Markets opened higher on Friday, gapping up 0.39% in the SPY, opening dead flat in the DIA, and gapping up 0.87% in the QQQ.  At that point, the DIA led the move lower, followed by an indecisive SPY, and finally a QQQ that was bullish the first two hours.  By 11:30 a.m. all three were selling in a jagged fashion the rest of the day. This action gave us black-bodied candles in all three major index ETFs.  The SPY and DIA only had lower wicks (based on the last wave being up the final 15 minutes.  However, the QQQ printed a black-bodied Spinning Top Inside Day candle.  All three remain well below their T-line (8ema).  This happened on just above-average volume in the SPY and above-average volume in the QQQ and DIA.

On the day, eight of 10 sectors were red with Basic Material (+0.11%) and Technology (+0.07%) being the only ones to stay green while Healthcare (-1.89%) and Utilities (-1.83%) led the way lower.  At the same time, the SPY lost 0.45%, the DIA lost a whopping 1.11% (led that way by CVX -6.72%), and QQQ gained 0.48%.  VXX gained 3.32% to close at 27.08 and T2122 fell back into the low end of the oversold territory at 6.22.  10-year bond yields ended the day unchanged at 4.845% while Oil (WTI) rose 2.34% to close at $85.16 per barrel on Middle East war fears.  

The major economic news reported Friday included the September PCE Price Index (year-on-year) of +3.4%, which was in line with the forecast and the August reading.  On a month-on-month basis, this was +0.4% (compared to a forecast of +0.3% but in line with the August reading of +0.4%).  Later, Michigan Consumer Sentiment came in better than expected at 63.8 (versus a forecast of 63.0 but down from the September reading of 68.1).  At the same time, Michigan Consumer Expectations came in lower than predicted at 59.3 (compared to a forecast of 60.7 and the September value of 66.0).  Meanwhile, the Michigan 1-year Inflation Expectation was very high at 4.2% (compared to a forecast of 3.8% and a September reading of 3.2%).  Further out, the Michigan 5-year Inflation Expectation was in line with predictions at 3.0% (versus a forecast of 3.0% but up from the September value of 2.8%).

In Autoworker contract talks and strike news, following Wednesday’s settlement with F, the UAW held nearly non-stop negotiation sessions with STLA and GM on Thursday and Friday.  Both the CEO of GM and the President of the UAW participated in the round on Friday.  As of Friday evening, a deal was said to be close, as both companies agreed to the same 25% pay increase that F agreed to earlier but talks continued.  At the same time, the union at F began returning to work Friday, ending the 6-week strike.  (As a side note, F announced Friday that the strike had cost the company $1.3 billion.) Then on Saturday evening, the UAW announced it had reached a tentative deal to end the strike against STLA.  (Reportedly, UAW President Fain had turned his focus to GM after focusing more on STLA on Friday.)  However, by Saturday evening, GM was still refusing on issues F and STLA agreed.  So, the UAW increased the strike by having 4,000 workers walk off the job at GM’s Spring Hill TN assembly plant (GM’s largest US plant).  Early today, the Canadian Autoworker Union (Unifor) called a strike of more than 8.200 workers against STLA up North.  (Unifor already reached deals with F and then after a 12-hour strike with GM. In last-minute news, STLA also settled with Unifor after about 12 hours of that strike.)  In tangentially related news, back in the US, F said it was postponing a $12 billion investment in EV manufacturing expansions. GM had also delayed the opening of a second EV truck plant and canceled a joint project between itself and HMC aimed at making sub-$30k EVs for the global market.

In stock news, GM announced it had decided to suspend operations of all its Cruise driverless robotaxis amid safety concerns.  At the same time, UPS announced it is buying the “Happy Returns” unit from PYPL.  UPS said the purchase of Happy Returns and a previously announced deal to buy MNX Global Logistics will total more than $1 billion.  Later, Reuters reported that merger negotiations between WDC and Japan’s Kioxia have stalled.  At the same time, DUK announced it would build an end-to-end “Green Hydrogen” energy plant in FL.  The plant will split water into hydrogen and oxygen using solar power to generate the electricity needed and is expected to be operational in 2024.  Elsewhere, JPM announced that CEO Dimon will be selling 1 million of his 9.6 million shares of JPM in a strategic diversification move.  Later VLKAF (Volkswagen) said it is cutting 2,000 jobs and has pushed back the release of its Porsche Macan EV until 2024.  After the close, BA announced it is assessing a claim made by a cybercrime gang (Lockbit) that the group had “a tremendous amount” of sensitive BA data and would dump the data to the public if the company did not pay a ransom by Nov. 2.  Then on Friday evening, GOOGL announced it is investing $2 billion in Anthropic (a competitor to MSFT-backed OpenAI) to further its presence in the AI market.

