Market Thoughts

5 Day Rule in play – Basically I have a play in my playbook that says, After a bottoming candle and 5 green bars/candles straight up, “on the 6th day, it should rest and reverse”. (This logic also applies to timing reversals at tops and 5 consecutive red candles straight down.) Today, after tagging my $2906 PT, the SPX reversed on queue and traded down rest of day, closing on the lows and engulfing (bearish) the prior day. My #1 indicator foretold this reversal and we timed it in my live trading room a good 15 min before The Turn.

With that, last week’s move off $2742 support was aggressive and this current pullback that has started today may only make it to $2837 before resuming its uptrend (lower probability), but if SPX decisively breaks $2800 – the point of break up – we have a high probability short to $2718.

As I said in my live trading room today: There are BUYERS ABOVE $2950 and SELLERS BELOW $2700.  Everything in between is CHOP.


 And with that, have a look at the volume under this move: .. maybe it is nothing. H/T @AlessioUrban

Stocks of Interest in the News

More Antitrust actions:
Congress is starting its probe into Big Tech with a focus on how online platforms like Google and Facebook have devastated the news industry. A House Judiciary antitrust panel will explore the market power they have over publishers, including their role in digital advertising, data collection and privacy
Going Private, or not:
Deals news: Apollo will buy Shutterfly for about $1.74 billion in cash and plans to merge it with Snapfish. CVS’s $68 billion purchase of Aetna may be blocked by a federal judge, the NY Post reported. A final T-Mobile, Sprint decision may come this week
Putting their chips on the table:
U.S. storage device maker Western Digital froze its partnership with Huawei and halted shipments to the company to comply with the U.S. ban, CEO Steve Milligan told Nikkei. He met Steven Mnuchin and Wilbur Ross to outline the risks of undoing the global supply chain and is considering a license to resume trade with Huawei
Before Brexit:
The U.K. economy shrank 0.4% in April compared with March, the Office for National Statistics said Monday, the largest monthly decline since March 2016. The contraction was driven by the manufacturing sector
About Time:
BYND downgraded to neutral from overweight at JPMorgan after shares surge over 570% since IPO
The Call Buying was a Tell
AVGO revealed it has landed a two-year deal with Apple Inc. (AAPL) to supply radio-frequency components for smartphones, tablets and smartwatches, and that Apple said it intends to rely solely on Broadcom for the components as long as the company can meet commitments for quantity and quality
TSLA Investment Meeting TONIGHT:
After swinging to a loss in Q1, Elon Musk insisted that the company will return to profitability in the second half of 2019, meaning investors will focus on any updates to those predictions.
***Shares have surged 19% since bottoming out June 3, when Samantha suggested a long >$180 stop and PT of $224.

Macro Matters

The Fed has way more room to cut rates than other DM Central Banks:

US blended PE ratio is still 31% higher vs its long term average.

Get Ready for Earnings Season
As it stands as of last weekend, the S&P 500 is expecting flat earnings growth for Q2 ’19, lapping the toughest comp’s from 2018’s “tax-cut-aided” growth last year.
The Communications sector deserves a closer look given its expected 16% growth rate, easily the highest of the 11 SP 500 sectors for Q2 ’19. Brian Gilmartin


Samantha Says –

Market Commentary from Samantha’s Live Trading Room and StockTwits Chat Room

Jun. 11th, 8:51 am you know from my writings and tweeting this has been a theme of mine for weeks: how will the market punish the Fed if they don’t cut (sic)? Brinksmanship does not a healthy market make.
Jun. 11th, 9:24 am Nice move higher in materials. $X nice look on weekly and daily; move higher to 17-18 area possible (prior UOA noted last week/chart I liked)
Jun. 11th, 9:25 am July could be a looooong month with looming G20 meeting and FOMC at the end of the month. Chop to lower.
Jun. 11th, 9:37 am FB WORKING: 179 PT HIT
Jun. 11th, 9:38 am KWEB/BABA WORKING: 168 is next PT/strong res but gap above on WK would be uber bullish
Jun. 11th, 9:39 am AMD SHORT WORKING from yday AM after long PT HIT
Jun. 11th, 9:41 am MU from 33 now >35. NVDA from 138 now 150/21d WORKING
Jun. 11th, 9:42 am USD/JPY: $1.1B option that needs to expire (108.50 will pin it)
Jun. 11th, 9:42 am ROTATION INTO RETAIL WORKING: Retail numbers out Fri – this is front-running, as usual. $XRT
Jun. 11th, 9:47 am $GLD coming down with miners and more than a little bit
Jun. 11th, 9:47 am $XLE still looking for that hold over 61.85
Jun. 11th, 9:48 am $SPX PT y-day was 2906..made it to 2904.  these types of moves can retrace up to 50%. Looking at 2844 for retracement area (to start)
Jun. 11th, 9:49 am $WYNN and $LVS from first of the week…remains on list of bullish reversals from oversold
Jun. 11th, 9:51 am $WWE continued weakness, below 50 WK MA and despite oversold could move lower.
Jun. 11th, 10:03 am SFIX >$30 looking bullish – could be trend reversal / bottom fishing play for Sept kinda thing. Needs to stay >$26
Jun. 11th, 10:06 am $USO still a wild card. If oil can’t hold $50 headed to $40. Want to see over $53.
Jun. 11th, 10:07 am  $CRM ITM 15.25M bet with Jan 2020 expiry. You don’t see that everyday.
Jun. 11th, 10:08 am Iron Ore futures up 75% since November
Jun. 11th, 10:12 am $SPOT Sellers came in (at PT of $144) and pushing it lower. Back in channel.
Jun. 11th, 10:14 am Defense names getting whacked. Trump comments about RTN UTX merger (as limiting competition/doesn’t like).
Jun. 11th, 10:18 am $MDB break of 3DMA and looking for lower (with COUP PAYC WDAY)
Jun. 11th, 10:19 am $FB calls lead puts 4:1
Jun. 11th, 10:27 am NEW IDEA: BIDU >$115, must stay >$113 to swing long as bottom fishing play on Morning Star Reversal on Weekly.
Jun. 11th, 10:28 am Small Caps, Transports are still the weak knees. Financials at resistance at $27.50 as a Tell: bullish/bearish based on next wk action.
Jun. 11th, 10:28 am XAR sector in sell off based on Trump’s talk yday on CNBC of this sector consolidation (RTN UTX) being bad for competition.
Jun. 11th, 10:31 am NEW IDEA: GRUB >$70 (72) can have legs.
Jun. 11th, 10:35 am COUP, MDB, PAYC lead the IGV leaderboard for pull-backs. Remember those (COUP) puts I called out yday AM… they were prescient and they have also been taken off.
Jun. 11th,11:43 am $VXX calls incoming earlier and now market taking a leg lower
Jun. 11th, 11:46 am $SPX looking like a good swing short if head below 2880. To 2844 area as mentioned earlier
Jun. 11th, 12:09 am $BA weak (AM chase short idea turns swing) short below 348 looking like a good play.

Wall Street Jane’s Journal

Not every day, week, or month will be successful in trading.

Trade Idea: I continue to follow the action in $ADBE (see y-day recap for details).

Interesting Reads

The collapse of the $13 billion Woodford investment fund is a taste of what a private equity liquidity crisis will look like

Jim Edwards | “The private equity industry has grown to the point where it owns significant amounts of capitalisation in an illiquid manner