Markets jumped higher again on Tuesday.  SPY gapped up 0.25%, DIA gapped up 0.37%, and QQQ gapped up 0.29% to start the day.  From there, was saw divergence. SPY chopped its way sideways until 2:15 p.m. before rallying into the close.  At the same time, DIA rallied sharply from the open until 11:15 a.m.  Then it meandered sideways until 1:30 p.m. before rallying more modestly but steadily the rest of the day.  For its part, after the gap higher, QQQ immediately faded the gap and sold off to reach the lows of the day at 12:30 p.m.  The rest of the say saw a modest QQQ rally that got it back just above the prior close by the end of the session. This action gave us a huge, gap-up, white candle in the DIA (with tiny upper wick), a gap-up white-bodied candle in the SPY, and a black-bodied long-legged Spinning Top in the QQQ. DIA and SPY both printed new all-time highs and new all-time high closes.  Meanwhile, QQQ retested its T-line (8ema) from above and passed the test again.

On the day, all 10 sectors were in the green with Industrials (+2.72%) leading the market, but the gains were wide-spread with five sectors up more than 1.70%.  On the other side, Energy (+0.14%) was by far the laggard sector.  At the same time, SPY gained 0.58%, DIA gained a whopping 1.81%, and QQQ gained 0.04%. (It is worth noting that for the fourth consecutive day we have seen a rotation into small-caps with IWM (+3.76%) way out in front of the three major index ETFs.  VXX gained 0.97% to close at a still extremely low at 10.41.  T2122 spiked to the extreme top end of its overbought territory at 99.20.  On the bond front, 10-year bond yields dropped sharply to 4.161% and Oil (WTI) fell 1.31% to close at $80.84 per barrel.  This happened on very heavy volume (twice the average volume) in DIA, but less than average volume in SPY and QQQ.  So, Tuesday was a divergent day with a modest selloff in most of the tech names that have led markets for ages.  NVDA (-1.62%), GOOGL (-1.40%), and META (-1.28%) fell.  However, among the DIA names, UNH (+6.47%), CAT (+4.31%), BA (+3.91%), and HD (+2.97%) spiked.  (It is worth noting that 19 of the 30 were up more than 1.00%.) 

The major economic news scheduled for Tuesday included the June Import Price Index, which was flat and lower than expected at 0.0% (compared to a forecast of +0.2% but higher than the May -0.2% reading).  On the other side, the June Export Price Index was also lower than expected at -0.5% (versus a -0.1% forecast but not as far down as in May when the value was -0.7%).  At the same time, June Core Retail Sales were much stronger than predicted at +0.9% (compared to a forecasted +0.2% and a May reading of +0.4%).  For the headline number, June Retail Sales were flat at 0.0% (versus the forecast of -0.3% and the May value of +0.3%).  Later, May Business Inventories grew 0.5% (compared to a +0.4% forecast and April’s +0.3%).  At the same time, May Retail Inventories were flat at 0.0% (versus a 0.0% forecast and down from April’s +0.3%).  Then, after the close, the API Weekly Crude Oil Stocks report showed a significant drawdown of 4.440 million barrels (compared to the prior week’s -1.923-million-barrel drawdown). 

In economic speak news, on Tuesday, Fed Governor Kugler expressed cautious optimism that inflation is falling back to the FOMC’s 2% target.  She said, “We’re seeing more progress on all three categories now.” (She was referring to inflation on goods, services, and housing.)  Kugler continued, “I’m cautiously optimistic that we’re seeing progress and the type of progress that we need to get back to 2%.”  She indicated that the job market is rebalancing, saying, “This continued rebalancing suggests that inflation will continue to move down toward our 2% target.”  She also said that if current trends continue, “I anticipate that it will be appropriate to begin easing monetary policy later this year.”

After the close, HWC, IBKR, and OMC all reported beats on both the revenue and earnings lines.  Meanwhile, JBHT missed on both the top and bottom lines.

In stock news, on Tuesday, PM announced it would be expanding the production of its nicotine pouches (Zyn), investing $600 million to build a new CO plant to expand their production.  Later, Russian tech firm YNDX spun off a portion of its business called Nebius Group, located in Amsterdam, for $5.4 billion.  (EU sanctions against the founder of YNDX were lifted in March, allowing the deal to proceed.)  At the same time, Bloomberg reported that VZ is in talks over the possibly of selling 5,000-6,000 cell service towers across the US.  VZ is reportedly looking for $3 billion.  (In 2015, VZ sold 11,000 towers to AMT for $5 billion.)  Meanwhile, TCRT announced a 1-for-10 reverse split to take effect July 17 at 5 p.m.  At the same time, 28k flight attendants will vote on whether to authorize a strike as their AFA union will begin negotiating a new contract with UAL.  After the close, Bloomberg reported that TSLA is hiring hundreds of new employees for its yet to be approved robotaxi program.  (Each robotaxi must constantly be monitored by a human supervisor due to deficiencies in the long claimed “full self-driving” system.)

