Analysts and talking head pontificators suggest a wide range of possibilities when the CPI number releases at 8:30 AM eastern. Some say prepare for a powerful rally, while others suggest new market lows are on the way. Still, others say the numbers will be confusing with contradictory results from the monthly to core numbers. So, although the entire world is waiting and watching, the only thing that matters is how the market reacts to the data! Plan for the price action to be initially volatile and dangerous except for the most experienced day traders. After that, anything is possible but keep in mind the bigger picture of a slowing global economy and an aggressive FOMC rate increase just around the corner.
While we slept, the Asian market rose slightly with cautious hope waiting on the U.S. economic numbers. European markets see modest gains across the board as they watch the U.S. inflation data report. But, with bold anticipation, U.S. futures point to a substantial gap up open ahead of the CPI report. However, anything is possible as the world reacts to the data. So, expect some wild and challenging price action that could include some big point whipsaws as investors digest the numbers.
Economic Calendar
Earnings Calendar
Tuesday is another very light day on the earnings calendar with just 12 confirmed reports, most of which are tiny small caps companies. So, the only marginally notable report will be from CNM today.
News and Technicals’
Peloton announced Monday that co-founder John Foley is resigning as executive chairman. Chief Legal Officer Hisao Kushi, another co-founder, is also departing. Uber veteran Tammy Albarrán will replace him. The changes come as CEO Barry McCarthy orchestrates a massive transformation plan for the fitness company. Nintendo said sales of Splatoon 3 in Japan surpassed 3.45 million units in the first three days since its Sept. 9 launch, marking a new record. Nintendo shares rose 5% on Tuesday after the announcement. Later Tuesday, the company will also hold its Nintendo Direct event, where it will reveal details of future games, which will help keep up the momentum for its aging Switch console. Oracle came up short on profit, but its revenue met expectations. The company closed its $28 billion acquisition of health data software maker Cerner in the quarter. According to a statement, revenue growth in the quarter ended Aug. 31 accelerated from the 5% it posted in the prior quarter.
Credit Suisse expects the Federal Reserve to pause interest rate hikes sooner than widely expected due to tumbling inflation. As a result, according to the firm’s chief U.S. equity strategist, it will launch a powerful market breakout. The August consumer price index will be released Tuesday at 8:30 AM. ET, and it is expected to show inflation is moderating. The report could be confusing because economists surveyed by Dow Jones expect headline CPI to decline by 0.1%, but it is expected to rise by 0.3%, excluding energy and fuel. The report is seen as key guidance for next week’s Federal Reserve rate decision. Still, economists say it is also critical for the longer-term view on interest rates since it could show whether some causes of inflation are receding. Treasury yields moved very little early Tuesday, with the 12-month at 3.60%, the 2-year at 3.52%, the 5-year at 3.40%, the 10-year at 3.32%, and the 30-year at 3.48%.
According to the vast amount of pontificators, the CPI number could plunge the market to new depths or send us into the stratosphere with a powerful rally! But, no matter the number, the most important thing is how the market reacts. One thing we can most likely count on is the reaction will likely create significant volatility rewarding some and punishing others at the open, which could be anything! But, despite how the market reacts, it’s unlikely to deter the Fed from raising rates aggressively in the coming FOMC meeting but may affect future decisions. In addition, the weakening global conditions and geopolitical issues will continue to be stumbling blocks we will have to deal with moving forward. So, fasten your seatbelt, plan carefully and get ready for the fireworks to begin.
Markets gapped up through the downtrend lines in all 3 major indices. After that we saw some follow-through for an hour in the SPY, DIA, and QQQ for an hour. Prices then drifted back lower until shortly after noon, reaching the opening levels again. From that point on, price meandered between the open and the highs. This action left us with gap-up white candles with upper wicks (especially in the DIA).
On the day, all 10 sectors are green with Consumer Cyclical (+1.61%) and Energy (+1.54%) leading the way higher. The SPY gained 1.07%, the DIA gained 0.71%, and the QQQ gained 1.19%. The VXX is off 1.73% to 18.15 and T2122 is up well into the overbought territory at 91.92. (The 3 major indices are also a tad extended above their respective T-lines.) 10-year bond yields have spiked back up to 3.356% (after being down in the 3.27% range early in the day) and Oil (WTI) is up 1.2% to $87.94/barrel. Overall, the bulls were in a good mood from the Ukraine news and their growing expectation that CPI will come in better than forecast tomorrow morning.
In business news, Monday afternoon, GS announced it will be cutting several hundred positions later this month. Then, after the close, PTON announced a major shakeup. Two of the PTON Co-founders (including the CEO and Chairman) as well as the Chief Commercial Officer are leaving. Elsewhere, after the close, TWTR shareholders voted to approve the sale to Elon Musk, despite his desire to back out of the deal). BAC was also fined $5 million by FINRA for failing to disclose 7.42 million options positions between 2009 and 2020. In addition, the SEC charged VMW with misleading investors starting in 2019. In addition, an industry group that represents US Defense Contractors (LM, BA, RTX, GD, NOC, HON, LHX, TXT, CAE, HII, etc.), issued a report to Congress saying the Pentagon will need an additional $42 billion in the next fiscal year budget to make up for inflation. Finally, SBUX will be holding an investor day today at 10:30 eastern. Their new CEO is expected to address guidance, unionization of their workforce (one store at a time), and his vision for the company.
In Economic news, the EU announced that member countries can use $227.5 billion in unused pandemic recovery funds for loans to offset the energy crisis brought on by Russia’s invasion of Ukraine. Meanwhile, in the US, the coal industry (BTU, ARCH, AMR, CEIX, etc.) is in panic mode ahead of what could be a potential Friday strike by rail workers. (Coal shipments would stop dead in the event of a rail strike.) Other industries that will be massively impacted include Lumber (BCC, UFPI, EVA, WFG, etc.), Metals and Minerals (FCX, VALE, AA, BHP, RIO, TECK, CCJ, etc.), and Steel (GGB, MT, RS, CMC, etc.). However, some industries have already shut down rail shipping (due to the nature of their products and the fear of shipments being stuck in rail cars during a strike). These include Fertilizers (MOS, NTR, CF, CTVA, FMC, SMG, etc.) and Chemicals (LIN, SHW, DOW, ALB, APD, LYB, ECL, DD, CE, etc.).
