The Bulls were in charge again on Friday.  SPY opened up 0.06%, DIA opened down 0.05%, and QQQ gapped up 0.27%.  At that point, the SPY and QQQ continued on slow, steady rally until 3 p.m. with some very modest profit-taking the last hour.  At the same time, DIA sold off slowly until noon, rallied slowly until 3 p.m. (just reaching the open level) and then took profits more strongly than the other indexes the last hour.  This action gave us large white-bodied candles with small upper wicks in the SPY and QQQ.  Meanwhile, DIA printed a black-bodied Doji candle.  SPY and QQQ printed yet another new all-time high and new all-time high close.  (SPY closed above 5000 for the first time.)  Again, this happened on very low volume in all three major index ETFs.

On the day, eight of the 10 sectors were in the green as Technology (+1.38%) again was well out in front leading the market higher. At the same time, Energy (-0.73%) and Consumer Defensive (-0.61%) were the only sectors in the red.  Meanwhile, the SPY gained 0.57%, the DIA lost 0.16%, and QQQ gained 0.98%.  VXX gained 0.72% to close at 14.02 and T2122 climbed again but remained in the mid-range (just outside of the overbought area) at 78.12.  10-year bond yields rose a bit to 4.173% and Oil (WTI) gained 0.42% to close at $76.54 per barrel.  So, the bulls ended the week again on its fourth higher close in the SPY.  However, that’s the least of the streaks. SPY, DIA, and QQQ are all on a five-week winning streak…and 14 out of 15 weeks closing higher.

There was no major economic news released on Friday.  However, the Bureau of Labor Statistics did revise downward the CPI data for December.  The new CPI data showed a +0.2% increase for December, down from the earlier +0.3% estimate.  However, at the same time, BLS revised the November number up from 0.1% to 0.2%.

In Fed news, Dallas Fed President Logan said Friday that risks are more balanced now and this gives the FOMC room to be patient on rate cuts.  Logan said that there had been “tremendous progress” on bringing down inflation, but she still wants to see more evidence before starting rate cuts.  She said, “The risks that I’m seeing in the economy are becoming more in balance, but I do think we need to take time here to continue to look at the data…I’m really not seeing any urgency to make any additional adjustments at this time.”

In stock news, ASTL (Canadian steelmaker) reported a significant “incident” at its north Casthouse blast furnace complex.  The incident affected 12 workers with at least five requiring medical treatment.  At the same time, STLA’s Chrysler brand announced it will unveil a new concept car on Tuesday that will be a “sustainable design” and be the basis for a fully electrified Chrysler future.  Later, BTTR announced it had acquired AIMFF in a move that positions it well for developing a weight-loss supplement for pets.  (This will compete with PFE who made a similar acquisition to move into the same segment.)  At the same time, ATR and BIIB announced a partnership to build digital health solutions for neurological diseases.  Later, DIS announced a new AI tool designed to match advertiser commercial messages to the mood created by specific program scenes.  At midday, ASML announced they are gearing up the production line for a new $350 million “High NA EUV” chipmaking machine.  The product will enable TSM, NVDA, INTC, and AMD to make new high-end, higher-density chips. At the same time, Reuters reported an exclusive the CSCO will announce a restructuring plan that will include laying off thousands of employees.  The report said a public announcement is likely to come at CSCO’s earnings call on Feb. 14.  Later, AXP announced that its 2023 restructuring-related costs amounted to $277 million.  Elsewhere, HUBB finalized its divestiture of its residential lighting unit to KWAC for an undisclosed sum.  At the same time, APLD announced it will take a revenue hit from the loss of revenue due to an ongoing power outage (since January 18) data center.  Then, on Saturday, Reuters reported that AMZN founder Bezos sold $2 billion worth of AMZN stock last week per regulatory filings.  (Bezos said a week ago that he would sell roughly 50 million shares by the end of January 2025.)  Later Saturday, TSLA announced temporary 2% – 2.3% price cuts on Model Y cars in the US (valid until Feb. 29).

