Wednesday started off with a Bearish gap (down 0.45% in the SPY, down 0.30% in the DIA, and down 0.48% in the QQQ).  The two large-cap index ETFs continued lower for the first hour, reaching the lows of the day at about 10:30 am before grinding sideways until about 1 pm.  At that point, the bulls led a rally back up to the opening level by 2 pm and then another sideways chop into the close.  Meanwhile, QQQ rallied the first 30 minutes of the day, fading the opening gap before the Bears stepped back in at 10 am.  The tech-heavy NASDAQ reached the lows of the day at about 11:30 am and then also ground sideways until 1 pm before rallying back to the opening level at about 1:35 pm. From there, we saw a much wavier sideways action all the way into the close.  This action gave us gap-down Doji candles in all three major indices.  The QQQ is still well above its T-line (8ema), while the SPY retested its T-line (from above) and held on the day.  The DIA retested its own T-line from below and remained below that level.. 

On the day, seven of the 10 sectors were in the red with Energy (-1.78%) way out in front pulling the rest of the market lower while Utilities (+0.72%) and Healthcare (+0.67%) held up better than the other sectors. At the same time, SPY lost 0.68%, QQQ lost 0.57%, and DIA lost 0.30%.  VXX fell 0.78% on the day to end at 34.46 and T2122 fell just into the oversold territory at 17.77. 10-year bond yields fell again to 3.645% while Oil (WTI) plummeted another 2% to end the day at $68.02 per barrel.  So, Wednesday was a bearish day as markets seemed to fear that the House won’t get the Debt Ceiling bill passed and that might give MAGA Senators the ability to stall the deal in the Senate past the deadline causing a debt default.  However, as the day progressed, House Democrats helped Speaker McCarthy get the bill to a floor vote last night.  So, traders were left unsure and that gave us an indecisive day on the Bearish side of neutral.  This all happened on average volume across the three major indices.  

In major economic news Wednesday, the May Chicago PMI came in well below what was expected at 40.4 (compared to a forecast of 47.0 and the April reading of 48.6).  This was the worst reading in six months and indicates there is a contraction in the Manufacturing sector in the Chicago region.  Later, the April JOLTs Job Openings number was higher than anticipated at 10.103 million (versus a forecast of 9.775 million and a March value of 9.745 million).  The new openings came mostly in Retail, Healthcare, Transportation, and Warehousing.  After the close, the API Weekly Crude Oil Stock Report showed a significant unexpected inventory build of 5.202-million-barrels (compared to a forecast of a drawdown of 1.220-million-barrels and a vast swing from the previous week’s 6.799-million-barrel drawdown).

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In Fed speak, early Wednesday Cleveland Fed President Mester (hawk, not a voter) told the Financial Times that (in her estimation) the FOMC does not have a “compelling reason” to pause on its interest rate hikes at the upcoming June Meeting.  A bit later, Fed Governor Bowman (hawk and voter) told a Boston audience that she thinks the rebounding residential housing market could impact how the Fed acts next in the inflation fight.  She said the Fed has been waiting on falling rents to have an impact on headline inflation numbers, but real estate prices have been rising.  However, she said that now home prices have been “leveling out recently, which has implications for our fight to lower inflation.” (She did not explain how or when it might impact decisions.)  On the other side, Philly Fed President Harker (borderline dove and voter) said he is in the pause camp.  He told an event Wednesday afternoon, “I think we can take a bit of a skip for a meeting,” … “I am definitely in the camp of thinking about skipping any increase at this (coming) meeting.”  Finally, Fed Governor Jefferson (hawk and voter) said, “A decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle,” which has been taken as hawk approval of a pause. 

In stock news, INTC’s CFO relieved some market fear over sales as he told an investor conference that he sees Q2 Revenue tracking at the upper end of previous guidance. (The fear came from the fact INTC has no AI products and is not participating in the recent AI-chip craze.)  Later, WMT announced shareholders had sided with the CEO and defeated all nine investor-proposed proposals (including revealing China risk exposure, conducting an independent safety review, and disclosing company political contributions).   Elsewhere, TSLA has begun shipping its cars to customers with only a 50% charge (and also giving the customer TSLA Supercharging credits) as a safety measure.   At the same time, the CEO of F said that his company’s cost to produce electric vehicles may not drop to match its cost to produce gasoline vehicles until 2030.  (Analysts had been projecting cost parity by 2025.)  At the close, DOW announced it is cutting its Q2 revenue forecast while citing slower macroeconomic growth (specifically noting weaker Chinese demand) and weaker market prices.  After the close, Reuters reported more than 100 AMZN corporate employees walked off the job in protest of the company’s “return to office” and climate policy changes on Wednesday afternoon.  (This work stoppage only happened in Seattle, but more than 1,900 AMZN employees globally have pledged to protest over those issues.)  Also in after-hours news, LCID announced it has raised $3 billion through a new equity offering (the majority bought by the Saudi Sovereign Wealth Fund).  Finally, the Biden Administration has agreed to let GE build jet engines for Indian military aircraft.  (The agreement will be announced during President Biden’s June 22 visit to India.)

In stock legal and regulatory news, CHWY won a US Appeals Court case, invalidating the company’s 2019 $13,000 fine related to workplace safety after the death of an employee.  The ruling said, “The retail industry as a whole lacked notice of the engineering reconfiguration requirements that OSHA now alleges are mandatory”.  Later, AMZN agreed to pay the FTC $25 million to settle allegations it has violated children’s privacy rights by having the Alexa voice assistant constantly monitoring conversations.  In a separate case, the AMZN agreed to pay the FTC $5.8 million for violating privacy by having its Ring Doorbell system include cameras that were placed in the bedrooms and bathrooms of female customers in 2017 (again, constantly recording and sending data to the company).  Meanwhile, META threatened to remove all “news” content from the view of users in the state of CA. This came in reaction to a CA state bill that would require online platforms to pay news publishers a usage fee for republishing their news stories (the same issue that has been faced in Australia, Canada, and Europe).  Elsewhere, BA said it is taking a “considerable amount of time” to get FAA approval of the company’s 737 MAX 7 and 10 planes.  The company spokesman went on to say they “hope” the 737 MAX 7 will still be certified by the end of this year and 737 MAX 10 certification is projected still to be sometime in 2024.  (LUV has already pushed back plans to have the 737 MAX 7 in service into 2024 after initially having it scheduled to be in service this summer.)  After the close, the NHTSA announced that F has recalled 142,000 2015-2019 Lincoln SUVs over fire risk.  At the same time, a new trial over JNJ talc asbestos claims began in CA.  This overrides the company’s attempt to settle claims and avoid liability via the “Texas Two-Step Bankruptcy” of a subsidiary.

In debt ceiling news, the Congressional Budget Office (nonpartisan) announced late Tuesday that the new work requirements the GOP had said would save money, would actually cost money because the agreement exempted veterans and the homeless.  This complicated things on the GOP side, reducing what they can claim when talking to their supporters. Later, 52 House Democrats crossed the aisle to vote with the majority of GOP members in a procedural vote which allowed a final floor vote.  Then last night, after hours of tedious posturing speeches, the House did pass the bill 314-117 with the support of 165 Democrats and 149 Republicans (bipartisan support).  After this vote was finalized, late last night Senate Majority Schumer stood in a virtually empty Senate chamber to place the bill on the calendar for today.  Senate leaders of both parties hope to see the bill passed within 48 hours.  However, the Senate rules make it easy for a single Senator to grind the process to a halt.  And, at least two Senators (Lee and Rand) have publicly said they want to see the bill stopped.  So, the solution seems to be progressing.  However, it’s not quite a done deal yet.

After the close, CRM, JWN, CHWY, PVH, NTAP, PSTG, VEEV, CRWD, and OKTA all reported beats on both the revenue and earnings lines.  Meanwhile, NGL and VSCO both missed on both the top and bottom lines.  CRM, VEEV, and OKTA all raised their forward guidance while VSCO lowered its guidance.

Overnight, Asian markets were mixed.  New Zealand (+0.87%) and Japan (+0.84%) were by far the largest gainers.  Meanwhile, Thailand (-0.79%) was by far the biggest loser on the day.  In Europe, the bourses are green across the board at midday.  The DAX (+1.11%), CAC (+0.67%), and FTSE (+0.39%) are leading the region higher in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a start to the day just on the green side of flat.  The DIA implies a +0.03% open, the SPY is implying a +0.24% open, and the QQQ implies a +0.20% open at this hour.  At the same time, 10-year bond yields have risen to 3.664% and Oil (WTI) is down another seven-tenths of a percent to $67.63 per barrel in early trading.t.  

The major economic news events scheduled for Thursday include ADP May Nonfarm Employment Change (8:15 am), Weekly Initial Jobless Claims, Q1 Nonfarm Productivity, and Q1 Unit Labor Costs (all three at 8:30 am), May Manufacturing PMI (9:45 am), ISM May Mfg. PMI (10 am), EIA Crude Oil Inventories (11 am), Fed Balance Sheet, and Bank Balances with the Fed (both at 4:30 pm).  We also get a Fed speaker (Harker at 1 pm).  The major earnings reports scheduled for the day are limited to BILI, DOOO, CAL, DG, HRL, M, and SPTN before the open. Then after the close, AVGO, COO, DELL, FIVE, and LULU report. 

In economic news later this week, on Friday, we get May Avg. Hourly Earnings, May Nonfarm Payrolls, May Private Nonfarm Payrolls, May Participation Rate, and May Unemployment Rate.  In terms of earnings reports later this week, there are no major reports scheduled for Friday.

In miscellaneous news, DB released a study Wednesday saying a wave of bank loan defaults is imminent in the US and Europe.  The study expects the peak of defaults to be in Q4 of 2024 and cites the “fastest monetary tightening cycle in 15 years” as the primary cause.  With that said, the study said default risks are higher in the US than in Europe and it estimates an 11.3% peak default rate for loans in the US.  In a related story, the FDIC said Wednesday that it has added four lenders to its confidential list of “problem banks,” increasing the number on the list to 43.  Elsewhere, after all the Fed speak on Wednesday, traders dramatically shifted the probabilities (based on Fed Fund Futures) of a rate hike at the upcoming June 14 Meeting.  The Fedwatch Tool tells us this morning 72% of traders expect no rate change with 28% still expecting another quarter-point hike.

So far this morning, M, DOOO, and BILI all reported beats on both the revenue and earnings lines.  Meanwhile, HRL, SPTN, and CAL all reported misses on revenue but beat on the earnings lines.  Unfortunately, DG missed on both the top and bottom lines.  So far, there have been no changes made to guidance.  In terms of surprises, M gave us the only significant shock with a 22% upside surprise on earnings (even though that number also represented a 48% earnings decline).

With that background, it looks like the market is still undecided this morning, giving us a premarket candle inside Wednesday’s candle at this point. The DIA seems to want to retest its T-line from below while the QQQ may be thinking about working on a J-hook pattern. For its part, the SPY is just treading water this morning. Perhaps traders are waiting on all the data to come later this morning. The QQQ is a little closer to its T-line than it has been but remains the most extended of the three major index ETFs. Meanwhile, the T2122 indicator is now just inside the oversold territory. Just remember, the economic data is likely to revive talk about whether the Fed will hike rates again in two weeks and news out of the Senate (related to stalling the Debt Ceiling bill) may throw a wet blanket on the Bulls. So, be cautious and ready for volatility.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

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

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

Markets opened modestly higher on Friday (gapping up 0.17% in the SPY, up 0.30% in the QQQ, and up just 0.12% in the DIA).  However, this open just fueled the Bulls to rally strongly until 11 am in all three major indices. At that point, the two large-cap index ETFs ground sideways (with a very slight bullish trend in the SPY and a slight Bearish trend in the DIA) for the rest of the day.  At the same time, QQQ trended modestly higher from 11 am to 3:15 pm, before taking profit the last 45 minutes of the day.  This action gave us gap-up large white-bodied candles with smaller upper wicks in all three major index ETFs.  The DIA also printed a Morning Star signal (while just failing to close above its T-line (8ema) after a retest.  SPY did cross back above its T-line and QQQ is now very extended above its T-line. 

