Thursday gave us a gap-up start to the day again.  The SPY opened 0.45% higher, DIA gapped up 0.21%, and QQQ opened 0.78% higher.  From there the SPY and QQQ gave us a gradual wavy rally that took us to the highs of the day at about 2:25 p.m.  At the same time, DIA spent the morning chopping sideways inside of its morning gap, before rallying to its highs of the day at about 1:45 p.m.  At that point, DIA started a slow and gradual selloff the rest of the day, closing very near the open level.  SPY and QQQ followed suit after 2:20 p.m. but both stayed well above their opening level.  This action gave us a white-body candle with a wick on both ends that closed above the high of Wednesday’s dark cloud cover candle.  So, it looks like QQQ has decided to push toward resuming its uptrend.  Meanwhile, SPY gave us a white-bodied Bullish Harami candle that crossed back up above the T-line (8ema) and near the top of Wednesday’s bearish engulfing candle.  At the same time, DIA gave us a Doji Inside Day candle as it continued its Bull Flag above its T-line.

On the day, eight of the 10 sectors were in the green with Industrials (+1.83%) and Technology (+1.34%) out in front leading the way higher while Energy (-0.25%) lagged well behind the other sectors.  At the same time, the SPY gained 0.74%, DIA gained lost 0.17%, and QQQ gained 1.40%. The VXX was flat at 17.25 and T2122 remains in its mid-range at 71.08.  10-year bond yields rose a bit to 4.144% and Oil (WTI) gained 0.40% to close at $69.66 per barrel.  So, Thursday saw a gap higher, followed by a bull run in the SPY and especially QQQ.  However, the DIA remained indecisive and all three major index ETFs showed some profit-taking at the end of the day (ahead of the November Payrolls data tomorrow). With that all said, AI ruled the day, as AMD soared 9.84% on the day after announcing its new AI chip Wednesday.  Meanwhile, GOOGL shot up 5.31% after it announced a new AI model (Gemini) Wednesday.  This happened on low volume across all three major index ETFs. 

The major economic news reported Thursday included Weekly Initial Jobless Claims which came in just shy of expectations at 220k (compared to a forecast of 222k and just above the prior week’s 219k reading).  At the same time, Weekly Continuing Jobless Claims fell to 1,861k (versus a forecast of 1,910k and the prior week’s 1,925k value).  Later October Consumer Credit was reported as FAR lower than anticipated at $5.13 billion (compared to a forecast of $9.00 billion and dramatically below the Sept. reading which was revised upward sharply to $12.22 billion).  Finally, after the close, the Fed Balance Sheet continued to show a reduction, coming in at $7.737 trillion (versus the prior week’s $7.796 trillion).  So, that was a fairly steep $59 billion of bonds offloaded by the Fed last week.

After the close, AVGO, COO, DOCU, and LULU all reported beats on both the revenue and earning lines.  Unfortunately, RH missed on both the top and bottom lines.  It is worth noting that DOCU raised its forward guidance.

In stock news, fresh off its new deals with the Big 3 Automakers, the UAW announced that more than 1,000 VLKAF (Volkswagen) workers at its Chattanooga TN plant signed union authorization cards this week.  This came even though VLKAF increased worker pay by 11% in November following the UAW deals.  (In 2019, the same plant rejected the union by a vote of 833 against to 776 for the union.)  Later, GM announced that it has partnered with Autocar Industries to create hydrogen-fueled heavy vehicles using GM’s hydrogen fuel cells.  Elsewhere, BA informed its suppliers Thursday that there will be a two-month delay in its 737 narrow-body jet production plan. The new schedule calls for 42 jets per month produced beginning in February 2024.  It also pushes back the ramp up to 47 per month from June to August and the 52.5 jets per month level pushed from December 2024 to February 2025.  Later, MCD announced it would launch ten “CosMc’s” restaurants in 2024, focused on a limited menu and cold beverages. This is not much of an announcement just one day after MCD said they’ll open 10,000 new full-line stores by 2027 (which is the most aggressive growth MCD has ever had.)  After the close, STLA said it would temporarily cut SUV production in Detroit, citing CA emissions regulations as the reason.  (The idea is they will produce fewer SUVs and more of its lower-emission vehicles so the company average meets CA standards.) Also after the close, MBI announced a special dividend of $8.00/share for shareholders of record on December 18 to be paid Dec. 22.  (This is noteworthy since MBI closed at $7.38 on Thursday. So, the dividend yield will be 108%…for the quarter.) Meanwhile, the Teamster union said that UPS has fired 35 newly organized workers.  The union said if the company does not “get its act together” they will face a strike of their 340k Teamster employees.

