Market Begin Looking Ahead to Earnings

On Friday, markets gapped lower on the better-than-expected September Payroll data (which leads traders to conclude that what the Fed has been saying is true…and the Fed will not be easing up on rate hikes anytime soon).  SPY gapped down 1.1%, DIA gapped down 0.9%, and QQQ gapped down 1.75%.  After that, the Bears followed up with a strong selloff in the first 30 minutes before starting a much slower downtrend that has lasted all the way into a small bounce in the last 30 minutes of the day.  This action has given us gap-down, large black candles with small lower wicks that are starting to get just a little extended below the T-line (8ema).  The QQQ is even nearing the breakout of its bearish “Dreaded h” pattern.

On the day, all 10 sectors are in the red.  Technology (-4.13%) is leading the way lower while Energy (-0.62%) is the laggard in the decline.  At the same time, SPY was down 2.81%, DIA is down 2.08%, and QQQ is down 3.81%.  The VXX is up 4% to 20.91 and T2122 has dropped back into the oversold territory at 8.54. 10-year bond yields are up to 3.883% and Oil (WTI) has spiked 4.76% to $92.66/barrel after a strong Payrolls Report seemed to tell the market demand will remain high while production will go down (based on the upcoming OPEC+ production cuts).  So, it was a “good news is bad news” day that has all 3 major indices working on another dreaded-h pattern.

In economic news, September Nonfarm Payrolls came in above expectation (at +263k versus +250k forecasted and +315k in August).  However, September Avg. Hourly Earnings came in lower than expected at +5.0% versus +5.1% forecasted and +5.2% in August.  That may be partially responsible for the September Participation Rate falling slightly to 62.3% (from 62.4% in August).  With that said, the September Unemployment fell to 3.5% (from 3.7% forecasted and 3.7% in August).  So, both of the headline numbers fall into the category of “things that will not give the Fed reason to start easing their rate hikes.”

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In stock news, on Friday, BP announced that it has boosted spending by $500 million in the North Sea and US Shale Basin in response to oil and gas shortages. However, it does not expect any of those projects to increase production for months.  PEP also said it expects to receive the first of 100 TSLA semi tractors on Dec. 1.  (The trucks have been on order since 2017 and PEP will be the first company to receive the new TLSA Semi.)   NIO announced that it will only lease (not sell) its electric vehicles when they go to market in Europe later this year.  The average lease will be $1,200/month.  Elsewhere, the NHTSA announced it has closed a safety investigation (started in 2017) into tired from GT.  Finally, RIVN has recalled almost all of the vehicles they have built over safety concerns stemming from a bolt that appears not fully tightened during production (on nearly every car).

In warning news, an FDX internal memo reported by Reuters showed that the company is significantly lowering its holiday package volume forecast.  The memo did not give the new number but warned contractor delivery companies to expect a downward adjustment to forecasts soon as major shippers have told FDX executives they are adjusting their own forecasts lower.  On Saturday, SSGFF (Samsung) warned that its profits will take up to a 32% hit for the year due to a slowdown in memory chip sales, meaning its customers like INTC, AMD, NVDA, LNVGY, AAPL, HPE, and DELL must be buying less and their own forecasts could be in jeopardy.

In international news, on Saturday, Russia seized the Sakhalin-1 Oil and Gas Project, which leaves US, Japanese, and Indian investors at risk as the order puts a Russian Operator in charge and authority over whether foreign investors can retain their stakes given to the Russian government.  XOM has/had a 30% stake in the project, while Japan’s Sodeco had a 50% stake.  Elsewhere, also Saturday, Taiwan signaled that it will follow President Biden’s new export controls (issued Friday) which limit the export of semiconductor chips made anywhere in the world using US chipmaking equipment.  This will end exports from TSM (and much smaller UMC) to China.  In France, strikes at oil refineries and storage facilities owned by TOT and XOM have more than 21% of gas stations closed for lack of supply.  TOT announced it will begin wage negotiations with the union this month.  The French government said it has a plan to ration fuel, but the situation has not yet reached that point.

Overnight, Asian markets were red across the board.  Hong Kong (-2.95%), Shenzhen (-2.38%), and Shanghai (-1.66%) led the region lower.  In Europe, markets are mixed but lean to the red side in midday trading.  The FTSE (-0.31%), DAX (+0.64%), and CAC (-0.07%) lead the market, with Russia (-3.21%) being an outlier in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly red start to the day.  The DIA implies a flat -0.06% open, the SPY is implying a -0.15% open, and the QQQ implies a -0.25% open at this hour.  10-yeat bond yields are at 3.888% and Oil (WTI) is down eight-tenths of a percent to $91.90/barrel in early trading.

There are no major economic news events scheduled for Monday (Columbus Day).  Bond markets are closed (although stock markets are open).  However, we do have a Fed speaker (Brainard at 1 pm).  There are no major earnings reports scheduled for the day.

In economic news later this week, on Tuesday we have another pair of Fed speaker (Harker and Mester).  Then on Wednesday we get September PPI, the WASDE Ag Report, September Fed Meeting Minutes, and the API Weekly Crude Oil Stocks report and Fed member Bowman speaks.  Thursday, September CPI, Weekly Initial Jobless Claims, EIA Weekly Crude Oil Inventories, the Federal Budget Balance are reported.  Finally, on Friday, we get September Retail Sales, September Import/Exports, August Business Inventories, Mich. Consumer Sentiment, and August Retail Inventories.

The silly season begins again later this week after a couple of days of reprieve. There are no reports scheduled for Monday or Tuesday.  Then, on Wednesday, both PEP and WIT report.  On Thursday, we hear from BLK, CMC, DAL, DPZ, FAST, INFY, PGR, TSM, and WBA.  Finally, on Friday, the banks really kick off the season with C, FRC, JPM, MS, PNC, USB, UNH, and WFC all report.

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With September Payrolls behind us and the Fed chorus continuing to beg us to believe that they will not be easing up on rate hikes anytime soon, dejected traders will start watching for earnings evidence to support their preconceived ideas. The weekend has probably taken care of the Payrolls Report volatility. However, good old-fashioned everyday volatility is likely to remain. Also, keep an eye on Ukraine as Putin is a sore loser and has lost face after 2 lanes of his Kerch Bridge were blown up on Saturday. It appears he is moving another large group of soldiers toward Belarus again, perhaps planning to take another run at Kyiv.

With this backdrop, the premarket action seems pretty mild. (Again, perhaps waiting on earnings to begin.) The market extension (to the downside) is a modest issue but we’ve seen far worse recently. So, I will start to watch for (but not expect today) a consolidation or relief rally. The one thing we know for sure this morning is that the strong bear trend is still in place and again that should be the main directional indicator we heed.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: TOST, TWTR, SNOW, RBLX, AAPL, META, SBUX, TSLA, and PYPL. 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.

TC2000 Discount

🎯 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 PlansPrivate 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

All Eyes on September Payroll Data

The 3 major indices gapped modestly lower at the open Thursday.  Then, initial volatility kicked in for the first hour of the day, reaching the day’s highs and lows in that hour.  After that, stocks meandered sideways in a tight range in the lower half of the day’s range until 2:45 pm (when the bears pushed us lower into new lows for the day.  This action left us with black-bodied, long-wick, indecisive candles in all 3 major indices.  All 3 still remain above their T-line (8ema).  This can also be seen as a Bearish Harami candle in the QQQ and SPY indices.

On the day, 9 of the 10 sectors are in the red.  Energy (+0.74%) was the lone green sector while Utilities (-2.90%) was by far the lagging sector.  Meanwhile, the SPY was down 1.04%, DIA down 1.16%, and QQQ down 0.79%.  The VXX was up 2.92% to 20.09 and T2122 fell but remains in the mid-range at 42.25. 10-year bond yields spiked to 3.822% and Oil was up 1.44% to $89.02/barrel.  Overall, this made Thursday a day of consolidation, perhaps as the market waits on today’s September Payrolls reports.

In economic news, the Weekly Initial Jobless claims came in higher than expected at 219k (versus 203k forecast and last week’s 190k reported).  Meanwhile, among Fed speakers, Minneapolis Fed President Kaskari said the Fed has “more work to do on bringing down inflation” and that the Fed is “quite a way away from being able to pause aggressive rate hikes.  At the same time, Chicago Fed President Evans said that the Fed’s rate policy is likely headed to 4.5% – 4.75% by Spring 2023, saying the Fed has “further to go” (on rate hikes).  New Fed Governor Cook said that inflation “remains stubbornly and unacceptably high and the data over the last few months show that inflationary pressure remains broad-based.”  She went on to say “we (Fed) will keep at it until the job is done.”  So, once again, every Fed speaker has told us that there is no letup in sight on Fed rate hikes (despite Fed Fund Futures pricing in a rate cut next year).

