Q4 Starting With Modest Gap Higher

Stocks gapped down very modestly (0.25% – 0.35%) Friday and followed through for 5 minutes.  However, then volatility stepped in to rally us to the highs of the day by 11:15 am.  At that point, the market reversed again as the bears led a selloff the rest of the day.  This took us to a series of new lows at about 2:30 pm and took us out on the lows.  This action has left us with black-bodied, indecisive, inverted hammer-type candles in all 3 major indices.  It is also worth noting that all 3 indices are again getting extended from their T-lines.

On the day, 9 of 10 sectors are in the green with Basic Materials (+0.15%) as the only sector able to hold onto a gain and Consumer Cyclical (-1.63%) leading the charge lower.  At the same time, SPY was down 1.55%, DIA was down 1.70%, and QQQ was down 1.70%.  The VXX gained almost 3% to 21.21 and T2122 has actually risen to 5.06 (which is still deep in the oversold territory).  10-year bond yields are down, but way up off the early morning lows to 3.821%, and Oil (WTI) is down almost 2% to $79.61/barrel.  Overall, it was a very volatile and bearish day.

So, with inflation high and the Fed on a super-sized hike cycle (while saying they are not going to let up until inflation is clearly headed to 2%), Mr. Market is not a happy camper.  That brought us to the end of a rough week, a brutal month, and a tough quarter.  On the week, SPY lost 2.93%, DIA lost 2.89%, and QQQ lost 2.99%.  For the month, SPY lost 9.62%, DIA lost 8.98%, and QQQ lost 10.70%.  For the quarter, SPY lost 5.32%, DIA lost 6.67%, and QQQ lost 4.65%.

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In economic news, the August Month-on-Month PCE Price Index came in at +4.9%, which was above the +4.7% forecast (and the previous reading of 4.7%).  In addition, the August Mon-on-Month Personal Spending was up +0.4% (compared to a +0.2% forecast and previous reading of -0.2%).  (It is worth noting that core PCE is the Fed’s favorite gauge of inflation and what its 2% target is set against.)  Meanwhile, August Year-on-Year PCE Price Index came in a +6.2%, which was better than the previous reading of +6.4%.  Then the Chicago PMI came in at 45.7 (versus a 51.8 forecast) and Michigan Consumer Sentiment came in at 58.6 (versus a 59.5 forecast and a previous reading of 59.5).  So, that information tells us inflation is up, business is contracting, and the general public is pessimistic.

Speaking of the Fed, Vice Chair Brainard added her full endorsement of the current “higher rates for longer” approach the Fed is undertaking.  She went on to say “Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back toward the target.”  Earlier, Richmond Fed President Barkin had said there were some promising signs of inflation progress.  However, he said that “festering inflation” remains a bigger threat to the economy than us (the Fed) over-correcting.”  Earlier, Fed Governor Bowman (a Republican) suggested averaging bank stress tests to determine bank capital requirements (as opposed to setting them every time they are tested).  Her generally suggested approach was toward lighter regulation of banks.  This stands in stark contrast to Fed Bank Supervisor Barr (Democrat), who has called for more scrutiny of bank risk-taking given the history of financial crises that banks have led the economy into in the past.

In stock news, on Friday, UAL announced it will cancel service from JFK airport as of October because the FAA will not give them additional flights out of that airport.  (UAL had only resumed service from JFK in 2021.)  Meanwhile, EU regulators announced they would publish a decision on whether to allow (or what mandated stipulations must be met to allow) the MSFT acquisition of ATVI by November 8.  Elsewhere, after hours, SWK announced it is cutting 1,000 finance jobs.  (It makes you wonder either who will do the books…or why they had so many since they only have 71,000 total employees.)  On Sunday, TSLA reported that it delivered 343k new vehicles in Q3 which was about 20k fewer vehicles than analysts had been expecting.  However, it was also a 35% increase over Q3 2021. TSLA blamed employee turnover in management positions (after Musk’s “work at least 40 hours per week in the office” decree) and logistics snarls for the shortfall.

After the close, NKE reported beating on both the revenue and earnings lines.  However, MU missed on revenue while beating on earnings.  MU also lowered its forward guidance.  It is also worth noting that despite beating on both lines, NKE reported that they have way too much inventory (44% globally and 65% too much in North America) across multiple seasons of apparel) due to severe supply chain problems. The company said it will be forced to aggressively discount in order to liquidate the excess inventory. Later this morning, CCL reports (9:15 am).

Overnight, Asian markets were mostly in the red.   Japan (+1.07%) was a clear outlier to the upside with only one other exchange managing any green.  However, Thailand (-1.98%), Shenzhen (-1.29%), and India (-1.21%) led the region lower.  Meanwhile, in Europe, we see a similar story taking shape at midday.  Russia (+3.43%), Norway (+1.34%), and Portugal (+0.96%) are the only green to be found on the continent.  At the same time, the FTSE (-0.56%), DAX (-0.59%), and CAC (-0.88%) are leading the region lower in early afternoon trade.  As of 7:15 am, US Futures are pointing toward a mixed start to the day.  The DIA implies a +0.57% open, the SPY is implying a +0.42% open, and the QQQ implies a +0.04% open at this hour.  At the same time, 10-year bond yields are down to 3.75% and Oil (WTI) is up 4.26% to $82.88/barrel in early trading.

The major economic news events scheduled for Monday is limited to September Mfg. PMI (9:45 am) and Sept. ISM Mfg. PMI (10 am).  There are no major earnings reports scheduled for the day.

In economic news later this week, on Tuesday, we get August Factory Orders, August JOLTs, and API Weekly Crude Oil Stocks.  Then Wednesday, the Sept. ADP Nonfarm Employment Change, August Imports/Exports, August Trade Balance, Sept. Services PMI, Sept. ISM Non-Mfg. PMI, and EIA Weekly Crude Oil Inventories are reported.  Thursday, we get the Weekly Initial Jobless Claims.  Finally, on Friday, Sept. Avg. Hourly Earnings, Sept. Payrolls, Sept. Participation Rate, and Sept. Unemployment Rate are reported.

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

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In late-breaking news from across the pond, the new government of UK PM Truss has scrapped its radical shift to large-scale tax cuts for top-end tax rates and “trickle down” economics. It seems the new PM (who even on Sunday had said she was absolutely committed to her plan) was told to drop it or get out by her fellow Torry party ministers amidst a public backlash, cost of living protests, and market rejection of the plan. The British pound briefly jumped on that news. Elsewhere, Reuters reports that CS is in bad financial health and is seeking to raise capital saw the stock drop 10% at one point during the premarket. Finally, Oil (WTI and Brent) is challenging its downtrend with a major gap this morning. This seems to be driven by rumors coming out of OPEC+ that point to the group announcing major production cuts at their Wednesday meeting.

With this backdrop, and as we start the fourth quarter, markets seem headed toward an inside candle at the open in the large-cap indices and a slight continuation of the down move in the tech-heavy QQQ. Once again, this is not showing a major change in sentiment. The trend remains strongly bearish across the market, but last week’s volatile chop may be continuing. Expect more volatility and even though everything looks bearish early, do not forget that we still need over-extension relief.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: OXY, VLO, MPC, META, NFLX, BE, EGO, JBHT, TWTR. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

End of Q3, 2nd Ian Landfall, and EU Prices

Markets gapped lower at the open Thursday (0.65% in the DIA, 1% in the SPY, and 1.25% in the QQQ).  All 3 major indices made a strong follow-through move for the first hour.  Then we saw a sideways meander until Noon.  However, the Bears stepped back in at that point to continue the wavy, gradual ride lower until 2:30 pm when the bulls tried to form a bottom.  From there we saw a sideways grind that bobbed along in a channel for the last hour before slightly breaking back out to the upside. This action has given us gap-down, black candles (with a large lower wick).

On the day, Utilities (-3.71%) and Consumer Cyclical (-3.37%) led the charge lower.  (Utilities is a very odd leader to the downside as one would think that sector would be a destination for a flight to safety.)  Meanwhile, Energy (-0.59%) was the laggard in the decline.  The SPY has lost 2.08%, DIA lost 1.52% and QQQ lost 2.81%.  The VXX was up almost 3% to 20.62 and T2122 is again deeply oversold at 3.22.  10-year bond yields are back down to 3.778% and Oil (WTI) is down three-quarters of a percent to $81.55/barrel.  Overall, just a bearish day in a choppy week all in the middle of a strong bearish trend.

In economic news, the Q2 GDP (2nd revision) came in exactly as expected at -0.6% (compared to Q1 -1.6%).  However, the Q2 Price index was revised up to 9.1% (higher than the 8.9% expected this revision) and the 8.3% in Q1.  The Weekly Initial Jobless Claims also came in better than expected at 193k (versus 215k forecast and 209k last week).  This all means the economy continues to be stronger than expected and inflation remains undaunted by the Fed’s 3 “super-sized” rate hikes this year.

