With a growing number of major financial institutions and company CEOs dominating the news cycle, warning of a 2023 recession, the bears extended their attack Tuesday. Though the selling raised some uncertainty for a Santa rally, critical support levels in the index charts held. However, we will need the bulls to step up and defend now, or the bears could quickly create some technical damage that may be difficult to recover. Earnings and economic reports could provide some inspiration, but recession worries, pending PPI and FOMC decisions, will likely keep uncertainty high for the near future.
While we slept, Asian markets sold off, with Hong Kong leading the way, down 3.22% as trade data disappointed. European markets also trade in the red this morning as the bear market rally sentiment diminishes with worries of a looming recession. U.S. futures reversed modest overnight bullishness to suggest a slightly bearish opening ahead of earnings and economic data. Uncertainty is high so prepare for news driving price volatility to continue.
Economic Calendar
Earnings Calendar
We have more activity on the Wednesday earnings calendar, but unlikely market-moving reports. Notable reports include AI, BF.B, CPB, GME, KFY, LOVE, OLLI, SPWH, THO, UNFI, & VRNT.
News & Technicals’
CEOs from JPMorgan, General Motors, Walmart, United, and Union Pacific are preparing for an economic slowdown. Rising interest rates, inflation, and geopolitical concerns are among the issues cited. The companies are taking a conservative approach to 2023. Goldman Sachs and Morgan Stanley have cut workers ahead of a possible economic downturn, but Bank of America CEO Brian Moynihan and his CFO have said they don’t see the need for layoffs. That doesn’t mean Bank of America’s headcount won’t shrink as it looks to cut expenses. “We’re up to about 215,000 [employees]; we need to run that backdown,” he said Tuesday.
Fink has become an outspoken proponent of “stakeholder capitalism” and, in his annual letter to CEOs earlier this year, pushed back against accusations that the giant asset manager was using its size to push a political agenda. Bluebell — an activist fund with around $250 million in assets under management that holds a tiny stake in BlackRock — has previously targeted the likes of Richemont and Solvay and had a hand in successfully forcing management to restructure at Danone.
With a growing number of banks and company CEOs warning about a 2023 recession, the bears found the inspiration to matain their attack on Tuesday. However, on the good news side of the selling, it has substantially relieved the frothy overbought condition of the Dow and key support levels held at yesterday’s close. The bad news is that recession worries continue to grow and wouldn’t take much to push the SPY, QQQ, and IWM below support to possibly spoil the hoped-for Santa rally. Today we have a few more earnings reports, Mortgage Apps, Productivity and Costs, and Petroleum Status numbers to inspire the bulls and bears. With a PPI number this Fraidy and an FOMC decision next week, understandably, making traders question the uber-bullish stance of late. With the big financial institutions battening down the hatches and layoff projections rising, plan for a volatile end to 2022.
On Tuesday markets opened flat only for all three major indices to start a long, steady selloff that lasted until 3:30 pm. However, the shorts took profits the last 30 minutes of the day to take us out up off the lows. The SPY and QQQ both also failed their uptrend lines during the day. This action gave us big black candles with small wicks at both ends. All three major indices also retested and failed their T-lines (8ema) on the day. This action took place on a larger-than-average volume in the DIA with a bit less than average volume in the SPY and QQQ.
On the day, nine of the ten sectors were in the red with only the Utilities (+0.11%) able to stay in the green while Technology (-2.23%) led the way lower. In the meantime, the SPY was down 1.45%, the DIA was down 1.05%, and the QQQ was down 2.07%. The VXX was up by more than 3% to 15.07 and T2122 has dropped into the oversold territory at 15.85. 10-year bond yields were down a bit to 3.531% and Oil (WTI) was off 3.38% to $74.35 per barrel. So, Tuesday was slow melt which saw the large caps close down a fourth straight day and the QQQ close lower for the third straight session.
In economic news, October Imports were up about $3.5 billion while October Exports fell just under $2.5 billion. This gave us an October Trade Balance deficit that was a bit less than expected at -$78.20 billion (compared to a forecast of -$80 billion) but also above the prior month’s actual of -$74.10 billion. Then after the close, the API Weekly Crude Oil Stock Report saw a larger-than-expected drawdown at -6.426 million barrels (versus a forecasted drawdown of 3.884 million barrels and last week’s drawdown of 7.850 million barrels).
In stock news, the EU Privacy Watchdog group ruled that META can no longer run ads based on users’ personal data without the users’ explicit consent. On this side of the pond, the CEO of BAC told Bloomberg that the company will be slowing hiring as fewer than expected employees are leaving the company, but continues to seek talent. This stands in contrast to MS, which let 2% of its workforce (1,600 people) go on Tuesday. In other news, Bloomberg reported AAPL has scaled back and delayed (until 2026) its plans to offer self-driving car software for electric vehicles. Meanwhile, a US District Judge ruled in favor of GSK, PFE, and SNY throwing out 50 thousand of US lawsuits that had claimed the heartburn drug Zantac caused cancer. However, about 10,000 similar cases in state and local courts remain intact. Finally, Reuters reports that MOS says that it is cutting potash production at its Saskatchewan Canada mine citing slower-than-expected demand.
In energy news, Oil (WTI) closed very near a one-year low on Tuesday. This comes as Fed and recession fears have overcome last month’s OPEC+ production cuts. Earlier in the day, the EIA released projections that US oil production for the year would rise marginally more than their previous estimates to 11.87 million barrels per day average (compared to the previous estimate of 11.83 million barrels per day). They also now estimate that 2023 production in the US will reach 12.34 million barrels per day. Still, they expect US oil consumption to be 20.36 million barrels per day and forecast that will rise to 20.51 million barrels per day in 2023.
After the close, PLAY and TOL reported beats on both the revenue and earnings lines. Meanwhile, CASY missed on revenue while beating on earnings. Unfortunately, SFIX missed on both the top and bottom lines. It is also worth noting that TOL and SFIX have both reduced their forward guidance.
