Markets jumped higher to start the week.  SPY gapped up 0.37%, DIA gapped up 0.57%, and QQQ gapped up 0.40% to start the day.  From there, SPY and QQQ rallied steadily to follow-through and reach the highs of the day at about 11:25 a.m. After that, both sold back off steadily into the gap again at 2:15 p.m.  At that point, both SPY and QQQ made a modest rally back above the opening level before selling sharply the last 30 minutes of the day.  Meanwhile, after its gap higher, DIA sold off for 30 minutes before following the two broader major market index ETFs higher until noon.  Then it followed the others, selling back into the gap and reaching the lows at 1:40 p.m. before rallying back above the open.  DIA finally got in-sync with its broader brothers selling off hard the last 30 minutes of the day.  This back-and-forth action gave us indecisive, black-bodied Doji candles in all three major index ETFs. SPY and DIA both printed new all-time highs and new all-time high closes.  QQQ retested its T-line (8ema) from above and passed the test.

On the day, the 10 sectors were split evenly Monday with five in the green and five in the red.  Financial Services (+1.35%), Energy (+1.19%), and Industrials (+1.12%) led the gainers while Utilities (-1.99%) was by far (by more than 1.20%) paced the losers. At the same time, SPY gained 0.28%, DIA gained 0.51%, and QQQ gained 0.27%. (It is worth noting that for the third day in a row, IWM (+1.90%) was well out in front of the three major index ETFs.  VXX gained 1.48% to close at a still extremely low at 10.31.  T2122 fell just a bit again, but remains in the top end of its overbought territory at 95.61.  On the bond front, 10-year bond yields popped to 4.23% and Oil (WTI) fell just a bit to close at $81.92 per barrel.  So, Monday was the volatile day where markets all gapped higher, rallied to the highs in the morning, sold off to the lows in the afternoon only to bounce the last few minutes.  This happened on above-average volume in DIA, average volume in the QQQ, and below-average volume in the SPY.

The major economic news scheduled for Monday was limited to NY Empire State Mfg.  Index, which came in slightly lower than expected at -6.60.  Compare this to a forecast of -5.50 and the June reading of -6.00.

In economic speak news, on Monday, Fed Chair Powell indicated that the recent CPI data had boosted FOMC confidence that inflation is falling.  When asked about Fed confidence, Powell said, “What increases that confidence in that is more good inflation data, and lately here we have been getting some of that.”  Powell went on to say that he does not expect the Fed to wait until inflation reaches the 2% target before cutting rates, because that could undercut economic expansion.  He said, “The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long.”  Powell was also questioned about whether he will serve out his term, given the questioning of FOMC policies during his tenure.  Powell bluntly answered “Yes” (indicating he will serve his entire term).  Later, San Francisco Fed President Daly echoed Powell’s remarks on confidence.  She said, “Confidence is growing that we are getting nearer a sustainable pace of getting inflation back down to 2%.”  She continued, “I’m not going to tell you when the rate cut is, how many rate cuts might come,” … “Over time, as inflation comes down and the labor market slows, we have to make sure that we’re holding rates high enough that we don’t lose that inflation fight, but not hold them too long and risk worsening the labor market to a point where it’s challenging for people to get jobs.” 

In stock news, on Monday, CLF announced it is acquiring Canadian steel company Stelco for $2.5 billion.  At the same time, SEDG announced it would lay off 400 (7% of workforce) employees in Israel as it tries to improve profitability.  Later, M announced it had ended acquisition talks with two private equity firms.  (The talks had been ongoing for months.)  After the close, the Wall Street Journal reported that a “hacktivist” group (Nullbulge) has obtained and leaked data from DIS’s internal communication system. The released data included everything from computer code, to excerpts from financial reports, to assessments of job candidates, to photos of employee dogs.  At the same time, GM declined to reiterate its 2025 forecast of producing 1 million electric vehicles.

In stock legal and governmental news, on Monday, the French competition authority confirmed that it is investigating NVDA related to “anti-competitive practices.”  At the same time, UBER lost an appeal of its lower court victory (which had ruled UBER rival taxi operators would be charged a 20% tax on profits).  Later, PYPL was fined $27.3 million by the Polish antitrust agency for failing to spell out which activities may cause consumers to be fined (ambiguous contract fine print).  At the same time, VRTX sued the US Dept. of HHS, seeking a court declaration that the company’s financial support for some patients does not violate US anti-kickback laws.

