The markets opened flat on Monday.  SPY opened dead flat, DIA opened down 0.08%, and QQQ opened down 0.03%.  From there, all three major index ETFs ground to the side in a tight range for an hour.  Then all three rallied modestly for 60 minutes before grinding sideways again for two hours.  At that point, all three sold off for 90 minutes (with QQQ giving the steepest selling) only to end the day with another hour of sideways drift in a tight range.  This action gave us new all-time highs in all three with DIA also giving us a new all-time high close.  However, all three had large upper wicks.  The DIA printed a Bullish Engulfing, QQQ printed a Bearish Harami, and SPY gave us a Shooting Star without the gap up.  With that said, to me, the biggest thing to take note of were those large upper wicks and far less than average volume in all three of the major index ETFs.

On the day, nine of the 10 sectors were in the green as Energy (+1.16%) and Utilities (+1.14%) led the way higher while Technology (-0.19%) was the only sector lagging in the red.  Meanwhile, the SPY lost 0.04%, the DIA gained 0.36%, and QQQ lost 0.39%.  VXX gained 2.14% to close at 14.32 and T2122 spiked into the top end of overbought territory at 96.60.  10-year bond yields rose a bit to 4.179% and Oil (WTI) was flat at +0.13% to close at $76.94 per barrel.  So, Monday was a dead day in the market with long periods of flat trading and offsetting rises and declines.  There were warning signs of exhaustion in the rally with very low volumes and those high wicks.  However, an argument can be made that traders were just waiting on the CPI data.

The major economic news released Monday was limited to NY Fed 1-Year Consumer Inflation Expectations, which came in flat from January at 3.00%.  Later, the January Federal Budget Balance came in much better than expected at -$22 billion (compared to a -$39.3 billion forecast and December’s massive -$129.0 billion). 

In Fed news, Atlanta Fed President Bostic said Monday afternoon that he anticipates that inflation will be near “the low twos” by the end of 2024.  Bostic continued, “With that outlook, I really see the first move (rate cut) coming sometime in the summer.”

After the close, ANET, SCI, WTS, and WM all reported beats on both the revenue and earnings lines.  Meanwhile, CAR, CDNS, GT, JHX, MEDP, and PFG all missed on revenue while beating on earnings.  Unfortunately, BHF and TSE missed on both the top and bottom lines.  It is worth noting that MEDP raised its forward guidance while PFG lowered guidance.

In stock news, GILD announced that it had reached an agreement to acquire CBAY for $32.50 per share.  (GILD expects the deal to close this quarter.)  Later, FANG said it had agreed to buy Endeavor Energy (private) for $26 billion in cash and stock.  The deal would make FANG the third-largest oil and gas producer in the Permian Basin (behind XOM and CVX).  At the same time, VINO announced it is starting a “strategic asset liquidation” plan.  The move is intended to head off what it says is a plan by other companies to drive down their stock price ahead of a takeover bid.   Later, MLM said it had agreed to acquire 20 operations in the Southeast US from Blue Water Industries for $2.05 billion.  Elsewhere, drivers from UBER, LYFT, DASH, and others announced Monday that they will go on strike on Valentine’s Day to demand fair pay.  Later, BB announced it had concluded 200 job cuts in Q4 and is targeting $100 million in added profit from cost savings (from unspecified means) in 2024.  At the same time, JBLU shares jumped 15% when reports stated that Carl Icahn had taken a 10% stake in the airline, saying that the stock was “undervalued.”

In stock legal, governmental, and regulatory news, on Monday a federal judge ordered Elon Musk to testify in the SEC probe of his takeover of Twitter (now X).  Later, KTOS was awarded a $877 million contract with the “Space Systems Command” (Space Force). At the same time, a federal judge ruled that WMT and ENR must face a lawsuit alleging they violated antitrust laws by conspiring to raise the prices of disposable batteries.  Later, the NHTSA said it had closed an investigation into F 2010 Fusion cars related to power steering issues.  At the same time, AWK filed an appeal contesting a December ruling.  The decision could change the management of water in CA’s Monterey County.  Later, in Germany, a ban went into effect against importing, making, or selling INTC server chips which had been found to violate the patent rights of R2 Semiconductors.  (This impacts INTC, DELL, HPQ, HPE, etc. who sell INTC server chips in Germany.)   At the same time, BRKB-owned Jazwares filed suit against BBW alleging that BBW based its new line of plush animals are knockoffs that infringe on its intellectual property rights.  Later, a federal judge blocked an OH law that prevented the access of children 16 and under to META’s Facebook, TikTok, GOOGL’s YouTube, and X without prior parental consent.  After the close, the Attorney General of KY filed suit against KR, claiming the company’s pharmacies contributed to the state’s opioid addiction crisis with more than 11% of all opioid pills in the state prescribed by the retailer. 

Note that the Chinese markets were closed for Lunar New Year and will stay closed all week as well.  Meanwhile, Japan (+2.89%), Malaysia (+1.26%), and South Korea (+1.12%) led the rest of the region higher.  In Europe, we see the opposite picture taking shape with all but two of the 15 bourses in the red.  The CAC (-0.46%), DAX (-0.57%), and FTSE (-0.30%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a gap lower to start the day (ahead of CPI).  The DIA implies a -0.20% open, the SPY is implying a -0.46% open, and the QQQ implies a -0.86% open at this hour.  At the same time, 10-year bond yields are back to 4.16% and Oil (WTI) is up 0.73% to $77.47 per barrel in early trading.

