Plenty of Data and Powell Speaks Today
November 30, 2022 by Ed Carter
The major exchanges opened essentially flat on Tuesday and then undulated sideways until just before 11 am when the bears sold us off for 30 minutes. At that point, markets ground essentially sideways with a slightly bullish trend right into the close. This action gave us Spinning Top candles in the large-cap indices, while the QQQ printed a bigger-bodied black candle with wicks on both ends (fat-bodied Spinning Top). All three major indices also gave up their T-lines (8 ema) on the daily candle. This all happened on very low volumes, with the DIA coming the closest to its average volume.
On the day, five of the ten sectors were in the green. The Energy sector (+1.65%) and Basic Materials (+1.50%) were by far the biggest winners while the Utilities (-0.56%) and Technology (-0.53%) sectors were down the most. At the same time, the SPY was down 0.17%, the DIA was dead flat, and the QQQ was down 0.76%. The VXX fell by 1.446% to 15.49 and T2122 climbed but remains in the mid-range at 59.52. 10-year bond yields have climbed a bit to 3.752% and Oil (WTI) is up 1.77% to $78.61 per barrel. So, Tuesday has been an indecisive day that saw the pullback continue in the high-tech QQQ.
In economic news, Conference Board Consumer Confidence came in slightly above its forecasted value at 100.2 (compared to a 100.0 forecast). However, that value was still below the October reading of 102.2 (and actually the lowest level since July). Reuters also reported Tuesday that three of the twelve Fed Regional Banks had wanted a smaller rate hike in November, but they were outvoted by the nine that voted for a 0.75% rate increase. However, none of the 12 had been in favor of a 1.00% or greater rate hike in November. (The Fed Regional Banks do not set rate policy, but do vote on the discount rate which moves in tandem with the policy rate.)
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In stock news, the CEO of AMCX resigned less than 3 months after taking that job. AMCX also announced that its previously announced 20% workforce reduction will continue as planned. In EV news, RIDE announced that its first 500 electric trucks are now on their way to customers. Meanwhile, the CEOs of both KR and ACI were grilled by the US Senate Judiciary Committee Antitrust Panel. (The two had agreed to a $25 billion deal for KR to acquire ACI, resulting in a chain of nearly 5,000 stores after selling between 100 and 375 stores to offset antitrust concerns.) Elsewhere, WMT was sued by an employee over its recent Virginia store shooting. Across the pond, MA lost an appeal to a UK court ruling, where MA had asked the court to throw out the portion of liability that stemmed from claims of 3 million people who have died since the case was first brought. The court ruled MA will have to face all the claims ($12+ billion total).
In miscellaneous news, ADBE Analytics confirmed Tuesday that Cyber Monday sales hit a record of $11.3 billion, $100 million higher than their Monday afternoon estimate. This record came in 5.8% above the 2021 level based on data from 85% of the top 100 internet retailers in the US. ADBE noted that much of that came in the electronics and toys categories. Elsewhere, the US House of Representatives is planning a vote on Wednesday to block a rail strike (despite labor group objections). In other government news, the TSA announced Tuesday that Thanksgiving Weekend travel saw the most people since before the pandemic with 24.6 million passengers over the weekend. This suggests a strong year-end for travel companies.
After the close, HPE, INTU, WDAY, and CRWD all reported beats on both the revenue and earnings lines. In the meantime, NTAP missed on the revenue line while beating on the earnings line. It is worth noting that NTAP also lowered its forward guidance.
So far this morning, RY, BEKE, DOOO, DCI, TITN, and LESL all reported beats on the revenue and earnings lines. Meanwhile, WOOF beat on revenue while missing on earnings. On the other side, HRL and XPEV missed on revenue while beating on earnings. It is worth noting that HRL, BEKE, XPEV, and LESL all lowered their forward guidance. However, TITN raised its forward guidance.
Overnight, Asian markets leaned heavily to the green side again with only Japan (-0.21%) in the red. Meanwhile, Hong Kong (+2.16%), South Korea (+1.61%), and Taiwan (+1.16%) led the region higher. In Europe, we see a similar story taking shape at midday. Only Greece (-0.27%) and Russia (-0.16%) are in the red while the FTSE (+0.75%), DAX (+0.40%), and CAC (+0.74%) lead that region higher in early afternoon trade. As of 7:30 am, US Futures are pointing toward a modestly green start to the day. The DIA implies a +0.08% open, the SPY is implying a +0.21% open, and the QQQ implies a +0.39% open at this hour. 10-year bond yields are back down to 3.72% and Oil (WTI) is surging up 2.26% to $79.99/barrel in early trading.
The major economic news events scheduled for Wednesday include Nov. ADP Nonfarm Employment Change (8:15 am), Preliminary Q3 GDP, Preliminary Q3 GSP Price Index, Preliminary Oct. Trade Goods Balance, and Preliminary Oct. Retail Inventories (all at 8:30 am), Chicago PMI (9:45 am), Oct. JOLTs Job Openings and Oct. Pending Home Sales (both at 10 am), EIA Crude Oil Inventories (10:30 am), and Fed Beige Book (2 pm). Fed Chair Powell also speaks at 1:30 pm. On the major earnings reports front, reports scheduled for the day include DOOO, DCI, HRL, BEKE, WOOF, RY, TITN, and XPEV before the open. Then, after the close, FIVE, LZB, PSTG, PVH, CRM, SNOW, SPLK, SNPS, and VSCO report.
In economic news later this week, on Thursday, Weekly Initial Jobless Claims, Oct. PCE Price Index, Oct. Personal Spending, Mfg. PMI, ISM Mfg. PMI, and a Fed speaker (Bowman) report. Finally, on Friday, we get Avg. Hourly Earnings, Nov. Nonfarm Payrolls, Nov. Unemployment Rate, and Nov. Participation Rate.
In earnings reports later this week, on Thursday, BMO, BIG, CM, DBI, DG, KR, PDCO, TD, MRVL, ULTA, and VEEV report. Finally, on Friday, we hear from CRBL and GCO.
In late-breaking news, a Standard & Poors report found that TSLA lost market share in the US. TSLA now has 65% market share for registered electric vehicles (down from 71% last year and 79% in 2020). Elsewhere, US mortgage rates fell for the third straight week with the national average 30-year fixed mortgage rate dropping to 6.49% (down from 6.67% the week prior). This rate drop helped loan applications to increase 4% on the week, but they were still down 41% from one year ago. With that background, markets are waiting on the GDP revision and all the other data on the way today. Perhaps most importantly, Fed Chair Powell's remarks will be closely watched this afternoon. And, of course, we have the November Payrolls data coming Friday.
With that said, the bullish trend in the DIA persists while the SPY and especially the QQQ have now turned into more of a sideways chop action. The question remains whether this is still just a normal pullback in the uptrend. All three major indices are below their T-lines (8ema), with the large-cap indices trying to retest that level in the premarket. So, there is no problem with extension, either in terms of that T-line or the T2122 indicator, which sits in the midrange. Be wary of chasing any knee-jerk reactions unless you are a very nimble (fast) trader. As always seems the case, more data (and over-reactions) are just around the corner.
As always, be deliberate and disciplined…but don't be stubborn. Remember it's 100 times more important to avoid big mistakes than it is to pick big winners. 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.
Swing Trade Ideas for your consideration and watchlist: BIDU, BOOT, UAN, RKT, NKE, KSS, KHC, and GSK. 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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🎯 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.