On Friday, more good economic data (or perhaps just a bounce off the ugly Thursday candle) led to a gap higher.  The SPY gapped up 0.73%, the DIA gapped up 0.46%, and QQQ gapped up 1.17%.  All three major index ETFs then slowly followed through to the upside until lunchtime.  There was a brief selloff from 12:30 – 1:45 pm and then a recovery that lasted until 3:15 pm.  The SPY, DIA, and QQQ then drifted sideways with a very slight bearish lean the last 45 minutes of the day.  This action gave us a gap-up, Bullish Harami Spinning Top in the SPY, a gap-up, long-legged Doji Harami in the DIA, and a gap-up white-bodied candle in the QQQ.  This move came on above-average volume in the QQQ and slightly below-average volume in both the SPY and DIA.

On the day, nine of the 10 sectors were in the green with Consumer Cyclical (+2.09%) way out front (by half of a percent) leading the way high while Utilities (-0.14%) lagged and was the only red sector.  At the same time, the SPY gained 0.98%, DIA gained 0.47%, and QQQ gained 1.82%.  The VXX dropped 3.78% for the day to 22.90 and T2122 popped up but remained just outside the overbought territory at 79.05.  10-year bond yields fell to 3.957% while Oil (WTI) gained another two-thirds of a percent to close at $80.61 per barrel.  So, Friday saw another strong move by the Bulls at the open, a little follow-through, and then afternoon indecisiveness that amounted to a giveback of the morning follow-through. 

The major economic news reported Friday started with the June PCE Price Index which came in better than expected at +3.0% year-on-year (compared to a forecast of +3.1% and a much higher May reading of +3.8%). This included a June Core PCE Price Index that was better than expected at +4.1% (versus a forecast of +4.2% and a May value of +4.6%).  In addition, Q2 Employment Cost quarter-on-quarter came in better than anticipated at +1.0% (compared to a forecast of +1.1% and a Q1 reading of +1.2%).  However, at the same time, June Personal Spending month-on-month was reported as above predicted at +0.5% (versus a forecast of +0.4% and much above the May value of +0.2%).  Later, Michigan Consumer Sentiment came in slightly below anticipated at 71.6 (compared to a 72.6 forecast but well above the June reading of 64.4).  At the same time, Michigan Consumer Expectations likewise improved but below expectation at 68.3 (versus the forecast of 69.4 but well above the June value of 61.5).  Finally, the Michigan 5-year Inflation Expectations remained as predicted at 3.0% (compared to a 3.0% forecast and a 3.0% June reading).

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In stock news, Reuters reported Friday that heatwaves across North America are going to drive large increases in coal shipments by rail (to fuel power plants).  UNP (largest public railroad) told them “Demand for coal is increasing again. And our customers are asking us to be able to handle more (volumes), which we love, and we’re doing.”   In the same article, CSX (the second largest public railroad) said “hot summers to provide a helpful tailwind.”  Elsewhere, STLA purchases one-third of zero-emission hydrogen vehicle company Symbio.  Meanwhile, after the close Friday, LUV announced it has converted its order for 54 BA “737 MAX 7” jets into “737 MAX 8” jets due to long and ongoing delivery delays.  (BA pushed back the delivery of the first of these jets into 2024 recently.)  Also, after the close, SGML (a lithium miner) told Reuters the company is in talks with parties interested in acquiring it.  (Bloomberg reported in February that TSLA was considering buying that company, but no suitor was mentioned Friday.)

In stock legal and regulatory news, on Friday the NHTSA rejected GM’s Thursday dire predictions from GM.  (Thursday, GM had said the new US emissions standards would cost the auto industry $100 billion in 2026 and up to $300 billion from 2027-2031.  That sounds dire, but the auto industry made $3 trillion in 2022 and is projected to make almost $6.1 trillion in 2030.)  Friday, the NHTSA (which oversees CAFÉ standards) said “The GM estimate is pure speculation and inaccurate.”  In addition, “(the higher standards) will save consumers more than $50 billion on fuel over a vehicle’s lifetime … Overall, the benefits of the rule would exceed costs by more than $18 billion,” the official added.  Elsewhere, the US Dept. of Justice asked a judge to dismiss a 2020 case against EADSY after a probationary period for the European aircraft maker expired.  (EADSY had paid $582 million in US penalties in connection with the case earlier.)  At the same time, the FDA approved a second opioid overdose drug for sale over the counter.  The new drug (RiVive) will be manufactured by CTLT.  Meanwhile, F recalled 870,000 2021-2023 F-150 trucks over the risk of unexpected parking brake activation.  After the close, a US judge shot down the second attempt by JNJ to resolve tens of thousands of lawsuits over its talc products.  The move puts the company’s $8.9 billion settlement offer (which would stop new lawsuits) in doubt.  The judge said the lawsuits simply do not put JNJ subsidiary LTL in financial peril and therefore the bankruptcy is clearly a legal maneuver (Texas two-step) to avoid the consequences of JNJ operations.  Finally, Politico reported that the US Dept. of Justice is investigating and may file an antitrust suit against LYV by the end of the year.  (LYV fell 5% in post-market trading on that news.)

