Markets were essentially dead money the first half of the day Thursday.  The SPY gapped up 0.16%, DIA gapped up 0.22%, and QQQ gapped up 0.15%.  After that the markets traded sideways until just before 1 p.m.  Then we saw a sharp selloff that took us to the lows of the day at 2:20 p.m.  From there, the rest of the day was a steady but modest rally into the close.  That action gave us black-bodied candles in all three major index ETFs.  The QQQ printed a Spinning Top type candle which was also a Bearish Engulfing.  SPY and DIA also printed Bearish Engulfing candles.  However, all three held above their T-line (8ema), after a retest in the SPY and DIA. 

On the day, nine of the 10 sectors were in the red with Basic Materials (-2.05%) far out in front leading the way lower.  Meanwhile, Energy (+0.01%) was the “big winner” by just barely hanging onto the green territory (doing almost 0.80% better than any other sectors).  At the same time, the SPY lost 0.61%, DIA lost 0.52%, and the tech-heavy QQQ lost 0.35%.  VXX increased 1.64% to close at 22.98 and T2122 fell back down into the oversold territory at 13.25.  10-year bond yields fell again, falling to 4.558% while Oil (WTI) closed up slighlty to $83.49 per barrel.  So, if you are a day trader, you’d say the strongest and most significant move of the day was that midday Bearish push. Still, the Bulls ended up recapturing half of the ground they lost in that push.  From a high-level view, Thursday was just a pause or modest pullback in the recent Bull run. There were no major changes with the short-term daily trend remaining bullish.

The economic news reported Thursday was limited to September year-on-year CPI which was a mixed bag.  It came in higher than expected at +3.7% (compared to a forecast of +3.6%, but was in-line with the August reading of +3.7%).  On a month-to-month basis the September CPI was also higher than anticipated at +0.4% (versus the forecast of +0.3% but also significantly better than the August +0.6% value).  At the same time, Weekly Initial Jobless Claims cane in just below expected at 209k (compared to a forecast of 210k and in-line with the revised prior week of 209k).  The most shocking news was EIA Weekly Crude Oil Inventories which shot higher by 10.176 million barrels.  Compare that to a forecast of just a 0.492-million-barrel build and the prior week’s 2.224-million-barrel drawdown).  Finally, after the close, the Fed’s balance sheet continued to shrink, but only slightly ($4 billion) from $7.956 trillion to $7.952 trillion).

Overnight, Asian markets were nearly red across the board.  Only Malaysia (+0.02%) managed to hang onto green territory.  Hong Kong (-2.33%) was by far (by more than 1.25%) the biggest loser followed by Singapore (-1.02%) and Shenzhen (-0.99%).  In Europe, we see a similar picture taking shape at midday.  Only two of the bourses are in the green, led by Russia (+0.27%) while the CAC (-0.75%), DAX (-0.77%), and FTSE (-0.32%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed start to the day.  The DIA implies a +0.07% open, the SPY is implying a -0.10% open, and the QQQ implies a -0.36% open at this hour.  At the same time, 10-year bond yields are climbing to 4.614% and Oil (WTI) is up a massive 3.81% to $86.09 per barrel in early trading.

The major economic news scheduled for Friday includes September Export Price Index and Sept. Import Price Index (both at 8:30 a.m.)  Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations (all at 10 a.m.).  We also hear from Fed member Harker at 9 a.m.  The major earnings reports scheduled for Friday include BLK, C, JPM, PNC, PGR, UNH, and WFC all before the open.  There are no major reports scheduled for after the close.

In US Congressional news, what was reported midday Thursday by a right-wing media outlet was confirmed.  Rep. Scalise abandoned his bid to be Speaker of the House after failing in the same way McCarthy failed before him (the handful of most extreme GOP members refused to support him and that was untenable with such a small majority over the Democrats). This leaves right-winger Jordan as the leading candidate but reportedly many of the more Centrist GOP Reps. have been pushing Emmert or Cole.  There are also reportedly 1 or 2 GOP members that have approached the Dems to say they may support Jeffries. (I am not sure if that is a practical move of people who actually want to govern or a Machiavellian move to make everything the Dem’s problem, which can then be blamed on Dem’s in 2024?)  Regardless, we look to be heading into another weekend with a House of Representatives that is dysfunctional, divided (in many ways), and unable to convene for business.

So far this morning, JPM, PNC, UNH, and WFC all reported blow-out earnings with beats on both the revenue and earnings lines.  These all represented major growth in revenue and earnings.  Meanwhile, BLK missed on revenue while beating on earnings including delivering 4.9% growth on earnings.  (C reports at 8 a.m.)  It is worth noting that UNH raised its forward guidance.

In US Congressional news, Rep. Scalise won a GOP caucus nod and was nominated to be House Speaker. This came on a 113 to 99 vote between Scalise and Rep. Jordan.  It is worth noting that three of Scalise’s 113 votes came from GOP delegates who have no vote where it really counts, in the House.  (An interesting side note is that multiple GOP sources indicated the first ballot actually had ex-Speaker McCarthy leading with 60 votes, Jordan with 47, and Scalise with 31 plus a ton of abstentions.  However, when McCarthy said “no way” all of his support, and more, shifted to Scalise.)  The problem for the GOP is that they need 217 votes to elect a speaker and somewhere between five and 20 the 221 GOP members have said publicly that they won’t vote for Scalise.   So, we may see another fiasco like the record 15 rounds of votes needed to select a crippled-from-the-start McCarthy. As a reminder, beyond the GOP caucus, there are 38 calendar days left until the existing CR ends (Nov. 17 is the last day) and a government shutdown.  There are some, both in government and outside analysts, who say even beyond Americans who would be hurt by a shutdown, Ukraine and Israel may also need House action (money appropriations) even before Nov. 17.

In miscellaneous news, Israel seems to be ready for its ground invasion of Gaza.  After hitting close to 7,000 targets in that 25-mile by 5-mile strip in the last few days, Israel has ordered 1.1 million Palestinians to evacuate Southward from the Northern half of Gaza.  Israel also broadened their targets shutting down two airports in Syria.  (It is being speculated that this was to prevent an Iranian official from reaching Syria for a potential “war council.”) 

With that background, it looks like the large-cap index ETFs are little changed in the premarket. However, the QQQ is showing some weakness with the largest candle of the three. However, QQQ was the furthest above its T-line and none of the three are sitting on that 8ema in the premarket. So, the change is nominal. DIA is back below its 200sma and QQQ looks like it will test its 50sma from above today. In terms of extension, none of the three major index ETFs are far from their T-line (8ema) but the T2122 indicator has dropped back down into the oversold territory at 13.25. So, again we still have room to run in either direction. However, this latest Bull run is getting some rest at the very minimum. Remember that it’s Friday, payday, and we have a weekend news cycle ahead before markets reopen. Be prepared. Lighten up, hedge your account, or be prepared to deal with the volatility that might happen.

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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