The Bulls had the momentum pretty much all day Monday. The SPY and DIA gapped up 0.69% at the open while the QQQ gapped up 0.73%.  All three of those major index ETFs followed through mildly for the first 30 minutes.  At that point, the DIA led the way for a change, beginning a mild bullish trend at about 10:50 a.m. while the SPY and QQQ kept meandering until their own stronger rallies started at 1 p.m. and lasted until 3:30 p.m.  Then all three have very modest selloffs the last 30 minutes of the day.  This action gave us white-bodied candles in all three. The SPY and QQQ both printed larger-body Spinning Top candles while the DIA printed a large-body candle that retested and just backed down from its T-line (8ema).  This happened on above-average volume in the DIA and modestly below-average volume in the SPY and QQQ.

On the day, nine of 10 sectors were green with communications Services (+1.77%) led the way higher while Energy (-0.05%) was the only sector in the red (barely).  At the same time, SPY gained 1.20%, DIA gained 1.58%, and QQQ gained 1.13%.  The VXX plummeted 7.46% to close at 25.06 and T2122 climbed but remains just inside the top end of its oversold territory at 18.25.  10-year bond yields rose to end the day at 4.888 and Oil (WTI) plummeted 3.58% to close at $82.48 per barrel.    

There was no major economic news reported Monday.

In Autoworker contract talks and strike news, the Canadian Unifor strike against STLA was settled with a tentative deal within hours of the start of a Unifor strike.  Later, the UAW announced it had reached a tentative deal with the last of the Big 3 Automakers (GM).  Interestingly, GM says the 6-week strike cost is more than $400 million per week, which is more than double what F (who settled last Wednesday) said the strike had cost it.  The 25% wage increase over four years that all three carmakers agreed to was the first significant wage increase for the UAW since 2008 when they gave up large amounts of wages and benefits to save the industry.  The GM deal includes a 25% base pay increase through April 2028 which when coupled with cost-of-living increases will bring the top union wage to $42/hour by the end of the contract.  It also reduced the time it takes a worker to reach the top tier of pay and brought two new GM business units under the deal. Finally, the deal increases retiree benefits which were major concessions made by the union back in 2008.

In stock news, Reuters reported Monday that AVGO expects its $69 billion purchase of VMW to close before its Nov. 26 deadline, despite continuing Chinese investigation of the deal over antitrust concerns.  AVGO told Reuters that the Chinese scrutiny did not pose a legal impediment to closing the deal.  At the same time, SAN announced it is set to unload $5.29 billion in “bad” real estate assets in order to shore up its balance sheet.  Elsewhere, WMT announced it is investing $9 billion over two years to upgrade 1,400 stores (out of 4,717).  117 WMT stores featuring upgrades worth $500 million are set to open Friday.  At the same time, F announced it is adding 15k TSLA chargers to its own vehicle charging network.  (No timeline was given for the addition, but F now expects to offer 106,000 chargers in the US in early 2024.)  Later, Reuters reported that GSK accounted for two-thirds of the RSV vaccines in the US since early September, dominating the only rival PFE.  (GSK’s $280 shot is $15 cheaper than the PFE shot.)  Analysts say there will be in the low hundreds of millions of RSV vaccinations in 2023.  At the same time, Reuters reports that BP is actively seeking joint ventures in the US shale natural gas production space.  This includes in the Permian Basis where XOM recently went big by buying PXD.  Later, LITE announced it was doubling its cloud computing infrastructure by purchasing Cloud Light for $750 million.  At the same time, ON announced it is laying off 900 workers due to an expected sluggish Q4, based on an expected slowing in electric vehicle demand.  In Pharmacy news, workers at CVS and WBA began a 3-day walkout Monday demanding improved working conditions and more staff at the stores.  (Essentially, the claim is that pharmacy companies are forcing pharmacists to do the work of two or more people, including delivering vaccine shots and answering health insurance questions in addition to their normal prescription filling duties.

In stock government, legal, and regulatory news, Reuters reported Monday that more than 14 progressive non-profit groups are pressing the US Dept. of Justice to step back from the “free pass” they perceive the Biden DOJ having given corporate offenders.  (The Biden DOJ has implemented a “safe harbor” policy to entice corporate disclosure of their misconduct.)  At the same time, the US Dept. of Transportation said a civil fine (or an unspecified amount) of LUV is warranted related to the December 2022 meltdown that caused 16,700 flight cancellations, causing major disruption to two million passengers.  Later, EU antitrust regulators granted approval for HTHIY (Hitachi) to buy Thales’ GTS Railway Signaling unit for $1.80 billion. Meanwhile, CP was served a “transfer pricing order” by the Indian Income Tax Authority.  Essentially, the order accuses CP of avoiding Indian taxes by transferring money across borders between CP divisions.  Later, two US Senators (one from each party) asked the US Dept. of Transportation and the Consumer Financial Protection Bureau to take action on “troubling reports” about deceptive and unfair airline frequent flyer loyalty programs.  Elsewhere, GOOGL CEO Pichai testified in the US antitrust lawsuit Monday.  He acknowledged the importance to the company of making its search engine the default for phones, browsers, and laptops.  Under cross-examination, Pichai granted that the company spends billions of dollars each year for such deals and noted that GOOGL “definitely sees value” from that default status program. 