In a good sign for markets, a new survey by BAC finds that investors are fleeing the stock market searching for safety on recession fear. The survey found that 52% of investors are already underweight stocks with a record high 62% saying they are overweight cash. This matches up with Refinitiv-Lipper data that showed that last week saw the heaviest outflow of funds from equity funds seen in a quarter. Since most money piles in and out when it is too late, this could indicate the markets are past the worst of the pullback.
After the close, ORCL posted a miss on both the revenue and earnings lines. The company blamed foreign currency sales (versus the strong dollar) for the EPS miss. So far this morning, CNM slightly missed on revenue while beating on earnings. CNM also raised their forward guidance.
Overnight, Asian markets were mixed but leaned to the green side. South Korea (+2.74%) was an outlier to the upside. However, India (+0.75%), Australia (+0.65%), and Taiwan (+0.59%) led the region higher in modest trading. In Europe, stocks are nearly green across the board at mid-day, also on modest moves. Only Portugal (-0.48%) is preventing the clean sweep. The FTSE (+0.35%), DAX (+0.71%), and CAC (+0.68%) are typical and are leading the region higher in early afternoon trade. As of 7:30 am, US Futures are pointing toward another green start to the day (though still well ahead of the morning data). The DIA implies a +0.67% open, the SPY is implying a +0.71% open, and the QQQ implies a +0.70% open at this hour. 10-year bond yields are down significantly to 3.316% and Oil (WTI) is up more than 1.5% to $89.18/barrel in early trading.
The major economic news events scheduled for Tuesday we get August CPI (the last major inflation data point prior to the Fed 9/20 meeting, at 8:30 am) and the August Federal Budget Balance (2 pm). The only major earnings report scheduled for the day is CNM before the open.
In economic news later this week, on Wednesday, August PPI and EIA Weekly Oil Inventories are reported. Then Thursday, we get August Import/Exports, Weekly Jobless Claims, NY Empire State Mfg. Index, Philly Fed Mfg. Index, August Retail Sales, August Industrial Production, July Business Inventories, and July Retail Inventories. Finally, on Friday, we get Michigan Consumer Sentiment. Friday is also Quadruple Witching
In terms of earnings later this week, on Wednesday, DOOO reports. Then Thursday ADBE reports. Finally, on Friday, there are no earnings reports scheduled.
The bulls continue their run this morning, as they have the momentum and (again ahead of the CPI data) are looking to gap us higher at the open. The schadenfreude of the Russian losses (men, material, and most importantly land) in Ukraine is also still a mood-lifting factor for traders as well. However, it is worth noting the resistance of the late August lows that will have to be dealt with after the opening bell. This CPI report may well be a large binary event, as some traders seem to have convinced themselves that a lower than forecast number will cause the Fed to hike only 0.50% instead of the 0.75% most expect. Make sure you are trading the reaction, not predicting the news. Either way, we know that zigs don’t last forever. So, there is a zag coming sometime in the not-too-distant future.
With that backdrop, we should note that all 3 major indices have broken their downtrends, but have yet to establish new uptrends (higher swing highs and higher swing lows). This is exactly the type of market that can become very choppy and volatile. So, while the bulls have control in the premarket, be prepared for a “gap and fail” or at least intraday reversals as the bulls and bears fight it out.
Remember that trading is our job, not a pastime or 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: RIG, DVN, SQ, AMZN, NFLX, META, AAPL. 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
After such a long stretch of selling, the current relief rally is a welcome sight, but with significant price resistance overhead, be careful getting caught up in the enthusiasm. Anything is possible with the T2122 indicator quickly reaching an overbought condition and a week full of market-moving economic data. Keep in mind the Fed has been clear about its intentions to raise rates, and the worsening economic conditions in China and Europe should not be ignored. Long story short, enjoy the rally but try not to drink too much of the Kool-aid!
Overnight Asian markets rallied, with the tech-heavy HSI leading the bullishness up 2.69%. European markets trade green across the board this morning with a cautious eye on U.S inflation data. U.S. futures look to extend the relief rally indicating a gap up open as we wait for the CPI number Tuesday morning. With so much data coming out way, expect price volatility and watch for clues of bear activity as we near price resistance levels.
Economic Calendar
Earnings Calendar
We have a light day of earnings to kick off the new trading week with just 14 confirmed reports, most of which are very small-cap companies. So, the only notable report for today is ORCL reporting after the bell.
News & Technicals’
JPMorgan Chase has agreed to acquire a payments startup called Renovite to fend off threats from fintech firms, including Stripe and Block, CNBC has learned. While JPMorgan is often content to partner with fintechs and takes relatively small stakes in them, the bank felt that Renovite’s product was too important not to own outright, according to a JPMorgan executive. The acquisition, reported first by CNBC, is the latest in a string of recent fintech deals made under CEO Jamie Dimon. The bank has acquired at least five fintech startups since late 2020. Spending by big retailers, including Walmart and Target, is way up this year, despite big earnings declines. As a result, technology spending is a top priority, while other costs are more likely to be cut. In addition, store refreshes are a focus for some brands as new investments reflect changes in how customers shop. With expectations for sluggish consumer income to rebound in 2023, future market share is on the line. The Biden administration plans next month to broaden curbs on U.S shipments to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said. The Commerce Department intends to publish new regulations based on restrictions communicated in letters earlier this year to three U.S. companies — KLA, Lam Research, and Applied Materials, the people said, speaking on the condition of anonymity. The letters, which the companies publicly acknowledged, forbade them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless the sellers obtain Commerce Department licenses. Treasury yields ticked slightly lower early Monday, with the 12-month at 3.61%, the 2-year at 3.54%, the 5-year at 3.42%, the 10-year at 3.330%, and 30-year at 3.45%.
