Although the big bullish bounce on Wednesday raised hopes of a relief rally, the real question is, can the bulls follow through a second day, or was it just a dead cat bounce? A lot will depend on how the market reacts to the GDP and Jobless Claims numbers before today’s bell. Sadly the Wednesday push upward didn’t seem to translate into bullishness in Asian overnight or European markets this morning. Keep in mind that with the uncertainty of 4th quarter earnings just around the corner, its possible we’ve entered a wide-ranging chop zone as we wait.
Asian markets struggled to pick up on the bullish love felt in the U.S., closing the day mixed. European markets see red across the board as the BOE intervention quickly fades. With some name earnings reports, GDP, and Jobless Claims ahead, the U.S. futures look to take back a big chunk of yesterday’s rally at the open. However, a lot could change depending on the reaction to the economic data. Expect another wild morning of whipsaws and reversals.
Economic Calendar
Earnings Calendar
The Thursday calendar is a light one, with just nine confirmed reports. Notable reports include BBBY, MU, NKE, KMX, RAD, & WOR.
News & Technicals’
Beneath all the clamor of Russia’s invasion of Ukraine and the efforts to tamp down inflation, investors are passing over a huge story in China, Jim Chanos said. The nation faces a deepening crisis caused by multiple factors, resulting in the worst plunge in home sales since China started allowing private property sales in the late 1990s. CNBC’s Jim Cramer said Wednesday’s rally would likely reverse course as soon as a Federal Reserve official reminds Wall Street of its hawkish stance against inflation. “The moment some Fed-head explains the obvious, today’s gains will disappear because they’re incompatible with the Fed’s attempts to control inflation,” he said.
Pension fund panic led to the Bank of England’s emergency intervention. To prevent an “unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy, the FPC said it would buy gilts on “whatever scale is necessary” for a limited time. Central to the Bank’s extraordinary announcement was panic among pension funds, with some of the bonds held within them losing around half their value in a matter of days. Analysts are hoping that a further intervention from Westminster or the City will help assuage the market’s concerns, but until then, choppy waters are expected to persist.
The Wednesday bounce raised hopes for a relief rally, but the real question is, can it follow through for a second day? A lot will depend on how the market reacts to the GDP and Jobless Claims numbers before the bell. While it was nice to get some selling relief, there was no substantive improvement in any chart technicals and changes, nothing in the FOMC inflation-fighting stance. That said, I still hope for a bit more relief to set up short trade positions, but with 4th quarter earnings uncertainty just around the corner, we may have just set the chop range of price action while we wait. The pullback in the U.S. dollar was a big help to the Wednesday rally, but I wouldn’t hold my breath thinking that it continues unless other countries get serious about fighting inflation.
Stocks gapped slightly higher at the open in all 3 major indices. Then price chopped back and forth across the gap the first hour before starting a slow, wavy rally that was in effect until a modest pullback the last 10 minutes of the day. This left us near the highs of the day at the close. This action has given us large white candles with smaller wicks on both ends across the 3 major indices. However, only the QQQ managed to reach (retest) their T-line (8ema) yet.
On the day, Utilities (+1.19%) is the laggard, while Energy (+3.97%) and Basic Materials (+3.34%) led the relief rally. Meanwhile, the SPY was up 1.96%, DIA was up 1.86%, and QQQ was up 1.99%. The VXX fell 4.2% to 20.07 and T2122 spiked up out of the oversold territory to 51.47 in the mid-range. After being up over 4% during the premarket, 10-year bond yields are down hard (the most since 2020) to 3.725%, and Oil (WTI) is up 4.4% to $81.97/barrel. So, Wednesday did give us some relief from bearish over-extension. However, the downtrend remains intact and you would be hard-pressed to even call it a “relief rally” yet.
In economic news, the August Goods Trade Balance came in at -$87.30 billion (as compared to -$90.19 billion in July) largely on a decrease in imports. This was the fifth straight month of improvements in the trade balance. Elsewhere, August Retail Inventories were up 0.6% (compared to a July increase of 0.3%). This might be a clue of economic slowdown with inventories building. However, contrary to Tuesday’s unexpected large increase in New Home Sales, August Pending Home Sales fell more than expected to -2.0% (versus -1.4% forecast and +0.6% in July). Finally, EIA Weekly Crude Oil Inventories fell by 0.215 million barrels (compares to a forecast of +0.443 million and last week’s +1.142 million barrels). What was odd about the EIA number is that it was only 10% of the build reported Tuesday night by the API (+4.150 million barrels).
In Fed news, Atlanta Fed President Bostic said that a lack of clear progress in inflation reduction means that the Fed needs to remain “moderately restrictive” and that rates should reach 4.25% – 4.50% by year-end. He wasn’t on to say that his baseline outlook remains that the Fed should hike rates 0.75% again at the next meeting in November. Later, Chicago Fed President Evans said most Fed voters are “penciling in” 4.50% to 4.75% by the end of the year or maybe March of next year. He went on to say that he worries about global market volatility causing additional restrictiveness, but that the Fed “just really needs to get inflation in check.” Finally, Fed Governor Bowman told a conference that the framework the Fed uses to assess competition in the banking sector needs to be overhauled. Her general point was that different service delivery channels and nonbank “competitors” need to be considered rather than just the size of deposits and loan volume when considering the competitive impact. (This seems to be a positive statement for mergers/acquisitions in the banking sector.)
In stock news, during the day Wednesday, BIIB had a massive day (+39.85%) after it reported surprisingly positive results in a trial of its Alzheimer’s drug. Even the direct competitors in this niche (LLY and Roche) were up 7% on the day on this news. In less positive news, BP announced it has laid off almost all of its contractors at a Toledo Ohio refinery (a joint venture with CVE, but run by BP using contractors) after there was an explosion last week. BP announced that the refinery (which processed 160k barrels of oil per day, making 3.8 million gallons of gasoline and 1.3 million gallons of diesel per day) will be offline for a prolonged period following the explosion and fire which killed two workers. Then, after the close, Bloomberg reported that AMZN plans to close several US-based call centers. This is part of their move toward remote work rather than in-office. No numbers on cost or headcount reductions were provided. In other news, Reuters also reported that AMZN has told their warehouse employees they have increased the worker’s pay and this initiative will cost just under $1 billion. Elsewhere, Bloomberg reports that MRK has struck a deal with China to sell its Covid-19 antiviral treatment (molnupiravir) in a first-of-its-kind deal for the country.