So far this morning, AER, CNA, L, and SOFI have reported beats on both the revenue and earning lines.  Meanwhile, ARLP missed on revenue While beating on earnings. (HCM and ON report closer to the opening bell.)

Overnight, Asian markets leaned heavily to the green side.  Japan (+1.26%), South Korea (+0.93%), and New Zealand (+0.92%) led the region higher.  Meanwhile, in Europe, the bourses lean to the green side but are a little more mixed at midday.  The CAC (+0.60%), DAX (+0.14%), and FTSE (+0.01%) lead the region on volume while Russia (+1.68%) is the movement leader and five smaller exchanges are modestly red in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a very modestly green start to the day.  The DIA implies a +0.14% open, the SPY is implying a +0.14% open, and the QQQ implies a +0.09% open at this hour.  At the same time, 10-year bond yields are up a bit to 3.967% and Oil (WTI) is up just less than one percent to $81.33 per barrel in early trading.

The major economics news scheduled for Monday is limited to July Chicago PMI (9:45 am).  The major earnings reports scheduled for before the opening bell include AER, ARLP, CAN, HCM, ON, and SOFI.  Then, after the close, AAN, AMKR, ANET, AVB, CAR, BHE, BMRN, BCC, CRC, CNO, CWK, CVI, FANG, HOLX, HUN, LEG, RSG, RYI, SANM, SBAC, SON, THC, TFII, RIG, WELL, WDC, WWD, and YUMC report.    

In economic news later this week, on Tuesday we get July S&P US Mfg. PMI, July ISM Mfg. PMI, July ISM Mfg. Prices, and JOLTs Job Openings, and API Crude Oil Stocks Report.  Then Wednesday, ADP Nonfarm Employment Change, and EIA Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Preliminary Q2 Nonfarm Productivity, Preliminary Q2 Unit Labor Costs, July S&P Global Composite PMI, July S&P US Services PMI, June Factory Orders, ISM Non-Mfg. Employment, July ISM Non-Mfg. PMI, and Fed Balance Sheet.  Finally, on Friday, July Avg. Hourly Earnings, July Nonfarm Payrolls, July Participation Rate, July Private Nonfarm Payrolls, and July Unemployment Rate are reported.

