Before the open Friday, the Fed’s favorite inflation measure (PCE Index) came in on estimate, down from the previous month’s +5.2%, but still at +4.9%.  This might indicate that inflation has peaked.  This news helped the bulls to gap the QQQ and SPY higher.  In turn, we then saw a strong rally the first hour that slowed over the second hour and ended in a sideways grind in a tight range most of the afternoon before rallying again into the close. However, this rally all happened on below-average volume as it appears traders decided to take off early for the holiday weekend.  On the day, SPY gained 2.45%, DIA gained 1.72%, and QQQ gained 3.26%.  This also ended a 7-week losing streak in all 3 major indices.  The VXX fell 3.44% to 22.46 and T2122 climbed even higher into the overbought territory at 96.56.  10-year bond yields remain flat at 2.743% and Oil (WTI) climbed another nine-tenths of a percent to $115.07/barrel going into the holiday weekend.

The Technology and Consumer Cyclical sectors led the way Friday with TSLA, AAPL, NVDA, AMD, GOOG, AVGO, ADBE, SQ, and DELL leading the way.  However, the Meme stocks were back in vogue as GMA gained more than 43%, AMC gained almost 20%, KOSS gained almost 17%, and BB gained 11.55% on the day.

In electric vehicle news, F delivered its first electric F-150 pickup on Friday according to Bloomberg.  This comes as F increased production plans for the vehicle to 150,000 trucks by mid-2023 and announced that is has more than 200,000 vehicle purchase reservations with deposits.  F stock was up 9.04% on the day Friday. Meanwhile, TSLA has pushed back delivery of its own “Cybertruck” until the end of 2022 or early 2023.  TSLA stock was up 7.33% on Friday.  Never one to let a news cycle go without making a headline, TSLA CEO Musk tweeted that Bill Gates has as much as a $2 billion short position in TSLA.  Meanwhile, electric van maker ELMS warned that it will run out of cash in June (at least one month earlier than previously projected).

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On the Russia story, on Friday Russia wired a $100 million interest payment to its own domestic settlement house.  However, that is not the same thing as paying the foreign investors in their US accounts.  So, technically, Russia is in default on its bond debt.  Those Russian bonds are now trading at 15-20 cents on the dollar of face value.  On Saturday Putin test-fired a “hypersonic” missile 1,000 km across the Barents Sea (in the Norway and Finland neighborhood) as an apparent signal that he is not happy about Sweden and Finland joining NATO.  S&P also cut the Ukrainian credit rating, citing “a more protracted war.”  On Sunday, pro-Russian Serbia agreed to a 3-year deal with Russia for the supply of natural gas and Pro-Putin Hungary got its way as an exemption for pipeline oil was added to the EU’s Russian oil ban proposal.  Finally, on Monday EU leaders agreed on a partial ban of Russian oil imports.  The ban excludes pipeline oil at the insistence of pro-Putin Hungary and means the ban only impacts two-thirds of Europe’s oil imports from Russia.  Still, it is another sanction on the Russian economy.

In response to a user request, here is some news/ideas for longer-term investments.

JPM sent out a note to clients saying that they are expecting up to $250 billion to flow into stocks during June.  This number is their estimate of “rebalancing inflows” where they expect mutual funds, pension funds, and sovereign wealth funds to sell bonds and buy stocks at the new lower prices (better P/E ratios).  These groups have a total of $7.5 trillion under management and the $250 billion would be the rebalancing into stocks required to get back to the overall 60/40 portfolio weight that the group seeks to achieve.  The note went on to say they expect the recently hit tech sector to do well from this reshuffle as the selloff has many tickers selling at a relatively attractive P/E Ratio.  INTC, AAPL, GOOGL, FB, AMAT, and MU are some of the more attractive P/E stocks among the QQQ 100.  This might be of interest for longer-term holdings.

