Wednesday was quite a ride.  Markets opened flat, sold off a little the first half-hour, and then bobbed along the lows until 2 pm.  However, the Fed announcement led to a sharp rally and pullback that left stocks flat going into Fed Chair Powell’s press conference.  It was at that point that the bulls ignited a tremendous rally for the last 1.5 hours of the day, going out very near the highs.  This left us with strong, white candles with small lower wicks.  In addition, all 3 major indices printed Morning Star patterns.  On the day, SPY gained 1.51% (closing within cents of a new all-time high close), DIA gained 1.02%, and QQQ gained 2.24%.  The VXX fell almost 7% to 20.40 and T2122 shot back up to the mid-range at 51.62.  10-year bond yields rose to 1.455% and Oil (WTI) closed up over 1% to $71.55/barrel.   

As mentioned, the market loved the data the Fed released and what the group and especially what Fed Chair Powell had to say.   For one thing, as expected, the Fed is doubling the speed of their bond-buying taper ($15 billion in Nov., $30 billion in Dec., and now $60 billion/month in Jan.).  In addition, they announced that they expect 3 interest rate hikes in 2022, followed by 2 more in 2024.  Lastly, the Fed reduced its 2022 GDP forecast to 5.5% (versus 5.9% as of September), which is still 2% above consensus economist forecasts.  On a side note, the Chief Economist of the Conference Board told Bloomberg that they are forecasting 3.5% but would add another half of a percent if the President’s “Build Back Better” budget and spending passes.

The Bank of England saw the Fed’s shift to focusing on inflation and said “hold my beer” as it announced an unexpected rate hike.  The move increased the UK interest rate from 0.1% to 0.25%.  The most shocking thing about the move was that it came the same day the country announced a new record number of covid cases as the omicron variant sweeps across the UK.  

In earnings news, ACN and JBL beat on both lines.  Meanwhile, WOR beat on earnings but came in light on revenue.  DAL also announced that it expects to post a pretax quarterly profit as both travel and airfares have increased. 

Overnight, Asian markets were mostly green with Japan (+2.13%) a massive upside outlier.  Thailand (+1.33%), Shanghai (+0.75%), and Taiwan (+0.71%) led the main pack higher.  Only Australia (-0.43%) and Indonesia (-0.47%) were in the red.  In Europe, we see strongly green markets across the region at mid-day.  The FTSE (+1.01%), DAX (+1.74%), and CAC (+1.55%) lead the way, but many of the smaller exchanges are up even further.  Russia (+3.20%) is an outlier.  As of 7:30 am, US Futures are pointing solid gap-up follow-through to the Wednesday Fed rally.  The DIA is implying a +0.64% open, the SPY implies a +0.74% open, and the QQQ is implying a +0.76% open at this hour.  10-year bond rates are flat and Oil (WTI) is up just a third of a percent in early trading.

The major economic news scheduled for release Thursday includes Nov. Building Permits, Nov. Housing Starts, Weekly Initial Jobless Claims, and Philly Fed Mfg. Index (all at 8:30 am), Nov. Industrial Production (9:15 am), and Mfg. PMI and Services PMI (both at 9:45 am).  The major earnings reports scheduled for the day are limited to ACN, JBL, ADBE, and WOR before the open.  Then after the close, SCS reports. 

The market loved the Fed’s announcement and the bulls charged higher yesterday afternoon. It looks like they are going to follow through this morning, but be aware there is a lot of economic data coming before the open. Being back near the all-time highs is great if you are in the Long camp, but markets have not digested the UK rate hike yet. So, be careful.

Stick to your trade rules and on managing the things you can control. Trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor. When you’re wrong, admit it and take your loss. (That’s why we set stops.) Trade carefully, and continue to think twice before holding through earnings…especially without a hedge in place.

Ed

Swing Trade Ideas for your consideration and watchlist: No trade ideas this morning. 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.

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

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