In miscellaneous news, after the close, TTE announced it will be spinning off its Canadian Oil Sands operations and listed the new company on the Toronto exchange (TSX). Some of these assets include a minority stake in a joint venture with SU and another venture with COP. On the earnings front, after the close, JEF reported a beat on both lines. However, CNXC and MLKN both reported missing on the revenue line while simultaneously beating on the earnings line. So far this morning, RAD and WOR both beat on revenue while missing on earnings. However, BBBY and KMX both missed on the top and bottom lines. Finally, it was reported overnight that the reason the BOE intervened to buy long-dated bonds Wednesday was panicked calls from UK pension funds that were near collapse based on the crashing pound and UK markets following the new government’s unexpected jerk toward “trickle down” economics and massive high-end tax cuts at the same time inflation is running rampant.
After the close, CALM and BB both reported beating on both the revenue and earnings lines. (However, the BB number was still a loss.) So far this morning, THO also reported beating on the top and bottom lines. However, CTAS and PAYX report closer to the opening bell.
Overnight, Asian markets were mixed in more modest trading. Australia (+1.44%), Japan (+0.95%), and New Zealand (+0.72%) led the gainers. Meanwhile, Hong Kong (-0.49%), Thailand (-0.43%), and Malaysia (-0.31%) paced the losses. In Europe, the day is off to more of a red start. Only Greece (+0.39%) and Norway (+0.43%) are green. Meanwhile, the FTSE (-0.63%), DAX (-0.97%), and CAC (-0.90%) are leading the region lower in early afternoon trade. As of 7:30 am, US Futures are pointing toward a down start to the day. The DIA implies a -0.46% open, the SPY is implying a -0.62% open, and the QQQ implies a -0.92% open at this hour. At the same time, 10-year bond yields are back up to 3.814% and Oil (WTI) is up four-tenths of a percent to $82.52/barrel in early trading.
The major economic news events scheduled for Thursday include Q2 GDP (3rd Revision) and Weekly Initial Jobless Claims (both at 8:30 am), and two Fed Speakers (Bullard at 9:30 am and Mester at 1 pm). The major earnings reports scheduled for the day include BBBY, KMX, RAD, and WOR before the open. Then after the close, MU and NKE report.
In economic news later this week, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester). Meanwhile, in earnings reports later this week, on Friday, BKR and CCL report.
With this backdrop, it again looks like we will see a gap lower. However, today’s premarket candle is still just inside yesterday’s candle. So, this is not showing a major change in sentiment yet. It just looks like more chop in this week’s consolidation. The strong bear trend remains in place in all 3 major indices. Expect more volatility and even though everything looks bearish early, do not forget that the extension relief usually lasts more than one day. As I have said, markets always move in a zig-zag motion and we are definitely in need of more zag to offset the recent strong zig.
Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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
Markets gapped higher on Tuesday (1.35% in the QQQ, 1% in the SPY and 0.7% in the DIA). However, that was a bull trap because after meandering sideways for an hour and 45 minutes, all 3 major indices sold off extremely hard for a little over an hour. During this selloff, DIA lost 1.90%, SPY lost 2% and QQQ lost 2.2%. After that, all 3 indices ground sideways in a tight range until 2:30 pm. Then volatility kicked back in as the bulls rallied all 3 major indices for half an hour before pulling back again a bit for the last hour of the day. This action is left us with large black candles that had some significant wicks on both ends (especially the upper wick), which Engulfed the prior candle. (However, these are not truly “Bearish Engulfing” candles because the prior candle bodies were also black.)
On the day, 5 of the 10 sectors are in the red with Energy (+1.49%) by far the largest gainer and Utilities (-1.66%) by far the largest loser on the day. At the same time, SPY was down 0.26%, DIA was down 0.49%, and QQQ managed to gain 0.04%. The VXX gained 1.9% to 20.95 and T2122 was up to a whopping 4.04 (still deeply oversold). 10-year bond yields rebounded from early losses to new highs at 3.976% and Oil (WTI) was up 2.25% to $78.44/barrel. So, while the day started off looking like it would provide some over-extension relief, it ended up with about the same extension as we had on Monday (which is to say a lot of extension).
In economic news, August Durable Goods Orders came in slightly better than expected at -0.2% (versus a forecast of -0.4%). However, Conf. Board Consumer Sentiment came in hotter than expected at 108.0 (vs. 104.5 forecast and July’s 103.6 reading). The big surprise of the day was August New Home Sales, which came in MUCH hotter than expected at 685k (versus a forecast of 500k and July’s number of 532k). Then after the close API reported that Weekly Crude Oil Inventories unexpectedly rose by 4.150 million barrels (versus a forecast build of only 0.333 million and last week’s build of 1.035 million barrels).
In Fed news, before the open Tuesday, Fed Chair Powell emphasized the risks and unregulated markets of “DeFi systems.” He called for the Fed (and other Central Banks) to play a major role in the oversight and regulation of cryptocurrencies, in particular speaking to stablecoins and unhosted crypto wallets. Later in the morning, St. Louis Fed President Bullard said that rapid interest rate increases have raised the risk of a recession. However, he maintained that the US economy remains resilient and said the recession is likely to be caused by an external shock rather than Fed policy. He went on to call for more hikes and said not only are the hikes needed to tame inflation but also to defend Fed credibility.
In stock news, Tuesday afternoon, the DOJ asked a Federal Judge to force AAL and JBLU to scrap their “US Northeast” partnership as being anti-competitive. The move also implies the JBLU acquisition of SAVE will face regulatory hurdles. Elsewhere, CS announced the loss of two senior executives, one of which is going to rival C. Then, after the close, the SEC announced it has fined 16 major Wall Street firms a total of more than $1.1 billion for failing to maintain and preserve electronic communications from Whatsapp usage (which their traders used to secretly communicate). This secret communication is a major fear given the recent market-fixing convictions of traders in various asset classes. The fined firms include BARC, BAC, C, CS, GS, MS, and UBS. Also, after the close, F said they are implementing a $700 million plant expansion in KY that will create 500 new hourly jobs. Finally, Bloomberg reports that APO is seriously exploring a takeover of R. Shares of R spiked 15% as the news broke late in the day.
