On Friday, the Bulls closed out a strong week with modest gain.  SPY gapped down 0.32%, DIA gapped down 0.23%, and QQQ gapped +0.39%.  Next, all three major index ETFs meandered back and forth across the gap until 11:30 a.m.  From there, all three rallied briskly until 1 p.m.  The rest of the day saw a slow and weak pullback. This action gave us white-bodied candles with modest upper wicks in the SPY, DIA and QQQ.  During the day, QQQ retested and held above its 50sma.  This happened on very low volume in the SPY and QQQ as well as below-average volume in the DIA.

On the day, nine of the 10 sectors were in the green again with Financial Services (+0.78%) and Communication Services (+0.72%) leading the way higher.  On the other side, Industrials (-0.01%) was the only sector in the red (barely).  Meanwhile, SPY was up 0.22%, DIA gained 0.21%, and QQQ gained 0.13%.  VXX fell slightly to close at 45.23 and T2122 also pulled back just a bit to stay in the overbought territory at 86.11.  On the bond front, 10-year bond yields fell to 3.883% and Oil (WTI) dropped 2.00% to close at $76.60 per barrel.  So, Friday was a less volatile but bullish day as traders got ready for the weekend.

For the week, SPY gained 4.00%, DIA gained 2.93%, and QQQ gained 5.47%.  This was the best weekly performance for the year in all three.  All three major index ETFs also crossed above their Weekly T-line (8ema).  In addition, DIA also closed at a new weekly high close.

The major economic news scheduled for Friday included July Building Permits, which came in light at 1.396 million (compared to a forecast of 1.430 million and a June value of 1.454 million).  At the same time, July Housing Starts also were light at 1.238 million (versus the 1.340 million forecast and June’s 1.329 million reading).  Later, Michigan Consumer Sentiment was better than predicted at 67.8 (compared to the 66.7 estimate and July’s 66.4 number).  At the same time, Michigan Consumer Expectations were even more positive at 72.1 (versus the 68.5 forecast and July’s 68.8 value).  On the inflation front, Michigan 1-Year Inflation Expectations were flat at 2.9% (compared to a forecasted 2.8% but in-line with July’s 2.9% reading).  For the longer-term, Michigan 5-Year Inflation Expectations were also flat at 3.0% (versus a 2.9% forecast and the July 3.0% survey result).   

In Fed news, on Friday, Chicago Fed President Goolsbee told NPR that he is leaning toward rate cuts at this point.  Goolsbee said, “You don’t want to tighten any longer than you have to…and the reason you’d want to tighten is if you’re afraid the economy is overheating, and this is not what an overheating economy looks like to me.”  He did decline to say whether he thought that first cut should be in September.  However, he said, “If we move toward less restrictiveness, it will help ease some of these credit conditions.”  He then went on to say that he thinks credit conditions appear tight now and he flagged rising unemployment as a “warning sign.”  In the end though, Goolsbee signaled his support for a gradual (rather than fast) pace to rate cute.  Analysts took this to mean he would support a quarter percent cut rather than a half percent.

In stock news, on Friday, UBS announced it will divest its Quantitative Investment Strategies unit to private Manteio Partners for an undisclosed amount.  (The QIS unit manages about $1.5 billion in quant funds.)   Later, RIVN said it has temporarily halted production of AMZN delivery vans due to a shortage of parts.  (AMZN is RIVN’s largest investor, holding a 16% stake.)  Meanwhile, MA announced it will cut 3% of its global headcount (about 1,000 jobs being cut) by the end of September.  Later, Reuters reported that BA and LMT are in talks to sell their ULA rocket-launching joint venture to Sierra Space for between $2 billion and $3 billion.  At the same time, CNBC reported on noise complaint issues made against AMZN related to its air drone delivery program in College Station, TX.  The latest complaints come after AMZN asked for approval to expand its air deliveries in the city from 200 to 470 flights per day and expanding hours of air operations to 7a.m. – 10 p.m. (AMZN drones create up to 60 decibels of noise, which is half that of a chainsaw and more than one-third less than heavy equipment according to OSHA.)

In stock legal and governmental news, on Friday, the US Dept. of Commerce said that TXN will receive $1.6 billion towards the construction of three new facilities under funding approved by the CHIPS Act.  At the same time, shareholders of formerly acquired German Postbank rejected a settlement offer from DB.  An attorney for the shareholders said the proposal was a “crackhead offer that was dead on arrival.” Later, GSK said it would seek dismissal of an upcoming lawsuit related to Zantac causing cancer.  The move followed Thursday’s court ruling in favor of GSK.  At the same time, a US Appeals Court threw out Dept. of Transportation safety standards for pipeline operators.  (The case was brought by the Natural Gas Assn. of America who argued the Hazardous Materials standards do not provide sufficient benefits to outweigh the costs they would incur to comply.)  At the same time, the NHTSA announced that F is recalling 85k Explorer SUVs equipped with the “Police Interceptor” package due to risks of engine fire.  The recall covers 2020-2022 model years. 

