Rethinking Fed Move as More Data Ahead

Wednesday was a bearish day with gaps lower after GOOGL, MSFT, and AMD all beat but disappointed the market. SPY gapped down 0.44%, QQQ gapped down 1.05% and DIA was the exception that proves the rule opening 0.17% higher.  At that point, SPY and QQQ sold off for an hour before trading sideways until 2 p.m.  Meanwhile, DIA just meandered sideways after the open crossing and recrossing the opening gap until 2 p.m.  When the Fed announced no rate cut we saw a modest knee-jerk lower in all three major index ETFs.  However, this more than recovered by 2:30 p.m.  Then when Chair Powell said the FOMC is not ready to cut rates yet and implied doubt about a March start to cuts, all three sold off hard until 3 p.m. and then drifted lower into the close.  This action gave us an Evening Star that crossed down the T-line (8ema) in the SPY.  At the same time, DIA gave us a Bearish Engulfing candle but did not cross below its T-line.  QQQ moved the most, gapping down through its T-line and giving us a large black candle with only an upper wick.

On the day, all 10 sectors were in the red as Technology (-2.42%) was way out in front leading the way lower.  At the same time, the defensive plays Healthcare (-0.34%) and Utilities (-0.43%) holding up better than the other sectors.  Meanwhile, the SPY lost 1.63%, DIA lost 0.81%, and QQQ lost 1.96%.  Meanwhile, VXX popped up 5.07% to close at 15.13 and T2122 dropped all the way down through its mid-range to end just above oversold territory at 22.05.  10-year bond yields plummeted to 3.912% and Oil (WTI) dropped 2.61% to close at $75.79 per barrel.  So, markets started lower on future (not current) earnings worries among the big tech names.  Then we trod water for most of the day.  Even the Fed announcement was basically a non-event since it was very widely anticipated.  However, Fed Chair Powell’s words shocked traders with fear we won’t get a March rate cut, and that flushed the market the rest of the day.  This all happened on above-average volume in the SPY and DIA as well as well-above-average volume in the QQQ.

The major economic news released Wednesday included January ADP Nonfarm Employment Change, which came in well below expectations at +107k (compares to a forecast of +145k and well below the prior reading of +158k).  Later, Q4 Employment Cost Index also came in below predictions at +0.9% (versus a forecast of +1.0% and the Q3 reading of +1.1%).  Later on, January Chicago PMI also came in a bit light at 46.0 (compared to the 48.0 forecast and the prior 47.2 value).  Then EIA Weekly Crude Oil Inventories showed an inventory build of 1.234 million barrels (versus a forecasted drawdown of 0.217 million barrels and far higher than the previous week’s 9.233-million-barrel drawdown.

In Fed news, the FOMC held the Fed Funds target rate steady at 5.25% – 5.50%.  It also removed language saying it was willing to keep increasing rates but also language that indicated inflation was headed back toward its 2% inflation goal.  In addition, the statement added language indicating it is not yet ready to cut rates.  The statement said, “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”  More importantly, Fed Chair Powell commented on this, saying, “I don’t think it’s likely that the committee will reach a level of confidence by the March meeting (to lower rates…but that’s to be seen.”  Powell also said, “Inflation has eased over the past year, but remains elevated.”  He went on, “The Fed’s interest rate target is likely at its peak for this tightening cycle” …and “the Fed will likely cut rates at some point this year.”  Finally, Powell said, “we are not declaring victory, we think we still have a way to go.”

Click for video

After the close, ALGN, AVB, AXS, CCS, CMPR, CTVA, CACC, FLEX, MTH, MEOH, NXT, PTC, QRVO, QCOM, SEIC, SIGI, and TTEK all reported beats on both the revenue and earnings lines.  At the same time, BHE, BOOT, THG, and UGI all missed on revenue while beating on earnings.  On the other side, MET beat on revenue while missing on earnings.  Unfortunately, AFL, BV, CHRW, LSTR, and VSTO all missed on both the top and bottom lines.  It is worth noting that BOOT, CTVA, FLEX, and LSTR lowered forward guidance.  However, CCS, NXT, QRVO, and TTEK raised their own guidance.

In stock news, NVAX announced it will lay off 12% of its workforce (about 240 people) in a cost-cutting move for the cash-strapped biotech.  At the same time, Reuters side that Byron Allen had submitted a $30 billion offer to buy PARA, including both debt and equity.  (This came hours after Bloomberg had reported the offer was $14.3 billion for the outstanding shares.)  Later, META CEO Zuckerberg apologized to parents (for the damage social media has done) after Senators of both parties dragged the CEOs of META, SNAP, AAPL, X (Twitter), TikTok, GOOGL, and others over the coals for a lack of monitoring, age restriction, and parental reporting of inappropriate social media content and targeting of children.  (Coincidentally, I’m sure, many of the companies subpoenaed instituted new policies covering overuse by children as well as various content age restrictions within the last week.)  At the same time, financial stocks took a hit Wednesday as NYCB cut its dividend after posting a surprise loss.  (NYCB closed down 37.67% on the news.)  Later, CI announced it had sold its Medicare business unit to HCSG for $3.3 billion. Elsewhere, ADM closed its acquisition of flavor company Fuerst Day Lawson.  Later, TSLA announced it will buy equipment to expand its NV factory to produce Lithium batteries from its Chinese supplier CATL (a controversial partner that has F under attack for partnering with in MI).  TSLA says the move will reduce its costs for batteries.

In stock legal, governmental, and regulatory news, EBAY agreed to pay $59 million and upgrade its compliance measure to settle US Dept. of Justice charges that the company sold pill-making equipment to criminals making counterfeit drugs.  Later, BA was sued by shareholders alleging the company prioritized short-term profit over safety, and misled them about the company’s commitment to making safe aircraft.  At the same time, a group of 25 CA counties sued TSLA alleging the company mishandled hazardous waste at its facilities in that state. (The core allegation is that TSLA regularly mislabel hazardous waste and sends it to landfills in those 25 counties.)  The law being cited calls for civil penalties of $70k per day per violation.  Later, the US Dept. of Health and Human Services announced 2025 reimbursement rates for Medicare Advantage programs that show a total increase of 3.7%.  At the same time, a US District Judge dismissed DIS’s lawsuit against FL Governor DeSantis and members of his appointed state board.  In the dismissal, the judge ruled DIA lacked standing to sue the governor or state Sec. of Commerce.  Elsewhere, the FAA said its previously announced comprehensive audit of BA production will include all elements of production at fuselage supplier SPR.

Overnight, Asian markets were evenly mixed with five exchanges in the red, six in the green, and one remains unchanged.  Australia (-1.20%) was by far the biggest loser (by half of a percent) while South Korea (+1.82%) was by far the biggest gainer (by more than one percent).  Meanwhile, in Europe, we also see a mixed board at midday.  The CAC (-0.69%), DAX (-0.09%), and FTSE (+0.45%) lead the mixed region 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 +0.11% open, the SPY is implying a +0.40% open, and QQQ implies a +0.57% open at this hour.  At the same time, 10-year bond yields are up a bit to 3.944% and Oil (WTI) is up nine-tenths of a percent to $76.52 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, and Q4 Unit Labor Costs (all at 8:30 a.m.), S&P Global Mfg. PMI (9:45 a.m.), Dec. Construction Spending, Jan. ISM Mfg. Employment, Jan. ISM Mfg. PMI, Jan. ISM Mfg. Price Index (all at 10 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for before the open are include FLWS, ATI, MO, ATKR, BALL, BDX, BR, BIP, BC, CAH, CMS, DLX, DOV, ETN, EPD, RACE, HON, HII, ITW, IP, JHG, KEX, LANC, LAZ, MKL, MRK, PH, PTON, PBI, DGX, RVTY, RCI, RCL, SBH, SNY, SNDR, SIRI, SR, SWK, TSCO, TT, WNC, WEC, and WRK.  Then, after the close, AMZN, AAPL, TEAM, CLX, COLM, DECK, DXC, EMN, GEN, HIG, HOLX, HLI, HUBG, KMPR, LPLA, META, MCHP, MTX, NOV, OTEX, POST, RGA, SKX, SKYW, and X report.

In economic news later this week, on Friday, Jan Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Jan. Private Nonfarm Payrolls, Jan. Participation Rate, Jan. Unemployment Rate, Dec. Factory Orders, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations are reported.

In terms of earnings reports later this week, on Friday, ABBV, AON, BSAC, BMY, BBU, BEPC, BEP, CBOE, CHTR, CVX, CHD, CI, XOM, IMO, LYB, REGN, SAIA, and GWW report.

So far this morning, MO, ATKR, BR, BIP, CAH, ETN, EPD, RACE, HII, KEX, LAZ, MRK, PTON, PBI, DGX, RVTY, SBH, SHEL, SKFRY, and SR all reported beats to both the revenue and earnings lines.  At the same time, FLWS, BALL, BDX, CMS, DLX, DOV, FCFS, HON, IP, RCL, SIRI, SWK, TAK, TT, WNC, and WEC all missed on revenue while beating on earnings.  On the other side, GOOS beat on revenue while missing on earnings.  Unfortunately, BC, ING, SNY, and WRK missed on both the top and bottom lines.  It is worth noting that BC, DOV, and DGX lowered forward guidance.  However, CAH, MRK, and RCL raised their guidance.

In miscellaneous news, CENTCOM announced Wednesday that the US had destroyed a Houthi surface-to-air missile that presented an imminent threat to US aircraft. Later, a US Destroyer intercepted a Houthi anti-ship missing in the Gulf of Aden. Meanwhile, the US carried out airstrikes against “a number of Houthi drone sites.” So, the Red Sea and Suez Canal remain to be hotspots as the Israeli invasion of Gaza continues. At the same time, the US House of Representatives is set to vote on a bipartisan package of tax breaks for businesses (making R&D and capital expenses and capital investments deductible through at least 2025).  However, the measure would require a two-thirds majority to pass.  The bill also modestly increases Child Tax Credits for low-income taxpayers. 

In China news, FBI Director Wray warned a House Select Committee Wednesday that “China’s hackers are positioning on American infrastructure in preparation to wreak havoc and cause real-world harm to American citizens and communities, if or when China decides the time has come to strike.”  Wray said that Chinese government-backed hackers are targeting things like water treatment plants, transportation, electrical infrastructure, as well as oil/natural gas pipelines.  Elsewhere, Bloomberg reported Wednesday evening that China is now openly engaged in a massive banking system overhaul.  Reportedly, Beijing is merging hundreds of rural lenders into giant regional banks.  This process has been slowly and quietly going on in the background since 2022.  However, the process has greatly accelerated in the last month as the country seeks to tackle the $7 trillion credit risk amidst a Chinese real estate collapse.  (For reference on scope, China is said to have between 1.5 and 3 BILLION unoccupied housing units nationally. This is because the government has a strong record of seizing bank deposits.  So, for years or decades, ordinary Chinese people have banded together to invest their savings in investment properties as a way to save with less risk of confiscation.  This resulted in a huge glut of unused, non-producing, and unsaleable housing…leading to massive numbers of loan defaults.)

With that background, it looks like (at least ahead of the economic data dump) we are getting a modestly bullish rethink of the Fed. All three major index ETFs opened the premarket higher and are putting in small, white-bodied candles so far in the early session. SPY is retesting its T-line (8ema) and all three are showing inside candles (Bullish Harami type) for the premarket. DIA remains above its T-line and QQQ is still below and not yet retesting. None of the three have broken their uptrend lines, but all three are close to the trend. So, the Bulls remain in control of the trend in the longer term but after yesterday’s candle, the very short-term trend has to be bearish. In terms of extension, none of the three is too far stretched from the 8ema. T2122 has also fallen but remains outside of its oversold range. This means the market has room to run in either direction if the Bulls or Bear can gain enough momentum to do it. Also, continue to keep an eye on those Tech Big Dogs. Once again yesterday it was those stocks that led markets lower. If those 7-10 stocks lead in one direction, it’s nearly impossible for the rest of the market to do anything but follow given their trading volumes.

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 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 gains are 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

GOOGL and AMD Guidance Disappoints

On Tuesday, markets opened a bit lower.  SPY opened down 0.15%, DIA opened down 0.12%, and QQQ gapped down 0.25%.  At that point, we saw a bit of divergence with SPY meandering back and forth across the gap all day.  Meanwhile, DIA did the same until about 10:45 a.m. when it very lowly rallied the rest of the day, closing not far from the highs.  However, QQQ continued to slowly sell off all day long after the open closing not too far up off the low.  This action gave us a white-bodied Spinning Top candle.  At the same time, QQQ printed a black-bodied Bearish Harami. But DIA gave us a white-bodied, large-body candle.  DIA printed a new all-time high and a new all-time high close.  SPY gave us a new all-time high, but not a new all-time high close.  Obviously, all three remained above their T-line (8ema).

On the day, five of the 10 sectors were in the green as Energy (+0.74%) led the way higher.  At the same time, Technology (-0.90%) was by far the worst-performing sector. Meanwhile, the SPY lost 0.08%, DIA gained 0.31%, and QQQ lost 0.67%.  Meanwhile, VXX lost 1.30% to close at 14.40 and T2122 dropped back outside of its overbought territory to the very top of the mid-range at 79.55.  10-year bond yields dropped to 4.036% and Oil (WTI) climbed 1.32% to close at $77.79 per barrel. So, markets started the day down just a bit and then diverged.  Tech (and in turn the QQQ) which have led markets for a long, long time, moved a bit lower while the lagging mega-cap DIA kept climbing and SPY trod water.  This all happened on a lower-than-average volume in the SPY and DIA as well as a just less-than-average volume in the QQQ.