In Energy news, as mentioned above, Oil (WTI) rose 2.25% on Tuesday due to cuts in production in the Gulf of Mexico and fear that Hurricane Ian could potentially temporarily take Florida oil storage and refining capacity offline. A modest pullback in a historically strong Dollar also helped buoy oil prices. Elsewhere, India and China have temporarily halted the purchase of Russian oil in the last week. The reason appears to be demand-related as recession fears are facing both those economies. However, the pause also allows those countries to put more pressure on Russia for price concessions in the face of recent global oil price reductions. Finally, in an odd turn, Senate Minority Leader McConnell (Republican) urged fellow Republicans to vote down a stopgap government funding bill…due to it containing riders intended to appease WV Democrat Manchin. What makes this odd, is that the riders are massively pro-business and anti-environment as they would reduce environmental regulation and shorten project permitting review timelines. This is odd because McConnell is from KY where there is a large coal mining industry that would benefit greatly from the bill. So, this appears to be a just political ploy, calculating that a government shutdown shortly before midterm elections can be blamed on Democrats.
After the close, CALM and BB both reported beating on both the revenue and earnings lines. (However, the BB number was still a loss.) So far this morning, THO also reported beating on the top and bottom lines. However, CTAS and PAYX report closer to the opening bell.
Overnight, Asian markets were red across the board. Hong Kong (-3.41%), Taiwan (-2.61%), Shenzhen (-2.46%), and South Korea (-2.45%) led the region lower. In Europe, stocks are also almost exclusively red at mid-day. The FTSE (-0.45%), DAX (-0.77%), and CAC (-1.15%) are leading the region lower with only Russia (+0.22%) and Switzerland (+0.41%) managing to hang on to green numbers in early afternoon trade. As of 7:30 am, US Futures are pointing to a gap lower to start the day. The DIA implies a -0.45% open, the SPY is implying a -0.69% open, and the QQQ implies a -1.13% open at this hour. 10-year bond yields have backed down slightly to 3.941% and Oil (WTI) is up a third of a percent to $78.76/barrel in early trading.
The major economic news events scheduled for Wednesday include August Goods Trade Balance and August Retail Inventories (both at 8:30 am), August Pending Home Sales (10 am), EIA Weekly Crude Oil Inventories (10:30 am), and many Fed speakers (Bostic at 8:35 am, Bullard at 10:10 am, Chair Powell at 10:15 am, and Bowman at 11 am). The major earnings reports scheduled for the day include CTAS, HEPS, PAYX, and THO before the open. Then after the close, CNXC, JEF, and MLKN report.
In economic news later this week, on Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester). Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester).
In earnings reports later this week, on Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report. Finally, on Friday, BKR and CCL report.
In late-breaking news, the Bank of England has decided to scrap plans to sell UK bonds (reduce its balance sheet) and has temporarily begun buying long-date UK bonds instead. This was an emergency move to try to stop the massive surge bond prices (the inverse of yields), which was at their highest price since 1957. AAPL also gave an ominous signal as it canceled planned increases in iPhone production. This came as the company has not seen the surge in new iPhone sales that it had expected. (Who knew you didn’t need a new $1,000 phone every year?) AAPL stocks was down almost 4% in premarket on the news.
With this backdrop, again, don’t be fooled by a gap lower. The recent pattern has been for price to fade the gap (regardless of its direction) as volatility remains high. So, while the strong bear trend remains in place in all 3 major indices, don’t expect a gap lower to just keep running. Instead, expect more volatility and even though everything looks bearish early, do not forget that the market needs some extension relief. Markets always move in a zig-zag motion and we are definitely in need of a zag to offset the recent strong zig.
Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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
Market uncertainties abound with currency gyrations, weakening economic conditions, a litany of talking head doublespeak, and geopolitical tensions. I suspect that condition will continue today with a few earnings reports, several economic reports, and a blizzard of flip-flopping Fed speak. A substantial bounce is not out of the question from this short-term oversold condition, but we can’t rule out the pile-on effect as data rolls out. Whipsaws and overnight reversals are likely to keep price action challenging, so plan your risk carefully.
Asian markets closed higher with modest gains as the healthcare sector rallied. Across the pond, European markets also trade with modest gains this morning in a choppy price action session. Seeing treasury yields relaxing slightly, U.S. futures point to a substantial gap up ahead of several potential market-moving reports. Hope for a relief rally but be prepared for fast-moving prices that could whipsaw in a heartbeat due to news sensitivity.
Economic Calendar
Earnings Calendar
We have a bit more activity on the earnings calendar for Tuesday, with 15 confirmed reports. Notable reports include BB, CALM, CBRL, JBL, NEOG, PRGS, & UNFI.
News & Technicals’
The sudden sell-off in the pound and U.K. bond markets led economists to anticipate more aggressive interest rate hikes from the Bank of England. In a series of tweets Tuesday morning, Harvard professor Summers said that although he was “very pessimistic” about the potential fallout from the “utterly irresponsible” policy announcements, he did not expect markets to capitulate so quickly. The likening of the U.K. to an emerging market economy has recently become more prevalent among market commentators. Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Evans said he remains “cautiously optimistic” that the U.S. economy can avoid a recession — provided there are no further external shocks. His comments come shortly after a slew of top Fed officials said they would continue to prioritize the fight against inflation, which is currently running near its highest levels since the early 1980s.
The British pound hit an all-time low against the dollar in the early hours of Monday morning, dropping below $1.04, while the U.K. 10-year gilt yield rose to its highest level since 2008. The announcement featured a volume of tax cuts not seen in Britain since 1972 and a return to the “trickle-down economics” promoted by the likes of Ronald Reagan and Margaret Thatcher. However, Vasileios Gkionakis, head of European FX strategy at Citi, told CNBC on Monday that the market was demonstrating an “erosion of confidence” in the U.K. as a sovereign issuer, leading to a “textbook currency crisis.” Bitcoin topped $20,000 on Tuesday, hitting its highest level in more than a week, but is still struggling to break out of its tight trading range. With another U.S. Federal Reserve interest rate out the way, traders may be positioning themselves for a peak in U.S. dollar strength, which would be positive for bitcoin, one analyst said. Bitcoin’s rally happened despite a fall in U.S. stocks, with the S&P 500 closing at its lowest level of 2022 on Monday, a potential sign the correlation between the two asset classes may be lessening.
