another 7.8%) to $2.057/mmBtu (another 2.5-year low).  Analysts see minor support at $1.98/mmBtu, but below that prices are said to be likely to fall to $1.80/mmBtu.  This comes as another couple of days of uncommonly warm weather is forecast for the Ohio Valley region and Mid-Atlantic states.  Finally, the International Energy Agency (IEA) said Tuesday that the oil and gas industry could slash global methane emissions by 75% with an investment of just 3% of the industry’s 2022 income.  The energy sector is the source of 40% of methane emissions and the reason this is important is that methane has 85 times more warming effect than CO2.  Major oil companies have not (yet?) made a reply to the announcement.

After the close, CHK, CZR, CVI, FANG, AGR, TOL, PANW, MATX, KEYS, PSA, FLS, O, BKD, SBAC, LZB, IAA, WSC, CSGP, ALIT, and EXAS all beat on both the revenue and earnings lines.  Meanwhile, COIN, CWH, GFL, CW, and IOSP all missed on the revenue line while beating on earnings.  On the other side, UFPI, BXC, ESI, and MTDR beat on the revenue line while missing on earnings.  Unfortunately, BCC, RIG, and UNVR missed on both the top and bottom lines.  It is worth noting that PANW, SBAC, and EXAS raised their forward guidance.  However, PSA, O, and CSGP have lowered their forward guidance.

Overnight, Asian markets were red across the board.  South Korea (-1.68%), India (-1.53%), and Japan (-1.34%) led the region lower.  Meanwhile, in Europe, we see the same picture taking shape at midday.  The European bellwethers FTSE (-1.15%), DAX (-0.73%), and CAC (-0.89%) are leading the continent lower even as several of the smaller exchanges have larger losses in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a flat start to the day.  The DIA implies a +0.04% open, the SPY is implying a -0.01% open, and the QQQ implies a +0.02% open at this hour.  At the same time, 10-year bond yields are down a bit to 3.935% and Oil (WTI) is off 0.85% to $75.74/barrel in early trading.

The major economic news events scheduled for Wednesday is limited to the February FOMC Minutes (2 pm), the API Weekly Crude Oil Stock Report (4:30 pm) and Fed member Williams speaks (6:30 pm).  The major earnings reports scheduled for the day include ALLE, BIDU, BLCO, BCO, CRL, CSTM, CRVN, GRMN, GIL, IBP, IQ, NI, OSTK, PRG, SBGI, TRGP, TJX, TNL, UTHR, VRT, and WWW, before the opening bell.  Then after the close, ATUS, ANSS, APA, BTG, CPE, CAKE, CHRD, CDE, FIX, CTRA, CCRN, DVA, EBAY, ETSY, EXR, GSM, FNF, ICLR, LBTYA, VAC, DOOR, MATV, MOS, MYRG, NTAP, NVDA, OPAD, OGS, OUT, PAGS, PARR, PK, PDCE, PXD, PR, RXT, RIO, RYI, SNBR, SM, STN, SUI, RUN, TDOC, VMI, and WES report.

In economic news later this week, on Thursday, we get Q4 GSP, Q4 GDP Price Index, Weekly Initial Jobless Claims, and EIA Crude Oil Inventories.  Finally, on Friday, the January PCE Price Index, January Personal Spending, Michigan Consumer Sentiment, and January New Home Sales are reported.

In terms of earnings later in the week, on Thursday, BABA, AMR, AEP, AMT, HOUS, AMBP, AAWW, BBWI, BHC, CBRE, CQP, LNG, COMM, DPZ, DTE, EME, AG, FCN, GPC, GFI, IRM, KDP, LKQ, MRNA, MODV, NTES, NEM, NICE, NOMD, OPCH, PZZA, PCG, PRMW, PWR, RCII, SPTN, SRCL, FTI, TFX, BLD, TAC, VIPS, W, YETI, ACCO, ATSG, ACA, ADSK, BALY, BECN, SQ, BKNG, BWXT, CVNA, CE, CGAU, CENX, CHE, CWK, EIX, ERIE, FTCH, FND, INTU, LYV, MTZ, MELI, OII, ZEUS, OPEN, PBA, PRI, RHP, SEM, SWN, VICI, WBD, and INT report.  Finally, on Friday, we hear from CM, GTLS, CNK, EOG, EVRG, FMX, FYBR, GTN, DINO, IEP, LAMR, and CRC.

