Rally Continues With More Indecision

Markets gapped higher at the open on Thursday.  The SPY gapped up 0.44%, DIA opened 0.31% higher, and QQQ gapped up 0.40%.  At that point, SPY wobbled sideways around that opening level, visiting the highs of the day again at 1 p.m.  At the same time, QQQ sold off and then bounced back to the open level at about 12:50 p.m.  DIA actually trended modestly higher all morning reaching the high of the day at about 12:50 p.m.  From there, all three major index ETFs sold off sharply reaching the low of the day at 2 p.m.  Then all three rallied the remainder of the day.  This action gave us gap-up, indecisive Doji or Spinning Top candles in all three.  All remain well above their T-line (8ema).  The action also left the DIA at another all-time high and all-time high close, QQQ within 1.3% of its all-time high, and SPY within 1.7% of its all-time high.

On the day, eight of the 10 sectors were in the green with Basic Materials (+2.65%) and Energy (+2.47%) out in front leading the way higher while Consumer Defensive (-0.79%) lagged behind the other sectors.  At the same time, the SPY gained 0.32%, DIA gained 0.43%, and QQQ lost 0.09%.  The VXX fell another 0.57% to close at 15.62 and T2122 ticked down but remained in the top end of its overbought territory to close at 97.90.  10-year bond yields fell again to 3.921% and Oil (WTI) spiked another 3.15% to close at $71.65 per barrel.  So, on Thursday, the market was very stretched and the Bulls needed rest.  However, we gapped higher again at which time markets became undecided as traders realized the market was very stretched.  This all came on above-average volume in the DIA and QQQ, as well as average volume in the SPY.

The major economic news reported Thursday included Weekly Initial Jobless Claims, which came in lower than expected at 202k (compared to a forecast of 220k and the prior week’s 221k).  Meanwhile, Weekly Continuing Claims rose to 1,876k (versus a forecast of 1,887k and the previous week’s 1,856k).  At the same time, Nov. Export Price Index came in better than expected a -0.9% (compared to the -1.0% forecast and the October reading of -0.9%).   On the other side, the Nov. Import Price Index also fell less than predicted at -0.4% (versus a forecast of -0.8% and October’s -0.6%).  At the same time, November Retail Sales remained strong at +0.3% (compared to a forecast calling for -0.1% and October’s -0.2%).  Later, October Retail Inventories were right in line with the anticipated at -0.9% (versus a forecast of -0.9% and much better than the September +0.4%).  At the same time, Oct. Business Inventories were better than we predicted at -0.1% (compared to a 0.0% forecast and a Sept. +0.2%).  Finally, after the close, the Fed Balance Sheet actually GREW by $3 billion this week as it was reported at $7.740 trillion (versus the prior week’s $7.737 trillion).

After the close, COST, LEN, and NASB all reported beats on both the revenue and earnings lines.  Meanwhile, SCHL missed on both the top and bottom lines.  It is worth noting that LEN raised its forward guidance while SCHL lowered its own guidance.  It is also worth noting that COST announced a special $15/share dividend for holders of record on 12/28 to be payable on 1/15/24.

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In stock news, on Thursday, GM fired nine executives and 900 employees (24% of its workforce) from the Cruise autonomous taxi unit amidst a continuing investigation of safety following an Oct. 2 incident where one of the taxis ran over and dragged a pedestrian 20 feet.  At the same time, C announced it would close its municipal business unit (which underwrites loans to state and local governments).  Meanwhile, INTC announced a new line of high-end AI products to be released in 2024, which they claimed were more powerful than the current pure performance leader from NDVA.  Later, T announced they would add RIVN electric vehicles to their corporate fleet in 2024.  (Financial details were not disclosed.)  Elsewhere, a coalition of Nordic institutional investment funds sent a letter to TSLA on Thursday, “expressing concern” that the company has refused to enter into collective bargaining, specifically with Swedish mechanics. (The letter stopped short of threatening to divest but that may be implied given the large funds involved and the region’s social and economic climate.)  Later, Reuters reported that WH franchise operators are expressing concern that the hostile takeover bid launched by CHH could hurt their business.  (80% of the franchisees surveyed said the merger would hurt their individual business.)  Late in the day, BP announced it had restarted a gasoline pipeline in WA state.  The pipeline had been closed after it leaked 25,000 gallons on Sunday.  After the close, GM announced it would lay off 1,300 workers at two MI plants in January.  

In stock government, legal, and regulatory news, the FDA approved an MDT treatment for atrial fibrillation (irregular heartbeat), which is a major market niche.  At the same time, Italian police seized $94.5 million from UPS over alleged tax fraud and illegal labor practices.  Later, the NRLB released a complaint against SBUX, alleging the coffee company closed 23 stores to discourage unionization as well as eight stores that had recently unionized.  This is now subject to a lawsuit.  At the same time, the FTC announced it would issue its decision on the KR acquisition of ACI for $24.6 billion on January 17.  However, sources reported that the agency is already working on a lawsuit that will be filed to stop that deal as soon as early January.  Later, the FDA issued a warning to CHWY and four other companies for selling (and in some cases making) unapproved animal antibiotics.  At the same time, the NHTSA announced it was opening an investigation into 447k VLKAF (Volkswagen) Golf and Audi A3 cars over fuel leaks.   (Some of these cars were subject to a 2016 recall that was supposed to solve the issue.)  Elsewhere, a judge in San Francisco ruled Thursday that Elon Musk must testify again in the SEC investigation of his $44 billion takeover of Twitter.

Overnight, Asian markets were mixed but mostly in the green.  Hong Kong (+2.38%) and India (+1.29%) led the gainers while Shanghai (-0.56%) and Shenzhen (-0.35%) paced the losses.  In Europe, we see a similar picture taking shape with 10 of the 15 exchanges in the green at midday.  The CAC (+0.60%), DAX (+0.28%), and FTSE (-0.28%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward another green start to the day.  The DIA implies a +0.26% open, the SPY is implying a +0.24% open, and the QQQ implies a +0.33% open at this hour.  At the same time, 10-year bond yields continue to fall and are at 3.902% while Oil (WTI) is up a half of a percent to $71.97 in early trading.  

The major economic news scheduled for Friday includes NY Empire State Mfg. Index (8:30 a.m.), Nov. Industrial Production (9:15 a.m.), S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI (all at 9:45 a.m.).  The major earnings report scheduled for before the open is limited to DRI.  There are no major earnings reports scheduled for after the close.

In miscellaneous news, the International Energy Agency (IEA) revised the 2024 oil demand forecast Thursday, increasing the projected demand for oil upward by 130k barrels per day in the US.  In total, the IEA increased the global demand forecast by 1.1 million barrels per day.  This revised forecast reflected a more positive outlook on the US economy.  (This was the proximate cause of Thursday’s spike in oil prices.)  At the same time, the US average mortgage rate fell below 7% for the first time in four months.  Meanwhile, Bloomberg reported that US car dealer inventory of electric vehicles grew to a 114-day supply.  (This compares to a 71-day supply of cars overall and a 53-day supply of EVs one year ago.)

In geopolitical news, the European Union began formal talks with Ukraine over that country’s admission into the EU.  This was a surprise decision and well ahead of the planned schedule.  However, Putin-lackey Victor Orban of Hungary vetoed a critical EU aid $55 billion aid package for Ukraine. This comes the same week as Republicans blocked another attempt to pass more US aid to Ukraine over their domestic political agenda.  As one result of the loss of outside support for Ukrainian sovereignty and democracy, Russia’s Putin told a 4-hour live Q/A panel that Ukraine’s support is crumbling, his forces remain on the offensive on all fronts, and he has no intention of ending the war until he has conquered all of Ukraine, disarmed then, and installed a neutral (read Russia obedient) government.  In Israel, the defense minister told the press that the war will continue for about seven months according to their projections. Having already extracted a 30-40:1 retribution, and now publicly ruled out both the Palestinian Authority (from the West Bank), Hamas, and foreign troops as post-war governance for the area, the options in Gaza are bleak.  (Only annihilation, subjugation, annexation, or diaspora come to my mind.)  So, it seems Autocracy is all the rage on the political right across the world. 

So far this morning, DRI missed on revenue (slightly = 0.4%) while beating on earnings (significantly = 9.7%).

With that background, it looks like all three major index ETFs are looking to follow through on again. All three major index ETFs opened the premarket a bit higher. However, they are printing small, indecisive (Doji-like) candles so far in the early session. All three remain well above their T-line (8ema) this morning. So, overall, the Bulls remain well in control of both the longer-term trend and the short-term trends. In terms of extension, all three major index ETFs remain extended above their T-lines. The T2122 indicator also remains in the top of its overbought range. This means the Bulls need rest and consolidation to avoid exhaustion in order to keep the rally healthy. We just have to remember that the market can remain stretched too far in either direction a lot longer than we can stay solvent betting on a reversal that hasn’t happened yet. Also remember this is Friday, payday, and a two-day weekend news cycle lies ahead. So, prepare your account by taking profits, hedging, buying insurance, and/or lightening up positions. And keep in mind that chasing a bull after he’s been running is a good way to get gored.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

Traders Loved Fed, Rally Persists in Premarket

Wednesday saw a dead market all morning and then a rocket ship in the afternoon.  SPY opened 0.07% higher, DIA opened just 0.01% higher, and QQQ gapped up 0.22%.  However, after that, all three major index ETFs just waffled sideways until 2 p.m.  At that point, there was a market-wide shot straight up until 3:05 p.m. (reaching new all-time highs in the DIA) when we saw 20 minutes of profit-taking.  Then the rally started again and lasted into the close where we went out near (SPY and QQQ) or at (DIA) the highs.  This action gave us large, white-bodied candles with very small lower wicks and no (or tiny) upper wicks.  All three major index ETFs remain well above their T-line (8ema).  DIA is at an all-time high close and within 4 cents of its all-time intraday high reached in the afternoon.  Meanwhile, SPY is within 2% of its own all-time high and now sits at the high since the first couple of days of 2022.  QQQ is sitting at its high since Dec. of 2021 and within 1.5% of its all-time high.  In short, the bulls have been on a wild and parabolic run for the last five days.

On the day, all 10 sectors were in the green with interest-sensitive Utilities (+3.72%) way, way out in front leading the way higher while Communications Services (+0.99%) lagged well behind the other sectors.  At the same time, the SPY gained 1.37%, DIA gained 1.45%, and QQQ gained 1.27%.  The VXX fell another 1.19% to close at 15.71 and T2122 spiked back up to the very top of its overbought territory to close at 98.44.  10-year bond yields plummeted to 4.026% and Oil (WTI) jumped 1.73% to close at $69.80 per barrel. So, on Wednesday, the market waited for the Fed.  Then traders heard exactly what they expected and had hoped for.  This led to a wild rally in the last two hours of the day.  These moves were on volume as, for once in the last week, all three major index ETFs were at average volume.

The major economic news reported Wednesday included November PPI (month-on-month), which came in better than expected at 0.0% (compared to a forecast of +0.1% but higher than the October reading of -0.4%).  At the same time, November Core PPI (month-on-month), came in even better than predicted at 0.0% (versus a forecast of +0.2% but in line with the October value of 0.0%).  Later, EIA Weekly Crude Oil Inventories showed a much bigger drawdown than anticipated at -4.259 million barrels (compared to a forecast of a drawdown of -0.650 million barrels and just shy of the prior week’s -4.632 million barrels).  However, the big news of the day was the Fed.

In Fed news, the FOMC held the Fed Funds Rate flat (as expected) for a third straight meeting at 5.25%-5.50% in a unanimous vote.  The Dot Plots show a current Fed Funds Rate projection of 5.40% for yearend (down two-tenths of a percent from the end of September).  One year out, the projections is for a Fed Funds Rate of 4.6% (down half a percent from the late September projection).  Two years out, the dot plot projects 3.6% (down three-tenths of a percent from the September forecast).  Three years out, the Fed projects a Fed Funds Rate of 2.9% (in line with the September projection).  Finally, the long-term projection is for a Fed Funds Rate of 2.5%, which was also in line with the September long-term forecast.  This implies three quarter-point rate cuts in 2024, four more in 2025, and three in 2026.  (It is worth noting that 17 or 19 FOMC members project those three quarter-point rate cuts in 2024.)