After the close, AGNC, AMKR, ACGL, ANET, CLW, CWK, CVI, MATX, MPWR, PEAK, PINS, PSA, PSMT, QGEN, SPG, THC, and WELL all reported beats on both the revenue and earnings lines. Meanwhile, KMPR, NEXA, and VFC both beat on revenue while missing on earnings.  On the other side, RYI and VNO both missed on revenue while beating on earnings.  However, CACC, FMC, LEG, and RIG missed on both the top and bottom lines.  It is worth noting that AMKR and VFC lowered their guidance.  At the same time, ANET, RYI, SPG, and WELL all raised their forward guidance.

Overnight, Asian markets were mixed but leaned slightly to the red side.  Hong Kong (-1.69%), South Korea (-1.41%), and Taiwan (-0.92%) led the region lower.  Meanwhile, in Europe, with the sole exception of Russia (-1.18%), we see green across the board at midday.  The CAC (+0.97%), DAX (+0.52%), and FTSE (+0.57%) are leading the region higher in early afternoon trade.  This came as Eurozone inflation dropped significantly in October to 2.9% (the lowest level in two years) and the Eurozone GDP declined 0.1% for Q3 (which was significantly better than forecast by economists).  In the US, as of 7:30 a.m., Futures point toward another positive start to the day.  The DIA implies a +0.38% open, the SPY is implying a +0.26% open, and the QQQ implies a +0.13% open at this hour. At the same time, 10-year bond yields are down to 4.829% and Oil (WTI) is up about two-thirds of a percent to $82.79 per barrel in early trading.

The major economic news scheduled for Tuesday includes Q3 Employment Cost Index (8:30 a.m.), Chicago PMI (9:45 a.m.), Conf. Board Consumer Confidence (10 a.m.), and API Weekly Crude Oil Stocks Report (4:30 p.m.).  The major earnings reports scheduled for before the open include 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.  Then, after the close, 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 report.

In economic news later this week, on 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 the 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 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 miscellaneous news, Reuters reported Monday that half of the S&P 500 have now reported earnings. So far, 77% of those have beaten expectations. Of those that have reported, Consumer Discretionary companies have been the biggest surprise, beating earnings expectations by an average 19% according to Refinitiv earnings data.  Later, the US Treasury Dept. said it expects to borrow $776 billion in Q4, down $76 billion from its July estimate citing increased revenue estimates (a strong economy plus taxes deferred from CA and HI due to disasters means more tax revenue).  In potentially related news, GS raised its long-term US economic growth estimates, saying that AI will boost productivity in the US more than it had previously expected.  Elsewhere, as expected, after the close, AAPL announced three versions of its new M3 chip (based on the ARM architecture and TSM 3nm production process), a new iMac, and a new MacBook Pro at its “Scary Fast” product launch.  (Macs accounted for only 11% of AAPL sales in 2022.) Finally, social media platform X (formerly Twitter) is now worth just 43% of what Elon Musk paid for it one year ago. While Musk paid $44 billion, stock awards just made to employees value the company at $19 billion.

In international news, Israeli PM Netanyahu again rejected growing calls for a cease-fire in their war against Hamas.  At the same time, Chinese factory activity contracted and the Chinese services sector failed to expand (as had been expected) in October.  This weaker-than-expected data is sure to lead to calls for more stimulus from Beijing.  In Japan, the BoJ held rates steady (the only Central Bank with a negative rate) but made a tweak to permissible government bond yields.  The BoJ claims this will give them more flexibility in shaping long-term yields.  (The Yen fell lower on this news.)

So far this morning, ALLE, AMGN, BCC, CAT, FNMA, GEHC, GPN, GVA, GPRE, IGT, LDOS, MPC, PFE, ST, BLD, and XYL all reported beats on both the revenue and earnings lines.  Meanwhile, AME, BUD, ETN, GPK, INCY, LGIH, MSCI, SIRI, and WEC all missed on revenue while beating on earnings.  On the other side, MPLX, NBIX, and ZBRA all beat on revenue while missing on earnings.  However, ARES, BP, CEIX, EPD, and JBLU missed on both the top and bottom lines.

With that background, it looks like the Bulls are again in control in the premarket this morning. The SPY and QQQ opened the early session lower, but have put in brong white-bodied candles to take price above the Monday close. Meanwhile, DIA opened the early session higher and ran up above its T-line (8ema) where the bears are pushing back to have a retest of that level. DIA does have the only significant wick (upper) of the three so far this morning. With that said, keep in mind at least two of the three remain below their T-line and also down 7%-9% from the summer highs. So, the Bears remain in control of the trend. In terms of extension, none of the three major index ETFs are extended from their T-line and while the T2122 indicator is still in its oversold territory, it is barely in that range. So, we may get additional relief from being oversold but the need is not nearly as bad as it was Monday morning.

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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