Overnight, Asian markets leaned to the downside. Hong Kong (-3.22%) was an outlier while Australia (-0.85%), Singapore (-0.83%), and Japan (-0.72%) paced the losses. Only Shenzhen (+0.17%) managed to stay green. Meanwhile, in Europe, we see a similar picture taking shape at midday. Only the FTSE MIB (+0.01%) and Greece (+0.15%) are in the green while the FTSE (-0.05%), DAX (-0.39%), and CAC (-0.41%) lead the way lower in early afternoon trade. As of 7:30 am, US Futures are pointing toward a red start to the morning. The DIA implies a -0.29% open, the SPY is implying a -0.45% open, and the QQQ implies a -0.70% open at this hour. 10-year bond yields are up slightly to 3.54% and Oil (WTI) is on the green side of flat at $74.35/barrel in early trading.
So far this morning, THO and CPB reported beats on the revenue and earnings lines. Meanwhile, UNFI beat on revenue while missing on earnings. (ASO, BF.B, and OLLI all report later but before the opening bell.)
The major economic news events scheduled for Wednesday include Q3 Labor Cost and Q3 Nonfarm Productivity (both at 8:30 am), and EIA Crude Oil Inventories (10:30 am). The major earnings reports scheduled for the day include ASO, CPB, WLY, THO, and UNFI before the open. Then after the close, GME and GEF report.
In economic news later this week, on Thursday we get Weekly Initial Jobless Claims. Then on Friday, November PPI and Michigan Consumer Sentiment are reported. In earnings later this week, on Thursday, we hear from CIEN, GMS, HOV, KFY, AVGO, CHWY, COO, COST, DOCU, LULU, and RH. Finally, on Friday, we hear from LI.
Overnight the Democrats expanded their tiny majority in the US Senate as Senator Warnock won the GA runoff election. Elsewhere, the first electric vehicle maker unionization vote is taking place in Ohio today and Thursday as the UAW seeks to unionize the GM battery plant in Northeastern Ohio. In non-election news, the large banks warned of recession yesterday and are preemptively cutting jobs to preserve profitability. For their part, WMT says the consumer is strong and we actually need a recession to tame inflation. This all came as the demand for mortgages fell again last week, even as mortgage interest rates fell from 6.49% to 6.41% for a 30-year, fixed-rate, conforming loan. The Mortgage Bankers Assn. said demand fell by 1.9% last week (but were 86% lower than the same week of 2021).
With that background, it looks like premarkets are down again as the QQQ test support and the SPY is reaching to do the same. DIA has not gotten there yet, but could do so on a bad day. The short-term trend remains bearish within the mid-term bullish trend no broken. Note that we have no extension from the T-line is only potentially a problem in the QQQ at the moment. However, we did dip into the oversold area of the T2122 indicator yesterday. Of course, we do have Q3 Productivity and Labor Cost data at 8:30 am, but those are not usually huge market movers. So, overall, if the bulls cannot rally to hold support levels we could see a bearish run for several percent in the QQQ and SPY (with the DIA holding up better on the rotation to the safety of the mega-cap names).
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
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
Reacting to hot ISM services numbers, the bear had a little party on Monday, producing a big point move in the indexes but support levels and bullish trends remained intact by the close. Though traders continue to worry about future FOMC rate increases and recession, the hope of the last push higher for Santa remains strong. However, plan for the big point whipsaws and overnight gaps to continue as the bulls and bears fight it out as the uncertain path forward for the economy drives the wild emotion.
Asian markets closed mixed in a volatile overnight session, with China easing some lockdown restrictions. However, European markets trade modestly bearish across the board this morning as future recession fears loom. U.S. futures gave back overnight gains to currently suggest a flat open as they wait on earnings and economic data to try and find inspiration. This could prove to be an interesting bull-bear battle at vital support, so plan carefully and expect considerable volatility.
Economic Calendar
Earnings Calendar
As usual, near the end of the quarter, we have a few earnings stragglers we will have to keep track of, but their numbers will continue to dimmish over the month. Notable reports include AVAV, AZO, CASY, CONN, PLAY, MDB, SFIX, SIG, SWBI, & TOL.
News & Techinicals’
The investment by TSMC is one of the largest foreign investments in U.S. history and the largest in Arizona. Semiconductor chips are used in everything from computers and smartphones to cars, microwaves, and healthcare devices. Once the plants open, they will produce enough chips to meet the U.S. annual demand. The announcement comes in the wake of the passage of the CHIPS and Science Act signed into law in early August.
Microsoft President Brad Smith said the company offered Sony a 10-year contract to make each new release of Call of Duty available on Sony’s PlayStation console at the same time as the Xbox. Microsoft hopes the move will assuage regulators’ and its rivals’ antitrust fears over its proposed $69 billion acquisition of Activision Blizzard, the developer behind Call of Duty. In addition, any move to make Call of Duty unavailable to Sony’s PlayStation console would be “economically irrational,” Microsoft’s President Brad Smith said.
The bears had a little party on Monday, reliving some of the short-term overbought condition, but they seemed to lack conviction, with index charts holding supports and bullish trends still intact. So although the big point move may have been a bit disconcerting, the move could prove to be very positive as long as the bulls defend the price supports. Today we have a few more earnings reports that could provide some inspiration with only the International Trade numbers on the economic calendar. Of course, it would be healthy if the indexes consolidated in a smaller price trading range, but with the all-or-nothing condition of the market, that’s likely just wishful thinking. Keep a close eye on the support and resistance levels and plan for the choppy volatility to continue.
Markets opened down on Monday (the large caps gapping down about 0.70% and the QQQ gapping down about 0.80%). Then, after 90 minutes of waffling, the three major indices sold off until 3 pm. However, we saw a little profit-taking by the shorts as we made a small bounce up off the lows at the close. This action gave us large-bodied, black candles with wicks at both ends. All three indices crossed back below their T-lines (8ema) on below-average volume. This all happened on lower-than-average volume again. However, the DIA was at least close to its average volume.