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Speaking of the Fed, in Fed news, St. Louis Fed President Bullard said Thursday that the Us is mostly insulated from the turmoil in UK stock and currency markets.  The mixed signals the BoE and UK government are sending are essentially a UK problem that will only effect US markets on the edges according to Bullard.  Meanwhile, Cleveland Fed President Mester reiterated that “at some point” the Fed will start to consider (economy) growth prospects against inflation.  However, she said this will not be until inflation is clearly heading back down toward 2%.  Then at the end of the day, Sand Francisco Fed President Daly said the Fed does not need to trigger a recession in order to take the heat out of high inflation.  She went on to say that slowing down growth was the right path, but that inducing a deep recession was not necessary.

In stock news, after the close META announced it has paused hiring and warned that it will be restructuring in the face of an uncertain economic outlook.  It was also reported that BCS was fined $361 million by the SEC over internal control failures related to the unregistered sale of a massive and unprecedented quantity of securities.  Elsewhere, the FTC sued two top pesticide makers for price-fixing through distributors to keep the prices farmers pay artificially high for generic pesticides, herbicides, and fungicides.  Privately-owned Syngenta was one and CVTA was the other and the FTC estimates the collusion cost farmers 20% more for the company’s generic products every year.  Reuters reports that a senior supply chain exec at AAPL is leaving the company after making an inappropriate remark about fondling women in a TikTik video.  Meanwhile, the FCC has asked for more information regarding the sale of TGNA (TV station operator) to hedge fund Standard General (which already owns a number of TV stations).  Finally, AMZN (and 5 large book publishers) won a dismissal of two antitrust lawsuits that had accused them of price-fixing on books and e-books.

In energy news, OPEC+ have begun discussions ahead of their production level announcement at the Oct. 5 meeting.  Reuters reports that some members question the logic of doing a major production cut (as posed by some) to maintain high oil prices when Russia continues to sell oil at near full capacity (at discounted prices) to major importers China, India, and Turkey.  Elsewhere, the 10% of US oil production that was shut down due to Hurricane Ian is expected to reopen in the next day or so after the storm missed the critical energy facilities in the Gulf and in Florida.  Meanwhile, in Florida itself, one in four gas stations are out of fuel Thursday afternoon.  However, the KMI pipeline and CVX fuel terminal are expected to resume operation Friday.  And nearly 200 fuel tanker trucks are already on the road heading toward Southern Florida where the shortages are worse.

After the close, NKE reported beating on both the revenue and earnings lines.  However, MU missed on revenue while beating on earnings.  MU also lowered its forward guidance.  It is also worth noting that despite beating on both lines, NKE reported that they have way too much inventory (44% globally and 65% too much in North America) across multiple seasons of apparel) due to severe supply chain problems. The company said it will be forced to aggressively discount in order to liquidate the excess inventory. Later this morning, CCL reports (9:15 am).

Overnight, Asian markets were mostly in the red.  Japan (-1.83%), Shenzhen (-1.29%), and Australia (-1.23%) led the way lower.  Meanwhile, India (+1.64%), Singapore (+0.49%), and Hong Kong (+0.33%) were in the green.  In Europe, with the exception of Russia (-1.41%), we see green across the board at mid-day.  The FTSE (+0.27%), DAX (+0.14%), and CAC (+0.68%) are leading the region higher with Norway (+2.10%) being an outlier to the upside in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.24% open, the SPY is implying a +0.36% open, and the QQQ implies a +0.27% open at this hour.  At the same time, 10-year bond yields are back down to 3.698% and Oil (WTI) is up a third of a percent to $81.42/barrel in early trading.

The major economic news events scheduled for Friday include August PCE Price Index and August Personal Spending (both at 8:30 am), Chicago PMI (9:45 am), Michigan Consumer Sentiment (10 am), and several Fed Speakers (Mester at 9 am, Williams at 9 am, Bowman at 11 am, and Williams at 4:15 pm).  The major earnings reports scheduled for the day are limited to CCL before the open.  There are no earnings scheduled for after the close. 

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In late-breaking news from across the pond, the British pound has managed to hold onto the gains it made after BoE intervention (3 days ago, buying long-dated bonds and stopping the reduction of its balance sheet). This comes amid wide speculation that the new government will be forced to back down from its radical shift to large-scale tax cuts and “trickle down” economics. This came as a report showed that Eurozone inflation has hit a record 10% (well above the 9.7% projections and 9.1% reading in August). If there is any good news in the report, it is that “core inflation” rose only 4.8% with energy (+40.8%) and “Food Alcohol, and Tobacco” up 11.8% doing most of the lifting. (The good news idea being that eventually, energy prices will come under control as replacement sources for Russian oil and gas begin to materialize in the next couple of months.)

With this backdrop, and as the Quarter comes to a close, it again looks like we will see a modest gap higher, inside of Thursday’s candle to start the day. So, this is not showing a major change in sentiment. It just looks like more chop in this week’s consolidation (albeit more volatile consolidation yesterday). The strong bear trend remains in place in all 3 major indices. Expect more volatility and even though everything looks bearish early, do not forget that we still need over-extension relief. Also, do not be surprised if we see some window dressing at the end of Q3 as funds get their portfolios in shape for their Q4 marketing campaigns. Finally, keep in mind that it’s Friday (and that Russia will announce it has annexed parts of Ukraine today). So, prepare your account for the weekend news cycle, which will include the second landfall of Ian.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

Bears Looking For Modest Gap Down Open

Stocks gapped slightly higher at the open in all 3 major indices.  Then price chopped back and forth across the gap the first hour before starting a slow, wavy rally that was in effect until a modest pullback the last 10 minutes of the day.  This left us near the highs of the day at the close.  This action has given us large white candles with smaller wicks on both ends across the 3 major indices.  However, only the QQQ managed to reach (retest) their T-line (8ema) yet.

On the day, Utilities (+1.19%) is the laggard, while Energy (+3.97%) and Basic Materials (+3.34%) led the relief rally.  Meanwhile, the SPY was up 1.96%, DIA was up 1.86%, and QQQ was up 1.99%.  The VXX fell 4.2% to 20.07 and T2122 spiked up out of the oversold territory to 51.47 in the mid-range.  After being up over 4% during the premarket, 10-year bond yields are down hard (the most since 2020) to 3.725%, and Oil (WTI) is up 4.4% to $81.97/barrel. So, Wednesday did give us some relief from bearish over-extension.  However, the downtrend remains intact and you would be hard-pressed to even call it a “relief rally” yet.

In economic news, the August Goods Trade Balance came in at -$87.30 billion (as compared to -$90.19 billion in July) largely on a decrease in imports.  This was the fifth straight month of improvements in the trade balance.  Elsewhere, August Retail Inventories were up 0.6% (compared to a July increase of 0.3%).  This might be a clue of economic slowdown with inventories building.  However, contrary to Tuesday’s unexpected large increase in New Home Sales, August Pending Home Sales fell more than expected to -2.0% (versus -1.4% forecast and +0.6% in July).  Finally, EIA Weekly Crude Oil Inventories fell by 0.215 million barrels (compares to a forecast of +0.443 million and last week’s +1.142 million barrels).  What was odd about the EIA number is that it was only 10% of the build reported Tuesday night by the API (+4.150 million barrels).

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In Fed news, Atlanta Fed President Bostic said that a lack of clear progress in inflation reduction means that the Fed needs to remain “moderately restrictive” and that rates should reach 4.25% – 4.50% by year-end. He wasn’t on to say that his baseline outlook remains that the Fed should hike rates 0.75% again at the next meeting in November.  Later, Chicago Fed President Evans said most Fed voters are “penciling in” 4.50% to 4.75% by the end of the year or maybe March of next year.  He went on to say that he worries about global market volatility causing additional restrictiveness, but that the Fed “just really needs to get inflation in check.”  Finally, Fed Governor Bowman told a conference that the framework the Fed uses to assess competition in the banking sector needs to be overhauled.  Her general point was that different service delivery channels and nonbank “competitors” need to be considered rather than just the size of deposits and loan volume when considering the competitive impact.  (This seems to be a positive statement for mergers/acquisitions in the banking sector.)