Friday was a good day for the bulls gapping up and finding the energy to push higher to test price resistance and technical levels of the index charts. With significant overhead price resistance levels just above and a busy week of economic data that includes CPI, PPI, and Retail Sales numbers, expect considerable volatility. Although the Fed has entered its quiet period ahead of the FOMC meeting, committee members have been clear and consistent about their intentions to raise rates. As the T2122 indicator nears an overbought condition, be careful overtrading long positions and watch for clues of bear attacks. However, with so many clues of a worldwide economic weakening, it’s nice to have and enjoy the benefits of the current relief rally.
Markets gapped modestly higher (0.6% – 0.9%) at the open Friday. From there the bulls followed through with a rally the was stronger the first 30 minutes, but continued at a slow steady pace all day in all 3 major indices until profit-taking the last 15 minutes of the day. This took all 3 up through their T-lines (8ema) and are now at or close to a test of their downtrend lines. The SPY, DIA, and QQQ are all printed a strong, white-body candles. This resulted in the first weekly gain (and a strong one at that) in all 3 major indices.
On the day, all 10 sectors are in the green. However, Energy (+2.89%) and Basic Materials (+2.63%), Energy (+2.58%), and Technology (+2.53%) led the market higher. However, the safety play Utilities (+0.54%) lagged. The SPY was up 1.55%, DIA up 1.27%, and QQQ up 2.19%. The VXX was up 1.4% to 18.47 and T2122 is right at the edge of the overbought territory at 79.22. 10-year bond yields are back up to 3.315% and Oil (WTI) has surged 3% to $86.10/barrel. Overall, it was been a risk-on, “we ain’t afraid of no Fed hikes” day across the markets.
In business news, on Friday, the US International Trade Commission announced it will launch an investigation into SONO possibly violating the patents held by GOOGL. Then, on Sunday, JPM acquired its 6th “Fintech” firm (Renovite). JPM was already the world’s largest merchant services bank (card processor), but this acquisition is aimed at allowing it to expand even more quickly into global small-business markets as Renovite supposedly will easily to integrate into JPM existing systems. In more economically important news coming later this week, the largest US Trucking Industry Group urged Congress to prepare legislation to prevent a rail strike on September 16. It seems that after President Biden stepped in to prevent the same strike in August, negotiations between UNP, CSX, and the unions representing 115,000 rail workers are making little progress. Current legislation prohibits the workers from striking for 30 days (which expires 9/16). If a strike does take place, the trucking industry group claims it will cost the US $2 billion per day in GDP output. The rail companies and their users are currently scrambling to ensure buffer inventories of supplies in case the stroke hits on Friday.
In Russian invasion news, the Russian statistics Bureau (RossStat) revised the Russian Q2 GDP downward. The release said that the Russian economy shrank 4.1% (down from the prior -4.0%) in Q2. The World Bank also released a report saying that it will cost $350 billion to rebuild Ukraine after the Russian invasion (far above that country’s GDP of $200 billion in 2021). On the ground, the Ukrainian offensive has caused a full-scale retreat by the Russians around Kharkiv and specifically the cities of Kupiansk and Izium (the major Russian logistics hub in Eastern Ukraine). In addition to the cities, the Russians fled from about 40 towns and villages, leaving heavy weapons, ammunition, and other supplies as they ran. During this offensive, Ukraine liberated over 1,100 sq. miles and driven the Russians back to the Russian border in that Northeastern region the 5 days ended Sunday. (This Ukrainian success will likely impact energy markets as well as overall market sentiment, at least in Europe.)
In Energy news, on Sunday, Treasury Sec. Yellen told CNN that Americans could see a spike in gas prices again this coming Winter. Her reasoning is that by year-end, EU countries will have significantly cut or stopped buying oil from Russia. This will mean additional buyers for Middle Eastern and American oil, which will naturally drive prices higher. Meanwhile, the IAEA reports that the final reactor at the Zaporizhzhia nuclear plant (largest in Europe) has now been shut down. This eliminates the source of 20% of Ukrainian electricity, but also dramatically reduces the likelihood of an accident from continual Russian shelling in that area.
In technical analysis news, more than 46% of stocks are trading above their 40sma and almost 31% of stocks are trading above their 200sma at this point. In the SPY, 451 (of 502) tickers had green days on Friday while 470 (or 502) were green for the week. The biggest gainers on the week were REGN, SEDG, ALB, RCL, FCX, DISH, CZR, DXCM, SYK, MTCH, NCLH, UAL, PVH, CCL, TSLA, FTNT, LNC, HCA, NUE, EW, CTLT, and ENPH (all of this gained 10% or more for the week). In the QQQ, 90 of 99 tickers were green for the week. Of those, 11 (ZS, REGN, DOCU, MELI, DXCM, MTCH, TEAM, LULU, TSLA, CRWD, and FTNT) gained 10% or more for the week.
Overnight, Asian markets were green across the board. Hong Kong (+2.69%), Taiwan (+1.54%), and Japan (+1.16%) led the region higher as Chinese inflation data came in better than expected (+2.5% vs. +2.7% forecast). In Europe, stocks are also green across the board as traders are in a good mood on the Ukraine war news at mid-day. The FTSE (+1.27%), DAX (+1.49%), and CAC (+1.21%) are typical and leading the region higher in early afternoon trade. As of 7:30 am, US Futures are pointing toward a modestly green start to the week. The DIA implies a +0.25% open, the SPY is implying a +0.43% open, and the QQQ implies a +0.49% open at this hour. 10-year bond yields are down a bit to 3.296% and Oil (WTI) is up three-quarters of a percent to $87.39/barrel in early trading.
The major economic news events scheduled for Monday is limited to the WASDE global Agriculture Report (noon) and a 10-year Bond Auction (1 pm). There are no major earnings reports scheduled before the open. However, ORCL reports earnings after the close.
