On Friday, markets gapped strongly higher as the Fed’s favorite inflation gauge came in better than expected.  The SPY gapped up 0.71%, DIA gapped up 0.65%, and QQQ gapped up 0.98%.  However, at that point, the DIA immediately began selling while the SPY traded sideways, and the QQQ continued to rally.  This lasted until 10 a.m. when the SPY and QQQ followed the DIA selling off. The selling lasted until all three major index ETFs reached the lows of the day at 2:30 p.m.  From that point, the rest of the day saw a sideways grind sideways along the lows with a very, very slight bullish trend.  This action gave us black-bodied candles that retested (and failed) their respective T-lines (8ema).  In addition, DIA printed a Bearish Engulfing candle, SPY came close to printing a Dark Cloud Cover, and QQQ just printed a large-body, black candle with wicks on both ends.  This happened on above-average volume in the DIA and SPY, as well as average volume in the QQQ.

On the day, six of the 10 sectors were in the red led by Energy (-1.51%) way out front leading the other sectors lower.  Meanwhile, Consumer Cyclical (+0.42%) holding up better than the other sectors.  At the same time, the SPY lost 0.24%, DIA lost 0.50%, and the tech-heavy QQQ gained 0.07%.  VXX gained almost 2% to close at 23.32 and T2122 fell but remained just outside the oversold territory at 21.90.  10-year bond yields fell slightly to 4.579% while Oil (WTI) lost just over one percent to end the day at $90.77 per barrel.  So, Friday was another whipsaw day that gave us a strong gap-up, which was met by a selloff that ripped the face off of gap chasers.  This was not helped when the dysfunctional House GOP failed to pass even their extremist version of a set of appropriations bills, leading to what is likely a government shutdown as of Sunday.  The Senate plans to pass a bipartisan funding bill Saturday (after their own GOP troublemaker, Sen. Paul forced the long wait instead of a fast-track Thursday vote after the bill passed 77-19).

The major economic news reported Friday included the August PCE Price Index which came in lower than expected at +0.4% month-on-month (compared to a forecast of +0.5% and a July reading of +0.2%).  That amounted to an August PCE Price Index year-on-year of +3.5%, which was in line with the forecast and a tick higher than the July value of +3.4%.  The “Core” numbers, which strip out food and energy, on a month-on-month basis were +0.1% (lower than the forecasted and July reading of +0.2%).  On a year-on-year basis, the Core number was +3.9% (in line with forecast and down significantly from the +4.3% in July).  At the same time, August Personal Spending came in just as predicted at +0.4%, which was down very sharply from the July +0.9% value.  Meanwhile, the Preliminary August Trade Goods Balance showed a significantly better than anticipated deficit of -$84.27 billion (compared to a forecast of -$91.20 billion and the prior month’s -$90.92 billion).  Preliminary August Retail Inventories came in up 0.6% versus the dead-flat +0.0% in July.  Later, September Chicago PMI survey results were a bit below predicted at 66.0 (versus a 66.3 forecast but slightly above the August reading of 65.5).

In Autoworker contract talks and strike news, in a hopeful sign, the UAW dropped its unfair labor practices charges against GM and SLTA on Friday.  (The union had filed charges with the NLRB on Aug. 31.)  Then in late morning, the UAW expanded the strike, this time hitting a GM plant and an F plant.  The added facilities bring 6,900 new workers to the strike, which has now increased to cover 17% of the workers whose contracts are under negotiation (18,300 total out of 146,000).  Later, the F CEO Farley said the UAW was “holding a deal hostage” over EV battery plants.  UAW President Fain fired back that Farley was “lying about the state of the negotiations,” going on to say the CEO “hasn’t been at the bargaining table this week or for most of the last 10 weeks.  If he were there, he’d know we gave Ford a new comprehensive proposal Monday and still haven’t heard back.”  (For what it is worth, the CEO of F has previously said he expects massive workforce reductions once the transition to EVs is complete. Perhaps as much as 40% workforce reduction.) Following those lines of contention, GM CEO Barra said she felt “It’s clear that there is no real intent to get an agreement (on the union’s part).” 