In stock news, during the day Wednesday, BIIB had a massive day (+39.85%) after it reported surprisingly positive results in a trial of its Alzheimer’s drug.  Even the direct competitors in this niche (LLY and Roche) were up 7% on the day on this news.  In less positive news, BP announced it has laid off almost all of its contractors at a Toledo Ohio refinery (a joint venture with CVE, but run by BP using contractors) after there was an explosion last week.  BP announced that the refinery (which processed 160k barrels of oil per day, making 3.8 million gallons of gasoline and 1.3 million gallons of diesel per day) will be offline for a prolonged period following the explosion and fire which killed two workers.  Then, after the close, Bloomberg reported that AMZN plans to close several US-based call centers.  This is part of their move toward remote work rather than in-office.  No numbers on cost or headcount reductions were provided.  In other news, Reuters also reported that AMZN has told their warehouse employees they have increased the worker’s pay and this initiative will cost just under $1 billion.  Elsewhere, Bloomberg reports that MRK has struck a deal with China to sell its Covid-19 antiviral treatment (molnupiravir) in a first-of-its-kind deal for the country.

In miscellaneous news, after the close, TTE announced it will be spinning off its Canadian Oil Sands operations and listed the new company on the Toronto exchange (TSX).  Some of these assets include a minority stake in a joint venture with SU and another venture with COP.  On the earnings front, after the close, JEF reported a beat on both lines.  However, CNXC and MLKN both reported missing on the revenue line while simultaneously beating on the earnings line.  So far this morning, RAD and WOR both beat on revenue while missing on earnings.  However, BBBY and KMX both missed on the top and bottom lines. Finally, it was reported overnight that the reason the BOE intervened to buy long-dated bonds Wednesday was panicked calls from UK pension funds that were near collapse based on the crashing pound and UK markets following the new government’s unexpected jerk toward “trickle down” economics and massive high-end tax cuts at the same time inflation is running rampant.

After the close, CALM and BB both reported beating on both the revenue and earnings lines.  (However, the BB number was still a loss.)  So far this morning, THO also reported beating on the top and bottom lines.  However, CTAS and PAYX report closer to the opening bell.

Overnight, Asian markets were mixed in more modest trading.  Australia (+1.44%), Japan (+0.95%), and New Zealand (+0.72%) led the gainers.  Meanwhile, Hong Kong (-0.49%), Thailand (-0.43%), and Malaysia (-0.31%) paced the losses.  In Europe, the day is off to more of a red start.  Only Greece (+0.39%) and Norway (+0.43%) are green.  Meanwhile, the FTSE (-0.63%), DAX (-0.97%), and CAC (-0.90%) are leading the region lower in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a down start to the day.  The DIA implies a -0.46% open, the SPY is implying a -0.62% open, and the QQQ implies a -0.92% open at this hour.  At the same time, 10-year bond yields are back up to 3.814% and Oil (WTI) is up four-tenths of a percent to $82.52/barrel in early trading.

The major economic news events scheduled for Thursday include Q2 GDP (3rd Revision) and Weekly Initial Jobless Claims (both at 8:30 am), and two Fed Speakers (Bullard at 9:30 am and Mester at 1 pm).  The major earnings reports scheduled for the day include BBBY, KMX, RAD, and WOR before the open.  Then after the close, MU and NKE report. 

In economic news later this week, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester). Meanwhile, in earnings reports later this week, on Friday, BKR and CCL report.

LTA Scanning Software

With this backdrop, it again looks like we will see a gap lower. However, today’s premarket candle is still just inside yesterday’s candle. So, this is not showing a major change in sentiment yet. It just looks like more chop in this week’s consolidation. The strong bear trend remains in place in all 3 major indices. Expect more volatility and even though everything looks bearish early, do not forget that the extension relief usually lasts more than one day. As I have said, markets always move in a zig-zag motion and we are definitely in need of more zag to offset the recent strong zig.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

BOE Steps In, AAPL Cuts Production Plan

Markets gapped higher on Tuesday (1.35% in the QQQ, 1% in the SPY and 0.7% in the DIA).  However, that was a bull trap because after meandering sideways for an hour and 45 minutes, all 3 major indices sold off extremely hard for a little over an hour.  During this selloff, DIA lost 1.90%, SPY lost 2% and QQQ lost 2.2%.  After that, all 3 indices ground sideways in a tight range until 2:30 pm.  Then volatility kicked back in as the bulls rallied all 3 major indices for half an hour before pulling back again a bit for the last hour of the day. This action is left us with large black candles that had some significant wicks on both ends (especially the upper wick), which Engulfed the prior candle.  (However, these are not truly “Bearish Engulfing” candles because the prior candle bodies were also black.)

On the day, 5 of the 10 sectors are in the red with Energy (+1.49%) by far the largest gainer and Utilities (-1.66%) by far the largest loser on the day.  At the same time, SPY was down 0.26%, DIA was down 0.49%, and QQQ managed to gain 0.04%.  The VXX gained 1.9% to 20.95 and T2122 was up to a whopping 4.04 (still deeply oversold).  10-year bond yields rebounded from early losses to new highs at 3.976% and Oil (WTI) was up 2.25% to $78.44/barrel.  So, while the day started off looking like it would provide some over-extension relief, it ended up with about the same extension as we had on Monday (which is to say a lot of extension).

In economic news, August Durable Goods Orders came in slightly better than expected at -0.2% (versus a forecast of -0.4%).  However, Conf. Board Consumer Sentiment came in hotter than expected at 108.0 (vs. 104.5 forecast and July’s 103.6 reading).  The big surprise of the day was August New Home Sales, which came in MUCH hotter than expected at 685k (versus a forecast of 500k and July’s number of 532k).  Then after the close API reported that Weekly Crude Oil Inventories unexpectedly rose by 4.150 million barrels (versus a forecast build of only 0.333 million and last week’s build of 1.035 million barrels).

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In Fed news, before the open Tuesday, Fed Chair Powell emphasized the risks and unregulated markets of “DeFi systems.” He called for the Fed (and other Central Banks) to play a major role in the oversight and regulation of cryptocurrencies, in particular speaking to stablecoins and unhosted crypto wallets.  Later in the morning, St. Louis Fed President Bullard said that rapid interest rate increases have raised the risk of a recession.  However, he maintained that the US economy remains resilient and said the recession is likely to be caused by an external shock rather than Fed policy.  He went on to call for more hikes and said not only are the hikes needed to tame inflation but also to defend Fed credibility.

In stock news, Tuesday afternoon, the DOJ asked a Federal Judge to force AAL and JBLU to scrap their “US Northeast” partnership as being anti-competitive.  The move also implies the JBLU acquisition of SAVE will face regulatory hurdles.  Elsewhere, CS announced the loss of two senior executives, one of which is going to rival C.  Then, after the close, the SEC announced it has fined 16 major Wall Street firms a total of more than $1.1 billion for failing to maintain and preserve electronic communications from Whatsapp usage (which their traders used to secretly communicate).  This secret communication is a major fear given the recent market-fixing convictions of traders in various asset classes. The fined firms include BARC, BAC, C, CS, GS, MS, and UBS.  Also, after the close, F said they are implementing a $700 million plant expansion in KY that will create 500 new hourly jobs.  Finally, Bloomberg reports that APO is seriously exploring a takeover of R.  Shares of R spiked 15% as the news broke late in the day.

In Energy news, as mentioned above, Oil (WTI) rose 2.25% on Tuesday due to cuts in production in the Gulf of Mexico and fear that Hurricane Ian could potentially temporarily take Florida oil storage and refining capacity offline.  A modest pullback in a historically strong Dollar also helped buoy oil prices.  Elsewhere, India and China have temporarily halted the purchase of Russian oil in the last week.  The reason appears to be demand-related as recession fears are facing both those economies. However, the pause also allows those countries to put more pressure on Russia for price concessions in the face of recent global oil price reductions.  Finally, in an odd turn, Senate Minority Leader McConnell (Republican) urged fellow Republicans to vote down a stopgap government funding bill…due to it containing riders intended to appease WV Democrat Manchin.  What makes this odd, is that the riders are massively pro-business and anti-environment as they would reduce environmental regulation and shorten project permitting review timelines.  This is odd because McConnell is from KY where there is a large coal mining industry that would benefit greatly from the bill.  So, this appears to be a just political ploy, calculating that a government shutdown shortly before midterm elections can be blamed on Democrats.

After the close, CALM and BB both reported beating on both the revenue and earnings lines.  (However, the BB number was still a loss.)  So far this morning, THO also reported beating on the top and bottom lines.  However, CTAS and PAYX report closer to the opening bell.

