Stocks all gapped higher, but diverged in doing so yesterday with the traders seeming to bet that the Fed announcement would be positive for the market.  The DIA gapped up four-tenths of a percent, the SPY gapped up nine-tenths of a percent, and the QQQ gapped up 1.6% higher.  After a little follow-through, the first 30 minutes all 3 major indices traded flat (even through the Fed rate announcement) until after Fed Chair Presser started.  However, the move at 2:40 pm was meteoric to the upside.  We then saw the rally continue more-or-less into the close.  This left us with a Bull Kicker in the QQQ and SPY, and just a gap-up strong white candle in the DIA. 

Almost 62% of stocks are now above their 40sma and 23.54% of them are above their 200sma.  So, all 3 major indices are also back above their T-lines (8 ema). The volume on the day was better than Tuesday, but still well below an average that continues to decline.  All 10 sectors were green, with Technology far and away the big winner, up 4.37%.  On the day, SPY gained 2.60%, DIA gained 1.41%, and QQQ gained 4.23%.  The VXX fell 1.7% to 21.31 and T2122 climbed high into the overbought territory at 97.16.  10-year bond yields fell to 2.776% and Oil (WTI) spiked 3.3% to $98.12 (apparently on answers from Chair Powell that we are not in a recession).

As expected, the Fed (in a unanimous vote) raised rates 0.75%, which takes the rate to 2.25-2.50% on Wednesday.  The hike itself was fully priced-in and markets had very little reaction on the hike news alone.  However, Fed Chair Powell’s press conference set off a massive afternoon rally.  In his presser, Powell said he did not think the US was in a recession yet (we’ll find out later this morning). He also said it would be appropriate at some point for the Fed to slow increases and assess how the overall policy was impacting both inflation and the economy.  This left open the possibility for a lesser increase in Sept. which is what I think may have led to the presser-timed rally.  He went on to point out the job growth remains robust and unemployment remains low.

SNAP Case Study | Actual Trade

In business news, the US Senate passed the “Chips and Science” bill in a bipartisan vote.  This bill provides $52 billion in subsidies along with another $24 billion in tax credits for semiconductor manufacturing in the US.  The House is expected to pass the revised bill later this week.  The bill disproportionately benefits INTC, TXN, and MU. (INTC alone is expected to get $30 billion in subsidies.)  However, chip designers like AMD, QCOM, and NVDA (regardless of the uproar over insider trading claiming they will benefit) are left out in the cold.  This is because the latter group does not make chips.  Instead, they contract out the production to TSM and to a lesser extent Global Foundries.

In stock news, after the close, SAVE canceled its negotiations with potential buyer ULCC after months of negotiations.  SAVE’s talks with JBLU (another potential buyer) continue.  (Then overnight JBLU agreed to buy SAVE for $3.8 billion.) However, any potential purchase may face monopoly scrutiny related to the Northeast corridor routes.  Elsewhere, BBY lowered its forward guidance and is now expecting a drop of 13% in sales in Q3 and an 11% drop for the year.  CS also announced they have replaced their CEO.

After the close, F, QCOM, MOH, CHRW, MUSA, LRCX, URI, FBHS, NCR, NOV, MTH, CSL, HOLX, GFL, CCS, ASGN, PLXS, MKSI, FIX, MYRG, CMPR, ACHC, AVB, QGEN, ETSY, GGG, TDOC, INVH, SLM, SNBR, MAA, FRWD, TYL, VICI, HP, and EQT all reported beats on both the top and bottom lines.  Meanwhile, FLEX, WFG, RJF, FTI, OMF, KGC, and OII all beat on revenue while missing on earnings.  On the other side, CTSH, RE, ACGL, EQIX, NOW, AWK, AEM, TROX, FLS, ICLR, ESI, COLM, AMED, CHE, and CHDN all missed on revenue while beating on earnings.  However, META, ORLY, CYH, CINF, SSNC, MEOH, ALGN, LUNMF, CAKE, AR, JBT, and PTC all missed on both the revenue and earnings lines.

