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.)

SNAP Case Study | Actual Trade

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.

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.

🎯 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