Tuesday was essentially a nothing day with all the moves made at the open.  The SPY gapped down 0.23%, the DIA opened down 0.13%, and QQQ gapped down 0.44%.  From there, all three major index ETFs ground sideways in a tight range for the rest of the day.  This action gave us inside day Doji-type candles in the SPY, DIA, and QQQ.  All three remain well above their T-line (8ema).  This all happened on extremely low volumes in the large-cap index ETFs and below-average volume in the QQQ.

On the day, seven of the 10 sectors were in the red with Technology (-0.87%) out front leading the way lower while Basic Materials (+0.28%) was by far the strongest sector.  At the same time, the SPY lost 0.22%, DIA lost 0.20%, and QQQ lost 0.58%.  The VXX fell almost 2% to close at 18.06 and T2122 fell just outside its overbought territory to the very top of the mid-range at 79.02.  10-year bond yields dropped again to 4.396% and Oil (WTI) was flat to close at $77.81 per barrel.  So, after a big bullish day on Monday, Tuesday saw some profit-taking and indecision.  Perhaps most of the traders have already taken off for the holiday.  Either way, it really was a treading water day after the open.  However, it is worth noting we are still just a bit stretched.

The major economic news reported Tuesday included October Existing Home Sales, which came in lower than expected at 3.79 million (compared to a forecast of 3.90 million and a September value of 3.95 million).  That was a 4.1% decline from the Sept. reading, which itself was a 2.2% decline over August.  Then after the close, the Weekly API Crude Oil Stocks Report showed a much bigger inventory build than predicted at +9.047 million barrels (versus a +1.467-million-barrel forecast and a prior week value of 1.335 million barrels). 

However, the main news of the day was the release of November Fed Minutes.  The main headline of that release was exactly what the Fed has been saying for months, conditions seem to warrant keeping rates higher for longer (restrictive).  Specifically, the minutes said, “All participants judged that it would be appropriate for policy to remain at a restrictive stance for some time until inflation is clearly moving down sustainably toward the Committee’s objective.” In addition, the committee said a period of “below-potential growth in real GDP and some further softening in labor market conditions” (will be needed to reduce inflation enough to return to 2 percent inflation).  The minutes also said that ALL PARTICIPANTS agreed to proceed carefully (meaning they recognize we are near the end of tightening and risks are now becoming two-sided and implying there is less interest in more hikes) and “all judged it appropriate” to hold rates steady (meaning there were no hawks fighting for a hike). 

In stock news, WH rejected a revised offer of $86 per share from CHH.  (The revised offer was $7.8 billion lower than the October 17 original offer.)  Later, AVGO said it would be closing its $69 billion purchase of VMW today (Wednesday).  At the same time, PLTR announced it had won a $414 million contract from the UK’s NHS.  Elsewhere, OMF entered into an agreement to acquire a subsidiary of JEF in a $115 million deal.  At the same time, CNBC reported that Jeff Bezos is expected to sell $1 billion of his AMZN stock after selling $240 million of it last week. Later, Reuters reported that WMT plans to add parcel stations to its stores in a bid to cash in on the demand for quick deliveries during the holidays.  At the same time, GM announced it would provide a new “business update” on Nov. 29 after the ratification of the UAW contract.  At the same time, F announced it is scaling back its planned EV battery plant in Michigan after US lawmakers chided the company for using Chinese company CATL as a partner in the plant.  After the close, a coalition of labor unions announced it is seeking three board seats at SBUX.  Also after the close, T announced it will spin off its cybersecurity unit into a new venture in partnership with venture capital firm WillJam Ventures.  T will retain majority ownership of the spinoff.

In stock government, legal, and regulatory news, the State of TX sued PFE alleging the company manipulated its quality control testing for an ADHD drug.  Later, a NY District judge ruled against a group of US pension funds who had sued to block Denmark’s tax authority from pursuing millions of dollars in tax fraud cases.  At the same time, a US jury ordered BAYRY (Bayer) to pay Seattle school employees $165 million after finding that PCB chemicals leaked from light fixtures and made them sick.  This adds to $870 million in verdict awards in other cases for the same reason.  Later, PAYC was hit with a second lawsuit by prominent law firms.  The suits claim the company did not fully disclose the negative impact its “Beti” product had on performance, thus defrauding investors.  At the same time, the FCC Chair proposed a rule barring cable and satellite TV providers from charging consumers exit fees or early termination fees.  The initial vote on the proposed rule will take place on Dec. 13.  Meanwhile, after the close, Canada introduced tax rules aimed at easing its housing shortage by reducing ABNB and VRBO’s ability to deduct certain expenses from taxes.  Also after the close, the FTC announced it is streamlining investigations into cases where AI is used to break regulations.  In the evening, a Florida court announced that the judge has found very “reasonable evidence” that TSLA and CEO Musk knew about defects in its Autopilot system but still allowed cars to use the feature unsafely.  This could be devastating to the company but the case will surely (for that reason) be appealed until the end of time.  Later, Bloomberg reported that AAPL is facing NLRB allegations that it excluded union retail workers in MD from benefits in 2022.