On the day, all 10 sectors were in the green with Technology (+2.56%) way out front leading the market higher, and Energy (+0.06%) and Healthcare (+0.10%) lagging way behind the other sectors. At the same time, the SPY gained 1.30%, DIA gained 0.94%, and QQQ gained 2.56%.  VXX dropped 3.83% on the day to end at 35.65 and T2122 climbed back up into the mid-range at 50.84. 10-year bond yields fell slightly to 3.81% while Oil (WTI) gained 1.32% to end the day at $72.78 per barrel.  So, Friday was the Tech Bulls’ Day again, with TSLA (+4.72%), AMD (+5.55%), and AMZN (+4.44%) pulling the rest of the QQQ and SPY upward on the promise of AI-based chip sales after a blowout report from MRVL.  Fear of a US Debt Default fell off as all day the reports said a deal was very close.  This all happened on greater-than-average volume in the QQQ and DIA and slightly below-average volume in the SPY.   

In major economic news Friday, April Durable Goods Orders came in much stronger than expected at +1.1% (compared to a forecast of -1.0% but still much weaker than the March reading of +3.3%).  At the same time, the April PCE Price Index also came in stronger than expected on the annual rate at + 4.4% year-on-year (versus a forecast of +3.9% and a March value of +4.2%).  On the month-on-month metric, April PCE Price Index came in right on target at +0.4% (against a forecast of +0.4% but still stronger than the March +0.1% reading).   Meanwhile, the April Personal Spending month-on-month came in very hot at +0.8% (versus the forecast of +0.4% and much higher than the March reading of +0.1%).  On the business side, Preliminary April Retail Inventories showed a decline of 0.1% (compared to the March 0.1% increase).  Later in the morning, Michigan Consumer Sentiment came in higher than anticipated at 59.2 (versus a forecast of 57.9 but still less than the April value of 63.5).  These measures show a stronger consumer than economists have been expecting with a slightly better outlook for the future. 

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In stock news, the IPO of ATMU, Atmus Filtration Technologies (a spinoff of CMI), opened at $21.67 and closed at $22.40 after pricing at $19.50/share on Thursday night.  CMI raised $275 million from the IPO and retains 83% control of the company. Meanwhile, Mexican President Lopez Obrador said Friday that his government may buy up 50% of the stock in Banamex (the C Mexican subsidiary, which C announced Wednesday it would spin off via IPO).  He told the press Mexico has $3 billion for this purchase and if his stock valuation is anywhere near correct it means C will take a major hit on the unit (which it purchased for $12.5 billion in the early 2000s).  On Saturday, MSFT announced it will discontinue some of its hardware products like ergonomic keyboards.  Elsewhere, in a potential blow to major importers (AMZN, DOLE, TGT, WMT, FDP, LOW, HD, etc.) the Panama Canal has ordered ships to lighten their loads and also increased transit fees due to a severe drought lowering the level of lakes used to flood docks over the course of the canal.

In stock legal and regulatory news, a US judge approved $50 million settlement of a class-action lawsuit against AAPL over defective MacBook keyboards.  Elsewhere, MSFT laid out the grounds of its appeal against the British Competition and Markets Authority’s veto of the company’s acquisition of ATVI.  MSFT said its appeal is based on “fundamental errors” in the CMA’s assessment of the company’s cloud gaming services.  At the same time, six major European insurers have quit the Net-Zero Insurance Alliance (aimed at forestalling climate change by committing to reduce greenhouse gases) in the 36 hours prior to the Friday close.  The insurers all cited US Republican political attacks (on behalf of fossil fuel industries) as the GOP has prioritized the financial health of those industries over climate.  Bank of England Governor (and co-chair of the COP26 project) Carney decried the losses and warned the political attacks are now interfering with the Insurance industry’s ability to price climate risk, harming their investors, policyholders, and the local governments that will suffer climate impacts.  Meanwhile, ETRN’s long-delayed Mountain Valley natural gas pipeline (in WV and VA) was dealt another legal blow Friday.  The US District Court in DC ruled that the US Federal Energy Regulatory Commission had “inadequately explained its decision not to prepare a supplemental environmental impact statement” (that would address the) “unexpectedly severe erosion and sedimentation along the pipeline’s right-of-way.”  Later, PFE and MRNA were sued by ALNY over patent infringement related to the two company’s COVID-19 vaccines.  The ALNY suit seeks unspecified damages, but PFE made $37.8 billion and MRNA made $18.4 billion from the sale of the vaccines in question.  Finally, a San Francisco Federal jury awarded SONO $32.5 million in its suit against GOOGL over patent infringement related to wireless audio devices.

In debt ceiling news, on Friday, Treasury Sec. Yellen announced that numbers were refined and it has now been determined that June 5 would be the actual date of default (as opposed to “as soon as June 1”).  However, by Saturday afternoon, the two sides had reached an agreement.  The deal increases the debt ceiling enough to avoid a similar situation for two years.  It raises defense spending by a whopping 11% over 2023 even kicking in an additional (unexpected) 3% while keeping non-defense spending roughly flat in 2024 (versus ’23 levels) and then increasing it by 1% in 2025.  The deal phases in some work requirements for SNAP (food stamps) but then ends those same work requirements in 2030.  It also rescinds about $30 billion in unspent COVID-19 aid (not to include veterans’ medical care or $5 billion for creating the next generation of vaccines and treatments).  The agreement also calls for a “lead environmental agency” to develop new comprehensive environmental reviews intended to appease the oil and gas industry by theoretically speeding up project approvals.  

Nobody wins or loses a negotiation.  However, based on reactions, it appears the MAGA faction of Republicans believes they lost.  There is enough there for them to claim credit (such as reducing IRS staffing).  However, the lack of reality in what they promised “they” would do and the fact that outrage is their political style likely means they were always going to be “the loser” of any deal.  On the other side, many of the most Progressive Democrats may well feel similarly (related to work requirements on SNAP and the loss of funding to increase IRS enforcement on the top one percent).  However, at least as of now, that group has expressed their concerns in a less bombastic way.  For the markets, it is expected that we do see those extremists (maybe both sides, but the GOP side is the one to watch) threaten to kill or at least delay a vote on the deal until there is a default.  Concerningly for us traders, I have heard commentators imply that the President and Speaker are counting on market turmoil to apply pressure to the extremists and get the bill turned into law. That may mean the war of words is not over…or may ramp up this week. Votes are scheduled to begin on Wednesday in the House.

Overnight, Asian markets were mixed and split evenly in number.  South Korea (+1.04%) was by far the biggest gainer while Malaysia (-0.57%) lost the most.  All of the other exchanges fell in the middle on modest moves.  Meanwhile, in Europe, we see a similar story taking shape at midday.  The DAX (+0.56%), CAC (-0.36%), and FTSE (-0.50%) lead a mixed region with on massive moves underway in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing to a green start to the morning.  The DIA implies a +0.14% open, the SPY is implying a +0.55% open, and the QQQ implies a +1.13% open at this hour.  At the same time, 10-year bond yields are down sharply to 3.719% and Oil (WTI) is off 1.13% to $71.85 per barrel in early trading.

The major economic news events scheduled for Tuesday are limited to Conference Board Consumer Confidence (10 am).  The major earnings reports scheduled for the day are limited to ESLT and SKY before the open.  Then after the close, HPE, HPQ, YY, AND UHAL report.  

In economic news later this week, on Wednesday, we get Chicago PMI, April JOLTs Job Openings, Fed Beige Book, API Weekly Crude Oil Stocks Report and two Fed speakers (Bowman and Harker).  Then Thursday, ADP May Nonfarm Employment Change, Weekly Initial Jobless Claims, Q1 Productivity, Q1 Unit Labor Costs, May Manufacturing PMI, ISM May Mfg. PMI, EIA Crude Oil Inventories, Fed Balance Sheet, Bank Balances with the Fed, and a Fed speaker (Harker) are reported.  Finally, on Friday, we get May Avg. Hourly Earnings, May Nonfarm Payrolls, May Private Nonfarm Payrolls, May Participation Rate, and May Unemployment Rate.

In terms of earnings reports later this week, on Wednesday, AAP, CAE, CPRI, CD, DCI, HOV, CHWY, CRWD, NTAP, NGL, JWN, OKTA, PSTG, PVH, CRM, and VEEV report.  Then Thursday, we hear from BILI, DOOO, CAL, DG, HRL, M, SPTN, AVGO, COO, DELL, FIVE, and LULU.  Finally, on Friday, there are no major reports scheduled.

So far this morning, ESLT beat on revenue while missing on earnings.  On the other side, SKY missed on revenue while beating on earnings.  (TNP reports at 8:20 am.)

With that background, it looks like the Bulls are frisky again this morning in the QQQ and SPY. The tech-heavy NASDAQ will be gapping to levels not seen in 14 months with prices now near the overnight highs similar to how they were in premarket Friday. The SPY is gapping as well but has backed off early highs. Still, an open where it sits now will take the main index ETF back to levels not visited since August of last year. However, the stodgy mega-caps remain just in the red and are at their premarket lows. If we open at this level, DIA will be just under its T-line and not giving the follow-through to the Friday Morning Star that the Bulls would have been hoping to get. QQQ is very extended from its T-line while SPY may also be just a bit stretched (both to the upside). Still, the T2122 indicator sits right in the mid-range, telling us we have some room to run. Just remember, the Debt Ceiling may be agreed upon by leaders but there are plenty of people who may decide it is a better political move to throw a wrench in the works (coincidentally getting a lot of headlines in the process) than it would be to get the bill approved and move on to other business. This is particularly true since the deadline has been shown to not hit until June fifth. So, beware of volatility and news risk.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

On Thursday, the major indices diverged greatly at the open.  The SPY gapped up 0.92%, QQQ gapped up a massive 2.29%, but the DIA opened flat (down 0.02%).  SPY immediately faded half of its gap higher and then went through wild fluctuations until noon.  At that point, a volatile rally took over for the rest of the day but ended on a down wave the last 15 minutes.  Meanwhile, QQQ followed up its gap higher by fading a third of the gain in the first hour before rallying strongly back above the open by 11 am.  From there, it rode waves slightly bullishly to the highs of the day at 2 pm.  QQQ then had a significant selloff and recovery before taking profits for the last 15 minutes of the day.  However, after its flat open, DIA sold off, ground sideways, and sold off again, reaching the lows of the day at about noon.  From that point, the mega-cap index ETF rode a wavy rally back to break even before taking profits on those last 15 minutes.  This action left us with three indecisive Doji candles (a gap-up Dojis in the QQQ and SPY as well as a flat Doji in the DIA.

On the day, eight of the 10 sectors were in the red with Technology (+2.45%) way out front leading the market higher and Energy (-2.04%) and Communication Services (-1.92%) lagging far behind the other sectors.  At the same time, the SPY gained 0.86%, DIA lost 0.08%, and QQQ gained 2.43%.  VXX fell 2.34% on the day to end at 37.07 and T2122 climbed but remains in the oversold territory at 14.52. 10-year bond yields spiked up to 3.819% while Oil (WTI) plummeted 3.31% to end the day at $71.88 per barrel.  So, Thursday was the Tech Bulls’ Day, with NVDA (+24.37%) and AMD (+11.16%) pulling the rest of the QQQ and SPY upward on the promise of AI-based chip sales after the NVDA report. However, fear of a US Debt Default pulled downward against that exuberance, weighing most heavily on the stodgy, mega-cap DIA.  It is worth noting that QQQ had above-average volume, DIA had average volume, and SPY had just below-average volume for the session.    

In major economic news Wednesday, Q1 GDP was revised upward to +1.3% (versus a forecast of +1.1% and the Q4 reading of +2.6%).  However, the Q1 GDP Price Index also was revised up slightly to +4.1% (compared to an expected +4.0% and the Q4 value of +3.9%).  At the same time, Initial Weekly Jobless Claims came in far below the expected number at 229k (versus the forecast of 250k but still more than the prior week’s 225k).  Later, April Pending Home Sales were reported at dead flat +/-0.0% (as compared to a forecast of +0.5% but much better than the March reading of -5.2%).  After the close, Bank Reverse Balances with the Fed were reported at $3.251 trillion (down $29 billion from last week’s $3.280 trillion value).