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In terms of Fed Chair Powell’s Press Conference, he indicated the tightening is likely over with FOMC talks of cuts starting to come into view.  Specifically, in answer to a question Powell said “That’s us thinking we’ve done enough,” adding rate increases are “not the base case anymore.”  Powell said, “Inflation has eased from its highs, and this has come without a significant increase in unemployment. That’s very good news.”  Later, in answer to a question, he said “Recent indicators suggest that growth in economic activity has slowed substantially from the outsized pace seen in the third quarter. Even so, GDP is on track to expand around 2.5% for the year as a whole.”  In explaining how the Fed has been able to beat down inflation without causing a recession (how we got a soft landing), Powell said, “This inflation was not the classic demand overload, pot-boiling over kind of inflation that we think about. It was a combination of very strong demand, without question, and unusual supply-side restrictions, both on the goods side but also on the labor side, because we had a [labor force] participation shock.”  (This seemed to indicate that since Covid was a primary force in inflation, restricting supply while the government ensured demand by helping people…or giving handouts if you’re on that side…inflation was easier to bring back in line while past unmet demand, from Covid supply restrictions, helped prop up the economy.) 

In stock news, on Wednesday, Bloomberg reported that SNAP now has 7 million subscribers for its $3.99 Snapchat+ service launched in July 2022.  At the same time, SON announced a $50/ton price increase for its uncoated recycled paperboard.  Later, TSLA’s problems in Sweden continued to mount as the Swedish Transport Workers Union revealed Wednesday that their members would stop collecting waste at TSLA locations in Sweden in sympathy strikes on behalf of TSLA workers. GOOGL’s venture capital arm (Google Ventures) has hired a “general partner” to specifically focus on AI startups and projects.  Later, GOOGL announced price cuts for its new Gemini AI model.  The price has been cut to just 25%-50% of the June announced price.)  At the same time, SBUX got some good labor news as a third-party investigation found that the company did not engage in a “union-busting playbook.”  However, the report found there were many things the company “can do better” in labor relations.  Later, ETSY announced it would cut 225 jobs (11% of the workforce) in its restructuring plan.  Elsewhere, Reuters reported that DIS and CMCSA have increased advertising spending on the META Instagram platform (by as much as 40%) in the weeks since the two companies (among many others) halted spending on Elon Musk’s X and Musk told them to “Go F themselves.”  At the same time, LCID announced it has assembled more than 800 cars at its new Saudi Arabia plant during the plant’s focus on training new employees. Later, C said they will pay most of the bonuses due to employees who agree to depart (thus avoiding the need for one layoff) as the company undergoes a major restructure that eliminates an entire layer of management.  At the same time, Reuters reported that BP has been able to “claw back” more than $40 million from its former CEO Looney after the oil giant determined he had misled the board over personal relationships with colleagues.  (Looney was fired Wednesday after admitting a relationship with a subordinate a few months ago.)  Later, GM CEO Barra reiterated that the company still plans to end the production of internal combustion vehicles by 2035, despite recent delays in EV projects.  Meanwhile, PFE closed at a 10-year low after the company revised down its 2024 sales forecast to $5 billion below analyst consensus.  PFE said the reduction reflects “a more conservative and reliable” forecast of its Covid vaccine business.

In stock government, legal, and regulatory news, the NHTSA released documents Wednesday announcing that TSLA will recall more than 2 million of its vehicles (nearly all of them on the road) to fix a faulty Autopilot system that is supposed to ensure drivers are paying attention.  The agency said the faults were design faults and may result in foreseeable misuse of the system (which could impact TSLA liability in many liability cases).  At the same time, ABNB announced it would pay $621 million to settle outstanding Italian income tax obligations for 2017-2021.  ABNB did not admit to tax evasion and will not try to recoup this money from its Italian hosts.  This comes after a judge ordered the seizure of ABNB’s Ireland headquarters over alleged tax evasion last month.  (2022-2023 were not covered by the agreement and remain outstanding issues.)  At midday, Bloomberg reported that its sources indicate AAPL will be hit with an EU antitrust order forcing the company to change the way it blocks App providers from steering customers toward non-AAPL subscription options.  This came from a four-year investigation after SPOT had initiated antitrust claims. (If AAPL fails to comply, it could be fined 10% of global annual sales.)  After the close, UBS announced that it would pay (on behalf of its acquired CS) $10 million to settle SEC charges of providing prohibited mutual fund services.  This came after that company was barred from providing the services after a NJ court found it had violated the law.

After the close, ADBE and NDSN reported beats on both the revenue and earnings lines.

Overnight, Asian markets were mostly green.  Only Japan (-0.73%), Shenzhen (-0.62%), and Shanghai (-0.33%) were in the red.  Meanwhile, Australia (+1.65%), Thailand (+1.54%), and South Korea (+1.34%) led the gainers.  In Europe, 14 of the 15 bourses are in the green at midday with only Russia (-0.01%) barely in the red.  The CAC (+1.18%), DAX (+0.58%), and FTSE (+1.85%) lead the continent higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a green start to the day.  The DIA implies a +0.32% open, the SPY is implying a +0.34% open, and the QQQ implies a +0.43% open at this hour.  At the same time, 10-year bond yields have fallen back below the key 4% level to 3.941% and Oil (WTI) is up 1.66% to $70.61 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Nov. Retail Sales, Nov. Import Price Index, and Nov. Export Price Index (all at 8:30 a.m.), Oct. Business Inventories and Oct. Retail Inventories (both at 10 a.m.), and the Fed Balance Sheet (4:30 p.m.).  The major earnings report scheduled for before the open is limited to JBL.  Then, after the close, , COST, LEN, and SCHL report.

In economic news later this week, on Friday, NY Empire State Mfg. Index, Nov. Industrial Production, S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Friday, DRI reports.

In miscellaneous regulatory news, the US Commodity Futures Trading Commission voted on Wednesday to approve Crypto exchange and brokerage Bitnomial to also become its own trade clearinghouse.  This unanimous bipartisan (two GOP and two Dem board appointees) approval was the first vertical integration of brokerage, exchange, and clearinghouse ever approved by the board.  Elsewhere, the SEC voted 4-1 to adopt new clearing rules for the US bond market.  The rules require more bond repo trades to be run through clearinghouses, targeting hedge funds and prop trading firms that have become huge players in bond markets but have not been regulated until now.  This has resulted in massive leverage, debt-based trade known as “basis trades” that have created large systemic risk like bank leverage trading in 2007.  At the same time, the Nuclear Regulatory Agency granted permission for a new type of nuclear reactor Wednesday, the first such approval in 50 years.

In geopolitical news, NATO increased its 2024 budget by 13% to $2.70 billion.  At the same time, over in UAE, the COP28 climate summit ended with an agreement and statement widely seen as weak and ineffective. This can be surmised, without even reading the statement, from the fact that oil-producing countries hailed the agreement as historic.  While the agreement calls for the reduction in consumption of fossil fuels in an orderly fashion, it sets no global targets, let alone country-specific targets other than the platitude of wanting the world to be at zero by 2050 “in keeping with science.”  The statement also calls for the tripling of renewable energy capacity by 2030 globally but again lacks individual country targets or timetables.  In the meantime, fossil fuels now account for 80% of global energy and the figure continues to grow.  The demonstration reactor will be built in TN and is the first low-pressure, molten salt reactor (Thorium fueled) allowed, although there was a similar design built at the Oakridge TN DOE facility decades ago before being abandoned when the industry convinced the DOE to only allow high-pressure, water-cooled, reactors.

So far this morning, ABM and REVG reported beats on both the revenue and earnings lines.

With that background, it looks like all three major index ETFs are looking to follow through on Wednesday’s Fed move. All three major index ETFs opened the premarket higher and are putting in a small, white-body, indecisive (Doji-like) candle so far in the early session. All three remain well above their T-line (8ema) this morning. So, overall, the Bulls remain well in control of both the longer-term trend and the short-term trends. In terms of extension, all three major index ETFs are now extended far above their T-lines, although QQQ is the most stretched. The T2122 indicator has also jumped back to the very top of its overbought range. This means the Bulls need rest and consolidation to avoid exhaustion and keep the rally healthy. We just have to remember that the market can remain stretched too far in either direction a lot longer than we can stay solvent betting on a reversal that hasn’t happened yet.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

PPI Early and Fed Later Will Call the Tunes

Markets opened the day mixed and mostly flat on Tuesday.  SPY opened down 0.08%, the DIA gapped up 0.18%, and QQQ opened dead flat.  Then, after 10 minutes of just gaining their footing, all three major index ETFs rallied higher at best (QQQ) in a good way and at worst (DIA) in a melt-up fashion.  This action gave us white-body candles with lower wicks and no upper wicks except in the DIA.  This took all three to new highs since January 2022 and within 1% to 3.5% of the all-time highs.  Obviously, all three remain above their T-line (8ema).  However, this all happened on far less-than-average volume in the SPY, DIA, and QQQ index ETFs.

On the day, five of the 10 sectors were in the green and five in the red with Healthcare (+0.67%) out in front leading the way higher while Energy (-1.39%) lagged well behind other sectors.  At the same time, the SPY gained 0.46%, DIA gained 0.47%, and QQQ gained 0.80%.  The VXX fell another 2.87% to close at 15.90 and T2122 fell out of its overbought territory to end in the upper part of the mid-range at 71.47.  10-year bond yields fell a bit to 4.204% and Oil (WTI) dropped another 3.55% to close at $68.79 per barrel.  So, on Tuesday the bulls again proved unphased by unchanged CPI data (did not fall but was not expected to fall) and continued to rally modestly higher.  Some may call it a “melt higher.”  The lack of volume may be a larger symptom or, quite possibly, a wait for the Fed on Wednesday afternoon.

The major economic news reported Tuesday included November CPI (month-on-month), which came in slightly above expectations at +0.1% (compared to a forecast of +0.0% and the October +0.0% reading).  At the same time, November CPI (year-on-year) came in just as anticipated at +3.1% (versus a +3.1% forecast and down slightly from the October value of +3.2%).  Simultaneously, the Nov. Core CPI (month-on-month) was reported as predicted at +0.3% (compared to the +0.3% forecast and a tick higher than October’s +0.2% reading).  On a year-on-year basis, Nov. Core CPI was flat at +4.0% (versus the +4.0% forecast and October reading).  Later, the November Federal Budget Balance showed a larger deficit than planned at -$314.0 billion (versus a -$301.1 billion forecast and far greater than the October $-67.0 billion deficit).  Then, after the close, the API Weekly Crude Oil Stocks report showed a larger-than-expected drawdown of 2.349 million barrels (compared to a -1.500 million barrel forecasted draw and the prior week’s 0.594-million-barrel inventory build).

In Fed Rate news, Tuesday evening (a day after the CPI release) Fedwatch tells us 98.2% of traders are betting rates do not change Wednesday.  Just 1.8% now expect a quarter-point hike on 12/13.  For January (1/31), there is a 92.2% probability of no change, a 6.1% chance of a quarter-point rate cut, and a 1.7% chance of a 0.25% rate hike.  The March 20 probabilities include 54.2% of the current rates, a 42.3% chance of a quarter-point reduction, a 2.6% chance of a half-percent cut, and a 1.0% probability of a quarter-point hike.  Finally, in May (5/1), the probabilities include 0.5% of a quarter-point hike from our current rates, a 25.5% chance of the same rates we have now, a 48.7 chance of a quarter-point rate cut, a 23.9% probability of a half-percent cut, and a 1.4% chance of three-quarters of a percent rate cut from current levels.

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In stock news, on Tuesday, SPWR entered into an amendment and waiver of its credit agreement with lenders.  As part of the amendment, SPWR received $25 million of new revolving credit and existing lenders will also allow access to $25 million of existing credit that had been halted.  (The deal requires the company to provide creditors with updated financial data every four weeks.)  At the same time, Reuters reported that GM and KMTUY (Komatsu) have said they will jointly develop hydrogen fuel cells for electric mining trucks.  Later, CHH “went hostile” in its bid to acquire WH.  CHH went public with its cash and stock offer in October ($8 billion at the time but now down to $7.2 billion due to stock price declines). CHH, which owns about 2% of WH, is now in the process of selecting a slate of board candidates to propose against the current board in a proxy fight.  At the same time, BA announced it delivered 56 airplanes in November, including 45 737 MAX, two 777 freighters, two 767s, six 787 Dreamliners, and one P-8 maritime patrol aircraft.  Elsewhere, STLA announced its Fiat brand will begin selling a fully-electric version of its “500 model” car in 2024.  At the same time, PFE said it expects to close its $43 billion deal to acquire SGEN this week.  Later, Reuters reported that Type-2 Diabetes patients are having difficulty being reimbursed for multi-use drugs, specifically the massively popular weight loss drugs from NVO and LLY.  This could pose a headwind for the companies as insurers UNH, CI, and others are now requiring prior authorization to cover the drugs.  At the same time. Bloomberg reported that WBA has started early discussions about exiting its “Boots” UK pharmacy business.  (WBA thought about this in the past but shelved the idea.  Bloomberg reports internal discussions have just begun again.)  Meanwhile, Reuters reported that LHX said it had suspended its acquisition activity (and mergers) “for the foreseeable future” as it seeks to strengthen its balance sheet.  After the close, it was announced that the CVLY and ORRF boards had approved their merger in an all-stock deal, creating a bank with a valuation of $5.2 billion.  The new bank will trade under ORRF.