In economic news later this week, on Tuesday we get August CPI (last major inflation data point prior to the Fed 9/20 meeting) and August Federal Budget Balance. Then Wednesday, August PPI and EIA Weekly Oil Inventory are reported. Thursday, we get August Import/Exports, Weekly Jobless Claims, NY Empire State Mfg. Index, Philly Fed Mfg. Index, August Retail Sales, August Industrial Production, July Business Inventories, and July Retail Inventories. Finally, on Friday, we get Michigan Consumer Sentiment.
In terms of earnings, this is a very light week. Tuesday we hear from CNM. On Wednesday, DOOO reports. Then on Thursday ADBE reports. Finally, on Friday, there are no earnings reports scheduled.
We start the week with markets in a good mood. The Russian losses (men, material, and most importantly land) in Ukraine have investors more hopeful. There is also a growing expectation that inflation data Tuesday will show that inflation has started to come down. (This expectation is largely on the back of strong and steady drops in fuel prices, but other commodities have joined the trend to a lesser extent.) However, these things may be fleeting. Russia has massive resources available, should it continue to stubbornly stick to Putin’s goal of capturing all of Ukraine. More directly, regardless of whether the CPI (Tuesday) and PPI (Wednesday) show an improvement, not many traders are betting that this will change the Fed’s mind about a 0.75% rate hike next week. So, don’t believe the zig will last forever. There is a zag coming sometime in the not-too-distant future.
With that backdrop, we should note that all 3 major indices are retesting their downtrend lines in the premarket. The DIA seems to be having the least luck at a breakthrough at this point. However, the broader SPY and QQQ seem to be gapping through that line. Above that, we have a potential resistance level from the 8/22-8/24 lows that will soon come into play. So, while the bulls have control in the premarket, be prepared for a “gap and fail.” In addition, intraday reversal and some volatility have been common or late.
Remember that trading is our job, not a pastime or 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: ADT, CPNG, RIVN, SNAP, DISH, META, AAPL. 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, markets gapped modestly lower (a half of a percent in the large-cap indices and nine-tenths of a percent in the QQQ) on fears generated by fewer than expected new Jobless Claims and Fed Chair Powell’s premarket speech. However, the bulls stepped in immediately and rallied markets until 11 am. From there, the roller coaster was on with action oscillating back and forth between the opening lows and the 11 am highs. This roller-coaster ended on an up wave. This action tested the T-line (8ema) in all 3 major indices, but only the SPY managed to close above to pass the retest. All 3 indices printed white-bodied Spinning Top candles.
On the day, seven of the 10 sectors ended up in the green. The largest movers were Healthcare (+1.93%) and Financial Services (+1.38%). Communications Services (-0.76%) was the largest losing sector on the day. The SPY closed up 0.65%, the DIA up 0.60%, and the QQQ up 0.52%. The VXX is off 1.56% to 18.26 and T2122 remains in the mid-range at 38.60. 10-year bond yields came back up to 3.323% and Oil (WTI) is up 1% to $82.74/barrel. All-in-all, this was an indecisive day where the bears could not regain control, but the bulls also had no appetite for a fight.
In economic news, before the open, the ECB raised its rates 0.75% as expected. Meanwhile, in the US, Weekly Initial Jobless Claims came in lighter than expected (222k versus 240k forecast) and Fed Chair Powell vowed to continue raising rates until inflation is under control. He stressed that job growth is still very strong and therefore, inflation is job number one for the Fed. Later in the day, EIA Weekly Crude Oil Stock (Inventories) shot higher with an 8.844 million barrel build (compared to a 250k barrel drawdown expected). Elsewhere, Treasury Sec. Yellen was politicking Thursday, touting the economic positives, calling for higher taxes on the rich as well as an increase in public assistance for the poor. However, on economy-related questions, she said that the cap on Russian oil prices will be a net positive for the global economy as well as the US.
In big tech news, the White House announced 6 principles to guide “big tech reform” (which will be aimed at META, TWTR, AAPL, GOOGL, and AMZN). The effort has broad bipartisan support (although for varying reasons) in Congress. These principles were enhancing competition, robust privacy protections, rescinding company legal protections, increasing algorithm transparency, ending discriminatory algorithmic decision-making, and improving content moderation. As you would expect, the tech giants are expected to spend tens of millions of dollars in campaign contributions and lobbying efforts to water down, control, or kill these legislative efforts.
In other stock news, Supreme Court Justice Gorsuch denied the appeal of ET against a $155 million award for not paying interest on late payments to various Oklahoma well owners. Elsewhere, Reuters reported that TWTR agreed in June to pay whistleblower Zatko $7 million to settle a compensation dispute after TWTR terminated him. Zatko (who goes by “Mudge”) is in the news for his congressional whistleblowing report and for being subpoenaed by Elon Musk in the trial over Musk’s TWTR buyout deal. After the close, TMUS announced that it has authorized a $14 billion stock repurchase program to last through September of 2023. Finally, this morning TSLA announced it is “considering” building a lithium processing plant (to make battery materials) on the gulf in Texas. This announcement may have been a deflection as the company also replaced its leadership and set new facility goals at the TSLA Nevada “Gigafactory.”
In energy news, oil rose Thursday despite a large and unexpected rise in crude oil inventories after a 7.5-million-barrel outflow from the US Strategic Petroleum Reserve. US Gasoline inventories also rose 33k barrels (versus an expected drawdown of 1.67 million barrels.) The primary cause for Thursday’s oil price rise was Russian President Putin threatening to end exports to the West should there be real action on the G-7 proposed “Russian oil price cap.” Finally, a Wisconsin judge ruled that an ENB pipeline is trespassing on Indian tribal land (due to expired easements) and that the tribe is due financial compensation. However, he also ruled the pipeline will remain in operation to avoid economic impacts and in recognition of Canada invoking a treaty. The pipeline imports 540k barrels per day of Canadian oil for Wisconsin refineries.