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In stock news, Nippon Steel continued its talks with the Management of TECK about taking a stake in the coking coal miner, despite the GLNCY bid (opposed by TECK mgmt.) to buy TECK.  At the same time, CMI has decided to brave debt ceiling risks to price an IPO for its filtration unit.  This new IPO will begin trading Friday.  Meanwhile, ILMN saw the Chair of its board voted out as activist investor Icahn (Chair of IEP) led an investor revolt.  However, two of Icahn’s board nominees failed to be elected and the CEO also retained his seat.  Elsewhere, the CEO of F (Farley) told an MS investor conference “I think we see the Chinese as the main competitor, not GM or Toyota” … “The Chinese are going to be the powerhouse.”  Interestingly, on the same day, F struck a deal with TSLA to allow F electric vehicle owners access to the TSLA supercharger network as of early 2024.  On a day when AI reigned in the market, MSFT President Smith told a Washington DC audience that deep fakes are the biggest AI concern.  “We’re going have to address the issues around deep fakes. We’re going to have to address in particular what we worry about most foreign cyber influence operations, the kinds of activities that are already taking place by the Russian government, the Chinese, the Iranians,” he said. He went on to call on President Biden to use an Executive Order to force federal agencies that use or deal with AI in any way to adopt and comply with a framework developed by the US NIST in 2020. Smith also called for the creation of a new federal agency dedicated to regulating AI.

In stock legal and regulatory news, in the afternoon, German authorities announced that they received serious indications of possible data protection violations by TSLA.  They cited 100gb of confidential TSLA customer and former/current employee data (including names, social security numbers, salaries, bank details, addresses, email, phone numbers, etc.) leaked to German newspaper Handelsblatt.  TSLA European HQ has been notified of the investigation and the matter has also been reported to the EU over GDPR violations.  Elsewhere, the US State Dept. followed up on MSFT’s report Wednesday by Thursday announcing that Chinese hackers had targeted both US and Western countries’ governments and public infrastructures. The report went on to say that FTNT products had been compromised and were being used by the Chinese “Volt Typhoon” group of attacks.  Later, a US district judge refused to dismiss a case, ruling that BAC must face allegations that it failed its responsibility by permitting unauthorized transactions on CA unemployment and disability benefit cards.  (BAC paid $225 million to settle cases brought by two US agencies over very similar matters in 2022.)  After the close, the New York City Banking Commission voted to freeze NYC deposits in COF and KEY after the two banks failed to file plans to eliminate discrimination from their operations.

In debt ceiling news, mid-morning Thursday, Representative Hern (head of GOP caucus) told Reuters the he believed it likely a debt-ceiling deal would be done by Friday afternoon.  He said “I think it’s some of the finer points they are working on right now,” … “You are likely to see a deal by tomorrow afternoon.”  (That makes sense as Speaker McCarthy has promised his conservative faction three days to read the deal.  So, a Friday afternoon deal gives them the normal 3-day weekend off to “read” the deal with a vote on Tuesday.)  By mid-day, Reuters sources inside the negotiations said the two sides were just $70 billion apart and they were edging close to a deal.  However, the source also said what is likely to emerge is just a “slimmed-down version” of an agreement rather than the hundreds of pages of detail the full bill will require. A second source in the room told Reuters that top-line numbers will be hammered out allowing both sides to declare victory while the fine details of what actually gets cut and what gets funded at what level) will all be worked out in future appropriations bills.  If that is true, it begs the question of why the hell the Congress (GOP) took us through this entire song and dance.  If there is no budget now, will be no budget after the deal (because this is not about a budget it’s about permissible debt), and the plan all along has been for Congress to actually budget by releasing appropriations at a line-item, fine-detail level…then this whole debt ceiling fiasco was just a publicity stunt for conservative lawmakers.  They could have done the same thing without all of the drama.

After the close, ULTA, MRVL, WDAY, RH, LGF.A, and DECK all reported beats on both the revenue and earnings lines.  Meanwhile, COST, GPS, and ADSK all missed on revenue while beating on earnings.  It is worth noting that DECK lowered its forward guidance.  The surprises included a 200% upside earnings shock from LGF.A, a 106% upside earnings surprise from GPS, and a 33% upside earnings shock from DECK.

Overnight, Asian markets leaned to the green side, but the biggest mover was toward the red.  Hong Kong (-1.93%) and New Zealand (-1.09%) showed the only appreciable losses on the day.  Meanwhile, Taiwan (+1.31%) and India (+0.97%) led the more numerous green exchanges higher to end the week.  In Europe, the bourses are mostly green on modest moves at midday.  Greece (+1.45%) is the exception to the rule with the CAC (+0.22%), DAX (+0.10%), and FTSE (+0.20%) leading the region higher in early afternoon trade.  In the US, as of 7:30 am, Futures point toward a modest green start to the day.  The DIA implies a +0.15% open, the SPY is implying a +0.19% open, and the QQQ implies a +0.36% open at this hour.  At the same time, 10-year bond yields are retreating to 3.789% and Oil (WTI) is up nine-tenths of a percent to $72.49/barrel in early trading.

The major economic news events scheduled for Friday include April Durable Goods Orders, April Goods Trade Balance, April PCE Price Index, April Personal Spending, and April Retail Inventories (all at 8:30 am), and Michigan Consumer Sentiment (10 am).  The major earnings reports scheduled for the day are limited to BIG, BAH, and HIBB before the opening bell.  There are no reports scheduled for after the close.  

So far this morning, KT, PDD, and BAH reported beats on both the revenue and earnings lines.  However, BIG and HIBB both missed on the top and bottom lines.  It is worth noting that HIBB has lowered its forward guidance.  Notable surprises include an 82% downside earnings shock from BIG and a 76% upside earnings surprise from PDD (which also delivered 187% earnings growth for the quarter).

In miscellaneous news, after-hours Thursday, CNBC reported that JPM is developing a “ChatGPT-like” AI named “IndexGPT” to give investment advice to its customers.  The US Supreme Court dealt a blow to the EPA’s ability to regulate pollution by ruling in favor of a couple who had sued to fight the designation of their lakefront property as Wetlands.  The ruling put new rules (written by the conservative majority) on the Clean Water Act which Bloomberg says will make it harder to stop pollution done on private property.  Finally, META has offered to “limit use of other businesses’ advertising data” for its own Facebook Marketplace offerings in a proposed concession to the British Competition and Markets Authority (anti-trust watchdog).  Using the product/price offerings, advertising, and sales (order click) data from other companies that use META as an advertising platform had always been a primary strategy of the company.  While doing it less to UK businesses is a step in the right direction, this is not final and was not a META commitment to any other country.

With that background, it looks like the Bulls are frisky again this morning with price now at the highs of the overnight trading in the SPY, QQQ, and DIA. SPY appears to be crossing back above its T-line (if premarket price holds) while QQQ is pulling away from its own 8ema to highs not seen in more than 13 months. Of course, DIA has the most work to do and must break its downtrend and deal with a resistance level immediately if the bulls are going to take it higher. Extension is not a problem in SPY obviously. DIA is also good in that department if premarket trends hold. However, QQQ is getting extended from its T-line to the upside. The T2122 indicator tells us the market remains oversold. With all of this said, we have to remember that this is the Friday before a 3-day weekend and there is still a lot of potential for politicians to throw a wrench into market works (drama for drama’s sake) related to the Debt Ceiling. (Not only today but over the long weekend as well.) So, be careful and position your account for the day and the long news cycle ahead. Take profits, move stops, lighten up, and consider the appropriate hedges.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

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

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

Markets gapped lower on Wednesday (down 0.40% in the SPY, down 0.21% in the DIA, and down 0.60% in the QQQ).  The bears then followed through for an hour in all three major indices.  At that point, all three then ground sideways near the lows for 4.5 hours.  However, at that point, the Bulls stepped in to rally strongly for 25 minutes only to see a selloff the last 25 minutes of the day.  This action gave us a gap-down black-bodied Spinning Top in the SPY, a gap-down white-bodied Doji-type candle in QQQ, and a gap-down black-bodied large candle (with small wicks at each end) in the DIA.  This all happened on above-average volume in the QQQ and just less-than-average volume in the two large-cap indices.

On the day, nine of the 10 sectors were in the red with Basic Materials (-1.72%) out in front leading the way lower as Energy (+0.13%) was the only sector in the green and, again, held up considerably better than the others.  At the same time, the SPY lost 0.72%, DIA lost 0.79%, and QQQ lost 0.51%.  VXX gained 4.03% on the day to end at 37.96 and T2122 fell but remains in the mid-range at 39.79. 10-year bond yields spiked up to 3.746% while Oil (WTI) climbed 1.71% to end the day at $74.16 per barrel.  So, Wednesday was the Bears’ Day as markets were spooked by fear of default grew (for the most part on GOP posturing and messages to the press, but certainly not helped by Treasury Sec. Yellen).  However, it is notable that a handful of the tech “big dogs” did resume trying to hold the market up tech names were holding up markets (NFLX, AMZN, and META in particular).    

The only economic news Wednesday, EIA Weekly Crude Oil Inventories showed a huge and unexpected 12.456-million-barrel drawdown of inventory (compared to a forecasted 0.920-million-barrel drawdown and the prior week’s 5.040-million-barrel build of inventory).  This was in addition to a 1.6-million-barrel release from the strategic petroleum oil reserves during the week.  So, the draw was actually more than 14 million barrels.  In addition, Treasury Sec. Yellen spoke during the day, answering questions on a variety of topics.  On the topic of inflation, she said that “inflation has come down very meaningfully” and went on to cite headline inflation as having fallen more than four percent from the peak and gas prices down more than $1.50 a gallon.  On labor, she said (that the US labor market) “is a bit less hot” and has seen a big rise in participation but also “the labor market remains tight.”  Related to bank consolidation, Yellen said greater concentration among big banks is undesirable, going on to say that diversity (between small, mid-sized, and big banks) is vital with each group serving a different need in the market.  So, while she had said a few days ago that there may be more consolidation in the banking sector, she opposes consolidation among the big banks (JPM, C, BAC, WFC, GS, MS).  Elsewhere, (and contrary to conventional wisdom) Fed Governor Waller said that while an inverted yield curve in the context of stable inflation usually points to a bad economic outlook…the current yield curve may signal better times ahead.  He told a University of CA economic conference “What you’re seeing in the inversion is not so much fears about bad economic outcomes in the future, but belief and trust that we’re going to bring inflation back down and rates will be lower in the future once we do that,”.  (Whether you believe him, you believe he really believes that, or whether it is true…you be the judge.)

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In stock news, sadly, TGT announced it is removing some LGBTQ-themed products from their stores “in order to safeguard stores and employees” as well as because of the pressure from groups opposed to such products.  At the same time, C announced it’s scrapping the idea of selling its Mexican unit (Banamex) after failing to find a buyer at what it believed was a fair price.  Instead, C intends to spin off that unit in an IPO in 2025.  Meanwhile, the largest shareholder of FRPT (Jana Partners) said it intends to pursue a proxy fight (July annual meeting) as it will seek to replace four board members.  The announcement came as Jana heavily criticized management and the board’s supervision of them.  Later, Bloomberg reported that AAPL is preparing to introduce a new interface for all its “iProducts” with a smart display that will appear on locked devices.  (Bloomberg said it will be announced at AAPL’s June 5 Developer Conference.)  Elsewhere, META has begun the next round of its previously announced elimination of 10,000 jobs.  This round of layoffs is focused on business teams (marketing, program management, content strategy, corporate communications, etc.).  This is the last batch of layoffs of the 10,000 announced in March.

In stock legal and regulatory news, UK anti-trust watchdog said Wednesday that both DB and C have admitted to anti-competitive behavior (exchanging sensitive UK bond data in order to fix prices).  The agency also announced that it has provisionally found five banks had breached rules (were part of the ring) but that HSBC, MS, and RY had not yet admitted their guilt.  Elsewhere, the Biden Administration urged the Supreme Court to reject an appeal by AAPL and AVGO stemming from their loss of a district-level appeal of a $1.1 billion judgment in a patent infringement case.  (Separate cases against MSFT, SSNLF, DELL, and HPQ are still pending over the infringement of the same patents.)  The original ruling was for AAPL to pay $837.8 million and AVGO to pay $270.2 million.  At the same time, Bloomberg reported that the US prosecutors are reviewing stock trading evidence against former FRCB employees.  Meanwhile, Reuters reported that the FTC is investigating whether ABT, British company Reckitt (who owns Mead Johnson), and NSRGF (Nestle) over collusion in bidding on state contracts for baby formula (WIC programs).  After the close, MSFT filed an appeal of the UK anti-trust watchdog’s April decision to prohibit the company’s acquisition of ATVI.  (The US FTC had previously also blocked the deal and MSFT has appealed that decision as well.)

