The bears started the week off with a roar as stocks gapped 1.2% – 1.5% lower at the open Monday.  The bulls never found their footing as prices slowly worked their way lower from the open to reach the lows about 3:45 pm.  Nine of the10 sectors are lower, with Consumer Cyclicals and Technology taken the worst hit (both down more than 2.6%) while Energy was the only sector to barely stay green.  All 3 indices also gave up their T-line (8ema) and 20sma levels as the uptrend line is now clearly broken.  The QQQ is even testing its 34ema for support at the moment. 

All-in-all, it was a strong bear day with a large gap and strong black candle in all the major indices.  On the day, DIA closed down 1.85%, SPY closed down 2.06%, and QQQ was down 2.63%.  Interestingly, VXX was basically flat at 21.22 and 10-year bond yields rose only slightly to 3.029%, indicating traders are not out buying up bonds (which would be normal on a big “risk off” day).  However, T2122 now shows the market is in oversold territory at 19.20, and Oil (WTI) is off just marginally to $90.67/barrel.

In general stock news, F announced 3,000 salaried and contracts job cuts (across North America and India) as part of a restructuring to move more into the electric vehicle market.  Elsewhere, workers at a GE plant in Alabama have launched a union initiative.  (A vote has not yet been authorized by the NLRB, pending the count of submitted union request cards.)  In the healthcare space, PFE and BNTX filed with the FDA for authorization to ship a Covid-19 booster specifically formulated to target the Omicron variant.

SNAP Case Study | Actual Trade

In meme stock news, AMC gapped down 36%, traded in a 27% range, and closed down 42% on the day.   This came after a rival (Regal, which is UK-based) warned of bankruptcy over the weekend and the AMC company distributed what it calls “APE Units” as a dividend over the weekend.  The issuance of APE units are similar to a 2-for-1 stock split.  Another meme stock, BBBY fell more than 16% Monday in follow-through to Friday’s 41% loss.

In energy news, Oil recovered Monday after Saudi Oil Minister bin Salman said the commodity’s futures were detached from fundamentals.  He also said OPEC+ may cut production output if the 2015 Iranian nuclear deal (which allows Iran to export oil) is reinstated.  However, the offset to this news is that Iran has said it can quickly double its 3.8 million barrels per day production if sanctions were lifted.  Elsewhere, COP won an appeal of the $8.7 billion it was awarded by the World Bank Tribunal in 2019.  (This includes over $1 billion in interest on the amount owed since the original award.)  The claim stems from Venezuela’s nationalization of COP’s assets in the country back in 2007.

In economic news, the Equipment Leasing and Finance Assn. (ELFA) said that business borrowing to lease equipment rose 2% in July.  This saw the association’s economic confidence index rise to 50. (Any reading above 50 indicates a positive outlook for the economy.)  In addition, the dollar continues to be extremely strong.  The Euro now trades at 0.993 per dollar and the British Pound is trading at 1.177/dollar making US exports more expensive, but also imports and commodities cheaper.

After the close Monday, NDSN and PANW both beat on the top and bottom lines.  At the same time, ZM reported a miss on revenue while beating on earnings.  So far this morning, JD, MDT, BNS, M, BEKE, SJM, DKS, and XPEV have all posted beats to both the revenue and earnings lines.  However, M, BEKE, and XPEV all lowered their forward guidance.

Overnight, Asian markets leaned strongly to the downside.  Thailand (+1.10%) and India (+0.50%) were the only green in the region.  Meanwhile, Australia (-1.21%), Japan (-1.19%), and South Korea (-1.10%) paced the losses across the region.  In Europe, we see a similar picture taking shape at mid-day.  The FTSE (-0.40%), DAX (+0.09%), and CAC (-0.32%) are leading the region lower with only Russia (+1.17%) and a couple of the minor exchanges showing any strength in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a flat, but green, start to the day.  The DIA implies a +0.08% open, the SPY is implying a +0.10% open, and the QQQ implies a +0.12% open at this hour.  10-year bond yields are flat at 3.02% and Oil (WTI) is up 1.90% to $92.03/barrel in early trading.

The major economic news events scheduled for Tuesday include Mfg. PMI and Services PMI (both at 9:45 am), July New Home Sales, (10 am), and the API Weekly Crude Oil Stocks Report (4:30 pm).  Fed member Kashkari also speaks at 7 pm.  The major earnings reports scheduled for the day include BNS, DKS, DOLE, SJM, JD, BEKE, M, MDT, and XPEV before the open.  Then after the close, AAP, CAL, INTU, LZB, JWN, SCSC, TOL, and URBN report.

In economic news later this week, on Wednesday, July Durable Goods Orders, July Pending Home Sales, Weekly EIA Crude Oil Inventories, and 5-year Bond Auction are reported.  Then Thursday, we get a Q2 GDP Revision, Weekly Jobless Claims, and the Jackson Hole Central Banker Symposium begins.  Finally, on Friday, we get July PCE Price Index, July Personal Spending, July Trade Goods Balance, July Retail Inventories, Michigan Consumer Sentiment, and the Jackson Hole Central Banker Symposium continues with Fed Chair Powell Speaking.

In earnings later this week, on Wednesday we get reports from EAT, CY, IIVI, WOOF, RY, ADSK, GES, NTAP, NVCA, CRM, SPLK, VSCO, and WSM.  Then Thursday we hear from ANF, BURL, CM, COTY, DG, DLTR, GFI, GOGL, HAIN, PTON, TD, DELL, FTCH, GPS, MRVL, ULTA, VMW, and WDAY.  Finally, on Friday JKS reports.

The bears ran wild on Monday, but the QQQ seems to be trying to hold its 34ema and the DIA may be trying to hold its own 20sma as support. The bulls will have a tailwind this morning from great earnings to start the day, but even in that victory, pessimists are looking at things like JD’s beats through a bearish lens. Plus, there is bad news in things like M cutting full-year guidance. Many traders are waiting to hear what Fed Chair Jerome Powell has to say in Jackson Hole on Friday before they take any firm view. Still, what they are trying to handicap is just whether the Fed will raise rates by 0.50% or 0.75% in September. Will Powell’s words really tell us anything a full month before the September 21 decisions date? And would that quarter of a percent make a huge difference? I don’t think so, but Mr. Market gets the only vote on both counts. With all of that said, the short-term trend is bearish and the mid-term bullish trend has been broken. So, we’re fast approaching levels of potential support, but need to reestablish a longer-term trend one way or the other. For now, the bias is bearish.

Demonstrate patience and wait for confirmation. 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. 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: DVN, MRO, OXY, APA, MOS, XLE, XOM, EOG, VLO, DE, CVX, GM, NTR, KMI, PG. 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