On the day, all ten sectors are in the red with the Energy (-3.03%) sector leading the way lower while the Utilities (-0.85%) sector lagged behind. In the meantime, the SPY was down 1.80%, the DIA was down 1.37%, and the QQQ is down 1.68%. The VXX was up by 1.74% to 14.63 and T2122 has dropped out of the overbought territory to 32.80. 10-year bond yields are up to 3.575% and Oil (WTI) was down 3.26% to $77.37 per barrel. So, Monday started the week off bearishly with price testing the uptrend line (since mid-October) but still having potential support a couple of percent below.
In economic news, the November Services PMI came in above expectations at 46.2 (versus 46.1 which was forecasted, and 47.8 in October). Later, the ISM Non-mfg. PMI came in further above expectations at 56.5 (versus 53.3 forecasted and 54.4 in October). November ISM Non-Manufacturing Employment Index was up to 51.5 from October’s 49.1 value. Finally, October Factory Orders also came in above expectation at +1.0% (compared to a forecast of +0.7% and +0.3% in September ). So, overall we got several pieces of better-than-expected economic data…which traders took as a bad thing, expecting it to potentially give the Fed reason to raise three-quarters of a percent again next week.
In stock news, on Monday, Reuters reported that the Shanghai TSLA plant output fell 20% in November. However, TLSA replied by putting out a statement claiming that was “false news.” Elsewhere, T settled charges with the SEC, agreeing to pay $6.25 million for disclosing nonpublic information to select research analysts. Later in the day, it was reported that the state of TX has offered a path for “sanctioned firms” to get off the TX boycott list. (TX is boycotting some financial firms as investments because the oil state didn’t like the financial company’s policy of not backing companies that do not limit emissions.) The only US firm on the current TX boycott list is BLK. In a twist to last week’s supply chain story, investor groups at NSC and UNP have proposed shareholder resolutions that the companies offer workers a “reasonable amount” of paid sick leave (instead of none, which is now given and was the main issue that the unions had been holding out to get). After the close, XOM raised the annual base salaries of all the top executives including the CEO effective January 1. Also, after the close, PEP announced it will be cutting hundreds of headquarters jobs.
In miscellaneous news, overnight GS reported that they are seeing big bets from professional investors that a bad recession can be avoided. This comes in the form of $5 trillion in sector positioning that is typical for a soft landing in a business cycle. Elsewhere, China is reporting that last month’s new wave of Covid cases is starting to tail off. This comes as the Chinese government said a negative test would no longer be required to enter many public venues in Beijing. Finally, Bloomberg reports that there is a major hidden risk in the global finance system. It seems that of the $65 trillion of dollar debt held by foreign financial institutions, $39 trillion is hidden in the form of derivatives that are not held on the balance sheet. This amount is double the debt they do report on balance sheets and 10 times their capital. (You may recall that such swaps and derivatives were the cause of the 2008 financial crisis caused in the US.) So, any shock to the Forex market could potentially crash the major non-US banks, which would likely precipitate governments needing to step in and bail out the system as the US did in 2008, otherwise, the collapse would definitely crash global markets and economies.
So far this morning, FERG, AZO, and SIG all reported beats on both the top and bottom lines. However, HEPS missed on both the revenue (badly) and earnings lines.
Overnight, Asian markets were mixed but leaned to the red side on modest moves. Shenzhen (+0.67%), Japan (+0.24%), and Shanghai (+0.02%) were the green exchanges. Meanwhile, Taiwan (-1.68%), South Korea (-1.08%), and Thailand (-0.53%) led to the downside. In Europe, we see a similar and perhaps more down picture taking shape at midday. The FTSE (-0.29%), DAX (-0.13%), and CAC (-0.19%) are leading the way on volume as usual with a couple of the smaller exchanges even more red and only three modestly green exchanges in early afternoon trade. As of 7:30 am, US Futures are pointing toward a modestly green start to the day. The DIA implies a +0.14% open, the SPY is implying a +0.18% open, and the QQQ implies a +0.29% open at this hour. 10-year bond yields are down again to 3.553% and Oil (WTI) is off 1.12% to $76.06/barrel.
The major economic news events scheduled for Tuesday include Oct. Imports/Exports and Oct. Trade Balance (both at 8:30 am), and API Weekly Crude Oil Stocks Report (4:30 pm). The major earnings reports scheduled for the day include AZO, FERG, HEPS, and SIG before the open. Then after the close, CASY, PLAY, and TOL report.
In economic news later this week, on Wednesday, Q3 Labor Cost, Q3 Nonfarm Productivity, and EIA Crude Oil Inventories are reported. On Thursday we get Weekly Initial Jobless Claims. Finally, on Friday, November PPI and Michigan Consumer Sentiment are reported.
In earnings later this week, on Wednesday, ASO, CPB, WLY, THO, UNFI, GME, and GEF report. On Thursday, we hear from CIEN, GMS, HOV, KFY, AVGO, CHWY, COO, COST, DOCU, LULU, and RH. Finally, on Friday, we hear from LI.
President Biden is in AZ for a ceremony at the new TSM semiconductor Fab construction site. TSM has upped its investment in the location to $40 billion, which will double the number of Fabs built to two. Last week TSM announced they will build 4nm chips (next-gen state of the art) at those facilities rather than 5nm (current-gen state of the art) at the urging of AAPL, NVDA, and AMD. (Those TSM customers would like the chips made in the US to reduce supply chain shipping risks…let alone the risk of Chinese action against Taiwan. By the same token, the move also reduces TSM risk by no longer having all its eggs in one basket so to speak.)
