Monday was a bit of a Bull trap.  SPY gapped up 0.19%, DIA gapped up 0.18%, but QQQ opened 0.08% lower. Initially, DIA rallied to new highs during the first hour. However, SPY and especially QQQ sold off sharply for that first hour.  DIA followed them in a much more modest selling the second hour.  From there, all three major index ETFs chopped sideways in waves along their lows the rest of the day.  With that said, DIA did manage to print a new all-time high and new all-time high close by about 80 cents.  This action gave us a white-bodied, Shooting Star candle in the DIA, a Dark Cloud Cover candle in the SPY, and a black-bodied Bearish Doji Continuation Pattern in the QQQ.  All three were done on below-average volume, although DIA was close to average.

On the day, five of the 10 sectors were in the green with Energy (+1.18%) way out front (0.72%) leading the way higher.  Meanwhile, Consumer Cyclical (-1.00%) led the five laggards.  At the same time, SPY lost 0.24%, DIA gained 0.22%, and QQQ lost 0.97%.  VXX was flat, closing at 45.90% and T2122 fell but remains in the top of its overbought territory to close at 95.68.  10-year bond yields rose to close at 3.82% while Oil (WTI) spiked 3.11% to close at $77.16 per barrel on the massive Israeli airstrikes in Lebanon.  So, Monday was a case of DIA reaching for the all-time highs while the tech-heavy QQQ and still-tech laden SPY lagged.  (NVDA -2.25% traded 3.5 times more dollar volume than the next closes stock, which was TSLA -3.23% followed by AMD -3.22%.  So, both the QQQ and SPY were pushing a rock uphill all day.

The major economic news scheduled for Monday was limited to July Durable Goods, which came in MASSIVELY higher than expected at +9.9% (compared to a +4.0% forecast and a June reading of -6.9%).  On the “core” front, July Core Durable Goods actually showed weaker than predicted at -0.2% (versus a 0.0% forecast and June’s +0.1% reading). 

In Fed news, Richmond Fed President Barkin told a Bloomberg podcast he thinks the prior tight labor market has companies engaging in a “low-hiring, low-firing” approach. (In other words, they have so much trouble finding employees, they have just hired fewer but are reluctant to fire them for fear of not being able to replace them later.)  Barkin expressed fear that this could lead to a rash of layoffs later, when companies can’t take the bad financial returns if the economy softens.  However, it could also lead to a new rash of hiring if the soft landing moves ahead.  Either way, he doesn’t think the current situation will last.  Barking said, “Either demand will continue and people will start hiring again, or you will start to see layoffs.”   He continued, “We are in a low-hiring, low-firing, mode. That does not feel like something that is going to persist. It is going to move left or it is going to move right.”  Barkin went on to indicate that he is likely pointing toward a quarter-point rate cut in September that would allow the Fed to “test-and-learn” as they gauge the impacts of rate cuts on the economy. 

ILater, San Francisco Fed President Daly told Bloomberg, “The time is upon us (to cut rates.) … (It’s) Hard to imagine anything that could derail a September rate cut.”  She went on to say, “We haven’t seen any deterioration yet in the labor market.” However, she also said the Fed may have to go to a half-percent cut, rather than a quarter-point, saying, “If the labor market weakens more than anticipated, we would need to be more aggressive (than the traditional quarter-percent cuts).” 

After the close, HEI reported beats on both the revenue and earnings lines.  At the same time, TCOM missed on revenue while beating on earnings.

In stock news, on Monday, the CEO of SEDG stepped down and was replaced by insider Ronen Faier.  Later, NSC announced that all embargoes associated with the Canadian rail shutdown have been lifted.  This effectively ends the impact of the Canadian rail strike on freight shipment.  However, it may take a few weeks to recover (get backlogs worked down) from just that short disruption.  After the close, META announced it struck a deal with Sage Geothermal to supply its datacenters with 150 megawatts by 2027 (or roughly enough power for 38,000 homes).  No terms were released.  Later, SHEL announced it plans to shutdown portions of its Zydeco pipeline in LA for 3-4 days starting on September 24 for maintenance.  (The pipeline ships 375k barrels of crude per day from Houston to the state of LA.)  The oil giants released very different forecasts Monday.  XOM said it expects oil demand to stay where it is through 2050 while BP said it expects oil demand to be 25% less than XOM by 2050.  (Hence, XOM, the top US oil producer is expanding production while BP plans to cut production to less than half of XOM’s output by 2030.)  Elsewhere, AAPL officially announced it will hold its new product launch on September 9, when the company is expected to release new versions of iPhones and Apple Watches.

In stock legal and governmental news, on Monday, it was announced a US District just had received (after the close Friday) and approved a price-rigging settlement involving GS, BASFY (BASF), HSBC, and London-based ICBC bank.  The four defendants agreed to pay $20 million to settle a case for rigging the price of platinum and palladium over a six-year period ending in 2014.  At the same time, IAC agreed to pay $8.5 million to settle FTC charges it continued billing customers after they had cancelled memberships at care.com from 2019 to 2022.  Later, UBER was fined $324 million in the Netherlands for sending the personal information of Dutch taxi drivers to the US over a three-year period.  At the same time, Canada announced it is imposing a 100% tariff on Chinese electric vehicles (including TSLAs). 