In debt ceiling news, in the morning, House Speaker McCarthy said the sides “were far apart” (which hit the markets).  On the other side, the White House criticized Republicans for holding the full faith and credit of the United States hostage.  At the same time, Treasury Sec. Yellen also reiterated that she expects the country will be unable to pay its bills as of June 1, but said it is hard to estimate the exact date.  Meanwhile, she has instructed Treasury to stop paying any bills without a definite due date.  Speaker McCarthy also said he accepts Yellen’s default deadline as true (some of his GOP Congressional colleagues had questioned the legitimacy of that date Tuesday).  For their part, GOP negotiators rejected the Biden Administration’s proposals to set corporate and billionaire tax minimums (which would raise revenue) or to expand the ability to negotiate cheaper drug prices (which would significantly reduce military, Medicare, and Medicaid spending).  (The latter seems odd for a group screaming about cutting spending, but these negotiations are about making political points and not about making sense or positive change.) Speaker McCarthy also increased the pressure slightly by saying the House now plans to adjourn for a full week on Thursday (rather than the previously planned Friday).  However, Congress can be recalled.  At the end of the day, both President Biden and Speaker McCarthy told reporters that progress had been made Wednesday and that was very positive, with negotiations continuing Wednesday night.  Unfortunately, by mid-evening, Moody’s disagreed and put the US AAA credit rating on “negative watch” which is typical prior to a rating reduction.  This immediately hit DJIA Futures and if lowered increases the cost of governance by raising bond rates.

After the close, NVDA, AEO, ENS, SPLK, GES, MOD, PLUS, and SNOW all reported beats on both the revenue and earnings line.  (The first clean sweep of companies with more than $500 million in quarterly revenue in quite a while.)  It is worth noting that NVDA and SPLK both raised their forward guidance.  However, AEO and SNOW both lowered their own guidance.  Among the earnings surprises were a 200% upside surprise (SNOW), 92% upside surprise (SPLK), 75% upside surprise (GES), 40% upside surprise (MOD), and a 32% upside surprise (ENS).  The largest revenue surprise was a 10.3% upside surprise from NVDA.

Overnight, Asian markets leaned heavily toward the red side.  Once again, Hong Kong (-1.93%) led the region lower with Australia (-1.05%) next among the losers.  On the plus side, Taiwan (+0.82%) was the standout. All other moves in the region were half of a percent or less in both directions.  In Europe, we see a mixed market at midday.  The largest mover is Norway (+1.02%) to the upside while the CAC (-0.28%), DAX (-0.12%), and FTSE (-0.27%) lead the region on volume as usual in early afternoon trade.  In the US, as of 7:30 am, Futures point to a VERY mixed start to the day.  The DIA implies a -0.32% open, the SPY is implying a +0.57% open, and QQQ implies a +1.90% open at this hour.  At the same time, 10-year bond yields are up to 3.761% and Oil (WTI) is down 2% to $72.86/barrel in early trading.

The major economic news events scheduled for Thursday include Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, and Weekly Initial Jobless Claims (all at 8:30 am), April Pending Home Sales (10 am), the Fed Balance Sheet and Bank Reserve Balances with the Fed (both at 4:30 pm).  The major earnings reports scheduled for the day are limited to AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, and TITN before the open.  Then, after the close, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY report. 

In economic news later this week, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported.

In terms of earnings reports later this week, on Friday, BIG, BAH, and HIBB report.

So far this morning, LNVGY (Lenovo), MDT, CM, NTES, and AMWD all reported beats on both the revenue and earnings lines.  Meanwhile, RY, TD, DLTR, and GCO beat on revenue while missing on earnings.  On the other side, TITN missed on revenue while beating on earnings. Unfortunately, BBY and BURL missed on both the top and bottom lines.  It is worth noting that DLTR and GCO both lowered their forward guidance.  The biggest surprises came from RY (110% upside revenue surprise), CM (130% upside revenue surprise), AMWD (64% upside earnings surprise), BBY (50% downside earnings surprise), GCO (45% downside earnings surprise), and NTES (31% upside earnings surprise).

With that background, it looks like the Bulls are on fire in the QQQ, which is near the premarket highs and appears as if it will challenge a breakout above the recent (Monday) highs. At the same time, it looks like SPY is headed back up to retest its T-line as resistance. However, DIA continues its move lower despite being up off of its premarket lows. Of course, all this is before the data dump at 8:30 am. Extension is not a problem in SPY obviously. However, DIA is starting to get a little stretched to the downside and, if it opens where it is now, QQQ will be a bit stretched to the upside. The T2122 indicator is now well into oversold territory. So, we have a divided market with the mega-cap DIA perhaps showing the fear of a debt default while NVDA’s blowout report has the tech-heavy QQQ in “buy, buy, buy” mode. This may be a sign of very short-term rotation into “risk on” mode. However, be careful that bad GDP, Jobless Claims, or word from the debt ceiling negotiations does not rain (hard) on that parade.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

Tuesday saw a gap lower to start the day (down 0.40% in the SPY, down 0.28% in the DIA, and down 0.50% in the QQQ).  At that point, all three major indices ground sideways until noon, with the DIA even actually recrossing its gap in a modest bullish trend.  However, at noon, the Bears stepped in to lead a selloff that lasted until 2:30 pm before grinding sideways into the close near the lows.  This action gave us larger, black-bodied candles with more upper wick and small lower wick.  The DIA failed a retest of its T-line (8ema) and crossed back below its 50sma.  Meanwhile, the SPY crossed back below its own T-line.  This happened on less-than-average volume in all three of the major index ETFs.

On the day, nine of the 10 sectors were in the red with Technology (-1.44%) out in front leading the way lower as Energy (+0.67%) was the only sector in the green and held up considerably better than the others.  (This was likely due to the warning from Saudi Oil Minister for oil speculators to “watch out,” which oil markets took to indicate more production cuts might be on the way soon.)  At the same time, the SPY lost 1.12%, DIA lost 0.69%, and QQQ lost 1.27%.  VXX gained 1.90% on the day to end at 36.49 and T2122 fell but remains in the mid-range at 39.79.  10-year bond yields fell a bit to 3.698% while Oil (WTI) climbed 2.40% to end the day at $73.78 per barrel.  So, Tuesday saw a pullback in the QQQ and SPY as well as retesting of the recent lows in the DIA.  It was notable that none of the “big dog” tech names were holding markets up Tuesday with only AMD (+0.11%) even slightly in the green.    

The only economic news Tuesday, Building Permits came is extremely low at 1.147 million (compared to a forecast of 1.416 million and the prior reading of 1.430 million).  This was a massive miss of nearly 20%.  Later in the morning, Preliminary May Mfg. PMI came in below expectation at 48.5 (versus a forecast of 50.0 and an April value of 50.2).  However, at the same time, Preliminary May Services PMI came in stronger than had been anticipated at 55.1 (compared to a forecast of 52.6 and an April reading of 53.6).  The Preliminary S&P Global Composite PMI also came in significantly stronger than expected at 54.5 (versus a forecast of 50.0 and an April value of 53.4).  Finally, after the close, the API Weekly Crude Stocks Report showed a large and unexpected drawdown of 6.799-million-barrels (compares to a forecast of a 0.525-million-barrel inventory build and the prior week’s 3.690-million-barrel build).  

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In debt ceiling news, the political drama continued Tuesday.  GOP Congressmen publicly “expressed doubt” on whether June 1 was a real deadline (as opposed to an artificial date set by the White House to put pressure on the GOP).  This implies the GOP side may be less likely to worry about it.  Meanwhile, GOP Speaker McCarthy said Tuesday that “negotiators are nowhere near (a deal)” and that “a deal must be reached by Friday to avoid default” (the latter based on McCarthy promising his party conservatives 3 full days to read any agreed deal before a vote) … but he also added, “there was still time.”  For their part in the drama, Congressional Democrats did two things Tuesday.  First, they introduced a bill to expand Social Security by raising taxes on the wealthy.  Secondly, they began circulating a “discharge petition” which would bring a vote on increasing the debt ceiling to the floor.  They have 213 signatures as of Tuesday evening and need 218 to force the vote (regardless of House Speaker McCarthy’s feelings on the matter).  Meanwhile, the White House said talks continue and tried to stay “above the fray.” At the end of the day, very few people believe there will be a default.  However, any deal before the deadline would mean one side or the other caved.  So, expect more of the same drama and a last-minute deal. For what that is worth, The Financial Times reported that the combination of this news (and in particular the GOP portions) was the cause behind the down day on Wall Street. 

In stock news, climate activists repeatedly attempted to storm the stage at SHEL’s shareholder meeting after their resolution (calling for SHEL to set more ambitious climate strategy) only got 20% of the shareholder votes.  Despite an overall week tape, the regional banks had a good day Tuesday with PACW (+7.74%), ZION (+4.63%), WSFS (+4.35%), and BKU (+4.32%) leading the group higher.  Elsewhere, AAPL announced a deal with AVGO to expand their relationship (AAPL already accounts for 20% of AVGO revenue) to supply AAPL with 5G chips for their phones.  Later UBER announced it is partnering with GOOGL (Waymo division) to offer driverless cars for ride-hailing and food delivery in the 180 square miles around Phoenix AZ.  At the same time, WH was halted briefly Tuesday after it was announced CHH is seeking to buy WH.  It is unclear at this point what WH management or board feels about the idea.  After the close, Elon Musk attempted to rev up a bidding war as he said TSLA will decide on the location of a new factory before the end of this year.

In stock legal and regulatory news, in the wake of FOX’s $787.5 million defamation settlement, another pending defamation case, and more recent on-air “misreporting” (on homeless veterans, migrants, and a hotel) activist investors have filed a proxy resolution calling for the network to study using “on-air labels” to distinguish news from its notorious opinion content.  However, with Chairman Murdoch holding 42% of the voting shares, it is unlikely this resolution will pass.  At the same time, across the pond, EU antitrust regulators have closed an investigation into the video licensing policies of a trade group whose members include GOOGL, AMZN, AAPL, and META.  Elsewhere, the NTSB announced it will hold a two-day investigative hearing on June 22-23 over the NSC train derailment in East Palestine OH back in March.  Meanwhile, the state of CA has filed a request with the US EPA asking for permission to ban internal combustion-only vehicle sales in that state by 2035. The same request also asks the EPA to approve the state’s proposed increasingly stricter car emission standards starting in 2026. Finally, the Netherlands said late Tuesday that MMM had been notified that the company will be held financially responsible for the cleanup of “forever chemicals” in a Dutch river.  No dollar value or estimate is yet available but it is expected to be significant since the contamination includes ground and water with the river dispersing contamination over a large area.

After the close, VFC, TOL, A, PANW, and URBN reported beats on both the revenue and earnings line.  Meanwhile, INTU missed on revenue while beating on earnings.  It is worth noting that INTU and A lowered their forward guidance.  At the same time, TOL and PANW both raised forward guidance.  Surprises included +51% (TOL), +31% (VFC), and +20% (PANW) on earnings.

Overnight, Asian markets leaned heavily to the red side with Hong Kong (-1.62%), Shanghai (-1.28%), and Japan (-0.89%) leading the way lower.  There was no significant green among the Asian exchanges.  Meanwhile, in Europe, we see strong red numbers across the board at midday.  The CAC (-1.12%), DAX (-1.66%), and FTSE (-1.74%) lead the region lower with only Russia (-0.06%) near breakeven in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing to a down start to the day.  The DIA implies a -0.38% open, the SPY is implying a -0.34% open, and the QQQ implies a -0.29% open at this hour.  At the same time, 10-year bond yields are down to 3.68% but Oil (WTI) is up another one and two-thirds percent to $74.09/barrel in early trading. 

The major economic news events scheduled for Wednesday are limited to EIA Weekly Crude Oil Inventories (10:30 am), FOMC May Minutes (2 pm), and Treasury Sec. Yellen speaks (10:05 am).  The major earnings reports scheduled for the day are limited to ANF, ADI, BMO, BNS, DY, KSS, WOOF, XPEV, and UHAL before the open.  Then, after the close, AEO, ENS, PLUS, GES, MOD, NVDA, SNOW, and SPLK report.  

In economic news later this week, on Thursday, we get Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, Weekly Initial Jobless Claims, April Pending Home Sales, the Fed Balance Sheet, and Bank Reserve Balances with the Fed.  Finally, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported.

In terms of earnings reports later this week, on Thursday, we hear from AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, TITN, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY.  Finally, on Friday, BIG, BAH, and HIBB report.