Uncertainties abound, whipsawing the Monday markets as currencies fluctuate, and a flurry of Fed speakers and talking head doublespeak points fingers of blame though still promoting their positions. Add in the geopolitical issues, and it’s not hard to understand why the market is a mess. Sadly, we now look to the same people that created the mess to clean it up and get things back on track. What could go wrong with that? Technically speaking, the indexes are in a short-term severely oversold condition, suggesting a relief rally could soon occur. Still, we will have to keep a close eye on the deteriorating conditions of our economy and other major economies’ stumbling blocks keeping the bears active. Today we face a blizzard of Fed speakers as well as Durable Goods, Case-Shiller, Consumer Confidence, and New Home Sales reports. Plan for price action to remain challenging. If a relief rally does begin, be willing to hold thorough substantial whips in price or stand aside because the bear market is not likely finished with market-moving surprises.
Stocks gapped down Monday (about 0.40% in the large-cap indices and about 0.20% in the QQQ). After an hour of rallying up to the day’s highs, the selloff to the lows took over from 10:30 am to 2 pm. At that point, we chopped our way sideways with a very slight bullish trend until a massive selloff in the last 5 minutes of the day. This action left us with black-bodied Spinning Top type candles. However, the SPY and DIA closed at the lowest level for a close since December 2020. On the other hand, all 3 of the major indices remain very extended below the T-line (ema).
On the day, all 10 sectors were red, with the Energy (-2.68%) and Utilities (-2.46%) sectors leading the way lower. At the same time, the Consumer Defensive (-0.44%) and Consumer Cyclical (-0.83%) sectors lagged the decline. Meanwhile, the SPY lost 0.95%, DIA lost 1.06%, and QQQ lost 0.41%. The VXX rose by 3.73% to 20.56 and T2122 remains deeply oversold at 1.56. 10-year bond yields spiked to 3.924% and Oil (WTI) fell 2.88% to $76.47/barrel. So, overall, it was an ugly, down but still indecisive day.
In Fed news, Boston Fed President Collins told a New England business group that she expects a more modest economic slowdown as the Fed continues to tighten. She went on to say inflation could be tamed without a pronounced spike in layoffs as part of a “soft landing.” Meanwhile, Atlanta Fed President Bostic told the Washington Post he doesn’t know if the Fed is being too optimistic or pessimistic, but that the important thing is that we need to get inflation under control. He also went on to say the new UK government’s decision to do major tax cuts will cause both further inflation and stoke market volatility more broadly than just in the United Kingdom. (“The key questions will be what this means for ultimately weakening the European economy, which is important for how the US economy will perform.”) Later, Cleveland Fed President Mester told an MIT audience that inflation will continue to be hard to predict and she was going to be very cautious before declaring victory over inflation. She went on to say we need to have rising rates until we see several months of declining inflation and “we can’t avoid pain.”
In stock news, the CEO of UL has announced he will retire at the end of 2023 after a bungled attempt to buy GSK’s consumer healthcare business. Then, after the close, BIIB finalized a $900 million settlement with the US Dept. of Justice for paying doctors kickbacks in return for prescribing BIIB products. Elsewhere, the US Forest Service also started a federal investigation into the “Mosquito” fire. The agency seized some of PCG’s equipment from a transmission pole. PCG said they are fully cooperating. Elsewhere, SBUX sent a letter to the unions that represent employees at more than 230 of its US stores. The company invited the unions to begin contract negotiations in October. In other union news, the Intl. Assn of Machinists and Aerospace Workers filed an application to hold an organizing vote among 3,000 of JBLU’s ground crews. The company opposes having a vote. At the same time, the UAW has sought speedier recognition by GM at a new battery manufacturing facility in Ohio. The faster process would forgo a vote if more than half of the plant employees sign a card requesting union representation.
In Energy news, SU announced Monday that it will buy back $1.27 billion in bonds it had previously issued even as S&P had just downgraded SU debt to a BBB rating. In weather-related issues, BP and CVX both shut down Gulf of Mexico oil production Monday as Hurricane Ian bears down on the top-producing area of the gulf. This shutdown accounts for about 15% of US daily oil production. Meanwhile, OXY said it was also implementing its storm protocols “designed to safeguard the environment and personnel safety” (but did not say whether that meant shutting down production). For their part, SHEL said it is closely monitoring the storm, but is not taking action at this point. Finally, European investigators are rushing to identify the cause of mysterious (potentially sabotage) leaks in the Nord Stream One pipeline under the Baltic Sea. Similar leaks were found in the nearby (and not yet opened) Nord Stream Two pipeline. Shipping in the area has been restricted.
In miscellaneous news, during the day, eight State Attorneys General filed cease and desist orders and lawsuits against crypto lending platform Nexo. The AGs charged Nexo with offering customers interest on deposits without filing the paperwork to register as a security or to disclose financial disclosures. Meanwhile, US farmers are lobbying the US government to challenge the looming Mexican ban on importing genetically-modified grain (specifically corn) via the USMCA. The ban is scheduled to be fully implemented by 2024 and would eliminate about $1.65 billion per year in US corn exports. The largest companies impacted would be ADM and BG.
Overnight, Asian markets were mixed but the larger exchanges were green led by China. Shenzhen (+1.94%), Shanghai (+1.40%), and Japan (+0.53%) led the region higher while New Zealand (-1.93%) was an outlier to the downside. In Europe, stocks are mostly green at midday. The FTSE (-0.01%) lags due to continued fear over the new Truss government tax cuts impacts. However, the DAX (+0.73%), and CAC (+0.67%) lead the region higher (with only Russia -0.07% and the FTSE red) 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 +0.85% open, the SPY is implying a +1.08% open, and the QQQ implies a +1.32% open at this hour. 10-year bond yields are down to 3.821% and Oil (WTI) is up 1.36% to $77.75/barrel in early trading.