So far this morning, BIDU, NI, IQ, BCO, CRL, ALLE, FDP, GEL, QUAD, and PRG all reported beats on the revenue and earnings lines.  Meanwhile, GRMN and TNL missed on revenue while beating on earnings. Unfortunately, CSTM, VRT, GIL, WWW, OSTK, UTHR, and DRVN all missed on both the top and bottom lines.  It’s worth noting that VRT and ALLE both raised their forward guidance.  However, GRMN and CRL both lowered their forward guidance.  (TJX, TRGP, AGESY, IBP, and STLA all report later in the morning.)

With that background, it looks like the bulls have pushed premarket prices up off the lows and are now looking to gap higher by between a quarter and a half of a percent. If this holds into the morning, it will help with the extension (which was not “terrible” anyway) below the T-line (8ema) among the three major indices. However, T2122 still shows us well inside the oversold reversal zone. The Fed Minutes are the big news of the day, but it seems unlikely that we will hear anything that we don’t know already (hikes will continue with a preference to stay at a quarter percent hike…remember, the meeting took place before the hot January Payrolls and CPI reports came out). As of this morning, we still have 79% of the Fed Futures bets on a quarter-percent hike while 21% are looking for a half-percent hike in March. All three major indices also have potential support levels not too far below. However, the trend (and momentum as of Tuesday) are bearish in the short term while the basic character of the market has been “chop and thrash back-and-forth” in recent weeks. So, continue to show some caution.

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

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

On Friday, markets gapped lower at the open (down 0.54% on the SPY, down 0.49% on the DIA, and down 0.75% in the QQQ), following through on Thursday afternoon’s selloff.  From there, all three major indices bobbed sideways below the open until about 2:15 pm.  At that point, a late-day rally saw the DIA cross the gap and turn green while the SPY and QQQ rallied back up above the open (into the gap) with all three going out near their highs.  This action gave us a gap-down Doji in the QQQ, a gap-down, white-bodied Hammer in the SPY, and a gap-down, white-bodied candle with a small lower wick in the DIA.  All three indices closed below their T-lines and the DIA retested and closed above its 50sma.

On the day, five of the 10 sectors were in the red as Energy (-2.97%) led the way lower and Communications Services (+1.12%) held up better than the other sectors.  At the same time, the SPY was down 0.24%, the DIA was up 0.25%, and QQQ was down 0.71%.  The VXX was flat at 11.67 and T2122 fell a bit more in the midrange to 44.71.  10-year bond yields fell significantly to 3.817% and Oil (WTI) is down 2.76% to $76.32 per barrel.  So, on the day, we’ve seen a gap lower met with volatile indecision.  This resolved into a bearish push to end the day.  Again, this all happened on slightly less-than-average volume.

In economic news Friday, the January Export Price Index came in far higher than expected at +0.8% (compared to a forecast of -0.2% and the December reading of -3.2%).  Meanwhile, the January Import Price Index came in just as expected at -0.2% (versus a forecast of -0.2% and a December value of -0.1%).   Together, these indicate that the US was passing inflated prices on the rest of the world, while the price of our imported goods fell slightly.  Elsewhere, two Fed speakers made headlines Friday.  Fed Governor Bowman said “I think there’s a long way to go before we reach our 2% inflation objective and I think we’ll have to continue to raise the federal funds rate until we see a lot more progress on that,” while addressing bankers in Nashville.  She also said, “We were seeing some progress in lowering inflation at the end of last year, but some of the data that we’re seeing early this year is not tracking with consistently lowering inflation in a way that I would like to see.”  In a separate event, Richmond Fed President Barkin said the Fed still needs to raise interest rates higher but noted that he prefers to stick with slower, quarter-percent hikes.  Barkin said, “I am not taking as much signal from the data that we’ve gotten recently on the demand side as you might if you start to see it for multiple months”.