In government shutdown news, having broken their word from June, the House GOP failed to approve even their own extreme government funding bill Friday. (It would have caused 30% budget reductions in most departments of the government.)  However, 21 GOP members voted against the bill, either because it was not extreme enough for them or because they were more interested in political theatre than the situation.  One of the most extreme right-wing members (Gaetz) even approached Democrats, trying to strike a deal that would allow him to replace the Speaker with a Freedom Caucus member.  Then Saturday, with only 9 hours left (and perhaps in response to Gaetz’s move), Speaker McCarthy reversed course by reaching across the aisle to pass a 45-day CR with Democratic help.  The bill passed 335-91, with 126 GOP votes (58%) and 209 (all but 1) of the Democratic votes.  The CR removed additional support for Ukraine but, oddly, doubled US disaster relief again. (President Biden asked for $4 billion, the Senate made it $8 billion additional, and the House doubled it again to $16 billion.)  The removal of Ukraine aid led to the lone Democratic thumbs down in the House and caused Dem. Senator Bennet to hold up a fast-track vote in the Senate.  However, with three hours to spare the Senate approved the House CR bill 88-9 as-is (meaning no reconciliation and re-votes in both houses were needed).  Then the President signed the bill shortly before the deadline.  Dow futures jumped more than 100 points on the news that the shutdown was averted.  The bottom line is that a shutdown was avoided by kicking the can 45 days down the road…and we can now look forward to more drama a week or so before Thanksgiving. In the meantime, Gaetz said he will move to remove McCarthy as Speaker this week for the high crime of reaching across the aisle to Democrats to keep the government open.

In stock news, Reuters reported exclusively Friday that CG is in talks to acquire two units from MDT for more than $7 billion.  Sources tell them an agreement could be reached within a few weeks.  Elsewhere, the Teamsters Union picketed two AMZN distribution facilities in CA on Friday.  At the same time, TSLA announced that one of its semi-trucks traveled over 1,000 miles in a single day.  (There was no word about any load.  So, it must be assumed it was just the truck with no trailer.  For reference, a semi with a load will typically travel 650 miles in an 11-hour shift, which would be about 1,300 in a driver-team day.)  Later, Reuters reported that APO is among two finalist investors to acquire bankrupt SAS airline.  Monday marks the separation of K from its snack business which will trade under KLG.  Industry analyst IQV reported that 1.8 million people got COVID-19 vaccine shots last week, with 1 million getting the PFE shot and 800k getting the MRNA vaccine.  RYAAY announced it is reducing its Winter flight schedule, citing BA not delivering promised jets on time.  (RYAAY said it now expects to get 14 at most of the 27 aircraft scheduled for delivery in Q4 from BA.)  After the close, WFC announced it had sold $2 billion of its private equity investments to a group or private equity firms including CG.  Then on Saturday, AAPL announced it will be issuing a software update to address a problem on its newly released iPhone 15, which has caused the phones to overheat.  AAPL said the phones are “running hot” due to bugs in iOS 17, a temporary set-up period of the phone, and bugs in apps. On Sunday, AMZN took an image hit as many customers reported receiving email confirmations of gift card purchases, that they never bought.  This led the customers to fear account hacking or much more ominously that AMZN may have been hacked.  As of Sunday evening, AMZN is still investigating.

In stock government, legal, and regulatory news, the SEC announced Friday that eight more broker-dealers have settled over employees discussing business using off-books messaging channels.  IBKR, FITB, PWP, and Nuveen paid a total of $91 million combined.  IBKR also paid $20 million to the CFTC over similar charges.  At the same time, a federal judge in OH declined to block the Biden Administration from negotiating the price of drugs for the Medicare plan.  Elsewhere, MS, BCLYF, and DRW Securities won a dismissal of a private suit alleging the institutions manipulated SPX options linked to the VIX in 2018.  The SEC fined D.E. Shaw $10 million for violating whistleblower protection rules.  Later, the SEC reported that 10 firms were charged a cumulative $79 million for recordkeeping violations.  At the same time, NLRB accused AMZN of violating the terms of a 2021 agreement that required the company to allow workers to unionize if they choose.  After the close, HOOD said it expects to see charges of $100 million in Q3 related to regulatory and legal issues.  Finally, the US Dept. of Energy is in the final stages of talks to lend $1 billion to LAC to allow the company to build out the largest lithium deposit in the US.  The loan is said to provide more than half the funding for the operation.