Overnight, Asian markets were green across the board. Hong Kong (+2.63%) was an outlier, while Taiwan (+1.20%), Shenzhen (+1.11%), and Singapore (+0.91%) led the region higher. In Europe, stocks are following Asia at mid-day as we see green across the board. The FTSE (+1.54%), DAX (+1.48%), and CAC (+1.62%) are leading a broad-based rally in early afternoon trade. As of 7:30 am, US Futures are pointing toward a green start to the day in the US as well. The DIA implies a +0.78% open, the SPY is implying a +0.85% open, and the QQQ implies a +1.08% open at this hour. 10-year bond yields are back down to 3.268% and Oil (WTI) is up almost 2% to $85.19/barrel in early trading.
There are no major economic news events scheduled for Friday. However, we do have 3 more Fed members scheduled to speak (Evans at 10 am, Waller at noon, and George at noon). Major earnings reports scheduled for the day are limited to ABM, KR, and WDH before the open. There are no major earnings reports after the close.
After the close, DOCU and RH reported beats on both the top and bottom lines. DOCU was up a whopping 18% in after-hours trading. However, RH, while it did have a 10% after-hours range was flat as to 5 pm. So far this morning, ABM has reported beats on both the top and bottom lines while leaving guidance as previously stated.
As we start the day, the dollar has retreated after reaching an all-time record high. The ECB rate hike has given the Euro the fuel it needed to climb back just above parity and the Yen rallied on frustration over how weak it has become recently. In CA, EIX warned residents that is likely to need to cut power to 50,000 residents, not over power shortages but due to the risk of starting wildfires. However, this is not to say the temperatures have not caused power supply issues as the state grid operator is in its fourth straight day of grid emergency status. In Ukraine, the fighting is heating up as the Ukrainian army has recaptured over 400 square miles of territory due to new offensives in both the East (Izium area) and South (Kherson region). In a related story, EU states (and other G-7 members) are continuing to work on Russian oil price caps, despite Putin’s escalating threats. And, of course, all eyes seem to be focused on the British royals after the Queen passed away Thursday afternoon.
With that backdrop, we should note the market is still in a downtrend and that downtrend line has not yet been reached for a test of resistance by any of the 3 major indices. Yesterday’s candle turned more positive late after being pretty indecisive most of the day. And, again, we saw a reversal after the opening gap. So, be prepared for volatility, at least early in the day. The T-line (8ema) remains a key level for all 3 indices today as the bulls test their strength and the same will be true of the downtrend when we reach those levels. So, keep an eye on those tests as well.
Remember that today is Friday and its time to pay yourself if you have profits. It’s also time to prepare for the weekend news cycle with appropriate position resizing, hedging, and/or flattening. Bear in mind that trading is our job, not a pastime or 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 new 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
Although they had a slow start, the bulls finally returned to work, raising hopes for a relief rally and defending index price supports. Unfortunately, we still have some questions due to the light volume if the bulls have the commitment to follow through with the technical resistance of the 50-day average above and significant price resistance. Moreover, with light day earnings, an ECB rate decision, Powell comments, and energy reports, it could be difficult for the market to find much bullish inspiration. Therefore, expect price action to remain challenging and markets to be sensitive to the news cycle.
While we slept, Asian markets traded mixed though the Nikkei surged 2.31% in reaction to the Wall Street bounce. With an ECB rate decision just around the corner, European market trade mixed but essentially flat as they wait on the decision. U.S. futures at the time of writing this report had recovered from overnight losses suggesting a flat to modestly bullish open as we wait to hear from Jerome Powell and react to the ECB decision. Continued relief or disappointment is at stake for the market sentiment!
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have more than 30 companies listed, with less than 20 confirmed. Notable reports include AOUT, BILI, DOCU, FCEL, LOVE, FIZZ, RH, SWBI, ZS, & ZUMZ.
News & Technicals’
Europe was already facing a difficult and unpredictable winter regarding its energy supplies as it looked to phase out all Russian imports. But Russian President Vladimir Putin on Wednesday threatened to stop all energy supplies to Europe completely. The comments could mean that European nations must introduce energy rationing in winter. Last week, Nvidia disclosed that the U.S. would require the chipmaker to get a license for future export to China for specific products to reduce the risk the Chinese military uses them. “We believe this will not have an impact on our business operations,” William Li, founder, chairman, and CEO of Nio, said via the company’s translator during an earnings call Wednesday. That’s according to a StreetAccount transcript. The Nvidia Drive Orin chip has become a core part of assisted driving tech for Nio and other electric car companies in China. The pandemic fundamentally changed how audiences consume media, leading to smaller foot traffic at movie theaters, says former Disney CEO Bob Iger. “I don’t think movies ever return, in terms of moviegoing, to the level that they were at pre-pandemic,” the veteran media executive said during a panel at Vox Media’s Code Conference in Beverly Hills, California, Wednesday. He noted that consumers became more comfortable with streaming services while in lockdown and grew to enjoy the content on these platforms and the flexibility of being able to choose what to watch and when.
India’s Prime Minister Narendra Modi said Wednesday that he is keen to boost ties with Russia, even as the country has become an international pariah following its invasion of Ukraine. Modi spoke of a “special partnership” between the two countries and expressed particular interest in bolstering their cooperation on energy and coking coal. Speaking in an online address to the Eastern Economic Forum in Vladivostok, Russia, Modi also called for “diplomacy and dialogue” to end the Ukraine war. Fed Vice Chair Lael Brainard vowed Wednesday to press the fight against inflation that hurts lower-income Americans the most. However, Brainard said the Fed needs to remain vigilant without committing to a specific course of action. Bond yields held steady in early Thursday trading.
Though it took time in the morning session to get organized, the bulls finally returned work defending price supports, raising hopes of a relief rally. However, while the rally was immensely encouraging, the volume was suspiciously light, raising questions about their commitment to follow through. One bullish day does not make a trend, and let us not forget we still have to deal with overhead price resistance and the technical resistance of the 50-day average to get through. Furthermore, this morning the ECB is expected to raise rates by 75 basis points to combat inflation, and they’re rapidly weakening Euro against the dollar. Finally, we will get comments from Jerome Powell and get both natural gas and petroleum reports with a light day of earnings inspiration. Fingers crossed, the bulls find the energy to follow through but be prepared because the bears are unlikely to give up easily.
