Unprecedented AAPL Buyback Program

Markets gapped up Thursday as traders rethought their late-day selloff from the day before.  SPY gapped up 0.76%, DIA gapped up 0.61%, and QQQ gapped up 0.94%.  At that point, all three major index ETFs faded and recrossed the gap by 10:10 a.m.  However, this was a Bear Trap with all three major index ETFs starting a steady rally at 10:15 a.m., recrossing the gap and continuing North and reaching the highs of the day at 3:15 p.m.  From there, SPY, DIA, and QQQ all sold off modestly the last 45 minutes of the day.  This action gave us white-bodied Hammer-type candles in all three major index ETFs.  All three crossed back above their T-line (8ema) during the session.  This all happened on less than average volume in all three, with QQQ have by far the weakest volume relative to its average.

On the day, all 10 sectors were in the green with Consumer Cyclical (+2.01%) far out front of Technology (+1.50%) which was far out in front of the other sectors, leading markets higher.  At the same time, SPY gained 0.93%, DIA gained 0.89%, and QQQ gained 1.28%.  VXX dropped 3.29% to close at 13.24 and T2122 popped higher and is now in the top-end of its mid-range at 70.16.  10-year bond yields fell to 4.589% and Oil (WTI) was just on the red side of flat, closing at $78.96 per barrel.  So, Thursday was a rebound day after Wednesday’s Fed indecision.  However, truly, nothing major has changed in the last 10-12 days as bullish moves are met with bearish moves and visa-versa. 

The major economic news scheduled for Thursday included March Exports, which came in lower at $257.60 billion (compared to February’s $263.00 billion reading).  The March Imports also fell to $327.00 billion (down from $331.90 billion in February).  This gave us a March Trade Balance of -$69.40 billion, which was down slightly from the February -$69.50 billion value.  At the same time, Weekly Initial Jobless Claims were lower than expected at 208k (compared to a 212k forecast but flat from the prior week’s 208k).  On the ongoing side, Weekly Continuing Jobless Claims were flat at 1,774k (versus a forecast of 1,800k and the prior week’s 1,774k).  Meanwhile, the Q1 Nonfarm Productivity was down slightly to +0.3% (compared to a much higher forecast value of +0.8% but only down a touch from Q4’s +3.5%).  However, the bigger miss was on Q1 Unit Labor Cost (preliminary) which was up 4.7% (versus a +3.6% forecast and greatly higher than Q4’s +0.4%).  Later, March Factory Orders were up to +1.6% (which was in line with the +1.6% forecast but up nicely from February’s +1.2%).  Then, after the close, the Fed Balance Sheet showed a $40 billion reduction from $7.402 trillion to $7.362 trillion. 

After the close, AMGN, AAPL, ACA, SQ, BKNG, BFAM, COIN, CTRA, DVA, EOG, EXPE, FTNT, GDDY, HOLX, HUN, ILMN, MTZ, MELI, MSI, OPEN, OTEX, PTVE, REZI, RGA, RKT, RYAN, SEM, and TXRH all reported beats on both the revenue and earnings lines.  At the same time, AES, DLR, ED, FND, IR, ZEUS, POST, SM, and X missed on revenue while beating on earnings.  On the other side, ALHC, BECN, CIVI, DKNG, LYV, MODV, and WSC beat on the revenue line while missing on earnings.  However, AEE, WTRG, MNST, OEC, and SWN missed on both the top and bottom lines.

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In stock news, on Thursday, CB told the Wall Street Journal is it preparing to pay a $350 million claim to the state of MD related to the collapse of the Francis Scott Key Bridge in March.  At the same time, NVO announced it will be reducing the price of its blockbuster weight loss drug Wegovy amidst an increase in competition from LLY. After the close, AAPL reported that iPhone sales fell less than expected (down 10% year on year in Q1) while overall sales fell 4%.  However, AAPL also announced the biggest stock buyback program in the history of the market at $110 billion (a 22% increase over their record $90 billion repurchase program from last year).  AAPL share soared in post-market trading on the news.  Also after the close, AMGN announced it had scrapped plans for a pill version of a weight loss drug and will move ahead with an injection version similar to NVO and LLY drugs in the same class.  For what it is worth, the CEO of AMGN touted excellent early-phase results of its injectable weight loss candidate.  Finally, SONY and APOS both expressed interest in buying PARA for $26 billion in cash as the company considers a bid from Skydance.  Under the alternate offer, SONY would be the majority shareholder with APOS holding a minority position.