The major economic news released Tuesday included January Conf. Board Consumer Confidence, which came in just below expectation at 114.8 (compared to a forecast of 115.0 and the previous reading of 108.0).  Still, that was a two-year high for the gauge.  At the same time, December JOLTs Job Openings were higher than predicted at 9.026 million (versus a forecast of 8.750 million and a November value of 8.925 million).  So, the economy remains strong with employers continuing to look for new employees.  Finally, after the close, Weekly API Crude Oil Stocks showed a larger drawdown than anticipated at -2.500 million barrels (compared to a forecasted -0.867 million barrels but far less than the prior week’s 6.674-million-barrel drawdown).

After the close, AMD, GOOGL, AX, BXP, CP, CB, EQR, FIBK, GOOG, MTCH, MSFT, MDLZ, RNR, RHI, SWKS, SYK, TSBA, and UMBF all reported beats on both revenue and earnings.  At the same time, ASH, ENVA, FBIN, LFUS, MOD, and TER all missed on revenue while beating on earnings.  On the other side, HA and UNM both bear on revenue while missing on earnings.  However, EA, JNPR, and SBUX missed on both the top and bottom lines.  It is worth noting that AMD, EA, LFUS, MOD, and MDLZ lowered their forward guidance.  Meanwhile, ASH, SYK, and UNM raised guidance.

Click for video

In stock news, GM CEO Barra promised to buy back another 200 million (of 1.2 billion outstanding) shares.  In addition, she promised a 33% dividend increase. Later, Nippon Steel announced it had agreed in principle to $16 billion in loans from MUFG and the two other largest Japanese banks for the financing to buy X.  Later, WHR said that the Red Sea problems (causing ships to go around Africa on the way to Europe, adding 15 days to the transit from Asia) will begin impacting its European business, but did not specify a financial impact.  At the same time, APH announced it is acquiring a division of CSL in a $2 billion all-cash deal.  Later, ENB said it would be cutting 650 jobs (5% of its workforce) as part of a cost-cutting drive. Elsewhere, Bloomberg reported that PYPL plans to lay off 9% of its workforce in 2024.  At the same time, Reuters reported that TSLA vehicle registrations in CA fell in Q4, the first decline in more than three years.  45,952 TSLA cars were registered in CA in Q4, down from 52,782 in Q4 of 2022. Later, NDAQ announced it is planning to cut “hundreds” of jobs as it integrated fintech firm Adenza into its operations.  Other employees will be reassigned as the technology eliminates the need for many employees.  (NDAQ bought Adenza for $10.5 billion in June 2023.)   After the close, WMT announced a 3-for-1 stock split as of February 23.

In stock legal, governmental, and regulatory news, an Australian court heard closing arguments in a case against BAYRY (Bayer).  The judge will decide whether BAYRY’s Roundup weedkiller caused cancer.  At the same time, Saudi Arabia told the national oil company to ditch plans to expand production, which essentially canceled major projects for SLB, HAL, and BKR, which were all down sharply on the news.  Later, BA said that it was withdrawing a request for exemption of safety regulations for its 737 MAX 7 (an exemption the company has been lobbying Congress and the FAA to get for a year) amidst the ongoing fallout from its quality control crisis.  Meanwhile, the NY Attorney General filed suit against alleging the company failed to protect and reimburse victims of fraud.  At the same time, the US Chamber of Commerce and two Texas business groups sued seeking to force the FCC to allow businesses to discriminate when it comes to internet access.  (The suit seeks to let internet service providers charge different groups different rates and give them different levels of bandwidth based on race, ethnicity, religion, or income level.  Elsewhere, JBLU and SAVE filed for an expedited appeal in their bid to overturn a lower court ruling preventing the companies from merging (which itself came after the FTC had blocked the merger).  At the same time, V was sued by consumers alleging that the company had failed in its duty to make “vanilla” gift cards less likely to be drained by thieves.  (This involved cards sold at WMT, TGT, and CVS among other retailers, which the complaint said can be drained by thieves while still inside their packaging at the stores and undetected by consumers.)  Meanwhile, a Delaware judge invalidated Elon Musk’s $56 billion pay package from TSLA, siding with shareholders who had called the package unfair.

So far this morning, ADP, AVY, BA, BSX, GIB, EVR, FTV, HES, LII, NDAQ, NMR, OTIS, ROP, TEVA, TMO, and UMC all reported beats on both the revenue and earnings lines.  Meanwhile, APTV, EAT, ODFL, PSX, and SLGN missed on revenue while beating on earnings.  On the other side, GPI, NAVI, and NYCB beat on revenue while missing on earnings.  However, MHO and ROK missed on both the top and bottom lines.

Overnight, Asian markets were mixed with China again down sharply.  Shenzhen (-1.95%), Shanghai (-1.48%), and Hong Kong (-1.39%) led the losses while Australia (+1.06%), India (+0.95%), and Japan (+0.61%) paced the gains.  In Europe, bourses lean heavily to the green side at midday with four spots or red amidst 11 spots of green on the board at the break.  The CAC (+0.13%), DAX (-0.01%), and FTSE (+0.10%) “lead” the region higher on volume with many smaller exchanges up stronger such as Athens (+1.55%) in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed but leaning strongly bearish start to the day.  The DIA implies a +0.09% open, the SPY is implying a -0.47% open, and QQQ implies a -1.05% open at this hour.  At the same time, 10-year bond yields are down a bit to 4.026% and Oil (WTI) is down 1.00% to $77.04 per barrel in early trading.

The major economic news scheduled for Wednesday includes Jan. ADP Nonfarm Employment Change (8:15 a.m.), Q4 Employment Cost Index (8:30 a.m.), Jan Chicago PMI (9:45 a.m.), EIA Weekly Crude Oil Inventories (10:30 a.m.), FOMC Rate Decision and FOMC Statement (both at 2 p.m.), and FOMC Press Conference (2:30 p.m.).  The major earnings reports scheduled for before the open are include APTV, ADP, AVY, AVY, BA, BSX, EAT, COR, GIB, EVR, FTV, GPI, HES, LII, MHO, MA, NDAQ, NYCB, NVO, ODFL, OTIS, PSX, ROK, ROP, SLGN, TEVA, TMO, and UMC.  Then, after the close, AFL, ALGN, AVB, AXS, BHE, BOOT, BV, CHRW, CCS, CMPR, CTVA, CACC, FLEX, THG, LSTR, MTH, MEOH, MET, NXT, PTC, QRVO, QCOM, SEIC, SIGI, TTEK, UGI, and VSTO report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, Q4 Labor Costs Index, S&P Global Mfg. PMI, Dec. Construction Spending, Jan. ISM Mfg. Employment, Jan. ISM Mfg. PMI, Jan. ISM Mfg. Price Index, and Fed Balance Sheet.  Finally, on Friday, Jan Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Jan. Private Nonfarm Payrolls, Jan. Participation Rate, Jan. Unemployment Rate, Dec. Factory Orders, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations are reported.

In terms of earnings reports later this week, on Thursday, we hear from FLWS, ATI, MO, ATKR, BALL, BDX, BR, BIP, BC, CAH, CMS, DLX, DOV, ETN, EPD, RACE, HON, HII, ITW, IP, JHG, KEX, LANC, LAZ, MKL, MRK, PH, PTON, PBI, DGX, RVTY, RCI, RCL, SBH, SNY, SNDR, SIRI, SR, SWK, TSCO, TT, WNC, WEC, WRK, AMZN, AAPL, TEAM, CLX, COLM, DECK, DXC, EMN, GEN, HIG, HOLX, HLI, HUBG, KMPR, LPLA, META, MCHP, MTX, NOV, OTEX, POST, RGA, SKX, SKYW, and X.  Finally, on Friday, ABBV, AON, BSAC, BMY, BBU, BEPC, BEP, CBOE, CHTR, CVX, CHD, CI, XOM, IMO, LYB, REGN, SAIA, and GWW report.

In miscellaneous news, the Biden Administration announced it had offered another tender for 3 million barrels with a June delivery date.  This is the latest tranche in the bid to refill the Strategic Petroleum Reserve. Elsewhere, President Biden said Tuesday that he has decided how the US will respond to the deadly drone attack on US troops in Jordan (by Iran-backed militia).  Most analysts believe the most likely response will be attacks on some Iranian-backed militias and/or assets in the Middle East (such as Syria and Iraq).  However, the President took the statesmanlike tone that we didn’t need an expanded regional conflict such as a direct strike on Iran itself is likely to bring.

In other news, the IMF raised its global growth forecast for 2024 on Tuesday.  The new expectation is for 3.1% global GDP growth (up from a +2.9% forecast from October).  In the process, the IMF echoed what the Fed has been saying, stating that growth is holding up even as inflation continues to fall.  IMF Chief Economist Gourinchas went on to say the world is in its final descent into a soft landing.  In the US, mortgage demand for new home purchases fell 11% last week (compared to the prior week) and were r20% lower than the same week one year ago.  Applications for refinance loans actually increased 2% on a week-on-week basis (+3% from one year earlier).  This averaged out to a total mortgage application volume decrease of 7.2% week-on-week.  This came as the national average 30-year-fixed rate on a conforming loan remained at 6.78% and closing points rose to 0.65 (up from 0.63 the prior week).  The average loan size also rose to $444,100 which was the largest since May 2022.

With that background, it looks like we are in for a rocky start to the day with the big dogs of tech gapping down the QQQ to start the premarket and then putting in a volatile black-bodied candle since that start. QQQ also gave up its T-line (8ema) in the process. SPY followed QQQ lower, just with much less energy and remains above its T-line. Meanwhile, DIA is diverging and made a modest gap higher to start the early session and has put in a very small-body, indecisive candle since that start. So, the Bulls were disappointed by the GOOGL and AMD beats or guidance last night. In terms of extension, none of the three are too far stretched from the 8ema. T2122 has also fallen to just outside the overbought range. This means the market has room to run in either direction, if the Bulls or Bear can gain enough momentum to do it. Once again, even though 99% of the market knows exactly what to expect from the Fed, with the Fed announcement this afternoon, don’t be surprised if today is a “wait and see” day until 2 p.m. and then volatile the last couple of hours. Also, continue to keep an eye on those Tech Big Dogs. If they lead in one direction, it is basically impossible for the rest of the market to do anything but follow given their trading volumes.

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 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 gains are 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

Fed Watch Starts After More Strong Earnings

Markets opened just a touch higher on Monday.  SPY opened 0.04%, DIA opened dead flat, and QQQ opened 0.09% higher.  From that point, all three major index ETFs wandered sideways for 90 minutes.  Then the QQQ and SPY began a modest but steady rally at 11 a.m.  DIA followed starting at 1 p.m.  Then at 3 p.m., the Bulls kicked it into gear so that even after a modest 20-minute pullback all three major index ETFs went out very near their highs of the day.  This action gave us large, white-bodied candles in all three with SPY and QQQ being at least “Trader’s Best Friend” patterns (Doji followed by a large white candle) and QQQ even being a Morning Star signal if you are lenient on the first candle.  All three remain above their T-line (8ema).

On the day, eight of the 10 sectors were in the green as Technology (+1.36%) led the way higher.  At the same time, Communications Services (-0.07%) and Energy (-0.05%) were the only down sectors (barely).  Meanwhile, the SPY gained 0.79%, DIA gained 0.58%, and QQQ gained 1.02%.  (All three closing at new all-time high closes.)  Meanwhile, VXX gained 0.41% to close at 14.59 and T2122 jumped up to the top end of its overbought territory at 94.08.  10-year bond yields dropped to 4.076% and Oil (WTI) fell 1.32% to close at $76.98 per barrel.  So, markets opened just on the bullish side of flat, bided their time for 90 minutes, and then rallied the rest of the day.  The last hour was the strongest move of the day.  This all happened on a well-less-than-average volume in all three major index ETFs.

There was no major economic news released on Monday.

After the close, ARE, CLS, CR, FFIV, GGG, HP, NUE, SANM, SMCI, WHR, and WWD all reported beats on both the revenue and earnings lines.  Meanwhile, CLF missed on revenue while beating on earnings.  It is worth noting that CLS, SANM, SMCI, and WWD all raised forward guidance.  However, WHR lowered guidance.

So far this morning, AOS, DHR, GM, JBLU, MDC, MPC, MPLX, MSCI, and PNR all reported beats on both the revenue and earnings lines.  Meanwhile, JCI, OSK, PFE, PHM, and UPS all missed on revenue while beating on earnings.  On the other side, PII beat on revenue while missing on earnings.  It is worth noting that GM also raised its forward guidance.

Click for video

In stock news, Reuters reported Monday that STLA has begun volume-level production of large and mid-sized hydrogen fuel cell vans.  At the same time, AMZN withdrew from its $1.4 billion acquisition of IRBT.  (This move was in response to opposition from EU antitrust regulators.  The deal was originally valued at $1.7 billion but investigations led to delay and drove the price down.)  At the time this withdrawal was announced, IRBT also announced it would lay off about 31% (350) of its employees.  (IRBT plunged as much as 19% on the day, but closed down just 8.77%.)  Later, the Wall Street Journal reported that GM dealers were pressuring GM corporate to launch and offer more hybrid vehicles to match demand.  Elsewhere, HCMLY announced Monday that it will spin off its North American operations.  (No announcement was made on a potential IPO, with NASDAQ and NYSE both courting the Swiss giant.)  At the same time, WMT announced it will offer annual stock grants to its store managers in an effort to attract and retain talent.  (The awards mean that the most successful store managers could earn more than $400k per year.)  After the close, ALB laid off 300 employees (4% of its global workforce).  This was part of a previously announced cost reduction plan.  (The company expects the move to save it $50 million in 2024.)  Also after the close, Reuters reported that TER (semiconductor testing equipment maker) had pulled more than $1 billion of manufacturing out of China in 2023 in order to ensure compliance with sanctions.