Meanwhile, after the close, BK agreed to pay $5 million to settled CFTC charges for repeatedly failing to report swap transactions, violating a previous order to do so. At the same time, the 5th Circuit Court of Appeals ruled 2-1 in favor of allowing TSLA to sue the state of LA over its law that bans the direct sale of cars to consumers (as opposed to doing so via a dealer).  Later, the NLRB ruled that CMG illegally refused to give raises to workers that had unionized, while doing so to other employees and also not negotiating with their union representatives.  At the same time, a federal judge rejected a banking-industry challenge to rules adopted by the CFPB that requires lenders to gather demographic data on small business borrowers.  (The idea is that so long as the data is not collected the banks cannot be charged with discriminatory lending practices.)  Elsewhere, JPM was sued in a proposed class-action suit over sweeping customer’s idle cash into their “unreasonably low” interest rate accounts.

Overnight, Asian markets were mixed but leaned toward the red as seven of the 12 exchanges posted losses.  Shenzhen (-1.11%) and New Zealand (-1.10%) were by far the biggest losers while Malaysia (+0.81%) was by far the biggest gainer.  In Europe, we see a similar mixed picture at midday with only six of 14 bourses (CNBC has stopped sharing Russian exchange results) in the green.  The CAC (-0.03%), DAX (+0.20%), and FTSE (+0.33%) lead the region in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start just on the red side of flat.  The DIA implies a -0.07% open, SPY is implying a -0.06% open, and the QQQ implies a -0.02% open at this hour.  At the same time, 10-Year bond yields are up to 3.85% and Oil (WTI) is off by 0.53% to $77.01 per barrel in early trading.

The major economic news scheduled for Tuesday is limited to Conference Board Consumer Confidence (10 a.m.) and API Weekly Crude Oil Stock report (4:30 p.m.).  The major earnings reports scheduled for before the open is limited to BMO, BNS, and SCSC.  Then, after the close, YY, JWN, and PVH report.

So far this morning, BNS reported a beat on both the revenue and earnings line.  At the same time, BMO beat on revenue while missing on earnings.

In economic news later this week, on Wednesday, EIA Crude Oil Inventories are reported.  We also hear from Fed Governor Waller and Fed member Bostic.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q2 GDP, Preliminary Q2 GDP Price Index, July Goods Trade Balance, Preliminary July Retail Inventories, July Pending Home Sales, and the Fed Balance Sheet.  We also hear from Fed member Bostic.  Finally, on Friday, we get July Core PCE Price Index, July PCE Price Index, July Personal Spending, Aug Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Wednesday, ANF, BBWI, CHWY, DCI, FL, HMY, SJM, KSS, LI, PDCO, RY, AFRM, COO, CRWD, FIVE, GEF, GES, HPQ, NTAP, NTNX, NVDA, OKTA, PSTG, CRM, VEEV, and VSCO report.  On Thursday, we hear from AEO, BBY, BIRK, BF.B, BURL, CPB, CM, DG, GMS, OLLI, PSNY, TITN, AMRK, ADSK, DELL, GAP, LULU, MRVL, and ULTA.  Finally, on Friday, JKS and MNSO report.

In miscellaneous news, on Monday BAC analysts reported that CTAs (trend-following funds) still have potential for systematic buying. It reports that an early-August pullback by the market gave entry signals to those CTA funds, which began buying.  According to the BAC model, the trend suggests buying into the end of the month at least under their median projections.  Elsewhere, the Commerce Dept. reported Monday that new orders for non-defense capital goods (a proxy for business spending) fell 0.1% in July and the June number was revised down to +0.5%.  (The initial estimate for June had been +0.9%.)  Essentially, this means businesses spent slightly less on equipment in July.  Finally, Bloomberg reports that Mpox is running ramped in Africa.  Hundreds have died and thousands have been hospitalized by virus.  Coming just four years after the COVID-19 global pandemic, the WHO is understandably worried and has issued its highest alert level.

With that background, all three major index ETFs are giving us indecisive, Doji-like candles so far in the premarket. QQQ retested its T-line (8ema), and so far has passed the test by staying above. However, all three are essentially flat from Monday’s close. All three are above their T-line and the short-term trend is still bullish. At the same time, the mid-term bearish trend is bullish and in the long-term, we are now clearly back in a Bull trend. In terms of extension, none of the three are stretched above their T-line. However, the T2122 indicator is still in the top end of its overbought range. So, the market Bulls could use more rest or pullback. However, keep in mind that the market can remain overdone longer than you can stay solvent predicting turns. Remember the mantra “follow, don’t lead, but also don’t chase” in mind. (In a volatile market, that may mean sitting on your hands.) With regard to those 10 big dog tickers, eight of the 10 are in the green with only AAPL (-0.26%) and META (-0.02%) in the red. NFLX (+0.55%) leads the pack while the biggest dog NVDA (+0.17%) has traded 3.5 times as much dollar-volume than any other ticker again this morning.

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 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 gains are 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