In stock government, legal, and regulatory news, Reuters reported Tuesday that AMZN will defend its acquisition of IRBT at a closed EU hearing.  This comes three weeks after EU antitrust officials said the deal would likely squeeze out other robot cleaners from AMZN’s online marketplace.  At the same time, in front of a 15-judge panel, ILMN accused EU antitrust regulators of reaching beyond their remit in their investigation of ILMN’s $7.1 billion acquisition of Grail.  Undaunted, the EU antitrust regulators counter-accused ILMN of trying to rewrite the EU merger rule book. (If ILMN loses this appeal, it has already said it will divest the already closed acquisition within one year.)  In the US, the Dept. of Transportation said Tuesday it is launching a new regulatory effort that will eventually require carmakers to implement technology preventing intoxicated drivers from starting a car.  At the same time, Reuters reported that AAPL has offered to let rivals access their “tap and go” mobile payments systems in an effort to settle EU antitrust charges and avoid massive fines.  Later, a group of hedge funds filed suit in the US Fifth Circuit Court of Appeals against the SEC in a bid to vacate two new rules that require transparency of short-selling.  Late in the day, a federal judge in VA ruled in favor of CSCO in a patent infringement claim from Centripetal Networks.  A different judge in the same court had awarded Centripetal $2.75 billion in 2020, but a federal appeals court overturned the decision and forced a retrial.  At the same time, AAPL announced it will now require a judge’s order before it will hand over customer push notification data to law enforcement.  (Push notification data is very useful for geolocating a phone over time.  In other words, tracking the phone’s past locations.)  Up to this point, AAPL had been handing over that data upon request from any law enforcement agency.  After the close, a Brazilian judge approved the bankruptcy of the operator of 140 SBUX stores in that country.  Also after the close, AMZN asked a DE judge to dismiss a lawsuit brought by shareholders over the company’s Kuiper satellite launch contracts.  The suit had alleged a conflict of interest as AMZN’s launch contracts were given to the former CEO’s Blue Origin company without considering alternatives such as Elon Musk’s SpaceX.

Overnight, Asian markets were mixed with the outnumbered exchanges in the red moving much more than the more numerous green exchanged.  Shenzhen (-1.54%), Thailand (-1.16%), and Shanghai (-1.15%) paced the losses with Australia (+0.31%) and Japan (+0.25%) being the only appreciable gainers.  In Europe, a different picture is taking shape at midday as all but two of the 15 exchanges are in the green.  The CAC (+0.37%), DAX (+0.17%), and FTSE (+0.35%) lead the gainers while Finland (-0.30%) and Norway (-0.04%) are the only red on the board in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a very modest green start to the day.  The DIA implies a +0.11% open, the SPY is implying a +0.11% open, and the QQQ implies a +0.17% open at this hour.  At the same time, 10-year bond yields have fallen again to 4.181% and Oil (WTI) is up a third of a percent to $68.87 per barrel in early trading.

The major economic news scheduled for Wednesday include Nov. PPI and Nov. Core PPI (both at 8:30 a.m.), EIA Crude Oil Inventories (10:30 a.m.), Fed Rate Decision, Fed Statement, Current Q4 Interest Rate Projection, Q4 1st Year Projection, Q4 2nd Year Projection, Q4 3rd Year Projection, and FOMC Economic Projections (all at 2 p.m.), and the Fed Chair Press Conference (2:30 p.m.).  The major earnings report scheduled for before the open is limited to ABM and REVG.  Then, after the close, ADBE and NDSN report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Nov. Retail Sales, Oct. Business Inventories, Oct. Retail Inventories, and the Fed Balance Sheet.  Finally, on Friday, NY Empire State Mfg. Index, Nov. Industrial Production, S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Thursday, we hear from JBL, COST, LEN, and SCHL.  Finally, on Friday, DRI reports.

In geopolitical news, Houthi rebels in Yemen took credit for a missile attack on a Norwegian oil tanker in the Red Sea.  The group claimed it attacked (in support of Palestine) because the tanker was delivering oil to an Israeli oil terminal.  Elsewhere, the US Departments of Treasury and State announced new sanctions on hundreds of people and entities in China, Turkey, and UAE as part of its crackdown on evading sanctions on Russia. 

In miscellaneous news, Reuters reported Tuesday that in November global sales of fully-electric vehicles and electric hybrid vehicles rose 20% versus the prior year to a new record of 1.4 million vehicles.  The report (citing market research firm Rho Motion) said the sales growth was strongest in North America and China which more than offset reduced sales in Europe.  Of the 1.4 million cars sold, 70% were fully electric with the remaining 30% hybrid. This news runs counter to “conventional wisdom” that, given that F is cutting production plans for the F-150 Lightning by 50%, seems to say the demand for electric vehicles is falling.  In other news, more leverage has entered the stock market as XXXX (4x leveraged S&P500 ETN) began trading earlier this month.  (This ETN is run by BMO and is the first US foray into 4x leverage in the form of ETN.)

So far this morning, ABM and REVG reported beats on both the revenue and earnings lines.

With that background, it looks like all three major index ETFs are looking to start the day higher (ahead of PPI data anyway) but are doing so in an indecisive way as we still await the Fed this afternoon. All three major index ETFs opened the premarket slightly higher and are putting in a small, white-body, indecisive (Doji-like) candle so far in the early session. All three remain well above their T-line (8ema) this morning. The market seems to be waiting on the Fed. However, the market also thinks it knows what the news will be (no rate hike, no cut, but a promise of “higher for longer” and no promises to be led by future data). Overall, the Bulls remain well in control of both the longer-term trend and the short-term trend. So, even the indecision causes a drift higher. In terms of extension, none of the three major index ETFs is extended too far from its T-line although QQQ is getting close. The T2122 indicator has also dropped back out of its overbought territory into the upper end of the mid-range. So, both the Bulls and Bears have slack to run…if either of them can find the momentum.

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

LTA Scanning Software
TC2000 Discount

🎯 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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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

CPI Data on Tap with Fed on Horizon

Monday saw an open just on the red side of flat with SPY opening down 0.09%, DIA gapping up 0.14%, and QQQ opening down 0.12%.  At that point, both large-cap index ETFs meandered sideways until 11 a.m., while QQQ rallied.  From there, SPY and QQQ sold off modestly until 11:35 a.m. before starting a rally that lasted until 2:15 p.m.  Then they both ground modestly lower and sideways with only the SPY rallying back the last 10 minutes of the day to close very near the high of the day.  Meanwhile, DIA ground sideways from 11 a.m. until 12:30 p.m. when it followed the other major index ETFs in rallying the rest of the day, with it too closing near the high of the day.  This action gave us, large, white-bodied candles with only the DIA having any real wick (lower).  All three also broke out to new highs that had not been seen since January 2022.  Obviously, all three remain above their T-lines.

On the day, eight of the 10 sectors were in the green with Technology (+0.74%) out in front leading the way higher while Energy (-0.35%) lagged well behind other sectors.  At the same time, the SPY gained 0.39%, DIA gained 0.43%, and QQQ gained 0.85%. The VXX fell another 2.27% to close at 16.37 and T2122 fell but still remains in overbought territory at 87.32. 10-year bond yields climbed a bit to 4.241% and Oil (WTI) rose a quarter of a percent to close at $71.42 per barrel.  So, Monday saw the bulls continue their rally but in a modest fashion on a no-news and no-earnings day ahead of the FOMC meeting.  So, we go into the CPI reports on a bullish note.  This all happened on far less-than-average volume in all three major index ETFs.

The only major economic news reported Monday was the NY Fed 1-Year Consumer Inflation Expectations which came down 0.2% between November and December to 3.40%.  This was the lowest reading since April 2021.  The report said the 3-year and 5-year inflation expectations remained steady at 3.0% and 2.7% respectively.

As the FOMC begins its meeting today, here are the Fedwatch Fed Fund Forecast probabilities as of Monday evening.  For December (Wednesday), 97.1% of Fed Futures bets expect no rate hike while 2.9% expect a hike of a quarter-point.  For January (1/31), 97.8% expect rates to be where they are now, 0.2% expect rates to be a quarter percent higher than now, and 2.1% expect a quarter-point rate cut.  For March (3/24) the bets start to lean more heavily toward a cut.  56.8% expect rates as they are now, 42.3% expect a quarter-point cut, and 0.9% expect a half-percent rate reduction.  By May (5/24) only 25% expect rates as they are now, 50.4% expect rates to be a quarter-point lower, 24% expect them to be a half of a percent lower, and 0.5% expect rates to be three-quarters of a percent lower. So, the market is expecting rate cuts to begin in the first half of 2024. You’ll have to decide whether the Fed will disappoint them (keeping to their “higher for longer” mantra) or not…and either way, how the market will react. However, traditionally, markets start to flag slightly before rate cuts begin.

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After the close, CASY and ORCL reported that they missed on revenue while also beating on the earnings line.  However, it is worth noting that ORCL did raise its forward guidance.

In stock news, on Monday, TSLA was urged by four Nordic region pension funds to respect collective bargaining for its employees.  The public letter the funds sent said TSLA’s behavior was deeply troubling and not only contrary to the region’s labor model but against human rights.  Later, GM and EVGO announced the opening of the first 17 sites in its nationwide electric vehicle fast-charging network.  Elsewhere, Reuters reported that MSFT had struck a deal with the AFL-CIO union federation where the company agreed to remain neutral in the efforts of unions to encourage its workforce to join a union. The two also agreed to work together in the future related to AI technology and its impact on the workforce.  Later, an SEC filing showed that BRKB had cut its holdings of HPQ by more than half.  The filing showed Berkshire Hathaway now holds 5.2% of HPQ stock (about 51.5 million shares).  The BRKB sales of HPQ took place in November.  After the close, HAS announced it is eliminating 900 more jobs (after having announced 1,000 job cuts in January 2023) amid weak toy sales.  The cuts are expected to take place sometime “in the next 18-24 months.” Also after the close, F announced it would cut production of F-150 Lightning (electric truck) by 50% in 2024 due to “changing market demand.”

In stock government, legal, and regulatory news, on Monday China’s Industrial Ministry announced that over 90% of new electric vehicles will qualify for that country’s tax incentives.  Later, a US judge said Monday that he will hear arguments in META’s request to block the FTC from reopening a 2019 consent agreement (including a $5 billion penalty) after the FTC said the company misled parents on how much control they had over children’s messenger accounts among other things.  The judge said he will hear arguments in late January.  At the same time, in Brazil, the main airline lobbying group IATA urged the state and state-run oil company PBR to slash fuel prices charged to airlines.  The statement called current jet fuel prices “excessively high” and “do not reflect the reality of an oil-producing country.”  The IATA said high fuel costs are the main challenges facing airlines in Brazil.  Later, workers at non-union automakers HMC, HYMTF (Hyundai), and VLKAF (Volkswagen) filed unfair labor practice charges against the companies Monday according to a release by the UAW union. The charges accuse the companies of launching anti-union activities and preventing workers from organizing union campaigns.  Late in the day Monday, the US Sec. of Commerce told Reuters that the US was in discussions with NVDA regarding the conditions under which the company can sell AI chips to China.  Sec. Raimondo made it clear that NVDA is forbidden from selling its most sophisticated semiconductors to China.  After the close, SNY said it terminated an exclusive deal to license a drug from Maze Therapeutics for the treatment of Pompe disease after the FTC objected.  The $755 million deal (signed in May) would have granted SNY a US monopoly on treatments for that disease.  Finally, late Monday evening a federal jury found that GOOGL Android App Store (Play Store) has been protected by anticompetitive barriers that have damaged smartphone consumers and software developers.  The unanimous verdict follows a four-week trial and will impact hundreds of millions of Android phone owners globally, making it a major blow to GOOGL. In fact, this could cost GOOGL billions upon billions of dollars in lost app store fees. (Expect at least months, if not years, of appeals before GOOGL gives up this fight. AAPL largely won a very similar case.)

Overnight, Asian markets were mixed but leaned toward the green side.  Hong Kong (+1.07%) was by far the biggest mover and led eight exchanges higher while New Zealand (-0.58%) paced the four losing exchanges.  Meanwhile, in Europe, we see a more even split of seven bourses in the red and eight in the green at midday (all on modest moves).  The CAC (+0.14%), DAX (-0.16%), and FTSE (+0.52%) lead the region on volume (as always) in early afternoon trade.  In the US, as of 7:30 a.m., the Futures are pointing toward a start to the day that is just on the green side of flat.  The DIA implies a +0.18% open, the SPY is implying a +0.05% open, and the QQQ implies a +0.12% open at this hour.  At the same time, 10-year bond yields have dropped hard to 4.189% overnight and Oil (WTI) is down another half of a percent to $70.94 per barrel in early trading.

