Tuesday was the second straight day with the Bulls in charge. All three major index ETFs opened flat before putting in a modest selloff the first 30 minutes of the day.  At that point, the Bulls took over to lead a gradual and wavy rally that lasted the rest of the day.  This action gave us white-bodied, Hammer-type candles.  DIA crossed back up above its T-line (8ema), SPY is right at the T-line (just cents below), and QQQ is now close to retesting its own T-line.  This happened on average volume in the DIA and less-than-average volume in the SPY and QQQ.

On the day, nine of the 10 sectors were again green with Healthcare (+0.90%) and Communication Services (+0.89%) leading the way higher and Basic Material (-0.03%) was the only sector in the red (barely). At the same time, the SPY gained 0.63%, DIA gained 0.38%, and QQQ gained 0.48%.  The VXX plummeted another 6.42% to close at 23.45 and T2122 climbed up out of its oversold territory and into the mid-range at 38.60.  10-year bond yields rose to end the day at 4.924% and Oil (WTI) dropped another 1.14% to close at $81.35 per barrel.    

The major economic news reported Tuesday included the Q3 Employment Cost Index, which came in a bit hot at +1.1% (compared to a forecast of +1.0% and a Q2 reading of +1.0%).  Later, the October Chicago PMI came in a bit low at 44.0 (versus a 45.0 forecast and slightly less than the September value of 44.1).  A few minutes later, the Conf. Board Consumer Confidence came in better than predicted at 102.6 (compared to a 100.0 forecast but a bit less than the 104.3 September reading).  Finally, after the close, the API Weekly Crude Oil Stocks showed a modestly less-than-anticipated oil inventory build of 1.347 million barrels (versus a 1.601-million-barrel increase forecast but significantly larger than the prior week’s 2.668-million-barrel drawdown.

In stock news, JBL announced it has acquired INTC’s Silicon Photonics “pluggable optical transceiver” product lines for an undisclosed amount.  At the same time, DOC and PEAK announced an all-stock merger that results in a $21 billion healthcare real estate company.  (The company will trade under DOC when the deal closes in early 2024.)  Elsewhere, TM announced it will invest an additional $8 billion in its existing NC EV battery plant, creating 3,000 new jobs.  At the same time, BX and Vista Equity Partners announced they will jointly buy Australian firm Energy Exemplar.  (Both firms will hold 50% in what sources say was a more than $1 billion valued Aussie firm.)  Later, WE announced it had decided to withhold interest payments on roughly $6.4 million of its senior notes when they become due today (11/1).  The company has a 30-day grace period but raised concern when it expressed “substantial doubt” about whether it can continue operations back in August.  (However, after the close, sources told Reuters WE would file for bankruptcy as soon as next week.)  By mid-afternoon, MSFT announced they had released a major Windows 11 update which includes the debut of Ai-powered Windows Copilot.  At the same time, BNS sold its 20% interest in the financial services unit of Canadian Tire back to the retailer for $647 million.  (BNS had paid $500 million for that stake in 2014.)  Sticking North of the border, V and BMO announced a partnership to offer a new installment payment service to Canadian cardholders starting in 2024.  Back in the US, shares of VRV spiked Tuesday following the announcement of an expanding partnership with LLY where LLY is acquiring the rights to multiple VRV gene editing products.  At the same time, NVDA shared dropped almost 5% at one point on a Wall Street Journal article that reported the company would have to cancel $5 billion in Chinese orders to remain in compliance with US restrictions on selling advanced AI chips to China.  Still NVDA stock recovered to close down less than 1%.  

In stock government, legal, and regulatory news, TTM was awarded $1 billion by a three-member arbitration tribunal in India in the action they brought against Indian regional development authority.  That authority had solicited TTM to buy land and build a plant in West Bengal India.  However, regional authorities then forced TTM to return the land acquired for the plant and the company had to move the project to another region of the country.  Later, a PA jury ordered MMTOF (Mitsubishi Motors) to pay just under $977 million in damages to a man who became quadriplegic in a vehicle rollover due to an allegedly defective seatbelt.  Elsewhere, the Dutch consumer watchdog group is challenging the fees AAPL charges to dating app providers in Netherlands.  Bloomberg reported this was part of a long-standing case against AAPL, with the authority having fined AAPL $53 million in 2021 for failure to comply with EU antitrust regulations.  At the same time, Semafor reported Tuesday that MS is close to finalizing a settlement with the US Dept of Justice and SEC for between $500 million and $1 billion related to MS mishandling of private “block trading” stock sales.  Later, NOK filed suit against AMZN and HPQ in multiple jurisdictions claiming unauthorized use of NOK’s video-related technologies in streaming devices and services.  (NOK recently entered into a licensing deal with AAPL over the same technologies.)  Late in the day, a group representing automakers (GM, TM, VLKAF, and HYMTF) announced that it opposes the proposed CLF acquisition of X.  In a letter to FTC Chair Khan and Dept. of Justice Antitrust Chief Kanter, the group claimed it would reduce competition and cause increased steel prices in the US.  Meanwhile, TSLA won the first US trial over allegations that its Autopilot feature led to a death.  This was a major victory for the company although the company faces a number of very similar lawsuits.  After the close, GOOGL announced it had settled claims from dating app MTCH which had claimed GOOGL had monopolized Android app distribution.  This settlement leaves Epic Games as the sole plaintiff in the antitrust suit against GOOGL with jury selection set for this week and the trial scheduled to begin Nov. 6.  At the same time, D was given approval from the US Dept. of Interior to build a 2.6-gigawatt offshore windfarm off the Virginia coast (the largest windfarm built offshore in the US).  Finally, after the close, the FDA approved AMGN’s version of JNJ’s blockbuster psoriasis treatment Stelara.