Overnight, Asian markets were red across the board.  Hong Kong (-3.41%), Taiwan (-2.61%), Shenzhen (-2.46%), and South Korea (-2.45%) led the region lower.  In Europe, stocks are also almost exclusively red at mid-day.  The FTSE (-0.45%), DAX (-0.77%), and CAC (-1.15%) are leading the region lower with only Russia (+0.22%) and Switzerland (+0.41%) managing to hang on to green numbers in early afternoon trade.  As of 7:30 am, US Futures are pointing to a gap lower to start the day.  The DIA implies a -0.45% open, the SPY is implying a -0.69% open, and the QQQ implies a -1.13% open at this hour.  10-year bond yields have backed down slightly to 3.941%  and Oil (WTI) is up a third of a percent to $78.76/barrel in early trading.

The major economic news events scheduled for Wednesday include August Goods Trade Balance and August Retail Inventories (both at 8:30 am), August Pending Home Sales (10 am), EIA Weekly Crude Oil Inventories (10:30 am), and many Fed speakers (Bostic at 8:35 am, Bullard at 10:10 am, Chair Powell at 10:15 am, and Bowman at 11 am).  The major earnings reports scheduled for the day include CTAS, HEPS, PAYX, and THO before the open.  Then after the close, CNXC, JEF, and MLKN report. 

In economic news later this week, on Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester).  Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester).

In earnings reports later this week, on Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report.  Finally, on Friday, BKR and CCL report.

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In late-breaking news, the Bank of England has decided to scrap plans to sell UK bonds (reduce its balance sheet) and has temporarily begun buying long-date UK bonds instead. This was an emergency move to try to stop the massive surge bond prices (the inverse of yields), which was at their highest price since 1957. AAPL also gave an ominous signal as it canceled planned increases in iPhone production. This came as the company has not seen the surge in new iPhone sales that it had expected. (Who knew you didn’t need a new $1,000 phone every year?) AAPL stocks was down almost 4% in premarket on the news.

With this backdrop, again, don’t be fooled by a gap lower. The recent pattern has been for price to fade the gap (regardless of its direction) as volatility remains high. So, while the strong bear trend remains in place in all 3 major indices, don’t expect a gap lower to just keep running. Instead, expect more volatility and even though everything looks bearish early, do not forget that the market needs some extension relief. Markets always move in a zig-zag motion and we are definitely in need of a zag to offset the recent strong zig.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

Premarket Green For Extension Relief

Stocks gapped down Monday (about 0.40% in the large-cap indices and about 0.20% in the QQQ).  After an hour of rallying up to the day’s highs, the selloff to the lows took over from 10:30 am to 2 pm.  At that point, we chopped our way sideways with a very slight bullish trend until a massive selloff in the last 5 minutes of the day.  This action left us with black-bodied Spinning Top type candles. However, the SPY and DIA closed at the lowest level for a close since December 2020. On the other hand, all 3 of the major indices remain very extended below the T-line (ema).

On the day, all 10 sectors were red, with the Energy (-2.68%) and Utilities (-2.46%) sectors leading the way lower.  At the same time, the Consumer Defensive (-0.44%) and Consumer Cyclical (-0.83%) sectors lagged the decline.  Meanwhile, the SPY lost 0.95%, DIA lost 1.06%, and QQQ lost 0.41%.  The VXX rose by 3.73% to 20.56 and T2122 remains deeply oversold at 1.56.  10-year bond yields spiked to 3.924% and Oil (WTI) fell 2.88% to $76.47/barrel. So, overall, it was an ugly, down but still indecisive day.

In Fed news, Boston Fed President Collins told a New England business group that she expects a more modest economic slowdown as the Fed continues to tighten.  She went on to say inflation could be tamed without a pronounced spike in layoffs as part of a “soft landing.”  Meanwhile, Atlanta Fed President Bostic told the Washington Post he doesn’t know if the Fed is being too optimistic or pessimistic, but that the important thing is that we need to get inflation under control.  He also went on to say the new UK government’s decision to do major tax cuts will cause both further inflation and stoke market volatility more broadly than just in the United Kingdom.  (“The key questions will be what this means for ultimately weakening the European economy, which is important for how the US economy will perform.”)  Later, Cleveland Fed President Mester told an MIT audience that inflation will continue to be hard to predict and she was going to be very cautious before declaring victory over inflation.  She went on to say we need to have rising rates until we see several months of declining inflation and “we can’t avoid pain.”

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In stock news, the CEO of UL has announced he will retire at the end of 2023 after a bungled attempt to buy GSK’s consumer healthcare business.  Then, after the close, BIIB finalized a $900 million settlement with the US Dept. of Justice for paying doctors kickbacks in return for prescribing BIIB products.  Elsewhere, the US Forest Service also started a federal investigation into the “Mosquito” fire.  The agency seized some of PCG’s equipment from a transmission pole.  PCG said they are fully cooperating. Elsewhere, SBUX sent a letter to the unions that represent employees at more than 230 of its US stores. The company invited the unions to begin contract negotiations in October.  In other union news, the Intl. Assn of Machinists and Aerospace Workers filed an application to hold an organizing vote among 3,000 of JBLU’s ground crews.  The company opposes having a vote.  At the same time, the UAW has sought speedier recognition by GM at a new battery manufacturing facility in Ohio.  The faster process would forgo a vote if more than half of the plant employees sign a card requesting union representation.

In Energy news, SU announced Monday that it will buy back $1.27 billion in bonds it had previously issued even as S&P had just downgraded SU debt to a BBB rating.  In weather-related issues, BP and CVX both shut down Gulf of Mexico oil production Monday as Hurricane Ian bears down on the top-producing area of the gulf.  This shutdown accounts for about 15% of US daily oil production.  Meanwhile, OXY said it was also implementing its storm protocols “designed to safeguard the environment and personnel safety” (but did not say whether that meant shutting down production).  For their part, SHEL said it is closely monitoring the storm, but is not taking action at this point. Finally, European investigators are rushing to identify the cause of mysterious (potentially sabotage) leaks in the Nord Stream One pipeline under the Baltic Sea. Similar leaks were found in the nearby (and not yet opened) Nord Stream Two pipeline. Shipping in the area has been restricted.

In miscellaneous news, during the day, eight State Attorneys General filed cease and desist orders and lawsuits against crypto lending platform Nexo.  The AGs charged Nexo with offering customers interest on deposits without filing the paperwork to register as a security or to disclose financial disclosures.   Meanwhile, US farmers are lobbying the US government to challenge the looming Mexican ban on importing genetically-modified grain (specifically corn) via the USMCA.  The ban is scheduled to be fully implemented by 2024 and would eliminate about $1.65 billion per year in US corn exports.  The largest companies impacted would be ADM and BG.

Overnight, Asian markets were mixed but the larger exchanges were green led by China.  Shenzhen (+1.94%), Shanghai (+1.40%), and Japan (+0.53%) led the region higher while New Zealand (-1.93%) was an outlier to the downside.  In Europe, stocks are mostly green at midday.  The FTSE (-0.01%) lags due to continued fear over the new Truss government tax cuts impacts.  However, the DAX (+0.73%), and CAC (+0.67%) lead the region higher (with only Russia -0.07% and the FTSE red) in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.85% open, the SPY is implying a +1.08% open, and the QQQ implies a +1.32% open at this hour.  10-year bond yields are down to 3.821% and Oil (WTI) is up 1.36% to $77.75/barrel in early trading.

The major economic news events scheduled for Tuesday include August Durable Goods Orders (8:30 am), Cond. Board Consumer Confidence and August New Home Sales (both at 10 am), and API Weekly Crude Oil Stocks (4:30 pm).  There are also 2 Fed speakers (Chair Powell at 7:30 am and Bullard at 9:55 am).  The major earnings reports scheduled for the day include CBRL, FERG, JBL, SNX, and UNFI before the open.  Then after the close, BB and CALM report.

In economic news later this week, on Wednesday, August Goods Trade Balance, August Retail Inventories, August Pending Home Sales, EIA Weekly Crude Oil Inventories, and a Fed speaker (Bullard) are reported.  Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester). Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester).

In earnings reports later this week, on Wednesday, we hear from CTAS, HEPS, PAYX, THO, CNXC, JEF, and MLKN.  Then Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report.  Finally, on Friday, BKR and CCL report.

LTA Scanning Software

So far this morning, FERG reported a beat on revenue while also missing on the earnings line.   On the opposite side, UNFI missed on revenue while beating on earnings.  JBL, SNX and CBRL all report later, but before the open.