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In stock news, during the day, a French court substantially lowered the fine that had been levied against AAPL (from $1.1 billion to $366 million) for anti-competitive behavior.  While the court agreed that AAPL had abused retailers economic dependency on the company, it also overruled the guilty charge of price-fixing as unproven.  Elsewhere, TM announced that is resuming production of its first electric vehicle (which had been halted for 3 months while new safety measures were designed and implemented related to the batteries).  HMC also announced its first electric SUV, which will hit the market for the 2024 model year.  Meanwhile, the Executive Chairwoman of FFIE resigned (Oct. 3 but announced Thursday), citing death threats she has received during the ongoing fight for control of the company’s board.  In addition, BRY stock jumped during the late afternoon when Reuters reported the company is exploring “strategic options including a potential sale.”  Finally, Elon Musk again asked for a postponement of the TWTR litigation and said that he expects the original deal to close on or about Oct. 28.

In profit warning news, after the close, LEVI missed on revenue and beat on earnings.  However, it also cut its full-year forecast.  LEVI also warned on profits citing inflation and a consumer shift away from higher-end products.  Elsewhere, AMD issued its Q3 preliminary results (it is scheduled to officially report November 1, after the close).  The company said results are likely to come in well below forecast on both weaker demand and supply chain issues.  The company expects gross margins of about 50% (versus the previous forecast of 54%).  Meanwhile, Bloomberg reports that its sources indicate CS may lose $2 billion this year.  In related news, CS is trying to bring in an unnamed outside investor to purchase its advisory and investment banking units as the main part of CEO Koerner’s restructuring plan.  Finally, this morning CS announced it will be buying back just over $3 billion of its own debt and selling the bank-owned Savoy Hotel (located in the Swiss Financial district) in an attempt to fight off a falling share price and ever-increasing bets against the company’s credit default swaps.

In pot news, President Biden pardoned thousands of people with federal convictions for simple marijuana possession.  He also initiated a new review of how the drug is classified.  (Currently marijuana is classified as “schedule 1” or the most dangerous class of drug.  This is a higher classification, meaning harsher penalties, than fentanyl or methamphetamine.)  The President also went on to put pressure on state and local officials by saying nobody should be in jail solely for marijuana possession and urged governors to follow his lead on the matter.  Cannabis tickers like TLRY and CGC jumped more than 20% on the news.

Overnight, Asian markets were red across the board.  Hong Kong (-1.51%), Taiwan (-1.37%), and Shenzhen (-1.29%) led the region lower.  Meanwhile, in Europe, stocks are mixed on modest moves at midday.  The FTSE (+0.14%), DAX (-0.08%), and CAC (+0.16%) lead the region on volume, per normal, in early afternoon trade. However, it appears the region is waiting on the US September Payrolls Reports as a read-through to economic slowing (and perhaps Fed actions).  As of 7:30 am, US Futures are pointing toward a mixed, flat start to the day.  The DIA implies a +0.22% open, the SPY is implying a +0.06% open, and the QQQ implies a -0.25% open at this hour (pre-news).  10-year bond yields are up again to 3.845% and Oil (WTI) is up 1% to $89.35/barrel in early trading.

The major economic news events scheduled for Friday include Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment Rate (all at 8:30 am).  We also have a Fed speaker (Williams at 10 am).  There are no major earnings reports scheduled for the day.

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With September Payrolls data coming today, do not be surprised if a beat is bad for markets (as traders assume the Fed will keep on the path of over-sized rate hikes) and visa-versa (a miss may cause traders to jump to the conclusion that the Fed will ease up). The average estimate is for a gain of 255k jobs in September. In either case, we can probably expect the market reaction to be an overreaction and a short-lived one at that. In other words, we are likely to see a swing back the other way very soon. On top of that, there has been no indication whatsoever from Fed members that they are even considering an easing. In fact, most true Fed Watchers are of the opinion they will not change course until something in the economy breaks.

With this backdrop, the premarket action seems to be waiting on the news. Market extension is not an issue as the premarket action has us sitting on the T-line (8ema) in all 3 major indices. The one thing we know for sure this morning is that the strong bear trend has not been broken and that is the main directional indicator we should heed. As mentioned, expect significant volatility today, especially in the premarket as the Payrolls data is released. So, in general, unless you are very quick or very comfortable in high volatility, this could be a day to sit on your hands and “wait and see” at least in the morning.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No tickers 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.

TC2000 Discount

🎯 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 PlansPrivate 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

Modest Down Open Appears in Cards

Markets gapped significantly lower on Wednesday (1.25% in the SPY, 1.15% in the DIA, and 1.35% in the QQQ) as markets followed Europe in rethinking whether the Fed would actually pivot soon.  The bears then proceeded to follow through, taking us to the lows of the day at 10:30 am.  However, the bulls stepped in to buy the pullback again, leading a long, steady rally which more than faded the gap and took us to the highs of the day at 3:20 pm.  Then there was one more reversal as the bears took back over at 3:20 pm and drove prices back down into the morning gap by the close.  This action is giving us gap-down, large white candles with wicks on both ends, that had bounced up off the T-line (8ema).

On the day, 7 of the 10 sectors are in the red with Energy (+1.31%) far out front due to the OPEC+ production cut.  On the lagging side, Communications Services (+1.77%) and Utilities (-2.08%) brought up the rear.  Meanwhile, SPY lost 0.19%, DIA lost 0.10% and QQQ lost 0.05%. The VXX is up 0.67% to 19.52 and T2122 is a bit higher y at 69.42.  The 10-year bond yields are back up to 3.751% and Oil (WTI) is up 1.63% to $87.93/barrel.  Basically, it was a schizophrenic day with a strong gap and run one direction that completely reversed to go back in the other direction and then reversed yet again.  However, the very short-term bullish trend remains intact.

In economic news, ADP reported September Nonfarm Employment went up more than expected, coming in at +208k jobs (versus +200k forecast and +185k in August).  The August Trade Balance also was less slightly negative than expected at -$67.40 billion versus -$67.70 billion forecast and -$70.50 billion in July.  In addition, September Services PMI came in better than expected at 49.3 (versus 49.2 forecast and 43.7 in August).  The ISM September Non-Mfg. PMI also came in hotter than expected at 56.7 (versus 56.0 forecast and 56.9 in August).  Overall, these are all things the Fed will not like to see and will probably want to come in worse to slow inflation.  Finally, EIA Weekly Crude Oil Inventories came in with a 1.356 million drawdown (compared to a forecast 2.052-million-barrel build).

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In energy news, as mentioned above, OPEC+ decided on and announced a 2 million barrel per day production cut starting in November.  This was at the very high end of analyst estimates for the cut, which had ranged between 0.5 million and 2 million.  The group’s stated aim is to get oil prices to stabilize in the $100 – $105 / barrel range.  Not that it matters much, but most analysts still do not expect the full 2 million barrel cut to be implemented as all OPEC+ countries tend to cheat their quotas at the margins. Elsewhere, the CEO of TTE made an announcement that the French energy giant will continue to ship Russian liquified Natural gas as long as there are no European sanctions on that fuel.

In stock news, TSN announced it is joining other major corporations and moving its corporate headquarters out of Illinois and into Arkansas.  This move will impact 1,000 employees.  Then, after the close, GM agreed to pay $3.5 million to the DOJ to resolve claims that failed to provide benefits and protections to US service members.  This amount only includes $65,000 in penalties and the other $3.435 million will go to the affected US service members.  Elsewhere, F announced an 11% price hike on electric F-150 Lightning Pro trucks for the 2023 model year.  That brings the base price to $51,974.  At the same time, COST announced comparable store sales rose by 8.5% in September.  This includes an 11.2% increase in US stores and a much smaller 5.7% increase in Canadian stores. Finally, this morning PTON CEO McCarthy said that his company has 6 months to prove it can survive and that 500 more job cuts are coming soon. PTON was down as much as 8% in premarket trade on this “news” but has recovered to be down only 1.65% at the moment.

In miscellaneous news, Bloomberg reported that the entire midday reversal and long rally was likely sparked by a single options trade.  They described this trade as a $31 million debit spread on SPX futures, buying 20,000 October $4500 Calls and 14,000 March $4300 Calls while also selling 48,000 January $4500 Calls.  Elsewhere, late in the afternoon, GS raised its Q3 GDP estimate to +1.9% (from the previous, and recently revised downward, +0.9%).  So, in other words, the economy was stronger in Q3 than GS had expected, even as late as mid-Q3. In Fed speak, Atlanta Fed President Bostic said that the Fed’s fight against inflation is still in early days. Specifically, he said that “despite some glimmers of hope (in recent data), the overarching message I’m drawing (from data) is that we are decidedly in the inflationary woods…not out of them.”

