Thursday was the Bulls’ Day almost from start to finish. The SPY gapped down 0.17%, DIA opened flat, and QQQ gapped down 0.35% at the open.  However, at that point, it was all Bulls, all the time until 3 pm.  The strongest rallies were from 9:30 am to 10 am, 10:30 am to 11:45 am, and 2 pm to 3 pm.  Then, the last hour of the day saw very modest profit-taking as price drifted lower into the close.  This action gave us big white candles with small upper wicks and no lower wicks in all three of the major index ETFs. The DIA bounced up off its T-line while printing a Bullish Engulfing candle and breaking out of its one-candle pullback.  The SPY Bullishly Engulfed a Doji and by day’s end, both the SPY and QQQ were again extended above their 8emas. To say the trend remains bullish is an understatement.

On the day, all 10 sectors were in the green as Communications Services (+1.52%) led the market higher and Consumer Defensive (+0.95%) was the “laggard” sector.  At the same time, SPY gained 1.24%, QQQ gained 1.19%, and DIA gained 1.28%.  The VXX gained 2.65% to 28.30 and T2122 climbed back up into the overbought territory to end at 91.60.  10-year bond yields plummeted to 3.72% while Oil (WTI) shot 3.38% higher to close at $70.58 per barrel.  So, overall, the Bulls simply ran the Bears off after the post-Fed indecision from Wednesday afternoon.  It is interesting to note that for the first time in a long time, all three major index ETFs gave us above-average volume with QQQ printing significantly greater-than-average volume.  However, none of them gave us so much volume that I would say we need to fear it was a “blowoff top.”  

In major economic news on Thursday, the May Export Price Index was far below the expected value at -1.9% (compared to a 0.0% forecast and the April -0.1% value).  At the same time, the May Import Price Index was also down but in line with expectations at -0.6% (versus the -0.6% forecast but well below the April +0.3% reading).  Weekly Initial Jobless Claims came in above the anticipated level at 262k (compared to a 250k forecast but right in line with last week’s 262k value).  Meanwhile, perhaps the oddest data was the divergence in Fed Mfg. Indices.  The NY Fed Empire State Mfg. Index came in far above expectations at +6.60 (versus a forecast of -16.00 and massively above the May reading of -31.80).  However, a relatively short distance away, the Philly Fed Mfg. Index came in slightly worse than anticipated but still down at -13.7 (versus the forecast calling for -13.5 but still a bit better than the May reading of -10.4).  So, both of the Manufacturing Indices were improved but the NY one was greatly improved and positive while Philly was still negative.  (Maybe the May NY reading was an anomaly?)  Meanwhile, May Retail Sales also came in better than expected at +0.3% (compared to a forecast of -0.1% but was slightly down from the April +0.4%).  Later, May Industrial Production Year-on-Year was reported significantly lower than anticipated at +0.23% (versus a +1.30% forecast and even less than the April +0.37% value).  The same was true on a Month-on-Month basis where the change was -0.2% (compared to a +0.1% forecast and an April value of +0.5%).  So, Industrial Production is slowing.  Later still, April Business Inventories came in line with expectations at +0.2% (compared to a +0.2% forecast and growing from the April -0.2% reading).  At the same time, April Retail Inventories came in below what was predicted at -0.2% (versus the -0.1% forecast and well better than the March +0.3% value).

SNAP Case Study | Actual Trade

In stock news, reacting to corporate boycotts, MDLZ continues to refuse to stop doing business in Russia.  However, the company announced Thursday it will try to avoid the stigma by saying that they have stopped making new capital investments in Russia and hope to move all its Russian operations into a separate, stand-alone unit by the end of the year.  Elsewhere, MBGAF (Mercedes Benz) announced Thursday that a 3-month test program in the US will begin today (6/16), in which ChatGPT can be given partial control over car systems so that system responses to voice commands will be (hopefully) better and more natural sounding.  As a follow-on to Thursday’s Retail Sales report, Reuters says both GM and F reported that consumers unexpectedly bought more cars than the companies had forecast.  Meanwhile, DAL announced it will resume paying quarterly dividends, which had been stopped in March 2020 due to the pandemic.  (The dividend will be $0.10 per share for holders of record on July 17, paid August 7.)  Later, the Wall Street Journal reports that TSLX is considering bidding on some of the bankrupt retailer BBBY’s assets, using more than $500 million of debt it lent to BBBY as at least part of the bid.  At the same time, Reuters reports that SPCE will launch its commercial space tourism service late this month when they take three passengers into space June 27-30.  In addition, Reuters also reported that within a day of its blowout earnings report, ORCL laid off hundreds of employees and rescinded job offers within its Health unit on Thursday.  (That unit includes CERN, which ORCL acquired in December.) 

