Markets started the week off with a small gap higher in all 3 major indices. After the open, the SPY and QQQ saw a strong rally into late morning and then sideways trading the rest of the day. Meanwhile, the DIA was much more tentative, trading in waves to the side all day long. This left us with a strong bullish candle in the QQQ, a decent bullish candle in the SPY, with just a bit of upper wick, and a gap-up black candle in the DIA. On the day, SPY gained 0.44% (to a new all-time high close), QQQ gained 1.12% (to a new all-time high close), and DIA lost 0.14%. The VXX fell a percent to 25.59 and T2122 dropped just outside of the overbought territory to 76.62. 10-year bond yields fell to 1.28% and Oil (WTI) gained about half of a percent to $69.06/barrel.
During the day, SEC Chairman Gensler told Barron’s that the banning of “payment for order flow” is a possibility. This caused HOOD to tank, closing down 6.89% after being down over 10% at one point. However, this has broader implications for traders as most brokerages are offering zero or no commissions now on the back of this practice of selling order flow to marketmakers rather than charging higher commissions. Gensler told Barron’s that this practice is an inherent conflict of interest (not necessarily giving brokerage clients the best price at the moment of order) and he feels it hurts both traders and markets. No timetable was mentioned, but this interview came after Friday’s announcement that the SEC would step up inquiries into the “gamification” of trading. So, it implies a major change in SEC governance. In other brokerage news, PYPL is exploring ways to allow users to invest in stocks. While likely not a threat to the major brokers, the likes of HOOD, WeBull, SOFI, FUTU, etc.
In tech stock news, South Korea has passed legislation (180-8) that prohibits AAPL and GOOG from requiring App developers to use only their own payment processing systems. South Korea is a major smartphone market. However, the much larger picture would be the adoption of such measures in Europe (likely) and the US (unknown probability). This will mean that developers can avoid paying AAPL and GOOG a 30% commission on all sales. If we assume the App developers will still need to have payments processed somewhere (at a cost), the move will likely mean improved profitability (but not by 30%) for developers and a major hit to AAPL and GOOG app store revenues.
GS said Monday that they expect 750k evictions by the end of the year out of the 3.5 million US households that are behind on rent. In related news, Bloomberg also reports that analyst firm RealPage has found that rents are increasing by an average of 17% relative to what the previous tenant paid. Obviously, these two developments will have major impacts on REITs and other property-related businesses.
Overnight, Asian markets were mostly green. South Korea (+1.75%), Hong Kong (+1.33%), and Japan (+1.08%) led the gains. Singapore (-1.52%) and Shenzhen (-0.66%) were the only red in the region as Chinese Factory data showed a slowing growth of activity in August. In Europe, markets are also mostly green so far today. The FTSE (-0.05%) is lagging, but the DAX (+0.71%), and CAC (+0.28%) are typical of the rest of the continent at mid-day. As of 7:30 am, US Futures are pointing toward a flat open. The DIA is implying +0.01%, the SPY implying +0.02%, and the QQQ implying +0.06%. The Dollar is trading a bit lower, while 10-year bond yields and Oil are up slightly in early trading.
The major economic news scheduled for release on Tuesday is limited to Chicago PMI (9:45 am) and Conf. Board Consumer Confidence (10 am). The major earnings reports scheduled for the day are limited to DBI, NTES, and DAO before the open. Then after the close, PVH reports.
Markets may well be in "wait and see" mode as we draw nearer to more data dumps later in the week (especially the August Payrolls number on Friday). However, we are sitting at all-time highs in s strong bullish trend on fairly strong breadth. We are a bit extended from the T-line in the QQQ (rally leader), but there has been no hint of bear strength yet. So, don't bet on trend failure, but be prepared if a pullback or rest starts to materialize.
Concentrate on the process and on managing those things you control, while not worrying too much about the things you can't control. Good trading rules and discipline is what separates long-term success from failure in trading. As always, manage your existing trades before you go chasing any new ones. Also, remember, the trend is your friend until it is broken. Simply put, the market maintains trend far more often than it reverses trends. Above all, consistently take profits when you have them. Don't let greed turn winners into losers.
Swing Trade Ideas for your consideration and watchlist: OPCH, CAN, EBON, BTBT, ARRY, RIDE, FLDM, NAIL, ABT, DLPN, PDD, RIG, TSLA. You can find Rick's review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.
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🎯 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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