Markets started the day higher again Friday, gapping up 0.23% in the SPY, up 0.48% in the DIA, and up 0.16% in the QQQ).  At that point, the QQQ rallied hard the first hour while the SPY and DIA were flat over that period.  This was the cue for the Bulls to take off early for the weekend.  The Bears were in control the rest of the way and it was just a matter of degrees.  The QQQ sold off more steeply, SPY sold off slowly, and DIA sold off sharply for 30 minutes before grinding sideways inside the opening gap from 11 am all the way into the close.  This action gave us a gap-up Shooting Star-type candle in the QQQ, a gap-up, black-bodied Spinning Top in the SPY, and a gap-up, small black-bodied Spinning Top in the DIA.  All three major index ETFs remain quite comfortably above their T-line (8ema) and while DIA failed to break through resistance again, no significant technical damage was done.

On the day, eight of the 10 sectors were in the red with Energy (-2.52%) way out front leading the way lower and Healthcare (+0.73%) holding up by far the best among the sectors.  At the same time, SPY lost 0.06%, DIA gained 0.36%, and QQQ lost 0.02%.  The VXX fell 1.20% to 23.92 and T2122 dropped back out of the overbought territory but remains in the top end of the mid-range at 70.83.  10-year bond yields shot back up to 3.846% while Oil (WTI) dropped 2.05% to close at $75.31 per barrel.  So, Friday saw follow-through on the strong week and strong premarket earnings.  However, then it was time to lock in profits and get ready for the weekend news cycle.  This happened with above-average volume in the QQQ, average volume in the DIA, and below-average volume in the SPY.

The major economic news on Friday, June Export Price Index fall much more than was expected at -0.9% (compared to a forecast of -0.2% but not as much as the May value of -1.9%).  At the same time, the June Import Price Index also fell more than expected at -0.2% (versus the forecast of -0.1% but not as far as the May reading of -0.4%).  So, even though this is meant to help explain whether the June Import Dollars and Export Dollars again are a result of higher prices or more goods, we can get a read-through on inflation from those indexes.  And the indexes imply inflation is falling.  Then later, the Preliminary July Consumer Sentiment came in much higher than expected at 72.6 (compared to a forecast of 65.5 and a June reading of 64.4).  Simultaneously, the Preliminary July Consumer Expectations also came in much better than anticipated at 69.4 (versus the 61.8 forecast and the June value of 61.5).  The same survey also gave us a Preliminary July Inflation Expectation also came in slightly above projected at 3.4% (compared to a forecast of 3.3% and a June reading of 3.3%).  (FYI, those are consumer-anticipated inflation over the next 12 months.)  Those survey results tell us the consumer is feeling much better about the present and future but also has slightly raised inflation expectations.

SNAP Case Study | Actual Trade

In stock news, LILM announced a $192 million financing package that includes a $75 million public stock offering and a $42 million private placement.  The stock offering is expected to close on July 18.  Elsewhere, MULN announced Friday that it has sent more than 350 Class 1 electric vehicles to its MS plant for final assembly.  In addition, the company reports 300 other Class 1 vehicles will also arrive at that plant for final assembly during the second half of 2023. At the same time, AAL and JBLU announced Friday that they will stop selling tickets on each other’s airline on July 21 as they wind down the “alliance” agreement in compliance with a court order.  Meanwhile, LLY said they have agreed to buy privately-held Versanis for $1.93 billion.  (Versanis drugs eat fat cells without impacting appetite.)  At the same time, Reuters reported that SAN is expanding its US investment banking operations including hiring 50 new bankers to compete with JPM, GS, MS, and others.  North of the border, Canadian pot company CGC has signed agreements with lenders to reduce its debt by $336 million in the next six months and reduced its interest rates in the process.  (CGC debt as of March 31 was $985 million.)  At the end of the day, Reuters reported that MLTX is exploring a sale.  However, no potential buyer was mentioned.  On Saturday, TSLA announced it completed the first “Cybertruck” after two years of delays.  (Mass production is set to begin at the end of the year.)  Also on Saturday afternoon, UAL announced it has reached a preliminary 4-year deal with pilots.  The deal includes a 40% pay increase over the four years.  On Sunday, ABOS announced that their Alzheimer’s drug has passed an early-stage safety test and will now advance to a larger trial.

In stock legal and regulatory news, on Friday, MSFT submitted a large proposal to the UK Competition and Markets Authority related to its ATVI acquisition.  The watchdog then extended its decision deadline from July 18 to August 29.  Elsewhere, DIS asked a judge to dismiss a lawsuit filed by Florida’s “State Oversight Board” (on behalf of Gov. DeSantis) which seeks to throw out deals made between DIS and the previous (pre- DeSantis takeover) board.  Late in the day Friday, CNBC reported crypto exchange Binance is planning to lay off between 1,500 and 3,000 employees due to the ongoing US Dept. of Justice investigation.  This comes a week after a rash of executives left the company.  CNBC reports sources tell it the probe is likely to end in a consent decree or settlement that will fundamentally change the company’s business model.  A Binance spokesman disputed the numbers but not the story.  Meanwhile, the US Virgin Islands filed a $190 million claim (including $150 million in penalties) against JPM related to the bank’s facilitation of Jeffrey Epstein’s sex trafficking.  (JPM paid $290 million in May to settle a similar claim made by survivors.)  Later, a US 5th Circuit Court of Appeals judge temporarily blocked a lower court injunction that had prohibited Biden Admin officials and agencies from contacting any social media company (META, GOOGL, Twitter, etc.) in relation to the posting of misleading or false information about matters of public health and welfare (general misinformation) especially related to vaccines.  Finally, late Friday a US Appeals Court denied the FTC appeal requesting an injunction against the closing of the MSFT purchase of ATVI.