The major economic news events scheduled for Tuesday include August Durable Goods Orders (8:30 am), Cond. Board Consumer Confidence and August New Home Sales (both at 10 am), and API Weekly Crude Oil Stocks (4:30 pm). There are also 2 Fed speakers (Chair Powell at 7:30 am and Bullard at 9:55 am). The major earnings reports scheduled for the day include CBRL, FERG, JBL, SNX, and UNFI before the open. Then after the close, BB and CALM report.
In earnings reports later this week, on Wednesday, we hear from CTAS, HEPS, PAYX, THO, CNXC, JEF, and MLKN. Then Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report. Finally, on Friday, BKR and CCL report.
So far this morning, FERG reported a beat on revenue while also missing on the earnings line. On the opposite side, UNFI missed on revenue while beating on earnings. JBL, SNX and CBRL all report later, but before the open.
With this backdrop, don’t be fooled by a gap higher. The strong bear trend remains in place across all 3 major indices. So, at this point, this move looks like nothing but relief from over-extension and perhaps a little support from the June Low in the large-cap indices. Expect more volatility and even though everything looks good early, do not forget the trend is not broken. Markets always move in a zig-zag motion and, so far, this doesn’t even qualify as a relief rally. This is just a pause in the run lower until proven otherwise.
Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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 technical situation worsened while I was hiking in South Dakota as the Dow fell below the critical psychological level of 30,000. Although the oversold condition of the T2122 indicator suggests the odds of a relief rally are strong, the strong dollar and the weakening worldwide economy will make it challenging to raise bullish sentiment. However, the hope that the 2022 lows of the SPY, QQQ, and IWM can inspire a defense by the bulls could provide some relief from the selling soon.
While we slept, the Asian markets declined across the board as currencies continued to decline against the dollar’s strength. European markets trade flat but mostly lower after the sterling fell to a record low against the dollar. The U.S. futures point to a bearish open though it has rallied substantially off overnight lows. Expect price volatility, and though the overnight rally is hopeful, remember a retest of overnight lows can often occur.
Economic Calendar
Earnings Calendar
Though we have 16 companies listed and only one confirmed report from CHG, I have to say we have no notable reports today.
News & Technicals’
Sterling’s plunge comes after last week’s announcement by the new U.K. government that it would implement tax cuts and investment incentives to boost growth. However, critics say those economic measures will disproportionately benefit the wealthy and could see the U.K. take on high debt levels at a time of rising interest rates. Brent crude fell below $85 a barrel Monday as recession fears weighed and the U.S. dollar surged. Brent futures for November settlement were trading down over 1%, around $84.92 at 8 a.m. London time. West Texas Intermediate futures also fell to trade around $77.93. Apple on Monday said it is assembling its flagship iPhone 14 in India as the U.S. technology giant looks to shift some production away from China. Apple’s main iPhone assembler Foxconn is manufacturing the devices at its Sriperumbudur factory on the outskirts of Chennai. Apple has manufactured iPhones in India since 2017, but these were usually older models. With the iPhone 14, Apple is manufacturing the latest model in its line-up at the device’s launch.
In focusing on raising interest rates to cool inflation, central banks and governments have overlooked the importance of maintaining stable currencies, said Steve Forbes, chair of Forbes Media. “The real cure is to stabilize the currency. You don’t have to make people poor to conquer inflation,” he said. The British pound briefly fell 4% to an all-time low of $1.0382 on Monday in Asia, following last week’s announcement by the new U.K. government that it would implement tax cuts and investment incentives to boost growth. Treasury yields moved higher early Monday, with the 12- month at 4.07%, the 2-year at 4.29%, the 5-year at 4.08%, the 10-year at3.77%, and the 30-year at 3.65%.
Having taken off Thursday and Friday for some time in nature to heal the soul, the technical situation continued to worsen as worldwide economies slowed. As a result, currencies fluctuated substantially overnight as the U.S. dollar continued to strengthen and the 2-year bond yield hit a fresh 15-year high early Monday morning. The Dow fell below a critical psychological level of 30,000 and set new 2022 lows. If there is some good news, the T2122 indicator indicates a relief bounce could occur at any time due to its oversold condition. Also hopeful for the bulls is the 2022 low-price support of SPY, QQQ, and IWM, which may still see a bullish defense. Though the odd of a relief rally is good, I suspect it may only serve to set up more short trading with a challenging 3rd quarter earnings season just around the corner.
US Markets followed Europe and gapped significantly lower Friday (-0.97% on the SPY, -0.89% in the DIA, and -0.90% in the QQQ). The bears piled on to drive prices lower during the first half of an hour. All 3 major indices then ground sideways in a tight range until 11:30 am. The bears got their second wind at that point and droved prices down another percent over the next hour. From 12:30 pm, we resumed a more volatile roller-coaster ride, reaching new lows at about 3 pm and bouncing the last hour. This action left us with large, black-bodied, gap-down, Hammer daily candles that could be seen as working on a Bearish Doji Continuation candle pattern (with a large lower wick) in all 3 major indices.
On, all 10 sectors are in the red with Energy (-6.904%) being by far the biggest loser and Healthcare (-1.17%) holding up best. Meanwhile, the SPY was down 1.63%, DIA was down 1.55%, and QQQ was down 1.63%. The VXX was up almost 5% to 19.82 and T2122 can hardly get more oversold at 1.01. 10-year bonds have pulled back from early highs to 3.685% and Oil (WTI) is off 5.5% to $78.89/barrel. All-in-all, it was a brutal day to end a brutal week. However, we are getting VERY extended from both the T-line (8ema) and in terms of the T2122 indicator at this point.
In Economic news, the September Mfg. PMI came in a bit above expectation (51.8 vs. 51.1 forecast and 51.5 in August). In addition, the September Services PMI also came in above the forecast (49.2 vs. 45.0 forecast and well above the 43.7 reading in August). These indicate a stronger economy than many had expected, but services still show some contraction. Bloomberg also reported that US government debt is shrinking rapidly in terms of percentage of GDP as inflation increases the GDP. (Note that debt in dollar terms grows daily, but the inflation increase of GDP has far outstripped the growth in debt.)
