Wednesday gave us a gap higher as traders liked the weaker-than-expected May ADP Employment report.  (Presumably, this was because they interpret that as a slowing economy and that moves us closer to a Fed rate cut.)  SPY gapped up 0.45%, DIA gapped up 0.28%, and QQQ gapped up 0.81%.  From there, SPY and QQQ ground to the side with a modest bearish bent for 45 minutes before starting a steady rally that lasted until all day and accelerated the last 10 minutes, closing at the highs. This action took SPY and QQQ to well above their T-line (8ema) and new all-time highs and new all-time high closes.  Meanwhile, DIA sold off from the open for the same 45 minutes, but recrossed its gap and more before starting its own weaker rally that lasted until 2:30 p.m. with a very modest selloff the last 90 minutes of the day.  This action gave us significant gap-up, large-body white candles with small lower wicks in the SPY and QQQ.  At the same time, DIA printed a gap-up, long-legged Doji that also closed back up above its T-line.

On the day, eight of the 10 sectors were in the green with Technology (+2.59%) way out in front leading the rest of the market higher.  At the same time, Utilities (-0.32%) was the laggard and only appreciable down sector.  Meanwhile, SPY gained 1.18%, DIA gained 0.26%, and QQQ gained 2.02%.  VXX fell 1.82% to close at a low 11.31 and T2122 rose but remains in the center of its mid-range, closing at 59.57.  On the bond front, 10-year bond yields dropped sharply again to 4.281% and Oil (WTI) gained 1.23% to close at $74.15 per barrel.  So, Wednesday was a strong day for the Bulls with markets appearing to embrace a lower ADP number (possibly believing that brings a Fed rate cut closer).  Then other data seemed more positive and that too was met with buying.  However, the other driver was NVDA (+5.16%), which surpassed $3 trillion in market cap, passing AAPL to become the second most valuable company behind MSFT (+1.91%).  This happened on just below-average volume in the SPY and QQQ but well below-average volume in the DIA. 

The major economic news scheduled for Wednesday included May ADP Nonfarm Employment Change, which came in lower than expected at +152k, a four-month low (compared to a forecast of +173k and April’s +188k).  Later, the May S&P Global Services PMI was up and as expected at 54.8 (versus a 54.8 forecast and an April reading of 51.3).  At the same time, the May S&P Global Composite PMI was a tick higher than anticipated at 54.5 (compared to the 54.4 forecast and up from April’s 51.3 value).  Later, the May ISM Non-Mfg. Employment Index was a tick lower than predicted at 47.1 (versus the 47.2 forecast but up from April’s 45.9 reading).  The headline May ISM Non-Mfg. PMI was stronger than anticipated at 53.8 (compared to a 51.0 forecast and April’s 49.4 value).  At the same time, the May ISM Non-Mfg. Price Index was lower than expected at 58.1 (versus the 59.0 forecast and also versus the April 59.2 reading).  Later, the Weekly EIA Crude Oil Inventories showed an unexpected inventory build of 1.233 million barrels (compared to a forecasted drawdown of 2.100 million barrels and the prior week’s 4.156-million-barrel drawdown). 

After the close, GEF and LULU reported beats on both the revenue and earnings line.  Meanwhile, VSCO missed on revenue while beating on earnings.  However, FIVE missed on both the top and bottom lines.  It is worth noting that LULU raised its forward guidance while FIVE lowered guidance. 

In stock news, on Wednesday, HBI announced a deal to sell its Champion unit to AHRO in a deal worth up to $1.5 billion.  (HBI shares spiked 10%, but closed up 4.95% on the news.)  At the same time, the CFO of ASML suggested he is positive on orders coming from their top customer TSM (world’s largest chipmaker).  This could suggest a strong market in coming quarters for chipmakers and that might mean they expect their customers to buy chips. (ASML shares closed up 9.52% on the day.)  Meanwhile, CPB raised its annual forecast, citing expectations for growth in the eat-at-home market.  Later, the Wall Street Journal reported that the NBA is nearing a $76 billion broadcast rights deal with AMZN, DIS’s ESPN, and CMCSA’s NBC.  At the same time, Reuters reported that DLTR is exploring the sale or spinoff of its Family Dollar unit.  (DLTR is trying to sell at a premium while economic conditions are helping discounters.)  Later, Reuters reported that LMT has signed a deal to buy 25 space launches by 2029 from private firm Firefly Aerospace for an undisclosed amount.    

Elsewhere, At the same time, reports indicated that an WM acquisition of GFL may be just a matter of time after WM bought SRCL for $7.2 billion Monday.  Later, WMT announced it will pay bonuses of up to $1,000/year to 700k hourly store workers. The bonuses will cover both full and part-time employees.  In addition, WMT store managers will be eligible to earn bonuses of up to 200% of their annual salary.  At the same time, AAL offered its flight attendants an immediate 17% raise and an improved profit-sharing plan as part of long-running negotiations.  (AAL flight attendants have not had any raise for 5 years and the union was seeking an immediate 33% increase.)  After the close, AMZN announced its Zoox unit will begin testing robotaxis in Austin TX and Miami FL. (The announcement comes as an NHTSA investigation into crashes by Zoox robotaxis.)  Later, BA finally launched its Starliner spacecraft with a manned crew and reached orbit Wednesday.  Finally, note that NVDA will split 10-for-1 on June 7 for owners as of June 6 (due to the T+1 settlement, a buyer must buy Thursday to be an owner prior to the split, which happens at the close Friday and will begin trading at the split price Monday).