In stock legal, governmental, and regulatory news, the Republican Chairmen of two US House committees sent a letter to President Biden asking that the administration launch investigations into four Chinese companies involved in the F battery plant that is planned for construction in MI. Later, AAL was sued (in a potential class-action suit) for having stripped 1.1 million frequent flier miles from two customers after they doubled up using credit card mileage bonuses.  The pair allege AAL wrongly accused them of fraud.  Elsewhere, TM urged the owners of 50,000 2003-2005 vehicles to stop driving their cars immediately until after recall repairs on airbag inflators can be done.  After the close, PHG (maker of recalled and deadly CPAP machines and masks) reached a settlement with the FDA and Dept. of Justice.  Under the agreement, the company will stop selling sleep apnea machines in the US (until it meets FDA corrective actions and gets approval), which could cost the company $400 million per year.  Also after the close, X agreed to a $42 million settlement of a lawsuit, including $37 million in facility improvements related to a 2018 fire.  (After the fire, X operated its plant without the required desulfurizing equipment for three months, emitting huge clouds of sulfurous gas.). The settlement was with environmental groups and the Allegheny County Health Department.

Overnight, Asian markets were mostly in the red as the region reacted to Monday’s court-ordered liquidation of China Evergrande.  Shenzhen (-2.40%), Hong Kong (-2.32%), and Shanghai (-1.83%) led the region lower.  Meanwhile, in Europe, we see a mostly green picture at midday.  The CAC (+0.47%, DAX (+0.19%), and FTSE (+0.51%) lead the region higher (with only four of the 15 exchanges in red numbers) in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing to an open just on the red side of flat.  The DIA implies a -0.16% open, the SPY is implying a -0.12% open, and the QQQ implies a -0.04% open at this hour.  At the same time, 10-year bond yields are down slightly to 4.064% and Oil (WTI) is flat at $76.78 per barrel in early trading.

The major economic news scheduled for Tuesday includes Jan. Conf. Board Consumer Confidence and Dec. JOLTs Job Openings (both at 10 a.m.), and API Weekly Crude Oil Stocks report (4:30 p.m.).  The major earnings reports scheduled for before the open include AOS, GLW, DHR, GM, HCA, HUBB, JBLU, JCI, MDC, MAN, MPC, MPLX, MSCI, OSK, PNR, PFE, PII, PHM, SYY, and UPS.   Then, after the close, AMD, GOOGL, ASH, BXP, CP, CB, EA, ENVA, EQR, FBIN, GOOG, HA, JNPR, LFUS, MTCH, MSFT, MOD, MDLZ, RNR, RHI, SWKS, SBUX, SYK, TER, and UNM report.

In economic news later this week, on Wednesday, Jan. ADP Nonfarm Employment Change, Q4 Employment Cost Index, Jan Chicago PMI, EIA Weekly Crude Oil Inventories, FOMC Rate Decision, FOMC Statement, and FOMC Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, Q4 Labor Costs Index, S&P Global Mfg. PMI, Dec. Construction Spending, Jan. ISM Mfg. Employment, Jan. ISM Mfg. PMI, Jan. ISM Mfg. Price Index, and Fed Balance Sheet.  Finally, on Friday, Jan Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Jan. Private Nonfarm Payrolls, Jan. Participation Rate, Jan. Unemployment Rate, Dec. Factory Orders, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations are reported.

In terms of earnings reports later this week, on Wednesday, APTV, ADP, AVY, AVY, BA, BSX, EAT, COR, GIB, EVR, FTV, GPI, HES, LII, MHO, MA, NDAQ, NYCB, NVO, ODFL, OTIS, PSX, ROK, ROP, SLGN, TEVA, TMO, UMC, AFL, ALGN, AVB, AXS, BHE, BOOT, BV, CHRW, CCS, CMPR, CTVA, CACC, FLEX, THG, LSTR, MTH, MEOH, MET, NXT, PTC, QRVO, QCOM, SEIC, SIGI, TTEK, UGI, and VSTO report.  On Thursday, we hear from FLWS, ATI, MO, ATKR, BALL, BDX, BR, BIP, BC, CAH, CMS, DLX, DOV, ETN, EPD, RACE, HON, HII, ITW, IP, JHG, KEX, LANC, LAZ, MKL, MRK, PH, PTON, PBI, DGX, RVTY, RCI, RCL, SBH, SNY, SNDR, SIRI, SR, SWK, TSCO, TT, WNC, WEC, WRK, AMZN, AAPL, TEAM, CLX, COLM, DECK, DXC, EMN, GEN, HIG, HOLX, HLI, HUBG, KMPR, LPLA, META, MCHP, MTX, NOV, OTEX, POST, RGA, SKX, SKYW, and X.  Finally, on Friday, ABBV, AON, BSAC, BMY, BBU, BEPC, BEP, CBOE, CHTR, CVX, CHD, CI, XOM, IMO, LYB, REGN, SAIA, and GWW report.

In miscellaneous news, ICE reported Monday that global futures (including derivatives) have hit a record level of open interest.  They reported that 87.2 million stock futures contracts traded on January 25, leaving an open interest of 61.5 million contracts.  At the same time, 33 million energy futures contracts traded leaving an open interest of 56 million contracts.  Elsewhere, JPM reported Monday evening that the 11 new “spot price of Bitcoin” ETFs are seeing large drops in money inflows. 

In government news, after the close, a bipartisan group of Congressional negotiators reached agreement on spending levels for each of the 12 funding bills needed to keep the government open.  These total to the amount previously agreed by House Speaker Johnson and Senate Majority Leader Schumer ($1.59 trillion) but below the amount originally agreed before the GOP reneged on the June 2023 deal. While Johnson could use Democratic votes to get the bills passed in the House, it is unknown whether any of the MAGA extremists would call for his ouster if he did that. (Of course, theoretically, Democrats could also override that tiny minority holding everything hostage by voting for Johnson during a “vote to vacate the chair,” but it is uncertain whether the Democrats would do that.  So, we have a step toward keeping the government open.  However, plenty of uncertainty remains on both sides of the aisle as to whether this step really has any meaning.  Elsewhere, the Treasury Department said on Monday that it expects to borrow $760 billion in Q1, which is $55 billion below the estimate released in October.  The primary reason we do not need to borrow as much is that the economy has been stronger than expected, resulting in higher tax inflows and a higher cash balance than previously forecasted.

With that background, it appears that all three major index ETFs are undecided early. All opened the premarket near their Monday close level and have put in small, black-bodied, and indecisive candles so far in the early session. All three remain above their T-line (8ema) and very, very near their all-time highs. So, the Bulls are still in control of the trend in both the short term and the longer term. In terms of extension, none of the three are too far stretched from the 8ema. However, the T2122 indicator is well into its overbought range. So, the market will again need a pause or pullback soon. Still, both sides have some slack to work with if they can gain enough momentum to do it. Even though 99% of the market knows exactly what to expect from the Fed, with the Fed announcement being tomorrow afternoon, don’t be surprised if today is a “wait and see” day. Continue to keep watching those Tech Big Dogs. (I follow 10, but somebody has coined the term “Magnificant 7” and five of those seven report this week. If those big dogs move as a group, it is basically impossible for the rest of the market to do anything but follow given their trading volumes.

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 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 gains are 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

Good Data Thursday with PCE Ahead

The market started out quite bullish again on Thursday.  SPY gapped up 0.45%, DIA opened 0.23% higher, and QQQ gapped up 0.60%.  All three major index ETFs then ground sideways for a while.  DIA was the first to break lower, selling off from 10:30 a.m. until noon.  SPY and QQQ followed at noon with SPY reaching its lows (not quite recrossing the morning gap) by 2:10 p.m.  QQQ sold off most sharply, recrossing its gap by 1:20 p.m. and reaching the low of the day at 2:10 p.m.  From that point, all three put in a modest rally that lasted the rest of the day.  DIA went out on the highs, putting in a white-bodied candle that bounced up off its T-line (8ema) and putting it back at the top of its four-day consolidation.  SPY printed a small, indecisive, white-bodied Hanging Man-type candle (which could also be seen as a Dragonfly Doji type).  QQQ was the laggard, giving us a gap-up, black-bodied, Spinning Top that closed at yet another all-time high close.

On the day, all 10 sectors were in the green as Utilities (+1.80%) and Energy (+1.78%) were way out in front leading the gainers.  At the same time, Consumer Cyclicals (+0.21%) was by far the worst-performing sector.  Meanwhile, the SPY gained 0.54%, DIA gained 0.64%, and QQQ gained 0.12%.  Meanwhile, VXX gained 1.31% to close at 14.64 and T2122 climbed to the top of the mid-range but remains just outside of its overbought territory at 78.52.  10-year bond yields dropped to 4.124% and Oil (WTI) spiked another 2.81% to close at $77.20 per barrel.  So, markets gapped higher on strong economic data and earnings reports (with the exception of TSLA which got hit hard on its miss and lower guidance).  However, at that point, traders were uncertain, took some profits and then finally started to modestly but again in the afternoon.  This all happened on less-than-average volume in all three major index ETFs.

The major economic news on Thursday included Building Permits, which came in just below expectations at 1.493 million (versus a forecast of 1.495 million and well above the prior reading of 1.467 million).  At the same time, Weekly Initial Jobless Claims were higher than projected at 214k (compared to a forecast of 200k and well above the prior week’s 189k).  Weekly Continuing Jobless Claims also came in hot at 1,833k (versus a forecast of 1,828k and the prior week’s 1,806k).  At the same time, Dec. Durable Goods Orders were flat month-on-month at 0.0% (versus a forecast of +1.1% and sharply lower than November’s +5.5%).  However, when looking at only the Core Durable Goods Orders for December, the number was hitter than expected at +0.6% (compared to a forecasted +0.2% and the November +0.5% reading).  In terms of Q4 GDP, it was very strong data coming in at +3.3% (versus the +2.0% forecast and still less than the Q3 +4.9%).  This was mostly real growth since the Q4 GDP Price Index was up just 1.5% (compared to a +2.3% forecast and the +3.3% Q3 value).  So, that data is telling us inflation is coming down sharply but GDP is still climbing briskly.  The December Goods Trade Balance was just slightly better than anticipated at -$88.46 billion (versus a forecast of -$88.70 billion and trending correctly compared to the Nov. -$90.27 billion).  December Retail Inventories were up a bit at +0.6% compared to the November -0.6% reading.  Later, Dec. New Home Sales were better than predicted at 664k (compared to a 645k forecast and much better than November’s 615k).  Finally, after the close, the Fed Balance Sheet was reported to have actually grown (for the first time in a long time) by just a touch from $7.674 trillion to $7.677 trillion (a $3 billion increase in the last week but still down $10 billion from the week before that).

Click for video

In stock news, in the wake of its acquisition of ATVI, MSFT announced the layoff of 1,900 from the Activision and Xbox gaming units (their need was eliminated by the merger).  The cuts represent 8% of the total employees of the post-merger gaming division.  At the same time, TSLA CEO Musk said that Chinese EV-makers will “demolish global rivals” without trade barriers.  This comes after BRKB’s Warren Buffett backed Chinese BYD with its substantially cheaper models compared to TSLA.  Later, PYPL announced new updates to its products on Thursday.  The news was not well received as the stock fell as much as 6.5% on the day before closing down 3.65%.  Elsewhere, GM and HMC said they have begun delivering fuel cell systems to customers from their joint venture.  The JV factory will produce 2,200 fuel cell systems per year by mid-decade.  At the same time, Reuters reported that BAC will give stock awards to 97% of its workforce (employees earning $500k or less).  Later, the CEO of PARA announced an unspecified number of layoffs, telling CNBC the company needs to “run leaner and spend less.”  After the close, LOW said it would be cutting a “limited number” of non-customer-facing corporate positions.  Also after the close, JPM shuffled several top executives as the company prepares for succession after Jamie Dimon leaves.  In addition, LEVI said it would cut between 10% and 15% of its global corporate jobs.  (LEVI has about 5,000 global corporate employees, which would make the cuts between 500 and 750 jobs.)

In stock legal, governmental, and regulatory news, bowing to obvious market opinion, BA CEO Calhoun said he agreed with the FAA ban on the expansion of 737 MAX 9 production following all the quality control issues identified in the wake of a fuselage panel blowing off a jet in mid-flight.  (This came in a brief interview following a meeting on Capitol Hill where Calhoun was explaining to lawmakers that BA would turn things around.)  At the same time, the EU’s top court ruled in favor of VLKAF in a dispute over spare parts manufacturers using similar markings to the original parts Audi logo.  Later, the NRLB accused WMT of union-busting in CA, alleging the company interrogated its employees, removed pro-union flyers from break rooms, and threatened employees who distributed union literature (all being violations of US labor law).   At the same time, the SEC delayed making an approval decision on BLK’s application to launch two Etherium-based spot-price ETFs (similar to the 11 Bitcoin ETFs recently approved).  AAPL announced Thursday that it will begin allowing app downloads from sources outside of its own store…but only in Europe and only in reaction to the new EU law (DMA) that requires this move to avoid massive penalties.  In reaction to the recent accounting investigation, shareholders filed suit against ADM and its executives.  Later, GM revealed it is being probed by both the US Dept. of Justice and the SEC related to the October incident where one of GM’s Cruise self-driving cars ran over and dragged a pedestrian.  GM said these investigations stemmed from a “failure of leadership” (which had tried to hide the incident initially) and vowed to “reform its culture.”  After the close, the CA Public Utilities Commission approved a $45 million penalty against PCG for its part in causing the 2021 “Dixie” fire.  Also after the close, the FTC announced it had ordered MSFT, GOOGL, and AMZN to provide information on their recent investments in AI companies OpenAI and Anthropic.  (The companies have 45 days to provide that information.)

After the close, AJG, ASB, TBBK, INTC, KLAC, LHX, OLN, SSB, V, and WDC all reported beats on both the revenue and earnings lines.  At the same time, COF, TMUS, and WAL beat on the revenue line while missing on earnings.  On the other side, LEVI AND WY missed on revenue while beating on earnings.  It is worth noting that INTC, LHX, and LEVI lowered guidance while WDC raised its forward guidance.