SNAP Case Study | Actual Trade

In stock news, Reuters reported Friday that MSFT is already in talks with ad agencies on how it plans to incorporate paid links (ads) in the AI responses generated by the new ChatGPT-enabled Bing (which is already in beta release).  Unnamed sources said that in addition, the AI-generated results will be more prominent (above) traditional search ads.  Then after the close, the US Navy awarded LMT a $2 billion contract for hypersonic missile systems.  Meanwhile, after hours a report circulated saying that TSLA is now considering buying metals (lithium) miner SGML. (SGML spiked in after-hours trade.)  Over the weekend, META took a page out of the Twitter playbook and launched new subscription services for Instagram and FaceBook where a user buys a blue badge to mark them as “verified.”  META is charging more than Twitter has (so far) for their badge at $12 on web and $15 on mobile (compared to Twitter’s $8 and $11 respectively).  In addition to the supposed prestige of having the badge, META is promising greater “visibility and reach” for verified user’s posts, suggesting that their algorithm will treat verified users similar to ad buyers (promoting their posts over those from second-class users).  Elsewhere, over the weekend Fortune reported that an online retailer named Temu (owned by US-listed Chinese online retailer PDD) has become the most downloaded shopping app in the US.  During Q4, the Temu app was installed more than AMZN, WMT, TGT, or any other shopping app.  Finally, UNP said on Monday that it has reached an agreement with two unions and will begin providing 2,100 of its workers with up to four paid sick days per year.

In stock legal and regulatory news, BDX convinced a US appeals court to reinstate three patents related to its medical injection device (Powerport).  Elsewhere, the FDA granted accelerated approval to TVTX for their kidney disease drug IgAN.  At the same time, the FDA also approved the APLS drug Syfovre (and macular degeneration drug).  Meanwhile, a group of US Senators and Congressmen asked that the Surface Transportation Board delay a decision on a proposed merger of CP with KSU until after a Chicago-region impact assessment has been completed.  On Saturday, Reuters reported that US Treasury Dept. sanctions authority has begun an investigation of US-listed, Austrian bank RAIFF over its business related to Russia and whether it is being used to skirt sanctions.  Later on Saturday, the FDA announced that PEP is recalling 300,000 bottles of SBUX chilled Frappuccino drinks after glass chips were found in some bottles.  On Sunday, the NHTSA added another deadly crash to its TSLA probe after a vehicle slammed into a fire truck on a California interstate Saturday, killing the driver, apparently while using the TSLA “Full Self-Driving” feature.  Finally, the US Supreme Court will hear oral arguments today in a case that challenges social media and the Internet as we know it.  The case will determine whether websites and social media companies are liable for everything posted (by the public) on their sites.  META and GOOGL are the most obviously impacted. However, every website will be affected by the ruling on this difficult subject.

In energy news, Friday was another down day (and week) for Natural Gas.  The March front-month Natty contract closed down 4.8% to $2.2750/mmBtu after hitting a 2.5-year low earlier in the session.  With the sole exception of the prior week, the Natty has closed lower every week since the beginning of December.  It has lost more than 65% in the process.  Meanwhile, Oil (WTI) also ended Friday down 4.2% on the week.  Oil analysts say that “rate hike jitters” have returned with vengeance. In addition, the oil traders are now also fearing the legally-mandated sale of 26 million more barrels of oil from the US Strategic Reserve hitting the market in the coming weeks/months.  Finally, Bloomberg reported Friday that a record 311 mid-range tanker ships have recently been seen sailing without cargo or listed destination near Russia.  (This is compared to an average of 14 such ships at any given time in the prior year.)  The shift implies a new “shadow fleet” has been formed to help Russia avoid sanctions and keep shipping hundreds of thousands of barrels of diesel and gasoline per day.  In addition, the removal of those ships from the global market has caused the cost of fuel tankers to skyrocket for regular routes such as those feeding Europe and the US East Coast.

Overnight, Asian markets were mixed on mostly modest moves.  Hong Kong (-1.71%), Thailand (+0.66%), and Shanghai (+0.49%) were the exception to that rule with all other exchanges in the region moving only fractionally in either direction.  In Europe, we see the bourses leaning to the red side at midday.  The FTSE (-0.20%), DAX (-0.43%), and CAC (-0.35%) lead the region lower in early afternoon trade.  However, Russia (+1.51%) is an outlier as they responded to President Biden’s surprise visit to Ukraine by dropping out of a nuclear arms treaty and vowing to keep pushing in their war of conquest against Ukraine.  As of 7:30 am, US Futures are pointing to a gap lower to start the day.  The DIA implies a -0.89% open, the SPY is implying a -0.84% open, and the QQQ implies a -1.08% open at this hour.  At the same time, 10-year bond yields are spiking again to 3.882% and Oil (WTI) is up just under 1% to $77.06/barrel.