So far this morning, MKC and CAG bother reported beating on the revenue and earnings lines.  The STZ report is late for some reason.

Overnight, Asian markets were mixed.  Shenzhen (-1.29%), Shanghai (-0.55%), and New Zealand (-0.49%) half of the region lower.  Meanwhile, South Korea (+1.02%), Taiwan (+0.66%), and Thailand (+0.56%) led the other half of the region higher.   Over in Europe, stocks are mostly in the red at midday.  The FTSE (-0.71%), DAX (-0.43%), and CA (-0.42%) lead the majority of exchanges lower.  However, there are a handful of smaller exchanges still modestly in the green in early afternoon trading.  As of 7:30 am, US Futures are pointing toward another down start to the day.  The DIA implies a -0.57% open, the SPY is implying a -0.63% open, and the QQQ implies a -0.57% open at this hour.  10-year bond yields are up a bit to 3.773% and Oil (WTI) is off fractionally to $87.44/barrel in early trading.

The major economic news events scheduled for Thursday is limited to Weekly Initial Jobless Claims (8:30 am).  However, we also have two more Fed speakers after the close (Waller at 5 pm and Mester at 6:30 pm).  The major earnings reports scheduled for the day is limited to CAG, STZ, and MKC before the open.  Then after the close, LEVI reports.

In economic news later this week, on Friday, we get Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment RateIn earnings reports later this week, on Friday, there are no major earnings reports scheduled.

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Overall, the market seems to be caught in the horns of a dilemma. Fed speaker after Fed speaker keeps saying that the fight against inflation is still in the early stages, they may raise rates as high as 4.5% before the end of 2022, and there will be no rate cuts in 2023. However, markets (as gauged by Fed Fund Futures and large-scale equity dip buying) continue to forecast a slowing of easing and a rate cut in 2023. The most recent reasoning being argued is that the Fed needs to slow tightening and then start cutting in order to save other major global economies from collapse. (For example, the UK faces another cliff next week when the BoE stops buying bonds and the new Truss government is still untrusted. Meanwhile, China faces massive government debt, has just reduced its lending to other countries, and has domestic real estate and banking sectors in turmoil.) So, some traders seem to be betting the Fed will let the US live with inflation in favor of stabilizing the global economy.

With this backdrop, the premarket action has been inside of yesterday’s candle in the major indices. This may indicate we are just consolidating and waiting on the September Payrolls data on Friday. Market extension is not a major issue given the implied open. However, the strong bear trend has not been broken and is the main directional indicator we should heed. Continue to expect volatility and watch for the next bearish leg now that we’ve relieved over-extension and had a short relief rally.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: AMZN, MSFT, SLV, FCX, X, ZS, RIG, FL, ENPH, FDX, PINS, and CORN. 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.

TC2000 Discount

🎯 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 PlansPrivate 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

Doubts of Fed Pivot Lead to Risk Off Move

US stocks followed the rest of the globe, gapping strongly higher at the open (2% in the QQQ, 1.6% in the SPY, and 1.33% in the DIA).  The bulls then proceeded to run us up the first 30 minutes, following through strongly on the gap.  This leveled off into a sideways grind in a tight range as the bulls caught their breath from 10 am to 12:45 pm.  At that point, the bears took us lower for half an hour before the bulls stepped in to slowly rally back close at new highs in the large-cap indices.  (The QQQ sold off more heavily and recovered more slowly.  So, it did not reach the late morning highs again.)  This action is leaving us with gap-up, large white candles (with an upper wick in the QQQ).  And, as mentioned in the morning blog, all 3 major indices are now well above their T-lines (8ema).

On the day, all 10 sectors were green with seven of them being up at least 3%. Cons. Defensive (+1.90%) was the laggard and Consumer Cyclical (+4.30%) led the pack higher.  The SPY was up 3.05%, the DIA up 2.83%, and the QQQ up 3.14%.  VXX was down about 3.77% to 19.39 and T2122 is now well into the overbought territory at 90.08.  These moves came on slightly higher than expected volume.  Meanwhile, 10-year bond yields have climbed back from early losses but are still down to 3.631% and Oil (WTI) has spiked another 3.12% to $86.24/barrel (as markets seem to anticipate major production cuts by OPEC+ on Wednesday).  All-in-all, a very bullish day and perhaps near the end of a relief rally as we now approach the downtrend line.

In economic news, August Factory Orders same in dead flat (0.0%), which was below forecast (+0.2%) but also well above the July reading of -1.0%.  However, the most telling number of the day is that August Job Openings (JOLTs) were down a whopping 1.12 million over the July number (10.053 million vs July’s 11.170 million) as well as being far below forecast (10.775 million).  Taken together, these economic indicators seem to be telling us the US economy is cooling fast, which potentially could be read by traders as a reason for the Fed to lighten up soon.  After the close, API Weekly Crude Oil Stocks reported an unexpected drawdown of 1.770 million barrels (versus a forecast build of 1.966 million barrels and the prior week’s build of 4.150 million barrels).

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In Fed news, the FOMC members tried to talk markets out of believing they will pivot soon. NY Fed President Williams reiterated that the Fed’s fight with inflation is not done and it will take some time to decelerate the conditions causing inflation.  Meanwhile, new Fed Governor Jefferson also spoke to a conference in Atlanta, saying “Inflation is still the most serious problem facing the Fed and it may take some time to address.”  He went on to reiterate that the Fed is resolute on bringing inflation back down to 2%.  Finally, San Francisco Fed President Daly said “there’s a lot of room to slow the labor market before we get into severe recessionary conditions.”  She added her prediction that unemployment will reach the 4.5% range and not the high levels some project.  However, again she reiterated that the Fed needs to do further rate hikes to bring down inflation.

In stock news, during the day, an SEC filing indicated that Elon Musk has abandoned his attempt to back out of buying TWTR and is prepared to proceed under the original terms of the buyout deal.  TWTR traded in a 23% range on the day, closing up 22.24%, which is oddly still $2.20/share less than the agreed per share price of the deal.  In other stock news, HAS cut its full-year revenue forecast.  This falls in line with WMT and TGT having announced plans to drastically reduce inventory (those 2 companies account for one-third of HAS sales).  Elsewhere, the New York Times reported that AMZN has sent an internal announcement of a corporate hiring freeze for the rest of the year in its retail/e-tail business (as opposed to cloud IT services).  The Wall Street Journal also reported that META is working to reduce its office space by letting some existing leases expire and consolidating multiple buildings into one.  This comes as META is hiring fewer employees and adopting a hybrid (office/work-from-home) policy.  On the brighter side, F reported strong demand for new vehicles in September although it also reported actual sales for the month were down slightly due to supply shortages.

In miscellaneous news, US Army Corps of Engineers reports that low water levels in the Mississippi River are causing a major shortage of transport in the center of the country.  1,600 barges are waiting for USACE dredging to make the lower Mississippi passable as the river has essentially been closed since last week.  The lack of those barges will be a real problem for agriculture, chemical, and other industries.  For example, 60% of US grain exports travel that river and exit the country via Gulf ports.  This could have a major impact on ADM, CAG, and BG among others. Meanwhile, the EU is set to approve PM purchasing a Swedish competitor of the spinoff MO.  Swedish Match is a large player in European cigarette alternatives.  Finally, US weekly mortgage demand plummeted last week as the average 30-year fixed-rate mortgage rose to 6.75% (from 6.52%) and hurricane Ian killed demand.  The number of applications to refinance loans fell 18% and new home purchase loan applications fell 13% for an overall decline of 14.2%.

So far this morning, AONNY, HELE, and RPM have all reported beats on both the revenue and earnings lines.  LW is scheduled to report at 8:30 am.

Overnight, Asian markets were mostly (and in some cases very strongly) green.  Hong Kong (+5.90%) was a clear outlier. Meanwhile, India (+2.29%), Australia (+1.74%), and Taiwan (+1.66%) led the gainers.  Only the mainland Chinese exchanges, Shenzhen (-1.29%) and Shanghai (-0.55%), were red on the day.  In Europe, we see a completely different story, with red across the board at midday.  The FTSE (-1.01%), DAX (-0.75%), and CAC (-0.62%) lead the region lower on volume.  However, most of the smaller exchanges have made bigger moves in early afternoon trade.  This comes as doubt of a central bank pivot sets in among traders.  (For what it is worth UK PM Truss also made another blunder in telling her party conference she is undecided whether to raise government benefits to offset inflation. That may be true, but while there are ongoing protests over “cost of living” in the streets, the optics are just abysmal.  As of 7:30 am, US Futures are pointing toward a down start to the day.  The DIA implies a -0.70% open, the SPY is implying a -0.68% open, and the QQQ implies a -0.65% open at this hour.  10-year bond yields are up again to 3.683% and Oil (WTI) is up another half of a percent to $86.96/barrel in early trading.

