Markets gapped higher Tuesday at the open (up 0.51% in the SPY, up 0.50% in the DIA, up 0.52% in the QQQ).  At that point, all three market index ETFs drifted higher until 11:00 a.m.  Then the whipsaw began with a selloff until 1 p.m. before running back up until 3:45 p.m. when we saw a mild selloff for the last 15 minutes of the day.  This action gave us indecisive candles in all three major index ETFs.  All three printed some form of a white-bodied Spinning Top candle.  However, the QQQ also printed a form of a Morningstar signal on that candle.  Still, all three remain above their T-line (8ema) and SPY crossed back above the 200sma.  This happened on well-below-average volume in the QQQ and SPY and just-below-average volume in the DIA.

On the day, nine of 10 sectors were green with Utilities (+2.03%) and Communications Services (+1.97%) being way out front leading the way higher while Energy (-0.07%) was the only sector in the red.  At the same time, the SPY gained 0.75%, the DIA gained 0.64%, and QQQ gained 0.97%.  VXX fell 4.54% to close at 24.39 and T2122 climbed but remained in its oversold territory at 12.21.  10-year bond yields fell again to 4.819% while Oil (WTI) dropped another 1.91% to close at $83.86 per barrel.  So, on Tuesday the market was a whipsaw again.  There was a gap higher at the open, a morning selloff that nearly recrossed the gap, and then an afternoon rally that took us back toward the highs of the day.  With that said, once again there was no change in character the real character of the market and continued indecision among the major index ETFs.

The major economic news reported Tuesday included the Preliminary S&P Global Mfg. PMI, which came in a bit higher than expected at 50.0 (compared to a forecast of 49.5 and a reading 2 weeks ago of 49.8).  At the same time, the Preliminary S&P Global Services PMI came in well above anticipated at 50.9 (versus a forecast of 49.8 and even above the 2-week-old reading of 50.1).  Combined, the Preliminary S&P Global Composite PMI was 51.0, which is up from the 50.2 reported two weeks ago.  It is worth noting that on all of these numbers, a value above 50.0 indicates expansion while a value less than 50 indicates contraction.  So, the global economy appears to be ever-so-slightly expanding when it was expected to be contracting.  Later, after the close, the API Weekly Crude Oil Stocks report showed a 2.668-million-barrel reduction in inventories (compared to a forecast of a 1.550-million-barrel increase but still only about half of the prior week’s 4.383-million-barrel drawdown).

In Autoworker contract talks and strike news, GM removed all forward guidance as part of their Q3 reporting.  At the same time, GLW (who missed) cited the ongoing strike against the Big 3 automakers as part of the reason for poor results and reducing their forward guidance.  (GLW makes windshields and emission control systems for GM, F, and STLA among other automakers.)  ITW also made similar claims related to the strike impacting their future prospects.  Later the UAW announced it has struck a GM plant in Texas that builds the company’s most profitable SUVs.  (This strike doubles the cost of the strike on GM to $400 million/week.)  Later, STLA laid off 535 additional workers after their Ram truck plant was struck earlier this week. 

In stock news, CNBC reported Tuesday that AMZN is considering a move to follow WMT into the veterinary telemedicine market.  (WMT signed a deal with veterinary telemedicine provider Pawp and CNBC reports AMZN is considering the same move.) At the same time, LIAN reaped a $350 million windfall (and also voided $127.5 million in future LIAN expenses) after terminating its deal with BMY related to FDA-approved heart medication.  BMY was forced to pay that $350 for exclusive rights to the drug in Asian markets.  (LIAN shot up to close 117% higher on the day.)  Later, Reuters reported STLA has entered a deal with French nuclear fuels firm Orano to recycle EV batteries and scrap materials.  At the same time, NVDA said new US export restrictions on high-tech sales to China were sped up and went into effect Monday.  (The original scheduled was Nov. 16, but the Biden Administration wanted to head off massive last-minute sales by the tech giants.)  AMD and INTC are also impacted by the export ban to China, Iran, and Russia.  In other chip news, Reuters reported Tuesday that QCOM has outlined details of a Windows-based laptop based on a QCOM ARM-based CPU that will be released in 2024 which will include enough processing power for AI applications like summarizing emails, writing text, and generating images.  (It would be a massive leap for a laptop to have the processing power to handle that sort of AI, but they claim it will support models with 13 billion parameters.)   Elsewhere, CADE said it has sold its insurance brokerage business to AJG for $904 million. At the same time, EPOW revealed it’s in negotiations with Dutch LG Energy and the Abu Dhabi Investment Fund regarding a lithium battery material production facility in the Middle Eastern country.  The proposed project would produce 50,000 tons of anode material per year. 