Overnight, Asian markets were mixed and leaned toward the red side.  Hong Kong (-1.60%), Japan (-1.34%), and Shenzhen (-1.06%) were by far the biggest losers while Australia (+0.48%), Singapore (+0.38%), and South Korea (+0.33%) led the gainers.  However, in Europe, we see strong green numbers across the board at midday.  The CAC (+2.17%), DAX (+0.21%), and FTSE (+1.21%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start on the red side of flat.  The DIA implies a -0.05% open, the SPY is implying a -0.07% open, and the QQQ implies a -0.35% open at this hour.  At the same time, 10-year bond yields are down slightly to 4.12% and Oil (WTI) is down 1% to $76.62 per barrel in early trading.

The major economic news scheduled for Friday includes Dec. Core PCE Price Index, Dec. PCE Price Index, and Dec. Personal Spending (all at 8:30 a.m.), and Dec. Pending Home Sales (10 a.m.).  The major earnings reports scheduled for before the open include AXP, ALV, BAH, CL, FCNCA, GNTX, and NSC.  There are no reports scheduled for after the close. 

So far this morning, ALV, BKU, BAH, and CL have reported beats on both the revenue and earnings lines.  Meanwhile, VLVLY missed on revenue while beating on earnings.  On the other side, FCNCA beat on revenue while missing on earnings.  Unfortunately. AXP missed on both the top and bottom lines.  However, AXP and BAH both raised forward guidance.

In miscellaneous news, major private Fintech firm EquiLend reported an outage of its service on Thursday.  The service, which automates the lending of shares between broker-dealers said Wednesday it had identified unauthorized access to its systems.  The system manages $2.4 trillion in stock transactions each month and this outage may have temporarily impacted the ability to short some stocks. (EquiLend is partly owned by GS, JPM, BAC, and BLK among other big Wall Street names.)  Elsewhere, Reuters reported that (in a sign of changed warfare) an explosive drone had a nat. gas field in Northern Iraq, doing limited damage.  Earlier in the day, another drone had targeted US forces near Erbil Iraq.  However, that drone was shot down by US air defenses and did no damage.

In overseas inflation news, the ECB policymakers said Thursday that they were “open to” a policy change in March (i.e. a rate cut).  This was a change in rhetoric for the European Central Bank.  Still, it maintained rates at its historically-high 4% rate.  Later, Japan reported that its Core Consumer Price Index (for Tokyo, which is a leading indicator for the rest of the country) has fallen below the Bank of Japan’s 2% inflation target.  Tokyo’s core CPI in January is just 1.6% above a year earlier, much lower than the 1.9% that was forecasted and down sharply from 2.1% in the December report.

With that background, it appears (take this with a grain of salt because TC2000 is acting up this morning) that all three major index ETFs gapped lower to start the premarket. However, all three have put in strong while candles in the early session. As a result, SPY and DIA look dead flat while QQQ is down just less than a quarter of a percent. All three remain above their T-line (8ema) and very near all-time highs. So, the Bulls are still in control of the trend in the short term and the longer term. In terms of extension, This morning’s premarket action seems to have eliminated its over-stretch from the 8ema while the SPY and DIA are within normal distance from the T-line. The T2122 indicator is near its overbought range, but remains just inside its midrange. So, once again, both sides have slack to work with if they can gain enough momentum to do it. With that said, given Thursday’s very good economic data (growth with falling inflation) the risk remains on the side of a move lower (if PCE data disappoints by coming in hot). Continue to keep watching those Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes. Finally, remember it’s Friday. Pay yourself and prepare your account for the weekend.

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 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 gains are 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

TSLA Warning and Big Data Release Ahead

Wednesday gave us a gap higher and then a fade.  SPY opened 0.60% higher, DIA gapped up 0.31%, and QQQ gapped up 0.96%.  After that open, all three major index ETFs meandered back and forth around that open level until 1 p.m.  At that point, we saw profit taking sell off the market the rest of the day.  This action gave us gap-up, black-bodied candles in all three.  All three had higher upper wicks than lower (DIA’s version was mostly body).  While all three also remain above their T-line, DIA is not far above even as QQQ is even more stretched after that morning gap.  This all happened on average volume.

On the day, seven of the 10 sectors were in the red with Energy (+1.04%) way out in front leading the gainers.  At the same time, Utilities (-1.35%) and Communications Services (-1.35%) were by far the worst-performing sectors.  Meanwhile, the SPY gained 0.11%, DIA lost 0.25%, and QQQ gained 0.55%.  Meanwhile, VXX gained 2.63% to close at 14.45 and T2122 dropped but remained in its midrange at 35.98.  10-year bond yields spiked up to 4.18% and Oil (WTI) gained 1.36% to close at $75.38 per barrel.  So, markets gapped higher on Chinese stimulus and a great earnings report (which included their report that orders have TRIPLED in the last quarter by ASML). However, at that point, traders started having second thoughts based on being extended and also on the breadth of the rally (being mostly led by the 10 big dog tech stocks).

The major economic news on Wednesday was limited to S&P Global Manufacturing PMI, which came in well above expectations at 50.3 (compared to a forecast and Dec. value of 47.9).  At the same time, the S&P Global Services PMI also came in higher than was predicted at 52.9 (versus a forecast of 51.0 and the December reading of 51.4).  This gave us an S&P Global Composite PMI of 52.3 (compared to the Dec. reading of 51.4).  Later the EIA Crude Oil Inventories showed a much bigger drawdown than anticipated at -9.233 million barrels (compared to a forecast of -2.150 million barrels and the prior week’s -2.492 million barrels).

After the close, AMP, CNXC, CCI, CSX, IBM, LRCX, PKG, RJF, RMD, STX, NOW, URI, and WRB all reported beats on both the revenue and earnings lines.  At the same time, COLB, LVS, SLM, and TSLA all beat on revenue while missing on earnings.  On the other side, PLXS beat on revenue while missing on earnings.  Unfortunately, CACI, HXL, KNX, LVRO, and LBRT missed on both the top and bottom line.  It is worth noting that CNCX, HXL, KNX, PLXS, and SLM all lowered their forward guidance.  It is also worth noting that TSLA (one of the biggest dogs in terms of dollar value of stock traded) warned of a slowdown in the year ahead.

Click for video

In stock news, the Seattle Times reported Wednesday that BA (not SPR) was the one that reinstalled the panel the explosively left the ALK 737 MAX 9 jet during flight.  The paper said the claims were confirmed by an anonymous whistleblower.  Later, C said that the 5,000 employees it has laid off since the start of the year will be paid through April.  At the same time, STLA announced it had acquired British AI technology firm CloudMade for an undisclosed amount.  Later, a DAL flight using a BA 757 jet lost its nose wheel as the plane was lining up to take off in Atlanta Monday, but the FAA notice on the event was not posted until Wednesday. At the same time, CG announced it is buying a $415 million student loan portfolio from TFC.  Later, Reuters reported that GM will invest $1.4 billion in Brazil over the next four years.  At the same time, Reuters reported the TSN has dropped CVS as its pharmacy benefits manager in favor of a startup.  (CVS, CI, and UNH currently control 80% of that pharmacy benefits market.)  Elsewhere, NVDA (chipmaker) and EQIX (data center provider) announced they are partnering to offer supercomputing systems to the corporate world.  (This service is meant to compete with AMZN and MSFT cloud computing offerings.)  At the same time, SPOT announced they will launch in-app purchases on iPhones as soon as EU laws take effect forcing AAPL to allow this on March 7.  Later, BA announced they had delivered the first 737 MAX 8 jet to China since the early 2019 grounding of those planes.  After the close, F said it expects to see a $1.7 billion pre-tax loss related to employee pension and other post-retirement benefits restatements.  Also after the close, TSLA said it will start making a new model of EV in the second half of 2025.  The new car will be a smaller crossover aimed at the mass market.  (TSLA is notorious for missing its production date promises by years.)

In stock legal, governmental, and regulatory news, LEVI filed suit against Italian luxury brand Brunello Cucinelli claiming trademark infringement.  At the same time, India company Zee Entertainment urged SONY to honor their $10 billion merger agreement after SONY had announced the termination.  Zee also filed suit in India, asking the court to force SONY to honor the deal and saying negotiations had taken two years.  Later, the NHTSA announced that F has agreed to recall 2.24 million older Explorer SUVs (2011 – 1019 models) related to panel trim clips that were not installed properly.  At the same time, court filings show that GOOGL reached a $1.67 billion AI chip patent infringement settlement with Singular Computing, just as the trial’s closing arguments were scheduled to begin.  Elsewhere, EU governments and lawmakers have agreed in principle to terms that would allow them to force European companies to prioritize the production of certain key products to prevent a supply chain crisis. The laws are meant to reduce the impacts of events like the COVID pandemic or the Russian invasion of Ukraine.  The European Commission would be the group vested with the power to make such decrees.  Later, in details of the ADM accounting investigation, it was reported that ADM senior executives’ bonuses were tied to the performance of that company’s minor nutrition unit.  (The nutrition unit contributed less than 10% of the company’s revenue.)  Meanwhile, the Biden Administration urged Congress to approve the sale of LMT F-16 fighter jets to Turkey following a 20-month delay after that country’s parliament approved the entry of Sweden into NATO.  At the same time, President Biden vetoed legislation that would have blocked a waiver granted for government-funded EV charging stations.  (The waiver allows the stations to not be “entirely” manufactured in the US.  It approves stations with more than 55% US materials and manufactured products.)  After the close, the FAA lifted its restrictions on BA 737 MAX 98 planes flying, if the plane has passed inspection.  This will be the first flight of the plane since the January 6 suspension.  However, at the same time, the FAA halted BA production expansion for 737 MAX planes of all types until compliance and quality control procedures are resolved.

Overnight, Asian markets were mixed but leaned toward the green side led by a strong move in China.  Shanghai (+3.03%), Shenzhen (+2.01%), and Hong Kong (+1.96%) led the region higher.  In Europe, we see the opposite picture taking shape as all but 3 of the exchanges are in the red at midday.  The CAC (-0.50%), DAX (-0.44%), and FTSE (-0.17%) are leading the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a flat start to the day (ahead of data).  The DIA implies a +0.02% open, the SPY is implying a +0.06% open, and the QQQ implies a +0.13% open at this hour.  At the same time, 10-year bond yields are down slightly to 4.17% and Oil (WTI) has popped up 1.13% to $75.95 per barrel in early trading.

The major economic news scheduled for Thursday includes Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Durable Goods Orders, Q4 GDP, Q4 GDP Price Index, Dec. Goods Trade Balance, and Dec. Retail Inventories (all at 8:30 a.m.), Dec. New Home Sales (10 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for before the open include ALK, AAL, AIT, BX, BFH, CRS, CMCSA, CFR, DOW, EXP, HUM, HZO, MMC, MKC, MBLY, MUR, NEE, NOK, NOC, ORI, BPOP, SDVKY, SHW, LUV, STM, UNP, VLO, VLY, XEL, and XRX.  Then, after the close AJG, COF, INTC, KLAC, LHX, LEVI, OLN, TMUS, V, WAL, WDC, AND WY report. 

In economic news later this week, on Friday, we get the Dec. Core PCE Price Index, Dec. PCE Price Index, Dec. Personal Spending, and Dec. Pending Home Sales.

In terms of earnings reports later this week, on Friday, AXP, ALV, BAH, CL, FCNCA, GNTX, and NSC report.

In miscellaneous news, the US Navy intercepted multiple missiles fired by Yemeni Houthi rebels on Wednesday as they escorted AMKAF (Maersk) ships in the Red Sea. (The ships were carrying US military supplies according to Maersk.)   Elsewhere, CSX reported a 13% drop in Q4 profits, which the company blamed on the loss of margin from its fuel surcharges (which the railroad can no longer charge now that fuel costs have fallen).  Meanwhile, former St. Louis Fed President Bullard (a mega hawk) hinted in an interview Wednesday that the FOMC may cut rates in March, even if inflation has not yet hit the 2% target.  (While no longer a Fed member, Bullard is widely seen as in the know and has always been hawkish.  If he hints at a March cut, that may mean the Doves are being more forceful in behind-the-scenes talks.)

In Fedwatch news, Fed Funds Futures (of the probability of a first rate cut) show only a 1.6% probability of a cut next week.  That probability rises to 41.9% in March, 100% by May, (oddly) back to 98.8% by June, and 99.9% by July.  The other three meetings in 2024 all show a 100% probability of Fed having made its first rate cut.  Of course, these are trader bets and do not necessarily match what the Fed will do. 

So far this morning, ALK, AAL, AIT, BFH, CNX, DOW, EXP, MMC, NOC, BPOP, SHW, and LUV all reported beats on both the revenue and earnings lines. Meanwhile, BANC, HUM, HZO, ORI, VLY, and VIRT all beat on revenue while missing on earnings.  On the other side, BX, MKC, MBLY, STM, and VLO all missed on revenue while beating on earnings.  Unfortunately, MUR, NOK, SDVKY, XEL, and XRX missed on both the top and bottom lines.  It is worth noting that, XRX, MBLY, HZO, and HUM lowered their forward guidance while AAL raised its guidance.

With that background, all three major index ETFs seem to be waiting on the data dump at 8:30 a.m. The SPY is giving us an “inside candle” Doji so far in the premarket while QQQ is giving us a Bullish Harami Spinning Top. DIA is the lone black body candle in the early session, but even so, it is an inside candle. All three remain above their T-line (8ema) and very near all-time highs. So, obviously, the Bulls are still in control of the trend in the short term and the longer term. In terms of extension, the QQQ is still stretched above its T-line withe the SPY getting a bit stretched and DIA just above its own 8ema. The T2122 indicator is also still in its midrange. So, both sides have room to run if they can gather the momentum to do it. With that said, the risk is of a move lower on data the disappoints. As I’ve been saying for some time, keep watching those Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes. As of 7:45 a.m., TSLA is getting hammered after yesterday’s earnings miss. However, the rest of the Big Dogs are mixed and lean toward the green side.