In stock legal and governmental news, on Wednesday, the FAA granted a certificate to begin commercial operations to ACHR (electric air taxi company). (ACHR, which is now backed by BA, UAL, and STLA, is the second electric air taxi firm to be approved, behind JOBY which received the approval in 2022.) At the same time, META was sued by a former engineer who alleges he was fired for fixing bugs that exposed company bias because it suppressed Palestinian Instagram posts.  Later, MCD lost exclusive rights to the term “Big Mac” for poultry-based products in the EU.  Judges ruled against MCD and in favor of an Irish food chain which has long used the term “Supermac” in relation to their poultry products. 

Elsewhere, after the close, the FDA Adviser panel unanimously voted to recommend that the 2024-2025 COVID-19 vaccines should target the JN.1 variant (currently the dominant strain).  This was good news for NVAX, which could not have sold a vaccine this year if the decision went the other way.  However, the final decision will be made by the full FDA in early August (the FDA rules the same way as their advisory panel 88% of the time).  At the same time, telecom industry groups filed suit against the FCC seeking to overturn the agency’s recent ruling to reinstate net neutrality (which prevents the telcos like T, VZ, CMCSA, etc.) from charging different rates for and slowing bandwidth of certain classes of internet traffic compared to other classes of traffic.  Later, the FAA extended its “minimum NYC flight requirements” at NYC airports through October 2025.  The reduction benefits AAL, DAL, and LUV, which have cited a shortage of air traffic controllers and airline staff as the reason they are not using at least 80% of their allotted takeoff/landing slots.  At the same time, BRKB’s NetJets luxury plane unit sued its 3,400-member pilot union, alleging defamation related to comments about safety and pilot training.

Overnight, Asian markets were mixed but leaned toward the green side with eight of the 12 regional exchanges above break-even.  Taiwan (+1.94%), South Korea (+1.03%), and India (+0.89%) led the region higher.  In Europe, we see a heavily green picture at midday with only two of 15 bourses in the red (and only Russia’s -0.65% showing any appreciable loss).  The CAC (+0.45%), DAX (+0.72%), and FTSE (+0.34%) lead the region higher in early afternoon trade on this D-day.  Meanwhile, in the US, as of 7:30 a.m., Futures are flat and mixed early.  The DIA implies a -0.04% open, the SPY is unchanged, and the QQQ implies a +0.08% open at this hour.  At the same time, 10-year bonds are up to 4.297% and Oil (WTI) is up six-tenths of a percent to $74.50 per barrel in early trading.

The major economic news scheduled for on Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, April Imports, April Exports, April Trade Balance, Q1 Nonfarm Productivity, and Q1 Unit Labor Cost (all at 8:30 a.m.), and Fed’s Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for before the open are limited to ABM, BIG, CIEN, GIII, SJM, NIO, and TTC.  Then, after the close, DOCU, NGL, and MTN report.  

In economic news later this week, on Friday, May Avg. Hourly Earnings, May Nonfarm Payrolls, May Private Nonfarm Payrolls, May Participation Rate, May Unemployment Rate, and April Consumer Credit.

In terms of earnings reports later this week, on Friday, there are no major reports.

So far this morning, ABM and CIEN reported beats on both the revenue and earnings lines.  Meanwhile, GIII and SJM missed on revenue while beating on earnings.  However, BIG and NIO missed on both the top and bottom lines.  It is worth noting that ABM, GIII, and NIO raised their forward guidance.  (TTC reports at 8:30 a.m.)

In miscellaneous news, BLK and major short-seller Citadel Securities announced they are backing an effort to launch a new stock exchange in TX.  The completely online exchange would be based on the idea that corporations are too regulated on NYSE and NASDAQ.  The actual term used was “more CEO-friendly.” (Yeah, what the market needs is less oversight of company reporting and transparency.)  At the same time, Canada became the first G7 nation to cut interest rates as the Bank of Canada cut rates a quarter percent to 4.75%.  Meanwhile, a US appeals court struck down an SEC rule intended to give investors more transparency into hedge funds.  Elsewhere, Dec. of Energy Granholm told an interview that the US could revive some recently-retired nuclear power plants to help meet demands for electricity.  (About a dozen reactors have closed since 2013, but some have been offline too long to be restarted.  Still, some are in a state where restart could quickly be accomplished.)

In other news, GS told clients Wednesday that a “flood of passive equity allocations” will pile into the stock market in early July.  The GS trading desk said this will tend to cause a market rally. In addition, GS said they believe seasonal trends and increasing retail investor interest in the market will also buoy stock prices this summer.  Elsewhere, the CDC reported that the JN.1 strain of COVID-19 is spreading fast across the US and is now killing hundreds of people each week.  Meanwhile, the World Health Organization reported that bird flu (H5N1) has killed one and hospitalized another man in Mexico.

With that background, it looks as if the market is undecided ahead of the ECB Rate decision (almost universally expected to be a cut) at 8:15 a.m. Eastern and US Weekly Jobless numbers at 8:30 a.m. SPY and QQQ gapped up just a bit and DIA gapped down just a bit to start the premarket. However, since then, all three have printed small indecisive Doji-type candles. All three are above their T-line (8ema). So, the Bulls are back in control of the market in the short-term. At the same time, the mid-term remains bullish in all three major index ETFs and the longer-term market remains very Bullish in trend. In terms of extension, none of the three are too stretched from their T-line (8ema). The T2122 indicator is also back in the center of its mid-range. So, the bottom line is that the market, has room to run. With regard to those 10 big dog tickers, seven of the 10 are red, but none more than a half percent down, in premarket. However, that biggest dog of all, NVDA (+1.89%), is pulling the rest higher as the huge Computex event continues in Taiwan.

Don’t forget to give the Army and Navy their due as we observe the 80th anniversary of D-day. The President is in Normandy paying our respects today along with other leaders and dignitaries from around the world. Cherish any WWII vet you meet, because they won’t be with us long.

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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