Tuesday saw a divergence at the open as SPY opened just 0.09% higher, QQQ opened 0.02% lower, but DIA gapped up 0.63%.  However, after that, all three major index ETFs chopped sideways the rest of the day.  The were a short 15-minute spike higher as soon as Fed Chair Powell finished speaking, but it sold right back down over the next 15-minutes.  This action gave us indecisive Doji candles in the SPY (black body) and QQQ (white body).  Meanwhile, DIA printed a gap-up, black-body candle.  All three major index ETFs remains well below their T-line (8ema) and never came close to a retest.  This happened on average volume in all three major index ETFs.

On the day, nine of the 10 sectors were in the red with Technology (+0.13%) the only sector able to hand onto green territory.  Meanwhile, Utilities (-1.38%) was by far the weakest sector.  At the same time, SPY lost 0.20%, DIA gained 0.18%, and QQQ gained 0.01%.  VXX lost 3.40% to close at 15.08 and T2122 rose but remained deep in its oversold territory at 2.80.  10-year bond yields jumped higher again to 4.665% and Oil (WTI) was just on the red side of flat at $85.31 per barrel.  So, Tuesday was a nothing day overall.  However, DIA popped higher at the open (presumably on strong earnings data) but then also sold off harder than the other major index ETFs.  The net result was an indecisive day where price ended up little moved.  However, it could be said to be a rest day after Monday’s strong Bearish move (including Bull trap).

The major economic news scheduled for Tuesday included March Building Permits, which came in lower than expected at 1.458 million (compared to a forecast of 1.514 million and the February reading of 1.523 million).  At the same time, March Housing Starts were also down at 1.321 million (versus a forecast of 1.480 million and the Feb. value of 1.549 million).  This amounted to a 14.7% decline from February after a 2.4% decline was forecasted.  Later, March Industrial Production were just as anticipated at +0.4% (compared to a forecast of +0.4% and a February +0.4% reading). Then the API Weekly Crude Oil stocks

In FOMC speak, Fed Vice Chair Jefferson seemed to revert to the old “higher for longer” stance from late in 2023.  Jefferson said, “it will be appropriate to hold in place the current restrictive stance of policy for longer (if inflation fails to slow as expected).”  He continued, “My baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance.”  Later, Fed Chair Powell said, “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.” However, he then continued, saying, “policy is well positioned to handle the risks that we face.”  (The latter statement easing fears of a rate hike somewhat.)  He went on to summarize, “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us.”  Then, Powell got into details, noting, “12 months core PCE inflation, which is one of the most important things, is estimated to have been little change in March.”  In speaking about the labor market, Powell said, “Our labor market has been moving into better balance over the past year,” … “(Strong demand for workers) has been met by a substantial increase in the workforce due both to rising labor force participation and a substantial increase in immigration.”  

After the close, HWC, IBKR, OMC, and UAL all reported beats on both the revenue and earnings lines.  However, JBHT missed on both the top and bottom lines.

In stock news, on Tuesday, UNH said it would take a $1.6 billion hit in 2024 from the hack of its subsidiary which caused widespread and weeks-long shutdown of medical billing and reimbursement.  At the same time, a JPM regulatory filing noted that CEO Dimon had completed the sale of $33 million of his JPM shares.  This completed his previously planned 1 million share sale (out of 8.6 million shares held).  Later MSFT announced it is investing $1.5 billion in G42, an UAE-based AI firm. (G42 is run by UAE’s national security adviser.)  G42 said it would cut ties with Chinese hardware suppliers for its data centers as part of the deal.  Elsewhere, AL state lawmakers have passed a bill barring the state from providing incentives to any company that voluntarily recognizes a union.  (The bill is aimed at preventing union recognition prior to a vote of the workforce.)

In stock legal and governmental news, on Tuesday, a US district judge dismissed 25 claims that were among the hundreds of cases filed against META, which allege the company concealed from the public that Facebook and Instagram were harmful to children.  Th 25 claims dismissed has accused META CEO Zuckerberg of personal responsibility (and liability) for not disclosing this information to the public.

So far this morning, ABT, ASML, BKU, FHN, and USB all reported beats on both the revenue and earnings lines.  Meanwhile, CFG and TRV both beat on revenue while missing on earnings.  (PLD reports closer to the opening bell.)  It is worth noting that ASML has lowered forward guidance.