In stock news, on Friday, brokerages popped as the SEC stopped short of banning payment for order flow. Then, after the close, DB paid $26.25 million to settle a shareholder lawsuit over ties to Jeffrey Epstein and Russian oligarchs. Another European bank (BCS), was sued for fraud by shareholders (led by two pension funds). The suit claims the bank sold $17.6 billion more debt than regulators allowed and had been claimed in annual reports. BCS claims the issue results from an accounting mistake. Then on Saturday, Bloomberg reported a leaked XOM internal study from 2020 which said that the oil and gas company had overspent $138 billion between 1998 and 2017 (or almost $7 billion per year) on 110 projects likely due to poor planning and mismanagement. 21 of the projects accounted for 93% of the overspending.
In Energy news, on Saturday, both JPM and MS reported that funds (hedge and mutual) massively exited energy stocks, bonds, and futures positions last week. The big banks reported the exodus this month has been the largest industry retreat by funds from any industry for at least months. This was, at least in part, the reason oil has fallen to an eight-month low. Elsewhere, German PM Sholz’s just-concluded trip to the Persian Gulf netted him the guarantee of one shipment of LNG from the UAE later this year. However, German LNG terminals are under construction which would allow for longer-term agreements. In addition, the UAE and German utility RWE will explore joint offshore Wind energy projects.
In miscellaneous news, on Sunday, Instacart (which is scheduled to IPO before the end of this year) has cut an unspecified number of staff, including 3 senior-level employees, and has paused hiring ahead of its IPO. It was previously announced that after the company goes public, the founder (Apoorva Mehta) would be stepping down as Chairman and CEO to leave the company. Also Sunday, Boston Fed President Bostic said he believes the Fed will avoid “deep pain” while taming inflation. He said “there is a really good chance that if we have job losses, it will be smaller than in past downturns.” Finally, Reuters reported Sunday that US businesses borrowing for equipment grew 4% in August according to the Equipment Leasing and Finance Assn. The ELFA group said US companies had signed up for almost $9 billion in new leases, loans, and lines of credit for equipment procurement in August, up from $8.5 billion one year prior. Overall, the group said borrowing for this purpose is up 5% so far this year compared to 2021.
Overnight, Asian markets were red across the board. South Korea (-3.02%), Japan (-2.66%), and Taiwan (-2.41%) led the region lower while mainland China and Hong Kong (-0.40%) held up relatively well. In Europe, Stocks are mostly red with a few minor exchanges holding onto green. The FTSE (-0.81%) is leading the way lower as the British Pound reached an all-time low against the dollar before recovering a bit as the new government’s tax cuts for corporations and the wealthy has markets scared. (The Tory party has now called on the Bank of England to act to prop up the pound, but the probability it will fall to parity with the dollar has now risen to 60%.) Meanwhile, the DAX (-0.10%), and CAC (-0.01%) show relative strength in the region in early afternoon trade. (It is worth noting that Russia is down almost 7% at this point.) Across the pond, as of 7:30 am, US Futures are pointing toward another gap lower to start the day. The DIA implies a -0.71% open, the SPY is implying a -0.80% open, and the QQQ implies a -0.69% open at this hour. 10-year bond yields are back up sharply to 3.791% and Oil (WTI) is down 1% to $77.98/barrel in early trading.
The major economic news events scheduled for Monday are limited to a 2-year bond auction (1 pm) and a Fed speaker (Mester at 4 pm). There are no major earnings reports scheduled for the day.
In economic news later this week, Tuesday we get August Durable Goods Orders, Cond. Board Consumer Confidence, August New Home Sales, and API Weekly Crude Oil Stocks. Then Wednesday, August Goods Trade Balance, August Retail Inventories, August Pending Home Sales, EIA Weekly Crude Oil Inventories, and a Fed speaker (Bullard) are reported. Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester). Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester).
In earnings reports later this week, on Tuesday, CBRL, FERG, JBL, SNX, UNFI, BB, and CALM report. Wednesday, we hear from CTAS, HEPS, PAYX, THO, CNXC, JEF, and MLKN. Then Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report. Finally, on Friday, BKR and CCL report.
Over the weekend, UNC’s Tax Center released a study (based on 2021 financials) that indicates 78 major US corporations will be hit with new tax bills due to the new 15% Corporate Minimum Tax (this is because they paid little or no taxes in 2021). BRKB, AMZN, F, and T are likely to be the tickers hit worst by the new tax. For example, the study estimates BRKB would have paid $8.3 billion to reach that 15% tax level. However, the main story is the US Dollar strength, based on the aggressive Fed rate hikes being juxtaposed to the new British approach of giving away tax cuts to stimulate. UK markets are scared stiff, while the rest of Europe is on edge by the unexpected and sudden lurch from normal/traditional policy to “Reaganomics Trickle Down Theory.” On the other side of the world, Japan has had to intervene to stop the fall of the Yen versus the Dollar. It is this kind of extremely strong dollar that has caused global economic crisis in the past. To top this all off, Russian President Putin made more “I’m not kidding, I’ll Nuke You” threats Sunday and Ukraine says they believe him.
With this backdrop, the strong bear trend remains in place across all 3 major indices. However, again, we are again very extended from the T-line (8ema) and are deeply oversold in terms of the T2122 indicator. The major indices are getting close to testing the lows from June. So, expect volatility and even though everything looks very bearish, do not forget we are extended. Markets moving in zig-zags and there will be a zag coming at some point soon.
Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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
On Thursday, the major indices gapped lower in a divergent manner. (The DIA gapped down 0.10%, SPY gapped down about 0.25%, and QQQ gapped down two-thirds of a percent.) After those gaps, we saw a sideways roller-coaster ride in a tight horizontal channel until 2:30 pm. However, at that point the bulls stepped in to drive a stronger wave for 45 minutes was met by an even sharper selloff in the last 10 minutes of the day. This action left us with indecisive, Spinning Top type candles. (It also sets up potential Morning Star signals in the 3 indices if we get the right candle Friday. However, every Morning Star Setup is also a Bearish Doji Continuation Pattern setup.) With all this said, the indices are also very extended below their T-lines (8ema) at this point.