In stock legal and governmental news, on Thursday, a Russian court ruled that JPM assets held in accounts which cannot be transferred outside of Russia will not be seized.  The court said this covered $2.25 billion of JPM’s assets.  Later, the FCC told Congress Thursday that 40% of US telecom providers report they will need additional government money to fund the removal of Chinese equipment from Huawei and ZTE from their networks.  (Congress approved $1.9 billion and the telecom companies report $4.98 billion will be needed to cover the 39.5% of replacement cost that the law said would be covered.)   At the same time, SPR filed suit in US district court to block TX from demanding documents and conducting a probe of the company (which does no manufacturing in TX).  Later, RIVN reported that it received $827 million in incentive packages from the state of IL to help fund the expansion of the company’s operations in that state.  At the same time, the Wall Street Journal reported that the US Dept. of Justice has launched a probe into how Chinese drug traffickers have laundered money from the sale of fentanyl through TD (TD Bank).  After the close, the USDA announced that WMT had recalled 16,000 pounds of ground beef due to a suspicion it is infected with E. coli. 

Overnight, Asian markets were evenly mixed.  Hong Kong (+1.48%) led the gainers while Shenzhen (-0.90%) paced the losses.  In Europe, the bourses are much more bullish with 12 of 15 exchanges in the green at midday.  The CAC (+0.53%), DAX (+0.40%), and FTSE (+0.49%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward another green start to the day.  The DIA implies a +0.79% open, the SPY is implying a +0.40% open, and the QQQ implies a +0.68% open at this hour.  At the same time, 10-year bond yields are down to 4.559% and Oil (WTI) is up 0.34% to $79.22 per barrel in early trading.

The major economic news scheduled for Friday include April Avg. Hourly Earnings, April Nonfarm Payrolls, April Private Nonfarm Payrolls, April Participation Rate, and April Unemployment Rate (all at 8:30 a.m.), April S&P Global Services PMI and April S&P Global Composite PMI (both at 9:45 a.m.), ISM Non-Mfg. Employment, ISM Non-Mfg. PMI, and ISM Non-Mfg. PMI Price Index (all at 10 a.m.), and Fed Member Williams speaks at 7:45 p.m.  The major earnings reports scheduled for before the open include on Friday, ADNT, AXL, AMRX, BEPC, BEP, CBOE, CBRE, GTLS, LNG, CRBG, FLR, FYBR, GPRE, HSY, KOP, MGA, NMRK, NVT, PAA, PAGP, TRP, TAC, TRMB, and XPO.  Then, after the close there are no major earnings report scheduled. 

So far this morning, AMRX, BBU, CBOE, CRBG, FYBR, HSY, NVT, TRP, TRMB, and XPO all reported beats on both the revenue and earnings lines.  Meanwhile, ADNT, CBRE, OMI, and TAC all missed on revenue while beating on earnings.  On the other side, BEP and LNG beat on revenue while missing on earnings.  However, GTLS, FLR, GPRE, and MGA missed on both the top and bottom lines.  It is worth noting that MGA lowered its forward guidance.

With that background, it looks as if the Bulls are gapping markets higher today as all three major index ETFs opened the premarket higher. However, with the exception of DIA’s significant white body, they have only printed indecisive candles since the open of the early session. All three are back above their T-line (8ema). So, the short-term trend is now bullish again. Meanwhile, the mid-term remains bearish. The longer-term market remains Bullish but under pressure. Overall, the character of the market is indecisive, choppy, and volatile. In terms of extension, none of the three major index ETFs is extended above their T-line. At the same time, the T2122 indicator is now in the upper-end of its mid-range. So, both sides have room to run if they can gain the momentum to do so. In terms of those 10 big dog tickers, they are evenly split with 5 in the green and 5 in the red this morning. However, AAPL (+6.02%) is by far the biggest mover and dragging the overall market higher on its massive buyback program announced last night. Keep in mind that we still have the April Jobs Report is likely to cause volatility or a change in market direction this morning. Also, don’t forget this is Friday, pay day. So prepare your account for the weekend news cycle.

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.


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