In stock government, legal, and regulatory news, On Friday, GOOGL announced its CEO would testify today in the US antitrust case against the tech giant.  Later, ABBV said it is taking a $2.1 billion charge related to and ahead of its negotiations with Medicare over its leukemia drug.  Elsewhere, NSC announced it has begun installing AI-based safety inspection portals at a dozen locations on its tracks.  The portals will use high-speed cameras and AI software to do safety inspections while trains keep moving.  This comes in response to EPA and FRA pressure following the railroad’s Feb. derailment and mass chemical spill in East Palestine OH.  Later, Reuters reported that the Argentine government had filed a motion with a US District judge asking that the judge stay the enforcement of a $16.1 billion judgment over the nationalization of a then minority state-owned oil company (YPF).  The judgment was due to REPYY, which had a 51% stake in the company.  By mid-afternoon, ANF was sued for ignoring a sex-trafficking ring run by former CEO Mike Jeffries, who allegedly lured young men in using the promise of becoming models for the ANF brand.  After the close Friday, JNJ announced that the Dept. of Justice has sought documents and information related to the drugmaker’s eye surgery products in connection with a DOJ civil (not criminal) investigation. Finally, early today President Biden announced a new executive order aimed at putting some guardrails on AI. The order calls for the Commerce Dept. to create safety and security standards covering AI. The order also aimed at protecting consumer data, watermarking AI-created content, and providing guidance to landlords and federal contractors to avoid unfair discrimination based on AI model training deficiencies.

Overnight, Asian markets were mixed but leaned toward the green side.  Shenzhen (+1.61%) was far and away the leader for the bulls while Japan (-0.95%) paced the four losing exchanges.  Meanwhile, in Europe, the bourses are nearly green across the board at midday.  Only Portugal (-0.07%) is in the red as the CAC (+0.71%), DAX (+0.58%), and FTSE (+0.76%) lead that region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a gap higher at the open.  The DIA implies a +0.58% open, the SPY is implying a +0.64% open, and the QQQ implies a +0.77% open at this hour.  At the same time, 10-year bonds are at 4.886% and Oil (WTI) is down 1.37% to $84.37 per barrel in early trading.

There is no major economic news scheduled for Monday.  The major earnings reports scheduled before the open include ACDVF, BGC, CHKP, CAN, DQ, HSBC, JKS, MCD, ON, RVTY, SOFI, WDC, and XPO.  Then, after the close, AMKR, ACGL, ANET, CACC, CWK, CVI, FMC, PEAK, KMPR, LEG, MATX, MPWR, NEXA, PINS, PSA, QGEN, RYI, SPG, THC, RIG, VFC, and WELL report.

In economic news later this week, on Tuesday we get Q3 Employment Cost Index, Chicago PMI, Conf. Board Consumer Confidence, and API Weekly Crude Oil Stocks Report.  Then Wednesday, ADP Oct. Nonfarm Employment Change, S&P US Mfg. PMI, ISM Oct. Mfg. Employment, ISM Oct. Mfg. PMI, ISM Oct. Mfg. Price Index, Sept. JOLTs Job Openings, EIA Crude Oil Inventories, FOMC Rate Decision, FOMC Statement, and the Fed Chair Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Preliminary Q3 Nonfarm Productivity, Preliminary Q3 Unit Labor Costs, Sept. Factory Orders, and Fed Balance Sheet.  Finally, on Friday Oct. Nonfarm Payrolls, Oct. Private Nonfarm Payrolls, Oct. Participation Rate, Oct. Unemployment Rate, Oct. Avg. Hourly Earnings, S&P Global Services PMI, S&P Global Composite PMI, Oct. ISM Non-Mfg. Employment, Oct. ISM Non-Mfg. PMI, and Oct. ISM Non-Mfg. Price Index are reported.