Markets opened flat on Wednesday but then the bulls took over and put in a slow, steady, all-day rally. However, there was very modest profit-taking in the last 10 minutes of the day. This action left us with large white candles with small upper wicks in all 3 major indices. DIA and SPY both managed to print Bullish Engulfing signals but none of the 3 major indices managed to touch (or climb up through) its T-line (8 ema).
On the day, 9 of the 10 sectors were green with Energy (-1.13%) being the laggard. Meanwhile, Utilities and Consumer Cyclical (both up 2.67%) led the gaining sectors. SPY gained 1.79%, DIA gained 1.32%, and QQQ gained 2.01%. The VXX fell 3.64% to 18.55 and T2122 climbed out of the oversold territory to 39.00. 10-year bond yields fell to 3.277% and Oil (WTI) dropped a whopping 5.79% to $81.87/barrel. (The oil decline was mostly based on fears of a dramatic demand decline in the face of skyrocketing European energy prices as well as rate hikes in Europe and the US.)
In economic news, Imports/Exports fell slightly in July ($330 billion and $259 billion vs. June’s $340 and $261 billion). However, the July Trade Deficit also dropped by just over $10 billion (from $81 billion to $71 billion). Next door in Canada, the Central Bank raised rates three-quarters of a percent to 3.25% as expected. After the close, the API Weekly Crude Oil Inventories showed a 3.645-million-barrel increase for the week which was a surprise since a 0.733-million-barrel drawdown was the consensus. Also after the close, the Fed announced it is reviewing Bank Capital Requirements which might impose tighter controls on large regional banks, depending on the outcome of its review of the “economic climate for lenders.”
In stock news, AAPL held its annual product announcement. The company outlined a new line of iPhone 14s with 4 models ranging between $800 and $1,100 dollars. These will include satellite-based SOS capability using GSAT satellites. AAPL stock gained 0.93% on the day on this early afternoon news. GSAT traded in a massive range (85%) but closed down just 1.44% on the day.
After the close, CPRT reported beats on both the revenue and earnings lines. At the same time, PLAY and CASY beat on revenue while missing on earnings. On the other side, GME missed on revenue while beating on earnings. However, AEO missed on both the top and bottom lines. So far this morning, BILI has reported a beat on revenue while missing on earnings.
In miscellaneous news, the US Dollar continues its rally, reaching another 24-year high versus the Yen and a 37-year high against the British Pound yesterday. However, the Euro gained against the Dollar and is back very slightly above parity. Elsewhere, a pair of papers were published at an economic forum yesterday claiming that the Fed’s fight against inflation will need to cause more harm to the economy (will be more restrictive) than the market currently appreciates. In the US West, the CA power grid managed to get through the eighth day of record heat without blackouts. However, that continues to be a close run race. Finally, the ECB will announce its decision on interest rates (+0.75% expected) at 8:15 am with a presser to follow at 8:45 am.
Overnight, Asian markets were mostly green with the notable exception of mainland China. Japan (+2.31%), Australia (+1.77%), and Taiwan (+1.20%) led the region higher while Hong Kong (-1.00%), Shenzhen (-0.86%), and Shanghai (-0.33%) were the only red in the region. In Europe, stocks are following Asia’s lead at mid-day. The FTSE (+0.20%), DAX (-0.25%), and CAC (+0.27%) are typical of the continent in early afternoon trade. As of 7:30 am, US Futures are pointing toward a very modestly green start to the day. The DIA implies a +0.19% open, the SPY is implying a +0.17% open, and the QQQ implies a +0.16% open at this hour. 10-year bond yields are lower to 3.241% and Oil (WTI) is up fractionally to $81.22/barrel in early trading.
The major economic news events scheduled for Thursday are limited to Weekly Jobless Claims (8:30 am) and Weekly Oil Inventories (11 am). Fed Chair Powell also speaks at 9:10 am. The major earnings reports scheduled for the day include BILI before the open. Then after the close, DOCU and RH report.
In economic news later this week, on Friday, there are no major economic reports. However, in terms of earnings later this week, on Friday, we hear from ABM, KR, and WDH.
As we start the day, keep in mind that AAPL may get some pushback in sales (and therefore the stock market) as it is testing the price elasticity of its phones by raising prices in 14 markets around the world while also keeping prices the same for iPhone 14s in the US. In politics to watch (which could impact US companies later), the UK’s new PM Truss announced a stimulus package that puts a $2,880 cap on what households pay for energy for the next two years. This will save a typical British household $1,154 annually. The pinch this will put on energy companies was offset (sugar for their medicine) by also announcing the government is granting new oil and gas exploration leases in the North Sea.
With that backdrop, we should note the market is still in a downtrend and yesterday’s strong candle is only a white candle in a sea of black ones until we get confirmation of a reversal (which we do not have yet). So, do not assume a reversal has happened until you have confirmation. Also be aware that futures are likely to react to the ECB Rate news, US Weekly Jobless Claims, and Fed Chair Powell speaking all before the open. So, be prepared for some volatility, at least early in the day. The T-line (8ema) above will be a key level for all 3 indices today as the bulls test their strength. So, keep an eye on that as well.
Remember that trading is our job, not a pastime or 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, GPN, TGT, PYPL, KEYS, WMT, SQQQ, DXCM, SNAP, SDOW, GERN. 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
Although the bulls enthusiastically started the day with a relief rally in mind, the shrinking global PMI figures quickly took the wind out of their sails. As a result, the indexes remain in a short-term oversold condition with price support levels failing and the technical damage piling on insult to injury. Though we are overdue for some relief, we face a wave of Fed speakers today and an ECB rate decision tomorrow, followed by Jerome Powell. Will the bulls find inspiration there, or will the rate increase fears continue to fuel the bears? We will soon find out but expect the price action to remain challenging and volatile.
