NY Mfg. This AM, Retailers Report In Days

On Friday, stocks gapped up 1% – 1.5% in the major indices and then followed through to the highs of the day just after noon.  Then the afternoon saw a roller-coaster ride that ended on an upswing, but not at the highs.  This left us with gap-up, white candles that failed a test of the down-trending T-line (8ema) in all three major indices and the small-cap IWM.  On the day, SPY gained 2.34%, DIA gained 1.45%, and QQQ gained 3.71%.  The VXX fell more than 3.5% to 25.97 and T2122 climbed out of the oversold territory to 25.97.  10-year bond yields closed up to 2.937% and Oil jumped 4% to $110.38/barrel.  On the week, all the major indices printed gap-down, indecisive, long-legged Spinning Top candles.

Part of the reason for Friday’s rally was the Fed removing some uncertainty from the market.  FOMC Chair Powell said on Thursday that larger rate hikes are off the table for now, but the Fed will be hiking rates half of a percent at each of the next two Fed meetings (June 15 and July 27).  Elsewhere, it was revealed that top tax officials from the US, UK, Canada, Australia, and the Netherlands met in London Friday to discuss 50 potential crypto-based tax crimes.  These crimes include a $1 billion Ponzi scheme carried out cross-border using an unspecified cryptocurrency as well as NFTs.

Meme stock trading came back into vogue last week.  Some examples include GMA closing up almost 10% on a 10% gap up Monday and trading in a 12.5% range over the week.  AMC closed down 14.17% while trading in a 45% range during the week.  BBBY closed down more than 20% and traded in a 35% range during the week.  BB closed up about 4% after trading in a 25% range during the week.  Finally, HOOD closed up 5.63% after trading in a 41% range over the week.

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On the Russian invasion story, Russia took action against Finland, stopping the supply of electricity (20% of the country’s power supply) and also stopping the flow of natural gas (used to generate another 6% of the country’s power) after the Finn government announced it will ask parliament to approve an application for NATO membership.  On Sunday, Sweden followed suit, with PM Andersson saying the country will now work toward NATO membership.  (This raises the question of how Russia will react. Will they cut off gas flows to Europe as they did to Finland?) Early Monday, MCD said it will sell its closed Russian stores rather than ever try to reopen.  From Russia’s standpoint, this raises the specter of whether the 1,000 companies which closed operations in its country will ever reopen. Elsewhere, India has banned wheat exports in anticipation of a global shortage due to Ukraine being unable to ship grain and droughts worldwide.  This is not a huge fear for the US (other than price hikes being ensured). However, Asia, Africa, and to a lesser extent parts of Europe need to worry about food shortages coming.

Energy markets and stocks/ETFs may face more turmoil this week.  In Europe, nat. gas prices were up 10% last week after the shutdown of one-third of the Russian Natural gas flow.  This week the EU is expected to unveil its $195 billion Euro plan to completely stop importing Russian oil and gas by 2027.  The plan is expected to include deals with Egypt, Israel, and Nigeria for natural gas to replace the current Russian supply as a stop-gap.  Elsewhere this week, many of the major US retailers will be reporting this week.  So, there may be guidance or at least a read-through on the outlook for consumers as markets gauge a potential economic slowdown.

Economic news later this week includes April Retail Sales, April Industrial Production, Mar. Business Inventories, Mar. Retail Inventories, and a couple Fed speakers on Tuesday.  On Wednesday we get April Building Permits, April Housing Starts, and Crude Oil Inventories.  Then Thursday we see Weekly Jobless Claims, Philly Fed Mfg. Index, and April Existing Home Sales.  There is no major news scheduled for Friday.

Overnight, Asian markets were mixed in very modes moves (by recent standards).  Singapore (+0.82%), Japan (+0.45%), and Taiwan (+0.43%) led the gains.  Meanwhile, Shenzhen (-0.59%), Shanghai (-0.34%), and South Korea (-0.29%) paced the losses.  In Europe, we see a similar story taking shape at mid-day.  Notable exceptions are Russia (+2.25%) and Denmark (+1.65%).  However, the FTSE (+0.05%), DAX (-0.53%), and CAC (-0.29%) lead the way as usual.  As of 7:30 am, US Futures are pointing toward a slightly negative start to the day.  The DIA implies a -0.14% open, the SPY is implying a -0.34% open, and the QQQ implies a -0.48% open at this hour.  10-year bond yields are down a bit to 2.913% and Oil (WTI) is also down almost 1% to $109.42/barrel.

The major economic news scheduled for release on Monday is limited to NY Empire State Mfg. Index (8:30 am) and a Fed speaker (Williams at 8:55 am).  Major earnings reports scheduled for the day are limited to TSEM and WEBR before the open.  Then, after the close, TTWO and TME report.

So far this morning TSEM reported beats on both lines.  Meanwhile, WIX has reported beating the estimates on revenue but missed on the bottom line.  Finally, MARUY has reported misses on both lines.

Notable earnings reports later in the week include WMT, HD, SE, AER, and KEYS on Tuesday.  Then on Wednesday, we get reports from LOW, TGT, CL, ADI, ARCO, CSCO, SNPS, CPRT, BBWI, and SQM.  On Thursday we hear from VIPS, KSS, BJ, CAE, WMS, AMAT, ROST, VFC, FLO, PANW, and DECK.  Finally, on Friday we see numbers from DE, FL, and BAH.

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Coming off a very volatile week and working on 7 straight weeks of losses in the DIA (6 straight in both the SPY and QQQ), markets sit at the edge of bear market territory. Premarkets seem to suggest a wait-and-see feeling this morning, perhaps waiting on the retailer reports coming this week to give a read-through to whether the consumer is tapped out or not. Inflation, geopolitical risk, and cryptocurrency meltdowns also weigh on Mr. Market’s mind. So, caution remains the smart play. Remember the trend is still to the downside, despite Friday’s nice candles. Also bear in mind that those bullish candles failed a test of the T-line. This does not mean they will always fail, it just suggests there remains a lot of resistance overhead. Remain nimble and hedged. Above all, don’t give in to FOMO -OR- feel the need to predict a reversal.

Trading is a job, not a lottery ticket. So, work the process. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Also, remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. Keep in mind that nobody is right all the time. When you’re wrong, just admit it and take your loss. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss.


Swing Trade Ideas for your consideration and watchlist: EPAM, KO, CVX, GILD, CLX, WDC, OXY, VTRS. 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.

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🎯 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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