The major economic news scheduled for Tuesday includes Nov. CPI and Nov. Core CPI (both at 8:30 a.m.), EIA Short-term Energy Outlook (noon), Nov. Federal Budget Balance (2 p.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  The major earnings report scheduled for before the open is limited to JCI.  However, there are no major reports scheduled after the close.

In economic news later this week, on Wednesday, Nov. PPI, Nov. Core PPI, EIA Crude Oil Inventories, Fed Rate Decision, Fed Statement, Current Q4 Interest Rate Projection, Q4 1st Year Projection, Q4 2nd Year Projection, Q4 3rd Year Projection, FOMC Economic Projections, and the Fed Chair Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Nov. Retail Sales, Oct. Business Inventories, Oct. Retail Inventories, and the Fed Balance Sheet.  Finally, on Friday, NY Empire State Mfg. Index, Nov. Industrial Production, S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Wednesday, ABM, REVG, ADBE, and NDSN report.  On Thursday, we hear from JBL, COST, LEN, and SCHL.  Finally, on Friday, DRI reports.

In grain and/or export news, Reuters reported Monday that bulk grain shippers across the US Gulf Coast will be sailing longer routes and paying higher freight costs to avoid the drought-caused record-high transit fees, load-size restrictions, and congestion of the Panama Canal through most of 2024. (Only 18 of the 35 normal transits per day will be allowed as of February and those ships will all be at greatly reduced maximum drafts, meaning much lower load capacities than in the past.)  It is hoped that Panama’s wet season (April-May) may begin to refill drought-stricken lakes used to operate the canal locks.  However, forecasters have been calling for another year of low rainfalls in the region as climate changes.  The immediate impact is that the vast majority of grain ships no longer transit the Panama Canal en route to Asia (the primary US customer).  Instead, in October the USDA said 33 of 38 grain ships crossed the Caribbean and Atlantic to transit the Suez Canal (adding 20 days and more than doubling freight costs in a notoriously thin-margin grain trading business).  From a stock market point of view, it is hard to predict the ramifications. Input costs for major domestic grain users such as ADM, GM, KHC, etc. may fall as US grain stockpiles rise. It’s also possible that markets will adjust by forcing farmers to produce less grain (or a different mix), which could drive input costs down for other sectors (like livestock feed). Or, Asian customers may simply recognize the changing climate effects and absorb the added costs (more likely the government will recognize the situation and subsidize grain shipping to avoid the loss of exports). In any event, the climate will force changes to the 2024 grain markets, even just through shipping costs.

So far this morning, JCI missed on both the revenue and earnings lines.

With that background, it looks like all three major index ETFs are looking to continue higher (before CPI data) but in a very tepid way. All three major index ETFs opened the premarket slightly higher and are putting in a small, white-body, indecisive (Doji-like) candle so far in the early session. All three remain above their T-line (8ema) this morning. It seems pretty obvious that the market is waiting on CPI but even more likely on the Fed. However, in both cases, the market thinks it knows what the news will be (flat inflation and flat rates). So, while we may well get more “wait and see” for the Fed decision Wednesday, the risk is on the side of a CPI surprise. Overall, the Bulls remain well in control of both the longer-term trend and the short-term trend. In terms of extension, none of the three major index ETFs is extended too far from its T-line (but QQQ is heading in that direction). However, the T2122 indicator remains well into its overbought territory. So, both the Bulls have a little room to run and the Bears have plenty of slack to run…if either of them can find the momentum.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

Strong Friday Data Leads to Fed Week

Markets diverged at the open Friday.  The SPY gapped down 0.17%, DIA opened dead flat, and gapped down 0.48%.  However, the Bulls stepped in immediately for a strong rally until 10:20 a.m. in all three major index ETFs.  The next two hours were spent in a volatile bearish move back down to the prior close at 12:20 p.m.  The Bulls then stepped in to lead a long, steady rally that lasted until we saw profit-taking that lasted 15 minutes of the day (most heavily in the DIA).  This action gave us white-bodied, larger candles in all three major index ETFs.  The SPY broke out of its recent range to a new level that has not been seen since March of 2022.  QQQ did not break its 11/29 highs but is right at those levels. For its part, DIA printed something that could be seen as a Morning Star if you squint, but remains in its Bull Flag pattern.  However, it is worth noting that this again happened on less-than-average volumes in the SPY, DIA, and QQQ.

On the day, seven of the 10 sectors were in the green with Energy (+1.28%) out front leading the way higher while Consumer Defensive (-0.51%) lagged well behind the other sectors.  At the same time, the SPY gained 0.43%, DIA gained 0.36%, and QQQ gained 0.45%. The VXX fell 2.90% to close at 16.75 and T2122 spiked back up into its overbought range at 93.95. 10-year bond yields spiked to 4.229% and Oil (WTI) burst up 2.77% to close at $71.26 per barrel.  So, Friday saw morning volatility and then a sustained and steady rally that took us to the highs of the day late and was only broken by very late profit-taking.  This also capped a sixth-straight week of gains in all three of the major index ETFs. 

The major economic news reported Friday included November Nonfarm Payrolls, which came in better than expected at +199k (compared to a +180k forecast and the Oct. reading of +150k).  At the same time, November Private Nonfarm Payrolls came in just shy of anticipated at +150k (versus the forecast of +153k and the +85k Oct. value).  The Nov. Participation Rate rose slightly to 62.8% (compared to a 62.7% forecast and October value).  Altogether, this gave us a significantly lower Nov. Unemployment Rate of 3.7% (versus a 3.9% forecast and 3.9% October reading).  At the same time Nov. Avg. Hourly Earnings (month-on-month) rose slightly to +0.4% (compared to a forecast of +0.3% and the Oct. value of +0.2%).  However, on a year-on-year basis November Avg. Hourly Earnings remained stable at +4.0% (versus both a forecast and Oct. reading of 4.0%).  Later, Michigan Consumer Sentiment was reported far better than had been predicted at 69.4 (compared to a forecast of 62.0 and a November value of 61.3).  At the same time, Michigan Consumer Expectations also far exceeded what was anticipated at 66.4 (versus a 57.0 forecast and a 56.8 November value).  Meanwhile, the Michigan 1-year Inflation Expectations were DOWN SHARPLY to 3.1% (compared to a forecasted value of 4.3% and the prior reading of 4.5%).  Likewise, the Michigan 5-year Inflation Expectations were also sharply lower at 2.8% (versus a forecast of 3.1% and a previous value of 3.2%).

Click for video

In stock news, on Friday, HON announced it had reached a deal to buy the security unit of CARR for $4.95 billion in cash.  Later, the Insurance Institute for Highway Safety expressed concerns over the design of the TSLA Cybertruck. The group said using a thick steel skin and sharp angles on the body to improve the frame rigidness poses a safety hazard during crashes.  Later, Reuters reported that SBUX has reached out to unions to mend relations after more than a year of fighting unions and taking action against potentially organizing employees.  The letter said SBUX is open to ideas from the union on how bargaining could resume as quickly as possible.  Elsewhere, TSLA announced that its Model Y standard range vehicle is now sold out in China for the rest of 2023.  Later, LUV flight attendants rejected a tentative agreement between their union and the airline.  The deal had called for a 20% immediate raise and then 3% per year over a five-year contract.  (AAL and UAL are still in negotiations with their flight attendants and DAL attendants are not unionized.  In addition, LUV has not yet reached a deal with its pilots either.)   Later, TTM announced it would raise the price of its commercial vehicles by 3% on January 1st.  On Sunday, Reuters reported that CI has abandoned its attempt to acquire HUM after the two companies could not agree on a price.  Instead of the acquisition, CI plans to announce a $10 billion share buyback plan.  At the same time, a group of funds led by Arkhouse Management and Brigade Capital have made a $5.8 billion offer to buy M according to the Wall Street Journal.  The offer includes $21/share that they did not own as of December 1st.  

In stock government, legal, and regulatory news, on Friday the FTC requested more information about the CVX acquisition of HES.  (This comes after 23 Democratic Senators had requested the agency look into the deal’s antitrust ramifications in November.)  At the same time, Bloomberg reported that the FTC is also examining MSFT’s investment into ChatGPT, again in terms of whether it might violate antitrust laws.   (Later, the UK announced it is also studying the MSFT-OpenAI collaboration.) Later, FDX was sued by a company formerly contracted by FDX to deliver packages in CA and OR.  The suit alleges that FDX has engaged in systematic and illegal business practices that amount to racketeering.  Elsewhere, GOOGL criticized a potential order from EU antitrust regulators that may require it to sell its profitable adtech business (the platform through which ads are sold).  GOOGL claimed that such a divestment was not proportional to the circumstances and is not right for GOOGL’s advertising partners. (Essentially, claiming that they should be allowed to control the ad sales platform and that nobody else could run it as well as GOOGL.)  Later, the FDA made a major announcement, approving two gene-editing treatments for sickle cell disease.  The therapies were produced by VRTX and BLUE using the CRISPR gene editing technology.  At the same time, AMZN asked a federal court to dismiss an FTC lawsuit, claiming that no consumer harm had been proven in the FTC’s allegations of antitrust violations by AMZN using algorithms to push up prices and feature the highest margins.  AMZN claimed these are all common retail practices.  Later, TSLA defended its “Autopilot” self-driving feature in court Friday, claiming that the state of CA implicitly approved its feature and branding when it had not taken action against the company in previous investigations.  (This was part of the CA Dept. of Motor Vehicles lawsuit seeking to suspend TSLA’s license to sell vehicles with that feature in the state and requiring the company to make restitution to consumers who had bought TLSA cars believing they could safely drive autonomously.)  

In dividend and buyback news last week, MA hiked its dividend by 15.8% (to $0.66 per share) and approved a new $11 share buyback program.  Later, XOM said it would raise the pace of its buybacks following the announcement of its purchase of PXD.  The increased buyback program will not be $20 billion (up from $17.5 billion) through 2025.  At the same time, AVGO hiked its quarterly dividend by 14.1% to $5.25/share.  Meanwhile, MBI announced a special $8.00/share dividend for owners of record 12/18 with an ex-div date of 12/26/23.  (That was 108% of the stock price at the time it was announced.)  Later, DE announced an 8.9% dividend increase to $1.47/share.  At the same time, OC raised its dividend by 15.4% to $0.60/share.

Overnight, Asian markets were mostly green.  Japan (+1.50%), Shenzhen (+0.82%), and Shanghai (+0.74%) led the region higher with only two exchanges in the red.  In Europe, things are much more bearish at midday with only seven of the 15 exchanges in the green.  The CAC (+0.27%), DAX (+0.04%), and FTSE (-0.51%) lead the region on volume and Russia (-0.96%) is the biggest mover in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a flat start to the morning.  The DIA implies an unchanged open, the SPY implies a -0.03% open, and the QQQ implies a -0.08% open at this hour.  At the same time, 10-year bond yields are up again to 4.272% and Oil (WTI) is off by two-thirds of a percent to $70.76/barrel in early trading.

There is no major economic news scheduled for Monday.  There are no major earnings reports scheduled for before the open.  However, after the close, CASY, and ORCL report.

In economic news later this week, on Tuesday we get November CPI, Nov. Core CPI, EIA Short-term Energy Outlook, Nov. Federal Budget Balance, and API Weekly Crude Oil Stocks.  Then Wednesday, Nov. PPI, No.v Core PPI, EIA Crude Oil Inventories, Fed Rate Decision, Fed Statement, Current Q4 Interest Rate Projection, Q4 1st Year Projection, Q4 2nd Year Projection, Q4 3rd Year Projection, FOMC Economic Projections, and the Fed Chair Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Nov. Retail Sales, Oct. Business Inventories, Oct. Retail Inventories, and the Fed Balance Sheet.  Finally, on Friday, NY Empire State Mfg. Index, Nov. Industrial Production, S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Tuesday, we hear from JCI.  Then Wednesday, ABM, REVG, ADBE, and NDSN report.  On Thursday, we hear from JBL, COST, LEN, and SCHL.  Finally, on Friday, DRI reports.

