NVDA Beat and Retail EPS Keeps Shining

Stocks opened flat Wednesday and then meandered sideways with a slight bearish lean the rest of the day.  This left us with a Bearish Harami Spinning Top in the SPY, a black follow-through (from the prior day’s Gravestone Doji) candle in the DIA, and a Doji in the QQQ.  On the day, SPY lost 0.25%, DIA lost 0.57%, and QQQ gained 0.05%.  The VXX gained 1.63% to 20.52 and T2122 fell to 31.91.  10-year bond yields fell to 1.587% and Oil (WTI) dropped 3.37% to $78.04/barrel.

As noted, Oil dropped hard on Wednesday.  The primary reasons for this were concerns about oversupply expressed in reports from the Intl. Energy Agency and OPEC.  Both organizations cited concerns over the reemergence of Covid in Europe. Not cited, but certainly looming, was the major pressure President Biden has been placed under to release oil from the US strategic reserve.  At any rate, contrary to the concerns about oversupply, US Oil inventories fell 2.1 million barrels last week versus an analyst consensus expectation of an increase of 1.4 million barrels.

After hours, NVDA crushed earnings, easily beating the consensus forecast on both lines.  The company reported an unexpected 55% growth in data center sales as the advent of Artificial Intelligence (which uses specialty cards NVDA makes) grows across the business world.  In earnings news from this morning, retail continues to post strong earnings as M, KSS, JD, and BJ all handily beat on both lines of their reports.  However, BABA missed on both lines, a victim of the Chinese government crackdown on their domestic online industry.  

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Bloomberg reports that JPM economists are now predicting the Fed will make its first interest rate hike in September 2022.  Their report says the economy has changed in fundamental ways since the last time the Fed said outright it did not expect a rate hike until at least 2023.  The author (Michael Feroli) says that the FOMC’s goal of full employment will be reached by the middle of 2022 and the bond-buying taper should be complete by June.  At that point, according to Feroli, the Fed will have no choice but to raise rates in order to fight inflation.  Among the other big bank economists, GS recently said they expect the first rate hike in July, but MS economists still expect rates to remain unchanged throughout all of 2022.

Overnight, Asian markets were mostly red.  Hong Kong (-1.29%), Shenzhen (-0.90%), and India (-0.75%) paced the losses.  Taiwan (+0.44%) and Thailand (+0.39%) were the only appreciable winners in the region Thursday.  In Europe, markets are also mostly in the red at mid-day.  The FTSE (-0.18%), DAX (+0.06%), and CAC (+0.08%) are the big dogs in the region, but many of the smaller exchanges are further south (such as Portugal -0.86%, Norway -0.76%, and Finland -0.69%) in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a green open.  The DIA is implying a +0.10% open, the SPY implies a +0.25% open, and the QQQ is implying a +0.51% open at this hour.

The major economic news scheduled for release Thursday is limited to Weekly Initial Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am) as well as 3 Fed speakers (Bostic at 7:30 am, Williams at 9:30 am, and Daly at 3:30 pm).  Major earnings reports scheduled for the day include BABA, BERY, BJ, CSIQ, PLCE, AVAL, JD, KSS, M, MMS, WOOF, and VIPS before the open.  Then after the close, AMAT, BECN, CAL, FTCH, INTU, PANW, POST, ROST, UGI, WSM, WWD, and WDAY report.

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With strong retail industry earnings continuing (signaling there is no let-up in spending by the consumer), the bulls have plenty of energy to help them run again this morning. Premarket prices are looking to challenge the all-time highs in the SPY and QQQ at the open, with the DIA lagging. Both the short and long-term trends are bullish in the SPY and QQQ and the short-term pullback continues in the DIA. However, that DIA longer-term trend remains bullish and even those mega-caps sit near all-time highs.

Watch your current positions before looking to add any new trades. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings...especially without a hedge.

Ed

Swing Trade Ideas for your consideration and watchlist: M, BBWI, AMD, LAC, MU. 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.

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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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