In stock government, legal, and regulatory news, AUB agreed to pay a $6.2 million settlement ($1.2 million in fines and $5 million in customer compensation) with the CFPB.  Later, a Swedish court ruled against TSLA in its legal battle with Sweden’s postal service (where the postal union has refused to deliver license plates to TSLA in sympathy with the IF Metall union which TSLA flatly refuses to negotiate with).  The ruling said that postal union workers do not need to deliver TSLA license plates.  At the same time, the Bank of England and the UK’s Financial Conduct Authority have proposed draft rules that place new regulations on “critical third parties” such as AMZN and MSFT.  The proposed rules would require those critical third parties to evaluate and mitigate operational risks that might impact their customers in the financial sector.  Later, AAL asked a US Appeals Court to reverse a lower court decision that sided with the US Dept. of Justice’s position that the now-scrapped JBLU and AAL partnership in the Northeast was anticompetitive.  At the same time, the FCC said it had approved the merger between DISH and SATS.

In major retraction news, late Tuesday evening, the National Retail Federation retracted previous claims by it and its members that nearly half of all retail losses in 2021 were due to “organized retail crime rings.”   The group admitted that it made and repeated that claim despite data showing this was nowhere near true.  (Clearly, this was another case of lying in politics and attempting to shift blame from its members in the stock market.)

Overnight, Asian markets were mostly green.  Singapore (+1.19%), South Korea (+1.03%), and Taiwan (+0.61%) led the region higher.  Meanwhile, in Europe, 12 of the 15 bourses are also in the green at midday.  The CAC (+0.71%), DAX (+0.16%), and FTSE (+0.19%) lead the region higher on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly red start to the day (ahead of data).  The DIA implies a -0.11% open, the SPY is implying a -0.12% open, and the QQQ implies a -0.26% open at this hour.  At the same time, 10-year bond yields are back up to 4.182% and Oil (WTI) is popping up 1.83% to $70.60 in early trading.

The major economic news scheduled for Friday include Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, and Nov. Avg. Hourly Earnings (all at 8:30 a.m.), Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Rate Expectations, and Michigan 5-year Inflation Rate Expectations (all at 10 a.m.), and the WASDE Ag Report (noon).  There are no major earnings reports scheduled for either before the open or after the close.

In miscellaneous news, the SEC announced it will vote next Wednesday (and is now widely-expected to approve) a major rule change that would force more Treasuries trading to go through clearing houses.  The clearing houses act as counter-parties to every trade in the event either the buyer or seller defaults, which ensures every trade is made. The rule is expected to reduce volatility in the $25 trillion US bond market.  It will also have the effect of reducing hedge funds leveraged debt bets.  Elsewhere, Freddie Mac reported Thursday that the average US 30-year fixed loan rate dropped to 7.03% this week.  This was the lowest rate since early August.  Meanwhile, one of the world’s largest coffee brokers, Mercon Coffee Group, filed for bankruptcy in the US.  The company said its major lenders chose to not extend credit agreements, leaving the company with very tight working capital conditions.  Finally, we have some economic news out of China.  Chinese exports in November rose 0.5% from the same month in 2022.  However, Chinese imports in November shrank 0.6% compared to the same month in 2022. 

In inflation analysis news, a study released Thursday by the British Think Tank Institute for Public Policy Research and Common Wealth found that contrary to corporate and political right-wing claims, it was “excessive profits” (especially in the energy and food sectors) were the major contributing factors that led to the high post-pandemic inflation.  The study, based on an analysis of 1,350 listed-company financial reports found that the spike in inflation was not driven by wage inflation or too many government handouts.  Instead, the primary issue was corporate greed, in the form of 30% higher profits when comparing 2019 to 2022, that drove inflation (at least in the US, UK, Germany, Brazil, and South Africa which the study covered).

With that background, it looks like all three major index ETFs are again looking to give us indecisive inside-day candles in the premarket. All three major index ETFs opened the premarket lower and are putting in small and mostly indecisive (Doji-like) candles so far in the early session. All three remain above their T-line (8ema) this morning. The overall character of the early session suggests that either nothing has changed yet (and more consolidation remains Mr. Market’s plan) or Traders are waiting on a big push one way or the other from the Nov. Payrolls reports. On balance, the Bulls are in control of both the longer-term trend and the short-term trend. However, the short-term trend is much more consolidating than a strong bullish trend. In terms of extension, none of the three major index ETFs is extended too far from its T-line. At the same time, the T2122 indicator remains in its mid-range. So, both the Bulls and the Bears have plenty of slack to run…if they can find the momentum.

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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