Asia markets traded mostly lower overnight as China’s trade data missed expectations. With an ECB rate decision in sight and growing fears of recession, European markets trade in the red across the board this morning. With little market-moving data from earnings, U.S. futures indicate a flat to slightly bullish open filled with Fed speak and the Beige Book later this afternoon. So, fasten your seatbelts tightly and stay focused because anything is possible.
Economic Calendar
Earnings Calendar
On the midweek earnings calendar, we have about 30 companies listed with less than 20 verified reports. Notable reports include ASO, AVAV, AEO, CASY, PLAY, GIII, GME, KFY, NIO, REVG, & VRNT.
News & Technicals’
Russian President Vladimir Putin slammed the West again on Wednesday, saying sanctions imposed on Russia for its invasion of Ukraine are a “danger” to the world. Putin said the current global geopolitical crisis had been precipitated by the U.S.’s “slipping dominance” in global politics and economics. He said the West had been reluctant to recognize “irreversible tectonic shifts” in international relations, particularly a pivot east. U.S. President Joe Biden has called Putin a “war criminal.” Google and Alphabet CEO Sundar Pichai gave more details about how he is thinking of making Google run “on fewer resources” as it faces a slew of challenges to its businesses. Pichai said he hopes to improve efficiency by 20%. He gave past examples of cutting down a team and merging two products into one. Bitcoin traded below $19,000 on Wednesday, hitting its lowest level since June following a global drop in stock markets and the U.S. dollar’s continued strength. The value of the entire cryptocurrency market also fell below $1 trillion as digital coins across the board saw a sell-off. Policy tightening by the Fed has strengthened the U.S. dollar, which has weighed on risk assets. Bitcoin has traded in correlation to stocks, so if equities fall, in general, so does cryptocurrency.
A recession is inevitable, says the CEO of Deutsche Bank, and Germany must cut its reliance on China. Sewing said Russia’s invasion of Ukraine had shone a spotlight on the dangers of becoming too dependent on individual countries and regions. “When it comes to dependencies, we also have to face the awkward question of how to deal with China,” he said. European economies are facing an energy crisis and soaring prices over the coming months. There have been concerns in some quarters that the increasing cost of charging an EV will disincentivize uptake among consumers. “The cost advantage for electric vehicles versus a gasoline car is fast diminishing here in Europe, and I’m wondering to what degree that will begin to impact EV sales,” Saxo Bank’s Peter Garnry tells CNBC. Treasury yields pull back slightly in early Wednesday trading, with the 12-month at 3.57%, the 2-year at 3.47%, the 5-year at 3.42%, the 10-year at 3.32%, and 30-year at 3.48%.
The bulls tested the waters for a relief rally only to run into the shrinking global PMI report and quickly lost the edge to the bears. Unfortunately, the price action and technical damage continue to grow as supports give way to additional selling as the short-term oversold condition extends. Perhaps traders extending their holiday played a part, but the slowing global economy and fears of rate increases have taken a toll on sentiment. Today we will get a reading on International Trade followed by a wave of Fed speakers. Keep in mind the ECB is expected to raise rates by 75 basis points tomorrow, and then we will hear from Jerome Powell. Plan your risk carefully!
Stocks gapped slightly higher (about 0.25%) at the open Monday. However, that was another bull trap as the bears immediately stepped in to sell off the 3 major indices for the first hour. The bulls did step back in to rally us back to the highs of the day shortly after 11 am. Still, that was the end of the bull’s strength as all 3 major indices oscillated lower the rest of the day, closing midway between the lows and the previous day’s close. This action left us with somewhat indecisive Black Spinning Top type candles across all the major indices.
On the day, all 10 sectors were in the red with Industrials (-0.01%) just barely below break-even and Energy (-1.35%) leading the market lower. The SPY lost 0.39%, DIA lost 0.50%, and QQQ lost 0.72%. This all happened on very slightly above-average volume. The VXX gained eight-tenths of a percent to 19.25 and T2122 fell even further into the oversold territory at 6.06. 10-year bond yields spiked higher to 3.342% and Oil (WTI) was just south of flat at $86.70/barrel.
In stock news, AIG announced that its upcoming IPO of its Corebridge Financial (CRBG) will be priced between $21 and $24 per share and they expect to raise $1.92 billion on the IPO. Elsewhere, NWL cut its forward guidance after hours, citing a deteriorating economic climate and inflationary pressure. Then after the close, Reuters reported that sources tell them that CVS’s weekend acquisition of SGFY is likely to face stiff antitrust regulator opposition from the FTC. Finally, in an attempt to steal AAPL’s thunder (AAPL holds its iPhone 14 launch event today), Tuesday afternoon GOOGL announced their new Pixel watch and Pixel 7 phones (running Android 13) will go on sale on October 6.
In miscellaneous news, the dollar continued to be strong and gained against the Euro and Yen after the July ISM Services PMI showed edged higher (56.9 vs. 56.7 in June and Economist forecasts of 54.7). The Yen reached another 24-year low of 142 Yen per dollar on that move. Elsewhere, after hours, Reuters reported that CEOs from banks (BAC. TFC, and MTB) all said consumers and businesses are still in good financial shape. Despite inflation and fear of recession, consumers spent 10% more in August than the same month in 2021. In addition, bank account balances are higher than even before the pandemic according to those bank CEOs.
In energy news, for the second consecutive day, California narrowly averted blackouts. Scorching temperatures above 100 pushed electrical demand to record levels again. At 5:30 pm Pacific, California’s grid operator ordered its highest level of emergency, warning that blackouts were imminent and the CA Office of Emergency Services then asked people to turn off electrical devices. Within 5 minutes electric demand dropped significantly and the crisis was avoided (at least for the moment). However, this was a tight-run affair and the CA electric demand is very near a crisis that could shut down (or at least slow down) the state’s business operations while electric supply is very tight (read: while the heatwave persists).
In real estate-related news, mortgage demand dropped again as the national average rate for a 30-year, fixed-rate, conforming loan rose from 5.80% to 5.94%. Refinance loan applications fell another 1% on the week (83% lower than the same week in 2021) and new home purchase loan applications also fell 1% (23% lower than last year). In other real estate news, the big banks (GS, MS, JPM, etc.) have now removed the final hurdles to full-time employees returning to the office. There are some exceptions as C is being more flexible in allowing workers to use a hybrid remote / in-office schedule.