In miscellaneous news, the SEC announced it will vote next Wednesday (and is now widely-expected to approve) a major rule change that would force more Treasuries trading to go through clearing houses.  The clearing houses act as counter-parties to every trade in the event either the buyer or seller defaults, which ensures every trade is made. The rule is expected to reduce volatility in the $25 trillion US bond market.  It will also have the effect of reducing hedge funds leveraged debt bets.  Elsewhere, Freddie Mac reported Thursday that the average US 30-year fixed loan rate dropped to 7.03% this week.  This was the lowest rate since early August.  Meanwhile, one of the world’s largest coffee brokers, Mercon Coffee Group, filed for bankruptcy in the US.  The company said its major lenders chose to not extend credit agreements, leaving the company with very tight working capital conditions.  Finally, we have some economic news out of China.  Chinese exports in November rose 0.5% from the same month in 2022.  However, Chinese imports in November shrank 0.6% compared to the same month in 2022. 

In Oil news, on Friday the US Dept. of Energy asked for bids to sell it 3 million barrels of crude oil (for delivery in March 2024) to refill the US Strategic Petroleum Reverse.  Elsewhere, after announcements from XOM and CVX last week, the EIA said it is now clear that US oil production will reach new record amounts again in 2024.  This comes after a recent all-time high of 13.2 million barrels per day was averaged for September. Meanwhile, early on Monday OXY agreed to buy CrownRock (a major private Permian Basin oil producer which produces roughly 140k barrels per day with 100k new acres under development) for $12 billion.

With that background, it looks like all three major index ETFs are again looking to give us indecisive inside-day candles in the premarket again. All three major index ETFs opened the premarket slightly lower and are putting in small and mostly indecisive (Doji-like) candles so far in the early session. All three remain above their T-line (8ema) this morning. The overall character of the early session suggests that either Traders are waiting for the Fed decision on Wednesday (which 98.4% believe will be no hike) or that it’s just early on a Monday. Overall, the Bulls are in control of both the longer-term trend and the short-term trend. However, the short-term trend is much more consolidating than a strong bullish trend in the large-cap indices with the QQQ trying to resume the rally. In terms of extension, none of the three major index ETFs is extended too far from its T-line. However, the T2122 indicator is again well into its overbought territory. So, both the Bulls have a little room to run and the Bears have plenty of slack to run…if either of them can find the momentum.

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

LTA Scanning Software
TC2000 Discount

🎯 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.

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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

November Payrolls Data On Deck

Thursday gave us a gap-up start to the day again.  The SPY opened 0.45% higher, DIA gapped up 0.21%, and QQQ opened 0.78% higher.  From there the SPY and QQQ gave us a gradual wavy rally that took us to the highs of the day at about 2:25 p.m.  At the same time, DIA spent the morning chopping sideways inside of its morning gap, before rallying to its highs of the day at about 1:45 p.m.  At that point, DIA started a slow and gradual selloff the rest of the day, closing very near the open level.  SPY and QQQ followed suit after 2:20 p.m. but both stayed well above their opening level.  This action gave us a white-body candle with a wick on both ends that closed above the high of Wednesday’s dark cloud cover candle.  So, it looks like QQQ has decided to push toward resuming its uptrend.  Meanwhile, SPY gave us a white-bodied Bullish Harami candle that crossed back up above the T-line (8ema) and near the top of Wednesday’s bearish engulfing candle.  At the same time, DIA gave us a Doji Inside Day candle as it continued its Bull Flag above its T-line.

On the day, eight of the 10 sectors were in the green with Industrials (+1.83%) and Technology (+1.34%) out in front leading the way higher while Energy (-0.25%) lagged well behind the other sectors.  At the same time, the SPY gained 0.74%, DIA gained lost 0.17%, and QQQ gained 1.40%. The VXX was flat at 17.25 and T2122 remains in its mid-range at 71.08.  10-year bond yields rose a bit to 4.144% and Oil (WTI) gained 0.40% to close at $69.66 per barrel.  So, Thursday saw a gap higher, followed by a bull run in the SPY and especially QQQ.  However, the DIA remained indecisive and all three major index ETFs showed some profit-taking at the end of the day (ahead of the November Payrolls data tomorrow). With that all said, AI ruled the day, as AMD soared 9.84% on the day after announcing its new AI chip Wednesday.  Meanwhile, GOOGL shot up 5.31% after it announced a new AI model (Gemini) Wednesday.  This happened on low volume across all three major index ETFs. 

The major economic news reported Thursday included Weekly Initial Jobless Claims which came in just shy of expectations at 220k (compared to a forecast of 222k and just above the prior week’s 219k reading).  At the same time, Weekly Continuing Jobless Claims fell to 1,861k (versus a forecast of 1,910k and the prior week’s 1,925k value).  Later October Consumer Credit was reported as FAR lower than anticipated at $5.13 billion (compared to a forecast of $9.00 billion and dramatically below the Sept. reading which was revised upward sharply to $12.22 billion).  Finally, after the close, the Fed Balance Sheet continued to show a reduction, coming in at $7.737 trillion (versus the prior week’s $7.796 trillion).  So, that was a fairly steep $59 billion of bonds offloaded by the Fed last week.

After the close, AVGO, COO, DOCU, and LULU all reported beats on both the revenue and earning lines.  Unfortunately, RH missed on both the top and bottom lines.  It is worth noting that DOCU raised its forward guidance.

Click for video

In stock news, fresh off its new deals with the Big 3 Automakers, the UAW announced that more than 1,000 VLKAF (Volkswagen) workers at its Chattanooga TN plant signed union authorization cards this week.  This came even though VLKAF increased worker pay by 11% in November following the UAW deals.  (In 2019, the same plant rejected the union by a vote of 833 against to 776 for the union.)  Later, GM announced that it has partnered with Autocar Industries to create hydrogen-fueled heavy vehicles using GM’s hydrogen fuel cells.  Elsewhere, BA informed its suppliers Thursday that there will be a two-month delay in its 737 narrow-body jet production plan. The new schedule calls for 42 jets per month produced beginning in February 2024.  It also pushes back the ramp up to 47 per month from June to August and the 52.5 jets per month level pushed from December 2024 to February 2025.  Later, MCD announced it would launch ten “CosMc’s” restaurants in 2024, focused on a limited menu and cold beverages. This is not much of an announcement just one day after MCD said they’ll open 10,000 new full-line stores by 2027 (which is the most aggressive growth MCD has ever had.)  After the close, STLA said it would temporarily cut SUV production in Detroit, citing CA emissions regulations as the reason.  (The idea is they will produce fewer SUVs and more of its lower-emission vehicles so the company average meets CA standards.) Also after the close, MBI announced a special dividend of $8.00/share for shareholders of record on December 18 to be paid Dec. 22.  (This is noteworthy since MBI closed at $7.38 on Thursday. So, the dividend yield will be 108%…for the quarter.) Meanwhile, the Teamster union said that UPS has fired 35 newly organized workers.  The union said if the company does not “get its act together” they will face a strike of their 340k Teamster employees.

In stock government, legal, and regulatory news, AUB agreed to pay a $6.2 million settlement ($1.2 million in fines and $5 million in customer compensation) with the CFPB.  Later, a Swedish court ruled against TSLA in its legal battle with Sweden’s postal service (where the postal union has refused to deliver license plates to TSLA in sympathy with the IF Metall union which TSLA flatly refuses to negotiate with).  The ruling said that postal union workers do not need to deliver TSLA license plates.  At the same time, the Bank of England and the UK’s Financial Conduct Authority have proposed draft rules that place new regulations on “critical third parties” such as AMZN and MSFT.  The proposed rules would require those critical third parties to evaluate and mitigate operational risks that might impact their customers in the financial sector.  Later, AAL asked a US Appeals Court to reverse a lower court decision that sided with the US Dept. of Justice’s position that the now-scrapped JBLU and AAL partnership in the Northeast was anticompetitive.  At the same time, the FCC said it had approved the merger between DISH and SATS.

In major retraction news, late Tuesday evening, the National Retail Federation retracted previous claims by it and its members that nearly half of all retail losses in 2021 were due to “organized retail crime rings.”   The group admitted that it made and repeated that claim despite data showing this was nowhere near true.  (Clearly, this was another case of lying in politics and attempting to shift blame from its members in the stock market.)

Overnight, Asian markets were mostly green.  Singapore (+1.19%), South Korea (+1.03%), and Taiwan (+0.61%) led the region higher.  Meanwhile, in Europe, 12 of the 15 bourses are also in the green at midday.  The CAC (+0.71%), DAX (+0.16%), and FTSE (+0.19%) lead the region higher on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly red start to the day (ahead of data).  The DIA implies a -0.11% open, the SPY is implying a -0.12% open, and the QQQ implies a -0.26% open at this hour.  At the same time, 10-year bond yields are back up to 4.182% and Oil (WTI) is popping up 1.83% to $70.60 in early trading.

The major economic news scheduled for Friday include Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, and Nov. Avg. Hourly Earnings (all at 8:30 a.m.), Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Rate Expectations, and Michigan 5-year Inflation Rate Expectations (all at 10 a.m.), and the WASDE Ag Report (noon).  There are no major earnings reports scheduled for either before the open or after the close.

In miscellaneous news, the SEC announced it will vote next Wednesday (and is now widely-expected to approve) a major rule change that would force more Treasuries trading to go through clearing houses.  The clearing houses act as counter-parties to every trade in the event either the buyer or seller defaults, which ensures every trade is made. The rule is expected to reduce volatility in the $25 trillion US bond market.  It will also have the effect of reducing hedge funds leveraged debt bets.  Elsewhere, Freddie Mac reported Thursday that the average US 30-year fixed loan rate dropped to 7.03% this week.  This was the lowest rate since early August.  Meanwhile, one of the world’s largest coffee brokers, Mercon Coffee Group, filed for bankruptcy in the US.  The company said its major lenders chose to not extend credit agreements, leaving the company with very tight working capital conditions.  Finally, we have some economic news out of China.  Chinese exports in November rose 0.5% from the same month in 2022.  However, Chinese imports in November shrank 0.6% compared to the same month in 2022. 

In inflation analysis news, a study released Thursday by the British Think Tank Institute for Public Policy Research and Common Wealth found that contrary to corporate and political right-wing claims, it was “excessive profits” (especially in the energy and food sectors) were the major contributing factors that led to the high post-pandemic inflation.  The study, based on an analysis of 1,350 listed-company financial reports found that the spike in inflation was not driven by wage inflation or too many government handouts.  Instead, the primary issue was corporate greed, in the form of 30% higher profits when comparing 2019 to 2022, that drove inflation (at least in the US, UK, Germany, Brazil, and South Africa which the study covered).

With that background, it looks like all three major index ETFs are again looking to give us indecisive inside-day candles in the premarket. All three major index ETFs opened the premarket lower and are putting in small and mostly indecisive (Doji-like) candles so far in the early session. All three remain above their T-line (8ema) this morning. The overall character of the early session suggests that either nothing has changed yet (and more consolidation remains Mr. Market’s plan) or Traders are waiting on a big push one way or the other from the Nov. Payrolls reports. On balance, the Bulls are in control of both the longer-term trend and the short-term trend. However, the short-term trend is much more consolidating than a strong bullish trend. In terms of extension, none of the three major index ETFs is extended too far from its T-line. At the same time, the T2122 indicator remains in its mid-range. So, both the Bulls and the Bears have plenty of slack to run…if they can find the momentum.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

Banks See Soft Landing, Q3 Labor Data On Deck

Markets opened lower again on Tuesday.  SPY gapped down 0.30%, DIA gapped down 0.22%, and QQQ gapped down 0.50%.  At that point, DIA ground sideways along the opening level.  Meanwhile, the SPY and QQQ also ground sideways but with a bit of a bullish trend. The left the SPY near the top of the gap, DIA at the bottom of its gap, and the QQQ back a bit above its gap at the close.  This action gave us a white-bodied candle with an upper wick, which retested and held the T-line (8ema), DIA printed a Doji (indecisive) Harami candle, and the QQQ printed a large, white-bodied Bullish Engulfing candle that retested and failed its T-line.  This happened on average volume in the DIA and well-below-average volume in the SPY and QQQ.

On the day, nine of the 10 sectors were in the red with Energy (-1.49%) out in front leading the way lower while Technology (+0.04%) held up much better than any of the other sectors. At the same time, the SPY lost 0.02%, DIA lost 0.20%, and QQQ gained 0.25%. The VXX fell 0.69% to close at 17.16 and T2122 fell back out of its overbought territory and back into the mid-range at 62.89.  10-year bond yields dropped sharply to 4.167% and Oil (WTI) dropped 0.32% to close at $72.09 per barrel.  So, Tuesday was another day where the main portion of the move was made at the open.  It felt like a day of rest with traders waiting on more information (waiting on the other shoe to drop) and happy for the consolidation/pullback to continue until it does get dropped. 

