The large-cap indices both opened flat on Monday and then spent the rest of the day wandering back and forth within a one-half of one percent range.  Both the SPY and DIA closed toward the top end of their range, crossing back above their T-line (8ema).  Meanwhile, QQQ also opened flat and meandered sideways for an hour.  However, at 10:30 am, QQQ saw a selloff that lasted until noon (at which point it was down 0.9% on the day).  Then the bulls stepped in to drive a long, slow rally that lasted the rest of the day.  This action gave us three indecisive candles with white, small candles in SPY and DIA as well as a black-bodied Spinning Top (which failed a retest of the T-line) in the QQQ.  This happened on far lower-than-average volume in all three major indices.

On the day, six of the sectors were in the green with Energy (+1.59%) by far the strongest and Communications Services (-0.69%) the weakest sector.  At the same time, the SPY gained 0.10%, DIA gained 0.19%, and QQQ lost 0.21%.  VXX fell by a half of a percent to 38.99 and T2122 remained flat in the mid-range at 62.42. 10-year bond yields fell to 3.496% while Oil (WTI) rose to $78.69 per barrel.  So, Monday was another clearly indecisive day where traders seemed unsure whether to give more credence to better-than-feared earnings or signs of economic slowdown.  And, while the probability of a quarter-point rate hike next week is 91%, that is not a certainty.  As a result, markets waffle sideways.     

In stock news, FOX stock took a massive hit midday before recovering by 2.25% over the afternoon.  This came after FOX’s midday firing of their number one-rated host, Tucker Carlson.  Elsewhere, LCID replaced three directors, effective immediately, at its shareholder meeting amid a 46% drop in share price since the end of January.  After the close, FRC reported earnings.  However, the larger story is that the regional banks said deposits fell by 35.5% during Q1.  The bank said it also plans to reduce its workforce by 20%-25% during Q2.  Meanwhile, JNJ priced its consumer unit spinoff IPO (KVUE) at $20-$23/share.  JNJ will continue to own 92% of KVUE after the IPO.  After the close, TSN closed a Nebraska pork processing plant after a weekend fire kept the facility closed.  The company is shipping hogs to other facilities in order to avoid supply disruptions.  Also after the close, AMZN delivery drivers in southern California joined the Teamster Union Monday.  Finally, Reuters reports that GM and Samsung will announce Tuesday that they plan to build a new joint-venture battery manufacturing plant in the US.  This will be the fourth battery plant GM has begun in the last year. 

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In stock legal and regulatory news, cancer victims had their chance to urge a US judge to dismiss JNJ’s second attempt to be granted bankruptcy for a subsidiary that was created to avoid legal liability from its talc products (which have been found to contain asbestos).  Lawyers for the 38,000 lawsuits against JNJ argued that the company has stripped away much of the subsidiary’s funding since the first bankruptcy attempt was denied and the move is a blatant move to force plaintiffs to accept the company’s offered settlement.  Elsewhere, a lawyer for the San Francisco’s public school system began trial against MO claiming the company helped create a crisis of vaping addiction among teenagers.  MO faces thousands of similar cases and the other primary target of the suits (Juul, which MO was a major investor in) settled for $2.7 billion rather than continue to trial.  Later, a US Appeals Court ruled AAPL cannot ban links to outside payment platforms, upholding a ruling in an antitrust case brought by Fortnite game maker Epic Games.  However, the appeals court ruled in AAPL’s favor on nine other matters, saying AAPL’s App Store rules do not violate antitrust laws.  After the close, the European Commission put forward a new draft of its patent rules (draft is to be released Wednesday).  The new rules will make it easier for patent holders of mobile technology technologies (AAPL, MSFT, MSI, NOK, SSNLF) to sue for patent infringement.  (The draft needs to be approved by both the EC and EU countries before they become law.)  Meanwhile, HRB and SQ agreed to dismiss with prejudice (it can’t be refiled) HRB’s lawsuit against SQ over use of the name “Block.”