With that background, it looks like premarkets are up modestly and perhaps looking to retest the T-line (8ema) as resistance. Of course, we have trade data at 8:30 am, but that is not likely to be a huge market mover. The short-term trend remains bearish within a mid-term bullish trend. Remember that the SPY and QQQ are now at (or near) uptrend support lines while the DIA seems to be wandering sideways looking for direction. Also, note that we have no extension problem either direction from either the T-line or in terms of the T2122 indicator.
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
Swing Trade Ideas for your consideration and watchlist: INFN, CLX, U, AMD, TLT, VLDR, SBSW. 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
As we begin another trading week, we have the magic of Santa competing with weakening economic numbers and worries about a challenging recession over next year’s horizon. Yet, the bulls showed incredible tenacity with a willingness to buy, buy, buy despite the hot jobs numbers likely to keep the FOMC hawkish. With many of the Dow component stocks in very extended parabolic patterns, traders will have to watch for possible big-point bear attacks, though the Santa rally hopes remain high.
While we slept, Asian markets rallied as China relaxed some pandemic rules prompting Hong Kong to surge 4.51%. However, European markets trade mixed this morning, with oil moving higher as price controls compete with OPEC’s production cutbacks. After Friday’s big recovery rally, U.S. futures point to a modest gap open as we wait for earnings and economic data. Plan carefully for another week of volatile data-charged price action as Santa hope battles recession fears.
Economic Calendar
Earnings Calendar
Earnings reports will be light this week, but we will still have some notables to keep us on our toes. Notable reports for Monday include GTLB & SUMO.
News & Technicals’
The Netherlands is outsized in the global semiconductor supply chain because of its star company, ASML. ASML produces a cutting-edge chip-making machine, and China is keen to have access. The U.S. is worried that if ASML ships the machines to China, chipmakers in the country could begin to manufacture the most advanced semiconductors in the world, which have extensive military and advanced artificial intelligence applications.
Foxconn said November revenue totaled 551.1 billion new Taiwan dollars ($14.7 billion), down more than 29% versus October and over 11% lower compared to Nov. 2021. The Taiwanese firm said the fall was due to “production gradually entering off-peak seasonality and a portion of shipments being impacted by the epidemic in Zhengzhou.” Zhengzhou, a city in China, is home to the world’s largest iPhone assembly plant, which Foxconn runs. In late October, the factory had an outbreak that Foxconn battled to control.
The European Union is poised to ban all imports of Russian seaborne crude from Monday. The Kremlin has previously warned that any attempt to impose a price cap on Russian oil will cause more harm than good. Oil prices have fallen below $90 a barrel from more than $120 in early June ahead of potentially disruptive sanctions on Russian oil.
As we begin another trading, there is still hope for the magic of Santa to keep the rally going. First, however, Santa will need to overcome the economic data showing a slowing economy while job growth remains stubbornly strong. In addition, the growing worries of recession, a disinflationary cycle, or even the dreaded stagflation still worry investors making for some high-risk volatility. To begin the trading week, we have a light earnings calendar with Factory orders, ISM Services, and PMI composite readings to try and gain some inspiration. The indexes remain in bullish patterns, yet many of the Dow component stocks are very extended in parabolic patterns, so we will have to stay focused for signals of bear attacks or longer choppy consolidations as it rests.
The strong economic data put fear into the markets before the open causing the SPY to gap down 1.28%, the DIA to gap down 1.03%, and the QQQ to gap down a huge 1.77%. However, the bulls stepped right in to start a gradual and wavy rally, working their way back up across the gap all day long until there was a little profit taking the last 30 minutes. On the day, we saw all 3 indices retest and bounce back up off their 8ema (T-line). There may also have been a bit of rotation toward mega-cap safety today as the DIA was the least hurt of the three major indices. This action gave us gap-down, large, white-body candles with modest upper wicks. And just like early in the week, volume was below average in the SPY, DIA, and QQQ.
On the day, five of the ten sectors were in the green again with the Basic Materials sector (+0.76%) leading the market while the Communications Services sector (-0.54%) lagged. In the meantime, the SPY was down 0.12%, the DIA was up 0.10%, and the QQQ was down 0.40%. The VXX fell by 1.78% to 14.38 and T2122 remains well into the overbought territory at 89.36. 10-year bond yields fell to 3.492% and Oil (WTI) was down 1.08% to $80.34 per barrel. So, Friday started with fear over what the Fed might do in the face of better jobs data, but the bulls immediately responded and kept the pressure on the bears all day long.
In economic news, November Nonfarm Payrolls increased by 263k (compared to the 200k that was forecasted and 284k gained in October after revision). At the same time, Nov. Private Nonfarm Payrolls rose 221k (versus the gain of 190k forecasted and the 248k that was gained in October). Meanwhile, the Participation Rate fell slightly from 62.2% to 62.1% and the November Unemployment Rate held steady at 3.7%. In terms of the Annualized Average Hourly Earnings, the November value jumped more than expected at +5.1% (versus the +4.6% forecasted and the +4.9% in October). So, all in all, this was not information the Fed wanted to hear as jobs growth and wage inflation remain stronger than expected. (As mentioned above, the fear of Fed reaction was the cause of the premarket crash and the opening gap-down.)
In stock news, the Wall Street Journal reported that UAL is nearing a deal to order as many as 100 of the 787 Dreamliner jets from BA. Elsewhere, Reuters reported that MRK is working to change the formulation of its $20 billion per year Keytruda cancer treatment to make it injectable. This would prevent the patents on that drug from beginning to expire in 2028 and prevent competition in the US until at least 2040. In legal news, after the close, ABB agreed to pay $315 million to the US Dept. of Justice, the SEC, and South African authorities in order to resolve a bribery case related to the South African state-owned energy company.
