Light News and Earnings Day to Start Short Week
Markets mostly ground sideways Friday. SPY opened up 0.04%, DIA opened down 0.04%, and QQQ opened dead flat. From there, QQQ ground sideways in a tight range until 12:30 p.m. when it started a modest rally lasting to 2:15 p.m. before wobbling sideways the rest of the day. Meanwhile, after its open SPY chopped to the side, back-and-forth across its “gap” all day. For its part, DIA sold off in a very slow and steady manner all day. This action gave us divergent candles. SPY printed a Doji candle, essentially at the same price as Thursday’s close. DIA gave us a black-bodied Bearish Harami of Inverted Hammer type that closed just pennies above its T-line (8ema). However, QQQ printed a white-bodied candle with small upper wick that came within pennies of its all-time high. This happened on well-below average volume in SPY and QQQ as well as below-average volume in DIA.
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On the day, seven of the 10 of the sectors were in the red with Consumer Defensive (-0.73%) and Healthcare (-0.67%) out front leading the way lower. On the other side, Communications Services (+0.60%) and Consumer Cyclical (+0.57%) holding up better than the other sectors. At the same time, SPY was just on the red side of dead flat, DIA lost 0.33%, and QQQ gained 0.42%. Meanwhile VXX was also just on the red side of flat at 42.00 and T2122 fell back into the middle of its mid-range, closing at 56.92. On the bond side, 10-Year Bond yields dropped to 4.478% and Oil (WTI) was down 0.88%, closing at $70.66 per barrel. So, Friday really was mostly a sideways day. There may have been a little rotation from DIA into QQQ, but it was nothing too dramatic. With the light volumes, it almost felt like the big money left early to stretch the weekend even more than it already is stretched at 3-days.
The major economic news on Friday included January Month-on-Month Core Retail Sales, which came in down sharply at -0.4% (compared to a +0.3% and far down from December’s +0.7%). On the headline number, January Month-on-Month Retail Sales, were DOWN SHARPLY to -0.9% (versus a +0.3% forecast and far below December’s +0.7% reading). At the same time, the January Export Price Index was up sharply to +1.3% (compared to a forecasted +0.3% and December’s +0.5%). On the incoming side, the January Import Price Index was only up a tick to +0.3% (versus a +0.4% forecast but up from December’s +0.2% value). Later, January Month-on-Month Industrial Production fell less than expected to +0.5% (compared to a +0.3% forecast but down sharply from the December+1.0% reading). Meanwhile, December Business Inventories were down at -0.2% (compared to a 0.0% forecast and November’s +0.1% value). At the same time, December Retail Inventories came in a -0.1% (versus a +0.2% forecast and November’s +0.5% number).
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Overnight, Asian markets were mostly green with seven of the 12 regional exchanges above break-even. Hong Kong (+1.59%) was by far the biggest gainer while Shenzhen (-1.61%) was the biggest loser. In Europe, we see a similar picture at midday with 10 of the 14 bourses in the green. The CAC (+0.05%), DAX (-0.02%), and FTSE (+0.15%) are typical and lead the region higher in early afternoon trade. Meanwhile, in the US, as of 7 a.m., Futures are pointing toward a higher start to the holiday-shortened week. DIA implies a +0.11% open, the SPY is implying a +0.33% open, and QQQ implies a +0.37% open at this hour. At the same time, 10-Year Bond yields are back up to 4.509% and Oil (WTI) is up 1.00% to $71.45 per barrel in early trading.
There is no major economic news scheduled for Tuesday. However, Fed member Daly speaks (10:20 a.m.). The major earnings reports scheduled for before the open include ALLE, BIDU, CC, CAG, ETR, EXPD, FLR, GPC, IQ, MDT, TPH, VMI, VC, VMC, and WSO. Then after the close, ANET, BKD, CDNS, CE, CYH, COMP, CSGP, CVI, DVN, ESI, EQT, FLS, NGVT, IFF, JHX, LZB, MTDR, OXY, QUAD, RBA, RUSHA, SON, TX, TOL, and UIS report.
In economic news later this week, on Wednesday we get Preliminary January Building Permits, January Housing Starts, FOMC Meeting minutes, and API Weekly Crude Stocks report. Then Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Employment, Philly Fed Mfg. Index, US Leading Economic Indicators, EIA Weekly Crude Oil Inventories, and the Fed Balance Sheet are reported. Finally, on Friday we get Preliminary S&P Global Mfg. PMI, Preliminary S&P Sevices PMI, Preliminary S&P Global Composite PMI, January Existing Home Sales, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer 1-Year Inflation Expectations, and Michigan Consumer 5-Year Inflation Expectations.
In terms of earnings reports later this week, on Wednesday we hear from ADI, BLCO, CRL, CNK, CLVT, CLH, ETSY, GRMN, GIL, HSBC, HBM, JLL, LPX, OGE, PSN, PRG, PHG, SCL, TECK, TNL, TRMB, WWW, AGI, AWK, ANSS, BTG, BHC, BMRN, CVNA, CF, CAKE, CHDN, EQX, EXAS, HLF, HST, ICLR, JXN, KALU, MFC, NGD, NDSN, NOG, NTR, OII, OGS, PAAS, PK, RS, SM, TS, TFII, TOST, VALE and VTLE. Then Thursday, BABA,ALIT, COLD, BAX, BILI, BLDR, CCJ, CVE, CNP, LNG, CSTM, CNR, CWK, DAN, DNB, NVRI, EPAM, ESAB, AG, FCN, GTX, HAS, DINO, HNI, LAMR, DRS, LKQ, NETS, NICE, POOL, PRMB, PWR, SABR, SO, TRGP, TPX, TAC, ULS, UPBD, VAL, WMT, W, AKAM, LNT, AMN, XYZ, BCC, BKNG, CGAU, CENX, ED, CPRT, DBX, EGO, EVH, EXPI, FG, FND, FNF, FYBR, GLOB, GMED, IAG, PODD, LYV, MELI, NEM, NU, RXT, REZI, RNG, RIVN, RYAN, RYI, RHP, SEM, SFM, TXRH, ICI, and WSC report. Finally, on Friday, we hear from TDS, TXNM, VIPS, and HE.
So far this morning, ALLE, BIDU, and ETR reported beats on both the revenue and earnings lines. Meanwhile, MDT and TPH missed on revenue while beating on earnings. On the other side, CC and GPC beat on revenue while missing on earnings. However, FLR missed on both the top and bottom lines.
With that background, it looks like the market wants to gap modestly higher (at least early this morning). All three major index ETFs have opened the premarket with a modest gap higher and, so far, have printed tiny, indecisive candles (QQQ and DIA have tiny black bodies and SPY a tiny white body). DIA did briefly run down to retest its T-line (8ema) from above and has, so far, passed that test. It is also worth noting that this morning’s gap and action has taken QQQ to new all-time highs. So, at this time, all three remain above their T-line, meaning the short-term trend is modestly bullish. The mid-term trend remains a choppy sideways mess. At the same time, the long-term trend remains bullish. In terms of extension, after the premarket gap-up, QQQ is starting to get a bit stretched to the upside. However, the other two major index ETFs remain close to their T-line. Meanwhile, T2122 sits in the middle of its mid-range. So, both sides of the market have room to work today if they can find momentum. In terms of the Big Dogs, nine of the 10 are in the green with INTC (+6.06%) far out front (by 5%) leading the tech sector higher. On the other side, META (-0.20%) is the laggard and only Big Dog in the red this morning. As far as liquidity goes, TSLA (+0.91%) has traded 50% more dollar volume as NVDA (+1.05%), which itself has traded twice as much as INTC.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
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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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