After the close, AMD, AMCR, AIZ, CZR, CHK, HY, LFUS, MTCH, and MTH all reported beats on both the revenue and earnings lines.  Meanwhile, EQH, LUMN, SKY, TX, and VOYA all beat on revenue while missing on earnings. On the other side, FSLR, MCY, LBTYA, OI, QUAD, SON, and UNM all missed on revenue while beating on earnings. However, BXC, ENLC, EQR, HUN, OKE, and YUMC missed on both the top and bottom lines. It is worth noting that LFUS, MTCH, MTH, and SON lowered their forward guidance while OKE raised its own guidance.

Overnight, Asian markets were mixed but leaned to the bullish side.  Japan (+2.41%) was by far the biggest gainer after the Japanese government announced a stimulus package, followed by South Korea (+1.03%), and New Zealand (+0.87%).  On the red side, India and Malaysia tied at -0.47% to pace the losses.  Meanwhile, in Europe, we see a similarly mixed but a bit more bearish picture taking shape at midday.  The CAC (-0.06%), DAX (+0.07%), and FTSE (-0.16%) lead the region on volume as nine of the 15 bourses in the region are modestly in the red while six are modestly in the green.  In the US, as of 7:30 a.m., Futures indicate a down start to the day.  The DIA implies a -0.33% open, the SPY is implying a -0.38% open, and the QQQ implies a -0.39% open at this hour.  At the same time, 10-year bond yields are back down a bit to 4.903% and Oil (WTI) is up 1.68% to $82.41 per barrel in early trading.

The major economic news scheduled for Wednesday includes ADP Oct. Nonfarm Employment Change (8:15 a.m.), S&P US Mfg. PMI (9:45 a.m.), ISM Oct. Mfg. Employment, ISM Oct. Mfg. PMI, ISM Oct. Mfg. Price Index, and Sept. JOLTs Job Openings (all at 10 a.m.), EIA Crude Oil Inventories (10:30 a.m.), FOMC Rate Decision and FOMC Statement (both at 2 p.m.), and the Fed Chair Press Conference (2:30 p.m.).  On The major earnings reports scheduled for before the open include 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, and YUM.  Then, after the close, 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.

In economic news later this week, 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 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 Tuesday evening that the Panama Canal will again cut its daily ship crossing slots due to drought.  (Prolonged drought has seriously depleted the lakes used to fill the many locks used to make the transit across the canal.  For example, October rainfall was the lowest for a month since 1950.)  This reduction will be to 25 vessels per day with additional planned reductions to 18 per day over the next three months.  These reductions will push up shipping costs (by cutting available vessels while some sit in the queue and by increasing transit distances and times to avoid the canal) and reduce the volume of global trade both immediately and over coming months.

In mortgage news, as rates remain high (relatively speaking), the proportion of demand looking for adjustable-rate mortgages popped nearly 10% this week.  According to the Mortgage Brokers Assn. the national average rate for a 30-year fixed-rate loan actually fell from 7.90% to 7.86%.  (Closing points also fell from 0.77 to 0.73 this week.)  Even so, applications for a new home purchase loan fell 1%, and refinance loan applications fell 4% for the week.  And among this smaller number of loan applications, the number looking for an adjustable-rate mortgage rose 10% to 10.7% of all mortgages.

So far this morning, AXTA, EAT, CHEF, CVS, DRVN, ESAB, FDP, GRMN, GNRC, HUM, JHG, KHC, LPX, LKNCY, PSN, SUN, TEL, TT, UTHR, and VRSK all reported beats on both the revenue and earnings lines.  Meanwhile, BLCO, BLDR, CDW, DD, ETR, EL, IDXX, IQV, KMT, LML, NI, TRI, TRMB, W, and YUM all missed on revenue while beating on earnings.  On the other side, SITE and SSRM beat on revenue while missing on earnings.  However, APO, DTE, and TKR missed on both the top and bottom lines.  It is worth noting that EAT, ESAB, NI, PSN, and TT all raised their forward guidance while EL lowered its guidance.

With that background, it looks like the Bears are in control in the premarket this morning. All three major index ETFs opened the early session lower and have put in smallish black-body candles since then. The DIA has now crossed back below its T-line while the SPY and QQQ moved back down away from their own 8emas. However, these are all Bearish Harami candles (meaning indecision leaning bearish) this morning. Keep in mind that all three remain near correction territory, being down 7%-9% from their 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 while the T2122 indicator is back in its mid-range. So, there is room to run in either direction if the Bulls or Bears can find the momentum. Today, that energy might come from the 10 a.m. news drop but it is more likely to come in reaction to the Fed or Fed Presser at 2 p.m. and 2:30 p.m. respectively. So, beware of volatility, even as the market has priced in a 97.2% probability the FOMC will hold rates steady. Words matter and we can expect a tweak to the FOMC statement as well as what Fed Chair Powell says in his remarks and answers this afternoon.

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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