After the close, ADSK, HPQ, NVDA, and URBN all reported beats on both the revenue and earning s lines.  It is worth noting that NVDA had an absolute blowout quarter with revenue increasing 206% (more than tripling year-on-year) and beating its own raised estimates from a quarter ago by 12%.  At the same time, NVDA beat its estimates for earnings from Q2 by a whopping 26%.  Meanwhile, JWN missed on revenue while beating on earnings.  Unfortunately, GES missed on both the top and bottom lines.  Also note that ADSK and GES lowered guidance while NVDA raised forward guidance again.

Overnight, Asian markets were mixed but leaned toward the downside.  Shenzhen (-1.41%), Shanghai (-0.79%), and Taiwan (-0.61%) led the region lower.  Meanwhile, in Europe, the exact opposite picture is taking shape at midday with only four of the 15 bourses even modestly in the red.  The CAC (+0.36%), DAX (+0.40%), and FTSE (-0.21%) lead the region higher on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are now pointing toward a modest green start to the day. The DIA implies a +0.04% open, the SPY is implying a +0.21% open, and the QQQ implies a +0.38% open at this hour.  At the same time, 10-year bond yields are falling again to 4.365% and Oil (WTI) is down 2.30% to $75.97 per barrel in early trading.

The major economic news scheduled for Wednesday includes Oct. Core Durable Goods Orders, Oct. Durable Goods Orders, and Weekly Initial Jobless Claims (all 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.), and EIA Weekly Crude Oil Inventories (at 10:30 a.m.).  The major earnings reports scheduled for before the open include DE.  There are no major earnings reports after the close. 

In economic news later this week, there is no major economic news scheduled for Thursday with markets and Federal agencies closed for Thanksgiving.  Finally, on Friday, we get S&P US Mfg. PMI, S&P US Services PMI, and S&P Global Composite PMI.

In terms of earnings reports later this week, there are no reports on Thursday.  Finally, on Friday we hear from HTHT.

In miscellaneous news, mortgage demand jumped to a new six-week high as rates continue to drop quickly. The national average 30-year, fixed-rate loan rate was 7.41% (down 0.20% from the prior week’s 7.61%). As a result, applications for new home purchase loans rose 4% and applications for refinance loans climbed 2%. This gave us an average increase of 3% in mortgage application volumes. Elsewhere, Sam Altman agreed to return as CEO of OpenAI after a board member joined the 700 employees (out of 770) signed the letter to the board threatening to resign if Altman was not brought back. The OpenAI board will also undergo a massive overhaul as a former co-CEO of CRM Taylor and former US Treasury Sec. Summers joining the board. (Taylor takes over as the new board Chairman.) There has been no word on which board members were fired (or taken out back and shot), but the entire high-tech industry seems to be comparing this to the board coup that ousted Steve Jobs from AAPL way back in 1985. Finally, in geopolitical news, Israel agreed to a deal creating a four-day pause to their onslaught in Gaza in exchange for the release of 50 hostages. In addition to the time, Israel will allow an unknown increase in humanitarian aid during the four days. At the same time, the IDF has said it is making plans to turn the focus of its invasion of Gaza toward the South, saying that many of the Hamas terrorists they are trying to destroy had escaped South during the IDF pincer movement on Northern Gaza. The point the IDF wanted to make is that the war is definitely not done and this was strictly a “hostages for time” pause deal.

So far this morning, DE beat on both the revenue and earnings lines.  Both numbers were blowout beats with revenue beating estimates by almost 20% and earnings coming in over 10% above expectation.  However, DE did lower its forward guidance. Coupled with last night’s massive blowout by NVDA and the market is going into the holiday on an earnings high.

With that background, it looks like the Bulls are in control of the premarket session in the SPY and QQQ. The DIA is positive, but printing a much more indecisive Doji-type candle in the early session while both the SPY and QQQ are printing large-body white candles. All three major index ETFs remain well above their T-line (8ema) and 50smas. So, the Bulls are in still well in control of both the short-term and 4-5-month trend. In terms of extension, the major index ETFs are on the edge of getting back to being too far extended from their T-lines (8emas) but for now are okay after Tuesday’s inside day. Meanwhile, the T2122 indicator has fallen back but down to the top of its mid-range. So, we have some slack to work with but we are still leaning toward the need of pause or pullback. With that all said, this is traditionally the heaviest holiday travel day. So, don’t be surprised if volumes are low and volatility increases as many traders either leave early or don’t show up at all today.

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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service