The major economic news events scheduled for Tuesday are limited to Mfg. PMI, S&P Global PMI, and Services PMI (all three at 9:45 am), and January Existing Home Sales (10 am).  The major earnings reports scheduled for the day include ARNC, CEQP, DAN, ELAN, EXPD, FLR, HD, HUN, IR, JBT, JELD, LGIH, LECO, LPX, MDT, MIDD, TAP, NMM, PEG, TECK, TPH, TRN, WMT, WLK, and WLKP before the opening bell.  Then after the close, ALIT, AGR, BXC, BCC, CZR, CWH, CHK, COIN, CSGP, CW, CVI, FANG, ESI, EQX, EXAS, FLS, GFL, IAA, IOSP, KEYS, LZB, MTDR, PANW, PSA, O, SBAC, TOL, RIG, UNVR, and WSC report.

In economic news later this week, on Wednesday the FOMC Minutes are released, the API Weekly Crude Oil Stock Report and Fed member Williams speaks.  On Thursday, we get Q4 GSP, Q4 GDP Price Index, Weekly Initial Jobless Claims, and EIA Crude Oil Inventories.  Finally, on Friday, the January PCE Price Index, January Personal Spending, Michigan Consumer Sentiment, and January New Home Sales are reported.

In terms of earnings later in the week, on Wednesday, we hear from ALLE, BIDU, BLCO, BCO, CRL, CSTM, CRVN, GRMN, GIL, IBP, IQ, NI, OSTK, PRG, SBGI, TRGP, TJX, TNL, UTHR, VRT, WWW, ATUS, ANSS, APA, BTG, CPE, CAKE, CHRD, CDE, FIX, CTRA, CCRN, DVA, EBAY, ETSY, EXR, GSM, FNF, ICLR, LBTYA, VAC, DOOR, MATV, MOS, MYRG, NTAP, NVDA, OPAD, OGS, OUT, PAGS, PARR, PK, PDCE, PXD, PR, RXT, RIO, RYI, SNBR, SM, STN, SUI, RUN, TDOC, VMI, and WES.  Then Thursday, BABA, AMR, AEP, AMT, HOUS, AMBP, AAWW, BBWI, BHC, CBRE, CQP, LNG, COMM, DPZ, DTE, EME, AG, FCN, GPC, GFI, IRM, KDP, LKQ, MRNA, MODV, NTES, NEM, NICE, NOMD, OPCH, PZZA, PCG, PRMW, PWR, RCII, SPTN, SRCL, FTI, TFX, BLD, TAC, VIPS, W, YETI, ACCO, ATSG, ACA, ADSK, BALY, BECN, SQ, BKNG, BWXT, CVNA, CE, CGAU, CENX, CHE, CWK, EIX, ERIE, FTCH, FND, INTU, LYV, MTZ, MELI, OII, ZEUS, OPEN, PBA, PRI, RHP, SEM, SWN, VICI, WBD, and INT report.  Finally, on Friday, we hear from CM, GTLS, CNK, EOG, EVRG, FMX, FYBR, GTN, DINO, IEP, LAMR, and CRC.

So far this morning, WMT, MDT, TAP, DDS, IR, JELD, TPH, ELAN, and MIDD have all reported beats on both the revenue and earnings lines.  Meanwhile, HD, ARNC, CEQP, LPX, and JBT have all reported misses on the revenue line while beating on the earnings line.  On the other side, HUN and DAN both beat on revenue while missing on the earnings line.  Unfortunately, WLK, FLR, and LGIH missed on both the top and bottom lines.  It is worth noting that MDT raised forward guidance,  However, WMT, HD, TAP, DAN, TPH, ELAN, and TRN all lowered their own forward guidance.

With that background, it looks like the bears are following through to the downside again this morning. Perhaps this is a reaction to HD’s mixed report and both WMT and HD lowering guidance (HD also raised the wages of its hourly workers to the tune of $1 billion). I’m sure that a renewed lack of certainty about the Fed’s March rate action is not helping. (As of this morning, 79% of the Fed Futures bets are on a quarter-percent hike while 21% are looking for a half-percent hike in March.) The DIA is retesting its 50sma at the moment and it looks like the SPY may be headed toward the same retest soon. All three major indices are below their T-lines and the short-term trends are bearish. However, all three also have potential support levels not far below. Continue to be cautious about intraday reversals as we have seen recently.

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

See you in the trading room.

Ed

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

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

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

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

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

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

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