In miscellaneous news, Canada announced new rules Monday that will force airlines with flights departing or landing in Canada to compensate all passengers for flight delays in essentially all cases other than snowstorms.  The burden of proof that there was no way to avoid the delay is now shifted to the airlines, rather than the passenger.  Democratic Senators introduced a bill Monday to prohibit members of Congress (and their immediate families) from owning individual stocks.  The bill is likely dead on arrival since a very similar bill was introduced and defeated in 2022 and a Republican Senator introduced a similar bill named after former House Speaker Pelosi and aimed at purely political ends back in January.

After the close, CLF, WHR, AMP, CNI, FRC, BRO, CDNS, ARE, SSD, CADE, and RRC all beat on both the revenue and earnings lines.  Meanwhile, CCK, CHX, and AAN missed on the revenue line while beating on earnings.  On the opposite side, NBR beat on revenue while missing on earnings.  Unfortunately, PKG missed on both the top and bottom lines.  It is worth noting that CNI raised its forward guidance while PKG and CHX both lowered their guidance. 

Overnight, Asian markets were mostly in the red.  Hong Kong (-1.71%), Taiwan (-1.64%), and Shenzhen (-1.48%) led the region lower.  Meanwhile, New Zealand (+0.83%) was by far the biggest gainer in Asia.  In Europe, we nearly have red across the board at midday.  Only Switzerland (+0.47%) is in the green while the CAC (-0.64%), DAX (-0.16%), and FTSE (-0.31%) are leading the charge lower in early afternoon trade.  In the US, as of 7:30 am, Futures are also pointing toward a lower start to the day.  The DIA implies a -0.29% open, the SPY is implying a -0.49% open, and the QQQ implies a -0.42% open at this hour.  At the same time, 10-year bond yields are falling again at 3.441% and Oil (WTI) is down 0.71% to $78.20/barrel in early trading.

The major economic news events scheduled for Tuesday include Building Permits (9:30 am…which is an hour later than normal), Conf. Board Consumer Confidence and March New Home Sales (both at 10 am), and API Weekly Crude Oil Stocks (4:30 pm).  The major earnings reports scheduled for the day include MMM, ABB, ALFVY, ADM, ARCC, ABG, BIIB, CNC, GLW, DHR, DOW, FISV, GEHC, GE, GM, GEO, HAL, HUBB, IVZ, JBLU, KMB, LH, LTH, MCD, MCO, MSCI, NEE, NTRS, NVS, OMF, PCAR, PEP, PII, PHM, RTX, ST, SHW, SPOT, SCL, THC, TRU, UBS, UPS, VZ, and XRX before the open.  Then, after the close, GOOGL, AGR, BXP, BYD, CMG, CB, CSGP, WIRE, ENVA, ENPH, EQR, GOOG, HA, ILMN, JBT, JNPR, MTDR, MSFT, NEX, OI, RUSHA, TX, TXN, TFII, UHS, V, and WFG report.  

In economic news later this week, on Wednesday, March Durable Goods, March Goods Trade Balance, Preliminary March Retail Inventories, and EIA Crude Oil Inventories are reported.  On Thursday, we get Preliminary Q1 GDP, Weekly Jobless Claims, and March Pending Home Sales.  Finally, on Friday, Q1 Employment Cost Index, March PCE Price Index, March Personal Spending, Chicago PMI, and Michigan Consumer Sentiment.