In miscellaneous news, the widespread (and seemingly correct) belief that the Fed is delivering the goldilocks scenario hoped for from the beginning of rate hikes.  Even notorious Fed critic Mohamed El-Erian has changed his tune, telling Bloomberg “You cannot get in the way right now of the soft-landing narrative—that narrative is building momentum.”  He also said Friday, that at this point if the Fed tries to reach its 2% target too soon, it could end up “breaking something”.  (Indicating, he is now in the “slow and less frequent rate increases” camp.)  Elsewhere, the Actors Guild joined Writers last week to create the first simultaneous strikes in that industry in 60 years.  Media company executives like DIS CEO Iger the workers simply were not being realistic and that they were already paying actors for their likenesses.  (Extra and lower-tier actors are paid for a day’s work to be scanned and then the company owns their likeness forever for AI and CGI use in any future productions.  The entertainment company’s point is that TV is dying, streaming is not profitable on its own, and the fragmented nature of the media space now means that companies cannot afford to pay employees more.  On Sunday, former PARA head Diller said this strike could well lead to catastrophe in the sector for companies like NFLX, DIS, PARA, WBD, etc.  His point was that with so many options available to consumers, viewership (ad revenue) lost may be very hard to regain.

Overnight, Asian markets were mixed.  Shanghai (-0.87%), Shenzhen (-0.63%), and New Zealand (-0.62%) paced the losses.  Meanwhile, India (+0.75%) and Thailand (+0.71%) led the gainers.  In Europe, stocks are leaning to the red side (with the one notable exception of Belgium being up a huge 3.11%) at midday.  The CAC (-1.22%) leads the losses with the DAX (-0.45%) and FTSE (-0.28%) being more typical in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a modestly red start to the day.  The DIA implies a -0.24% open, the SPY is implying a -0.12% open, and the QQQ implies a +0.025% open at this hour.  At the same time, 10-year bond yields are down to 3.787% and Oil (WTI) is off 1.17% to $74.50 per barrel in early trading.

The major economic news events scheduled for Monday are limited to NY Fed Empire State Manufacturing Index.  There are no major earnings reports scheduled for before the opening bell or after the close.  

In economic news later this week, on Tuesday we get June Industrial Production, June Retail Sales, May Business Inventories, May Retail Inventories, and API Weekly Crude Oil Stocks.  Then on Wednesday, Preliminary June Building Permits, Preliminary June Housing Starts, and EIA Crude Oil Inventories are reported.  Thursday, we get Weekly Initial Jobless Claims, Philly Fed Mfg. Index, June Existing Home Sales, and the Fed’s Balance Sheet.  Then Friday, there is no major economics news scheduled.    

In terms of earnings reports, on Tuesday, we hear from BAC, BK, SCHW, LMT, MS, NVS, PNC, PLD, SYF, AIR, IBKR, JBHT, and WAL.  Then Wednesday, ALLY, ASML, BKR, CFG, ELV, FHN, GS, HAL, MTB, NDAQ, NTRS, USB, AA, COLB, CCI, DFS, EFX, IBM, KMI, LVS, LBRT, NFLX, STLD, TSLA, UAL, WTFC, and ZION report.  On Thursday, we hear from ABT, ALFVY, AAL, BX, DHI, EWBC, FITB, FCX, GPC, INFY, JNJ, KVUE, KEY, MAN, MMC, NEM, NOK, PM, POOL, SAP, SNA, SNV, TSM, TRV, TFC, WBS, COF, CSX, ISRG, KNX, PPG, and WRB.  Finally, on Friday, AXP, ALV, AN, CMA, HBAN, IPG, RF, ROP, and SLB report. 

In geopolitical news, Russia killed the UN-brokered Black Sea Grain Deal just ahead of the previous agreement period expiration.  Global Wheat prices spiked 3.5% on that news. On Sunday, Putin had said that it the West unilaterally delivered all the promises made to get the original deal (helping promote and facilitate Russian grain and fertilizer sales) then Russia would immediately reconsider joining the deal.  The last ships covered by the deal left Odesa, Ukraine on Saturday.  Elsewhere, overnight China reported a Q2 miss on GDP but still printed a 6.3% annual growth rate.  The Q2 increase was +0.8% compared to the much bigger +2.2% GDP growth in Q1.  Beijing also said that unemployment in the 16-24 age group was at a record 21.3% in June, which is neither something China likes to admit nor is likely to accept without stimulus to try to head off unrest among that energetic age group.

With that background, it looks like markets are tepid or at least unsure in the premarket. Again, the DIA looks the weakest of the three major index ETFs and is sitting at the bottom of its early session candle. However, all three remain above their T-line and are, so far at least, just giving us a pullback within an uptrend. The only news this morning is that Fed NY Empire State Mfg. Index. That may cause minor volatility but I doubt it will create an earth-shattering change in markets. It seems more likely that traders will be waiting on the earnings from some more of the big boys this week for their next direction check. As far as extension goes, none of the three major index ETFs are stretched from the T-line and the T2122 indicator has fallen back into the top part of the mid-range. So, there is room to run (available buyers/sellers) in either direction.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

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

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