Also for longer-term holdings, MarketWatch put out a list of high dividend-paying stocks that are expected to increase their dividends the most over the next two years.  These are not necessarily the 15 highest dividend payers of the S&P500, but they are the top in terms of current dividend yield and financials pointing to potentially raised yields in the future. These include: EOG, PPL, MTB, RF, OMC, BKR, AMGN, PFG, CFG, WELL, VTRS, VTR, HBAN, MO, C.  (Note that many of these stocks are in the banking and oil industries, which do well in rate increase, oil shortage, and inflationary times.)

Overnight, Asian markets were mixed but lean to the green side.  Shenzhen (+1.92%), Malaysia (+1.75%), and New Zealand (+1.46%) led the winners. Meanwhile, Australia (-1.03%), India (-0.46%), and Japan (-0.33%) paced the losses.  In Europe, at mid-day stocks are mixed but lean to the red side.  The FTSE (+0.34%), DAX (-0.63%), and CAC (-0.70%) lead as usual.  However, there are a number of mixed moves more than one percent by the smaller exchanges as Europe comes to grips with the partial ban on Russian oil (and expected Russian retaliation on natural gas availability).  As of 7:30 am, US Futures are pointing toward modestly lower open.  The DIA implies a -0.50% open, the SPY is implying a -0.45% open, and the QQQ implies a flat -0.04% open at this hour.  10-year bond yields have moved back up to 2.81% and Oil (WTI) is up more than 3% to $118.57 on the news out of Europe.

The major economic news scheduled for release Tuesday is limited to Chicago PMI (9:45 am) and Conf. board Consumer Confidence (10 am). However, there is also a meeting scheduled at the White House between President Biden, Treasury Sec. Yellen, and Fed Chair Powell. This will undoubtedly lead to statements to the press. The major earnings reports scheduled for release include BEKE and LX before the open.  Then after the close, HPQ, YY, CRM, and VSCO report.

Economic news later this week includes May ADP Nonfarm Payroll Change, Mfg. PMI, ISM Mfg. PMI, Fed Beige Book, and 3 Fed speeches on Wednesday.  On Thursday we get Weekly Initial Jobless Claims, Q1 Nonfarm Productivity, Q1 Unit Labor Costs, April Factory Orders, Crude Oil Inventories, and another Fed speaker.  Finally, on Friday we get May Avg. Hourly Earnings, May Nonfarm Payrolls, May Participation Rate, May Unemployment Rate, May Services PMI, and May ISM Non-Mfg. PMI.

Earnings reports scheduled for later this week include CPRI, DCI, WB, CHWY GME, HPE, NTAP, PSTG, PVH, and VEEV on Wednesday.  Then on Thursday, we hear from CAE, CIEN, DBI, HRL, SPTN, TTC, COO CRWD, JOAN, LULU, and RH.  Finally, on Friday we get reports from DOOO.

As traders come back after the long weekend, another Fed Governor (Waller) said Monday that he favors continuing to do half-point rate hikes until after neutral is reached (in order to put inflation back into its place). The bulls are hoping to follow through on their strong showing last week. They are also hoping to push to make May a green monthly candle. However, the fundamental issues of inflation and the impact of rising rates remain just as they were at the end of April. So, the forward-looking market still needs to decide whether we’ll see a soft or hard landing going into year end as well as early 2023. If anyone knows exactly how that will shake out, they are wiser than I am. So, all I can do is follow the trend (which is up in the very short-term and down in the mid and longer-term) and acknowledge the extension of every move. (We are overbought at this point and should see rest/pullback regardless of whether we are currently in a relief rally or not.)

Be very careful chasing any moves early. Remember that the first rule of making big money in the market is to not lose big money in the market. Trading is our job. So, do the work and work the process. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Always move your stops in your favor. Don’t be stubborn. If you have a loss, just admit you were wrong and take it before it grows. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Finally, remember that you get rich steadily in Trading…not by striking it rich on one or two trades.

Ed

Swing Trade Ideas for your consideration and watchlist: TREX, VLO, FUBO, DTE, ENPH, SOFI, T, SQ, DIS, JNJ, C, NVDA, UPST, PLUG. 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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