In miscellaneous news, the Financial Times reported Friday that the state of FL is now considering a reversal of the April decision to strip DIS of the ability to self-govern in the area around its theme parks (after DIS opposed a state GOP culture war bill). This may or may not be related to new CEO Iger recently saying he was “sorry to see us (DIS) get dragged into the battle.” It is worth noting that Iger also opposed the bill, but was not a part of DIS at that time. Meanwhile, ecommerce software vendor BIGC reported that holiday sales are off to a blistering pace this year. They stated that Thanksgiving Day sales were up 23% and Cyber Week sales were up 32% this year among their customers.
In energy news, the EU agreed Friday to a $60 price-cap on Russian oil shipped via sea. This comes into effect at the same time as the EU ban on seaborne Russian oil (as of today). In response, Russia said it will not ship any oil that is subject to that price cap. Then on Sunday, OPEC+ met and decided to “pause” for the moment. In other words, they will not reduce oil production nor will they increase oil production at this time. They will wait to see how the new oil sanctions on Russia play out. Finally, the Kuwait delegation to OPEC+ said Sunday that (in a nod to global recession) the oil-importing countries do not plan to import more oil in 2023 than they did in 2022.
After the close, ULTA and VEEV both reported beats on the revenue and earnings lines. However, MRVL reported misses on both the top and bottom lines. It is worth noting that ULTA raised its forward guidance while MRVL and VEEV both lowered their forward guidance.
Overnight, Asian markets were mixed but mostly green. Malaysia (-0.69%), South Korea (-0.62%), and Thailand (-0.41%) were the only red. Meanwhile, Hong Kong (+4.51%) was an outlier as Shanghai (+1.76%) and Shenzhen (+0.92%) led the region higher. In Europe, we see a similar story taking shape at midday. The FTSE (+0.19%), DAX (-0.60%), and CAC (-0.53%) are typical with only Russia (+1.11%) being an outlier in early afternoon trade. As of 7:30 am, US Futures are pointing toward a red start to the day. The DIA implies a -0.42% open, the SPY is implying a -0.46% open, and the QQQ is implying a -0.34% open. 10-year bond yields are back up to 3.521% and Oil (WTI) is up 2.63% to $82.08/barrel in early trading.
The major economic news events scheduled for Monday are limited to the November Services PMI (9:45 am), as well as Oct. Factory Orders and ISM Non-Mfg. PMI (both at 10 am). The major earnings reports scheduled for the day include SAIC before the open. There are no major reports scheduled for after the close.
In economic news later this week, on Tuesday we get Oct. Imports/Exports, Oct. Trade Balance, and API Weekly Crude Oil Stocks Report. Then Wednesday, Q3 Labor Cost, Q3 Nonfarm Productivity, and EIA Crude Oil Inventories are reported. On Thursday we get Weekly Initial Jobless Claims. Finally, on Friday, November PPI and Michigan Consumer Sentiment are reported.
In earnings later this week, on Tuesday we hear from AZO, FERG, HEPS, SIG, CASY, PLAY, and TOL. Then Wednesday, ASO, CPB, WLY, THO, UNFI, GME, and GEF report. On Thursday, we hear from CIEN, GMS, HOV, KFY, AVGO, CHWY, COO, COST, DOCU, LULU, and RH. Finally, on Friday, we hear from LI.
Overnight news out of China, showed Chinese authorities easing Covid testing requirements and hinting that they may loosen their approach to combatting Covid. This rallied Chinese stocks and combined with a guess that Russia will follow through and cut supply due to the price-caps has Oil traders pushing crude higher. At this point, we have other data coming, but it will all be seen in light of how the market expects the Fed to react to that data. Bulls really want a reduced 0.50% hike next week and every hint that the economy is not falling in recession gives the Bears hope that the FOMC will help them out with a 0.75% hike.
With that background, it looks like premarkets are pulling back about half of a percent from Friday’s close as price continues to wobble around and try to find its next direction after last Wednesday’s huge bullish move. Remember that the SPY and QQQ remain at/near a resistance level from prior highs and lows as well as their longer-term downtrend lines. Also, note that we remain extended in terms of the T2122.
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
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
Economic reports continue to point to a slowing U.S. economy, but the bulls show no signs of concern as the index trends remain bullish in stark contrast to the data. After the data-driven price volatility, the volume quickly declined into a choppy afternoon session, waiting for today’s Employment Situation report. With little on the earnings calendar, the job numbers will be the source of bullish or bearish inspiration as we slide into the weekend. Plan carefully and remember to take some profits because this extended market condition could bring sudden bear attacks, so avoid complacency.
Asian markets had a rough overnight session, wanting clarity on pandemic rules as the lockdowns continue. European markets trade slightly bearish this morning as they wait on the U.S. job data. With a very light day of earnings, all eyes will focus on the Employment Situation number out before the bell. The question is will it inspire the bulls or the bears? We will soon find out, so plan carefully and expect a shot of price volatility as we wrap up another trading week.
Economic Calendar
Economic Calendar
We have a light day on the Friday earnings calendar to wrap up the week. Notable reports include CBRL & GCO.
News & Technicals’
While the European Union has dubbed China as a “strategic rival” on different occasions, it is pursuing a different approach from the U.S. Data from Europe’s statistics office showed that China was the third largest buyer of European goods and the most important market for imported EU products in 2021. The importance of China as a market for Europe becomes even more relevant at a time when its economy is struggling from Russia’s invasion of Ukraine.
OPEC+, a group of 23 oil-producing nations led by Saudi Arabia and Russia, will convene on Sunday to decide on the next phase of production policy. The highly anticipated meeting comes ahead of potentially disruptive sanctions on Russian oil, weakening crude demand in China, and mounting fears of a recession. However, RBC Capital Market’s Helima Croft said there was no expectation of a production increase from the upcoming OPEC+ meeting and a “significant chance” of a deeper output cut.
The Senate passed legislation that would force a tentative rail labor agreement and thwart a national strike. A separate vote on adding seven days of paid sick leave to the agreement failed. The legislation now goes to President Joe Biden, who urged Congress to move quickly on its passage.