In terms of earnings reports, on Tuesday MO, AME, ARES, BLMN, BP, CAT, CEQP, DORM, ETN, ECL, EPD, ESAB, IT, GPN, GPK, HWM, HSBC, IDXX, ITW, INCY, NSP, IGT, IQV, JBLU, KMT, LEA, LDOS, LGIH, MPC, MAR, MLCO, MRK, TAP, MPLX, NCLH, OSK, PFE, PEG, ROK, SIRI, SWK, SPWR, SGRY, SYY, TM, TRN, UBER, WSO, WEC, ZBRA, ZBH, AMD, AFL, ALIT, ALL, AIG, AIZ, AXTA, AXS, BXP, BFAM, CZR, CWH, CHK, COLM, DVN, EA, EHC, EXAS, FLS, ULCC, GNW, GTE, JBT, LFUS, LUMN, MTCH, MATX, MOS, NUS, PINS, PXD, PRU, KWR, SCI, SEDG, SFM, SBUX, STE, SU, TEX, TX, UNM, VRTX, and VFC report.  Then Wednesday, we hear from ADNT, ATI, ALGT, ABC, BLCO, BWA, BLDR, BG, CG, CDW, SID, CVS, DD, DVRN, EMR, EXC, RACE, FIS, FDP, FTDR, GRMN, GNRC, GFF, HUM, IBP, JCI, KHC, LPX, DNOW, PSN, PSX, QUAD, RCM, RXO, SMG, SGEN, SPR, SUN, TEVA, TRI, TT, VRSK, VRT, WAT, XYL, YUM, ALB, ATUS, DOX, AEE, AFG, ANSS, APA, ATO, BKH, CHRW, CPE, CENT, CF, CAKE, CHRD, CIVI, CLX, COKE, CTSH, CYH, CODI, CCRN, CW, DASH, ET, ETSY, FMC, GT, GXO, HLF, HI, HUBS, NGVT, KGC, LNC, MRO, MKL, VAC, MMS, MCK, MELI, MET, MGM, MKSI, MOD, NFG, NCR, NTR, OXY, PTVE, PK, PYPL, CNXN, PR, PSA, QRVO, QCOM, O, HOOD, SHOP, SPG, SBGI, RUN, TRIP, UFPI, UGI, U, WCN, WTS, WMB, WSC, ZG, and  Z.  On Thursday, GOLF, WMS, APD, BUD, APG, APO, APTV, ARW, BALY, BHC, BCE, BDX, BV, BIP, BRKR, CNQ, FUN, CQP, LNG, CI, CLVT, COMM, COP, CEG, CMI, DQ, DLX, DNB, EPC, ENTG, EPAM, EXPE, FCNCA, FOCS, HAS, DINO, HGV, HII, H, ICE, IRM, ITRI, ITT, K, MMP, MDU, MIDD, MUR, NJR, ONEW, PZZA, PH, PBF, PNW, PBI, PRVA, PWR, REGN, SABR, SBH, SNDR, SRE, FOUR, SO, SAVE, STWD, TRGP, TGNA, TFX, TPX, TKR, BLD, TRMB, VC, VMC, WBD, W, WCC, WLK, WRK, AES, AGL, AL, ATSG, ABNB, LNT, AMZN, COLD, AMGN, AAPL, ACA, TEAM, BGS, BIO, SQ, BKNG, BWXT, ED, CTVA, DVA, DKNG, DBX, EOG, EXPI, FND, FTNT, GEN, GILD, GDDY, ICFI, MTZ, MCHP, MODV, MNST, MSI, ZEUS, OTEX, OPEN, PBA, PBR, POST, RMD, RBA, RKT, RYAN, SWN, SYK, TPC, VTR, and WERN report.  Finally, on Friday, we hear from ADV, AMR, AXL, AMRX, BSAC, BBU, BEPC, BEP, CLMT, CNK, CRBG, D, ENB, EVRG, FLR, FYBR, GTES, GLP, GTN, GPRE, LSXMK, LSXMA, LYB, MGA, OMI, PAA, PAGP, PPL, QRTEA, TU, TIXT, TNC, and XPO report.

In miscellaneous news, TUP was up more than 242% last week as “meme stock” fever seems to have returned.  (Early in July, TUP was warned it may be delisted for a low market cap, $50 million, and stock price, $1.)  Elsewhere, Bloomberg reported that for the first time since 2000, the amount of office space in the US is declining.  This is due to the pandemic exposing a massive amount of unneeded office space (i.e. remote work works) and as a result, there is a lack of new office construction while nearly 15 million square feet of office space has been removed from the market.  (Some of this space was converted to other uses and some was torn down to be replaced by other projects.)  Finally, as in the US, overnight Eurozone inflation was reported down in July even as economic activity is picking up.  EU headline inflation fell to 5.3% according to preliminary data (down from 5.5% in June).  At the same time, Eurozone GDP grew by 0.3%, which was higher than the forecasted +0.2%.  While Euro inflation remains far above the 2% target, progress is being made without the crash landing many had predicted over and over.

With that background, it looks like the Bulls are working on another modest attempt at a push within the recent consolidation. All three index ETFs are giving us white-body candles that are making modest gains on Friday’s close. The SPY, DIA, and QQQ all remain above their T-lines (8ema). As far as extension goes, none of them are far from their T-line and the T2122 indicator remains in the mid-range just outside the overbought region. So, there is room to run in either direction. Remember that this is a heavy earnings week (Q2 earnings have been modestly good so far) and that we get July Payrolls data at the end of the week. In addition, we are looking to close out a strong July as all three major index ETFs start the 31st up more than 3% for the month.

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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