So far this morning, NIO beat on revenue while missing on earnings. KFY and GIII both came in in-line on revenue while missing on earnings. Meanwhile, REVG came in in-line on revenue while beating on earnings.
Overnight, Asian markets were mixed but leaned to the red side. Taiwan (-1.82%), Australia (-1.42%), and South Korea (-1.39%) led the region lower as China’s trade data missed expectations amid “Zero Covid” shutdowns in various parts of that country. In Europe, we see even more red at mid-day. The FTSE (-0.59%), DAX (-0.39%), and CAC (-0.32%) are leading the region lower with only Spain (+0.55%) showing any significant green in early afternoon trade. As of 7:30 am, US Futures are pointing toward a flat start to the day. The DIA implies a +0.09% open, the SPY is implying a +0.12% open, and the QQQ implies a +0.13% open at this hour. 10-year bond yields are down a bit to 3.324% and Oil (WTI) is up a quarter of a percent in early trading.
The major economic news events scheduled for Wednesday are limited to July Import/Exports and July Trade Balance (8:30 am) and Fed Beige Book (2 pm). However, there are also 3 Fed speakers (Mester at 10 am, Brainard at 12:40 pm, and Vice Chair Barr at 2 pm). The major earnings reports scheduled for the day include ASO, GIII, KFY, NIO, and REVG before the open. Then after the close, AEO, CASY, CPRT, and GME report.
In economic news later this week, on Thursday, Weekly Jobless Claims and Weekly Oil Inventories are reported. Finally, on Friday, there are no major economic reports.
In terms of earnings later this week, on Thursday, we hear from BILI, DOCU, and RH report. Finally, on Friday, we hear from ABM, KR, and WDH.
In the watch and phone announcement noted above, GOOGL CEO Pichai said he hopes to improve the company’s efficiency by 20% and that could include a headcount reduction. This is just the latest example of companies fearing a recession or at least an economic slowdown. Elsewhere, be aware that analysts are now expecting the Central Bank of Canada to hike interest rates 0.75% at 10 am today. This may have a modest impact on US markets.
The downtrend remains in place, but the extension to the downside also remains extreme. The premarket indices continue to be flat but are just now on the red side of that break-even line. The SPY is sitting at a potential support level, but the DIA and QQQ support is much less discernable. Expect chop and be very careful about chasing any move as it is likely to be a precursor to reversal.
Remember that trading is our job, not a pastime or 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, Rick is on vacation visiting a gandbaby. 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 Friday early bullishness ended with a nasty pop and drop, extending the short-term substantial oversold condition of the index charts. However, a ray of relief rally hope may have been left behind with the ViX unable to make a new high and some possible tweezer bottom candle patterns. That said, I think we should keep a close eye on overhead price resistance levels for more bearish activity with global economic conditions slowing. Expect price action to remain challenging in the days and weeks ahead.
Asian markets traded mixed as we slept with the Australian Central Bank raising rates by 50 basis points. European markets trade in the green hoping for a bit of relief as they welcome a new U. K. Prime Minster. Finally, with a light day of earnings, PMI, and ISM numbers around the corner, U.S. futures point to a bullish open, hoping to relieve recent selling pressure. Plan your risk carefully and expect volatility to remain challenging.
Economic Calendar
Earnings Calendar
We have a light earnings calendar to begin this shortened trading week. Though there are about 20 companies listed, most are small, low-volume companies. Notables for today include COUP, GWRE & PATH.
News & Technicals’
CVS said it would acquire Signify Health for $30.50 per share in cash. The deal marks a big push by CVS into the in-home health care space. Signify announced its decision to explore strategic alternatives in early August. Analysts said that OPEC+’s decision to implement a small production output cut is more of a political statement and symbolic message sent by the alliance. On Monday, the group announced a small oil production cut of 100,000 barrels per day to bolster prices. Just last month, OPEC+ decided to raise oil output by the same target of 100,000 barrels per day. The analysts were also skeptical about the efficacy of price caps on Russian oil. As Liz Truss becomes Britain’s new prime minister on Tuesday, questions are being raised over her plans for the U.K.’s historic financial district: the City of London. A re-merging of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) could be on the cards, but one former insider asks if it’s change for change’s sake. The “battle” to deregulate the banking sector is like “winding the clock back to the pre-2008 global financial crash,” campaign group head Fran Boait said.
“I have said this a number of times this year and I’m educating policymakers. Look, the worst is still to come,” Uniper CEO Klaus-Dieter Maubach told CNBC on Tuesday at Gastech 2022 in Milan, Italy. On Friday, Russia’s state-owned energy giant Gazprom indefinitely halted gas flows to Europe via a major pipeline, stoking fears that parts of Europe could be forced to ration energy through winter. Uniper, as Germany’s biggest importer of gas, has been hit hard by vastly reduced gas flows via pipelines from Russia, which have sent prices soaring. Apple is gaining momentum in online advertising, while Facebook and Google appear to be losing steam. Apple’s ad platform for app developers mirrors the rise of Amazon’s ad business for retailers. TikTok overtook Snap at the bottom tier of online ad platforms. Bond yields traded higher Tuesday morning, with the 12-month at 3.46%, the 2-year at 3.45%, the 5-year at 3.35%, the 10-year at 3.24%, and the 30-year at 3.38%.
Friday’s pop and drop may not have been a big surprise, but it was disappointing all the same due to the short-term, substantial oversold condition on the index charts. However, there may be a bit of a silver lining with some tweaser bottom candle patterns left behind and a VIX unable to break recent highs. Perhaps this holiday-shortened week can produce some needed relief to the selling! However, please don’t mistake my hopefulness for some relief as bullishness. I think a rally could set up short positions as the world economic picture continues to slow ahead of the central bank rate increases. If traders extend their holiday plans, it is possible we could see a light volume day but continue to plan for price volatility in the days ahead.