The major economic news events scheduled for Wednesday include OPEC+ decision on production cuts (tba), Sept. ADP Nonfarm Employment Change (8:15 am), August Imports/Exports and August Trade Balance (all at 8:30 am), Sept. Services PMI (9:45 am), Sept. ISM Non-Mfg. PMI (10 am), and EIA Weekly Crude Oil Inventories (10:30 am).  We also have another Fed speaker (Bostic at 4 pm).  The major earnings reports scheduled for the day is limited to HELE, LW, and RPM before the open.

In economic news later this week, on Thursday, the Weekly Initial Jobless Claims are reported.  Finally, on Friday, Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment Rate are reported.

In earnings reports later this week, on Thursday, we hear from CAG, STZ, MKC, and LEVI.  Finally, on Friday, there are no major earnings reports scheduled.

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With this backdrop, we see that it appears the Fed members have talked us off the hopium (of a Fed easing) that markets had been smoking. All 3 major indices are above their T-lines, but it looks like we are headed back in that direction for a retest. The strong bear trend remains in place and is the indication we should heed. That line more-or-less coincides with a potential support level from a line across the tops starting on 9/23. Continue to expect volatility and watch for the next bearish leg now that we’ve relieved over-extension.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: SSYS, BBIG, RIG, TSM, VLO, WMT, COST, PINS, ORCL, XOM, FDX, and MSFT. 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.

TC2000 Discount

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

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

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

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

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

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

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

Free YouTube Education  •  Subscription PlansPrivate 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

Global Rally on Smaller Aussie Rate Hike

Markets gapped significantly higher on Monday (+1.12 in SPY, +1.20% in the DIA, and +0.75% in the QQQ).  Then the bulls took a few minutes to gather themselves before following through in the morning, grinding sideways in the midday, and then strongly rallying from 1 pm to 3 pm.  Finally, the three major indices all took profits in the last 30 minutes of the day.  This action left us with gap-up, big white candles with significant upper and lower wicks.  The large-cap indices also both retested their T-lines (8ema) and the QQQ got close. 

On the day, all 10 sectors were well into the green.  Consumer Cyclical (+1.66%) and Consumer Defensive (+1.95%) were the lagging sectors.  Meanwhile, Energy (+5.50%) and Basic Materials (+4.04%) led the rebound.  At the same time, the SPY gained 2.62%, the DIA gained 2.61%, and the QQQ gained 2.35%.  The VXX fell 5% to 20.15 and T2122 jumped back up into the mid-range at 52. 10-year bond yields fell to 3.65% and Oil (WTI) spiked 4.69% to 83.22/barrel.  So, the strong bearish trend remains in place, but at a minimum, the over-extension was resolved in just one candle.

In economic news, the September Mfg. PMI came in slightly stronger than expected at 52.0 (versus a 51.8 forecast and a 51.5 reading in August).  However, the September ISM Mfg. PMI came in below forecast at 50.9 versus a 52.2 expected and a 52.8 number in August.  Also, later in the day, NY Fed Pres. Williams said that while there have been a few nascent signs of cooling inflation, the Fed must press forward with its tightening policy to really get inflation under control.  He specifically said that some commodity prices are falling, but that is not enough.  He went on to say goods demand remains very high and both labor and services demand is still outstripping the available supply.  These are all conditions the Fed must force to reverse to get inflation under control in the longer run.  Along those lines, Williams said, “I see inflation moving close to our 2% goal in the next few years.” (Meaning this will be a long tightening cycle.)

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In stock news, CS was the news of the day trading wildly.  It was down 11% in the premarket, opened down just 1%, and then sold off 6% before reversing and raying 9%.  It closed the day up 2.3%.  Elsewhere, AAPL lost its second bid to challenge patents held by QCOM after the Supreme Court declined to hear an AAPL appeal.  This leaves AAPL on the hook for violation of 3 QCOM smartphone patents as had been ruled by lower courts in 2017-2019.   A multi-billion-dollar settlement had already been reached, between the companies, but now that AAPL’s appeal has failed, it will need to renew licenses for those patents from QCOM as soon as 2025.  Meanwhile, RIVN announced it had produced 7,363 vehicles in Q3 (a 67% increase from Q2) and reiterated it still expects to make 25,000 for the full year.  However, not all RIVN news was good after a County judge in Georgia blocked proposed state and county incentives for RIVN to build a $5 billion manufacturing plant in that area.  The ruling found the plan did not appear feasible and it failed to promote the public welfare of local communities.

In other overnight AAPL news, the EU has passed regulations that will force AAPL to violate its longstanding policy of not conforming to industry standards.  The new law would force all mobile devices (phones, tablets, and cameras) to use standard charging ports meaning they can all use the same chargers.  In other AAPL news, Foxconn (the main iPhone manufacturer) said that they are “cautiously optimistic” about Q4 sales and production. This flies in contrast to last week’s announcement that AAPL had scrapped plans to increase production of iPhone 14s.

Also overnight, the Reserve Bank of Australia has sparked global speculation that central banks are about to pivot away from tightening by easing their rate hikes.  The bank raised its rates by only a quarter of a percent (versus the widely expected half of a percent hike).  It seems global traders are adding this to NY Fed President Williams Monday statement that tighter monetary policy has BEGUN to cool demand and reduce inflationary pressures…and lurched to the conclusion a pivot is near at hand. This could be a leading factor in the global rally we are seeing today. (Be extremely careful buying into a market reversal on such thin logic.)

Overnight, Asian markets were mixed but mostly green.  Australia (+3.75%), Japan (+2.96%), and South Korea (+2.50%) led the gainers.  Meanwhile, Shenzhen (-1.29%), Hong Kong (-0.83%), and Shanghai (-0.55%) were the only red in the region.  At the same time, in Europe, we see green across the board at midday.  The FTSE (+1.86%), DAX (+2.95%), and CAC (+3.28%) are leading a charge higher in early afternoon trading.  Even Russia (+0.01%) has managed green so far today.  As of 7:30 am, US Futures are pointing toward a strong gap higher to start the day.  The DIA implies a +1.31% open, the SPY is implying a +1.61% open, and the QQQ implies a +2.04% open at this hour.  10-year bond yields are falling again to 3.589% and Oil (WTI) is up another half of a percent to $84.06/barrel.

The major economic news events scheduled for Tuesday, include August Factory Orders, August JOLTs, and API Weekly Crude Oil Stocks.  However, again we have three Fed speakers (Williams at 9 am, Mester at 9:15 am, and Daly at 1 pm).  The major earnings reports scheduled for the day is limited to AYI before the open.

In economic news later this week, on Wednesday, we get the Sept. ADP Nonfarm Employment Change, August Imports/Exports, August Trade Balance, Sept. Services PMI, Sept. ISM Non-Mfg. PMI, and EIA Weekly Crude Oil Inventories as well as an OPEC+ decision on production cuts.  Then Thursday, the Weekly Initial Jobless Claims are reported.  Finally, on Friday, Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment Rate are reported.

In earnings reports later this week, on Then on Wednesday, HELE, LW, RPM report.  Thursday, we hear from CAG, STZ, MKC, and LEVI.  Finally, on Friday, there are no major earnings reports scheduled.

LTA Scanning Software

With this backdrop, we see all 3 major indices looking to gap up above their T-lines. However, the strong bear trend remains in place and has not yet been challenged. It is important to note that we appear to be opening back in the September 23 gap, but there is still a lot of resistance above to work through. Expect more volatility and even though everything looks bearish early, do not forget that we still need over-extension relief.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: AMZN, HD, META, LVS, NEM, GIS, MPC, and VLO. 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.

TC2000 Discount

🎯 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 PlansPrivate 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

Q4 Starting With Modest Gap Higher

Stocks gapped down very modestly (0.25% – 0.35%) Friday and followed through for 5 minutes.  However, then volatility stepped in to rally us to the highs of the day by 11:15 am.  At that point, the market reversed again as the bears led a selloff the rest of the day.  This took us to a series of new lows at about 2:30 pm and took us out on the lows.  This action has left us with black-bodied, indecisive, inverted hammer-type candles in all 3 major indices.  It is also worth noting that all 3 indices are again getting extended from their T-lines.