The major economic news reported Tuesday, S&P Global Services PMI came in exactly as expected at 50.8 (compared to a forecast of 50.8 and an Oct. reading of 50.6).   At the same time, the S&P Global Composite PMI also came in on target at 50.7 (versus a 50.7 forecast and 50.7 Oct. value).  Later, Nov. ISM Non-Mfg. PMI was reported stronger than predicted at 52.7 (compared to a forecast of 52.0 and an Oct. reading of 51.8).  In addition, Nov. ISM Non-Mfg. Employment came in lower than was anticipated at 50.7 (versus a 51.4 forecast but still up from October’s 50.2).  At the same time, Nov. ISM Non-Mfg. Prices Index was a bit higher than expected at 58.3 (compared to a 58.0 forecast but down from October’s 58.6 value).  Later, after the close, the API Weekly Crude Oil Stock Report showed a modest inventory build of 0.594 million barrels (versus a forecast that called for a 2.267-million-barrel drawdown and a prior week’s reading of -0.817 million barrels.

After the close, TOL reported beats on both the revenue and earnings lines.  At the same time, PLAY missed on revenue while beating on earnings.  It is worth noting that TOL also lowered its forward guidance.

Click for video

In stock news, F announced a partnership with XEL that will install 30k electric vehicle chargers throughout the US by 2030.  Later, PG unexpectedly announced it would record a $2.5 billion write-down in the value of its Gillette unit. At the same time, GDRX took a hit Tuesday when CVS announced a plan to implement a more transparent model of reimbursement from pharmacy benefit managers like GDRX.  (CVS rose 4% on the announcement while GDRX fell more than 6% on the day.)  Elsewhere, auto industry analysts at MS said Tuesday that TSLA’s market share of the global EV market fell to 13% in October (down sharply from TSLA’s 17% share in September).  At the same time, the CFO of CHTR (speaking at a UBS conference) said he expects a reduction in broadband subscribers in Q4.  (This news hit the stocks of CHTR as well as competitor CMCSA.)  Later, Axios reported that DEO is seeking to sell its portfolio of beer brands (except the flagship Guinness brand) due to concerns over margins.  At the same time, TSLA CEO Musk said Tuesday that “his projections” indicate the newly released Cybertruck will not have a significant impact on TSLA finances until 2025.  In other news, Reuters reported BA delivered 46 narrowbody 737s in November.  That brings the 2023 total to 351 units, leaving BA 25 planes short of the low end of its already reduced target range of 375-400 for the year.  After the close, MA announced it had approved a new $11 billion share buyback program.  The new program takes effect as soon as its current $9 billion buyback program is complete.

In stock government, legal, and regulatory news, a bankruptcy court announced that XPO was the winning bidder and would acquire 28 service centers formerly owned by bankrupt YELL.  XPO will pay $870 million for the 28 centers.  Later, the trial over the US Dept. of Justice seeking to block the JBLU acquisition of SAVE (for $3.8 billion) ended.  The judge suggested he might approve the deal if JBLU agreed to divest more assets, also saying he was “having trouble with the DOJ’s request for a permanent injunction” in a dynamic marketplace.  Elsewhere, an FTC inquiry has delayed the XOM’s planned $60 billion acquisition of PXD.  According to SEC filings, PXD has been asked for additional information for an expanded investigation.  (XOM and PXD remain optimistic the deal will eventually be approved.)  Later, AMZN lent its voice to the calls asking the British antitrust authority to investigate and sanction MSFT for business practices that restrict customers’ ability to choose non-MSFT platforms for cloud computing.  At the same time, a group of Catholic nuns filed suit against SWBI, trying to force the gunmaker to abandon manufacturing and sales of “assault-style” weapons.  After the close, JNJ announced it had settled an unspecified number of additional talc cancer lawsuits.  (JNJ settled with several major law firms with settlements covering all their clients in such suits.)  Also after the close, BAYRY (Bayer) was ordered to pay $3.5 million to a woman by a Philadelphia jury in the latest lawsuit over Roundup weedkiller causing cancer.

In major retraction news, late Tuesday evening, the National Retail Federation retracted previous claims by it and its members that nearly half of all retail losses in 2021 were due to “organized retail crime rings.”   The group admitted that it made and repeated that claim despite data showing this was nowhere near true.  (Clearly, this was another case of lying in politics and attempting to shift blame from its members in the stock market.)

Overnight, Asian markets leaned toward the green side with only two of region’s 12 exchanges in the red and another (New Zealand) unchanged.  Japan (+2.04%) and Australia (+1.65%) led the region higher on the day.  In Europe, we see a similar picture taking shape with only four of the 15 bourses in the red at midday.  Russia (-1.31%) is by far the biggest loser while the CAC (+0.50%), DAX (+0.30%), and FTSE (+0.49%) lead the rest of the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start to the day modestly on the green side of flat.  The DIA implies a +0.09% open, the SPY is implying a +0.14% open, and the QQQ implies a +0.16% open at this hour.  At the same time, 10-year bond yields are back up a bit to 4.193% and Oil (WTI) is down another percent to $71.61 per barrel in early trading.

The major economic news scheduled for Wednesday includes Nov. ADP Nonfarm Employment Change (8:15 a.m.), Oct. Exports, Oct. Imports, Oct. Trade Balance, Q3 Nonfarm Productivity, and Q3 Unit Labor Costs (all at 8:30 a.m.), and Weekly EIA Crude Oil Inventories (10:30 a.m.).  The major earnings reports set for before the open are limited to BF.A, CPB, KFY, OLLI, THO, and UNFI.  Then, after the close, CHWY, GME, GEF, and VEEV report.  (We are also supposed to get testimony from all the major bank (JPM, MS, C, GS, and BAC) CEOs. They are expected to testify that banks will be pushed to the brink of failure (and the economy is in big trouble) IF…IF Fed-proposed additional banking oversight and reporting is enacted OR the requirements for capital held in reserve for runs is raised. (JPM CEO Dimon has already said he will testify that higher cash reserve requirements for banks will mean higher interest rates, driving homebuyers out of the market, and hurting low-to-moderate income borrowers.)

In economic news later this week, on Thursday, we get the Weekly Initial Jobless Claims and the Fed Balance Sheet.  Finally, on Friday, we get, Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, Nov. Avg. Hourly Earnings, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Rate, Michigan 5-year Inflation Rate, and WASDE Ag Report.

In terms of earnings reports later this week, on Thursday, we hear from CIEN, DG, GMS, AVGO, COO, DOCU, LULU, and RH.  Finally, on Friday, there are no major earnings reports scheduled.

In economic/banking outlook news, the heads of four major US banks told a GS conference that they are all expecting some version of a soft landing, thanks in large part to a resilient consumer.  GS CEO Soloman said, “People continue to be cautious on the U.S. economy, but I think it’s very, very clear that the U.S. economy has been more resilient than we expected.”  Meanwhile, WFC CEO Scharf remarked, “The consumer is still very, very strong…as we sit here today, our base case is something closer to a soft landing as opposed to something far more serious than that.”  Then BAC CEO Moynihan said, “We’ll be at about $1 billion in fees this quarter,” (which reflects a low single-digit decline that outperforms the average industry expectation).  Finally, SYF CEO Wenzel said delinquencies are not as bad as feared, saying, “As we think about the fourth quarter, delinquency rates will rise, with losses peaking in the first half of the year” (while still being below industry forecasts).

In China news, MCO (Moody’s) downgraded China’s sovereign debt credit rating outlook from stable to negative.  It kept its “A1” rating on Chinese debt, but similarly to the way outlooks were reduced on US debt during various political games in the US, the “outlook” was reduced.  MCO cited property sector pressures and warning signs related to Chinese growth (including a major national pneumonia outbreak).

So far this morning, KFY and OLLI reported beats on both the revenue and earnings lines.  Meanwhile, CPB, THO, and UNFI all missed on revenue while beating on earnings.  (Note that UNFI’s earnings beat was just a significantly lower loss than had been forecasted.)  It is worth noting that OLLI raised its forward guidance.  (BF.A reports closer to the opening bell.)

With that background, it looks like all three major index ETFs are looking to make a modest gap higher this morning. All three major index ETFs opened the premarket higher and are putting in small candles so far in the early session. QQQ opened up above its T-line (8ema) again and has traded back down to retest that level this morning. However, the overall character of the early session suggests nothing has changed yet and more consolidation remains Mr. Market’s plan. On balance, the Bulls are in control of the longer-term trend but the short-term trend is consolidating or sideways. In terms of extension, none of the three major index ETFs is extended too far from its T-line. At the same time, the T2122 indicator is back down in its mid-range. So, both the Bulls and the Bears have plenty of slack to run…if they can find the momentum.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

NOK Loses Deal as PMI and JOLTS Ahead

Monday was a day that saw most of the move made at the open.  The SPY gapped down 0.75%, DAI gapped down 0.49%, and QQQ gapped down 0.99% at the open.  At that point, the DIA immediately recrossed the opening gap and then spent the rest of the day meandering back and forth inside that gap area, closing near the top end (near Friday’s close).  Meanwhile, SPY and QQQ traded to the lows of the day at 11 a.m., rallied back to the highs by 1 p.m., and then stayed there in a tight range the rest of the day.  This action gave us a gap-down, white-bodied, large-bodied Hammer-type candle in the SPY. SPY also successfully retested its T-line (8ema) as support during the day.  At the same time, QQQ printed a gap-down, white-bodied, Dragonfly Doji-type candle that crossed back below its T-line.  Finally, DIA gave us a gap-down, white-bodied, inside-day candle.

On the day, six of the 10 sectors were in the red again with Basic Materials (-1.13%) out in front leading the way lower while Healthcare (+0.53%) held up much better than any of the other sectors.  At the same time, the SPY lost 0.52%, DIA lost 0.10%, and QQQ lost 0.93%. The VXX gained slightly (+0.29%) to close at 17.28 and T2122 fell just a touch but remains in the top of its overbought territory at 97.01.  10-year bond yields climbed to 4.253% and Oil (WTI) dropped 1.03% to close at $73.31 per barrel. So, Monday was one of those days where the move was either captured at the open or it was missed.  Surprisingly, DIA was again the strongest of the major index ETFs (with particular strength in MMM) while QQQ was the weakest (with INTC, NVDA, and NFLX dragging the most).  This all happened on average volume in the DIA and below-average volume in the SPY and QQQ.

The major economic news reported Monday was limited to October Factory Orders (month-on-month), which came in well below expectations at -3.6% (compared to a forecast of -2.6% and significantly below a September reading of +2.3%).  However, in the afternoon, the NY Fed released a report (Multivariate Core Trend) which indicated that underlying inflation pressures eased in October (2.6%) compared to September (2.88%).

After the close, JOAN missed on revenue while beating on earnings (albeit still a loss).

Click for video

In stock news, SPOT announced that it will lay off about 1,500 employees (roughly 17% of the workforce).  (This was SPOT’s third round of cuts, although the other two were much smaller, in 2023.)  At the same time, the Chinese Passenger Car Assn. released date Monday that indicated TSLA sales fell 18% in November (this was TSLA’s worst drop since December 2022).  Later, TWLO also announced it would cut 5% of its workforce.  At the same time, RIOT announced a $290+ million order from a crypto miner.  Elsewhere, F reported a 0.5% decline in US sales in November.  (Sales had dropped 5.3% in October.)  However, F’s electric vehicle sales jumped 43.3% versus the same month a year ago.  Near the close, Bloomberg reported that ZM is in discussion to acquire (via merger) FIVN.  After the close, T announced it has selected ERIC to build a telecom network that uses new technology, a project covering 70% of the US and scheduled to be completed by late 2026.  (ERIC was selected over NOK.)  Also after the close, Bloomberg reported that Mark Zuckerberg’s trust had just sold 682,000 shares of META. 

In stock government, legal, and regulatory news, ATR was awarded an FDA contract for $6 million contract to develop an environmentally-friendly metered-dose inhaler.  At the same time, NIO was given a license to produce electric vehicles in China. In Spain, a group representing 83 Spanish media outlets filed a $600 million lawsuit against META.  The case alleges META engaged in unfair competition in the advertising market.  The case also alleges that META violated EU data protection rules between 2018-2023.  (The worry is that this is a case that could easily be replicated throughout the EU.)  Later, analysts are saying that questioning from the US Supreme Court seems to indicate a divided court in the case involving Purdue Pharma whose bankruptcy filing immunized the Sackler family (Purdue owners, but not declaring bankruptcy) from responsibility in the opioid settlement the company had agreed prior to filing for that bankruptcy.  At the same time, in Asia, VFS is now under investigation following a massive $93.00 to $4.59 share price decline.  Law firms are investigating the company for allegedly disseminating false and misleading statements prior to the decline.  Later, in a re-ignition of tensions, FL Gov. DeSantis’ hand-picked board leveled accusations at DIS and the previous board that controlled the DIS park region.  The new board said DIS controlled the old board via millions of dollars in free tickets, discounted hotel prices, merchandise, and other gifts.  After the close, DHR received court approval to acquire UK firm Abcam plc.  Finally, in another case being heard by the US Supreme Court, the court is hearing arguments Tuesday on whether to preclude Congress and the Executive branch from being able to tax stock holdings, real estate, and other asset appreciation.  In other words, stocks, real estate, art, and commodities owned would not be taxable until or unless sold.  (I am unsure whether the case could make state and local property taxes void as well, but it would certainly seem possible.)