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 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 gains are 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

China Cuts Bank Reserve Rules

Markets were undecided on Tuesday with SPY opening 0.12% higher, DIA opening 0.17% lower, and QQQ opening 0.17% higher.  From that point, SPY and QQQ traded sideways, wandering back and forth across the open gap until noon.  DIA also traded sideways in a very tight range along the open for 60 minutes.  Then DIA sold off for 90 minutes before resuming its sideways trading.  Then, at noon, all three major index ETFs made a modest (20-degree) rally the rest of the day.  This left all three as indecisive candles.  SPY and QQQ both printed white-bodied Inside Day Hammer candles.  At the same time, DIA printed a gap-down, black-bodied Doji-type candle.  All three remain above their T-line (8ema).  This all happened on slightly above-average volume in DIA and QQQ and slightly below-average volume in the SPY.

On the day, seven of the 10 sectors were in the green with Communication Services (+1.30%) way out in front leading the way higher.  At the same time, Financial Services (-0.14%) and Industrials (-0.10%) were the worst-performing sectors.  Meanwhile, the SPY gained 0.29%, DIA lost 0.27%, and QQQ gained 0.41%.  Meanwhile, VXX was off by 2.90% to close at 14.08 and T2122 climbed a bit but remained in the upper side of its midrange at 73.33.  10-year bond yields climbed back to 4.136% and Oil (WTI) fell just a bit to close at $74.50 per barrel.  So, after a mixed, flat open the market was pretty much undecided and lethargic on the day.  The Bulls had a slight advantage for the afternoon.  (It is worth noting that the big Tech names were all green but only ranged from INTC (+1.39%) to AMD (+0.14%).

The major economic news on Tuesday was limited to the API Weekly Crude Oil Stocks report, which showed a significantly larger drawdown than expected at -6.674 million barrels (compared to a forecasted 3.000-million-barrel drawdown and the prior week’s 0.483-million-barrel increase). 

In Fed news, on Tuesday, Reuters provided a summary of the FOMC voters’ most recent statements.  However, note that some of these quotes are older than others.  Atlanta Fed President Bostic (dove) said, “If we continue to see a further accumulation of downside surprises in the data it’s possible for me to get comfortable to advocate normalization sooner than the third quarter. But the evidence would need to be convincing.”  NY Fed President Williams (centrist) said, “It will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis.”  Fed Governor Waller (centrist) has said, “The key thing is the economy is doing well. It is giving us the flexibility to move carefully and methodically.”  Fed Vice-Chair Barr (centrist) has said, “The Fed is at or near the peak of interest rates.”  Fed Vice-Chair Jefferson said, “We are in a sensitive period of risk management, where we have to balance the risk of not having tightened enough, against the risk of policy being too restrictive.” Fed Governor Cook (centrist) has said, “I see risks as two-sided, requiring us to balance the risk of not tightening enough against the risk of tightening too much.”  San Francisco Fed President Daly recently said, “It takes patience. It takes gradualism.”  Cleveland Fed President Mester (hawk) said, “March is probably too early in my estimation for a rate decline.”  Richmond Fed President Barkin (hawk) said, “Getting inflation under control is critically important.”  Fed Governor Bowman (hawk) said, “While the current stance of monetary policy appears to be sufficiently restrictive … I remain willing to raise the federal funds rate further at a future meeting.”  Finally, Fed Chair Powell (centrist) said, “Declaring victory would be premature … But of course the question is when will it become appropriate to begin dialing back?”

After the close, CNI, EWBC, ISRG, LRN, and TXN all reported beats on both the revenue and earnings lines.  At the same time, BKR missed on revenue while beating on earnings.  On the other side, NFLX and STLD both beat on revenue while missing on earnings.  It is worth noting that NFLX raised forward guidance while TXN lowered its guidance.

Click for video

In stock news, FSR said Tuesday that it expects to deliver the remaining 5,000 vehicles produced in 2023 by the end of Q1, through its new network of 100 dealers in the US, Canada, and Europe.  At the same time, in addition to its earnings, NFLX announced a $5 billion, 10-year deal to broadcast WWE’s weekly program.  Later, SNY agreed to buy INBX in a stock and cash deal worth $2.2 billion.  Elsewhere, GOLD announced that it is accelerating the expansion of its copper mine in Zambia.  This will make that mine one of the largest copper mines in the world.  At the same time, PLUG announced its Georgia “green hydrogen” (liquid hydrogen) plant is now operational.  Later, LUV flight attendants voted to authorize a strike by at 98% margin.  Meanwhile, UAL said it is no longer counting on BA’s 737 MAX 10 jets.  This announcement comes after more BA delays and plane groundings have pushed back delivery schedules that were already years behind schedule.  While UAL did not cancel its orders (at least yet), the airline has removed those planes from its internal plans, saying it believes recent production quality issues will delay certification yet another year.  At the same time, Bloomberg reported that AAPL has reduced the number of features and delayed the release of its “Apple Car” until at least 2028.  (AAPL had previously announced it would develop an autonomous self-driving car by 2026.  The original plan was for a level 4-5 self-driving capability.  The new plan is for level 2+.)  After the close, SAP announced a restructuring that will “impact” 8,000 employees worldwide.  Some of the job cuts will be implemented through voluntary leave programs while many other employees will be “reskilled and transferred” within the company.  Also after the close, Bloomberg reported that WBA is exploring the sale of its “Shields Health Solutions” unit for roughly $4 billion.  Finally, EBAY announced Tuesday evening that it will lay off 9% of its workforce or about 1,000 employees.

In stock government, legal, and regulatory news, the Dept. of Justice requested data from SIX and FUN related to their merger (announced in November).  Later, the FDA asked drugmakers GILD, JNJ, BMY, LEGN, and NVS to add a serious warning label to their cancer therapies that use “CAR-T” technology.  (This comes after recent reports of patients treated with genetically engineered CAR-T technologies developing different cancers than the one the drug was treating.)  Later, AAPL asked a British Competition Tribunal to throw out a $1 billion class-action type lawsuit brought by more than 1,500 app developers alleging AAPL’s 30% fee and monopoly on iPhone app stores are anti-competitive. At the same time, JNJ announced it has reached a tentative settlement to resolve investigations by 42 states and the District of Columbia into whether the company misled consumers about the safety of its talc products. Later, the Wall Street Journal reported that the settlement included a $700 million payment.  The CEO of ALK told NBC news that the company had reported finding many BA 737 MAX 9 planes with loose bolts to the FAA and Dept. of Transportation.  At the same time, ADM was hit with an accounting probe.  This caused ADM shares to plummet 24% on Monday, rebounding slightly (+1.20%) on Tuesday.  Later, NMR was sued by a former employee, claiming she was paid less relative to men, and was fired for insisting that the company stop discriminating against women.  After the close, CACI was awarded a US Army contract for $900 million.  Also after the close, BA announced its CEO will meet with US Senators who are investigating the ALK airline mid-air panel blowout and loose bolts.  Finally, an Oregon jury ordered a subsidiary of BRKB to pay $62.3 million to nine property owners whose properties were damaged by wildfires found to have been caused by the company’s negligence in dealing with power lines.  (This is the first of many trials from 5,000 home and business owners whose properties were damaged by the 2020 fires.)

Overnight, Asian markets were mostly green, with Japan (-0.80%) and South Korea (-0.36%) the only red in the region. Meanwhile, Hong Kong (+3.56%), Thailand (+1.82%), and Shanghai (+1.80%) led the nine gainers.  (China roared back after the PBOC announced policy easing in an attempt to boost their economy.)  In Europe, we see a similar picture with only Russia (-0.59%) and Norway (-0.09%) in the red.  At the same time, The CAC (+0.90%), DAX (+1.27%), and FTSE (+0.39%) lead the region higher.  In the US, as of 7:30 a.m., Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.22% open, the SPY is implying a +0.43% open, and the QQQ implies a +0.70% open at this hour.  Meanwhile, 10-year bond yields are down to 4.107% and Oil (WTI) is off a quarter of a percent to $74.18 per barrel in early trading.

The major economic news scheduled for Wednesday includes S&P Global Mfg. PMI, S&P Global Services PMI, S&P Global Composite PMI (all at 9:45 a.m.), and EIA Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled for before the open Wednesday include ABT, APH, ASML, T, BOKF, ELV, FCX, GD, KMB, EDU, PGR, SAP, TEL, TDY, and TXT.  However, after the close, AMP, CACI, COLB, CNXC, CCI, CSX, HXL, IBM, KNX, LRCX, LVS, LVRO, LBRT, PKG, PLXS, RJF, RMD, STX, NOW, TSLA, URI, and WRB report. 

In economic news later this week, on Thursday, Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Durable Goods Orders, Q4 GDP, Q4 GDP Price Index, Dec. Goods Trade Balance, Dec. Retail Inventories, Dec. New Home Sales, and Fed Balance Sheet are reported.  Finally, on Friday, we get the Dec. Core PCE Price Index, Dec. PCE Price Index, Dec. Personal Spending, and Dec. Pending Home Sales.

In terms of earnings reports later this week, on Thursday, we hear from ALK, AAL, AIT, BX, BFH, CRS, CMCSA, CFR, DOW, EXP, HUM, HZO, MMC, MKC, MBLY, MUR, NEE, NOK, NOC, ORI, BPOP, SDVKY, SHW, LUV, STM, UNP, VLO, VLY, XEL, XRX, AJG, COF, INTC, KLAC, LHX, LEVI, OLN, TMUS, V, WAL, WDC, AND WY.  Finally, on Friday, AXP, ALV, BAH, CL, FCNCA, GNTX, and NSC report.

In miscellaneous news, on Tuesday, BAC analysts reported that hedge funds were net buyers of stocks last week for the first time in 10 weeks.  The analysis said that the net was $554 million of stock added to hedge fund portfolios.  Elsewhere, bond icon Bill Gross told Bloomberg that the Fed needed to end Quantitative Tightening and begin cutting rates soon.  Gross said the window to do this (to preserve the soft landing) was this year.  Later, Bloomberg reported that India’s stock market has surpassed Hong Kong’s market (by $4.33 trillion versus $4.29 trillion).  This makes India the fourth largest stock market globally, behind the US, China, and Japan.  (Hong Kong, France, and the UK follow those top four.)  Finally, TM Chairman Toyoda told an interview Tuesday that he believes electric-only vehicles will reach a maximum of 30% of the market, with the rest of the market made up of hybrid, hydrogen, and traditional-fuel cars.  Part of his reasoning was explained that 1 billion people in the world still live without electricity (and many, many more without reliable electricity), which makes EV cars a non-starter for that portion of the world.

So far this morning, ABT, ASML, ELV, EDU, and SF all reported beat on both the revenue and earnings lines.  Meanwhile, T and SAP both beat on revenue while missing on earnings.  On the other side, TXT, TDY, and TEL missed on revenue while beating on earnings.  Unfortunately, KMB and GD missed on both the top and bottom lines.  It is worth noting that ELV and EDU both raised forward guidance while ASML, T, and KMB lowered guidance.

With that background, all three major index ETFs gapped higher to start the premarket session. All three are also printing white-bodied candles, which although small, are at the top of their range so far in the early session. The SPY, DIA, and QQQ remain above their T-line (8ema) and sitting at (or near in the case of DIA) all-time highs. So, obviously, the Bulls are in control of the trend in the short term. In the longer term, we are also clearly bullish in all three. In terms of extension, the QQQ is stretched above its T-line after the premarket gap, while the other major index ETFs are still inside the normal range. The T2122 indicator is also still sitting in its midrange. So, both sides have room to run if they can gather the momentum to do it. As I’ve been saying for some time, keep watching those Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes. As of 7:45 a.m., all of them are looking to gap higher and all but two of them are printing white-bodied premarket candles.

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 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 gains are 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

Bulls Ran Hard Friday Look to Add Early

The Bulls were in control from the jump on Friday. SPY gapped up 0.26%, DIA opened 0.28% higher, and QQQ gapped up 0.51%.  From that point, all three major index ETFs rallied steadily higher before plateauing in the last 90 minutes of the day, near their highs.  This action gave us gap-up, large, white-bodied candles in the SPY, QQQ, and DIA. All three closed at new all-time high closes after printing new all-time highs during the day.  SPY and QQQ have almost no wicks while DIA had some wick on both ends.  That meant that all three were above their T-lines (8ema).  This all happened on slightly above-average volume in DIA and QQQ and slightly below-average volume in the SPY.

On the day, all 10 sectors were in the red with Utilities (-1.36%) out in front leading the way lower.  At the same time, Consumer Defensive (-0.40%) and Financial Services (-0.46%) held up better than the other sectors.  At the same time, the SPY lost 0.56%, DIA lost 0.25%, and QQQ lost just 0.56%.  Meanwhile, VXX gained 3.65% to close at 15.92 and T2122 dropped even further into the oversold territory at 6.25.  10-year bond yields climbed to 4.102% and Oil (WTI) rose 0.60% to close at $72.83 per barrel.  So, after a significant gap lower, Mr. Market was indecisive with a very modest bias toward the bullish side.  This happened on less-than-average volume in the SPY, and average volume in both the QQQ and DIA.

On the day, nine of the 10 sectors were in the green with Technology (+2.00%) way out in front leading the way higher.  At the same time, Consumer Defensive (-0.29%) was by far the worst-performing sector and the only one in the red.  Meanwhile, the SPY gained 1.25%, DIA gained 1.01%, and QQQ gained 1.98%.  Meanwhile, VXX fell 2.53% to close at 15.00 and T2122 climbed back up into the upper side of its midrange at 69.04.  10-year bond yields spiked to 4.13% and Oil (WTI) fell 0.50% to close at $73.71 per barrel.  So, after a significant gap higher at the open, Mr. Market was dead set on achieving that all-time high in the SPY, led by the AI-crazed Tech big dogs (AMD was up 7.11%, NVDA up 4.17%, INTC up 3.03%, GOOGL up 2.02%, META up 1.95%, AAPL up 1.55%, MSFT up 1.22%, and AMZN up 1.20%).  Even beleaguered TSLA gained 0.15%.