With this backdrop, don’t be fooled by a gap higher. The strong bear trend remains in place across all 3 major indices. So, at this point, this move looks like nothing but relief from over-extension and perhaps a little support from the June Low in the large-cap indices. Expect more volatility and even though everything looks good early, do not forget the trend is not broken. Markets always move in a zig-zag motion and, so far, this doesn’t even qualify as a relief rally. This is just a pause in the run lower until proven otherwise.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

TC2000 Discount

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Strong Dollar and Russian Nuke Threats

US Markets followed Europe and gapped significantly lower Friday (-0.97% on the SPY, -0.89% in the DIA, and -0.90% in the QQQ).  The bears piled on to drive prices lower during the first half of an hour.  All 3 major indices then ground sideways in a tight range until 11:30 am.  The bears got their second wind at that point and droved prices down another percent over the next hour. From 12:30 pm, we resumed a more volatile roller-coaster ride, reaching new lows at about 3 pm and bouncing the last hour. This action left us with large, black-bodied, gap-down, Hammer daily candles that could be seen as working on a Bearish Doji Continuation candle pattern (with a large lower wick) in all 3 major indices.

On, all 10 sectors are in the red with Energy (-6.904%) being by far the biggest loser and Healthcare (-1.17%) holding up best.  Meanwhile, the SPY was down 1.63%, DIA was down 1.55%, and QQQ was down 1.63%.  The VXX was up almost 5% to 19.82 and T2122 can hardly get more oversold at 1.01.  10-year bonds have pulled back from early highs to 3.685% and Oil (WTI) is off 5.5% to $78.89/barrel.  All-in-all, it was a brutal day to end a brutal week.   However, we are getting VERY extended from both the T-line (8ema) and in terms of the T2122 indicator at this point.

In Economic news, the September Mfg. PMI came in a bit above expectation (51.8 vs. 51.1 forecast and 51.5 in August).  In addition, the September Services PMI also came in above the forecast (49.2 vs. 45.0 forecast and well above the 43.7 reading in August).  These indicate a stronger economy than many had expected, but services still show some contraction.  Bloomberg also reported that US government debt is shrinking rapidly in terms of percentage of GDP as inflation increases the GDP.  (Note that debt in dollar terms grows daily, but the inflation increase of GDP has far outstripped the growth in debt.)

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In stock news, on Friday, brokerages popped as the SEC stopped short of banning payment for order flow.  Then, after the close, DB paid $26.25 million to settle a shareholder lawsuit over ties to Jeffrey Epstein and Russian oligarchs.  Another European bank (BCS), was sued for fraud by shareholders (led by two pension funds).  The suit claims the bank sold $17.6 billion more debt than regulators allowed and had been claimed in annual reports.  BCS claims the issue results from an accounting mistake.  Then on Saturday, Bloomberg reported a leaked XOM internal study from 2020 which said that the oil and gas company had overspent $138 billion between 1998 and 2017 (or almost $7 billion per year) on 110 projects likely due to poor planning and mismanagement.  21 of the projects accounted for 93% of the overspending.

In Energy news, on Saturday, both JPM and MS reported that funds (hedge and mutual) massively exited energy stocks, bonds, and futures positions last week.  The big banks reported the exodus this month has been the largest industry retreat by funds from any industry for at least months.  This was, at least in part, the reason oil has fallen to an eight-month low. Elsewhere, German PM Sholz’s just-concluded trip to the Persian Gulf netted him the guarantee of one shipment of LNG from the UAE later this year.  However, German LNG terminals are under construction which would allow for longer-term agreements.  In addition, the UAE and German utility RWE will explore joint offshore Wind energy projects. 

In miscellaneous news, on Sunday, Instacart (which is scheduled to IPO before the end of this year) has cut an unspecified number of staff, including 3 senior-level employees, and has paused hiring ahead of its IPO.  It was previously announced that after the company goes public, the founder (Apoorva Mehta) would be stepping down as Chairman and CEO to leave the company.  Also Sunday, Boston Fed President Bostic said he believes the Fed will avoid “deep pain” while taming inflation.  He said “there is a really good chance that if we have job losses, it will be smaller than in past downturns.”  Finally, Reuters reported Sunday that US businesses borrowing for equipment grew 4% in August according to the Equipment Leasing and Finance Assn.  The ELFA group said US companies had signed up for almost $9 billion in new leases, loans, and lines of credit for equipment procurement in August, up from $8.5 billion one year prior.  Overall, the group said borrowing for this purpose is up 5% so far this year compared to 2021.

Overnight, Asian markets were red across the board.  South Korea (-3.02%), Japan (-2.66%), and Taiwan (-2.41%) led the region lower while mainland China and Hong Kong (-0.40%) held up relatively well.  In Europe, Stocks are mostly red with a few minor exchanges holding onto green.  The FTSE (-0.81%) is leading the way lower as the British Pound reached an all-time low against the dollar before recovering a bit as the new government’s tax cuts for corporations and the wealthy has markets scared.  (The Tory party has now called on the Bank of England to act to prop up the pound, but the probability it will fall to parity with the dollar has now risen to 60%.)  Meanwhile, the DAX (-0.10%), and CAC (-0.01%) show relative strength in the region in early afternoon trade.  (It is worth noting that Russia is down almost 7% at this point.)  Across the pond, as of 7:30 am, US Futures are pointing toward another gap lower to start the day.  The DIA implies a -0.71% open, the SPY is implying a -0.80% open, and the QQQ implies a -0.69% open at this hour.  10-year bond yields are back up sharply to 3.791% and Oil (WTI) is down 1% to $77.98/barrel in early trading.

The major economic news events scheduled for Monday are limited to a 2-year bond auction (1 pm) and a Fed speaker (Mester at 4 pm).  There are no major earnings reports scheduled for the day. 

In economic news later this week, Tuesday we get August Durable Goods Orders, Cond. Board Consumer Confidence, August New Home Sales, and API Weekly Crude Oil Stocks. Then Wednesday, August Goods Trade Balance, August Retail Inventories, August Pending Home Sales, EIA Weekly Crude Oil Inventories, and a Fed speaker (Bullard) are reported.  Thursday, we see Q2 GDP, Weekly Jobless Claims, and a Fed Speaker (Mester). Finally, on Friday, we get August PCE Price Index, August Personal Spending, Chicago PMI, Michigan Consumer Sentiment, and 3 Fed Speeches (Mester, Williams, Mester). 

In earnings reports later this week, on Tuesday, CBRL, FERG, JBL, SNX, UNFI, BB, and CALM report.  Wednesday, we hear from CTAS, HEPS, PAYX, THO, CNXC, JEF, and MLKN.  Then Thursday, BBBY, KMX, RAD, WOR, MU, and NKE report.  Finally, on Friday, BKR and CCL report.

LTA Scanning Software

Over the weekend, UNC’s Tax Center released a study (based on 2021 financials) that indicates 78 major US corporations will be hit with new tax bills due to the new 15% Corporate Minimum Tax (this is because they paid little or no taxes in 2021). BRKB, AMZN, F, and T are likely to be the tickers hit worst by the new tax. For example, the study estimates BRKB would have paid $8.3 billion to reach that 15% tax level. However, the main story is the US Dollar strength, based on the aggressive Fed rate hikes being juxtaposed to the new British approach of giving away tax cuts to stimulate. UK markets are scared stiff, while the rest of Europe is on edge by the unexpected and sudden lurch from normal/traditional policy to “Reaganomics Trickle Down Theory.” On the other side of the world, Japan has had to intervene to stop the fall of the Yen versus the Dollar. It is this kind of extremely strong dollar that has caused global economic crisis in the past. To top this all off, Russian President Putin made more “I’m not kidding, I’ll Nuke You” threats Sunday and Ukraine says they believe him.

With this backdrop, the strong bear trend remains in place across all 3 major indices. However, again, we are again very extended from the T-line (8ema) and are deeply oversold in terms of the T2122 indicator. The major indices are getting close to testing the lows from June. So, expect volatility and even though everything looks very bearish, do not forget we are extended. Markets moving in zig-zags and there will be a zag coming at some point soon.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

Bears Look to Start Friday With a Roar

On Thursday, the major indices gapped lower in a divergent manner. (The DIA gapped down 0.10%, SPY gapped down about 0.25%, and QQQ gapped down two-thirds of a percent.)  After those gaps, we saw a sideways roller-coaster ride in a tight horizontal channel until 2:30 pm.  However, at that point the bulls stepped in to drive a stronger wave for 45 minutes was met by an even sharper selloff in the last 10 minutes of the day. This action left us with indecisive, Spinning Top type candles.  (It also sets up potential Morning Star signals in the 3 indices if we get the right candle Friday.  However, every Morning Star Setup is also a Bearish Doji Continuation Pattern setup.)  With all this said, the indices are also very extended below their T-lines (8ema) at this point.  

On the day, nine of the ten sectors are in the red with Comm. Services (+0.01%) barely hanging on to the green while Consumer Cyclical (-2.24%) was by far the largest losing sector.  Meanwhile, the SPY was down 0.86%, DIS was down 0.42%, and QQQ was down 1.23%.  The VXX was flat at 18.87 and T2122 has dropped extremely deep into the oversold territory to 1.79. 10-year bond yields have spiked to 3.704% and Oil (WTI) was up three-quarters of a percent to $83.60/barrel.  So, the good news is that the major post-Fed volatility has dissipated.  However, the bad news is that there is still major indecision and some volatility within the strong bearish trend.