Economic data continued to roll in, indicating a slowing U.S. economy, and although we saw some selling, the index trends remained bullish in another light volume session. However, as we slide into the weekend, we could get a spark of inspiration today from the Employment Situation numbers. Once again, the T2122 indicator is signaling a short-term overbought condition, but despite so many parabolic-looking charts, we still have no sign the bulls are ready to stop. That said, stick with the trend but be careful not to overtrade, watching for a bearish attack that could begin any time. Remember to take some profit along the way and enjoy the ride as long as it lasts.
Markets gapped up modestly in all three major indices Thursday, with follow-through to the upside for 30 minutes. However, at that point, the SPY and QQQ had hit resistance and their long-term downtrend lines. This led to an even stronger snap-back selloff for 30 minutes, followed by a sideways series of tightening waves with a modest overall bullish trend the rest of the day. The DIA took the worst hit by having the weakest bullish trend in its recovery ride. This action is giving us indecisive Doji or Spinning Top candles in the SPY and QQQ as well as just a black candle with a lower wick (it was a Dark Cloud Cover at one point) in the DIA. Interestingly, of the 3 major indices, DIA is showing the highest volume relative to their average daily volume, while the other two did not reach average volume.
On the day, five of the ten sectors were in the green with the Technology (+0.50%) and Healthcare (+0.49%) sectors leading the market while the Energy sector (-0.97%) lagged. In the meantime, the SPY was down 0.08%, the DIA was down 0.52%, and the QQQ is up 0.12%. The VXX fell by 1.88% to 14.64 and T2122 remains well into the overbought territory at 91.75. 10-year bond yields fell sharply to 3.512% and Oil (WTI) is up 0.89% to $81.26 per barrel. So, Thursday was an indecisive rest day after Wednesday’s explosive rally and in front of Friday’s November Payrolls data.
In economic news, the Fed’s favorite inflation gauge (PCE Price Index) came in slightly below expectations for October at 0.3% (versus 0.5% forecasted and 0.3% in Sept.). The year-on-year version of that same PCE Price Index data came in at 6.0% (exactly as forecasted, but down 0.3% from the September reading). At the same time, Weekly Initial Jobless Claims came in lower than expected at 225k (compared to 235k that was forecasted and 241k the previous week). Later in the morning, Nov, Mfg. PMI came in slightly above expectation at 47.7 (versus a 47.6 forecast and a prior month’s reading of 47.6). However, the Nov. ISM Mfg. PMI came in lower at 49.0 (compared to a forecast of 49.8 and the Oct. reading of 50.2). So, overall, inflation may be coming down a bit and unemployment is still better than expected, but Manufacturing expectations are now coming down.
In stock news, ATUS announced that it has decided to keep its Suddenlink business unit after it underwent a strategic review. In addition, Bloomberg reported that TSM will be making advanced 4-nanometer chips in its new AZ plant (when it opens in 2024) at the request of major customers AAPL and NVDA. Elsewhere, the CEO of MS told a conference that the company would make “modest job cuts” but that this was just normal after years of strong growth and really was not due to recessionary pressures. At the same time, Reuters reports that META has reached out (and continues to do so) in an attempt to settle multiple EU antitrust regulator investigations. The uncertainty of a potential fine of 10% of global turnover is apparently uncomfortably large for the META board and management team. ROIV and PFE launched a joint venture on a new inflammatory disease drug which the companies value as a $15 billion opportunity in the US market. CVX announced that it has purchased ships of Venezuelan crude oil after the Bide n Administration relaxed restrictions on that last week. Reuters reports that VLO, PBF, and Citgo Petroleum are all vying to purchase portions of those cargos.
In miscellaneous news, the US Dollar slumped hard against major trading currencies as inflation moderates and Fed Chair Powell’s speech was more dovish Wednesday. Then late on Thursday, NY Fed President Williams (a modest hawk) said he feels “we have a ways to go in terms of the Fed Funds target.” When asked about the increase increments, Williams did not commit but did say “slowing the pace would simply mean stepping down one step” (implying a 0.50% hike as is widely expected now). However, he also reiterated his Monday statement that the FOMC may have the space to cut rates sometime in 2024. Finally, after the close, Fed Vice-Chair of Supervision Barr said he is among the central bankers who will back slowing the pace of rate hikes at the Dec. 13-14 meeting. He went on to say “now that we’re in restrictive territory…I think that it’s smart (to slow the pace of increases) and that would give us (Fed) space to think about how high it needs to be and how long we need to keep it at that rate to get the job done.”
In supply chains news, following up on the House vote to approve the bill, the Senate voted 80-15 to approve a bill forcing unions to accept the September tentative deal and prohibiting a rail strike. The separate bill that amended the deal to add 7 paid sick days to the deal (instead of 1 per year) failed to pass. (It had already passed in the House.) So, the bill to avert the strike will go to the President who has already said he will sign it. Industry analysts suggest that some of the rail workers will quit after receiving back pay that is due to them under the deal since they will not be getting the paid sick time they had demanded. If that were to materialize in large numbers, it would have the same impact as a strike, potentially stopping 35%-40% of US freight (this number is higher than the normal 30% because the Mississippi River is too low for barge traffic and much more bulk freight like grains and fuel must travel by rail or truck).
After the close, ULTA and VEEV both reported beats on the revenue and earnings lines. However, MRVL reported misses on both the top and bottom lines. It is worth noting that ULTA raised its forward guidance while MRVL and VEEV both lowered their forward guidance.