Overnight, Asian markets were evenly split in number but leaned bullish on the strength of the move.  Hong Kong (+2.51%) and Taiwan (+1.24%) were by far the biggest movers and led the region higher as New Zealand (-0.47%) was the biggest loser on the day.  In Europe, the bourses are leaning to the res side at midday with only four bourses in the green.  The CAC (-0.18%), DAX (-02.7%), and FTSE (-0.26%) lead the region lower with Russia (+0.92%) an outlier to the upside in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed, flat start to the day.  The DIA implies a -0.02% open, the SPY is implying a +0.02% open, and the QQQ implies a +0.17% open at this hour.  At the same time, 10-year bond yields are moving higher again to 4.631% and Oil (WTI) is up just under another percent to $91.66 per barrel in early trading.

The major economic news scheduled for Monday includes September S&P US Mfg. PMI (9:45 a.m.), September ISM Mfg. PMI and September ISM Mfg. Prices (both at 10 a.m.)  We also have three Fed speakers (Chair Powell at 11 a.m., Harker at 11 a.m., and Williams at 1:30 p.m.). There are no major earnings reports scheduled for Monday. 

In economic news later this week, on Tuesday we get JOLTs Job Openings and API Weekly Crude Oil Stocks.  Then Wednesday we get Sept. ADP Nonfarm Employment Change, Sept. S&P Global Services PMI, Sept. S&P Global Composite PMI, Aug. Factory Orders, Sept. ISM Non-Mfg. PMI, Sept. ISM Non-Mfg. Price Index, EIA Crude Oil Inventories, and Fed member Bowman speak.  On Thursday, we get August Imports, August Exports, Weekly Initial Jobless Claims, the Fed Balance Sheet, and two Fed Speakers (Mester at 9 a.m. and Daly at noon).  Finally, Friday, Sept. Avg. Hourly Earnings, Sept. Nonfarm Payrolls, Sept. Private Nonfarm Payrolls, Sept. Participation Rate, Sept. Unemployment Rate, and a Fed speaker (Waller at noon).

In terms of earnings reports later this week, on Tuesday MKC, CLM, and NG report.  Then Wednesday, we hear from AYI, HELE, and RPM.  On Thursday, CAG, STZ, LW, and LEVI report.  Finally, on Friday, there are no major earnings reports scheduled.

In miscellaneous news, US crop exports are at risk again as water levels in the Mississippi River have fallen below safe barge traffic levels again.  Just like the Panama Canal, barge operators are being forced to carry smaller, lighter loads per barge to avoid grounding.  In a related story, the low freshwater level of the river has allowed saltwater to creep up the river from the Gulf of Mexico, endangering or ruining drinking water supplies.  The US Army Corps of Engineers has been working on an underwater dam to slow the creep since July and will begin barge delivery of 36 million gallons of fresh water per day to the lower Mississippi area starting this month.

In late-breaking news, CA Governor Newsome appointed Laphonsa Butler to the open interim position to replace Senator Feinstein who died last Thursday.  Her seat will be up for election again in November 2024.  Elsewhere, in good labor news, the UAW and VOLAF (Volvo, Mack trucks) reached a new labor deal just before midnight last night to avoid a strike.  The tentative deal must still be ratified by UAW members.  In less good labor news, union healthcare workers of Kaiser Permanente (private) told CNBC is it not likely that the 310,000 workers will reach a deal with management of the healthcare giant.  This makes a strike, which has already been authorized by the workers, likely across CA, OR, WA, VA, and Washington DC as soon as Wednesday.

With that background, it looks like the pop from Saturday night’s government shutdown avoidance did not last long. All three major index ETFs opened the premarket with a strong gap higher but have sold steadily since, giving us gap-up large black candles in all three so far in the early session. All three remain below their T-line (8ema) and 50sma. (However, QQQ did gap above before selling back below its T-line this morning.) So, for now, the short-term trend clearly remains headed lower. In terms of extension, none of the three major index ETFs are far below their T-line (8ema) and the T2122 indicator is still just outside of its oversold range. This tells us either side has room to run if they can find the momentum to do so.

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 absolutely 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 money is 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