In stock legal and governmental news, on Tuesday, Reuters reported that the FTC has requested details on its deal to hire the top executives and researchers from AI startup Adept.  (Similar investigations are also ongoing related to MSFT and GOOGL hiring away the main talent from AI startups.)  At the same time, SKX filed suit against private brand LL Bean, alleging the latter infringe on two of SKX’s patents.  Later, Reuters reported that the European Commission has told VLKAF (Volkswagen) and BMWYY (BMW) that they may consider lowering the tariffs on those two carmakers’ imports from China of electric vehicles.  (The article said the EC is willing to classify the two automakers as “cooperating companies,” which would make them eligible for 20.8% tariffs compared to the general China EV tariff of 37.6%.)  Meanwhile, TRP said that an arbitration tribunal has thrown out its claim seeking to recover $15 billion from the US government related to the cancellation of the Keystone XL pipeline.  At the same time, a group of restaurants in the Houston area filed a $100 million lawsuit against CNP alleging the utility has displayed incompetence and negligence in efforts to restore power quickly following Hurricane Beryl. 

Overnight, Asian markets were evenly mixed. Taiwan (-0.95%) and South Korea (-0.80%) paced the losses while New Zealand (+0.88%) and Australia (+0.73%) led the gainers.  In Europe, with the notable exception of Russia (+1.39%) we see red across the board at midday.  The CAC (-0.57%), DAX (-0.81%), and FTSE (-0.33%) lead the region lower in early afternoon trade.  Meanwhile, in the US, markets are looking to gap lower on Trump’s statements that foreign nations (Taiwan and South Korea…and by implication Europe) should pay for US military facilities and expenditures).  The DIA implies a -0.34% open, the SPY is implying a -1.01% open, and the QQQ implies a -1.55% open at this hour.  At the same time, 10-Year bond yields are down to 4.172% and Oil (WTI) is up half a percent to $81.15 per barrel in early trading.

The major economic news scheduled for Wednesday includes June Building Permits and June Housing Starts (both at 8:30 a.m.), June Industrial Production (9:15 a.m.), EIA Crude Oil Inventories (10:30 a.m.), and Fed Beige Book (2 p.m.).  Fed Governor Waller also speaks at 9:35 a.m.  The major earnings reports before the open include ALLY, ASML, CFG, ELV, FHN, JNJ, NTRS, PLD, SYF, and USB.  Then, after the close, AA, CCI, DFS, EFX, KMI, LBRT, STLD, SNV, UAL, and WTFC report.

In economic news later this week, on Thursday, we get Weekly, Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, US Leading Economic Indicators Index, Fed’s Balance Sheet.  We also hear from Fed member Daly and Fed Governor Bowman.  Finally, on Friday, Fed members Williams and Bostic speak.

In terms of earnings reports later this week, Thursday, ABT, ALK, BX, CTAS, CHI, DPZ, HXL, INFY, KEY, MTB, MAN, MMC, NOK, NVS, SNA, TSM, TXT, AIR, ISRG, NFLX, PPG, and SCHL report.  Finally, on Friday, AXP, ALV, CMA, EEFT, FITB, HAL, HBAN, RF, SDVKY, SLB, TRV, and WIT report.

So far this morning, ASML, ELV, JNJ, NTRS, SYF, and USB all reported beats on both the revenue and earnings lines.  Meanwhile, ALLY and ASAZY missed on revenue while beating on earnings.  On the other side, CFG and FHN beat on revenue while missing on earnings.  ASML and ALLY posted significant earnings beats.  However, ASML lowered forward guidance.

In miscellaneous news, BAC released the results of its survey of fund managers.  This time, the survey finds that fund managers are still bullish on stocks.  However, growth expectations are the lowest since March of 2022.  27% now expect a softening global economy over the next 12 months (up sharply from just 6% feeling that way in June).  Nonetheless, 68% still expect a soft landing in the US, with another 18% expecting no landing at all.  Only 11% are expecting a hard landing. In addition, 67% of the surveyed expect no recession in the next 12 months.  Meanwhile, Bloomberg reported that Wall Street’s biggest banks have pulled off a clean sweep this quarter, all reporting higher-than-expected gains. They have averaged an 18% increase in revenue during Q2. Finally, after the close, Cox Automotive reported car repossessions were up 23% in the first half of 2024 compared to the first half of 2023.

With that background, it looks as if the market is dropping and will be seeking shelter after the disgraced ex-President’s remarks. QQQ gapped down through its T-line (8ema), SPY gapped lower and is now retesting its T-line from above, but DIA is just giving a modest lower candle in the early session after a massive gain Tuesday. All three major index ETFs have printed a black-body candle since the start of the early session. Overall, the short-term trend remains bullish but perhaps under pressure. We are seeing rotation out of tech and into small-caps and the traditional mega-cap names. However, for the mid-term and longer-term, there is no way to look at markets except to say they are extremely bullish. In terms of extension, only DIA is stretched (to the upside). Meanwhile, the T2122 indicator remains extremely overbought. Therefore, the market may be in need of some rest or a pullback. (Just remember, the market can stay over-extended longer than we can stay solvent predicting a turn too early.) With regard to those 10 big dog tickers, nine of the 10 are in the red this morning. AMD (-4.51%), NVDA (-4.05%) and any other name that depends on Taiwan is down hard on Trump’s isolationist comments. Only INTC (+0.58%) has managed to stay on the green side of flat among those market leaders.

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

See you in the trading room.

Ed

🎯 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