In miscellaneous news, Bloomberg reported Tuesday what most traders have known for decades.  Corporate guidance is in inaccurate 70% of the time when it comes to the two numbers the market cares about most (revenue and earnings). Sandbagging is still the name of the game…beat and lower, beat and lower, rinse and repeat.  Finally, US mortgage demand dropped as expected as 30-year, fixed-rate, conventional mortgage rates crossed over 7% Tuesday.  For the week, the average rate was 6.69% showing the volatility.  The Mortgage Brokers Assn. reports applications for new home purchase loans fell 4% (down 30% from one year prior) and refinance applications dropped 5% (44% lower than on year ago).

So far this morning, ADI, WOOF, and DY have reported beats on both the revenue and earnings lines.  Meanwhile, BMO and BNS reported huge beats on revenue (112% and 110% upside surprises respectively) while missing on earnings. On the other side, KSS missed on revenue but beat on earnings (a 130% upside earnings surprise).  However, XPEV missed on both the top and bottom lines.  It is worth noting that XPEV also lowered its forward guidance.  (ANF reports later this morning.)

With that background, it looks like the Bears are trying to follow through on Tuesday’s down day and currently had premarket prices near their overnight lows. QQQ is retesting its T-line for support this morning while SPY and especially DIA fall further below their own 8ema. It is notable that the SPY premarket move would break its uptrend line and challenge its 17ema if the market session follows the early traders’ lead. However, QQQ remains in a bullish trend (the current move is nothing but a pullback or over-extension relief…yet). Extension from the T-line is not a problem in any of the major indices nor is the T2122 indicator (which remains in its mid-range). So, we have room to run if the bears want to stretch their legs. This is an area to be especially careful as it is looking like it could be at least a short-term trend break. Also, as mentioned above, none of the tech “big dog” names stepped up to hold markets yesterday. This was an uncommon occurrence of late and it is worth keeping an eye on. In short, be careful. The rally may have exhausted itself for at least a while.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

Large-cap indices opened flat Monday and spent the day wobbling sideways in a fairly tight range.  The SPY spent most of the day on the plus side while the DIA spent nearly the whole day on the red side of breakeven.  Meanwhile, the QQQ opened flat only to immediately rally for 30 minutes before grinding sideways in a tight range the rest of the day. This action gave us a Doji in the SPY, a black-bodied Spinning Top in the DIA, and a Bullish Engulfing candle with a not insubstantial upper wick in the QQQ.  The QQQ and SPY remained above their T-line while the DIA failed that retest and closed below its own 8ema.  This all happened on very low SPY volume, as well as below-average volume in the DIA and QQQ.

On the day, eight of the 10 sectors were in the green (and a ninth just barely red) with Technology (+0.91%) out in front leading the way higher as Consumer Defensive (-1.01%) was by far the worst performing sector.  At the same time, the SPY gained 0.04%, DIA lost 0.39%, and QQQ gained 0.34%.  VXX was flat on the day at 35.81 and T2122 climbed a bit but remains in the mid-range at 65.43.  10-year bond yields spiked up to 3.717% (after being down a good chunk in premarket) while Oil (WTI) climbed a third of a percent to end the day at $71.81 per barrel.  So, Monday saw a great deal of uncertainty with a handful of big dog tech names (TSLA, AMD, GOOGL, and META) holding up the QQQ and by extension the rest of the market.   

The only economic news Monday was more talking…this time by four non-voting members of the Fed.  Before the open, St. Louis Fed President Bullard (uber-hawk) went further than he has before, saying the US economy has been “fairly robust so far (in 2023) … So, for that reason, I think we’re going to have to grind higher with the policy rate in order to put enough downward pressure on inflation.”  He went on to argue that he thinks two more rate hikes are needed in 2023, adding that he has previously wanted the Fed to make those kinds of moves.  This was quite unusual for a Fed member and contrary to his colleagues’ postures of needing to see more information.  Bullard has already made up his mind weeks and months in advance.  (Perhaps he has that freedom because he is not an FOMC voter this year.)  Later, in a virtual appearance San Francisco Fed President Daly said it would be a historical anomaly to get inflation back to 2% without unemployment going to at least 4%.  She went on to say, “Even three weeks in advance of the (next) meeting, it’s still a lot of time to collect information before we make a decision about what to do in June or what to do for the rest of the year.” (Daly is not a voter either in 2023.)  Meanwhile, Atlanta Fed President Bostic (not a voter either this year) indicated he is still in favor of a June pause, saying “Right now, absent a big change, I think I will be comfortable saying let’s just look and see how things play out.”  At the same event, Richmond Fed President Barkin said “I’m not going to prejudge June,” and “There is a plausible narrative whereby the Fed’s previous rate hikes, plus tighter credit standards amid strains in the banking sector, will cool demand and prices.”  (Barkin does not have a vote in 2023 either.) 

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In stock news, F held an investor day to tout its plan to (profitably) ramp up its electric vehicle business.  However, the company also acknowledged a huge hurdle, saying that its cost structure is $7 billion higher than its competition (non-union TSLA).  Later, INTC told its own investor conference about its plan to shift toward AI chips which it will introduce in 2025 in order to better compete with NVDA and AMD.  (INTC currently has zero market share in the AI space after its AI chips have been delayed for years.)  In other news, M&A Advisory firm GHL announced Monday that it has agreed to be acquired by Japanese company Mizuho Financial Group for $550 million ($15/share, which was a 121% premium over GHL’s Friday close of $6.78).  Meanwhile, WMT has announced it has signed a deal with pet telehealth provider Pawp to allow WMT subscribers access to Vets via video and text without appointments.  (This is direct competition to a service offered by CHWY.)  Elsewhere, both PFE and NVO announced (separately) findings of studies that show their oral weight loss drugs are as effective as the LLY and NVO injectable weight loss drugs that have been so popular and newsworthy in recent months.  Later CVX announced it is buying PDCE in a stock and debt deal worth $7.6 billion.  After the close, TGNA announced a $300 million accelerated share repurchase program and a 20% dividend increase. 

In stock legal and regulatory news, WBA asked a US judge to vacate an arbitrator’s $642 million award to HUM over prescription drug reimbursements after the arbitrator found WBA has submitted millions of falsely-inflated drug prices for reimbursement. It was no surprise the HUM asked the judge to affirm the award.  Elsewhere, FCNCA has sued HSBC for hiring away more than 40 top employees of SBNY after FCNCA bought the holdings of SBNY from the FDIC.  The suit seeks $1 billion in damages, claiming the hiring was a planned scheme and the employees took major customers and trade secrets that allowed SBNY to secure major customers.  Meanwhile, MU announced midday on Monday that after the early morning ban by China, it expects a hit mid-to-high single-digit percentage range.  Two Korean firms SSNLF and SK Hynix (South Korea listed) are expected to pick up the market share unless the US can convince the Koreans to forego the revenue in an effort to punish China.  At the same time, a US judge has ruled the CEO of MMM must attend the mediation sessions aimed at resolving nearly 260,000 lawsuits alleging MMM military earplugs failed causing hearing loss.  After the close, a federal judge in Chicago dismissed some claims made against ABT in litigation over recalled baby formula.  The judge threw our claims of “only economic loss” related to the recall.

In miscellaneous news, the USDA just reported a third of the nation’s winter wheat crop is being abandoned (or will be) in the field.  This comes as farmers have decided it’s economically better to destroy the crop and file an insurance claim than to spend more money harvesting.  This is the highest percentage of a planted winter-wheat crop to be abandoned since World War One.  Elsewhere, the Wall Street Journal reported over the weekend that XOM has acquires 120,000 acres of AR land where it plans to produce lithium.  Meanwhile, the Biden Administration announced a deal that calls for CA, AZ, and NV states to all cut their water usage by about 13%.  The deal means that the Federal government will not need to impose severe restrictions on the states.  (The deal was made more palatable by massive snow and rainfalls this year.)    Finally, President Biden and House Speaker McCarthy did not reach a final debt ceiling agreement Monday.  However, game theory had suggested no deal would be reached with 10 days left until the deadline.  After their meeting, both men said they had a productive meeting and believe they will reach a deal before a default

After the close, ZM, NDSN, and HEI all reported beats on the revenue and earnings lines.  Meanwhile, LU missed on revenue while beating on earnings.  It is worth noting the ZM raised its forward guidance.

Overnight, Asian markets were mixed but leaned to the red side.  Shanghai (-1.52%), Hong Kong (-1.25%), and Shenzhen (-1.03%) led the region lower.  Meanwhile, in Europe, we see a similar picture taking shape at midday as the bourses lean to the red side.  The CAC (-0.82%), DAX (-0.27%), and FTSE (+0.22%) lead and are typical of the spread in the region in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a very modestly down open.  The DIA implies a -0.13% open, the SPY is implying a -0.11% open, and the QQQ implies a -0.11% open at this hour.  At the same time, 10-year bond yields are jumping again and are now at 3.748% while Oil (WTI) is up two-thirds of a percent to $72.54/barrel in early trading.  

The major economic news events scheduled for Tuesday include Building Permits (8 am), Preliminary May Mfg. PMI, Preliminary May S&P Global Composite PMI, and Preliminary May Services PMI (9:45 am), April New Home Sales (10 am), and API Weekly Crude Stocks Report (4:30 pm).  The major earnings reports scheduled for the day are limited to AZO, BJ, DKS, HIS, LOW, VIPS, and WSM before the open.  Then, after the close, A, INTU, PANW, TOL, URBN, and VFC report. 

In economic news later this week, on Wednesday, EIA Weekly Crude Oil Inventories, FOMC May Minutes, and Treasury Sec. Yellen speaking are on tap.  On Thursday, we get Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, Weekly Initial Jobless Claims, April Pending Home Sales, the Fed Balance Sheet, and Bank Reserve Balances with the Fed.  Finally, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported.

In terms of earnings reports later this week, on Wednesday, ANF, ADI, BMO, BNS, DY, KSS, WOOF, XPEV, UHAL, AEO, ENS, PLUS, GES, MOD, NVDA, SNOW, and SPLK report.  On Thursday, we hear from AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, TITN, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY.  Finally, on Friday, BIG, BAH, and HIBB report.

So far this morning, LOW, VIPS, AZO, and DKS all reported beats on both the revenue and earnings lines.  Meanwhile, BJ missed on revenue while beating on earnings.  On the other side, HIS beat on revenue but missed on earnings.  It is worth noting that LOW also lowered its forward guidance. It’s also worth noting that the largest surprises were 38% (VIPS) and 11% (AZO) upside earnings surprises.

In overnight news, the Saudi Oil Minister warned oil speculators to “watch out” ahead of the OPEC+ meeting.  He went on to say “They did ouch in April.  I don’t have to show my cards, I’m not a poker player … but I would just tell them to watch out.”  He made no clear implications, however, in the past, he has advocated for more investment in expanding production capacity.  So, he could, theoretically, be signaling he intends for OPEC+ not to cut production again or even to increase production quotas.  Elsewhere, Minneapolis Fed President Kashkari (voter in 2023) said last night that if the Fed does pause rate hikes in June, it should also signal that tightening isn’t over yet and the move is just a pause.  Finally, as mentioned above, the one thing both President Biden and Speaker McCarthy agreed on Monday evening was that “a default is off the table.”

With that background, it looks like markets are tepidly in the red this morning. DIA continues to be the weakest of the major indices and is retesting potential support this morning in the premarket. Meanwhile, QQQ and SPY continue to trend bullishly. The SPY does look to be doing a tiny pullback. However, the QQQ isn’t even pulling back and could best be described as consolidating at a potential resistance level at this point. Over-extension from the T-line is not a problem and consolidation will help the QQQ (which is currently the only major indice that is even a bit stretched). The T2122 indicator also continues to sit in its mid-range (telling us we have at least a little room left to run). With this all said, it does not pay to fight the tape and the trend remains bullish at the moment in the SPY and especially QQQ. DIA, on the other hand, is a choppy, slightly bearish mess. The one thing to keep in mind is that breadth of the rally is getting very thin. QQQ only had 19 (of 100) gainers and SPY had 201/500 gainers on Monday. This can be a sign of rally exhaustion.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

Friday saw a very modest gap higher (up 0.24% in the SPY, down 0.03% in the DIA, and up 0.06% in the QQQ).   This led to a sideways grind until 11 am in all three major indices.  However, at that point we saw a sharp selloff across the board for 40 minutes.  From that point, the rest of the day saw an undulating sideways move the entire rest of the day in all three indices.  This action gave us indecisive, black-bodied Spinning Top candles in the QQQ, SPY, and DIA (although the DIA body was admittedly larger than the other two indices).  The DIA also closed just below its T-line (8ema) while the other two major indices remain comfortably above their own.  This all happened on average volume in the DIA and less-than-average volume in the SPY and QQQ.