In terms of earnings reports later this week, on Wednesday, we hear from ALLE, AMT, APH, ADP, AVY, BA, BOKF, BSX, CVE, GIB, CME, CSTM, DOV, ETR, EVR, FSV, FTV, GD, GPI, HES, HLT, HUM, NSP, MHO, MAS, NSC, ODFL, OTIS, OC, PAG, BPOP, PRG, RCI, RES, R, SLGN, TMHC, TEL, TECK, TDY, TMO, TNL, UMC, VRT, WNC, WAB, WFRD, ACHC, AFL, ALGN, AB, AWK, NLY, AR, ACGL, ASGN, AVB, AXS, BMRN, CHRW, CACI, CP, CLS, CCS, CHDN, CMPR, FIX, EBAY, EW, ESI, EQT, FBIN, GGG, HELE, ICLR, IEX, KLAC, LSTR, MKL, MAT, MTH, META, MEOH, MAA, MOH, MYRG, NOV, ORLY, OII, PPC, PXD, PLXS, PTC, RJF, RHI, ROKU, ROL, NOW, SNBR, STC, SUI, TDOC, TER, TNET, TROX, TYL, URI, WCN, WSC, and WM.  On Thursday, AOS, ABBV, MO, AAL, AIT, ARCH, AMBP, AZN, BAX, BFH, BMY, BC, CRS, CARR, CAT, CBRE, CNP, CHD, CMS, CNX, CMCSA, CROX, CRF, DQ, DPZ, DTE, LLY, EME, FIS, FAF, FCFS, FCN, GOL, HOG, HAS, HP, HSY, HTZ, HGV, HON, IP, IPG, IQV, KDP, KEX, LEA, LII, LECO, LIN, LKQ, HZO, MA, MRK, NEM, NOC, ORI, OSK, PATK, PTEN, BTU, PNR, DGX, RS, ROK, ROP, SPGI, SNY, SNDR, SIRI, SAH, SO, LUV, SAVE, SRCL, STM, FTI, TXT, TTE, TSCO, TPH, VLO, VLY, VC, GWW, WST, WEX, WTW, WIT, XEL, ATVI, AEM, ALSN, AMZN, AMGN, ATR, ACA, AJG, BZH, COF, CSL, SS, SINF, COLM, DXCM, DLR, EMN, EHC, ERIE, FLSR, FE, GFL, GILD, HIG, PEAK, HUBG, INTC, LHX, LPLA, MTX, MHK, MDLZ, OLN, PINS, PFG, RSG, RMD, SGEN, SKX, SKYW, SM, SNAP, AWN, SSNC, TMUS, X, WY, and INT report.  Finally, on Friday, AON, ARCB, ARES, AVTR, BLMN, CCJ, GTLS, CHTR, CVX, CL, DAN, XOM, FMX, GNTX, IMO, JKS, LAZ, LYB, NYCB, NWL, NHYDY, NVT, POR, SAIA, and TRP report.

So far this morning, GM, ADM, GE, PEP, RTX, DOW, NVS, MMM, DHR, ABB, MCD, SHW, THC, HAL, FISV, GLW, PHM BIIB, PII, JBLU, IVZ, MCO, ST, TRU, and GEHC have all reported beats on both the revenue and earrings lines.  Meanwhile, VZ, UPS, ABG, XRX, and MSCI all reported misses on revenue while beating on earnings.  On the other side, CNC, UBS, LH, OMF, SCL, GEO, and BKU all beat on revenue while missing on earnings.  Unfortunately, SPOT and ARCC missed on both the top and bottom lines.  It is worth noting that GM has raised its forward guidance and, so far, there have been no lowered guidance reported.  Notable surprises include GE with an 108%, GM with a 40%, DOW with a 57%, XRX with a 133%, MCO with a 29%, and PHM with a 32% upside surprise on earnings.  Meanwhile, SPOT had a 26% downside surprise on earnings.  On revenue, UBS had a 41%, IVZ had a 31%, OMF a 21%, BKU a 74% upside surprise.  There were no notable downside revenue surprises.

With that background, it looks like the uncertain consolidation wants to continue in the DIA with yet another test of the flat T-line (8ema) likely in the cards today. However, SPY and QQQ look a little more bearish as they seem to be preparing to retest the lows of the last week this morning. However, it is not a huge bear move (at least yet) and still can’t be classified as anything more than a modest pullback. Over-extension is obviously not a problem in terms of the T-line or the T2122 indicator. Meanwhile, even though the Fedwatch tool tells us that there is an 89% probability of a quarter-point hike by the Fed next week, the market just isn’t sure and seems leery. Right now, the chart tells us to maintain a long bias, but expect consolidation to continue as the 3ema has crossed below the 8ema in all three major indices. Also, keep a sharp eye out for trend breaks.

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 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.

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.

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