Overnight, Asian markets were almost green across the board.  Only Hong Kong (-0.23%) and Taiwan (-0.20%) showed any red.  Meanwhile, New Zealand (+1.74%), India (+1.73%), and Thailand (+1.50%) led the region higher.  In Europe, stocks are showing a similar pattern at mid-day.  It is the biggest exchanges that lag the rally with the FTSE (-0.15%), DAX (+0.01%), and CAC (+0.13%) following the rest of the continent in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly down start to the day.  The DIA implies a -0.14% open, the SPY is implying a -0.22% open, and the QQQ implies a -0.56% open at this hour.  10-year bond yields are up slightly to 2.785% and Oil (WTI) is up more than 2% to $99.24/barrel in early trading.

The major economic news events scheduled for Thursday are limited to Q2 GDP and Weekly Initial jobless Claims (both at 8:30 am).  Treasury Sec. Yellen also speaks at 8:30 am.  The major earnings reports scheduled for the day include AOS, AGCO, ALLE, MO, AMT, BUD, HOUS, MT, ARCH, ARES, ABG, BAX, BFH, BC, CP, CRS, CARR, CVE, CMS, CNX, CMCSA, DTE, EXP, EME, EEFT, FAF, FCNCA, FCFS, FMX, FTS, FTV, BEN, FCN, GTX, GOL, GVA, HOG, HSY, HTZ, HON, IP, JHG, KDP, KEX, LH, LAZ, LII, LECO, LIN, LKQ, MDC, MMP, HZO, MLM, MAS, MA, MRK, NOC, ORI, OSK, OSTK, PATK, PBF, BTU, PFE, PCG, BPOP, POR, RS, RCL, SNY, SNDR, SHEL, SIRI, SAH, SO, LUV, SWK, STM, TROW, TRP, TFX, TXT, TMO, TKR, TNL, VLO, VSTO, VC, WST, WEX, WTW, and XEL before the open.  Then after the close, AMZN, AAPL, ATR, AJG, AVTR, BZH, BIO, CE, CC, CLR, DECK, DXCM, DLR, EMN, EIX, EW, ERIE, FSLR, HIG, INTC, KLAC, LHX, LBTYA, MTD, MTX, MHK, OLN, ROKU, SKYW, TXRH, TFII, UCTT, X, VALE, VFC, INT, and AUY report.

So far this morning, CMCSA, VLO, PFE, MRK, SNY, TMO, HON, CVE, LIN, MO, PBF, IP, CARR, SO, ASX, LUV, LH, RS, TXT, KDP, XEL, STM, ABG, AMT, HSY, BC, MDC, ARES, TKR, AOS, VSTO, ALLE, WST, EEFT, VC, KEX, VIRT, POR, EXP, WEX, VLY, TRTN, HEES, KIM, CBZ, and STNG all beat on both the top and bottom lines.  At the same time, MT, BUD, NOC, LKQ, FAF, HOG, LAZ, TNL, TFX, HZO, FCFS, SHEL, and WTW all missed on revenue while beating on earnings.  On the other side, DTE, SIRI, FTS, and ARCH beat on revenue while missing on earnings.  However, SWK, SAH, DTE, BAX, MAS, OSK, TROW, GVA, GTX, OSTK, and JHG all missed on both the top and bottom lines.

In economic news coming later this week, Friday we get the June PCE Price Index, Q2 Employment Cost Index, June Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.

As usual on Fed rate hikes, the market seems to have rethought the late afternoon rally from yesterday and is looking to open tepidly bearish…pending the GDP news, of course. Truthfully, the GDP print (and whether we are actually already in a recession) will drive trading today…especially if it says we are. Also, don’t discount the talking heads rehashing and reparsing every word Powell said yesterday. That may cause fluctuations across the market as every Tom, Dick, and Harry tells us what Powell “was really saying or implying.” Beyond that, we now have higher lows and higher highs in all 3 major indices, which is the very definition of an uptrend. However, don’t be surprised if/when we see more intraday whipsaw action.

Remember that trading is our job. So, 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. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. 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: ENVX, DOV, MRO, GE, F, BEAM, TXN, NFLX, NOK, 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.

🎯 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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