Overnight, Asian markets are red across the board to end the week. South Korea (-1.84%), Japan (-1.59%), and Singapore (-1.02%) led the region lower. Meanwhile, in Europe, the bourses are mixed but lean to the red side at midday. The FTSE (-0.25%), DAX (+0.28%), and CAC (-0.20%) are typical with a couple of the smaller exchanges making larger moves in early afternoon trade. Finland (+1.17%) and Norway (-1.08%) are examples there. However, as of 7:30 am, US Futures are pointing toward a very modest redstart to the day. The DIA implies a -0.14% open, the SPY is implying a -0.13% open, and the QQQ implies a -0.22% open at this hour. 10-year bond yields are flat at 3.512% and Oil (WTI) is up again by 0.71% to $81.80/barrel in early trading.
So far this morning, GCO reported beats on both the revenue and earnings lines. However, it also lowered the forward guidance. (CBRL is scheduled to report at 8 am.)
The major economic news events scheduled for Friday include November Avg. Hourly Earnings, Nov. Nonfarm Payrolls, Nov. Unemployment Rate, and Nov. Participation Rate (all at 8:30 am). The major earnings reports scheduled for the day include CRBL and GCO before the open. There are no reports scheduled for after the close.
As we wait on the November Payrolls data, the consensus forecast is calling for a 200k increase in November as well as for the Unemployment rate to hold steady at 3.7%. If that holds true, it would indicate a reduction in job growth (down from +261k in October). However, the question would then be “Is that enough for the Fed, or do they need to see a negative number before taking their foot off the rate-hike accelerator?” The market reaction will tell us what the average trader thinks the answer to that question will be, but we won’t know for sure for another two weeks.
With that background, it looks like premarkets are just treading water until the data dump at 8:30 am. Beyond this, the SPY and QQQ remain at/near a resistance level from prior highs and lows as well as their longer-term downtrend lines. Also, note that we remain extended both in terms of the T-line (8ema) and T2122. So, keep Warren Buffett’s first rule of making big money in the market “Don’t lose big money in the market.” In other words, caution is the better part of valor…be careful.
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
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
Though yesterday’s economic data was primarily bearish, Powell’s statement of slower rate increases triggered a powerful short squeeze ripped through recent price resistance levels. The emotional move was remarkable, considering rate increases will continue to a restrictive level according to the chairman’s comments. So, the question for today is, can the bull hold or even follow through to the upside with another busy morning of market-moving economic data? Expect more wild price gyrations as this very emotional market reacts.
While we slept, Asian markets rallied in response to the Fed’s smaller rate hikes. Likewise, European markets are trading with bullish energy across the board as the Powell comments reverberate worldwide. However, U.S. futures point to a slightly lower open, possibly suffering from a little hangover after parting hard yesterday afternoon with another big round of economic data just ahead.
The 27 countries of the European Union agreed in June to ban the purchase of crude oil from Dec. 5. They have been working on the details ever since. The EU discussed a $62 barrel limit this week, but Poland, Estonia, and Lithuania refused, arguing it was too high. India and China are crucial to the success of the ban. But India’s Petroleum Minister Shri Hardeep S Puri told CNBC in September: “We will buy oil from Russia, we will buy from wherever.”
A year after being promoted to the co-CEO role alongside Marc Benioff, Bret Taylor is leaving Salesforce. It’s the second time in less than three years that Benioff has lost a co-CEO. Keith Block held the position for 18 months before leaving in 2020.
Former FTX CEO Sam Bankman-Fried said he’d had a “bad month” but denied committing fraud at his crypto exchange. Bankman-Fried spoke at the Dealbook Summit weeks after FTX filed for bankruptcy protection amid a cryptocurrency meltdown. He also started Alameda Research, a crypto hedge fund that allegedly commingled FTX customer funds with trading funds. Yet, the former FTX CEO claims he committed no fraud.
Jerome Powel triggered a powerful short squeeze Wednesday, stating a slower pace of rate increases is possible beginning in December, with increases continuing to a restrictive level. The emotional reaction to was nothing short of remarkable as the indexes sliced right through resistance levels, and the SPY popped its 200-day average for the first time since last April. Interestingly, most of the economic data delivered yesterday were bearish, indicating that the economy is slowing down. So, now the big question is can it hold or follow through? This morning we face Jobless Claims, a Core PCE reading, PMI MFG., ISM MFG. numbers meaning a volatile morning of price action is likely.
Markets opened flat and then roller-coastered their way sideways (slightly bearish in the large-cap indices and slightly bullish in the QQQ). This lasted all the way to 1:30 pm. However, then Fed Chair Powell strolled to the mic and confirmed that we may get a smaller rate hike later this month. That was all the bulls needed to hear and the market took off like a rocket the rest of the day, closing very near the highs on all three major indices. This action gave us Morning Star signals in the SPY, DIA, and what could be seen as one in the QQQ if you squint and relax your Doji standards. All 3 also crossed above their T-lines as well as breaking out of their recent pullbacks.
On the day, all ten sectors were in the green. The Energy sector (+1.03%) lagged and the Technology sector (+4.85%) led the market higher. Meanwhile, the SPY was up 3.06%, the DIA was up 2.27%, and the QQQ was up a whopping 4.54%. The VXX fell by 3.68% to 14.92 and T2122 shot up into the overbought territory again at 92.43. 10-year bond yields fell to 3.633% and Oil (WTI) is up 2.98% to $80.54 per barrel. So, Wednesday was a wait-and-see day until Powell spoke and then a moonshot after he started talking.
In economic news, ADP Nonfarm Payrolls increased 127k jobs, which was far below the +200k forecasted and even further below the October value or +239k. However, Q3 GDP came in above expectation at +2.9% (compared to the forecast of +2.7%) and at the same time Q3 GDP Price Index came in above expectation at +4.3% (compared to the forecasted +4.1%). At the same time, Oct. Goods Trade Balance came in well below the expected value at -99 billion (compared to -90.20 forecasted and -92.22 billion in September). Meanwhile, Oct. Retail Inventories were higher better than was expected at -0.4% (versus the -0.2% forecasted, but worse than the Sept. drawdown of -0.9%). Later, the Chicago PMI came in far below expectation at 37.2 (compared to 47.0 forecasted and 45.2 in October). October JOLTs were slightly above average at 10.334 million (versus 10.300 million forecasted but better than the previous periods 10.687 million). In addition, October Pending Home Sales fell 4.6% which was better than the forecasted -5.0% and much better than the September value of -8.7%. Still, the most unexpected number of the day was a huge drawdown in EIA Weekly Crude Oil Inventories of 12.580 million barrels (compared to an expected drawdown of 2.758 million barrels).
