Markets were a bit divergent, but mostly sideways on Monday. SPY opened 0.04% lower, DIA gapped up 0.35%, and QQQ gapped down 0.44%. After that star, all three major index ETFs were more volatile during the first hour, but then ground their way to the side the rest of the day. This action gave is indecisive candles with DIA and SPY on the upside and QQQ down. SPY printed a white-bodied, Hanging Man type candle sitting very near the August highs and even the all-time highs from July. At the same time, DIA gave us a white-body, Spinning Top, candle that printed both a new all-time high and a new all-time high close. Meanwhile, QQQ printed a long-legged Doji Harami type, perhaps indicating it had failed the downtrend line Friday. This happened on below-average volume in all three of the major index ETFs.
On the day, all 10 sectors were in the green again, with Energy (+1.28%) out in front of the others leading the market higher. On the other side, Consumer Cyclical (+0.16%) lagged well behind the other sectors. Meanwhile, SPY increased 0.15%, DIA added 0.59%, and QQQ fell 0.44%. VXX gained just less than one percent to close at 49.24% and T2122 fell slightly but remains in the top of its over-bought range at 94.93. At the same time, 10-Year bond yields fell to close at 3.621% while Oil (WTI) gained 2.65% to close at $70.47 per barrel. So, on Monday the Bulls got their new all-time high in DIA. However, for the most part, it was a “wait and see” day as traders look forward to the Fed rate decision and Chairman’s press conference on Wednesday afternoon.
The only major economic news scheduled for Monday was the NY Fed Empire State Mfg. Index, which came in quite a bit stronger than expected at 11.50 (compared to a forecast of -4.10 and the August reading of -4.70). This was the sixth straight month of increases in this indicator of manufacturing strength.
In stock news, on Monday, BA announced a hiring freeze, paused all non-essential staff travel, and are considering temporary layoffs according to CNBC. This comes after the union leader for the 33k striking BA workers said he thinks “the work stoppage will drag on for some time.” At the same time, the Teamsters Union announced that hundreds of AMZN delivery drivers in NY have joined the union. Later, TGT announced it will hire 100k season employees this year (in-line with the last three years). In addition, TGT announced it start its holiday promotions early, on October 6. At the same time, Bloomberg reported that CG is reviving its plan to IPO its Nouryon chemical business. Later, AMZN CEO Jassy announced he intends to streamline the company, eliminating management layers with a goal of increasing the employee to manager ratio by 15%. He also announced AMZN will require its employees to return to the office five days per week. During a subsequent Q/A session, Jassy also said that AMZN is eliminating a program that let employees work from anywhere for up to four months per year.
Elsewhere, Reuters reported that BX and Vista Equity Partners are in advanced talks and near a deal to acquire SMAR for roughly $8 billion ($56/share). At the same time, an ET natural gas liquids pipeline in La Porte, TX caught fire, knocking out power to nearly 1,000 homes and businesses in the area. After the close, INTC said it plans to set up its Foundry Services unit as an independent subsidiary. (Many traders see this as a potential pre-cursor to INTC potentially spinning off the unit based on recent comments by CEO Gelsinger that INTC is open to considering the sale of some units.) Separately, INTC announced a multi-year, multi-billion per year, deal with AMZN to co-invest in custom chip designs for use in AMZN’s AWS cloud computing services. Also after the close, Bloomberg reported that TUP is preparing to file for bankruptcy as soon as this week. At the same time, MSFT approved a new $60 billion share buyback program and declared a $0.83 Q3 dividend (which is a 10% increase over Q2’s dividend).
In stock legal and governmental news, on Monday, Reuters reported that forty of the world’s leading banks have joined the G-7 pilot digital currency project run by the New York Fed. This list includes JPM, HSBC, UBS, and MUFG. Later, INTC was awarded up to $3 billion to develop a “Secure Enclave” (which are critical component chips used across a variety of weapons and national security products). At the same time, a US District Appeals Court ruled in favor of XOM, CVX, DVN, ET, OXY, PSX, and CLR by ruling against an appeal made by two dozen consumers of their 2020 lawsuit. The court said there was a lack of proof of the companies’ collusion with Russia and Saudia Arabia to cut oil production to keep oil prices higher. Later, an OR state judge threw out a $260 million jury verdict against JNJ related to the company’s talc (which contained asbestos) causing a woman’s mesothelioma. The judge ordered a new trial, saying the plaintiff’s lawyers had committed “egregious errors.” After the close, the UAW union filed unfair labor practices charges with the NRLB against STLA.