On the day, nine of the ten sectors are in the red with Comm. Services (+0.01%) barely hanging on to the green while Consumer Cyclical (-2.24%) was by far the largest losing sector. Meanwhile, the SPY was down 0.86%, DIS was down 0.42%, and QQQ was down 1.23%. The VXX was flat at 18.87 and T2122 has dropped extremely deep into the oversold territory to 1.79. 10-year bond yields have spiked to 3.704% and Oil (WTI) was up three-quarters of a percent to $83.60/barrel. So, the good news is that the major post-Fed volatility has dissipated. However, the bad news is that there is still major indecision and some volatility within the strong bearish trend.
In Economic news, Q2 Current Account came in much better than expected (-$251.1 billion vs. -$260.6 billion forecast and -$282.5 billion in Q1). This 11.1% decrease in the deficit happened due to a sharp INCREASE in exports. Weekly Initial Jobless Claims also came in slightly better than expected (213k vs. 218k forecast, but a bit higher than last week’s 208k). Meanwhile, overseas, South Korea reported its first monthly PPI fall in two years. In terms of bond yields, most of them are sitting at the highest level since 2008. The 2-year is at 4.118% yield. However, the most concerning fact about bond yields is the complete inversions, which is usually an indicator of a pending recession. (2-year > 5-year > 10-year > 30-year.) Finally, in counter-inflationary news, Bloomberg reports that copper has fallen by one-third since March.
After the close, in earning news, COST reported beats on both the revenue and earnings lines. At the same time, FDX and AIR both reported misses on revenue while beating on earnings. None of those companies changed forward guidance. However, FDX had already reduced the reported quarter’s guidance and had removed all forward estimates in a preannouncement last week. The company also said it was struggling with light shipping volumes in Europe and Asia.
In other stock news, speaking of FDX, the company announced they are raising Express, Ground, and Home Delivery by an average of 6.9%. The company will increase FedEx Freight rates by between 6.9% and 7.9%. They also announced a plan to cut costs which they expect to deliver $2.25 billion in cost savings during fiscal 2023. Elsewhere, the Wall Street Journal reported after the close that HUM and CVS are both in the running to acquire senior primary care provider CANO. (CANO was up 60% between 3:15 pm and 3:30 pm Thursday as the news leaked. The stock closed up 32% on the day.) Finally, after the close, the SEC announced that BA and its former CEO (Muilenburg) have consented to pay $200 million and $1 million respectively to settle charges of issuing materially misleading statements in 2018 and 2019, following the company’s multiple 737Max crashes.
In miscellaneous news, the Yen soared Thursday as Japanese monetary authorities continued their intervention to prop up their currency. The Yen climbed 1.2% against the US Dollar on the day. With that said, the Dollar gained against the Euro and Loonie. Elsewhere, Reuters reports that Senate Republicans threatened large banks (JPM, BAC, C, WFC, USB, PNC, etc.) that they will face unspecified retaliation unless they abandon and avoid all liberal stances on social, environmental, and/or cultural issues (so-called ESG issues). Meanwhile, the Senate Democrats “requested” (again, an implied and unspecified threat) that the banks remain neutral on employee unionization, limit and strictly manage bank risks, and warned them over profiteering and practices that prey on customers (such as WFC has repeatedly been found guilty). Finally, in one last quasi-political tidbit, it was widely reported last night that Senator Manchin does not have even the Senate votes to pass his Energy bill aimed at removing environmental restrictions, fast-tracking project permitting, and approving pipelines. It’s uncertain which, if any, of the oil and coal companies (Manchin’s benefactors) may have been relying on this bill or which are most impacted if it does fail to pass.
Overnight, Asian markets were red across the board. Australia (-1.87%), South Korea (-1.81%), and India (-1.72%) led the region lower. In Europe, stocks are sharply lower as Putin’s farce referendums begin in the areas Russia still holds (but even refugees from those areas held in Russia are not permitted to vote), the UK announced a raft of corporate tax cuts, and eurozone PMI fell again. (The British pound also fell 1.8% to a fresh 37-year low versus the dollar.) The FTSE (-2.14%), DAX (-2.43%), and CAC (-2.33%) are leading the region lower in early afternoon trade. However, even the best exchange in the region is down 1.70% (Switzerland). As of 7:30 am, US Futures are pointing toward a significant gap lower to start the day. The DIA implies a -1.19% open, the SPY is implying a -1.30% open, and the QQQ implies a -1.42% open at this hour. 10-year bond yields are surging again to 3.771% and Oil (WTI) is down more than 3% to $80.85/barrel in early trading.
The major economic news events scheduled for Friday are limited to Mfg. PMI and Service PMI (both at 9:45 am) and Fed Chair Powell speaks again at 2 pm. There are no major earnings reports scheduled for Friday.
As we come into the last day of the week, markets are staring at more than a 4% loss so far by the SPY. GS also sharply reduced their year-end target for the S&P500 from 4300 to 3600 (citing rising interest rates and, as a result, increasing recession risk. Overseas, the Europeans are scrambling to cap wholesale energy prices, subsidize companies and households for energy costs, and add better/additional volatility circuit-breakers to energy markets. The point is, the picture is pretty bleak and there isn’t a lot of good news to bolster bulls.
With this backdrop, the strong bear trend remains in place across all 3 major indices. However, especially after today’s significant gap down, we are again very extended from the T-line (8ema) and are deeply oversold in terms of the T2122 indicator. The DIA will be testing the June lows if we open as we sit now and there is no significant potential support in the other indices before we reach that test as well. So, expect volatility and even though everything looks very bearish, do not forget we are extended. Markets moving in zig-zags and there will be a zag coming at some point soon. Finally, remember that it’s Friday and there is a weekend news cycle ahead. Consider whether you should take profits, move stops, hedge, or adjust position sizes ahead of the two days when we can’t react to news.
Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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
Markets gapped about a half of a percent higher at the open Wednesday. This turned into a long sideways grind in a tight range on low volume for all 3 major indices right up until the Fed announcements at 2 pm. That abruptly came to an end, when the Fed news hit and we saw the true definition of whipsaw. After the announcement, there was a small surge higher for 5 minutes, only to be met by a massive 1.6% to 2% collapse in the 5 minutes after that initial surge. The volatility continued when Fed Chair Powell began to speak, the bulls surged the market back up by more than a full percent, to take us to the highs of the day in all 3 major indices at about 2:50 pm. However, the whip was not done as the bears stepped in shortly after 3 pm to drive us back down into the close, taking us out on the lows of the day.