On the day, seven of the 10 sectors were in the red with Consumer Cyclical (-1.15%) leading the way lower as Healthcare (+0.64%) held up better than the other sectors.  At the same time, the SPY lost 0.15%, DIA lost 0.23%, and QQQ lost 0.56%.  VXX gained 2.5% to 35.77 and T2122 dropped back to the center of the mid-range at 56.95.  10-year bond yields spiked up to 3.682% while Oil (WTI) fell a quarter of a percent to end the day at $71.67 per barrel.  So, Friday saw an intraday whipsaw that really amounted to an indecisive stalemate between the bulls and bears with the Bears having just a bit of the upper hand on the strength of a 40-minute mid-day selloff.  

The only economic news Friday was talking.  On the Fed front, Gov. Bowman again pleaded the case on behalf of banks.  She criticized the Fed for using the collapse of SIVB, SBNY, and FRC as a “pretext” for considering what she termed “radical reform of the bank regulatory framework…as opposed to targeted changes to address identified root causes of banking stress.”  She went on to say the new regulation being considered is simply “incompatible with the fundamental strength of the banking system.”  At the same time, NY Fed President Williams told a conference that he refuses to tie Fed policy to his recently published research that shows major global economies are still fundamentally in a low-interest rate world.  Later, Fed Chair Powell spoke and said that recent banking system troubles (causing tighter credit conditions) mean that “our policy rate may not need to rise as much as it would have otherwise to achieve our goals.”  He went on to give what Bloomberg called a clear signal he is open to pausing interest rate increases next month.  Powell said, “We’ve come a long way in policy tightening and the stance of policy is restrictive and we face uncertainty about the lagged effects of our tightening so far and about the extent of credit tightening from recent banking stresses … Having come this far we can afford to look at the data and the evolving outlook to make careful assessments.” 

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In other talking news Friday, Treasury Sec. Yellen told bank CEOs that more bank mergers may be necessary.  Specifically, she told Reuters “Pressures on U.S. regional bank earnings may lead to more concentration in the sector and regulators will likely be open to such mergers.”  Elsewhere, the proximate cause of the mid-day slump in markets was that GOP negotiators walked out of the Debt Ceiling talks.  However, on Friday evening (once the GOP had made their headlines), they returned to the table and negotiations resumed after a six-hour pause. Progress was reported over the weekend and another meeting between President Biden and Speaker McCarthy is scheduled for today after a call from the President (from Airforce One) to McCarthy which the Speaker called “productive.” At this point, it definitely seems like an agreement is a done deal but the two sides will wrestle for political points until the last minute. So, be prepared for news from the Monday meeting (likely bad news to stoke fear).

In stock news, the Wall Street Journal reported Friday that Samsung (which has a little over 27% of smartphone market share) has decided it will not change its default search engine from GOOGL to the MSFT Bing engine.  The company had been considering a switch for a couple of months.  (GOOGL earns $3 billion per year from its contract with Samsung, in addition to ad revenue.)  Meanwhile, CTLT slashed its forecast and again delayed the release of its quarterly results (the third postponement) after replacing several financial directors and naming a new CFO last month.  At the same time, Reuters reports that META will release a text-based app to compete with Twitter in June.  The news outlet reports META is already testing the service with influencers and content creators.  Elsewhere, the CEO of MS announced he will step down sometime in the next 12 months.  In the auto industry, TSLA began offering more discounts ($1,300 this time) on some Model 3 cars in the US and even heavier discounts in Europe.  Finally, in a funny story, the Wall Street Journal reported Friday that AAPL has issued an internal edict to employees forbidding them from using ChatGPT.  This is interesting because it comes less than a day after AAPL announced they are offering a ChatGPT app for iPhones and less than a week since the company hinted that it is working on its own AI offering (when it touted the fact it has been designing AI chips for years).  So, AI is good as a product to sell…just not good enough a product for “us” to use.

In stock legal and regulatory news, a driver for startup Revel is suing TSLA over a crash at the end of January.  The driver claims his TSLA “suddenly and automatically” took accelerated, forcing the driver to need to crash the vehicle in order to get it to stop.  Elsewhere, EU antitrust regulators questioned MSFT competitors about the type of data their contracts with MSFT require them to turn over.  The watchdog asked if MSFT may have used the required data to go directly to the competitors’ customers. In somewhat related news, the same EU antitrust agency finalized its record fine of META (reported here last week) to be a whopping $1.3 billion for transferring EU customer data from European to US servers. Later, the US FDA approved a KRYS gene therapy used to treat skin disorders.  At the end of the day, the US Forest Service told a federal court it is not sure when it would be able to approve a land swap that would allow RIO and BHP to develop a new copper mine in AZ.  (Native American groups have opposed the swap and mine.)  The Biden Administration (Bureau of Land Mgmt.) on Friday issued a decision supporting a $6.6 billion pipeline proposed by ETRN.  (Earlier last week, Energy Sec. Granholm also had backed the pipeline.)  Meanwhile, a US judge ruled Friday that AAL must end its alliance with JBLU in a victory for the Biden Administration which had claimed their agreement would reduce competition and raise consumer prices.  Finally, the Wall Street Journal reports that the NHTSA is making an official demand and will take legal action against ARCW after the company refused the agency’s request that it recall 67 million airbag inflators after nine of them exploded during deployment, killing two people. While ARCW has been defiant, GM proactively recalled all vehicles with those inflators. However, this recall would cut across F, TM, STLA, VLKAF (Volkswagen), and HYMLF (Hyunda/Kia) and could threaten ARCW solvency.

Overnight, Asian markets leaned heavily toward the green side, with only three of the region’s exchanges in the red.  New Zealand (-0.88%) saw the worst of the losses as Hong Kong (+1.17%), Thailand (+0.95%), and Japan (+0.90%) led the region higher.  Meanwhile, in Europe, the bourses are leaning the opposite direction at midday.  The CAC (-0.35%), DAX (-0.33%), and FTSE (flat) lead the region lower with two notable exceptions (Greece +7.06% and Denmark +1.23%) in early afternoon trade.  (Greece skyrocketed as its ruling conservative party won the most seats in the Greek election and will now enter talks with other smaller parties about forming a government.)  In the US, as of 7:30 am, Futures are pointing to a start just on the red side of flat.  The DIA implies a -0.07% open, the SPY is implying a -0.10% open, and the QQQ implies a -0.15% open at this hour.  At the same time, 10-year bond yields are down 3.663% and Oil (WTI) is just on the green side of flat at $71.58/barrel.

The major economic news events scheduled for Monday are limited to just three Fed speakers (Bullard at 8:30 am, Barking at 10:50 am, and Bostic at 10:50 am). The major earnings reports scheduled for the day are limited to RYAAY and ZIM before the open.  Then, after the close, HEI, NDSN, and ZM report  

In economic news later this week, on Tuesday we get Building Permits, Preliminary May Mfg. PMI, Preliminary May S&P Global Composite PMI, Preliminary May Services PMI, April New Home Sales, and API Weekly Crude Stocks Report.  Then Wednesday, EIA Weekly Crude Oil Inventories, FOMC May Minutes, and Treasury Sec. Yellen speaking are on tap.  On Thursday, we get Preliminary Q1 GDP, Preliminary Q1 GDP Price Index, Weekly Initial Jobless Claims, April Pending Home Sales, the Fed Balance Sheet, and Bank Reserve Balances with the Fed.  Finally, on Friday, April Durable Goods Orders, April Goods Trade Balance, Aprile PCE Price Index, April Personal Spending, April Retail Inventories, and Michigan Consumer Sentiment are reported. 

In terms of earnings reports later this week, on Tuesday, we hear from AZO, BJ, DKS, HIS, LOW, VIPS, WSM, A, INTU, PANW, TOL, URBN, and VFC.  Then Wednesday, ANF, ADI, BMO, BNS, DY, KSS, WOOF, XPEV, UHAL, AEO, ENS, PLUS, GES, MOD, NVDA, SNOW, and SPLK report.  On Thursday, we hear from AMWD, BBY, BURL, CM, DLTR, GCO, HEPS, MDT, NTES, RL, RY, TD, TITN, ADSK, COST, DECK, GPS, MRVL, RH, ULTA, and WDAY.  Finally, on Friday, BIG, BAH, and HIBB report.

So far this morning, RYAAY beat on both the revenue and earnings line.  Meanwhile, ZIM missed on both the top and bottom lines.

In miscellaneous news, after the close Friday, the Fed reported that deposits at US banks edged lower on the week ending May 10, falling to $17.10 trillion (from $17.16 trillion the week prior).  At the same time, the Fed reported that bank-provided credit fell from $17.37 trillion to $17.32 trillion.  Meanwhile, at the G-7 Summit, President Biden changed course and approved the transfer of F-16 fighter-bomber jets (from US allies, not the US directly) to Ukraine.  The US will provide Ukrainian pilot training on the jets after having already trained two for the purposes of determining what topics would need to be covered and to what extent.  LMT and GD make the F-16 and it is now being speculated that orders will be placed to replace the jets given to Ukraine by US allies.  (The most recent sale of F16s averaged a price of $350 million per jet after add-ons, accessories, and spare parts were figured in…$4.21 billion for 12 jets in 2022.)  The number of jets to be provided is unknown, however, military analysts say 50 or more may be the fleet size required for combat effectiveness across all of Ukraine.  So, there is a strong potential for large orders of spare parts and maintenance supplies at the very least…and the possibility of large orders for F16 or F35 planes to replace the jets going to Ukraine.

With that background, it looks like traders are still undecided early on Monday. DIA seems to be retesting its T-line while the other two major indices are just sitting inside Friday’s candle just below their closes. SPY may be getting some support from the 2/2 and 5/1 highs level. Meanwhile, QQQ still has to deal with its next resistance level it failed Friday (which has caused multiple reversals back into early 2021. Over-extension from the T-line is not a problem although QQQ remains a bit stretched. The T2122 indicator also sits in its mid-range (telling us we have at least a little room left to run). With this all said, it does not pay to fight the tape and the trend remains bullish at the moment in the SPY and especially QQQ. DIA, on the other hand, is a choppy, slightly bearish mess.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

Markets started the day dead on Thursday (“gapping” up 0.06% in the SPY, up 0.11% in the QQQ, and down 0.25% in the DIA).  The large-cap indices both then proceeded to be dead money for 30 minutes.  However, the Bulls had other plans in the QQQ as a strong rally kicked in at the open and did not let up until noon.  After their 30-minute wake-up call, the SPY and DIA followed QQQ higher until 11 am before resting for an hour. From noon until 2 pm all three major indices sold off a bit (with DIA even crossing back through its open to new lows at 2 pm).  Yet the Bulls would have none of this and led a strong rally across the board the last two hours of the day, taking all three of the major indices out very near the highs.  This action gave us large, white-bodied candles in the SPY and QQQ with essentially no lower wick and a tiny upper wick.  Meanwhile, the DIA printed a white-bodied candle with a longer lower wick and a tiny upper wick.

On the day, six of the 10 sectors were in the green with Technology (+1.83%) leading the way higher as Communications Services (-0.71%) lagged behind the other sectors.  At the same time, the SPY gained 0.96%, DIA gained 0.43%, and QQQ gained 1.86%.  VXX fell another 4% to 34.90 and T2122 climbed back up outside of the oversold territory to 75.61.  10-year bond yields spiked up to 3.651% (as a flood of money came out of bonds) while Oil (WTI) fell 1.18% to end at $72.03 per barrel.  So, Thursday saw the large caps unsure but the “big dog” tech names like NFLX, NVDA, AMD, AMZN, and AAPL dragged the rest of the market to new highs.  This happened on close to average volume in all three major indices.  

In economic news, Weekly Initial Jobless Claims came in below expectations at 242k (compared to a forecast of 254k and the prior week’s 264k number).  However, it must be noted that three-quarters of the decline from last week was due to the stopping of massive fraudulent claims coming from the state of MA.  At the same time, the Philly Fed Manufacturing Index came in better than expected (but still negative) at -10.4 (versus a forecast of -19.8 and far better than the April reading of -31.3).  Later in the morning, April’s Existing Home Sales were just shy of the anticipated value at 4.28 million (compared to a forecast of 4.30 million but well below the March value of 4.43 million).  This represented a 3.4% month-on-month decline.  After the close, the Fed Balance Sheet was reported at $8.457 trillion, which is down $46 billion from one week ago.  Meanwhile, Bank Reserve Balances at the Federal Reserve were up to $3.280 trillion (from last week’s $3.225 trillion). 