In stock government, legal, and regulatory news, ACB has settled its patent breach suit against CANSF in a confidential settlement.  Later, Reuters reported TEF and VOD drew the short straws as French telecom group Orange chose Romanian firm Digi to buy assets the company was divesting.  This selection was made to avoid EU antitrust concerns that would be raised if TEL or VOD bids were chosen.  At the same time, Reuters reports that evidence (internal safety reports) was presented in court showing that TSLA was aware of an Autopilot malfunction two years prior to a fatal crash.  The suit seeks $400 million plus punitive damages and is the first TSLA Autopilot case to make it to trial.  Elsewhere, 33 states’ Attorneys General filed suit against META and its Instagram unit for misleading the public and knowingly creating features designed to become addictive to children, causing mental health problems.  Shortly afterward, the District of Columbia and eight other states filed a separate but nearly identical suit which brought to total to 41 states and DC.  At the same time, JBLU asked the US Dept. of Transportation to ban Air France’s KLM from NY JFK airport if a Dutch government cap on flights to one of its airports takes place.  (The Dutch plan to reduce flights by 10% from 2019 levels starting in 2024 to reduce noise pollution.  This would effectively ban JBLU from that airport.)   Meanwhile, NWG faces a lawsuit from former CEO Rose after the bank canceled her previously awarded but not yet vested 2.5 million shares of stock worth millions of dollars.  In mid-afternoon, the state of CA DMV ordered GM Cruise driverless cars off state roads, saying they are a safety risk.   After the close, the SEC announced that BLK had agreed to pay $2.5 million for failing to accurately describe investments made in the entertainment industry.  Tuesday afternoon, AAPL announced they are now backing the Biden Administration’s call for a “Right to Repair” law that has been pushed by FTC Chair Khan.  (Of course, Congress determines what laws are passed.  So, publicly supporting a proposal can easily be offset by some lobbying inside the halls of Congress.)

After the close, GOOGL, CB, WIRE, FFIV, GOOG, LRN, MTDR, MSFT, RHI, RUSHA, SNAP, UMBF, V, and WFRD all reported beats on both the revenue and earnings lines.  Meanwhile, BYD and ENVA beat on revenue while missing on earnings.  On the other side, RRC, TDOC, and WM missed on revenue while beating on earnings.  Unfortunately, CNI, CHX, CSGP, HA, and TXN all missed on both the top and bottom lines.  It is worth noting that CHX, TDOC, and TXN lowered their forward guidance.  However, LRN raised its guidance.

Overnight, Asian markets were mixed but leaned to the upside.  South Korea (-0.85%) and India (-0.83%) paced the losses while Thailand (+0.77%) and Japan (+0.67%) led the more numerous gainers.  In Europe, we see the opposite picture taking shape at midday with more bourses in the red than in the green.  The CAC (-0.18%), DAX (-0.09%), and FTSE (+0.06%) are typical of the continent in early afternoon trading.  In the US, at 7:30 a.m., Futures are pointing toward a mixed open leaning to the downside.  The DIA implies a +0.13% open, the SPY is implying a -0.32% open, and the QQQ implies a -0.57% open at this hour.  At the same time, 10-year bond yields are back up to 4.863% and Oil (WTI) is off another quarter of a percent to $83.53 per barrel in early trading.

