Trade Goods Balance, Retail Inventories

Stocks gapped very modestly higher at the open Monday but immediately sold off about 3 times more than the opening gap rose…all before reversing once again.  This whipsaw action continued, with price spending the afternoon on the downside of the previous close.  Overall, this gave us a small bearish move on the day.  This left us with black-body candles that did not quite qualify as Dark Cloud Cover candles above the T-line in all 3 major indices.  Six of the 10 sectors were bullish and 4 of the sectors were bearish.  However, Energy made by far the biggest move, up over 3.25% on the day.  With that said, SPY lost 0.37%, DIA lost 0.18%, and QQQ lost 0.70% on the day.  The VXX fell 2.25% to 22.60 and T2122 dropped a little further down in the mid-range to 63.86.  10-year bond yields rose to 3.207% and Oil (WTI) climbed almost 2% to $109.74/barrel on the day.

In economic news, May Durable Goods Orders and May Pending Home Sales both came in much higher than expected.  The Pending Home Sales number is particularly surprising since interest rates rose overall during the month.  These two reports tend to suggest consumers are still willing and able to make major purchases.  This stands in conflict with a CNBC report Monday (of a Lending Club report) that said that 58% of Americans are now living paycheck-to-paycheck. 

In business news, Bloomberg reported that crypto exchange FTX is considering acquiring HOOD.  (Last month the CEO of FTX took a 7.6% stake in HOOD.)  As a result, HOOD traded in a 24% range on the day, closing up 14%.  However, after the close, FTX CEO Bankman-Fried said there were no active M&A conversations taking place with HOOD at this point.  Elsewhere, AAL regional carriers (subsidiaries) are offering pilots triple pay to pick up flights during July. Perhaps in a hint of waning demand, AMZN announced it will be holding a second “Prime Day” sale this year (the original Prime Day is July 12-13) in Q4.  After the close, BAC said it will raise its dividend by 5%.  Meanwhile, MS raised its dividend by 11% and approved a new $20 billion share buyback plan as of the start of Q3.

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After the close, NKE and TCOM both reported beats on both the top and bottom lines.  However, CNXC missed on revenue while beating on earnings.  On the other side, JEF reported a beat on revenue while missing on earnings.  So far this morning, SNX reported beats on both lines.

In technical analysis news, 112 of the S&P500 components are trading above their 50sma.  These include GOOGL, GOOG, UNH, JNJ, CRM, PFE, MRK, BMY, ABBV, and VZ.  Of that same group, BMY and LLY are trading at 52-week highs.  However, 421 of the 502 are trading above their T-line (8ema).

In China news, the second-largest economy has now begun easing its “Covid Zero” policy restrictions.  Foreign travelers have had their “quarantine on entry” time cut in half.  At the same time, regional lockdowns have been lifted in many areas as covid rates have fallen.  In addition, for the first time since January 2020, Chinese President Xi will be traveling (but not too far) as he visits Hong Kong later this week.  Markets have taken all these announcements positively.

On the Russian invasion story, Russia continues its missile strikes on Kiev and other Western Ukrainian cities.  Most infamous of these was a strike on a shopping mall in the city of Kremenchuk.  G-7 leaders have labeled the attack a “war crime” as they are urgently discussing how they can reduce the price Russia receives for oil, thus actually reducing Russian revenues for the first time since the start of the war.  However, it is unclear (to say the least) that they can impact the price China or India pay Russia for oil.  The suggestion is that the G-7 can dictate the terms of shipping insurance to only cover oil below a certain limit price.  Separately, NATO announced it will be increasing the size of its “high readiness” forces in the Eastern part of the alliance to over 300,000 troops.  Also, Ukraine is now going to receive 3 Turkish Bayraktar TB2 attack drones at no cost after a crowdfunding campaign has paid for those weapons.

Overnight, Asian markets were green across the board.  Hong Kong (+2.35%), Australia (+1.94%), and New Zealand (+1.70%) paced the gains with Malaysia (+0.10%) a lagging outlier.  In Europe, stocks are mostly following Asia at mid-day.  The FTSE (+0.67%), and DAX (+0.87%), are leading the region higher with the CAC (+0.01%) and two minor exchanges either red or barely green in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modest gap higher to start the day.  The DIA implies a +0.36% open, the SPY is implying a +0.47% open, and the QQQ implies a +0.61% open at this hour.  10-year bond yields are off a bit to 3.166% and Oil (WTI) is up half of a percent to $108.12/barrel in early trading.

The major economic news events scheduled for release Tuesday include May Goods Trade Balance and May Retail Inventories (both at 8:30 am), and Conf. Board Consumer Confidence (10 am). On the earnings front, we get a report from SNX before the open.  However, there are no major reports scheduled after the close.

In economic news coming later this week, on Wednesday, we get Q1 GDP, Crude Oil Inventories, and 2 Fed speakers.  On Thursday, we get May PCE Price Index, Initial Jobless Claims, May Personal Spending, and Chicago PMI.  Finally, on Friday we get June Mfg. PMI and June ISM Mfg. PMI.  There will also be the ECB Central Banking forum (6/27-6/29) where both Fed Chair Powell and ECB President Lagarde speak.

On the earnings front, on Wednesday we get reports from BBBY, GIS, MKC, MSM, PDCO, PAYX, SCHN, UNF, MLKN, and SGH.  Thursday, we get reports from AYI, STZ, WBA, and MU.  There are no reports on Friday, July 1.

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Stocks seem to be setting up for a modest gap higher again. Just be sure to remember that yesterday’s gap was met with reversal and whipsaw action has been the norm for quite some time. So, if you chase a gap, be prepared to take the volatility. GS analysts warned that the upcoming quarter’s earnings estimates are too high. While this may end up being true, that is a statement about the average and not very useful on any specific trade. The mid and longer-term trends remain strongly bearish, while the trend this week is strongly bullish. In addition, we are neither oversold nor over-bought at this point. Caution remains the watchword. Small, nimble, and/or hedged are not bad things. Bear in mind that “slow and steady” wins the race.

Demonstrate patience and wait for confirmation. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Remember that trading is our job. So, do the work and follow the process. And always, always, always move your stops in your favor. Remember the “Legend of the man in the green bathrobe“…it’s NOT house money, it’s all our money (so don’t give very damn much of it back). Also, the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.


Swing Trade Ideas for your consideration and watchlist: STNG, BANF, BA, TGT, TUP, WMT, NFLX, QID, CVNA, AAPL, FNGU. 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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🎯 Dick Carp: the scanner paid for the year with HES-thank you

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🎯 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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