In terms of earnings reports later this week, on Tuesday we hear from AGCO, ALLE, AME, AMGN, BUD, ARES, BCC, BP, CCJ, CAT, CEIX, DORM, ETN, ECL, EPD, BEN, GEHC, GVA, GPK, GPRE, HNI, HUBB, INCY, NSP, IGT, JBLU, LDOS, LGIH, MPC, MPLX, MSCI, PFE, PEG, ST, SIRI, SFM, STLA, SYY, BLD, UFPI, WEC, XYL, and ZBRA, AMD, AMCR, AIZ, EQH, BXC, CZR, CGAU, CHK, ENLC, EQR, FSLR, HUN, HY, JBSS, LBTYA, LFUS, LUMN, MTCH, MCY, MTH, OI, OKE, SON, TX, UNM, VOYA, and YUMC.  Then Wednesday, ALIT, APO, AXTA, BLCO, EAT, BIP, BLDR, CDW, CHEF, CLH, CVS, DRVN, DTE, DNB, DD, ETR, ESAB, EL, FTDR, FYBR, GRMN, HUM, IDXX, IQV, JHG, KMT, KHC, LPX, MLM, NMRK, NI, NCLH, PSN, QUAD, SGEN, SITE, SPR, SUN, SPWR, TEL, TRI, TKR, TT, TRMB, TTMI, UTHR, VRSK, W, YUM, AFL, ABNB, ALB, ALL, ATUS, AFG, AIG, AWK, APA, ACA, CAR, AVT, AXS, BALY, BMRN, BKH, BXP, BFAM, BWXT, CHRW, CRC, CPE, CWH, CF, CAKE, CLX, COKE, CTSH, CW, DASH, DXC, EIX, EA, ET, NVST, ETSY, EXAS, EXEL, GFL, THG, HLF, HST, IR, LNC, MTW, MRO, VAC, MCK, MELI, MET, MKSI, MOD, MDLZ, MUSA, NOG, NUS, NTR, PYPL, CNXN, PRU, PTC, QRVO, QCOM, QDEL, RRX, RNR, REZI, ROKU, SIGI, SCI, SBGI, SEDG, SUM, RUN, SMCI, TS, TYL, VSTO, WTS, WERN, WES, WMB, WSC, and Z report.  On Thursday we hear from GOLF, ADT, WMS, ATI, ALGT, AMR, AEP, APG, APTV, ARW, AVNT, BALL, GOLD, BHC, BAX, BCE, BDC, BWA, BR, CNQ, FUN, CVE, LNG, CI, CIGI, COP, COR, CPG, CROX, CMI, DLX, XRAY, DUK, LLY, ENTG, NVRI, EPAM, EXC, RACE, FOXA, GIL, DINO, HWM, HII, H, NSIT, ICE, IRM, ITRI, ITT, JLL, KBR, KTB, LAMR, DRS, MKL, MAR, MDU, MRNA, TAP, MUR, NVO, DNOW, NRG, OGE, OGN, PLTR, PZZA, PARA, PH, PBF, MD, PTON, PENN, PNW, PBI, PPL, PRMW, PWR, RCM, REGN, ROK, SPGI, SABR, SNDR, SEE, SHEL, SHOP, SO, STGW, TRGP, TFX, TPX, TRN, UPBD, VNT, WEN, WCC, WLK, ZTS, ACHC, ACCO, AES, AGL, ASTL, LNT, COLD, AMN, AAPL, TEAM, BECN, SQ, BKNG, CVNA, CVCO, COIN, CODI, ED, BAP, DKNG, DBX, EVH, EXPI, EXPE, FND, FTNT, GDDY, ACFI, LYV, MTZ, MCHP, MODV, MNST, MSI, ZEUS, OTEX, OPEN, OEC, PBA, PXD, RGA, RKT, RYAN, SBAC, SEM, SWKS, SM, SWN, SBUX, SYK, and VTR.  Finally, on Friday, AMCXM AXL, BSAC, BLMN, BBU, BEPC, BEP, CAH, CBOE, CHD, CNK, CRBG, D, ENB, EOG, FLR, FWONK, FWONA, IT, GTES, IEP, KOP, LSXMK, LSXMA, MGA, OMI, PAA, PAGP, PRVA, QRTEA, QSR, SRE, TDS, TIXT, USM, WPC, and TSE report.

In interesting real estate news from North of the border, Canadian PM Trudeau has been under pressure about the tight housing market in Canada.  As a result, Trudeau introduced measures to tighten the criteria colleges apply to their international students starting in the fall of 2024.  Colleges that meet the higher criteria will be given priority in the processing of student visas requested by their international students.  In effect, the idea is to reduce the number of international students in Canada, thereby freeing up housing for native Canadians.

In miscellaneous news, Israel expanded its ground invasion of Gaza on Friday and the expansion of that attack continued Saturday and Sunday.  Meanwhile, on an interesting side note, since 1950, October 28 has statistically been the best single day of the year in terms of bullish market gains.  So, of course, October 28 came on a Saturday this year. (For the record, the worst market day of the year is statistically Oct 19…just nine days prior to the best day.)  Elsewhere, tonight (8 p.m. Eastern) Bloomberg reports AAPL will unveil eight M3 CPUs (built on TSM’s 3nm process fab) with eight, 12, or 16 processing cores (both efficiency and performance cores) and 10, 18, or 40 graphics processing cores.  They will also launch a 24-inch iMac using the new M3 chips and a new MacBook Pro.

So far this morning, ACDVF, BGC, CHKP, CAN, JKS, L, MCD, SOFI, and XPO all reported beats on both the revenue and earnings lines.  Meanwhile, HSBC missed on revenue while beating massively on earnings (+194% quarter-on-quarter).  However, DQ and RVTY missed on both the top and bottom lines.  (ON and WDC report at 8 a.m.)  It is worth noting that SOFI raised its forward guidance.  In addition to the HSBC growth, JKS had 59% earnings growth on just 4% revenue growth.

With that background, it looks like the Bulls are in control in the premarkets this morning. All three major index ETFs gapped higher at the open of the early session with the large-cap indices printing small, white-bodied candles. However, the QQQ gapped higher and the Bulls have continued to run, giving us a large, white-bodied candle with very small wicks this morning. With that said, keep in mind that all three remain well below their T-line (8ema) and also down 9%-10% from the summer highs. Once again, we have no really major economic news today and with the Fed and Q3 Payrolls later in the week, it would not be surprising for markets to drift while they wait on more news. In terms of that extension, all three major index ETFs are back a bit extended down below their T-line (8ema). The T2122 indicator is also in the lower end of its oversold territory. So a pause or relief rally may well be in order. Just remember that the market can remain extended longer than we can stay solvent betting that it has to turn. Finally, the only thing we can say for sure is the Bears maintain control of the 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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