The major economic news on Friday included December Existing Home Sales, which came in a bit lower than expected at 3.78 million (versus a forecast and November value of 3.82 million).  On a month-on-month basis, that was a 1.0% decline compared to a forecasted +0.3% and the prior month’s +0.8%.  At the same time, Michigan Consumer Sentiment was stronger than anticipated at 78.8 (versus a 70.0 forecast and December’s 69.7).  Meanwhile, Michigan Consumer Expectations also far exceeded the predictions at 75.9 (compared to a 67.0 forecast and a 67.4 December reading).  At the same time, the Michigan 1-Year Inflation Expectations were down at 2.9% (versus the forecast and prior value of 3.1%).  On a 5-year outlook, the Michigan Consumer Inflation Expectations also came in lower than expected at 2.8% (compared to a 3.0% forecast and the previous reading of 2.9%).

In Fed news, San Francisco Fed President Daly said Friday that she believes FOMC policy “is in a good place” now and that risks have become more balanced.  She said, “We have to calibrate very carefully to ensure that we continue to bring inflation down and we ensure that we do it gently, as gently as we possibly can.”  Daly went on to say, “The risks to the economy are balanced, and the risks to both sides of our mandate are balanced.”  She concluded by saying, “So while I think it’s appropriate for us to look forward and ask when would policy adjustments be necessary so we don’t put a stranglehold on the economy, it’s really premature to think that that’s (speaking of rate cuts) around the corner.”

Click for video

In stock news, the CEO of STLA told an audience Friday that his company will not sell electric vehicles below cost to boost sales the way TSLA and other competitors do.  He said, “I am trying to avoid a race to the bottom.” He went on to imply that TSLA stocks’ slide since last summer was a result of price cuts to maintain sales.  At the same time, SCGLY (major French bank Societe Generale) announced it would cut hundreds of jobs in France in order to cut costs.  Later, CVX announced it plans to sell its Canadian Duvernay Shale natural gas business between now and 2028.  CVX hopes to get between $10 billion and $15 billion for the unit.  Elsewhere, F announced it is reducing the production of F-150 Lightning pickups starting April 1.  However, at the same time, F said it is adding a third shift of production for Bronco SUVs and Ranger pickups. (This means no job cuts with employees transferred rather than laid off.)  After the close, BX announced its acquisition of TCN for $3.5 billion ($11.25 per share).

In stock government, legal, and regulatory news, a major Chinese bank (ICBC) agreed to pay $32.4 million to the Fed in penalties for unauthorized use and disclosure of confidential supervisory information. At the same time, Reuters reported that the AMZN acquisition of IRBT will be blocked by the EU Antitrust regulator. (IRBT shares plunged nearly 27% on the story.)  Later, the EPA sent its proposed standards calling for major reductions in new vehicle emissions to the White House for review.  (The auto industry lobbying group called the standards “neither reasonable nor achievable.”  Meanwhile, TSLA and environmental groups called on even tougher standards.)  At the same time, a class-action shareholder suit was filed against VNET alleging the company provided false and misleading information about financial stability. Later, Reuters reported that the FDA had found new manufacturing and quality control problems at a LLY plant in NJ.  (LLY released a statement saying that it has asked the FDA for “added flexibility” to manufacture a migraine medicine at a different production line in light of the findings.)  Elsewhere, a federal Court of Appeals upheld a previous ruling in favor of UEIC which prevents ROKU from importing and selling streaming products that were found to violate UEIC’s patents.  At the same time, Reuters reported that the European Commission has asked for public comment on AAPL’s offer to settle EU antitrust charges by opening up its “tap and go” payment technology to rivals.  (By this, they mean they want competitor comments.)  Later, the CDC warned against charcuterie meat being sold at COST and WMT after a multi-state salmonella outbreak. The private brand in question issued a “voluntary recall” after the announcement.  At the same time, JBLU and SAVE filed an appeal of a federal judge’s ruling that blocked the tie-up that the Dept. of Justice opposed and the FTC both had previously blocked. Later, a US court approved $20.8 billion in claims made by 17 creditors, including COP, to be paid from proceeds of an auction of Venezuelan-owned Citgo Petroleum.  The first bids on the auction of the assets of Citgo are due Monday.

Overnight, Asian markets were evenly split with the exception of Chinese markets which were all three down sharply.  (This fall was said to be due to market expectations of a rate cut by the PBOC, which kept rates steady.  As a result, China tightened liquidity in the offshore foreign exchange market while selling US Dollars onshore to stabilize the Yuan.)  Shenzhen (-3.50%), Shanghai (-2.68%), and Hong Kong (-2.27%) were far and away the biggest losers.  Meanwhile, Japan (+1.62%), Taiwan (+0.76%), and Australia (+0.75%) paced the gainers.  In Europe, except two small exchanges, we see green across the board at midday.  The CAC (+0.42%), DAX (+0.45%), and FTSE (+0.18%) lead the region 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 lags as it implies a +0.16% open, the SPY is implying a +0.31% open, and the QQQ implies a +0.58% open at this hour.  At the same time, 10-year bond yields are down to 4.096% and Oil (WTI) is up 0.42% to $73.72 per barrel in early trading.

The major economic news scheduled for Monday is limited to the December Index of US Leading Economic Indicators (10 a.m.).  There are no major earnings reports scheduled for before the open Monday.  However, after the close, BRO, LOGI, UAL, and ZION report.

In economic news later this week, on Tuesday we get API Weekly Crude Stocks Report.  Then Wednesday, S&P Global Manufacturing PMI, S&P Global Services PMI, S&P Global Composite PMI, and EIA Crude Oil Inventories. On Thursday, Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Durable Goods Orders, Q4 GDP, Q4 GDP Price Index, Dec. Goods Trade Balance, Dec. Retail Inventories, Dec. New Home Sales, and Fed Balance Sheet are reported.  Finally, on Friday, we get the Dec. Core PCE Price Index, Dec. PCE Price Index, Dec. Personal Spending, and Dec. Pending Home Sales.

In earnings news later this week, on Tuesday we hear from MMM, DHI, ERIC, GE, HAL, IVZ, JNJ, LMT, PCAR, PG, RTX, SYF, VZ, WBS, BKR, CNI, EWBC, ISRG, NFLX, STLD, LRN, and TXN.  Then Wednesday, ABT, APH, ASML, T, BOKF, ELV, FCX, GD, KMB, EDU, PGR, SAP, TEL, TDY, TXT, AMP, CACI, COLB, CNXC, CCI, CSX, HXL, IBM, KNX, LRCX, LVS, LVRO, LBRT, PKG, PLXS, RJF, RMD, STX, NOW, TSLA, URI, and WRB report.  On Thursday, we hear from ALK, AAL, AIT, BX, BFH, CRS, CMCSA, CFR, DOW, EXP, HUM, HZO, MMC, MKC, MBLY, MUR, NEE, NOK, NOC, ORI, BPOP, SDVKY, SHW, LUV, STM, UNP, VLO, VLY, XEL, XRX, AJG, COF, INTC, KLAC, LHX, LEVI, OLN, TMUS, V, WAL, WDC, AND WY.  Finally, on Friday, AXP, ALV, BAH, CL, FCNCA, GNTX, and NSC report.

In miscellaneous news, on Friday, Axios reported the results of an Axios – Harris poll of 2,120 US adults conducted in mid-to-late December.  According to the poll, 63% of Americans rate their own current financial situation as “good” or “very good.”  At the same time, 66% expect 2024 to be better than 2023 economically and a whopping 85% feel their personal financial situation will be better at the end of the year than at the end of 2023.  Part of the reason for that is that 63% of respondents feel their job security is “a sure thing.”  I guess the moral of the story is that things may not be as bad as some report.  Elsewhere, on Friday, the bipartisan tax cut deal (restoring research and development deductions for business and child tax credits for families) passed out of the Ways and Means Committee by a vote of 40-3.  Perhaps due to the GOP House majority, the tax cuts lean heavily in favor of businesses with child tax credits growing at $100 per year to just $2,000 in 2025.  (For reference, those deductions were $3,600 per child in 2021.)  Interestingly, Congress reports that only $399 million of the $77.5 in reduced revenue will add to the federal deficit.  This is because their estimates assume $77.1 billion in savings will be obtained from previous fraudulent COVID-relief claims.  (Although, I have no idea what this has to do with the tax cuts and I won’t hold my breath that they actually recover that much.)

In other news, MSFT reported that Russian state-sponsored hackers had broken into company systems to spy on top company executives.  The breach resulted in some lost emails and documents from senior staff.  Elsewhere, the Biden Administration issued another purchase of 3.2 million barrels of oil to refill the US Strategic Petroleum Reserve.  (Delivery is in April for this batch.)  At the same time, in what may become a much wider trend, 26 states (led by deep red TX) asked a US Appeals Court to delay deciding whether or not to block a US Dept. of Labor rule until after the US Supreme Court decided whether (and, if so, how) to black the executive branch from issuing rules (and interpreting the law) to achieve laws.  SCOTUS is expected to announce its decision on the matter in June.  (The lawsuit in question seeks to block retirement plans from being allowed to consider ESG factors in any way when choosing where to invest retirement funds and the suit was brought by Republicans because the Dept. of Labor does not explicitly forbid retirement funds from considering those factors.)

With that background, all three major index ETFs gapped higher to start the premarket session. However, all three are also printing small, white-bodied candles so far in the early session indicating some indecision early. The SPY, DIA, and QQQ remain above their T-line (8ema) and sitting at all-time highs, obviously the Bulls are in control of the trend in the short-term. In the longer term, we are also clearly bullish in all three. In terms of extension, the QQQ is getting a little stretched above its T-line, while the other major index ETFs are still well inside the normal range. The T2122 indicator is also sitting in its midrange. So, both sides have room to run if they can gather the momentum to do it. As I’ve been saying for some time, keep watching those Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes.

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 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 gains are 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

QQQ and SPY Looking to Rally Early

Markets followed Asia and Europe down by gapping lower at the open again.  The SPY opened 0.65% lower, DIA gapped down 0.49%, and QQQ opened 0.80% lower. At that point, SPY meandered sideways following the opening level the entire day. Meanwhile, DIA roamed back and forth across its gap the entire day.  For its part, QQQ sold off after the open but from 10 a.m. until the close it traded in a bullish trend the rest of the day, closing very near the high of the day and inside its morning gap.  This action gave us white-bodied candles in all three major index ETFs.  The SPY printed a gap-down Spinning Top with most of its wick below the body.  DIA printed a larger, white-bodied Spinning Top with most of its wick above the body.  QQQ split the difference, printing a larger white-bodied Spinning Top with most of its wick below the body and retested its T-line (8ema) from below after the gap down.  It did close just above that T-line.

On the day, all 10 sectors were in the red with Utilities (-1.36%) out in front leading the way lower.  At the same time, Consumer Defensive (-0.40%) and Financial Services (-0.46%) held up better than the other sectors.  At the same time, the SPY lost 0.56%, DIA lost 0.25%, and QQQ lost just 0.56%.  Meanwhile, VXX gained 3.65% to close at 15.92 and T2122 dropped even further into the oversold territory at 6.25.  10-year bond yields climbed to 4.102% and Oil (WTI) rose 0.60% to close at $72.83 per barrel.  So, after a significant gap lower, Mr. Market was indecisive with a very modest bias toward the bullish side.  This happened on less-than-average volume in the SPY, and average volume in both the QQQ and DIA.

The major economic news on Wednesday included December Core Retail Sales, which came in much stronger than expected at +0.4% (compared to a forecast and Nov. readings of +0.2%).  For the broader, Dec. Retail Sales things also came in above what was anticipated at +0.6% (versus a forecast of +0.4% and the Nov. value of +0.3%).  At the same time, the December Import Price Index was flat at 0.0% (versus a forecast and November of -0.5%).  In addition, the Dec. Export Price Index fell more than predicted at -0.9% (compared to a -0.6% forecast but in line with November’s -0.9% reading).  Later, Dec. Industrial Production (year-on-year) increased at +0.98% (versus a 2023 reading of -0.62%).  On a month-on-month basis, the Dec. Industrial Production grew more than expected at +0.1% (compared to a 0.0% forecast down also down from November’s +0.2%).  After that, Nov. Business Inventories came in as predicted at -0.1% (versus the -0.1% forecast and October reading).  At the same time, Nov. Retail Inventories were down more than anticipated at -0.9% (compared to a -0.8% forecast but in line with the October -0.9% value).  Then, after the close, the API Weekly Crude Oil Stocks report showed a modest inventory build of 0.483 million barrels (versus a forecast calling for a 2.400-million-barrel drawdown and the prior week’s 5.215-million-barrel drawdown.

In Fed news, the Fed Beige Book showed steady to slightly improved economic activity and employment levels.  This included stable or declining input costs, more than half of the Fed districts having steady employment levels, and retailers adjusting profit margins in response to the changing costs.  Earlier, Fed Governor Bowman said the proposed plan to increase bank capital requirements has some shortcomings.  Still, she was optimistic policymakers and the banking industry advocates could compromise.  (It is worth noting that Bowman had voted against the rules which passed anyway back in July.)

After the close, AA and FUL missed on revenue while beating on earnings.  (It is worth noting that AA’s beat was just less of a loss than expected.)  At the same time, DFS, SNV, and WTFC all beat on revenue while missing on earnings.  However, KMI missed on both the top and bottom lines.

