Markets started the day modestly lower.  SPY gapped down 0.20%, DIA gapped down 0.23%, and QQQ started off 0.20% lower at the open.  From that point, all three major index ETFs spent the rest of the day meandering sideways.  Only SPY ended on a short spurt to close bear the highs.  This action gave us white-bodied candles in all three as DIA printed a Spinning Top that retested and stayed above its T-line (8ema).  Meanwhile, SPY and QQQ printed larger-body white candles with small upper wicks.  Both of them retested their T-line from above and bounced up off to close above.  This all happened on well-below average volume in all three, especially the DIA.

On the day, five of the 10 sectors were in the green with Consumer Cyclicals (+0.63%) leading the gainers higher.  Meanwhile, Utilities (-0.43%) and Financial Services (-0.41%) led the laggard sectors lower.  At the same time, SPY gained 0.12%, DIA gained 0.06%, and QQQ gained 0.21%.  VXX fell another 1.09% to close at 10.88 and T2122 gained a bit but remains in the lower half of its mid-range at 34.04.  On the bond front, 10-year bond yields spiked to 4.325% and Oil (WTI) fell slightly (-0.21%) to close at $80.66 per barrel.  So, Wednesday was another “wait and see” day where markets basically treaded water while waiting on GDP or the Presidential Debate (or more likely PCE data on Friday). 

The major economic news scheduled for Wednesday included Building Permits, which came in a bit higher than expected at 1.399 million (compared to a forecast of 1.386 million but below the last 1.440 million reading).  Later, May New Home Sales were lower than predicted at 619k (versus the 636k forecast and well down from the April 698k value).  Then the EIA Weekly Crude Oil Inventories showed an unexpected large inventory build of 3.591 million barrels (compared to a forecasted drawdown of 2.600 million barrels and the prior week’s 2.547-million-barrel drawdown). 

Then after the close, the results of the Annual Fed Bank Stress Tests were announced.  The Fed said that all 31 banks passed the tests, even withstanding a hypothetical severe economic downturn.  However, the banks tested this year showed that they would have larger (but still sustainable) losses under this year’s scenarios than the very similar 2023 scenarios.  The Fed announcement said the largest banks would see 9.9% dips in “high-quality capital” at the worst point of this year’s harshest scenario.

Also after the close, CNXC, FUL, JEF, MU, and WS all reported beats on both the revenue and earnings lines.  Meanwhile, LEVI and MLKN both missed on revenue while beating on earnings.  BB is of special note.  BB had a massive miss on revenue but still beat (by 175%) on the earnings line.

In stock news, on Wednesday, AIG sold its travel insurance unit to ZURVY (Zurich Insurance) for $600 million.  Later, Reuters reported (exclusively) that German firm Robert Bosch is considering a takeover bid for WHR according to three sources.  (WHR was up 17.10% on the day on this report.)  Meanwhile, Bloomberg reported that B is exploring “strategic alternatives” including a sale of the company.  (B stocks was up 7.63% on the news.)  During the day, AMZN passed the $2 trillion valuation mark, becoming just the fifth company to do so.  (Analysts attribute the climb to AI mania, but that does not really explain Wednesday’s 3.91% gain to a level not far above the May and April highs.)  After the close, Reuters reported that CG and KKR have won the auction to acquire the $10 billion student loan portfolio from DFS.

In stock legal and governmental news, on Wednesday, the NYSE denied the claims of IBKR, which resulted in the brokerage losing $48 million.  (IBKR had tried to get NYSE to pay for trade executions IBKR made when BRKA dropped from $622k/share to $185/share on June 3, prior to the BRKA stock being halted due to erroneous data. At the same time, the NHTSA announced that TM is recalling 145k vehicles over side curtain air bad issues.  Later, the US Dept. of Commerce awarded a $75 million grant to ENTG as part of the Chips Act program. (The money will go toward development of a new ENTG facility in CO.    At the same time, the NHTSA announced that VLKAF (Volkswagen) is recalling 307k vehicles in North America over an airbag sensor wiring problem.  Later, Bloomberg reported that VLVLY (Volvo) will delay shipments of its EX30 electric vehicle due to the higher tariffs the US has imposed on Chinese imports.  As a result, VLVLY won’t deliver these cars until 2025 (previously scheduled for late summer to early fall).  Eventually, Volvo will begin producing the cars in Belgium during 2025, which will allow it to avoid the higher tariffs by shipping to the US from that location instead of the China plant.  After the close, MO filed a request to the FDA to authorize it to sell nicotine pouch products in the US.  Also after the close, Republican state AGs refused to accept any increase in NHTSA CAFÉ (mileage) standards on car makers.  The Biden administration’s watered-down 2% per year increase (only starting in 2026) has “forced” those state AGs to file suit against the NHTSA for exceeding its regulatory authority.

Overnight, Asian markets leaned heavily to the red side.  Hong Kong (-2.06%) and Shenzhen (-1.53%) were way out in front pacing the losses.  Meanwhile only India (+0.74%) and Singapore (+0.35%) were in the green in the region.  In Europe, the picture is more mixed but still leans to the red side at midday.  The CAC (-0.67%), DAX (+0.07%), and FTSE (-0.31%) lead the region on volume.  However, Russia (+1.39%) is the biggest European mover in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a down start to the day.  The DIA implies a -0.21% open, the SPY is implying a -0.18% open, and the QQQ implies a -0.22% open at this hour.  At the same time, 10-Year bond yields are up to 4.329% and Oil (WTI) is up a third of a percent to $81.19 per barrel in early trade.

The major economic news scheduled for Thursday include Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, May Core Durable Goods, May Durable Goods, Q1 Core PCE Prices, Q1 GDP, Q1 GDP Price Index, May Goods Trade Balance, and May Retail Inventories (all at 8:30 a.m.), and May Pending Home Sales (10 a.m.).  The major earnings reports scheduled for before the open include AYI, MKC, and WBA.  Then after the close, NKE reports.    

In economic news later this week, on Friday, May Core PCE Price Index, May PCE Price Index, May Personal Spending, Jun Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.  We also hear from Fed Governor Bowman.

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

In miscellaneous news, on Wednesday, the US Dollar hit a 38-year high against the Yen.  (Speculation continued to ramp that the Bank of Japan will intervene to make the Yen stronger soon as BoJ currency chief Kanda said they were “seriously concerned and on high alert”.)  Elsewhere, Reuters reported that the SEC could well approve ETFs based on the spot price of ether cryptocurrency to begin trading as soon as after the July 4 holiday.

So far this morning, MKC reported beats on both the revenue and earnings lines.  At the same time, AYI missed on revenue while beating on earnings.  On the other side, WBA beat on revenue while missing on earnings.  IT is worth noting that WBA also lowered its forward guidance.

With that background, it looks as if markets are starting the premarket modestly lower. All three major index ETFs have retested their T-lines again in the early session and so far all have remains above that 8ema on small white-bodied candles. However, those candles are indecisive and did start off from a modest gap down in the early session. Again, remember that despite intraday movement, all three major index ETFs are still quite near their all-time highs. So, the short-term trend is mixed. However, the mid-term and especially the longer-term trend in all three major index ETFs remains very bullish. In terms of extension, none of those three are extended above their T-line and the T2122 indicator is still in its mid-range. Therefore, the market still has room to run in either direction. With regard to those 10 big dog tickers, eight of the 10 are in the red this morning. Only AAPL (+0.37%) and AMZN (+0.30%) are in the green early. You should also be aware that the biggest dog, NVDA (-1.65%) is the biggest mover and biggest loser of the group this morning, acting as an anchor on 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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