On the day, this action left us with large bearish engulfing candles that had a significant upper wick and that had failed a retest of the T-line (8 ema) in all 3 major indices. All 10 sectors were red on the day with Consumer Defensive (-0.53%) by far the strongest and Consumer Cyclical (-2.58%) by far the weakest sector. The SPY lost 1.73%, the DIA lost 1.71%, and the QQQ lost 1.82%. VXX gained over 2% to 18.86 and contrary to what you might expect, T2122 dropped deeper into the oversold territory at 3.45. 10-year bond yields fell to 3.514% and Oil (WTI) fell two-thirds of a percent to $83.42/barrel.
In Economic news, August Existing Home Sales came in a bit stronger than expected (4.8 million versus the 4.7 million forecast and 4.82 million in July). EIA Weekly Crude Oil Inventories also followed the API number from Tuesday evening by building less than was expected (+1.142 million vs +2.161 million barrels forecast). Across the pond, the UK’s new PM Truss announced corporate tax cuts and reversing a planned corporate tax increase as her plan for fighting a recession. IFS (the non-partisan arbiter of UK government spending) called the move disappointing and said there is little chance the cuts would ever pay for themselves and they will likely increase the UK budget deficit by around 3.5% of GDP. However, as stated above, the day’s big economic news came out of the Fed.
In Fed News, the FOMC decided to go with a 0.75% rate hike (to 3.25%) which was exactly what more than 80% of traders had been expecting. The FED statement also indicated that they will keep hiking well above the current level in order to fight inflation. The FOMC now projects the “terminal point” (the highest they will raise rates) to be 4.6% and that this level will be reached in 2023. The “Dot Plots” (the individual FOMC member expectations) do not foresee a rate cut until at least 2024. Meanwhile, the Fed projections see unemployment rising from the current 3.7% to a high of 4.4% next year. They also expect GDP Growth to slow to +0.2% for 2022 and then rise slowly to a long-term rate of +1.8%. (That +0.2% growth number for 2022 is a sharp cut from their June estimate of +1.7%. This coupled with the wording “below trend growth” scared many traders.) However, the Fed expects headline inflation to drift lower the rest of the year, coming down to a 5.4% number (compared to July which expected 6.3% inflation by year-end). Finally, they expect to have inflation back down to 2% by 2025.
In stock news, META announced plans to cut costs by 10%. This is likely to include job cuts, but nothing was announced yet. Then after the close, MSFT announced an increase in its quarterly dividend by 10% to $0.68, payable on 12/8 for holders of record on 11/17. On the opposite side, GLT announced it has suspended its dividend in order free up cash for the operational and financial needs of the company. Also, after the close, FUL, KBH, LEN, SCS, and TCOM all reported misses on the revenue line while also beating on the earnings line. KBH and SCS went further to lower forward guidance while the others left guidance as it was stated the previous quarter.
In Energy news, the UK government announced a multi-billion-pound bailout program to help companies pay their energy bills. They also will cap wholesale energy prices for the next six months. In the US, the Senate ratified (in a bipartisan manner, 69-27) the “Kigali Amendment” to the Global Environmental Treaty. This amendment outlaws various HFC gasses used in HVAC and Refrigeration units. These both followed an oil surge after Putin’s ratcheting of tensions calling up another 300,000 reservists and then threatening nuclear attacks (by saying they were being threatened with nukes). However, the Fed got the last word as the Dollar reached a new 20-year high after the Fed news, working against all dollar-denominated commodities and driving oil down.
Overnight, Asian markets were mixed but leaned to the red side. Thailand (+0.72%) was by far the biggest of the 3 winners. Meanwhile, Hong Kong (-1.61%), Australia (-1.56%), and Taiwan (-0.97%) led the majority of the region’s exchanges downward. In Europe, stocks are mostly red at mid-day with the notable exception of Russia (+2.04%). The FTSE (-0.32%), DAX (-0.62%), and CAC (-0.68%) are leading the region lower in early afternoon trade. As of 7:30 am, US Futures are pointing toward a modestly red start to the day. The DIA implies a -0.01% open, the SPY is implying a -0.13% open, and the QQQ implies a -0.28% open at this hour. 10-year bond yields are up again to 3.54% and Oil (WTI) is up eight-tenths of a percent to $83.64/barrel in early trading.
The major economic news events scheduled for Thursday are limited to Q2 Current Account and Weekly Initial Jobless Claims (both at 8:30 am). The major earnings reports scheduled for Thursday, ACN, DRI, and FDS report before the open. Then after the close, AIR, COST, and FDX report.
In economic news later this week, on Friday, we see Mfg. PMI, Service PMI, and Fed Chair Powell speaks again. Meanwhile, in earnings reports later this week, on Friday there are no major earnings reports scheduled.
So far this morning, ACN has posted beats on both the top and bottom lines. Meanwhile, FDS beat on revenue while missing on earnings. The DRI report missed on revenue and reported in-line in terms of earnings.
In late-breaking news, the Bank of England raised rates by 0.50%, which followed the same move made by Norway’s Central Bank. However, Turkey is swimming against the current by cutting interest rates by a full percent…even as the country is suffering from 80% inflation. Meanwhile, the US Dollar is down this morning (versus the basket of 10 peer currencies). Some of the Dollar’s move lower is due to the Japanese government intervening to prop up the Yen for the first time since 1998.
With this backdrop, the strong bear trend remains in place across all 3 major indices. It now looks (ahead of weekly unemployment data) like we will open just a modest amount lower. However, we are again extended from the T-line (8ema) and are deeply oversold in terms of the T2122 indicator. There is also potential support not far below. So, beware of the potential for “gap and reverse.” As yesterday’s Fed whipsaw should have taught us…we simply can’t get caught chasing. Otherwise, Mr. Market will punish us severely. So, be patient and remember that the first rule of making big money in the market is to not lose big money in the market.
Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.
See you in the trading room.
Ed
Swing Trade Ideas for your consideration and watchlist: GME, AAPL, UBER, SQQQ, GOOG, AMZN, SDS. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 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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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
In this Members E-learning I go over my rules for choosing the right option based on my rules. We get into Delta, Gamma, Theta, Open Interest, Bid/Ask Spreads and Implied Volatility. I hope you find it helpful to your trading decisions.