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In stock news, after settling the lawsuit related to how majority owner BRKB was doing valuation accounting, BRKB bought out the remaining 20% of the Pilot Truck Stop business from the Haslam family.  (Terms were not disclosed.)  At the same time, DOOR announced it had ended its bid to acquire PGTI.  Later, ALSN employees voted to ratify the previously tentative contract the UAW had negotiated with the company. (82% voted in favor of the deal, which offers a $20/hour starting wage and a 6%-8% increase in company contributions to 401k accounts.)  At the same time, AMD said it has cut the price of its Radeon RX 7900 XT graphics card by $40 (originally $809, then $749 and now sold at $709) to better compete with NVDA products.  Elsewhere, ALB (the world’s largest lithium producer) announced Wednesday that it will cut jobs, and push off one new project as part of cost-cutting it said was driven by falling lithium prices.  At the same time, VZ announced that it will take a $5.8 billion write-down of its wire-based unit amidst increased competition from wireless services.  Later, TSLA slashed the price of its Model Y cars in Europe (between 8% and 9%).  At the same time, Reuters reported that AAPL topped Korea’s Samsung as the top seller of smartphones.  AAPL had a 20.0% market share in 2023 compared to Samsung’s 19.4%.  (Interestingly, QCOM and Samsung jointly announced a new S24 line of phones that include a QCOM chip and will come with GOOGL generative AI built-in.)

In stock government, legal, and regulatory news, the FAA announced Wednesday that it had completed inspection of the first 40 (of 171 total) BA 737 MAX 9 jets.  (This was just data collection.  The data from the inspection still needs to be reviewed.)  In the UK, British antitrust regulators won a court appeal over data requests to BMWYY (BMW motors) and VLKAF (Volkswagen), which the companies had sought to block.  At the same time, GOOGL announced it will tweak search results in Europe to comply with EU rules to treat rival services and products the same as its own listings.  Later, the NTSB announced that if a partial government shutdown takes effect on Friday, it will be forced to suspend the probe into the ALK airline BA 737 MAX 9 jet losing a portion of its fuselage in flight.  Elsewhere, the US Court of Appeals rejected AAPL’s appeal and ordered the ban on importation of AAPL watches effective at 5 p.m. ET on Thursday.  (Lower courts found that AAPL violated the patent rights of MASI by putting MASI-designed oxygen sensors in their watches without paying MASI.)  Later, a unit of SBGI signed a deal with creditors to emerge from bankruptcy by getting funding from AMZN as part of a streaming sports content deal.  The deal must still be approved by the bankruptcy court, but this is expected since creditors are now on board.  After the close, ARAV announced it will delist from the NASDAQ and dissolve the company by selling company assets to satisfy creditors.

Overnight, Asian markets were mixed.  Shenzhen (+1.00%), Hong Kong (+0.75%), Shanghai (+0.43%), and Taiwan (+0.38%) led the rebound from a tough Wednesday while Malaysia (-0.81%) and Australia (-0.63%) dragged on the rally.  In Europe, with the sole exception of Russia (-0.01%) we see green across the board at midday.  The CAC (+0.94%), DAX (+0.73%), and FTSE (+0.23%) led a broad-based rally in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a much better start than earlier in the week.  The DIA implies a flat open at -0.01%, the SPY is implying a +0.42% open, and the QQQ implies a +0.76% open at this hour.  At the same time, 10-year bond yields are down to 4.088% and Oil (WTI) is flat at $72.50 per barrel in early trading.

The major economic news scheduled for Thursday includes Dec. Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Housing Starts, and Philly Fed Mfg. Index (all at 8:30 a.m.), EIA Weekly Crude Oil Inventories (11 a.m.), and the Fed Balance Sheet (4:30 p.m.).  We also hear from Fed member Bostic (7:30 a.m. and 11:30 a.m.).  The major earnings reports scheduled for before the open include FAST, FHN, KEY, MTB, NTRS, TSM, and TFC.  Then, after the close, JBHT, and PPG report.

In economic news later this week, on Friday, we get Dec. Existing Home Sales, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations as well a Fed member Daly speaking.

In terms of earnings reports later this week, on Friday, ALLY, CMA, FITB, HBAN, RF, SLB, STT, and TRV report.

In miscellaneous news, the National Assoc. of Builders reported Wednesday that the confidence of Builders jumped 7 points this month to 44 on its index as optimism flowed from falling mortgage rates and signs of an improving economy.  However, 31% of the surveyed group still reported cutting prices to boost sales.  (That is down from 36% who were cutting price in both December and November.)  Meanwhile, China reported that its population fell in 2023, making it the second consecutive population decline.  The Chinese population now stands at 1.4 billion after a spike to 11.1 million deaths following the lifting of COVID restrictions in that country.  Meanwhile, Chinese births fell 5.6% to 9 million.  (2023 was China’s seventh-straight year of decline in births.)  This leads to concerns over the potential growth of the world’s second-largest economy as faltering demographics point to higher costs for retirement benefits and increasing competition for a shrinking labor pool could also mean higher labor costs.

In Government-related news, on Wednesday, President Biden hosted a negotiation session over the $110 billion package that will include aid to Ukraine, and Israel, as well as funds for the US border.  It was a large meeting with the leadership of both parties in both houses of Congress as well as all the key committee leaders in attendance.  After the meeting, attendees were upbeat and hoped for an agreement soon.  However, House Speaker Johnson made a point of saying there will be no compromise on immigration.  Elsewhere, the Consumer Financial Protection Bureau proposed cutting credit card overdraft fees to a maximum of $3.00.  This is much lower than the current average of $26.00.  Banks immediately responded that they have already cut other fees and there is no reason to cut overdraft fees.  (The bankers did not mention the potential impact on bank profits.)  Meanwhile, the US Supreme Court heard arguments Wednesday on what is called the “Chevron deference.”  This is a long-standing (since 1984) position of the courts that when there is a dispute over the interpretation of a regulation, the deference goes to the regulators (executive agencies) that wrote those regulations.  The case at hand challenges the executive branch’s ability to regulate fishing.  (Specifically, whether fishermen must pay for tracking devices that make sure they were not fishing in protected areas that had been set as off limits to protect fish populations.) The plaintiff seeks to overturn the “Chevron deference” to make it such that only laws and rules explicitly passed by Congress could be enforced by the executive branch.  This would have massive implications, overturning a huge part of government regulation and forcing Congress to visit every single issue and interpretation of every law.  Even with that said, the questioning by justices led many observers to feel that the court is split with many of the conservative-packed court members strongly in favor of stripping all federal agencies of the power to regulate anything not explicitly laid out by Congress.  While it is possible to argue the issue on both sides, the idea of Congress getting into every detail would likely lead to a practical problem of nothing being regulated for a long time.  (Think environment, labor, health, education, energy policy, etc.) After all, it’s been years since Congress could pass even broad department-level budgets, let alone dictating every rule and regulation as well as how each will be interpreted. That would leave litigation and federal courts to decide on the interpretation of every rule and regulation. In other words, who should write and interpret federal regulation details? Congress? The Courts? Or the Agencies that are experts in and are charged with carrying out those regulations? This could be a massive societal change.

So far this morning, FAST, FHN, KEY, NTRS, and TSM all reported beats on both the revenue and earnings lines.  (Some of the banks, in particular, had big beats on revenue, such as NTRS beating revenue by 51% and FHN beating that line by 23%.)  At the same time, MTB, TBCI, and TFC all beat on revenue while missing on earnings.

With that background, all three major index ETFs gapped lower to start the premarket session. SPY gapped down through its T-line, but QQQ again is holding on to that level after an early test. Both SPY and QQQ are giving us white-bodied candles in the early session while DIA is indecisive after the gap down. So, the short-term trend is being challenged and is indeterminate except for DIA which has turned down in the short-term. (If you take a broader look at DIA, it has just chopped sideways for a month.) However, the Bulls remain slightly in control of the short-term trend in at least the QQQ and SPY (market leaders). In the longer term, we are near all-time highs (potential resistance) in the SPY, QQQ, and DIA. In terms of extension, none of the three major index ETFs are far from their T-line (8ema). However, the T2122 indicator is now sitting well inside of its oversold range. So, both sides have room to run if they can gather the momentum to do it. However, the Bulls have more slack to work with. As I’ve been saying, keep watching those Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes.

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

Asia and Europe Leading Us Lower Early

The Bears had control of the ball pretty much all day Tuesday.  The SPY gapped down 0.30%, DIA gapped down 0.23%, and QQQ gapped down 0.29%.  From there, all three major index ETFs saw 30 minutes of follow-through to the downside followed by an hour of rally that showed the divergence in the three. The rally in DIA only made it back up to the open level while SPY recrossed the opening gap and QQQ rallied to more of a gain than the open gapped lower.  All three then sold off slowly until 2:30 p.m. and then rallied very slowly for the last 90 minutes.  This action gave us indecisive candles in all three, with SPY printing a Doji that retested and held above its T-line (8ema).  The QQQ printed a small-body, white-bodied Spinning Top that also retested and bounced up off its T-line.  Meanwhile, DIA was the weak sister again, giving us a black-bodied Spinning Top that retested its T-line from below and failed that test.

On the day, nine of the 10 sectors were in the red with Energy (-2.18%) out in front leading the way lower.  At the same time, Communications Services (+0.15%) was the only sector able to hang onto green territory.  At the same time, the SPY lost 0.37%, DIA lost 0.60%, and QQQ lost just 0.01%.  Meanwhile, VXX gained 3.50% to close at 15.36 and T2122 dropped sharply, down well into the oversold territory at 10.39. 10-year bond yields climbed to 4.054% and Oil (WTI) fell 1.06% to close at $71.91 per barrel. So, after the opening gap lower (mostly on the weekend tit-for-tat strikes in and off of Yemen), it was basically an indecisive day.  This happened on less-than-average volume in the SPY and QQQ as well as average volume in the DIA. 

The only economic news on Tuesday was the NY Fed Empire State Manufacturing Index, which came in far below expectations at -43.70 (compared to a forecast of -5.00 and even down significantly from December’s -14.50 reading).  This low value led to speculation that the Fed may indeed cut rates in March as expected.  (More than 97% of Fed Funds Futures bets expect no change at the end of January.  However, 65.9% of futures bets are expecting a quarter point rate cut in March with just 34.1% thinking there will be no change in March.)

In FOMC news, Fed Governor Waller said Tuesday that the US “is now within striking distance” of its 2% inflation target.  However, he also said the FOMC should not rush to cut its benchmark rate until it is clear lower inflation will be sustained.  (Markets did not like the idea of not rushing cuts.)  Waller said “The key thing is the economy is doing well. It is giving us the flexibility to move carefully and methodically. We can see how the data comes in, see if progress is being sustained.”  He continued, “The worst thing we’d have is it all reverses after we’ve already started to cut. We really want to see evidence that this progress in the real data and the inflation data continues. I believe it will.”  Waller also said, “Recent data is almost as good as it gets for the central bank with economic growth gradually slowing, the unemployment rate remaining low, and important measures of inflation now hitting the 2% target for the past six months.”

After the close, IBKR beat on revenue while missing on earnings.  Interestingly, it was a massive beat on revenue (+38.2%) but still missed on earnings by 1.3%.

Click for video

In stock news, STLA announced Tuesday that it has signed a deal to sell 250k vehicles over three years to German-based rental firm SIXT.  (Deliveries will start this quarter and will cover both Europe and North America.)  In other auto news, TSLA CEO Musk tweeted that he would be uncomfortable growing the company into a leader in AI and robotics without having 25% of the voting stock.  (Musk only owns 13% of that stock now, after his sales to support his purchase of Twitter. So, Musk is demanding twice as much voting power as his ownership provides.)  At the same time, SNPS announced it had agreed to buy ANSS for $35 billion.  Later, QSR (Burger King) bought out its largest franchisee, TAST, for about $1 billion ($9.55 per share).  QSR will get 1,000 Burger King and 60 Popeye’s Chicken restaurants in the deal.  QSR also said it will invest $500 million to remodel 600 of the restaurants at twice the pace TAST was doing so.  At the same time, AAPL announced it is offering discounts of up to $70 on iPhones sold in China and cut the price on other products by as much as $110.  This is part of a push by AAPL to compete with Chinese phone giant Hauwei. Later, XOM said it would buy an additional 1.2 million tons of LNG per year from Mexico Pacific over a 20-year contract.  Elsewhere, TSN announced more closures and temporary scaled-back meatpacking operations due to winter weather.  At the same time, SHEL announced it is exiting Nigerian on-shore oil production after more than a century.  The company said it will sell its operations to a consortium of five mostly local companies for $2.4 billion.  Later, BA named an “independent quality advisor” to lead a review of its quality management practices.  At the same time, LEG issued a business update, saying it plans to consolidate 15-20 of its 50 production and distribution facilities.  The move will gradually cut between 900 and 1,100 jobs although this will not be accomplished until late 2025.

In stock government, legal, and regulatory news, France’s highest court rejected a request from HCMLF that it rule the company cannot be charged with complicity in “crimes against humanity” charges levied against the Syrian government.  (HCMLF kept its factory running throughout the Syrian civil war and lower courts ruled the company was complicit in the regime’s actions due to company support of the regime.)  Later, KR and ACI both announced they are pushing the closure of the $24.6 billion acquisition until “first half 2024” from “early 2024” after discussions with the FTC who (along with lawmakers) has questioned and pushed back on the deal.  At the same time, JPM agreed to pay an $18 million civil penalty to settle charges it violated laws on whistleblower protection.  Later, the US Supreme Court on Tuesday declined to hear the appeal by AAPL on the portion of the lower court’s decision that the company had lost in the lawsuit brought by Epic Games related to App Store billing requirements and rules.   Elsewhere, the FAA-ordered grounding of 171 BA 737 MAX 9 jets entered its 11th day while inspections over loose bolts and other structural defects continue.  At the same time, a US District Judge ruled in favor of the FTC and blocked the acquisition of SAVE by JBLU.  Meanwhile, QMCO said Tuesday that it had offered voluntary retirement to more than 1,500 employees at its Panama mine.  (This is continued fallout from the Panamanian government’s December decision to shut the company’s Cobre Panama mine in the public interest.)  Meanwhile, the US banking industry and its main lobbying groups all peppered the Fed with criticism Tuesday all aimed at forcing the Fed to completely redo its rules which increase in bank capitalization requirements. 