Overnight, Asian markets leaned heavily to the downside.  Shenzhen (-1.97%), Hong Kong (-1.91%), Shanghai (-1.67%), and Japan (-1.37%) led the region lower. However, in Europe, markets are leaning to the upside (on mostly modest moves) at midday. The CAC (+0.28%), DAX (+0.24%), and FTSE (-0.57%) lead the region on volume with Greece (-0.99%) being by far the biggest mover in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward another lower start to the day.  DIA implies a -0.25% open, the SPY is implying a -0.33% open, and the QQQ implies a -0.48% open at this hour.  At the same time, 10-year bond yields are back down to 4.234% and Oil (WTI) is just on the red side of flat at $72.90 per barrel in early trading.

The major economic news scheduled for Tuesday includes Nov. S&P Global Services PMI and Nov. S&P Global Composite PMI (both at 9:45 a.m.), Nov. ISM Non-Mfg. PMI, Nov. ISM Non-Mfg. Employment, Nov. ISM Non-Mfg. Price Index, and Oct. JOLTs Job Openings (all at 10 a.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  The major earnings reports set for before the open are limited to AZO, CNM, DBI, FERG, GIII, HOV, SJM, NIO, and SIG.  Then, after the close, PLAY, and TOL report. 

In economic news later this week, on Wednesday, Nov. ADP Nonfarm Employment Change, Oct. Exports, Oct. Imports, Oct. Trade Balance, Q3 Nonfarm Productivity, Q3 Unit Labor Costs, and Weekly EIA Crude Oil Inventories are reported.  On Thursday, we get the Weekly Initial Jobless Claims and the Fed Balance Sheet.  Finally, on Friday, we get, Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, Nov. Avg. Hourly Earnings, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Rate, Michigan 5-year Inflation Rate, and WASDE Ag Report.

In terms of earnings reports later this week, on Wednesday, BF.A, CPB, KFY, OLLI, THO, UNFI, CHWY, GME, GEF, and VEEV report.  On Thursday, we hear from CIEN, DG, GMS, AVGO, COO, DOCU, LULU, and RH.  Finally, on Friday, there are no major earnings reports scheduled.

In miscellaneous news, in China, a court granted China Evergrande Group (the troubled and bankrupt real estate developer) an extension until January 29 to revise its offshore debt restructuring plan.  Evergrande has $300 billion in liabilities.  Meanwhile, the White House announced Monday that it is essentially out of funds to support Ukraine’s defense (more than 90% of which are actually paid to US corporations and not sent abroad).  A letter from the White House to Congress said the funds would be exhausted by the end of the month.  In Asia, Japan announced that Japanese CPI fell more than expected in November (flat) after a +0.4% gain in October.

So far this morning, AZO, FERG, and SIG have reported beats on both the revenue and earnings lines.  Meanwhile, GIII, SJM, and NIO missed on revenue while beating on earnings.  Unfortunately, DBI missed on both the top and bottom lines.  It is worth noting that DBI and NIO lowered their forward guidance.  At the same time, GIII raised its guidance.

With that background, it looks like all three major index ETFs are continuing their consolidation or pullback. The DIA started the premarket lower and is printing a small, black-bodied, “inside day” candle in the early session. At the same time, SPY also opened the premarket lower and is printing a small black-bodied candle that is now retesting its T-line (8ema). Meanwhile, the QQQ is following the DIA’s lead, but its “inside day” premarket candle is inside Monday’s long lower wick (instead of inside of Monday’s candle body). So, on balance, the Bulls are in control of the longer-term trend but the short-term trend is consolidating or sideways. In terms of extension, none of the three major index ETFs is extended too far from its T-line. However, at the same time, the T2122 indicator remains at the high end of its overbought territory. So, the market may still need some relief from extension in the form of more consolidation or pullback. With that said, remember that the market can remain overbought longer than you can remain solvent predicting the turn too early. So, don’t be too quick to predict a turn is underway. In the long run, successful traders follow trend while those who predict reversals have a few big winners while getting beat to death most of the time.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

Slow Day as Oct Factory Orders On Tap

On Friday, the Bulls closed out another week with a strong performance.  SPY gapped down 0.12%, DIA gapped up 0.09%, and QQQ gapped down 0.29%.  At that point, all three major index ETFs ground sideways for the first hour.  However, at that point, all three rallied steadily for 2.5 hours, reaching the highs of the day at 1 p.m.  From there it was a sideways grind in a tight range (perhaps with a slight bearish trend) the rest of the day.  This action gave us large-body white candles in the SPY and DIA as well as a not-quite-bullish-engulfing candle with 50% wick in the QQQ.  QQQ also crossed back above its T-line (8ema) while the other two remained above their own T-lines.  So, DIA and SPY continued their rallies while QQQ continued its Bull Flag pattern.  This took place on above-average volume in the DIA and a bit less-than-average volume in the QQQ.

On the day, all 10 sectors were in the green again with Basic Materials (+2.06%) out in front leading the way higher as Energy (+0.47%) lagged well behind the other sectors.  At the same time, the SPY gained 0.59%, DIA gained 0.85%, and QQQ gained 0.29%. The VXX fell slightly to close at 17.23 and T2122 spiked up to the top of its overbought territory at 99.01.  10-year bond yields dropped to 4.209% (which was the low since mid-September) and Oil (WTI) dropped 2.05% to close at $74.40 per barrel. So, Friday saw the three major index ETFs diverge at the open but then basically move in lockstep the rest of the day.  This came as the Bulls drove the price up to finish a fifth-straight gain on strong white candles in the large-cap index ETFs.  Meanwhile, QQQ also gave us a fifth-straight week of gains but on a much more indecisive Doji-type candle.   

The major economic news reported Friday included November S&P Global Mfg. PMI, which came in just as expected at 49.4 (compared to a forecast of 49.4 and an Oct. value of 50.0).  Later, the November ISM Mfg. Employment Index came in lower than the October value at 45.8 versus October’s 46.8 reading.  At the same time, Nov. ISM Mfg. PMI remained flat at 46.7 (lower than the forecast of 47.6 but in line with the Oct. value of 46.7).  In addition, the Nov. ISM Mfg. Price Index came in significantly higher at 49.9 (versus a forecast of 46.2 and the October reading of 45.1). 

In Fed Speak news, Chicago Fed President Goolsbee said he believes that inflation was “on track” to reach the FOMC’s 2% target.  Goolsbee’s upbeat comments included that (the inflations fight) “It’s working the way we’ve anticipated,” then adding that there is “no evidence” that inflation has stalled or reversed course at 3%.  Goolsbee said, “I still think it’s on track to get back to 2%.”  (Goolsbee was one of six voting members who indicated they think rates have increased enough during the week.)  Later, Fed Chair Powell also said there was a risk of the Fed going too far with rate hikes and that since the economy is slowing, it makes sense for the Fed to become “more balanced” in their approach and the Fed should “move carefully” going forward.  Powell said, “We are getting what we wanted to get (out of the economy), … Having come so far so quickly, the (FOMC) is moving forward carefully, as the risks of under and over-tightening are becoming more balanced.”  However, as he is wont to do, Powell kept to a non-committal path by later saying “We are prepared to tighten policy further if it becomes appropriate to do so.”

Click for video

In stock news, BK announced Friday that it will raise its minimum wage to $22.50 per hour and expand its health benefits to include mental health.  All this takes effect in March 2024.  Elsewhere, WMT added its name to the growing chorus of major ad buyers who have said they will no longer advertise on X (Twitter) after Elon Musk’s tirade against advertisers boycotting his platform after his recent antisemitic statements.  Later, Reuters reported that the LUV pilots union is very near a new labor deal with the airline.  The report said the few remaining details may take a couple of weeks to iron out, but the basic framework of the agreement is in place.  After the close, it was announced that UBER, JBL, and BLDR would join the S&P500 on Dec. 18.  At the same time SEE, ALK, and SEDG will be removed from the S&P500.  On Sunday it was announced that ALK has also agreed to buy HA in a $1.9 billion deal.  (ALK will pay $18/share for HA as well as taking on $900 million of HA’s debt.  HA closed Friday at $4.86/share.)

In stock government, legal, and regulatory news, the NHTSA announced it had opened an investigation into 73k GM Chevrolet Volt hybrid cars. (The inquiry comes from customer reports that the cars lose power suddenly and unexpectedly.)   Elsewhere, national security interests prompted the US to force Saudi Aramco-backed venture capital firm Prosperity-7 to divest from an AI startup (Rain Neuromorphics).  That startup is backed by OpenAI co-founder and returned CEO Sam Altman (which has led to wide speculations that OpenAI will acquire Rain at some point, which would impact MSFT among others).  Later, the US Dept. of Justice argued with the National Assn. of Realtors in a US Appeals Court Friday.  NAR wanted the court to prevent the DOJ from reopening its antitrust case against realtors in relation to “pocket listings” (properties that are not listed to the public but still sold with the seller charged thousands of dollars in fees).  Late in the afternoon Friday, the NHTSA said it is expanding its investigation into HMC Civic steering issues.  (The probe covers 238k 2022-2023 Honda Civics after 145 reports of loss of steering control while in motion.)  After the close, Reuters reported that BA has been eliminated from the US Air Force competition for an $8.3 billion initial contract (through 2028) to develop a successor to the E-4B Nightwatch (Doomsday Plane).  Also after the close, an NRLB judge found that AMZN as well as consultants hired by AMZN broke several federal labor laws by calling union organizers “thugs” (and other epithets) as well as interrogating employees, sending suspected union sympathizers home early (and changing their shift assignments), confiscating union pamphlets, conducting surveillance of employees at the company’s Staten Island NY distribution facility.

Overnight, Asian markets were mixed but leaned toward the red side with seven of the 12 regional exchanges down on the day.  Hong Kong (-1.09%), Shenzhen (-0.62%), and Japan (-0.60%) paced the losses while India (+2.07%) was by far the biggest gainer.  In Europe, we see a similar mixed picture taking shape at midday.  The CAC (-0.25%), DAX (+0.06%), and FTSE (-0.45%) lead the region in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a down start to the day.  The DIA implies a -0.26% open, the SPY is implying a -0.41% open, and the QQQ implies a -0.57% open at this hour.  At the same time, 10-year bond yields are up to 4.259% and Oil (WTI) is off by 0.55% to $73.66 per barrel in early trading.

The major economic news scheduled for Monday is limited to October Factory Orders (10 a.m.). The major earnings reports set for before the open are limited to SAIC. Then, after the close, JOAN reports. 

In economic news later this week, on Tuesday, we get Nov. S&P Global Services PMI, Nov. S&P Global Composite PMI, Nov. ISM Non-Mfg. PMI, Nov. ISM Non-Mfg. Employment, Nov. ISM Non-Mfg. Prices, Oct. JOLTs Job Openings, and API Weekly Crude Oil Stocks.  Then Wednesday, Nov. ADP Nonfarm Employment Change, Oct. Exports, Oct. Imports, Oct. Trade Balance, Q3 Nonfarm Productivity, Q3 Unit Labor Costs, and Weekly EIA Crude Oil Inventories are reported.  On Thursday, we get the Weekly Initial Jobless Claims and the Fed Balance Sheet.  Finally, on Friday, we get, Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, Nov. Avg. Hourly Earnings, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Rate, Michigan 5-year Inflation Rate, and WASDE Ag Report.

In terms of earnings reports later this week, on Tuesday we hear from AZO, CNM, DBI, FERG, GIII, HOV, SJM, NIO, SIG, PLAY, and TOL.  Then Wednesday, BF.A, CPB, KFY, OLLI, THO, UNFI, CHWY, GME, GEF, and VEEV report.  On Thursday, we hear from CIEN, DG, GMS, AVGO, COO, DOCU, LULU, and RH.  Finally, on Friday, there are no major earnings reports scheduled.