In stock news, JNJ sued AMGN for infringing two of JNJ’s patents related to JNJ’s Stelara (which accounts for $9.1 billion in annual sales for JNJ). Elsewhere, GM announced that its robotaxi division (Cruise) will have thousands of vehicles in service in 2023. This includes service in San Francisco CA, Phoenix AZ, and Austin TX as well as “a large number of other markets.” Meanwhile, the CEO of BHP told a Reuters conference that he expects the Chinese economy to grow in 2023 and for at least the next 20 years. (China accounts for 50% of the world’s demand for raw materials.) In other news, LH and CRL stocks both fell Wednesday after the US Dept. of Justice indicted their primary supplier of natural health products (in Cambodia) and both said an alternative supplier will be difficult to find. In acquisition news, Reuters reported that GE, LHX, and TXT are all competing to acquire AJRD (after a previous acquisition by LMT was killed by regulators last February). At the same time, CTVA announced it has acquired unlisted Stoller for $1.2 billion in cash.
In miscellaneous news, as mentioned above, the main story of the day was that Fed Chair Powell confirmed that smaller rate hikes are ahead and could start as soon as this month. However, he also said it will be quite some time before inflation starts to come under control and policy could begin to become less restrictive. In addition, in what might have been a “clap back” to Elon Musk (who earlier had said the Fed must cut rates immediately to avoid a severe recession), Powell also said “the Fed won’t crash the economy with interest rate hikes.” Later, in a separate speech, Fed Governor Cook echoed those same thoughts.
In supply chain news, in a bipartisan vote, the US House of Representatives voted 290-137 to block a rail strike and mandate that the railroads must provide paid sick time for rail workers (which was the main sticking point in negotiations). The measure must still pass the Senate and be signed, but President Biden supports this legislation. The first date a strike could happen would be December 9. Railroads impacted include UNP, CSX, NSC, KSU, and BRKA’s rail unit BNSF.
After the close, CRM, PVH, SNPS, SPLK, FIVE, LZB, PSTG, OKTA, and SNOW all reported beats on both the revenue and earnings lines. However, VSCO missed on revenue while beating on earnings. It is worth noting that CRM, SNPS, PSTG, OKTA, and SNOW all raised their forward guidance. At the same time, PVH and LZB both lowered their own guidance.
Overnight, Asian markets green across the board, taking their lead from the US but in a more muted move. Shenzhen (+1.40%), Australia (+0.96%), and Japan (+0.92%) led the region higher. Meanwhile, in Europe, we see a similar picture taking shape at midday. The FTSE (+0.08%), DAX (+0.75%), and CAC (+0.18%) lead by volume as many of the smaller exchanges are up more than one percent in early afternoon trade. As of 7:30 am, US Futures are pointing toward a start to the day just on the red side of flat. The DIA implies a -0.16% open, the SPY is implying a -0.06% open, and the QQQ implies a -0.13% open at this hour. 10-year bond yields are falling again to 3.589% and Oil (WTI) is up another 1.3% to $81.60/barrel in early trading.
So far this morning, KR, TD, and GIII reported beats on both the top and bottom lines. Meanwhile, DG, BMO, and CM beat on revenue while missing on earnings. On the other side, PDCO missed on revenue while beating on earnings. However, BIG and DBI both missed on the top and bottom lines. It is worth noting that KR raised its forward guidance in its report.
The major economic news events scheduled for Thursday include Oct. PCE Price Index, Oct. Personal Spending, and Weekly Initial Jobless Claims (all at 8:30 am), Nov. Mfg. PMI (9:45 am), Nov. ISM Mfg. PMI (10 am), and a Fed speaker (Bowman at 9:30 am). The major earnings reports scheduled for the day include BMO, BIG, CM, DBI, DG, KR, PDCO, and TD before the open. Then, after the close, MRVL, ULTA, and VEEV report.
In late-breaking news, China gave a hopeful signal to its own people and the rest of the global economy. The top Chinese Health Official said that its fight with covid-19 is entering a “new phase” as the Omicron variant becomes less deadly and vaccinations reaching more people. (Side note, the Chinese vaccines are ineffective against omicron, but whatever.) As a result “some infected people” in the most populated districts will be allowed to self-quarantine at home and “other easing” measures will follow. This would seem to be an attempt to placate the masses who publicly protested the “Zero Covid” policy and began calling for the end of President Xi. Regardless, if this does lead to easing, that will help bolster the Chinese GDP, global supply chains, and the global economic outlook (not to mention the profits of all the companies that sell into and are supplied from China).
With that background, it looks like markets want a breather after the frantic rally yesterday afternoon. This is a very normal thing and healthy for a rally. We also have more economic data coming this morning, including Jobless Claims, Personal Spending, and the PMIs. At this point, the DIA has taken out its near resistance and has room to run. However, the SPY and QQQ still have to deal with resistance levels from prior highs and lows as well as the long-term downtrend. So, be careful. A lot of buyer were “used up” in the rally and chase yesterday (which showed well above average volume for the first time in a long time) and it takes more than one day to get the broader public pouring back into the market. Also, note that we are extended both in terms of the T-line (8ema) and T2122. Just beware of buying into a pullback.
As always, be deliberate and disciplined…but don’t be stubborn. Remember it’s 100 times more important to avoid big mistakes than it is to pick big winners. 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
Swing Trade Ideas for your consideration and watchlist: RIG, HD, NFLX, PANW, and NKE. 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