In stock legal and regulatory news, BAYRY (Bayer) and its US subsidiary MON have reached an agreement to pay NY state $6.9 million to settle claims of misleading ads claiming that Roundup weedkiller was environmentally safe. Elsewhere, Bloomberg reported Thursday that GS has paid “millions” to settle an internal complaint after an executive “accidentally” sent a sexually explicit video recording of himself to a female junior staffer. (This complaint was deemed so sensitive that it was handled at the C-suite level and overseen by CEO Solomon.)  In the opposite of government regulation, Reuters has reported that INTC and the German government are very close to a deal whereby the chipmaker will receive a $10.83 billion subsidy (up 50% from the amount originally agreed) in return for INTC building a chip-making Fab plant in Magdeburg Germany.  (A deal is expected to be signed Monday.)  Meanwhile, AMAT sued CA company Mattson (owned by Chinese company) of a 14-month effort to steal technologies and trade secrets used to AMAT’s chipmaking equipment.  Later, the Wall Street Journal reported that both the Dept. of Justice and SEC are investigating GS’s role in the final days of SIVB.

In IPO news, exuberance returned to the market as FOMO drove action on the new issue CAVA. The company had priced its IPO at $19-$20 Wednesday night, but the stock opened Thursday at $42 and reached a high of $47.89 before closing at $43.78. That amounted to a tidy 118+ percent one-day gain for those (institutions, insiders, and others) who had got in at the IPO price. The bottom line is that first, CAVA really caught the right day to list and second, the appetite for IPOs seems to have returned to markets. (Some would say that may be a sign we are nearing a top.)

After the close, ADBE beat on both the revenue and earnings lines.  This included quarter-on-quarter growth of both lines.  ADBE also raised its forward guidance.

Overnight, Asian markets were heavily green with only Taiwan (-0.27%) in the red.  Meanwhile, Shenzhen (+1.11%), Hong Kong (+1.07%), and New Zealand (+0.96%) led the rest of the region higher.  In Europe, we see the same picture taking shape at midday with only Russia (-0.28%) in the red.  The CAC (+0.90%) is out front leading the region while the DAX (+0.30%) and FTSE (+0.38%) also are driving optimism in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a flat start to the day.  The DIA implies a -0.03% open, the SPY is implying a +0.04% open, and the QQQ implies a +0.15% open at this hour.  At the same time, 10-year bond yields are up slightly to 3.732% and Oil (WTI) is off a quarter of a percent to $70.44 per barrel in early trading.

The major economic news events scheduled for Friday are limited to the Michigan Consumer Sentiment Report (10 am) and a pair of Fed Speakers (Bullard at 3 am and Waller at 7:45 am).  There are no major earnings reports scheduled for Friday. Still, it is worth remembering that today is Triple Witching Day (the simultaneous expiration of monthly stock options, stock index futures, and stock index futures options), which causes heavy volume, especially at the end of the day.  Also, remember that Monday is a market holiday (Juneteenth).

In miscellaneous news, Bloomberg reported that markets need to prepare for more uncertainty around soon to begin flowing “economic disaster” news coming out of Washington.  On Thursday, and in spite of claims that they had no such plans earlier this year, a 176-member group of the GOP House members proposed cuts to Social Security in the form of raising the retirement age to 69.  The group’s plan would also subsidize private alternatives to Medicare.  (This would apparently be a precursor to eliminating that government program at some later time.)  The group’s plan (appropriation bills proposals) calls for 30% cuts to all the non-defense areas of the budget…and also for another $5.1 trillion round of tax cuts.  (All of these measures are contrary to what they agreed to and was signed into law by the debt ceiling deal just two weeks ago.)  So, this is the start of what will clearly be another round of GOP brinksmanship. This time, instead of threatening a default of US debt, they will threaten a government shutdown, leading up to the September fiscal year-end.  So, be prepared for coming daily market swings (chop or volatility) based on a series of “the world is ending” and “I’m the most XXX and the other side are all YYY” proclamations from every politician, economist, pundit, Tom, Dick, and/or Harry.  In other government news, several US federal agencies joined a growing list of companies (SHEL as one example) and governments hit by a global hacking campaign known as MOVEit.  This attack took advantage of a flaw in PRGS company software that is widely used (globally) in information infrastructures.

With that background, it looks like the large-cap indices are looking to start Friday with a little rest (modestly lower open). However, QQQ is near premarket highs at this point and the Bulls seem to want to keep running in the tech-heavy index. All three major index ETFs remain above their T-lines (8ema). So, at least at this point, there is no way to see the market except in a bullish trend. In terms of over-extension, the QQQ is far above its 8ema as of this moment while the premarket action has allowed SPY to get some extension relief. The T2122 indicator is back inside of the overbought territory, but only midway into that measure of overextension. A few other things to keep in mind. First, we have had a hell of a bullish run-up this week. So, profit-taking would seem to be in order (don’t be surprised if we see it by the market overall today). Secondly, the first point is especially true ahead of the upcoming 3-day weekend (and you also need to prepare your account for that off period…take profits, hedge, lighten up, move stops, etc.). Finally, it is “triple witching” (the fourth witch stopped trading in 2020). So, we should expect heavy volume today…particularly at day end…with the possibility of “pinning” or even increased volatility in spots. (Triple witching does not tend to increase volatility overall…but you can drown in a river that viewed overall is only a quarter inch deep.)

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