The major economic news scheduled for Wednesday includes Building Permits (8 a.m.), September New Home Sales (10 a.m.), and EIA Weekly Crude Oil Inventories (10:30 a.m.).  We also hear from Fed Chair Powell at 4:35 p.m.  The major earnings reports scheduled for before the open include ALFVY, APH, ATLKY, ADP, AVY, BA, BOKF, CME, CSTM, EVR, FTV, GD, GBX, GPI, HES, HLT, LTH, LAD, MHO, MCO, MSM, EDU, NSC, ODFL, OMF, OPCH, OTIS, OC, PAG, PRG, RDUS, ROP, R, SLGN, TMUS, TMHC, TDY, TMO, TNL, UMC, VRT, WNC, and WAB.  Then, after the close, AEM, ALGN, ALSN, AMP, NLY, AR, ATR, ASGN, AVB, AGR, BKR, BHE, CACI, CP, CLS, CCS, CHE, CHDN, CMPR, CYH, EW, ESI, EQT, EQIX, EG, FLEX, FLS, FBIN, GL, GGG, ICLR, IEX, IBM, INVH, KALU, KLAC, LSTR, MAT, META, MAA, MOH, MYRG, NBR, NXT, ORLY, OII, PPC, PLXS, RJF, ROL, SEIC, NOW, STC, SUI, TER, TNET, TROX, URI, UHS, VMI, VICI, WCN, WFG, WU, and WHR report.

In economic news later this week, on Thursday, we get September Durable Goods Orders, Preliminary Q3 GDP, Preliminary Q3 GDP Price Index, September Goods Trade Balance, Weekly Initial Jobless Claims, Sept. Retail Inventories, Sept. Pending Home Sales, and we hear from Fed member Waller.  Finally, on Friday, Sept. PCE Price Index, Sept. Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations are reported. 

In terms of earnings reports later this week, on Thursday, AOS, MO, AMT, AIT, ARCH, AMBP, BSX, BFH, BMY, BC, BG, CRS, CARR, CX, CNP, CMS, CMCSA, CFR, EXP, EME, FAF, FCNCA, FSV, ULCC, FCN, HOG, HAS, HSY, HTZ, HON, IP, KVUE, KDP, KEX, LH, LAZ, LEA, LII, LIN, LKQ, MDC, MAS, MA, MRK, NYCB, NEM, NOC, ORI, OSK, PATK, BTU, PCG, BPOP, RS, RCL, STX, SAH, LUV, STM, FTI, TXT, TTE, TSCO, TPH, UPS, VLO, VLY, VC, VMC, GWW, WST, WEX, WTW, AB, AMZN, AJG, BIO, SAM, COF, CSL, CC, CMG, CINF, COLM, DECK, DXCM, DLR, EMN, EHC, ENPH, ERIE, FE, F, HIG, HUBG, INTC, JNPR, LHX, LPLA, MTX, NOV, OLN, PFG, RSG, RMD, SKX, SKYW, SSNC, TEX, TXRH, X, VALE, WY, and WKC report.  Finally, on Friday, we hear from ABBV, AER, ARLP, AON, ARCB, AN, AVTR, BAH, CBRE, GTLS, CHTR, CVX, CL, DAN, EQNR, XOM, FMX, FTS, GNTX, IMO, LECO, LYB, NWL, NVT, PSX, POR, SAIA, SNY, SWK, TROW, and XEL.