In stock legal, governmental, and regulatory news, on Friday, the FDA granted “orphan drug” status to IRON’s DISC-3405 investigational therapy.  This grants the company development assistance, tax credits, fee waivers, and 7 years of market exclusivity. At the same time, the FAA accepted the propulsion system certification plan from JOBY.  This sets a clear path to commercial passenger use of JOBY’s electric air taxi vehicles.  Later, the FDA approved Phase 2 clinical trials of OKYO’s ocular investigational drug.  At the same time, a proposed class-action suit was filed against AMZN for allegedly violating consumer protection laws by steering consumers to higher-priced products by hiding lower-price options.  Later, the SEC announced Wall Street firms have agreed to pay $81 million in fines for record-keeping failure.  The violators include USB and OPY.  After the close, AAPL made a court filing indicating it plans to settle a lawsuit that alleged it had stolen trade secrets from startup Rivos.  (Just another in a long line of firms that AAPL has “allegedly” stolen technology from.)  Also after the close, Reuters reported that FAA Chief Whitaker and other top administrators of the agency will be in Seattle to meet with BA executives early this week.

Note that most Asian markets were closed for the Lunar New Year and will stay closed all week as well.  In Europe, the bourses are mostly green at midday with just four of the 15 in the red.  The CAC (+0.32%), DAX (+0.32%), and FTSE (-0.14%) lead the region on volume as usual in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start to the week just on the red side of flat.  The DIA implies a -0.08% open, the SPY is implying a -0.02% open, and the QQQ implies a -0.01% open at this hour.  At the same time, 10-year bond yields are down a touch to 4.16% and Oil (WTI) is off 1.16% to $75.94 per barrel in early trading.

The major economic news scheduled for Monday is limited to NY Fed 1-Year Consumer Inflation Expectations (11 a.m.) and Jan. Federal Budget Balance.  However, we also hear from Fed member Kashkari (1 p.m.).  The major earnings reports scheduled for before the open are limited to TRMB. Then, after the close, ANET, CAR, BHF, CDNS, GT, MEDP, PFG, SCI, TSE, WTS, and WM report.

In economic news later this week, on Tuesday we get Jan. Core CPI, Jan. CPI, and Weekly API Crude Oil Stocks.  Then, Wednesday EIA Crude Oil Inventories are reported.  On Thursday, we get Initial Weekly Jobless Claims, Weekly Continuing Jobless Claims, Jan. Core Retail Sales, Jan. Retail Sales, Jan. Import Price Index, Jan. Export Price Index, NY Empire State Mfg. Index, Jan. Industrial Production, Dec. Business Inventories, Dec. Retail Inventories, the Fed Balance Sheet, and Fed member Bostic speaks.  Finally, on Friday, Jan. Building Permits, Jan. Housing Starts, Jan. Core PPI, Jan. PPI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and Fed member Daly speaks.

In terms of earnings reports later this week, on Tuesday, AN, BIIB, BRKR, KO, DDOG, ECL, FELE, GFS, HAS, HRI, HWM, INCY, JHX, LCII, LDOS, MAR, TAP, MCO, QSR, SHOP, TRU, WSO, WCC, KLG, ZTS, ABNB, AKAM, ALSN, AMX, AIG, BFAM, DVA, ENTG, EQT, GDDY, GXO, IAC, IOSP, CART, INVH, LYFT, MCY, MGM, MRC, NGD, PRI, QDEL, REZI, SSNC, MODG, WCN, WELL, and ZG report.   Then Wednesday, we hear from AVTR, AVNT, GOLD, BGC, CAE, CRL, CHEF, CME, CNHI, DBD, ES, GNRC, GPN, IQV, KHC, LAD, LPX, MLM, NHYDY, OC, PSN, R, SITE, SAH, SUN, TMHC, WAB, WMB, ALB, ATUS, AWK, AR, APP, ACGL, CF, CC, CSCO, CW, ET, EQIX, HLF, HUBS, KGC, MTW, MFC, OXY, PTEN, CNXN, ROL, SON, SUM, TWLO, TYL, VTR, and WFG.  On Thursday, HOUS, ARCH, CBRE, CVE, CRBG, CROX, DE, DNB, EPAM, GTX, GPC, GEO, HBI, H, NSIT, KELYA, KNF, LH, LECO, DNOW, OGN, PBF, PENN, RS, RPRX, SABR, SN, SO, SPTN, STLA, SLVM, TRGP, USFD, VNT, WEN, WST, YETI, ZBRA, AEM, AL, LNT, AMN, AMAT, BIO, BE, ED, DLR, DASH, DKNG, DBX, GLOB, IR, LBTYA, MERC, OPEN, ROKU, TXRH, TOST, TTD, and TROX report.  Finally, on Friday, we hear from ACDVF, AXL, CNK, POR, PPL, TRP, THS, and VMC.