In Economic news, Q2 Current Account came in much better than expected (-$251.1 billion vs. -$260.6 billion forecast and -$282.5 billion in Q1).  This 11.1% decrease in the deficit happened due to a sharp INCREASE in exports.  Weekly Initial Jobless Claims also came in slightly better than expected (213k vs. 218k forecast, but a bit higher than last week’s 208k).  Meanwhile, overseas, South Korea reported its first monthly PPI fall in two years.  In terms of bond yields, most of them are sitting at the highest level since 2008.  The 2-year is at 4.118% yield.  However, the most concerning fact about bond yields is the complete inversions, which is usually an indicator of a pending recession.  (2-year > 5-year > 10-year > 30-year.)  Finally, in counter-inflationary news, Bloomberg reports that copper has fallen by one-third since March.

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After the close, in earning news, COST reported beats on both the revenue and earnings lines.  At the same time, FDX and AIR both reported misses on revenue while beating on earnings.  None of those companies changed forward guidance.  However, FDX had already reduced the reported quarter’s guidance and had removed all forward estimates in a preannouncement last week.  The company also said it was struggling with light shipping volumes in Europe and Asia.

In other stock news, speaking of FDX, the company announced they are raising Express, Ground, and Home Delivery by an average of 6.9%.  The company will increase FedEx Freight rates by between 6.9% and 7.9%.  They also announced a plan to cut costs which they expect to deliver $2.25 billion in cost savings during fiscal 2023. Elsewhere, the Wall Street Journal reported after the close that HUM and CVS are both in the running to acquire senior primary care provider CANO.  (CANO was up 60% between 3:15 pm and 3:30 pm Thursday as the news leaked.  The stock closed up 32% on the day.)  Finally, after the close, the SEC announced that BA and its former CEO (Muilenburg) have consented to pay $200 million and $1 million respectively to settle charges of issuing materially misleading statements in 2018 and 2019, following the company’s multiple 737Max crashes.

In miscellaneous news, the Yen soared Thursday as Japanese monetary authorities continued their intervention to prop up their currency.  The Yen climbed 1.2% against the US Dollar on the day.  With that said, the Dollar gained against the Euro and Loonie.  Elsewhere, Reuters reports that Senate Republicans threatened large banks (JPM, BAC, C, WFC, USB, PNC, etc.) that they will face unspecified retaliation unless they abandon and avoid all liberal stances on social, environmental, and/or cultural issues (so-called ESG issues).  Meanwhile, the Senate Democrats “requested” (again, an implied and unspecified threat) that the banks remain neutral on employee unionization, limit and strictly manage bank risks, and warned them over profiteering and practices that prey on customers (such as WFC has repeatedly been found guilty). Finally, in one last quasi-political tidbit, it was widely reported last night that Senator Manchin does not have even the Senate votes to pass his Energy bill aimed at removing environmental restrictions, fast-tracking project permitting, and approving pipelines.  It’s uncertain which, if any, of the oil and coal companies (Manchin’s benefactors) may have been relying on this bill or which are most impacted if it does fail to pass.

Overnight, Asian markets were red across the board.  Australia (-1.87%), South Korea (-1.81%), and India (-1.72%) led the region lower.  In Europe, stocks are sharply lower as Putin’s farce referendums begin in the areas Russia still holds (but even refugees from those areas held in Russia are not permitted to vote), the UK announced a raft of corporate tax cuts, and eurozone PMI fell again.  (The British pound also fell 1.8% to a fresh 37-year low versus the dollar.)  The FTSE (-2.14%), DAX (-2.43%), and CAC (-2.33%) are leading the region lower in early afternoon trade.  However, even the best exchange in the region is down 1.70% (Switzerland).  As of 7:30 am, US Futures are pointing toward a significant gap lower to start the day.  The DIA implies a -1.19% open, the SPY is implying a -1.30% open, and the QQQ implies a -1.42% open at this hour.  10-year bond yields are surging again to 3.771% and Oil (WTI) is down more than 3% to $80.85/barrel in early trading.

The major economic news events scheduled for Friday are limited to Mfg. PMI and Service PMI (both at 9:45 am) and Fed Chair Powell speaks again at 2 pm.  There are no major earnings reports scheduled for Friday. 

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As we come into the last day of the week, markets are staring at more than a 4% loss so far by the SPY. GS also sharply reduced their year-end target for the S&P500 from 4300 to 3600 (citing rising interest rates and, as a result, increasing recession risk. Overseas, the Europeans are scrambling to cap wholesale energy prices, subsidize companies and households for energy costs, and add better/additional volatility circuit-breakers to energy markets. The point is, the picture is pretty bleak and there isn’t a lot of good news to bolster bulls.

With this backdrop, the strong bear trend remains in place across all 3 major indices. However, especially after today’s significant gap down, we are again very extended from the T-line (8ema) and are deeply oversold in terms of the T2122 indicator. The DIA will be testing the June lows if we open as we sit now and there is no significant potential support in the other indices before we reach that test as well. So, expect volatility and even though everything looks very bearish, do not forget we are extended. Markets moving in zig-zags and there will be a zag coming at some point soon. Finally, remember that it’s Friday and there is a weekend news cycle ahead. Consider whether you should take profits, move stops, hedge, or adjust position sizes ahead of the two days when we can’t react to news.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

Market Tries to Steady After Fed Whipsaw

Markets gapped about a half of a percent higher at the open Wednesday.  This turned into a long sideways grind in a tight range on low volume for all 3 major indices right up until the Fed announcements at 2 pm.  That abruptly came to an end, when the Fed news hit and we saw the true definition of whipsaw. After the announcement, there was a small surge higher for 5 minutes, only to be met by a massive 1.6% to 2% collapse in the 5 minutes after that initial surge.  The volatility continued when Fed Chair Powell began to speak, the bulls surged the market back up by more than a full percent, to take us to the highs of the day in all 3 major indices at about 2:50 pm.  However, the whip was not done as the bears stepped in shortly after 3 pm to drive us back down into the close, taking us out on the lows of the day.  

On the day, this action left us with large bearish engulfing candles that had a significant upper wick and that had failed a retest of the T-line (8 ema) in all 3 major indices.  All 10 sectors were red on the day with Consumer Defensive (-0.53%) by far the strongest and Consumer Cyclical (-2.58%) by far the weakest sector.  The SPY lost 1.73%, the DIA lost 1.71%, and the QQQ lost 1.82%.  VXX gained over 2% to 18.86 and contrary to what you might expect, T2122 dropped deeper into the oversold territory at 3.45.  10-year bond yields fell to 3.514% and Oil (WTI) fell two-thirds of a percent to $83.42/barrel.

In Economic news, August Existing Home Sales came in a bit stronger than expected (4.8 million versus the 4.7 million forecast and 4.82 million in July).  EIA Weekly Crude Oil Inventories also followed the API number from Tuesday evening by building less than was expected (+1.142 million vs +2.161 million barrels forecast).  Across the pond, the UK’s new PM Truss announced corporate tax cuts and reversing a planned corporate tax increase as her plan for fighting a recession.  IFS (the non-partisan arbiter of UK government spending) called the move disappointing and said there is little chance the cuts would ever pay for themselves and they will likely increase the UK budget deficit by around 3.5% of GDP.  However, as stated above, the day’s big economic news came out of the Fed.

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In Fed News, the FOMC decided to go with a 0.75% rate hike (to 3.25%) which was exactly what more than 80% of traders had been expecting.  The FED statement also indicated that they will keep hiking well above the current level in order to fight inflation.  The FOMC now projects the “terminal point” (the highest they will raise rates) to be 4.6% and that this level will be reached in 2023.  The “Dot Plots” (the individual FOMC member expectations) do not foresee a rate cut until at least 2024.  Meanwhile, the Fed projections see unemployment rising from the current 3.7% to a high of 4.4% next year.  They also expect GDP Growth to slow to +0.2% for 2022 and then rise slowly to a long-term rate of +1.8%.  (That +0.2% growth number for 2022 is a sharp cut from their June estimate of +1.7%.  This coupled with the wording “below trend growth” scared many traders.)  However, the Fed expects headline inflation to drift lower the rest of the year, coming down to a 5.4% number (compared to July which expected 6.3% inflation by year-end).  Finally, they expect to have inflation back down to 2% by 2025.