On the day, 9 of 10 sectors are in the green with Basic Materials (+0.15%) as the only sector able to hold onto a gain and Consumer Cyclical (-1.63%) leading the charge lower.  At the same time, SPY was down 1.55%, DIA was down 1.70%, and QQQ was down 1.70%.  The VXX gained almost 3% to 21.21 and T2122 has actually risen to 5.06 (which is still deep in the oversold territory).  10-year bond yields are down, but way up off the early morning lows to 3.821%, and Oil (WTI) is down almost 2% to $79.61/barrel.  Overall, it was a very volatile and bearish day.

So, with inflation high and the Fed on a super-sized hike cycle (while saying they are not going to let up until inflation is clearly headed to 2%), Mr. Market is not a happy camper.  That brought us to the end of a rough week, a brutal month, and a tough quarter.  On the week, SPY lost 2.93%, DIA lost 2.89%, and QQQ lost 2.99%.  For the month, SPY lost 9.62%, DIA lost 8.98%, and QQQ lost 10.70%.  For the quarter, SPY lost 5.32%, DIA lost 6.67%, and QQQ lost 4.65%.

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In economic news, the August Month-on-Month PCE Price Index came in at +4.9%, which was above the +4.7% forecast (and the previous reading of 4.7%).  In addition, the August Mon-on-Month Personal Spending was up +0.4% (compared to a +0.2% forecast and previous reading of -0.2%).  (It is worth noting that core PCE is the Fed’s favorite gauge of inflation and what its 2% target is set against.)  Meanwhile, August Year-on-Year PCE Price Index came in a +6.2%, which was better than the previous reading of +6.4%.  Then the Chicago PMI came in at 45.7 (versus a 51.8 forecast) and Michigan Consumer Sentiment came in at 58.6 (versus a 59.5 forecast and a previous reading of 59.5).  So, that information tells us inflation is up, business is contracting, and the general public is pessimistic.

Speaking of the Fed, Vice Chair Brainard added her full endorsement of the current “higher rates for longer” approach the Fed is undertaking.  She went on to say “Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back toward the target.”  Earlier, Richmond Fed President Barkin had said there were some promising signs of inflation progress.  However, he said that “festering inflation” remains a bigger threat to the economy than us (the Fed) over-correcting.”  Earlier, Fed Governor Bowman (a Republican) suggested averaging bank stress tests to determine bank capital requirements (as opposed to setting them every time they are tested).  Her generally suggested approach was toward lighter regulation of banks.  This stands in stark contrast to Fed Bank Supervisor Barr (Democrat), who has called for more scrutiny of bank risk-taking given the history of financial crises that banks have led the economy into in the past.

In stock news, on Friday, UAL announced it will cancel service from JFK airport as of October because the FAA will not give them additional flights out of that airport.  (UAL had only resumed service from JFK in 2021.)  Meanwhile, EU regulators announced they would publish a decision on whether to allow (or what mandated stipulations must be met to allow) the MSFT acquisition of ATVI by November 8.  Elsewhere, after hours, SWK announced it is cutting 1,000 finance jobs.  (It makes you wonder either who will do the books…or why they had so many since they only have 71,000 total employees.)  On Sunday, TSLA reported that it delivered 343k new vehicles in Q3 which was about 20k fewer vehicles than analysts had been expecting.  However, it was also a 35% increase over Q3 2021. TSLA blamed employee turnover in management positions (after Musk’s “work at least 40 hours per week in the office” decree) and logistics snarls for the shortfall.

After the close, NKE reported beating on both the revenue and earnings lines.  However, MU missed on revenue while beating on earnings.  MU also lowered its forward guidance.  It is also worth noting that despite beating on both lines, NKE reported that they have way too much inventory (44% globally and 65% too much in North America) across multiple seasons of apparel) due to severe supply chain problems. The company said it will be forced to aggressively discount in order to liquidate the excess inventory. Later this morning, CCL reports (9:15 am).

Overnight, Asian markets were mostly in the red.   Japan (+1.07%) was a clear outlier to the upside with only one other exchange managing any green.  However, Thailand (-1.98%), Shenzhen (-1.29%), and India (-1.21%) led the region lower.  Meanwhile, in Europe, we see a similar story taking shape at midday.  Russia (+3.43%), Norway (+1.34%), and Portugal (+0.96%) are the only green to be found on the continent.  At the same time, the FTSE (-0.56%), DAX (-0.59%), and CAC (-0.88%) are leading the region lower in early afternoon trade.  As of 7:15 am, US Futures are pointing toward a mixed start to the day.  The DIA implies a +0.57% open, the SPY is implying a +0.42% open, and the QQQ implies a +0.04% open at this hour.  At the same time, 10-year bond yields are down to 3.75% and Oil (WTI) is up 4.26% to $82.88/barrel in early trading.

The major economic news events scheduled for Monday is limited to September Mfg. PMI (9:45 am) and Sept. ISM Mfg. PMI (10 am).  There are no major earnings reports scheduled for the day.

In economic news later this week, on Tuesday, we get August Factory Orders, August JOLTs, and API Weekly Crude Oil Stocks.  Then Wednesday, the Sept. ADP Nonfarm Employment Change, August Imports/Exports, August Trade Balance, Sept. Services PMI, Sept. ISM Non-Mfg. PMI, and EIA Weekly Crude Oil Inventories are reported.  Thursday, we get the Weekly Initial Jobless Claims.  Finally, on Friday, Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment Rate are reported.

In earnings reports later this week, on Tuesday we hear from AYI.  Then on Wednesday, HELE, LW, and RPM report.  Thursday, we hear from CAG, STZ, MKC, and LEVI.  Finally, on Friday, there are no major earnings reports scheduled.

LTA Scanning Software

In late-breaking news from across the pond, the new government of UK PM Truss has scrapped its radical shift to large-scale tax cuts for top-end tax rates and “trickle down” economics. It seems the new PM (who even on Sunday had said she was absolutely committed to her plan) was told to drop it or get out by her fellow Torry party ministers amidst a public backlash, cost of living protests, and market rejection of the plan. The British pound briefly jumped on that news. Elsewhere, Reuters reports that CS is in bad financial health and is seeking to raise capital saw the stock drop 10% at one point during the premarket. Finally, Oil (WTI and Brent) is challenging its downtrend with a major gap this morning. This seems to be driven by rumors coming out of OPEC+ that point to the group announcing major production cuts at their Wednesday meeting.

With this backdrop, and as we start the fourth quarter, markets seem headed toward an inside candle at the open in the large-cap indices and a slight continuation of the down move in the tech-heavy QQQ. Once again, this is not showing a major change in sentiment. The trend remains strongly bearish across the market, but last week’s volatile chop may be continuing. Expect more volatility and even though everything looks bearish early, do not forget that we still need over-extension relief.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: OXY, VLO, MPC, META, NFLX, BE, EGO, JBHT, TWTR. 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.

TC2000 Discount

🎯 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 PlansPrivate 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

End of Q3, 2nd Ian Landfall, and EU Prices

Markets gapped lower at the open Thursday (0.65% in the DIA, 1% in the SPY, and 1.25% in the QQQ).  All 3 major indices made a strong follow-through move for the first hour.  Then we saw a sideways meander until Noon.  However, the Bears stepped back in at that point to continue the wavy, gradual ride lower until 2:30 pm when the bulls tried to form a bottom.  From there we saw a sideways grind that bobbed along in a channel for the last hour before slightly breaking back out to the upside. This action has given us gap-down, black candles (with a large lower wick).

On the day, Utilities (-3.71%) and Consumer Cyclical (-3.37%) led the charge lower.  (Utilities is a very odd leader to the downside as one would think that sector would be a destination for a flight to safety.)  Meanwhile, Energy (-0.59%) was the laggard in the decline.  The SPY has lost 2.08%, DIA lost 1.52% and QQQ lost 2.81%.  The VXX was up almost 3% to 20.62 and T2122 is again deeply oversold at 3.22.  10-year bond yields are back down to 3.778% and Oil (WTI) is down three-quarters of a percent to $81.55/barrel.  Overall, just a bearish day in a choppy week all in the middle of a strong bearish trend.

In economic news, the Q2 GDP (2nd revision) came in exactly as expected at -0.6% (compared to Q1 -1.6%).  However, the Q2 Price index was revised up to 9.1% (higher than the 8.9% expected this revision) and the 8.3% in Q1.  The Weekly Initial Jobless Claims also came in better than expected at 193k (versus 215k forecast and 209k last week).  This all means the economy continues to be stronger than expected and inflation remains undaunted by the Fed’s 3 “super-sized” rate hikes this year.