In miscellaneous news, climate researcher Michael Mann (University of PA) was awarded $1 million for libel and defamation by two right-wing, climate-denying writers.  It took Mann 12 years of legal work, but just like the defamation suit that FOX settled last year, it is another small step in favor of truth.  Elsewhere, Reuters reported Friday that Chinese banks issued a new all-time high record ($683.7 billion) in loans during January.  This was more than four times the amount loaned in December and came as the Chinese central bank provided more support measures to banks.  Meanwhile, in the US, the Washington Post reported that OpenAI CEO Altman is seeking $7 trillion in funding (yes, trillion) to begin creating and supplying the company’s own AI semiconductor chips.  This is a massive effort.  (For reference, “only” $527 billion worth of chips were sold globally in 2023, in total.)  In addition, this would create a direct competitor to the two main suppliers of chips to all AI users (NVDA and AMD).  Nonetheless, Altman is meeting with various Silicon Valley venture capitalists and had meetings with the UAE and Saudi Arabian sovereign funds last week.  He has also met with SoftBank (majority owners of ARM) and the world’s largest chipmaker TSM.  (It is worth keeping in mind that Altman has the backing of MSFT.)  The Washington Post reported Friday he was also in contact with the US government related to where to build semiconductor Fabs (factories). Finally, Bloomberg reports that the National Assn. for Business Economics survey released today found that 21% of economists feel the Fed policy is “too restrictive.” (It is worth noting that the survey was conducted just before the last FOMC meeting.) This is the most disagreement with the Fed policy from those economists since 2011.

In geopolitical news, on Friday Israeli PM Netanyahu ordered his military to prepare a plan to evacuate Rafah.  (Rafah is the Southernmost and largest city in the Gaza Strip that has not yet been occupied by Israeli ground troops.  It is also the main border crossing into Egypt through which the vast majority of humanitarian aid flows.)  The media speculates this is a precursor to seizing what is left of that city.  (Rafah is already under air and artillery attacks.)  This led to more Oil market fear of an expanded conflict. Then, on Saturday, Reuters reported that a US-led coalition) air defenses (including Kurdish forces, who suffered six dead in the incident) stopped a six-drone attack on a COP oil field in Syria.  The report claimed the attack came from an Iranian-backed militia in Syria. On Sunday, the Israeli PM told US morning news shows that his military was being very careful and that the ratio of dead civilians to dead Hamas fighters was 1-to-1. If that were somehow true (very, very unlikely) Hamas had a much larger militia than anyone had ever realized since a little over 28,000 Palestinians are confirmed dead and almost 68,000 injured.

With that background, it looks like the Bulls are rebounding slightly after the Bears started the premarket with a modest lead in their race. All three major index ETFs are printing small, white-body candles in the early session and are little changed from Friday’s close. All three also remain above their T-line (8ema). So, the Bulls remain in control of the trend in both the long and short term. In terms of extension, none of the three is too far from their 8ema yet and the T2122 indicator remains just outside of overbought territory at the top of its midrange. This means the market still has slack to work with if either side of the market gains traction. As I have been saying for months, keep an eye on those 10 huge tech stocks. If they walk in lock-step, whatever direction they decide to go is very likely to call the tune for the rest of the market.

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 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 gains are 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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