Overnight, Asian markets were mixed.  Shenzhen (+2.48%), Shanghai (+2.14%), and Taiwan (+1.56%) led the gainers.  Meanwhile, Thailand (-2.11%) and Japan (-1.32%) paced the losses.  In Europe, the picture is much greener at midday with only two of 15 bourses in the red.  The CAC (+1.23%), DAX (+0.51%), and FTSE (+0.60%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modest green start to the day.  The DIA implies a +0.22% open, the SPY is implying a +0.31% open, and the QQQ implies a +0.195 open at this hour.  At the same time, 10-year bond yields are flat at a high 4.657% and Oil (WTI) is off by half of a percent to $84.88 per barrel in early trading.

The major economic news scheduled for Wednesday is limited to EIA Weekly Crude Oil Inventories (10:30 a.m.) and the Fed Beige Book (2 p.m.).  We also hear from Fed Members Mester (5:30 p.m.) and Bowman (6:30 p.m.).  The major earnings reports scheduled for before the open include ABT, ASML, CFG, FHN, PLD, TRV, and USB.  Then, after the close, AA, CCI, CSX, DFS, EFX, KMI, LVS, LBRT, SNV, and WTFC report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, March Existing Home Sales, US Leading Economic Indicator Index, Fed Balance Sheet, and three Fed speakers (Bowman, Williams, and Bostic twice).  Finally, there are no major economic news scheduled for Friday.

In terms of earnings reports later this week, on Thursday, we hear from ALK, AALY, BX, CMA, DHI, ELV, GPC, INFY, KEY, MAN, MMC, NOK, SNA, TSM, ISRG, NFLX, PPG, and WAL.  Lastly, on Friday AXP, FITB, HBAN, PG, RF, SLB, and WIT report.

In geopolitical news, Russia has stepped up its bombing of Kharkiv (Ukraine’s second largest city) in an attempt to make it the city uninhabitable.  The new strategy is massive bombing of residential housing and utilities and then following up with a “double tap” (second wave of attacks on the same targets) one to two hours later.  The idea is that if the population is denied water, electric, and housing …and rescuers as well as aid workers are also taken out…then the city will become uninhabitable.  This is designed to force the 1.4 million people living in Kharkiv to flee to other cities, opening up Kharkiv for conquest and putting additional stress on cities further West due to the immigrant flows.  (It also becomes harder to defend a location while also allowing the civilian population to pass through said position.) Elsewhere, Treasury Sec. Yellen said Tuesday that new sanctions on Iran are being considered.  Yellen, talked about not only the attack on Israel, but also Iran-backed Houthi attacks in the Red Sea that are impacting global economic stability.  She told the AP that she will be working with her counterparts at the IMF Spring Meeting this week to hammer out another round of sanctions on the Iranian regime.

In miscellaneous news, the SEC now blocked the use of third-party messaging apps and texts from Wall Street firm employee phones.  Elsewhere, in political news, the House GOP, and especially the Twitter faction of the GOP, have brought drama and discord back to the House.  House Speaker Johnson told the GOP Caucus that he intends to bring forth four separate individual bills this week, one for military aid to Ukraine, one for military aid for Israel, one for military aid for Taiwan and the Philippines (to hold China in check), and a final bill to ban TikTok from the US.  This did not go over well with the far-right MAGA faction.  (Even if they are separate votes.)  Specifically, Rep. Massie (KY), asked Johnson to resign as Speaker.  He then told reporters he supports and seconds the previous MTG motion to vacate the Speaker.  Beyond that drama, if the four bills are brought for a vote, all are expected to pass.  Then for some procedural reason they will be delivered to the Senate as one packaged bill.  The Senate GOP does not like that idea as they have already passed aid to the first three and don’t want to vote on the TikTok bill.  (One of the largest GOP donors, Jeff Yass, owns about $30 billion of TikTok’s parent corporation ByteDance while BLK also owns a similar-sized piece.  A forced sale could cost both billions.) 

With that background, it looks as if the Bulls are trying again this morning, but are having only small and not particularly decisive gains in any of the three major index ETFs. All three are giving us small, white-bodied candles in the premarket. However, all three have larger upper wicks (compared to the candle bodies). The SPY, DIA, and QQQ all remain well below their T-line. So the short-term trend is bearish. Meanwhile, the mid-term has also turned bearish and the longer-term market remains Bullish but trend is broken and is clearly under pressure. In terms of extension, all three of the major index ETFs now a fair distance below their T-line and the T2122 indicator is deeply in its oversold range. So, at the very least, the Bears are in need of some rest. (Just remember markets can remain oversold a lot longer than we can stay solvent predicting a reversal.) In terms of those 10 big dog tickers, nine of the 10 are in the green early with only INTC (-0.39%) pushing to the downside. Be careful of whipsaws, but today is looking more indecisive again.

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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