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Speaking of the Fed, in Fed news, St. Louis Fed President Bullard said Thursday that the Us is mostly insulated from the turmoil in UK stock and currency markets.  The mixed signals the BoE and UK government are sending are essentially a UK problem that will only effect US markets on the edges according to Bullard.  Meanwhile, Cleveland Fed President Mester reiterated that “at some point” the Fed will start to consider (economy) growth prospects against inflation.  However, she said this will not be until inflation is clearly heading back down toward 2%.  Then at the end of the day, Sand Francisco Fed President Daly said the Fed does not need to trigger a recession in order to take the heat out of high inflation.  She went on to say that slowing down growth was the right path, but that inducing a deep recession was not necessary.

In stock news, after the close META announced it has paused hiring and warned that it will be restructuring in the face of an uncertain economic outlook.  It was also reported that BCS was fined $361 million by the SEC over internal control failures related to the unregistered sale of a massive and unprecedented quantity of securities.  Elsewhere, the FTC sued two top pesticide makers for price-fixing through distributors to keep the prices farmers pay artificially high for generic pesticides, herbicides, and fungicides.  Privately-owned Syngenta was one and CVTA was the other and the FTC estimates the collusion cost farmers 20% more for the company’s generic products every year.  Reuters reports that a senior supply chain exec at AAPL is leaving the company after making an inappropriate remark about fondling women in a TikTik video.  Meanwhile, the FCC has asked for more information regarding the sale of TGNA (TV station operator) to hedge fund Standard General (which already owns a number of TV stations).  Finally, AMZN (and 5 large book publishers) won a dismissal of two antitrust lawsuits that had accused them of price-fixing on books and e-books.

In energy news, OPEC+ have begun discussions ahead of their production level announcement at the Oct. 5 meeting.  Reuters reports that some members question the logic of doing a major production cut (as posed by some) to maintain high oil prices when Russia continues to sell oil at near full capacity (at discounted prices) to major importers China, India, and Turkey.  Elsewhere, the 10% of US oil production that was shut down due to Hurricane Ian is expected to reopen in the next day or so after the storm missed the critical energy facilities in the Gulf and in Florida.  Meanwhile, in Florida itself, one in four gas stations are out of fuel Thursday afternoon.  However, the KMI pipeline and CVX fuel terminal are expected to resume operation Friday.  And nearly 200 fuel tanker trucks are already on the road heading toward Southern Florida where the shortages are worse.

After the close, NKE reported beating on both the revenue and earnings lines.  However, MU missed on revenue while beating on earnings.  MU also lowered its forward guidance.  It is also worth noting that despite beating on both lines, NKE reported that they have way too much inventory (44% globally and 65% too much in North America) across multiple seasons of apparel) due to severe supply chain problems. The company said it will be forced to aggressively discount in order to liquidate the excess inventory. Later this morning, CCL reports (9:15 am).

Overnight, Asian markets were mostly in the red.  Japan (-1.83%), Shenzhen (-1.29%), and Australia (-1.23%) led the way lower.  Meanwhile, India (+1.64%), Singapore (+0.49%), and Hong Kong (+0.33%) were in the green.  In Europe, with the exception of Russia (-1.41%), we see green across the board at mid-day.  The FTSE (+0.27%), DAX (+0.14%), and CAC (+0.68%) are leading the region higher with Norway (+2.10%) being an outlier to the upside 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 +0.24% open, the SPY is implying a +0.36% open, and the QQQ implies a +0.27% open at this hour.  At the same time, 10-year bond yields are back down to 3.698% and Oil (WTI) is up a third of a percent to $81.42/barrel in early trading.

The major economic news events scheduled for Friday include August PCE Price Index and August Personal Spending (both at 8:30 am), Chicago PMI (9:45 am), Michigan Consumer Sentiment (10 am), and several Fed Speakers (Mester at 9 am, Williams at 9 am, Bowman at 11 am, and Williams at 4:15 pm).  The major earnings reports scheduled for the day are limited to CCL before the open.  There are no earnings scheduled for after the close. 

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In late-breaking news from across the pond, the British pound has managed to hold onto the gains it made after BoE intervention (3 days ago, buying long-dated bonds and stopping the reduction of its balance sheet). This comes amid wide speculation that the new government will be forced to back down from its radical shift to large-scale tax cuts and “trickle down” economics. This came as a report showed that Eurozone inflation has hit a record 10% (well above the 9.7% projections and 9.1% reading in August). If there is any good news in the report, it is that “core inflation” rose only 4.8% with energy (+40.8%) and “Food Alcohol, and Tobacco” up 11.8% doing most of the lifting. (The good news idea being that eventually, energy prices will come under control as replacement sources for Russian oil and gas begin to materialize in the next couple of months.)

With this backdrop, and as the Quarter comes to a close, it again looks like we will see a modest gap higher, inside of Thursday’s candle to start the day. So, this is not showing a major change in sentiment. It just looks like more chop in this week’s consolidation (albeit more volatile consolidation yesterday). The strong bear trend remains in place in all 3 major indices. Expect more volatility and even though everything looks bearish early, do not forget that we still need over-extension relief. Also, do not be surprised if we see some window dressing at the end of Q3 as funds get their portfolios in shape for their Q4 marketing campaigns. Finally, keep in mind that it’s Friday (and that Russia will announce it has annexed parts of Ukraine today). So, prepare your account for the weekend news cycle, which will include the second landfall of Ian.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

TC2000 Discount

🎯 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 PlansPrivate 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

Bears Looking For Modest Gap Down Open

Stocks gapped slightly higher at the open in all 3 major indices.  Then price chopped back and forth across the gap the first hour before starting a slow, wavy rally that was in effect until a modest pullback the last 10 minutes of the day.  This left us near the highs of the day at the close.  This action has given us large white candles with smaller wicks on both ends across the 3 major indices.  However, only the QQQ managed to reach (retest) their T-line (8ema) yet.

On the day, Utilities (+1.19%) is the laggard, while Energy (+3.97%) and Basic Materials (+3.34%) led the relief rally.  Meanwhile, the SPY was up 1.96%, DIA was up 1.86%, and QQQ was up 1.99%.  The VXX fell 4.2% to 20.07 and T2122 spiked up out of the oversold territory to 51.47 in the mid-range.  After being up over 4% during the premarket, 10-year bond yields are down hard (the most since 2020) to 3.725%, and Oil (WTI) is up 4.4% to $81.97/barrel. So, Wednesday did give us some relief from bearish over-extension.  However, the downtrend remains intact and you would be hard-pressed to even call it a “relief rally” yet.

In economic news, the August Goods Trade Balance came in at -$87.30 billion (as compared to -$90.19 billion in July) largely on a decrease in imports.  This was the fifth straight month of improvements in the trade balance.  Elsewhere, August Retail Inventories were up 0.6% (compared to a July increase of 0.3%).  This might be a clue of economic slowdown with inventories building.  However, contrary to Tuesday’s unexpected large increase in New Home Sales, August Pending Home Sales fell more than expected to -2.0% (versus -1.4% forecast and +0.6% in July).  Finally, EIA Weekly Crude Oil Inventories fell by 0.215 million barrels (compares to a forecast of +0.443 million and last week’s +1.142 million barrels).  What was odd about the EIA number is that it was only 10% of the build reported Tuesday night by the API (+4.150 million barrels).

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In Fed news, Atlanta Fed President Bostic said that a lack of clear progress in inflation reduction means that the Fed needs to remain “moderately restrictive” and that rates should reach 4.25% – 4.50% by year-end. He wasn’t on to say that his baseline outlook remains that the Fed should hike rates 0.75% again at the next meeting in November.  Later, Chicago Fed President Evans said most Fed voters are “penciling in” 4.50% to 4.75% by the end of the year or maybe March of next year.  He went on to say that he worries about global market volatility causing additional restrictiveness, but that the Fed “just really needs to get inflation in check.”  Finally, Fed Governor Bowman told a conference that the framework the Fed uses to assess competition in the banking sector needs to be overhauled.  Her general point was that different service delivery channels and nonbank “competitors” need to be considered rather than just the size of deposits and loan volume when considering the competitive impact.  (This seems to be a positive statement for mergers/acquisitions in the banking sector.)