In miscellaneous news, on Monday, the US offshore energy regulator announced that 20% of US Gulf of Mexico oil production and 28% of its natural gas output in the area remain offline following Hurricane Francine. Elsewhere, interest rate futures indicated that more traders are expecting a 50-basis-point rate cut on Wednesday. Probabilities of a half percent cut increased from 30% a week ago, to 50% on Sunday to 62% after the close Monday.
Overnight, Asian markets were mostly green. Hong Kong (+1.34%) led eight gaining exchanges higher while Japan (-1.03%) and Shenzhen (-0.88%) led four lower. The picture is even more green in Europe as 12 of the 14 bourses are above break-even at midday. The CAC (+0.57%), DAX (+0.59%), and FTSE (+0.61%) lead the region higher in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day. The DIA implies a +0.19% open, the SPY is implying a +0.25% open, and the QQQ implies a +0.42% open at this hour. At the same time, 10-Year bond yields are down to 3.61% and Oil (WTI) is just on the green side of flat at $70.16 per barrel in early trading.
The major economic news scheduled for Tuesday includes August Core Retail Sales and August Retail Sales (both at 8:30 a.m.), August Industrial Production (9:15 a.m.), July Business Inventories and July Retail Inventories (10 a.m.), and Weekly API Crude Oil Stocks (4:30 p.m.). The only major earnings reports scheduled for either before the open or after the close is FERG prior to the open.
In economic news later this week, on Wednesday, August Building Permits, August Housing Starts, Weekly EIA Crude Oil Inventories, Fed Rate Decision, FOMC Statement, Current Q3 Interest Rate Projection, 1st-Year Q3 Interest Rate Projection, 2nd-Year Q3 Interest Rate Projection, 3rd-Year Q3 Interest Rate Projection, Longer-Term Q3 Interest Rate Projection, FOMC Economic Growth Projections, Fed Chair Press Conference, and TIC Net Long-Term Transactions are reported. On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q2 Current Account, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, August Existing Home Sales, August US Leading Economic Index, and Fed Balance Sheet. Finally, on Friday, there is no major news, but Fed member Harker speaks.
In terms of earnings reports later this week, on Wednesday, GIS and SCS report. On Thursday, we hear from CBRL, DRI, FDS, FDX, LEN, and MLKN. Finally, on Friday there are no earnings reports of note.
So far this morning, FERG missed on revenue while beating on earnings. FERG also raised its forward guidance.
With that background, it looks as if markets are bullish again in the premarket. All three major index ETFs opened higher (with QQQ providing the biggest gap up) and have traded modestly bullish from that open. DIA is sitting at another all-time high, SPY is retesting its own all-time high, meanwhile QQQ is back up to retest its mid-term downtrend line stretching back to early-July. All three remain above their T-line (8ema). So, the short-term trend is bullish. The mid-term trend remains mixed (barely) with the QQQ bearish and just below its downtrend line while the others chase clean air at their highs. In the longer-term we still have a Bull trend all three major index ETFs. In terms of extension, none of the three major index ETFs are extended above their T-lines yet. However, at the same time, the T2122 indicator remains in the top end of its overbought range. So, markets have room to run either direction (if one side or the other can find momentum), but the Bears have a little more slack to work with today. With regard to those 10 big dog tickers, nine of the 10 are in the green so far this morning. INTC (+7.13%) is far and away the percentage gainer on the news of the split out of its Foundry business. Meanwhile, NVDA (+0.71%) is, as always, the dollar-volume leader. Only AAPL (-0.17%) lags among the big dogs.
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.
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🎯 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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