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In Fed talk, Fed Governor Jefferson (also Vice-Chair nominee) told a conference that inflation may be slowing but it is too early to judge the full impact of the rapid rate increases the Fed instituted in the last 15 months.  He said “By some measures, progress has been slowing” and “Outside of energy and food, the progress on inflation remains a challenge,”.  However, Dallas Fed President Logan seemed to be in the other camp, saying “The data in coming weeks could yet show that it is appropriate to skip a meeting.”  However, uber-hawk St. Louis Fed President Bullard told the Financial Times “(the slow progress on taming inflation) may warrant taking out some insurance by raising rates somewhat more to make sure that we really do get inflation under control.”

In stock news, Reuters reported Thursday that in the wake of the failures of SBNY, SVB, and FRC, banks now see social media as a serious threat rather than a potential marketing channel.  Reuters says banks, especially the majors like JPM and C, have set up teams to monitor social media, contact any complaining customers to resolve issues quickly, and also nip any reputational risks in the bud.  (Unstated, but implied, is the big banks using bots to post counter-messaging to any concerns over liquidity.)  In a related story, SCHW (who was a brokerage mentioned among the bank deposit run stories) raised $2.5 billion through a debt offering on Thursday.  Elsewhere, the NYSE and NASDAQ said they will nullify premarket trades of CDW (made between 4 am and 4:22 am Eastern) after share prices briefly plunged 96%.  Meanwhile, Reuters reported SONY is considering spinning off its finance unit in an IPO just three years after taking full control of that line.  Also, in the afternoon, META shared new details on its AI work, including a custom AI chip being developed in-house.  The company claimed it has been developing AI chips since 2020 and their chips use a fraction of the electricity of market-leading NVDA’s AI chips.  In political spat news, DIS has canceled plans to build a $1 billion office campus in Florida, announced the closing of a luxury hotel there, and also canceled the relocation of 2,000 high-paid employees (averaging $120k) to that state amidst the company’s fight with the Florida Governor. The fight is over the Governor’s retaliation against the company for publicly stating opposition to his 2022 cultural agenda law.  The impact on DIS of these decisions is unknown although it has already lost its self-controlled zoning and tax district and will spend a large amount suing the state for breaking related contracts. On the FL side of the equation, these moves will cost the state billions of dollars in lost taxes, jobs, and development in the next few years.

In stock legal and regulatory news, a US district judge issued a temporary restraining order preventing AMGN from closing its $27.8 billion purchase of HZNP until after the suit brought by the FTC to block that deal has been heard in court.  Meanwhile, the US Supreme Court refused to take up an appeal of a lower court decision to throw out a lawsuit against GOOGL.  The case challenged the so-called “Section 230” liability protection of social media companies for content posted by their users.  This caused a sigh of relief across all major tech names.  In another case, the Supreme Court ruled 9-0 against AMGN in its bid to revive patents in an infringement case the company had brought against SNY and REGN.  Elsewhere, GOOGL agreed to pay the state of WA $39.9 million to settle a lawsuit claiming the company had misled users about its location tracking practices.  (The company had previously paid $391.5 million to settle a suit from 40 states last November and another $80+ million to settle with AZ in October over the same issue.)  Later, the NHTSA announced that F is recalling 422k SUVs because the video from rearview cameras may fail even after a prior recall repair.  This recall includes 2020-2023 Ford Explorers and Lincoln Navigators.

After the close, AMAT, ROST, FTCH, and GLOB all reported beats on both the revenue and earnings lines.  Meanwhile, DXC, FLO, and CVCO all missed on revenue while beating on earnings.  Unfortunately, QFIN missed on both the top and bottom lines.  There were no guidance changes announced.

Overnight, Asian markets leaned heavily to the green side.  Hong Kong (-1.40%), Thailand (-0.77%), and Shanghai (-0.42%) were the only red in the region.  Meanwhile, New Zealand (+1.03%), South Korea (+0.89%), and Japan (+0.77%) led the more numerous gainers.  In Europe, we see a similar story taking shape at midday.  The CAC (+0.65%), DAX (+0.57%), and FTSE (+0.43%) lead all but three bourses higher with only Denmark (-0.53%) showing any appreciable loss in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a very modest green start to the day.  The DIA implies a +0.12% open, the SPY is implying a +0.17% open, and the QQQ implies a +0.05% open at this hour.  At the same time, 10-year bond yields are flat at 3.65% and Oil (WTI) is up 1.14% to $72.76/barrel in early trading.  

The major economic news events scheduled for Friday is limited to hearing from three Fed speakers (Williams at 8:45 am, Bowman at 9 am, and Chair Powell at 11 am). The major earnings reports scheduled for the day are limited to DE, CTLT, and FL before the open.  There are no earnings reports scheduled for after the close. 

So far this morning, DE beat on both the revenue and earnings lines.  Showing solid growth in revenue (+30% which was a 17.2% upside surprise) and earnings (+42%, which was a 12.6% upside surprise).  However, FL missed on both the top and bottom lines.  It is worth noting that DE also raised its forward guidance while FL lowered its guidance at the time of reporting.  (CTLT was scheduled to report at 7 am but has been delayed for some reason.)

In miscellaneous news, after the close, the US and Taiwan reached a trade agreement covering customs procedures, regulatory practices, anti-corruption measures, as well as small business issues.  The deal is not expected to impact any tariffs.  This deal was really just a “make-up” deal because Taiwan had previously been excluded from the Indo-Pacific Economic Framework to avoid conflicts with China.  Elsewhere, G7 countries unveiled new sanctions and export controls that target Russia.  The measures added 70 entities to a blacklist prohibiting them from receiving any exports from G7 countries as well as 300 sanctions against individuals, entities, vessels, and aircraft considered facilitators.  The Russian energy-extracting industry was also targeted.  Meanwhile, in Kansas, a Wheat industry group announced the results of its survey of the state’s winter wheat crop.  The survey expects Kansas (the largest wheat-producing state) to have the lowest crop yield since 2000.  They expect a crop of 178-million-bushels (compared to a USDA forecast of 191.4-million-bushels and 2022’s 244.2-million-bushel winter wheat crop). If this new estimate is correct, expect pressure on food prices related to wheat despite the recent extension of the Russia-Turkey-Ukraine grain export deal.

With that background, it looks like DIA is pushing up against resistance at yesterday’s closing level. However, SPY and QQQ are looking to push higher this morning. In addition, all three major indices are up off the premarket lows and are now at the top of their premarket range. Just be aware that QQQ (the market leader) is close to retesting its next resistance level above and it is really a relative handful of massive tech names dragging QQQ (and the rest of the market) higher. Over-extension from the T-line is also a problem for QQQ and to a lesser extent for SPY. However, the T2122 indicator is still in (the top of) its mid-range telling us we have at least a little room left. All of this is taking place on a Friday after a nice up week (especially in QQQ). So, profit-taking and rest for the market seem in order. Don’t get caught off-guard by some Friday selling. Still, we can’t fight the tape and the trend remains bullish at the moment.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

Wednesday was the Bulls’ Day.  The SPY gapped up 0.52% and the DIA gapped up 0.54%.  Then after a modest 30-minute pullback, those bulls started running in a long, steady rally that took us to the highs of the day at about 2 pm.  Meanwhile, the QQQ was more muted, gapping up 0.34% and then recrossing the gap before the Bulls stepped in to drive that same long, steady rally to the highs at 2 pm.  From there, we saw very modest profit-taking and a sideways grind into the close near the highs in the SPY, DIA, and QQQ.  This action gave us large-bodied, white candles with larger lower than upper wicks in all three major indices.  The SPY and DIA both crossed back above their T-line (8ema) and DIA crossed back above its 50sma while QQQ continues its rally and is starting to get a bit extended above its own T-line.

On the day, nine of the 10 sectors were in the green with Financial Services (+2.29%) leading the way higher as Utilities (-0.11%) was the only red sector and lagged the rest.  At the same time, the SPY gained 1.19%, DIA gained 1.30%, and QQQ gained 1.21%.  VXX fell 3.32% to 36.36 and T2122 jumped back up out of the oversold territory to 66.67.  10-year bond yields spiked up to 3.581% while Oil (WTI) jumped up 2.62% to end at $72.72 per barrel.  So, Wednesday saw the three major indices get back “in sync” as the bulls ran and then modest profits were taken to end the day.  While volume was less-than-average, all three indices were closer to average volume than has been the case for several days.    

In economic news, Preliminary April Building Permits came in a bit shy of expectations at 1.416 million (compared to a forecast and prior month reading of 1.437 million).  This was a 1.5% month-on-month decline, which was improved from March’s 3.0% month-on-month decline.  However, at the same time, April Housing Starts were very slightly above expectation at 1.401 million (versus a forecast of 1.400 million and the March value of 1.371 million).  Later in the morning, EIA Weekly Crude Oil Inventories showed a much larger than expected inventory build of +5.040-million-barrels (compared to an expected drawdown of 0.920-million-barrels or the prior week’s 2.951-million-barrel increase in inventories).  With all that said, the main economic news came from the Debt Ceiling front.  Both President Biden and Speaker of the House McCarthy told the press (separate events) that the two sides are making progress and neither thinks the US will default on its debt. 

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In stock news, WAL gave an update on their deposits saying that they continue to rise in May after the March and early April spate of withdrawals. Elsewhere, the CEO of FSR told an automotive conference in Germany that the company is actively pursuing partnerships with rivals PSNY and an EV maker supported by Mercedes.  The partnerships are intended to allow the small EV companies to get to scale and work together to solve supply chain challenges that companies like TSLA can solve on their own.  Later, in other EV news, TM announced they are partnering with SZKMY (Suzuki) and Tokyo-listed Daihatsu on a mini-electric commercial van.  Each partner will release their own branded version of the vehicle later this year.  At the same time, PFE announced it is planning to raise $31 billion through its largest-ever debt offering.  PFE intends to use the proceeds to complete its $43 billion deal to acquire SGEN.  The debt offering is expected to close on May 19.  As the economy weakens, many grocery and household product makers are adding to their low-cost products and smaller-size packages specifically for dollar stores like DLTR and DG.  Among these, according to Reuters, are EPC, KHC, HSY, CAG, PG, and SJM, who all have dedicated dollar-store units or teams.  This falls in line with a Tufts University study that found dollar stores to be the fastest-growing US food and household goods retailers.  Meanwhile, FDX pilots voted overwhelmingly in favor of a strike if needed as the pilots union and company enter the final stages of negotiations.  (However, pilots cannot strike until after given permission by the National Labor Relations Mediation Board and after a cooling-off period if and when an impasse is reached.)  Finally, the Wall Street Journal reported that TPG and Francisco Partners are collaborating on a $5 billion bid to acquire NEWR.

In stock legal and regulatory news, Reuters reports that Qatar’s sovereign wealth fund (the second-largest shareholder of CS prior to its forced sale) is seeking legal help in an attempt to recover the haircut it took when CS was sold to UBS at “a fraction of its value.” At the same time, according to multiple sources, Reuters reported META is set to face an unspecified but claimed to be the largest fine ever levied by the EU.  The fine is a result of META failing to comply with warnings and deadlines from a top EU court and continuing to transfer European user data from EU-based servers to US-based servers.  (The prior record fine levied was $821.2 million levied against AMZN.)  In Congress, a bipartisan group of lawmakers introduced legislation making it illegal for automakers (including GM, F, STLA, TSLA, and VLKAF) from eliminating AM radios from new models of their vehicles.  The bill would direct the NHTSA to mandate that new cars include AM radio at no additional charge.  Elsewhere, AVGO has offered “interoperability remedies” in order to address EU antitrust concerns over its deal to acquire VMW for $61 billion.  The EU Antitrust Agency recently extended the deadline for its final decision to July 17.  Meanwhile, the FAA is forecasting a 4.5% increase in flights over the Memorial Day holiday period, expecting the total to be just shy of the pre-pandemic peak.  (DAL expects a 17% increase in passengers from 2022 while AAL and UAL both expect unspecified increases over last year.)  Then, after the close, WBA reached a $230 million settlement with the city of San Francisco over its role in the city’s opioid epidemic.