In stock news, META announced plans to cut costs by 10%.  This is likely to include job cuts, but nothing was announced yet.  Then after the close, MSFT announced an increase in its quarterly dividend by 10% to $0.68, payable on 12/8 for holders of record on 11/17.  On the opposite side, GLT announced it has suspended its dividend in order free up cash for the operational and financial needs of the company.  Also, after the close, FUL, KBH, LEN, SCS, and TCOM all reported misses on the revenue line while also beating on the earnings line. KBH and SCS went further to lower forward guidance while the others left guidance as it was stated the previous quarter.

In Energy news, the UK government announced a multi-billion-pound bailout program to help companies pay their energy bills.  They also will cap wholesale energy prices for the next six months.  In the US, the Senate ratified (in a bipartisan manner, 69-27) the “Kigali Amendment” to the Global Environmental Treaty.  This amendment outlaws various HFC gasses used in HVAC and Refrigeration units.  These both followed an oil surge after Putin’s ratcheting of tensions calling up another 300,000 reservists and then threatening nuclear attacks (by saying they were being threatened with nukes).  However, the Fed got the last word as the Dollar reached a new 20-year high after the Fed news, working against all dollar-denominated commodities and driving oil down. 

Overnight, Asian markets were mixed but leaned to the red side.  Thailand (+0.72%) was by far the biggest of the 3 winners.  Meanwhile, Hong Kong (-1.61%), Australia (-1.56%), and Taiwan (-0.97%) led the majority of the region’s exchanges downward.  In Europe, stocks are mostly red at mid-day with the notable exception of Russia (+2.04%).  The FTSE (-0.32%), DAX (-0.62%), and CAC (-0.68%) are leading the region lower in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a modestly red start to the day.  The DIA implies a -0.01% open, the SPY is implying a -0.13% open, and the QQQ implies a -0.28% open at this hour.  10-year bond yields are up again to 3.54% and Oil (WTI) is up eight-tenths of a percent to $83.64/barrel in early trading.

The major economic news events scheduled for Thursday are limited to Q2 Current Account and Weekly Initial Jobless Claims (both at 8:30 am).  The major earnings reports scheduled for Thursday, ACN, DRI, and FDS report before the open. Then after the close, AIR, COST, and FDX report. 

In economic news later this week, on Friday, we see Mfg. PMI, Service PMI, and Fed Chair Powell speaks again. Meanwhile, in earnings reports later this week, on Friday there are no major earnings reports scheduled.

So far this morning, ACN has posted beats on both the top and bottom lines.  Meanwhile, FDS beat on revenue while missing on earnings.  The DRI report missed on revenue and reported in-line in terms of earnings.

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In late-breaking news, the Bank of England raised rates by 0.50%, which followed the same move made by Norway’s Central Bank. However, Turkey is swimming against the current by cutting interest rates by a full percent…even as the country is suffering from 80% inflation. Meanwhile, the US Dollar is down this morning (versus the basket of 10 peer currencies). Some of the Dollar’s move lower is due to the Japanese government intervening to prop up the Yen for the first time since 1998.

With this backdrop, the strong bear trend remains in place across all 3 major indices. It now looks (ahead of weekly unemployment data) like we will open just a modest amount lower. However, we are again extended from the T-line (8ema) and are deeply oversold in terms of the T2122 indicator. There is also potential support not far below. So, beware of the potential for “gap and reverse.” As yesterday’s Fed whipsaw should have taught us…we simply can’t get caught chasing. Otherwise, Mr. Market will punish us severely. So, be patient and remember that the first rule of making big money in the market is to not lose big money in the market.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: GME, AAPL, UBER, SQQQ, GOOG, AMZN, SDS. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

F Warns, Swiss Hike, as All Eyes On Fed

Markets gapped down (0.88% in the SPY, 0.89% in the DIA, and 1.10% in the QQQ) at the open Monday.  However, this was a bear trap as bulls immediately stepped in and rallied all 3 major indices back up through the gap and into positive territory before 11 am.  At that point, the market started a sideways grind with a slight bearish trend for a few hours.  Then finally, the bulls stepped back in at 2:30 pm to drive us back to the highs of the day at 3 pm and take us out on the highs.  This action left us with gap-down, white-bodied, Marubozu-type candles that engulfed the prior white candles.

Nine of the 10 sectors were green with Healthcare (-0.75%) by far the biggest loser and Basic Materials (+2.11%) by far the biggest gaining sector.  Meanwhile, the SPY gained 0.76%, DIA gained 0.68%, and QQQ gained 0.60% on the day.  At the same time, the VXX closed down over 9% to 17.99 and T2122 climbed out of the oversold territory to 27.34.  10-year bond yields pulled back from early highs to 3.49% and Oil (WTI) has recovered from early lows to $85.53/barrel.  All-in-all, just a bear trap day that maybe held support and relieved some over-extension.  

In stock news, AXP announced Monday that it will be hiring 1,500 technology workers before the end of 2022 (a 2.5% headcount increase) despite other financial institutions cutting jobs. Meanwhile, TSLA announced that it has completed its production capacity expansion project at its Shanghai facility.  Elsewhere, at the end of the day Monday, Bloomberg reported that banks led by BARC and BAC are moving ahead with risky leveraged buyout financing projects that had 8-10% ahead of the Fed decision, citing several project examples. (The takeaway is that, despite interest rates rising, big banks are still willing to undertake risky projects in search of an additional 4% profit above their own projected terminal Fed Funds Rate…which would make risk-free bond yields in the area of only 2.5%-3% below their risky projects.)  In other news, a group of 46 US states has now appealed a lower court dismissal of an anti-trust lawsuit against META.  Finally, after the close, F warned investors of an additional $1 billion in unplanned supply chain costs during Q3.

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In Economic news, on Monday, the National Assn. of Home Builders Housing Market Index dropped three points to 46.  Any reading below 50 indicates that single-family homebuilders have a bearish sentiment toward the housing market.  Elsewhere, Fed Funds futures have now priced in an 81% chance of a 0.75% rate hike along with a 19% probability of a 1.00% hike by the FOMC on Wednesday.  The US Dollar rose on these expectations, nearing the 20-year high set on September 7th.  Obviously, this inversely impacts all dollar-denominated commodities such as oil, gold, and grains.  Finally, the second largest US Port (Port of Long Beach) reported a decline in inbound containers in August.  The Port Executive Director attributes this to cooling consumer demand and the end of pandemic-related port backlogs.  (Long Beach and Los Angeles together account for 40% of container traffic from China.)

In Energy news, Reuters reports that German utility companies (RWE and Uniper) are very close to signing a long-term LNG supply contract with Qatar as at least a partial replacement for Russian LNG.  The Qatari fields that would supply this gas are partly owned and operated by RDS, XOM, and COP. In a related story, Bloomberg reports that European natural gas prices fell again (its longest losing streak since July) as EU countries unveiled plans to offset costs, avoid shortages, and help household users.  Elsewhere, AAA reports that US vehicle traffic fell by 3.3% in July.  This was the second consecutive monthly decline in travel that the group reported.  However, year-to-date, the group says miles traveled is up 1.8% over 2021 levels.

In miscellaneous news, Turkey’s President Erdogan told PBS News that Russian President Putin has pressed him on the need for peace.  Erdogan went on to say that the basis of any peace deal would have to be returning all Ukrainian land (including Crimea), but that no leader will ever admit military action was a mistake. Meanwhile, the battle to liberate Luhansk has Russian proxies worried and again threatening to hold a referendum to join Russia (implying Russia would then be free to nuke the rest of Ukraine to guarantee the Donbas then remains in Russian hands).  Elsewhere, US Dollar strength continues as the Euro is back below parity, the British Pound is at its lowest level going back to 1980, and the Japanese Yen is again approaching a 24-year low versus the dollar.  Finally, overnight Switzerland kicked off the week’s rate hikes by increasing its benchmark rate by 1.00%.

Overnight, Asian markets were green across the board.  Australia (+1.29%), Hong Kong (+1.16%), and India (+1.10%) led the region higher as China kept its benchmark interest rate unchanged.  Meanwhile, in Europe, at midday, we are seeing the opposite story taking shape.  Russia’s -4.03% is an outlier in the region and the FTSE (-0.09%) is mostly flat in its first trading since before the Queen’s funeral.  However, the DAX (-0.65%) and CAC (-0.74%) are more typical and lead the region lower.  As of 7:30 am, US Futures are pointing toward another down start to the day.  The DIA implies a -0.33% open, the SPY is implying a -0.40% open, and the QQQ implies a -0.47% open at this hour.  10-year bond yield continue to spike and are now at 3.539% while Oil (WTI) is off 0.4% to $85.39/barrel in early trading.