In stock news, during the day Wednesday, BIIB had a massive day (+39.85%) after it reported surprisingly positive results in a trial of its Alzheimer’s drug.  Even the direct competitors in this niche (LLY and Roche) were up 7% on the day on this news.  In less positive news, BP announced it has laid off almost all of its contractors at a Toledo Ohio refinery (a joint venture with CVE, but run by BP using contractors) after there was an explosion last week.  BP announced that the refinery (which processed 160k barrels of oil per day, making 3.8 million gallons of gasoline and 1.3 million gallons of diesel per day) will be offline for a prolonged period following the explosion and fire which killed two workers.  Then, after the close, Bloomberg reported that AMZN plans to close several US-based call centers.  This is part of their move toward remote work rather than in-office.  No numbers on cost or headcount reductions were provided.  In other news, Reuters also reported that AMZN has told their warehouse employees they have increased the worker’s pay and this initiative will cost just under $1 billion.  Elsewhere, Bloomberg reports that MRK has struck a deal with China to sell its Covid-19 antiviral treatment (molnupiravir) in a first-of-its-kind deal for the country.

In miscellaneous news, after the close, TTE announced it will be spinning off its Canadian Oil Sands operations and listed the new company on the Toronto exchange (TSX).  Some of these assets include a minority stake in a joint venture with SU and another venture with COP.  On the earnings front, after the close, JEF reported a beat on both lines.  However, CNXC and MLKN both reported missing on the revenue line while simultaneously beating on the earnings line.  So far this morning, RAD and WOR both beat on revenue while missing on earnings.  However, BBBY and KMX both missed on the top and bottom lines. Finally, it was reported overnight that the reason the BOE intervened to buy long-dated bonds Wednesday was panicked calls from UK pension funds that were near collapse based on the crashing pound and UK markets following the new government’s unexpected jerk toward “trickle down” economics and massive high-end tax cuts at the same time inflation is running rampant.

After the close, CALM and BB both reported beating on both the revenue and earnings lines.  (However, the BB number was still a loss.)  So far this morning, THO also reported beating on the top and bottom lines.  However, CTAS and PAYX report closer to the opening bell.

Overnight, Asian markets were mixed in more modest trading.  Australia (+1.44%), Japan (+0.95%), and New Zealand (+0.72%) led the gainers.  Meanwhile, Hong Kong (-0.49%), Thailand (-0.43%), and Malaysia (-0.31%) paced the losses.  In Europe, the day is off to more of a red start.  Only Greece (+0.39%) and Norway (+0.43%) are green.  Meanwhile, the FTSE (-0.63%), DAX (-0.97%), and CAC (-0.90%) are leading the region lower in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a down start to the day.  The DIA implies a -0.46% open, the SPY is implying a -0.62% open, and the QQQ implies a -0.92% open at this hour.  At the same time, 10-year bond yields are back up to 3.814% and Oil (WTI) is up four-tenths of a percent to $82.52/barrel in early trading.

The major economic news events scheduled for Thursday include Q2 GDP (3rd Revision) and Weekly Initial Jobless Claims (both at 8:30 am), and two Fed Speakers (Bullard at 9:30 am and Mester at 1 pm).  The major earnings reports scheduled for the day include BBBY, KMX, RAD, and WOR before the open.  Then after the close, MU and NKE report. 

In economic news later this week, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester). Meanwhile, in earnings reports later this week, on Friday, BKR and CCL report.

LTA Scanning Software

With this backdrop, it again looks like we will see a gap lower. However, today’s premarket candle is still just inside yesterday’s candle. So, this is not showing a major change in sentiment yet. It just looks like more chop in this week’s consolidation. The strong bear trend remains in place in all 3 major indices. Expect more volatility and even though everything looks bearish early, do not forget that the extension relief usually lasts more than one day. As I have said, markets always move in a zig-zag motion and we are definitely in need of more zag to offset the recent strong zig.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

TC2000 Discount

🎯 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 PlansPrivate 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

BOE Steps In, AAPL Cuts Production Plan

Markets gapped higher on Tuesday (1.35% in the QQQ, 1% in the SPY and 0.7% in the DIA).  However, that was a bull trap because after meandering sideways for an hour and 45 minutes, all 3 major indices sold off extremely hard for a little over an hour.  During this selloff, DIA lost 1.90%, SPY lost 2% and QQQ lost 2.2%.  After that, all 3 indices ground sideways in a tight range until 2:30 pm.  Then volatility kicked back in as the bulls rallied all 3 major indices for half an hour before pulling back again a bit for the last hour of the day. This action is left us with large black candles that had some significant wicks on both ends (especially the upper wick), which Engulfed the prior candle.  (However, these are not truly “Bearish Engulfing” candles because the prior candle bodies were also black.)

On the day, 5 of the 10 sectors are in the red with Energy (+1.49%) by far the largest gainer and Utilities (-1.66%) by far the largest loser on the day.  At the same time, SPY was down 0.26%, DIA was down 0.49%, and QQQ managed to gain 0.04%.  The VXX gained 1.9% to 20.95 and T2122 was up to a whopping 4.04 (still deeply oversold).  10-year bond yields rebounded from early losses to new highs at 3.976% and Oil (WTI) was up 2.25% to $78.44/barrel.  So, while the day started off looking like it would provide some over-extension relief, it ended up with about the same extension as we had on Monday (which is to say a lot of extension).

In economic news, August Durable Goods Orders came in slightly better than expected at -0.2% (versus a forecast of -0.4%).  However, Conf. Board Consumer Sentiment came in hotter than expected at 108.0 (vs. 104.5 forecast and July’s 103.6 reading).  The big surprise of the day was August New Home Sales, which came in MUCH hotter than expected at 685k (versus a forecast of 500k and July’s number of 532k).  Then after the close API reported that Weekly Crude Oil Inventories unexpectedly rose by 4.150 million barrels (versus a forecast build of only 0.333 million and last week’s build of 1.035 million barrels).

SNAP Case Study | Actual Trade

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In Fed news, before the open Tuesday, Fed Chair Powell emphasized the risks and unregulated markets of “DeFi systems.” He called for the Fed (and other Central Banks) to play a major role in the oversight and regulation of cryptocurrencies, in particular speaking to stablecoins and unhosted crypto wallets.  Later in the morning, St. Louis Fed President Bullard said that rapid interest rate increases have raised the risk of a recession.  However, he maintained that the US economy remains resilient and said the recession is likely to be caused by an external shock rather than Fed policy.  He went on to call for more hikes and said not only are the hikes needed to tame inflation but also to defend Fed credibility.

In stock news, Tuesday afternoon, the DOJ asked a Federal Judge to force AAL and JBLU to scrap their “US Northeast” partnership as being anti-competitive.  The move also implies the JBLU acquisition of SAVE will face regulatory hurdles.  Elsewhere, CS announced the loss of two senior executives, one of which is going to rival C.  Then, after the close, the SEC announced it has fined 16 major Wall Street firms a total of more than $1.1 billion for failing to maintain and preserve electronic communications from Whatsapp usage (which their traders used to secretly communicate).  This secret communication is a major fear given the recent market-fixing convictions of traders in various asset classes. The fined firms include BARC, BAC, C, CS, GS, MS, and UBS.  Also, after the close, F said they are implementing a $700 million plant expansion in KY that will create 500 new hourly jobs.  Finally, Bloomberg reports that APO is seriously exploring a takeover of R.  Shares of R spiked 15% as the news broke late in the day.

In Energy news, as mentioned above, Oil (WTI) rose 2.25% on Tuesday due to cuts in production in the Gulf of Mexico and fear that Hurricane Ian could potentially temporarily take Florida oil storage and refining capacity offline.  A modest pullback in a historically strong Dollar also helped buoy oil prices.  Elsewhere, India and China have temporarily halted the purchase of Russian oil in the last week.  The reason appears to be demand-related as recession fears are facing both those economies. However, the pause also allows those countries to put more pressure on Russia for price concessions in the face of recent global oil price reductions.  Finally, in an odd turn, Senate Minority Leader McConnell (Republican) urged fellow Republicans to vote down a stopgap government funding bill…due to it containing riders intended to appease WV Democrat Manchin.  What makes this odd, is that the riders are massively pro-business and anti-environment as they would reduce environmental regulation and shorten project permitting review timelines.  This is odd because McConnell is from KY where there is a large coal mining industry that would benefit greatly from the bill.  So, this appears to be a just political ploy, calculating that a government shutdown shortly before midterm elections can be blamed on Democrats.

After the close, CALM and BB both reported beating on both the revenue and earnings lines.  (However, the BB number was still a loss.)  So far this morning, THO also reported beating on the top and bottom lines.  However, CTAS and PAYX report closer to the opening bell.

Overnight, Asian markets were red across the board.  Hong Kong (-3.41%), Taiwan (-2.61%), Shenzhen (-2.46%), and South Korea (-2.45%) led the region lower.  In Europe, stocks are also almost exclusively red at mid-day.  The FTSE (-0.45%), DAX (-0.77%), and CAC (-1.15%) are leading the region lower with only Russia (+0.22%) and Switzerland (+0.41%) managing to hang on to green numbers in early afternoon trade.  As of 7:30 am, US Futures are pointing to a gap lower to start the day.  The DIA implies a -0.45% open, the SPY is implying a -0.69% open, and the QQQ implies a -1.13% open at this hour.  10-year bond yields have backed down slightly to 3.941%  and Oil (WTI) is up a third of a percent to $78.76/barrel in early trading.