The major economic news scheduled for Tuesday is limited, but important with Jan. Core CPI and Jan. CPI (both at 8:30 a.m.), and Weekly API Crude Oil Stocks (4:30 p.m.).  The major earnings reports scheduled for before the open include AN, BIIB, BRKR, KO, DDOG, ECL, FELE, GFS, HAS, HRI, HWM, INCY, JHX, LCII, LDOS, MAR, TAP, MCO, QSR, SHOP, TRU, WSO, WCC, KLG, and ZTS.  Then, after the close, ABNB, AKAM, ALSN, AMX, AIG, BFAM, DVA, ENTG, EQT, GDDY, GXO, IAC, IOSP, CART, INVH, LYFT, MCY, MGM, MRC, NGD, PRI, QDEL, REZI, SSNC, MODG, WCN, WELL, and ZG report.

In economic news later this week, on Wednesday EIA Crude Oil Inventories are reported.  On Thursday, we get Initial Weekly Jobless Claims, Weekly Continuing Jobless Claims, Jan. Core Retail Sales, Jan. Retail Sales, Jan. Import Price Index, Jan. Export Price Index, NY Empire State Mfg. Index, Jan. Industrial Production, Dec. Business Inventories, Dec. Retail Inventories, the Fed Balance Sheet, and Fed member Bostic speaks.  Finally, on Friday, Jan. Building Permits, Jan. Housing Starts, Jan. Core PPI, Jan. PPI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and Fed member Daly speaks.

In terms of earnings reports later this week, on Wednesday, we hear from AVTR, AVNT, GOLD, BGC, CAE, CRL, CHEF, CME, CNHI, DBD, ES, GNRC, GPN, IQV, KHC, LAD, LPX, MLM, NHYDY, OC, PSN, R, SITE, SAH, SUN, TMHC, WAB, WMB, ALB, ATUS, AWK, AR, APP, ACGL, CF, CC, CSCO, CW, ET, EQIX, HLF, HUBS, KGC, MTW, MFC, OXY, PTEN, CNXN, ROL, SON, SUM, TWLO, TYL, VTR, and WFG.  On Thursday, HOUS, ARCH, CBRE, CVE, CRBG, CROX, DE, DNB, EPAM, GTX, GPC, GEO, HBI, H, NSIT, KELYA, KNF, LH, LECO, DNOW, OGN, PBF, PENN, RS, RPRX, SABR, SN, SO, SPTN, STLA, SLVM, TRGP, USFD, VNT, WEN, WST, YETI, ZBRA, AEM, AL, LNT, AMN, AMAT, BIO, BE, ED, DLR, DASH, DKNG, DBX, GLOB, IR, LBTYA, MERC, OPEN, ROKU, TXRH, TOST, TTD, and TROX report.  Finally, on Friday, we hear from ACDVF, AXL, CNK, POR, PPL, TRP, THS, and VMC.

In miscellaneous news, C told its bond trading customers to be cautious in their bets on the Fed’s rate easing.  The bank recommended trades take a hedged approach to such investments, warning we could see something akin to 1998 when the FOMC did a quick succession of cuts.  However, they warn traders to not be surprised if there is a rate hike in the mix. Elsewhere, Bitcoin closed above $50,000 for the first time in two years on Monday.  At the same time, a survey by BNPQY (BNP Paribas) found that hedge funds (in particular multi-strategy funds) are now returning just $0.41 to their clients for every $1.00 the fund makes.  This is reflecting a new trend where popular funds now have a blank check for expenses. Finally, the US Senate approved a $95 billion bill to provide aid to Ukraine, Israel, and Taiwan. (This is the same bill as a week ago but stripped of the border policy and appropriates that the GOP wants but that the MAGA types don’t want to pass so they can preserve the issue to run on in 2024.) The bill passed 70-29 with strong bipartisan support. However, the House GOP caucus is such a mess that passage in the House remains in serious doubt. (The MAGA types there have said they won’t pass aid without the border components, but killed the earlier bill that gave them what they wanted because their boss wants the issue more than a solution. So, they are in a “damned if you do and damned if you don’t” situation of their own making related to passage of the needed bill.)

So far this morning, AN, BRKR, KO, DDOG, GFS, HWM, LDOS, TAP, QSR, SHOP, and TRU all reported beats on both the revenue and earnings lines.  Meanwhile, MAR missed on revenue while beating on earnings.  On the other side, INCY, MCO, and ZTS beat on revenue while missing on earnings.  Unfortunately, BIIB, HAS, HRI, LCII, WSO, and WCC missed on both the top and bottom lines.  It is worth noting that DDOG, GFS, MAR, and MCO lowered their forward guidance.  (ECL, FELE, JHX, and KLG report at 8 a.m.)

With that background, it looks like the Bears are in control this morning, energized by those high wicks from Monday. Ahead of the CPI print, the Bears are pressing especially hard in the QQQ giving a gap lower to start the premarket and a large red-body candle that is now near a retest of its T-line (8ema) from above. Still, all three major index ETFs remain above their T-line (8ema). So, the Bulls still have control of the trend in both the long and short term. In terms of extension, none of the three is too far from their 8ema yet. However, T2122 is deep into that indicator’s overbought territory. This means the market still has slack to work with if either side of the market gains traction, but the Bears have more room to work with. As I have been saying for months, keep an eye on those 10 huge tech stocks. If they walk in lock-step, whatever direction they decide to go is very likely to call the tune for the rest of the market. And so far in this early session, they are all flashing bright red.

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