Elsewhere, a federal appeals court narrowed an injunction that blocked enforcement of a CA law aimed at protecting children’s online safety.  The court ruled that while the group suing to stop the law is likely to show the law violates the first amendment, but that the lower court failed to recognize than many provisions of the law could survive after removing first amendment concerns.  (AMZN, GOOGL, and META are the hallmark members of the group that sued.)  At the same time, the State Dept. approved the same of $264 million of RTX missiles to Canada.  Later, the FTC filed suit against ABG, alleging that its dealerships charged Black and Latino customers higher prices and routinely added services to customer contracts without consent.  Meanwhile, Reuters reported that unsealed documents from a TX court showed that TPX’s proposed $4 billion takeover of Mattress Firm was “intended to eliminate future competition.”  At the same time, a US District Judge temporarily blocked the launch of a sports streaming service (joint venture) from DIS, FOX, and WBD based on antitrust claims from smaller rival FUBO.

Overnight, Asian markets were mostly green as only three of the 12 exchanges were left showing red.  Japan (-1.77%) was the biggest mover in the region while Thailand (+1.56%) and Malaysia (+1.53%) paced the gains.  In Europe, we see a similar picture taking shape.  Only three of the 15 bourses are in the red and a couple of those are barely red.  The CAC (+0.34%), DAX (+0.15%), and FTSE (-0.04%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a flat start to the morning.  The DIA implies a -0.02% open, the SPY is implying a +0.01% open, and the QQQ implies a -0.02% open at this hour.  At the same time, 10-Year bond yields at down to 3.875% and Oil (WTI) is off three-quarters of a percent to $76.08 per barrel in early trading.

The major economic news scheduled for Monday is limited to US Leading Economic indicators Index (10 a.m.)  We also hear from Fed Governor Waller (9:15 a.m.).  The major earnings reports scheduled for before the open are is limited to EL and ZIM. Then, after the close, FN and PANW report.

In economic news later this week, on Tuesday, API Weekly Crude Oil Stocks are reported. Fed members Bostic and Barr also speak.  Then Wednesday, we get EIA Weekly Crude Oil Inventories and July FOMC Meeting Minutes. One Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, S&P Global Mfg. PMI, S&P Global Services PMI, S&P Global Composite PMI, July Existing Home Sales, and the Fed Balance Sheet are reported.  The Jackson Hole Symposium also starts.  Finally, on Friday we get July Building Permits, and July New Home Sales.  The Jackson Hole Symposium also continues.

In terms of earnings reports later this week, on Tuesday, RERE, AS, FUTU, HTHT, LOW, MDT, VIPS, XPEV, ALC, SQM, COTY, JKHY, KEYS, LZB, PAGS, TOL, and ZTO report.  Then Wednesday we hear from, ADI, DY, M, TGT, TJX, ZK, A, CAAP, LU, NDSN, SNOW, SNPS, URBN, and ZM.  On Thursday, AAP, BIDU, BILI, BJ, CSIQ, IQ, NTES, PTON, TD, VIK, BMA, INTU, ROST, and WDAY report.  Finally, on Friday, we hear from GFI.

So far this morning, EL and ZIM reported beats on both the revenue and earnings lines.

In late-breaking news, AMD announced Monday that it will acquire server manufacturer ZT Systems for $4.9 billion (75% cash and 25% stock).  This is part of the move toward offering total AI solutions rather than just selling AI Chips or AI processing cards.  The industry move is toward being able to sell entire AI computing server racks to corporate clients at a higher margin.  Elsewhere, China announced it had made a deal with the US to cooperate on matters of financial stability after talks in Shanghai last week.  The PBOC (Chinese Central Bank) said the deal covers capital markets, cross-border payments, and the two country’s monetary policy.  A statement on the deal from the US Treasury, SEC, and Fed (agencies that participated in the talks from the US) as well as the details are not yet available.  However, the belief is that the talks were aimed at heading off any global systemic risk such as from the volatile and stressed Chinese bond markets.

With that background, all three major index ETFs are just on the green side of flat at the moment. For what it is worth, all three have printed small, white-body candles with lower wicks at this point. All three are still extended above their T-line (8ema) and the short-term trend is clearly strongly bullish. Meanwhile, the mid-term bearish trend is broken, though one could argue a new mid-term bullish trend has not formed yet. In the long-term, we are now clearly back in a Bull trend. In terms of extension, as I mentioned all three are stretched to the upside relative to their T-line. At the same time, the T2122 indicator is now in the lower half of its overbought territory. So, the market is in need of a rest or pullback. With that said, remember the market can remain overextended a lot longer than we can stay solvent predicting a reversal. So, keep the mantra “follow, don’t lead, but also don’t chase” in mind. With regard to those 10 big dog tickers, six of them are in the green, led by AMD (+1.98%). However, the biggest dog (in terms of dollar-volume traded), is down with NVDA (-0.14%) among the laggards.

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