There major economic news events scheduled for Tuesday include August Building Permits and August Housing Starts (both at 8:30 am), and API Weekly Crude Oil Inventories (4:30 pm).  The major earnings reports scheduled for Tuesday are limited to AJG before the open.  Then after the close, SFIX reports. 

In economic news later this week, Wednesday, August Existing Home Sales, EIA Weekly Crude Oil Inventories, Fed Interest Rate Projections, Fed Rate Decision, Fed Statement, Fed Economic Projections, and the Fed Chair Press Conference all are reported.  On Thursday, we get Q2 Current Account and Weekly Initial Jobless Claims.  Finally, on Friday, we see Mfg. PMI, Service PMI, and Fed Chair Powell speaks again.

In earnings reports later this week, Wednesday, GIS, FUL, KGH, LEN, SCS, and TCOM report.  On Thursday, we hear from ACN, DRI, FDS, AIR, COST, and FDX report.  Finally, on Friday there are no major earnings reports scheduled.

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The downtrend remains in place but the market feels like it is pausing here, waiting on the Fed decision before making any significant moves. However, the vast majority of traders expect a 0.75% hike tomorrow (the futures say the probability is now 82%). You will have to judge for yourself whether the risk is more for a lesser or greater hike. With that said (and ahead of housing data), it looks like we will open with a gap down today. So, beware of the potential for “gap and reverse” like yesterday. Simply, just don’t get caught chasing.

The major indices all remain extended a bit to the downside at this point, at least relative to their T-line (8ema). As mentioned, the trend also remains bearish. However, there is support just below. This indecision is not a good environment for swing trading. This is a “get quick or get out” market where the intraday whip and the daily “gap and chop” could eat your account alive. So, don’t feel the need to trade. Be patient and remember that the first rule of making big money predict in the market is to not lose big money in the market.

Keep in mind that trading is our job. It’s not a hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: BVN, NCLH, LVS, SQQQ, TZA, SPXS, MOS, WMT, NEM, NFLX, NVAX, ZS, PINS, KGC, MRNA, VALE, BAC, JPM, TSLA, FCX, CUK. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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

Bear Gap As Bond Yields Rise For Monday

FDX removing guidance and predicting a global recession had markets spooked on Friday.  As a result, the 3 major indices gapped down (between 1.1% and 1.5%) at the open and has then oscillated sideways in a fairly tight range until 2:30 pm.  At that point the bulls stepped to rally for the rest of the day, closing near the highs of the day.  (However, still the lowest close in two months.)  This action gave us gap-down, indecisive Spinning Top candles across all the major indices.  This will put all 3 major indices in a large Bearish Engulfing signal on the Weekly chart. 

On the day, all 10 sectors are firmly in the red.  The Energy and Industrials sectors led the way lower while Comm. Services and Consumer Defensive held up the best.  SPY fell 1.18%, DIA lost 0.76%, and QQQ fell 0.66%.  The VXX gained 3.45% to 19.81 and T2122 dropped deep into the oversold territory at 5.87.  10-year bond yields are back down to 3.453% and Oil (WTI) is mostly flat at $85.28/barrel.  So, overall, it has been a fearful and yet undecided day in the market as most eyes focus on the Fed decision coming this week.

In Economic news, on Friday, Michigan Consumer Expectations came in slightly above expectations (59.9 vs 59.7 forecast) while current Michigan Consumer Sentiment came in below estimates (59.5 versus 60.0 forecast).  Bloomberg also reported interesting news about the housing markets that points toward the bifurcation of the economy.  If seems that in July nearly one-third of home purchases came in all-cash deals (buyers who paid cash and did not need a mortgage).  Records for such things are not kept, but this seems like a huge percentage. On Saturday, GS cut its US Economic Growth forecast for 2023 from 1.5% to 1.1% after it raised its terminal Fed Rate to 4.25% (Fed Funds have priced in 4.5% terminal).  Finally, in what points toward a downturn, WBD has fired 100 television ad salesmen as NFLX also announced another round of 300 terminations in a cost containment move.

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In stock news, Reuters reported that the details of SEC accounting guidance for any companies that hold cryptocurrency assets (announced on the last day of March) are now fleshed out.  These additional costs and capital reserve holding requirements have caused major lenders (GS, JPM, BK, WFC, STT, etc.) to put cryptocurrency projects on hold (or outright canceled).  After the close Friday, US Dept. of Justice officials have asked the court to take part in oral arguments in the Court of Appeals in the Epic Games vs. AAPL antitrust lawsuit. The DOJ is expected to be on the Epic side, but neither party objected to the DOJ request.  Also, after the close, BMY and ABBV both announced minor job cuts (360 for both companies combined).  On Saturday, the ECB asked AMZN and 4 European companies to submit proposals for the creation of a new Digital-Euro (cryptocurrency). This is part of a two-year prototyping and investigation phase of the project.

In Energy news, Germany took control of a major Russian-owned oil refinery Friday.  (This was the Schwedt refinery owned by Rosneft.  This refinery supplies 90% of the fuel used in Berlin.)  Meanwhile, on Sunday, China’s August gasoline exports were reported as almost double (+97.4%), while its LNG imports for the month fell 28.1% from a year earlier.  Overnight, Bloomberg reported that after a Russian Gazprom unit (seized by Germany earlier this year after the invasion) canceled shipments to India, GAIL India has been forced to buy 3 LNG tankers (for October to November delivery) on the open market, paying twice the price it had previously paid Russia.

In miscellaneous news, the Fed is not the only central bank looking at rate hikes this week.  Japan, the UK, Norway, Sweden, Switzerland, Taiwan, and several other countries all have rate meetings set for this week.  While the Fed is widely expected to continue the inflation-fighting theme with another 0.75% hike, much of the rest of the world (especially places like the Philippines, Indonesia, and even Turkey) is likely to take a softer approach.  (Counting on the US and EU to do the heavy lifting on taming global inflation.)  Speaking of Taiwan, overnight President Biden answered an interview question, stating that the US forces would defend Taiwan from “any unprecedented attack.”  (That was the fifth time he has made a similar statement on Taiwan since the Russian invasion of Ukraine.) Finally, note that the UK markets are closed for the Queen’s funeral and Japan is also closed for a national holiday.

Overnight, Asian markets were nearly red across the board.  Only India (+0.52%) and Thailand (+0.07%) were able to manage to hang onto the green.  Meanwhile, South Korea (-1.14%), Malaysia (-1.08%), and Hong Kong (-1.04%) led the region lower.  In Europe, we see a similar story taking shape at mid-day.  Only Russia (+0.30%) is holding green.  At the same time, the DAX (-0.69%), and CAC (-1.23%) are leading the region lower in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a gap lower to start the day.  The DIA implies a -0.85% open, the SPY is implying a -0.87% open, and the QQQ implies a -0.92% open at this hour.  10-year bond yields are up to 3.506% (the highest level since 2011) and Oil (WT) is down almost 2% to $83.55/barrel in early trading.

There are no major economic news events scheduled for Monday.  The major earnings reports scheduled for Monday are limited to AZO before the open.  (AZO reported a beat on both the top and bottom lines early today.)

In economic news later this week, Tuesday we get August Building Permits, August Housing Starts, and API Weekly Crude Oil Inventories.  Then Wednesday, August Existing Home Sales, EIA Weekly Crude Oil Inventories, Fed Interest Rate Projections, Fed Rate Decision, Fed Statement, Fed Economic Projections, and the Fed Chair Press Conference all are reported.  On Thursday, we get Q2 Current Account and Weekly Initial Jobless Claims.  Finally, on Friday, we see Mfg. PMI, Service PMI, and Fed Chair Powell speaks again.

In earnings reports later this week, AJG and SFIX report Tuesday.  Then Wednesday, GIS, FUL, KGH, LEN, SCS, and TCOM report.  On Thursday, we hear from ACN, DRI, FDS, AIR, COST, and FDX report.  Finally, on Friday there are no major earnings reports scheduled.

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The downtrend continues with the gap lower looking to take at least the SPY and QQQ indices down near to a potential support level. With that said, and while there may be some movement today, many traders are going to be waiting to see whether the Fed gives us any surprises. (Talking heads are all over the place, calling for every scenario from +0.25% to +1.00% on Wednesday. However, traders have priced in +0.75% judging by the Fed Funds Futures.)

The major indices are extended to the downside at this point, far below their T-line and with T2122 deep into the oversold territory. However, we have seen indecision (more wick than candle body) the last 3 days (as well as in the premarket session today). So, expect some volatility after the gap lower…but also be prepared if the market goes dead while traders begin waiting on the FOMC. All we can do is trade the chart (the actual price action) and not what you predict will happen.

Remember that trading is our job, not a pastime or hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No Tade Ideas today. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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