In oil news, speaking of algo traders, Bloomberg reported that the roller coaster in oil prices (moving as much as 6% in one day) in the past two months is being increasingly driven by algos.  Oil has traded near $100 and near $70 per barrel during that time, having fallen a net two percent in November.  One analyst told Bloomberg that the bots are trading positions that are larger than BP, SHEL, and Koch…combined.  Right now, nearly 60% of all oil trades are made by algorithm.  Elsewhere, the US imposed more sanctions on Russia in measures intended to reduce the price cap on Russian oil by targeting three entities and three oil tankers.  With the closing of these loopholes, higher-priced Russian oil is removed from the market. Separately, the US, EU, and UK increased oversight of ships carrying Liberian, Marshall Islands, and Panamanian flags after accusing vessels under those flags of violating price-cap sanctions on Russian oil.  Meanwhile, oil prices fell Friday as both analysts and investors were skeptical of OPEC+ additional production cuts after there was no firm schedule or assignment of the amount of cuts that will be made by each OPEC+ member.

In miscellaneous news, Bloomberg reported Friday evening that quant traders had been working under the belief they had discovered a scientific algorithm that could accurately predict US bond markets.  However, a doctoral candidate at the UK’s Warwick Business School discovered that the data used to create and test that model (algorithm) was actually in error.  This caused the professor who originally published the research leading to the bond market algorithm to retract his paper and left several quant funds scrambling to figure out what to do. Finally, in earnings news, SAIC beat on both the top and bottom lines this morning and also raised its forward guidance.

With that background, it looks like all three major index ETFs are starting the day with smaller, black, inside day-type candles. The QQQ is retesting its T-line (8ema) in the premarket session with the DIA again looking the strongest of the three early. The SPY sits above its T-line and the DIA sits comfortably above its own. So, on balance, the Bulls are still in control of both the shorter and the longer-term trends. In terms of extension, only the DIA could in any way be seen as extended from its T-line and that would be a marginal call. However, at the same time, the T2122 indicator is now nearly pegged at the very top of its overbought territory. So, the market needs extension relief in the form of consolidation or pullback. With that said, remember that the market can remain overbought longer than you can remain solvent predicting the turn too early.

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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

PFE Takes a Hit with ISM PMI Ahead

Markets diverged on Thursday.  SPY gapped up 0.16%, DIA gapped up a whopping 0.58%, and QQQ opened flatish, up just 0.08%.  From there, the SPY traded sideways with a very slight bearish trend until 2 p.m. when it slowly rallied, crossing back across the gap and closing very near the highs of the day.  At the same time, DIA traded sideways from the open with a very slight bullish trend until 2 p.m. when it too began a stronger rally, also closing very near the highs of the day.  Finally, QQQ sold off pretty strongly until noon, traded sideways along the lows until 2 p.m., and then also rallied the last two hours of the day, closing about halfway between the lows and the open.  This action gave us a white-bodied, Bullish Harami Hammer candle in the SPY, a large body white candle that could be seen as a “Best Friend” in the DIA, and a black-bodied Hammer candle in the QQQ.  All three major index ETFs remain above their T-line (8ema) and now-rising 50sma. 

On the day, eight of the 10 sectors were in the green again with Healthcare (+1.02%) and Industrials (+0.98%) out front leading the way higher while Technology (-0.28%) lagged well behind the other sectors.  At the same time, the SPY gained 0.39%, DIA gained 1.51%, and QQQ lost 0.25%. (DIA was led by a massive +9.36% day by CRM.)  The VXX fell 1.54% to close at 17.29 and T2122 rose a bit to the middle of its overbought territory at 89.59.  10-year bond yields rose to 4.33% and Oil (WTI) dropped 2.89% to close at $75.61 per barrel. So, Thursday saw divergence with DIA popping and running to new highs going back to January 2022.  Meanwhile, SPY and QQQ both continued to grind sideways in their consolidations.  This happened on average volume in the DIA and QQQ, as well as less-than-average volume in the SPY.

The major economic news reported Thursday included the October PCE Price Index (month-on-month) which came in lower than expected at 0.0% (compared to a forecasted +0.1% and the September value of +0.4%).  On a year-on-year basis, October’s PCE Price Index was in line with predictions at +3.0% (versus a +3.0% forecast and down significantly from the +3.4% September reading). At the same time, the Oct. Core PCE Price Index was right in line with anticipated values (which means down significantly) as month-on-month at +0.2% (compared to a +0.2% forecast but far lower than September’s +0.7% reading).  On a year-on-year basis, Oct. Core PCE Price Index came in at +3.5% (versus a forecast of +3.5% and down only a bit from September’s +3.7% value).  Elsewhere, the Weekly Initial Jobless Claims came in very near expectation at 218k (compared to a forecast of 220k and up a bit from the prior week’s 211k).  At the same time, October Personal Spending (month-on-month) was at +0.2% (versus a +0.2% forecast and well down from the Sept. reading of +0.7%).  Later, Chicago PMI came in much better than predicted at 55.8 (compared to a 45.4 forecast and the previous value of 44.0).  Then, Oct. Pending Home Sales fell less than expected, down 1.5% (versus a -2.0% forecast but far worse than September’s +1.0%).  Finally, after the close, the Fed Balance Sheet continued its fall, dropping from $7.811 trillion to $7.796 trillion (down $15 billion for the week).

After the close, AMWD, MRVL, and ULTA all reported beats on both the revenue and earnings lines.  Meanwhile, DELL missed on revenue while beating on earnings.  It is worth noting that also DELL lowered its guidance.

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In retrospect, November is the best month the market has seen all year. The SPY gained 9.13% (most since July of 2022) for the month. Meanwhile, DIA added 8.93% (the biggest monthly gain it has seen since October 2022). Finally, QQQ saw 10.82% of gains, which was its biggest monthly bullish move since July 2022 as well. At the same time, 10-year bond yields were down nearly 11%.

In stock news, Reuters reported Wednesday that WMT has shifted its supply chain to import more from India and less from China.  WMT now sources 25% of its goods from India (compared to just 2% in 2018).  Meanwhile, shipments from China have fallen from 80% to 60% of its total imports over the same period.  Later, JPM CEO Dimon said the bank would exit China if required to do so by the US government (as if, not complying with US government requirements was an option for the bank).  At the same time, UBER struck a deal with London’s black cabs.  The deal will roll out a new service in 2024 where London’s “knowledge-tested” cabbies to sign up with UBER to take pre-booked journeys.  (UBER is taking no commission for the first six months of the deal in an effort to smooth over a decade of friction between the two sides.)  At the same time, mem stock GME had another monster volatility day, opening 15% higher, trading at more than 30% higher one point, and closing up 20.46%.  Elsewhere, in China, NIO announced a partnership with EV-maker Geely to create a battery hot-swapping network across China (as opposed to charging stations).  Later, the Wall Street Journal reported that CI and HUM are in advanced talks on a merger.  (The two had considered merging in 2015, but HUM chose to partner with Aetna at that time.) At the same time, OKTA notified customers that hackers had stolen information including the name and email address of every OKTA customer support user.  Meanwhile, Reuters reported after the close that AVGO is reviewing strategic options for two business units (End-User Computing and Carbon Black) that it had acquired in the purchase of VMW.  Finally, self-proclaimed genius Elon Musk claimed advertisers that pulled their ads from his former Twitter (now X) platform were blackmailing him related to his antisemitic posts.  In a fiery interview Wednesday, the bright bulb told any such advertisers to “Go f*@k yourself” and then asked if that was clear enough (message to the advertisers).  He went on to double down that his post referencing the supposed “great replacement theory” on Nov. 15 did speak the actual truth.  However, he also said it was a very foolish post and was akin to handing his detractors a loaded gun.

In stock government, legal, and regulatory news, the USDA has extended its trial program to allow US pork processing plants to operate at higher speeds (while still collecting data on the impact of the speed increase on workers, safety, and quality).  This is a big win for TSN, JBSAY, WHGRF, BRFS, and HRL.  Later, Reuters reported that EU antitrust lawyers initially opposed sending a charging sheet to AMZN related to its acquisition if IRBT.  (This indicates there are some in the EU antitrust group who do not oppose the deal and some feel this gives hope for eventual deal approval.)  Later, a lawsuit was filed against CSX claiming that a Thanksgiving-eve train derailment that spilled molten sulfur in Eastern KY was caused by company negligence, recklessness, and failure to follow federal train regulations.  Elsewhere, the US Supreme Court gave hints that its right-wing super majority is leaning toward limiting the SEC’s power to enforce securities laws.  (The case stems from a fund manager being found guilty of securities fraud and the SEC fining and barring him from the industry.)  Later, VZ agreed to pay $23.5 million to resolve an FCC investigation into its TracFone subsidiary violating government program rules (collecting millions of dollars in undeserved emergency broadband benefit funds).  After the close, DD, CTVA, and CC agreed to pay the state of OH $110 million to resolve claims related to the release of toxic PFAS “forever chemicals.”

Overnight, Asian markets were mixed but leaned to the green side in terms of breadth.  Hong Kong (-1.25%) and South Korea (-1.19%) were by far the biggest movers in the region with India (+0.67%) leading the more numerous green exchanges to gains.  In Europe, with the exceptions of Russia (-0.47%) and Denmark (-0.14%) we see green across the board at midday.  The CAC (+0.38%), DAX (+0.74%), and FTSE (+0.65%) are leading the region higher in early afternoon trade.  In the US, as of 7:30 a.m., the Futures are pointing toward a mixed and modest start to the day.  The DIA implies a +0.12% open, the SPY is implying a -0.07% open, and the QQQ implies a -0.25% open at this hour.  At the same time, 10-year bond yields are up slightly to 4.344% and Oil (WTI) is just on the green side of flat at $76.07 per barrel in early trading.

The major economic news scheduled for Friday includes Nov. S&P Global Mfg. PMI (9:45 a.m.), Nov. ISM Mfg. Employment, Nov. ISM Mfg. PMI, and Nov. ISM Mfg. Price Index (all three at 10 a.m.).  We also hear from Fed Chair Powell at 11 a.m.  The major earnings reports set for before the open are limited to GCO and BMO.  There are no earnings reports scheduled for after the close. 

So far this morning, BMO reported a huge beat ($14 billion vs $6.07 billion estimate) on revenue while coming in just in-line on earnings.  Unfortunately, GCO missed on both the top and bottom lines.

In miscellaneous overseas news, Reuters reports that the third-largest investment bank in China (CICC) has been told not to publish any bearish views on the Chinese economy or markets.  The bank was also told that its staff should not wear luxury brand clothing and accessories or disclose their pay.  Elsewhere, OPEC+ agreed to raise its production cuts by 2.2 million barrels per day for Q1 2024. (The group had already reduced production by five million barrels per day, mostly by Saudi Arabia, to support oil prices.) However, there was major confusion in Oil markets as the group provided no details on which countries were going to cut their output, by exactly how much, or exactly when. The group’s communique just said “early 2024” with individual countries (like UAE, who said “during Q1”, and Saudi Arabia, who said “during 2024”) muddying the waters. Lastly, Bloomberg said Friday that there are signs President Biden’s meeting with Chinese President Xi and the US’s low-key approach to China are bearing some fruit. The report a series of “market opening” measures taken by China since the recent event, including approving joint ventures and mergers as well as allowing visa-free access to citizens of six more countries (five in Europe plus Malaysia). The report also pointed out Chinese intervention to bolster and stabilize its stock markets.

In late-breaking news, PFE announced it has stopped development of a twice-daily version of its experimental weight-loss drug due to high rates of adverse side effects discovered during mid-stage trials. However, PFE said it will still continue development and release data on a once-daily version of the drug (different dosage means different side effects). This is a significant blow to PFE, which was trying to cash in on the wildy popular and fast-growing $10 billion weight-loss drug market now dominated by NVO and LLY. (PFE said it expects the niche to grow to $90 billion per year eventually.)

With that background, it looks like markets are again diverging and are undecided so far in the premarket session. The DIA gapped up in the early session but has sold off steadily to form a black bodied candle that is little changed from Thursday’s close. SPY did the same thing but had gapped up less and sold off more to creat a Bearish Engulfing candle so far this morning. For its part, QQQ opened the premarket flat and has sold off since, now retesting its T-line (8ema) for support. The SPY and DIA remain above their T-line (8ema) and all three are well above their 50smas. So, the Bulls are still in control of both the shorter and the longer-term trend. In terms of extension, the major index ETFs are all near their T-lines (8emas). At the same time, the T2122 indicator has now climbed back up into the center of its overbought territory. So, the Bulls still have some slack to work with if they are intent on continuing the really. Of course, the Bears have tons of room to run if they could mount a charge. Lastly, remember that it’s Friday…pay day. So, take some money off the table and get your account ready (lightened up or hedged) for the coming weekend news cycles,

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

LTA Scanning Software
TC2000 Discount

🎯 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 PlansPrivate 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