Overnight, Asian markets were red across the board.  China led a huge push down in the region with Hong Kong (-3.71%), Shenzhen (-2.58%), and South Korea (-2.47%) leading the charge lower. In Europe, we see a similar (if not yet as bad) picture taking shape at midday.  The CAC (-1.15%), DAX (-1.01%), and FTSE (-1.81%) are leading the move lower with only Greece (+0.20%) and Russia (+0.14%) in the green in early afternoon trade.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward another gap lower to start the day.  The DIA implies a -0.33% open, the SPY is implying a -0.34% open, and the QQQ implies a -0.44% open at this hour.  At the same time, 10-year bond yields are up slightly to 4.068% and Oil (WTI) is down 1.71% to $71.16 per barrel in early trading.

The major economic news scheduled for Wednesday includes Dec. Core Retail Sales, Dec. Retail Sales, Dec. Imports, and Dec. Exports (all at 8:30 a.m.), Dec. Industrial Production (9:15 a.m.), Nov. Business Inventories and Nov. Retail Inventories (both at 10 a.m.), Fed Beige Book (2 p.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  We also have two fed speakers, Bowman at 9 a.m. and Williams (3 p.m.).  The major earnings reports scheduled for before the open include SCHW, CFG, PLD, and USB.  Then, after the close, AA, DFS, FUL, KMI, SNV, and WTFC report. 

In economic news later this week, on Thursday, Dec. Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Housing Starts, Philly Fed Mfg. Index, EIA Weekly Crude Oil Inventories, and Fed Balance Sheet are reported as well as Fed member Bostic speaks.  Finally, on Friday, we get Dec. Existing Home Sales, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations as well as Fed member Daly speaking.

In terms of earnings reports later this week, on Thursday, we hear from FAST, FHN, KEY, MTB, NTRS, TSM, TFC, JBHT, and PPG.  Finally, on Friday, ALLY, CMA, FITB, HBAN, RF, SLB, STT, and TRV report.

In miscellaneous news, on Tuesday night (US time) the US Navy carried out more strikes on Yemeni Houthi anti-ship missiles.  This came after a Houthi missile hit a Greek-owned vessel in the Red Sea. Elsewhere, a meteorological study out of Canada said that Western Canada’s abnormally dry winter (so far) likely points to the worsening of a severe drought in the region.  (In turn, these will impact US grain, oil, gas, and timber prices.)  That region produces most of the country’s grain, oil, gas, and forest products.  It was also the site of many wide-ranging fires in 2023 that were bad enough to severely impact US city air quality last summer.  Meanwhile, the EIA said that Wind and Solar are going to lead the growth in US power generation over the next two years.  The agency said it expects Solar generation to increase 75% over that period from its 2023 level of 163 billion kWh.  Over the same time, the EIA expects wind farm production to grow a much more modest 11% from its current 429 billion kWh.  (EIA expects coal generation to fall 18% and natural gas production to remain level over the same two years.)

In mortgage news, loan demand surged last week by 10.4% compared to the prior week.  This came as the national average loan rate fell again from 6.81% to 6.75% for a 30-year, fixed-rate, conforming loan.  However, loan closing points did increase from 0.61 to 0.62 on the week.  New home purchase loan applications were up 9% on the week while refinance loan applications jumped 11%. 

So far this morning, USB reported a significant beat on the revenue line (29.5% growth) but only came in in line on earnings.  At the same time, CFG also beat handily on revenue (+15.2% over forecast) but missed significantly (-43.3% versus estimates).  PLD and SCHW both report at 8 a.m.

With that background, all three major index ETFs gapped lower to start the premarket session. SPY gapped down through its T-line, but QQQ again is holding on to that level after an early test. Both SPY and QQQ are giving us white-bodied candles in the early session while DIA is indecisive after the gap down. So, the short-term trend is being challenged and is indeterminate except for DIA which has turned down in the short-term. (If you take a broader look at DIA, it has just chopped sideways for a month.) However, the Bulls remain slightly in control of the short-term trend in at least the QQQ and SPY (market leaders). In the longer term, we are near all-time highs (potential resistance) in the SPY, QQQ, and DIA. In terms of extension, none of the three major index ETFs are far from their T-line (8ema). However, the T2122 indicator is now sitting well inside of its oversold range. So, both sides have room to run if they can gather the momentum to do it. However, the Bulls have more slack to work with. As I’ve been saying, keep watching those Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes.

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

PNC Crushes, GS Beats, and Empire State Ahead

Friday was another flat and indecisive day in the market.  Spy gapped up 0.32%, DIA opened 0.07% higher, and QQQ gapped up 0.26%.  At that point, DIA diverged from the other two major index ETFs.  DIA sold off the first 90 minutes and then followed the SPY and QQQ, which traded sideways in a tight range.  Both QQQ and SPY spent the day bouncing around in the lower end of the opening gap.  This action gave us black-bodied Spinning Top candles in all three index ETFs with the DIA having the largest body.  DIA retested its T-line (8ema) closing just pennies below it.  This all happened on below-average volume in the QQQ and SPY.  For its part, DIA had just shy of average volume.

On the day, eight of the 10 sectors were in the green with Energy (+1.09%) out in front leading the way higher on the Yemeni strife.  At the same time, Consumer Cyclical (-0.93%) was by far the biggest loser on the board.  At the same time, the SPY gained 0.07%, DIA lost 0.33%, and QQQ gained 0.05%.  Meanwhile, VXX gained 1.64% to close at 14.84 and T2122 rose but remained firmly in the center of its mid-range at 52.59.  10-year bond yields fell 3.939% and Oil (WTI) gained 1.03% to close at $72.76 per barrel.   

The economic news on Friday, December Core PPI came in dead flat and lower than was expected at 0.0% (compared to a forecast of +0.2% and in line with November’s 0.0% value).  At the same time, December PPI also came in lower than anticipated at -0.1% (versus a forecast of +0.1% and in line with the November -0.1% reading).  

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In stock news, before the open Friday, C announced it was cutting 20k jobs over the next two years as part of its massive restructuring effort.  At the same time, CNC completed the sale of its Circle Health Group to private firm Pure Health.  Later, STLA announced Friday that due to the recent attacks on ships in the Red Sea, the company will temporarily prioritize airfreight to address supply disruptions (at a much higher cost, obviously).  At the same time, DAL announced it is shifting toward EADSY (Airbus) A350-1000 aircraft instead of BA jets (which it has used for decades).  This included the order for 40 of the A350-1000 planes with the first half to be delivered in 2026.  Later, UNP said it expects continued delays in shipments in midwestern states due to heavy snow, severe thunderstorms, and road closures which impact its ability to move crews to trains.  Elsewhere, TSCO and TGT were among the retailers saying Friday that they expect product outages of up to 20 days due to the Red Sea attacks, which are causing ships to be rerouted around the horn of Africa.  At the same time, WFC, C, and JPM all said they expect industry Net Interest Income (spread between borrowing and lending costs) peaked in Q4 2023.  (This is in line with their expectation that rates will fall in 2024.)  Later, SUM finalized its $3.2 billion merger with Argos North America.  Meanwhile, MSFT edged out AAPL as the company with the largest market cap in the world.  (MSFT was at $2.887 trillion as AAPL was “only” $2.875 trillion.)  This is the first time since 2021 that AAPL was not the largest capitalized company in the world.

In stock government, legal, and regulatory news, a bipartisan group of 15 US Senators urged the SEC to closely scrutinize the bid of JBSAY to list on the NYSE.  The group echoed the concerns of British Parliamentarians from earlier in the week.  However, the group’s public letter to the SEC failed to directly call on the SEC to deny the listing, but the letter clearly implied that was their wish.  At the same time, the FDA classified the recall of RMD respiratory masks as extremely serious since the use of those products could lead to major injuries or death.  (It seems the devices cause magnetic interference with other medical devices and implants.)  Later, a US Appeals Court upheld two earlier decisions by a patent tribunal reaffirming the ruling that AAPL stole the intellectual property of MASI related to medial sensor technologies that AAPL then put into their watches.  Elsewhere, the FAA said Friday that the agency is planning to perform “closer monitoring” of BA 737 MAX 9 jets when they do reenter service.  The agency chief told Reuters it was “pretty clear” the mid-air blowout was a manufacturing problem and not a design defect.  As such, BA deserves more scrutiny, including an increase in production line and supplier inspections, which have not been standard in the past.  At the same time, MS agreed to pay $249.5 million to the US Dept. of Justice and SEC to end criminal and civil investigations into the company’s handling of large block trades for its customers.  Later, the US Supreme Court agreed to hear a challenge by SBUX to lower court decisions that required the company to rehire seven employees it was found to have fired due to their support of unionization.  In the afternoon, the FDA announced a major recall by PEP of many Quaker Oats products over the risk of salmonella contamination.  At the same time, WH told Reuters it had received a second request for information from the FTC related to a $7.8 billion hostile takeover bid from CHH.

Overnight, Asian markets leaned heavily to the red side. Hong Kong (-2.16%) was way out in front leading Taiwan (-1.14%), and South Korea (-1.12%) as well as the rest of the region lower.  Only Shenzhen (+0.31%) and Shanghai (+0.27%) were in the green in that region.  In Europe, we see a similar picture taking shape at midday. Only Oslo (+0.22%) is in the green while the CAC (-0.34%), DAX (-0.39%), and FTSE (-0.33%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a lower open to start the day.  The DIA implies a -0.34% open, the SPY is implying a -0.40% open, and the QQQ implies a -0.46% open at this hour.  At the same time, 10-year bond yields have moved back above four percent to 4.014% and Oil (WTI) is up a half of a percent to $73.08 per barrel in early trading.

The major economic news scheduled for Tuesday is limited to NY Fed Empire State Mfg. Index (8:30 a.m.) and Fed Governor Waller speaks (11 a.m.).  The major earnings reports scheduled for before the open are limited to GS, MS, and PNC.  Then, after the close, IBKR reports.

In economic news later this week, on Wednesday we get Dec. Core Retail Sales, Dec. Retail Sales, Dec Imports, Dec. Exports, Dec. Industrial Production, Nov. Business Inventories, Nov. Retail Inventories, Fed Beige Book, API Weekly Crude Oil Stocks, and Fed member Williams speaks.  Then Thursday, Dec. Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Housing Starts, Philly Fed Mfg. Index, EIA Weekly Crude Oil Inventories, and Fed Balance Sheet are reported as well as Fed member Bostic speaks.  Finally, on Friday, we get Dec. Existing Home Sales, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations as well as Fed member Daly speaking.

In terms of earnings reports later this week, on Wednesday, SCHW, CFG, PLD, USB, AA, DFS, FUL, KMI, SNV, and WTFC reports.  Then Thursday, we hear from FAST, FHN, KEY, MTB, NTRS, TSM, TFC, JBHT, and PPG.  Finally, on Friday, ALLY, CMA, FITB, HBAN, RF, SLB, STT, and TRV report.

In miscellaneous news, on Friday, the Biden Administration put out another bid for 3 million additional barrels of oil to continue refilling the US Strategic Petroleum Reserve.  Elsewhere, if you’ve ever doubted whether the saying “it’s not the news, it’s how the market reacts to the news” than Friday was a day for you.  JPM reported a record $49.6 billion in profit for 2023 on Friday, a 32% increase over 2022.  This caused more than a 2% gap higher and JPM stock was up more than 3.5% in the first five minutes of the day.  This was a bear trap as hard selling started at 9:35 a.m. and lasted all the way into the close.  On the day, JPM sold off more than 4.12% from the high and ended the day down 0.73% compared to Thursday’s close.  For its part, WFC profits rose 9% for Q4, but the market did not like that its costs rose although less than the revenue.  WFC was punished with a 2.38% gap lower and ended the day down 3.34%.  Part of this big bank angst was due to the forecast by big banks that they truly believe rate cuts are real and will start “soon” cutting into their interest income.

In geopolitical weekend news, Taiwan thumbed its nose at Beijing by electing the “status quo” candidate, which was not Xi’s preferred contender because he is not pro-reunification, William Lai.  Almost immediately, President Biden moved to calm the situation by announcing that the US does not support Taiwanese independence and that US policy is still “one China, two systems.” However, the Chinese still did not like the fact that a lesser official, US Sec. of State Blinken, congratulated Lai on his election victory.  Meanwhile, in the Red Sea, Saturday the Houthi rebels fired on a US destroyer with rockets and drones. All drones were shot down and no damage was reported. Then on Sunday, the Pentagon reported two Navy Seals had been lost overboard during a ship boarding operation in rough seas off the coast of Yemen.  (That seems quite odd given the timing and other happenings in that area, but it was the story disseminated.) At the same time, the US led a second wave of air attacks on the Houthi rebels.  In retaliation, on Monday the Houthi hit a US-owned container ship (which was stupid enough to ignore the events in that shipping lane during the last month as well as the US Navy’s explicit warning to all ships to avoid the area for at least three days).  No major damage was reported, but a fire was caused in one hold.

So far this morning, GS and PNC reported beats on both the revenue and earnings lines.  (PNC destroyed market expectations by reporting $3.16/share in earnings against the consensus forecast of $2.14/share on only modestly higher than expected revenue.)  At the same time, MS beat on revenue while missing on earnings.  GS cited better-than-expected “asset management profits” during its report.

With that background, markets look to be recovering a bit from a gap lower to start the premarket. All three major index ETFs are showing significant white-bodied candles at this point in the early session. SPY and QQQ both crossed back above their T-line (8ema) and DIA is close to retesting the level that all three gapped below early this morning. So, the Bulls remain in control of the short-term trend in at least the QQQ and SPY (market leaders) although the news out of Yemen had traders very nervous at the beginning of the premarket. In the longer term, we are near all-time highs (potential resistance) in the SPY, QQQ, and DIA. In terms of extension, none of the three major index ETFs are far from their T-line (8ema). At the same time, the T2122 indicator is now sitting in the middle of its mid-range. So, both the Bulls and Bears do have room to run if they can gather the momentum to do it. Continue to keep an eye on the Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes.

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