The major economic news events scheduled for Wednesday include August Goods Trade Balance and August Retail Inventories (both at 8:30 am), August Pending Home Sales (10 am), EIA Weekly Crude Oil Inventories (10:30 am), and many Fed speakers (Bostic at 8:35 am, Bullard at 10:10 am, Chair Powell at 10:15 am, and Bowman at 11 am).  The major earnings reports scheduled for the day include CTAS, HEPS, PAYX, and THO before the open.  Then after the close, CNXC, JEF, and MLKN report. 

In economic news later this week, on Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester).  Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester).

In earnings reports later this week, on Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report.  Finally, on Friday, BKR and CCL report.

LTA Scanning Software

In late-breaking news, the Bank of England has decided to scrap plans to sell UK bonds (reduce its balance sheet) and has temporarily begun buying long-date UK bonds instead. This was an emergency move to try to stop the massive surge bond prices (the inverse of yields), which was at their highest price since 1957. AAPL also gave an ominous signal as it canceled planned increases in iPhone production. This came as the company has not seen the surge in new iPhone sales that it had expected. (Who knew you didn’t need a new $1,000 phone every year?) AAPL stocks was down almost 4% in premarket on the news.

With this backdrop, again, don’t be fooled by a gap lower. The recent pattern has been for price to fade the gap (regardless of its direction) as volatility remains high. So, while the strong bear trend remains in place in all 3 major indices, don’t expect a gap lower to just keep running. Instead, expect more volatility and even though everything looks bearish early, do not forget that the market needs some extension relief. Markets always move in a zig-zag motion and we are definitely in need of a zag to offset the recent strong zig.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

TC2000 Discount

🎯 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 PlansPrivate 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

Premarket Green For Extension Relief

Stocks gapped down Monday (about 0.40% in the large-cap indices and about 0.20% in the QQQ).  After an hour of rallying up to the day’s highs, the selloff to the lows took over from 10:30 am to 2 pm.  At that point, we chopped our way sideways with a very slight bullish trend until a massive selloff in the last 5 minutes of the day.  This action left us with black-bodied Spinning Top type candles. However, the SPY and DIA closed at the lowest level for a close since December 2020. On the other hand, all 3 of the major indices remain very extended below the T-line (ema).

On the day, all 10 sectors were red, with the Energy (-2.68%) and Utilities (-2.46%) sectors leading the way lower.  At the same time, the Consumer Defensive (-0.44%) and Consumer Cyclical (-0.83%) sectors lagged the decline.  Meanwhile, the SPY lost 0.95%, DIA lost 1.06%, and QQQ lost 0.41%.  The VXX rose by 3.73% to 20.56 and T2122 remains deeply oversold at 1.56.  10-year bond yields spiked to 3.924% and Oil (WTI) fell 2.88% to $76.47/barrel. So, overall, it was an ugly, down but still indecisive day.

In Fed news, Boston Fed President Collins told a New England business group that she expects a more modest economic slowdown as the Fed continues to tighten.  She went on to say inflation could be tamed without a pronounced spike in layoffs as part of a “soft landing.”  Meanwhile, Atlanta Fed President Bostic told the Washington Post he doesn’t know if the Fed is being too optimistic or pessimistic, but that the important thing is that we need to get inflation under control.  He also went on to say the new UK government’s decision to do major tax cuts will cause both further inflation and stoke market volatility more broadly than just in the United Kingdom.  (“The key questions will be what this means for ultimately weakening the European economy, which is important for how the US economy will perform.”)  Later, Cleveland Fed President Mester told an MIT audience that inflation will continue to be hard to predict and she was going to be very cautious before declaring victory over inflation.  She went on to say we need to have rising rates until we see several months of declining inflation and “we can’t avoid pain.”

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In stock news, the CEO of UL has announced he will retire at the end of 2023 after a bungled attempt to buy GSK’s consumer healthcare business.  Then, after the close, BIIB finalized a $900 million settlement with the US Dept. of Justice for paying doctors kickbacks in return for prescribing BIIB products.  Elsewhere, the US Forest Service also started a federal investigation into the “Mosquito” fire.  The agency seized some of PCG’s equipment from a transmission pole.  PCG said they are fully cooperating. Elsewhere, SBUX sent a letter to the unions that represent employees at more than 230 of its US stores. The company invited the unions to begin contract negotiations in October.  In other union news, the Intl. Assn of Machinists and Aerospace Workers filed an application to hold an organizing vote among 3,000 of JBLU’s ground crews.  The company opposes having a vote.  At the same time, the UAW has sought speedier recognition by GM at a new battery manufacturing facility in Ohio.  The faster process would forgo a vote if more than half of the plant employees sign a card requesting union representation.

In Energy news, SU announced Monday that it will buy back $1.27 billion in bonds it had previously issued even as S&P had just downgraded SU debt to a BBB rating.  In weather-related issues, BP and CVX both shut down Gulf of Mexico oil production Monday as Hurricane Ian bears down on the top-producing area of the gulf.  This shutdown accounts for about 15% of US daily oil production.  Meanwhile, OXY said it was also implementing its storm protocols “designed to safeguard the environment and personnel safety” (but did not say whether that meant shutting down production).  For their part, SHEL said it is closely monitoring the storm, but is not taking action at this point. Finally, European investigators are rushing to identify the cause of mysterious (potentially sabotage) leaks in the Nord Stream One pipeline under the Baltic Sea. Similar leaks were found in the nearby (and not yet opened) Nord Stream Two pipeline. Shipping in the area has been restricted.

In miscellaneous news, during the day, eight State Attorneys General filed cease and desist orders and lawsuits against crypto lending platform Nexo.  The AGs charged Nexo with offering customers interest on deposits without filing the paperwork to register as a security or to disclose financial disclosures.   Meanwhile, US farmers are lobbying the US government to challenge the looming Mexican ban on importing genetically-modified grain (specifically corn) via the USMCA.  The ban is scheduled to be fully implemented by 2024 and would eliminate about $1.65 billion per year in US corn exports.  The largest companies impacted would be ADM and BG.

Overnight, Asian markets were mixed but the larger exchanges were green led by China.  Shenzhen (+1.94%), Shanghai (+1.40%), and Japan (+0.53%) led the region higher while New Zealand (-1.93%) was an outlier to the downside.  In Europe, stocks are mostly green at midday.  The FTSE (-0.01%) lags due to continued fear over the new Truss government tax cuts impacts.  However, the DAX (+0.73%), and CAC (+0.67%) lead the region higher (with only Russia -0.07% and the FTSE red) in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.85% open, the SPY is implying a +1.08% open, and the QQQ implies a +1.32% open at this hour.  10-year bond yields are down to 3.821% and Oil (WTI) is up 1.36% to $77.75/barrel in early trading.

The major economic news events scheduled for Tuesday include August Durable Goods Orders (8:30 am), Cond. Board Consumer Confidence and August New Home Sales (both at 10 am), and API Weekly Crude Oil Stocks (4:30 pm).  There are also 2 Fed speakers (Chair Powell at 7:30 am and Bullard at 9:55 am).  The major earnings reports scheduled for the day include CBRL, FERG, JBL, SNX, and UNFI before the open.  Then after the close, BB and CALM report.

In economic news later this week, on Wednesday, August Goods Trade Balance, August Retail Inventories, August Pending Home Sales, EIA Weekly Crude Oil Inventories, and a Fed speaker (Bullard) are reported.  Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester). Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester).

In earnings reports later this week, on Wednesday, we hear from CTAS, HEPS, PAYX, THO, CNXC, JEF, and MLKN.  Then Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report.  Finally, on Friday, BKR and CCL report.

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So far this morning, FERG reported a beat on revenue while also missing on the earnings line.   On the opposite side, UNFI missed on revenue while beating on earnings.  JBL, SNX and CBRL all report later, but before the open.

With this backdrop, don’t be fooled by a gap higher. The strong bear trend remains in place across all 3 major indices. So, at this point, this move looks like nothing but relief from over-extension and perhaps a little support from the June Low in the large-cap indices. Expect more volatility and even though everything looks good early, do not forget the trend is not broken. Markets always move in a zig-zag motion and, so far, this doesn’t even qualify as a relief rally. This is just a pause in the run lower until proven otherwise.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

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

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

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

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

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

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

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