In US Congressional news, the circus continued Tuesday.  After four more ballots, the House GOP Caucus selected Rep. Emmer as its nominee to be Speaker.  Emmer then requested a secret ballot to see how many would actually vote for him.  He lost 26 of the extreme MAGA members, putting him in roughly the same boat as McCarthy was in three weeks ago.  So, after a few hours of attempting to whip GOP votes, he too withdrew himself from consideration.  This put the GOP back in the same boat they’ve been in since the MAGA coup against McCarthy.  After a few more hours of spit-balling potential nominees, by mid-evening, some GOP members were floating a “Tag-Team of McCarthy-Jordan as joint-Speaker.”   However, Constitutionally, the job is singular (not a two-person job) including only one person being second in line of Presidential succession.  At the same time, Democrats sat back and reveled in the schadenfreude as the country continued to be a laughing stock to the world and no Congressional business even gets attempted.  (It is apparently beyond the pale for Democrats to approach moderate Republicans saying they’d back one of them OR for moderate Republicans to approach Democrats offering to back Jeffries, since the GOP still has the votes if he tries to get out of line)  In short, your tribe is still more important than your party and your party is still more important than the country in D.C.)  Regardless, late Tuesday night, the GOP decided to nominate Rep. Johnson (of LA) as Speaker and take his name to the floor for a vote.  The GOP did take a roll call vote in private on how many of their caucus would support the fifth choice for the job, but by that point of the night, more than 20 of their caucus had already gone home. So, the drama remains as to whether GOP Choice number five will can get elected Speaker, and if so whether he will have enough support to work around the extremists in his own party (let alone dealing with Representatives across the aisle.

In miscellaneous earnings news, it’s interesting that even though GOOGL posted strong earnings after the close, beating on both lines and showing 11% quarter-on-quarter revenue growth, post-market traders jumped on the fact its cloud computing unit reported $20 million lower-than-expected revenue. (Bear in mind that this sub-unit missed by $20 million on a report of almost $77 billion in total revenue. Talk about splitting hairs.) So, despite a strong report, GOOGL stock was down as much as 6.5% in after-market trading on their beats.

So far this morning, ATLKY, ADP, CME, GD, GPI, HLT, MCO, MSM, NAVI, EDU, ODFL, OMF, OTIS, PRG, ROP, TMUS, TMHC, TELNY, TNL, UMC, and WAB all reported beats on both the revenue and earnings lines.  Meanwhile, ALFVY, AVY, CSTM, OC, SLGN, TDY, TMO, VRT, and WNC all missed on revenue while beating on the earnings line.  On the other side, EVR, GBX, LAD, and PAG beat on revenue while missing on earnings.  Unfortunately, LTH missed on both the top and bottom lines.  It is worth noting that AVY, LTH, EDU, SLGN, and TDY lowered their forward guidance.  At the same time, PRG, ROP, TMHC, VRT, and WAB all raised their guidance.

In mortgage news, the Mortgage Bankers Assn. reports mortgage loan applications fell just 1% last week, even as the rate for a 30-year, fixed-rate, conforming loan shot up from 7.70% to 7.90% on average.  Refinancing loan applications increase 2% from the previous week while new home purchase loan applications fell 2%.  MBA noted that the percentage of loans sought which were adjustable-rate increased to 9.5%.  (The average 5/1 ARM loan was at a 6.99% rate for the week, skyrocketing from 6.52% the week prior.)

With that background, it looks like markets are undecided again this morning. All three major index ETFs are printing small, white-bodied, Spinning Top type candles in the premarket. However, the DIA gapped up a bit before forming its Spinning Top while the SPY and QQQ gapped down before forming their own. With that said, keep in mind that all three remain well below their T-line (8ema) and the SPY is just below its 200sma. Once again, we have no really major economic news today and Fed Chair Powell does not speak until after hte close. So, beware of more whipsaw and don’t be surprised if intraday moves are reversed in just a short period. (There does not seem to be strong momentum from either side.) In terms of that extension, all three major index ETFs are back to being near their T-line (8ema) and none are extended. The T2122 indicator does remain in the middle of its oversold territory, but it has moved up off the very bottom. So, we may need a little more pause or bounce to relieve pressure, but we are not overly stretched. The only thing we can say for sure is the Bears maintain control of trend.

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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