In miscellaneous news, on Wednesday, the NY Fed published a report that said the downside risk to the economy “eased a bit so far this year, but remains elevated.” At the same time, a Reuters poll of 116 economists found that 60% believe rates are at the same level they will be at year-end. Interestingly, 26% predict no hike and at least a 25-basis-point rate cut before year-end.  Only 14% are expecting another rate hike by the end of the year.  Meanwhile, the Fedwatch Tool tells us markets (futures) are pricing in a 29% chance of a quarter-point hike in June.  However, those futures also see a 43% chance of a rate cut in September, a 79% probability of a cut in November, and a 95% chance of a rate cut in December. So, somebody is (or somebodies are) wrong. The question is whether it is the market, the majority of economists, the Fed, or some combination of the three.

After the close, CSCO, SNPS, CPRT, STNE, and TTWO all reported beats on both the revenue and earnings lines.  Meanwhile, VSAT and ZTO both missed on revenue while beating on earnings.  It is worth noting that CSCO, SNPS, and STNE all raised their forward guidance.  Meanwhile, TTWO lowered its forward guidance.

Overnight, Asian markets leaned heavily to the green side.  Japan (+1.60%), Taiwan (+1.11%), and Hong Kong (+0.85%) led the region higher while only India (-0.28%) and Shenzhen (-0.12%) showed any red.  Meanwhile, in Europe, the bourses are mixed at midday with the big exchanges rallying.  The DAX (+1.68%), CAC (+0.92%), and FTSE (+0.55%) are leading the region higher in early afternoon trade.  In the US, at 7:30 am, Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.09% open, the SPY is implying a +0.22% open, and the QQQ implies a +0.27% open at this hour.  At the same time, 10-year bond yields are rising again at 3.6% and Oil (WTI) is flat at $72.80/barrel in early trading.  

The major economic news events scheduled for Thursday include Philly Fed Mfg. Index and Weekly Initial Jobless Claims (both at 8:30 am), April Existing Home Sales (10 am), Fed Balance Sheet and Bank Balances with the Fed (both at 4:30 pm).  We will also have testimony from Fed Vice Chair (for Bank Supervision) Barr at 9:30 am.  The major earnings reports scheduled for the day include WMS, BABA, BBWI, CSIQ, DOLE, GRAB, BEKE, MSGE, and WMT, before the open.  Then, after the close, AMAT, CVCO, DXC, FTCH, FLO, GLOB, and ROST report. 

In economic news later this week, on Friday, we hear from two Fed speakers (Chair Powell and Williams).  In terms of earnings reports later this week, Friday, we hear from DE and FL.

So far this morning, WMT, BEKE, CSIQ, WMS, MSGE, and EXP all reported beat to both the revenue and earnings lines.  Meanwhile, BABA, DOLE, and BBWI all missed on revenue while beating on earnings.  It is worth noting that BEKE and WMT have raised forward guidance while WMS lowered its guidance.  It is also worth noting the MSGE has a 132% upside earnings surprise, BEKE posted a 100% upside surprise on earnings, CSIQ posted a 95% upside surprise on earnings, DOLE posted a 79% upside surprise on earnings, and WMS had a 56% upside surprise on earnings.  So, the sandbagging remains strong.

With that background, it looks like all three major indices are running up to test the next potential resistance level in premarket trading. DIA is also retesting its recent downtrend line. However, it is the QQQ (and the handful of massive tech names) that are leading this march higher, until yesterday’s good news gave financials a boost. Over-extension from the T-line is not a problem in general. However, QQQ is getting stretched. Still, the T2122 indicator sits in the mid-range telling us we have at least a little room to move. Be careful of chop and watch for rotation if traders start to think we are overcooked and look to start locking in profits. We still cannot say we have a nicely trending market anywhere except for the QQQ.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

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

On Tuesday, markets saw a modest gap lower at the open (down 0.27% in the SPY, down 0.30% in the DIA, and down 0.21% in the QQQ).  However, those three major indices diverged at the point, with the QQQ immediately rallying (recrossing the gap within 5 minutes and continuing higher at 1 pm), the SPY trading sideways along its opening level, and the DIA selling off until 10:15 am and then trading sideways until about 1 pm.  At about 1 pm, all three got back in sync by starting a wavy selloff that lasted into the close.  This action gave us a white-bodied candle with a large upper wick in the QQQ, a black-bodied candle with a significant upper wick in the SPY, and a large-bodied black candle in the DIA.  The SPY fell down through its T-line (8ema) while the DIA failed a retest of its 50sma after holding up above the previous three days.

On the day, all 10 sectors were in the red with Utilities (-2.11) leading the way lower as Technology (-0.25%) held up significantly better than any other sector.  At the same time, the SPY lost 0.67%, DIA lost 1.02%, and QQQ gained 0.11%.  VXX was up more than 3% to 37.61 and T2122 climbed dropped back down into the oversold territory at 14.79.  10-year bond yields spiked up to 3.541% while Oil (WTI) fell 0.76% on the day to end at $70.57 per barrel.  So, Tuesday was a divergent day that saw the mega-cap DIA fall out of its recent range, large-cap SPY stay at the lower end of its recent range, and QQQ stay inside the top of its recent range.  This came on very divergent moves in the QQQ as AMD, AMZN, and GOOGL essentially held up that index on their own.  Once again, this happened on well less-than-average volume across all three of the major indices.    

In economic news, April Retail Sales came in much lower than was expected at +0.4% (compared to a forecast of +0.8% but also far better than the March reading of -0.7%).  Later, April Industrial Production month-on-month came in much better than expected at +0.5% (versus a forecast of -0.1% and the March reading of +/- 0.0%). On an annual basis, Industrial Production was up 0.24% (and last year had been up 0.07% versus the 2021 reading). March Business Inventories were a bit lower than expected at -0.1% (compared to the forecast of +0.1% and the February value of +0.2%).  In addition, March Retail Inventories also grew less than expected at +0.3% (versus the forecast and February reading which were both +0.4%).  Finally, after the close, the API Weekly Crude Oil Stocks report showed a 3.690-million-barrel inventory build (compared to an expected drawdown of 1.300-million-barrels but in line with the prior week’s value of a 3.618-million-barrel inventory build).

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In Fed talk, Cleveland Fed President Mester said Tuesday that she does not think the FOMC is at a point where it can hold rates steady for a period of time.  Specifically, she said, “Have we gotten to that rate yet? At this point, given the data we’ve gotten so far, I would say no.”  Later Richmond Fed President Barkin told Bloomberg “I do want to learn more about what’s happening with all these lagged effects.  But I also want to reduce inflation…and if more increases are what’s necessary…I’m comfortable doing that.”  However, NY Fed President Williams told a university audience he was more comfortable with a “pause and see” approach, telling them “We know it takes a while for our decisions to fully affect the economy” … “We’ve got to make our decisions and then watch what happens, get that feedback, see how the economy’s behaving.”  Then Dallas Fed President Logan told a Fed conference “(Changing rates in) smaller, less frequent steps can make it less likely that FOMC monetary policy causes US financial instability.”

In stock news, CNBC (citing sources) reported that CMCSA is likely to sell its 33% stake in the Hulu streaming platform to DIS between now and early next year.  Later, an investing consortium including BX and TRI released a term sheet stating that it is going to sell $3 billion worth of stock in the London Stock Exchange, which would be approximately 5.5% of the exchanges voting shares.  Mid-day, the CEO of OpenAI (creator of ChatGPT) and IBM both told US Senators that artificial intelligence needs to be heavily regulated…but also that we shouldn’t stifle innovation or the great benefits AI could offer.  Testimony from the two raised fears of AI spreading misinformation, influencing elections, infringing copyrights, and upending the economy by replacing swaths of jobs.  (Needless to say, MSFT, GOOGL, and many others companies that have gone “full speed ahead” on AI were likely not pleased by the news.)  Also in the afternoon, a German Automobile Club study found that TSLA Model 3 vehicles dominated its internal combustion engine competitors in terms of reliability for cars older than three years finding that just 1.1 out of every 1,000 2020 TSLA Model 3 broke down annually.  (6.9 breakdowns per 1,000 was the average for gas vehicles and 4.9/1000 was the EV average.)  Elsewhere, after the close, NYCB announced that the FDIC is selling shares of the bank that were acquired during the seizure of SBNY in what amounts to a secondary share offering.  Meanwhile, NOW announced its first-ever stock buyback program of up to $1.5 billion.  Finally, it was announced that the new entity created by the combination of WWE and EDR will trade under the ticker TKO (TKO Group).

In stock legal and regulatory news, the FTC said Tuesday that it will sue to prevent the proposed AMGN $27.8 billion purchase of HZNP which would give AMGN monopoly positions in the treatments in certain diseases.  Meanwhile, the NHTSA announced that STLA is recalling 219,000 2014-2016 Jeep Cherokee SUVs over fire risks due to electrical shorts in the power liftgate.  Later in the day, Reuters reported that WFC has agreed to pay $1 billion to settle a lawsuit that accused the company of defrauding shareholders by misinforming them about its progress in recovering from a series of scandals.”  A US District judge has granted preliminary approval to an all-cash settlement of the suit, but the deal will not be final until a hearing in early September.  Elsewhere, Reuters reports that JNJ has set aside $400 million in a separate fund to resolve State AGs claims that it violated state unfair business practices and consumer protection laws as part of its second attempt to settle 38,000 lawsuits over talc product liability.  (JNJ’s second bankruptcy plea offered $8.9 billion to settle the 38,000 cases.)  At the same time, a US Appeals Court has ruled in favor of GE, HD, and Ikea and against the University of CA, which had sought to ban the import of light bulbs that infringe on the university’s patents. (Lawsuits against AMZN, WMT, and TGT had also  been paused waiting on the outcome of this ruling.)   After the close, MAR settled with the state of TX and agreed to “prominently display all resort fees” to increase price transparency.  This comes a day after the TX State AG filed suit against H for misleading consumers with marketing and hidden fees. 

Overnight, Asian markets were mixed but leaned toward the red side.  Hong Kong (-2.09%) and Thailand (-1.25%) were by far the biggest losers while Taiwan (+1.60%), Japan (+0.84%), and South Korea (+0.58%) were the only appreciable gainers on the day.  Meanwhile, in Europe, the bourses lean heavily to the red side at midday.  The DAX (+0.43%) is an outlier while the CAC (-0.01%) and FTSE (-0.07%) are typical of the small losses being registered across most of the region in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a green start to the day.  The DIA implies a +0.41% open, the SPY is implying a +0.37% open, and the QQQ implies a +0.23% open at this hour.  At the same time, 10-year bond yields are back down to 3.519% and Oil (WTI) is up a half of a percent to $71.23/barrel in early trading.

The major economic news events scheduled for Wednesday are limited to April Building Permits and April Housing Starts (both at 8:30 am), and EIA Crude Oil Inventories (10:30 am).  The major earnings reports scheduled for the day include ARCO, TGT, and TJX before the open.  Then, after the close, SQM, CSCO, STNE, SNPS, TTWO, VSAT, and ZTO report.   

In economic news later this week, on Thursday we get Weekly Initial Jobless Claims, Philly Fed Mfg. Index, April Existing Home Sales, Fed Balance Sheet, and Bank Balances with the Fed.  Finally, on Friday, we hear from two Fed speakers (Chair Powell and Williams).

In terms of earnings reports later this week, Thursday, WMS, BABA, BBWI, CSIQ, DOLE, GRAB, BEKE, MSGE, WMT, AMAT, CVCO, DXC, FTCH, FLO, GLOB, and ROST report.  Finally, on Friday, we hear from DE and FL.

After the close, KEYS and KD both reported beats to both the revenue and earnings lines.  It is worth noting that KEYS raised its forward guidance while KD lowered it own guidance.  So far this morning, TCEHY and ARCO have reported beats to both the revenue and earnings lines.  Meanwhile, TGT and TJX both missed on revenue while beating on earnings.  (This includes a 50% upside earnings surprise from ARCO and an 18% upside earnings surprise by TGT.)

With that background, it looks like the SPY is retesting its T-line and the QQQ continues its march higher, at least as of the premarket. Even DIA is trying to climb back above its 50sma (and back into the recent trading range). Over-extension is not a problem yet in terms of distance from the T-lines. However, the T2122 indicator is back in the oversold region. Be careful of the chop and watch for rotation given the divergence of short-term attitudes of the SPY, DIA, and QQQ. We still do not have a nicely trending market anywhere except the QQQ.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the man in the green bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is absolutely no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby. It’s a job. The money is real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

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

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

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

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

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

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

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