Overnight, Asian markets had seven of 12 exchanges in the green.  However, Hong Kong (-1.60%) was the biggest mover while Shenzhen (+0.86%) led the gainers.  In Europe, the bourses lean heavily to the red side at midday with 12 of 15 exchanges in the red.  The CAC (-0.79%), DAX (-0.48%), and FTSE (-0.29%) are leading the region lower in early afternoon trade.  Russia (+1.39%) is again an outlier.  Meanwhile, in the US, as of 7:15 a.m., Futures are pointing to a modestly green start to the day.  The DIA implies a -0.10% open, the SPY is implying a +0.15% open, and the QQQ implies a +0.21% open at this hour.  At the same time, 10-Year bond yields are down sharply to 4.18% and Oil (WTI) is off just over one percent to $80.94 per barrel in early trading.

The major economic news scheduled for Tuesday includes June Import Price Index, June Export Price Index, June Core Retail Sales, and June Retail Sales (all at 8:30 a.m.), May Business Inventories and May Retail Inventories (both at 10 a.m.), and API Weekly Crude Oil Stocks report (4:30 p.m.).  The major earnings reports before the open include BAC, SCHW, MS, PNC, PGR, STT, and UNH.  Then, after the close, IBKR, JBHT, and OMC report.

In economic news later this week, on Wednesday, June Building Permits, June Housing Starts, June Industrial Production, EIA Crude Oil Inventories, and Fed Beige Book are reported.  Fed Governor Waller also speaks.  Then Thursday, we get Weekly, Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, US Leading Economic Indicators Index, Fed’s Balance Sheet.  We also hear from Fed member Daly and Fed Governor Bowman.  Finally, on Friday, Fed members Williams and Bostic speak.

In terms of earnings reports later this week, on Wednesday, ALLY, ASML, CFG, ELV, FHN, JNJ, NTRS, PLD, SYF, USB, AA, CCI, DFS, EFX, KMI, LBRT, STLD, SNV, UAL, and WTFC report.  On Thursday, ABT, ALK, BX, CTAS, CHI, DPZ, HXL, INFY, KEY, MTB, MAN, MMC, NOK, NVS, SNA, TSM, TXT, AIR, ISRG, NFLX, PPG, and SCHL report.  Finally, on Friday, AXP, ALV, CMA, EEFT, FITB, HAL, HBAN, RF, SDVKY, SLB, TRV, and WIT report.

So far this morning, BAC and UNH have reported beats on both their revenue and earnings lines.  Meanwhile, PNC missed on revenue while beating significantly on the earnings line.  (SCHW, MS, PGR, and STT report closer to the opening bell.)

In miscellaneous news, Reuters reported Monday that the cost to transport a standard 40-foot shipping container from Shanghai to New York is pushing $10k ($9,387).  This is more than double the rate in February but still well below the early pandemic high of almost $16k.  The increase in costs is mostly attributed to attacks from Yemeni Houthi rebels (which have caused longer routes around the horn of Africa).  This increase in shipping costs will either pressure company margins, contribute to inflation, or both as the Israeli invasion of Gaza shows no signs of an Israeli withdrawal yet.  Elsewhere, the CDC sent a field team to CO to help the state deal with an outbreak of bird flu after four confirmed cases and a fifth suspected case were reported.  (Based on current information, the CDC said it believes the risk to people in the public are low.  However, farm workers and livestock herds are at significant risk.)  Meanwhile, Bolivia announced the discovery of the largest natural gas field found since 2005.  The single 1.7 trillion cubic feet field (located in northern Bolivia) is about 17.5% the size of the total US natural gas reserves. (However, bear in mind that it will take years to develop the field and build the infrastructure to transport the natural gas to global markets from the land-locked nation.)

With that background, it looks as if the SPY and QQQ are bullish again this morning while DIA is much more undecided. SPY and QQQ both opened the premarket slightly lower, but have put in white-bodied candles with only lower wick since that point. Meanwhile, DIA also opened slightly lower and also ran higher before backing down again to have a high-wick, Doji candle at this point. All three major index ETFs remain above their T-line (8ema). So, regardless of your timeframe, the market trend (short-term, mid-term, or longer-term) remains very bullish. In terms of extension, DIA remains the only one of the three that can be said to be stretched above its T-line. However, the T2122 indicator still remains in the top end of its overbought range. Therefore, the market may be in need of some rest or a pullback. With regard to those 10 big dog tickers, nine of the 10 are in the green this morning. TSLA (+1.29%) is again the biggest mover and also leading the market in premarket dollar volume traded. Only MSFT (-0.02%) is below break-even among those market-moving stocks.

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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