Tuesday saw similar movement across all three major index ETFs, but with different magnitudes.  SPY opened down 0.02%, DIA opened up 0.04%, and QQQ opened down 0.17%.  From there, all three meandered back-and-forth around the “gaps” with SPY and DIA moving in a 0.50% range while QQQ moved in a 0.85% range.  This was only interrupted by a selloff the last 10 minutes across all three major index ETFs.  This action gave us black-bodied, inverted Hammer type candles in the SPY, DIA, and QQQ.  SPY and QQQ both retested their T-line (8ema) from below and failed the test during the day.  Meanwhile, DIA retested its own T-line from above and fell through by just four cents.  (So, it’s still a test in progress.)

On the day, six of the 10 sectors were in the red with Energy (-1.26%) way out front leading the market lower.  On the other side, Financial Services (+0.31%) held up better than the other sectors.  At the same time, SPY fell 0.16%, DIA fell 0.16%, and QQQ fell 0.35%. VXX fell 0.82% to close at a very low at 10.83.  T2122 fell a bit, climbed just a bit further into its overbought range at 85.97.  On the bond front, 10-year bond yields closed at 4.253% and Oil (WTI) continued to fall, down another 1.19% to close at $77.47 per barrel.  This all happened on far below-average volume in the SPY, DIA and QQQ.  So, Tuesday saw a pause after Monday’s gains.  continuation of the pullback from all-time highs with QQQ leading, SPY in the middle, and DIA following (just as it did on the way up). 

The major economic news scheduled for Tuesday included June Existing Home Sales, which came in light at 3.89 million (compared to a forecast of 3.99 million and the May reading of 4.11 million).  Then, after the close, API Weekly Crude Oil Stocks showed a much larger drawdown than expected at -3.900 million barrels (versus a forecasted build of 0.700 million barrels but less of a drawdown that the prior week’s -4.440 million barrels).

After the close, GOOGL, AGR, CALM, CB, EWBC, ENVA, GOOG, MTDR, PKG, RRR, STX, and TXN all reported beats on both the revenue and earnings lines.  Meanwhile, CSGP, EQT, MAT, RRC, and V missed on the revenue line while beating on earnings.  On the other side, NBR and TSLA beat on revenue while missing on earnings. However, CNI, COF, and WFRD missed on both the top and bottom lines.

In stock news, on Tuesday, KMB, KO, PM, SHW, HCA, GM, LMT, and even UPS (despite reporting its Q2 miss) raised their annual guidance.  Later, tech industry magazine Information reported that AAPL is working on a foldable iPhone with a planned release date in 2026.  At the same time, GM announced it has delayed plans for a self-driving version of the Chevrolet Bolt without a steering wheel.  (In 2022, GM have petitioned the NHTSA to allow deployment of 2,500 self-driving vehicles without human controls.)  Later, META released a new version of its Llama AI model, the biggest (largest training data set) model it has released to date.  At the same time, IEX announced it will buy private firm Mott Corp for $1 billion in cash.  (The move would improve IEX’s presence in the medical technologies industry.)  Later, cybersecurity startup Wiz ended talks with GOOGL related to the tech giant’s $23 billion deal to acquire the Israeli firm.  Meanwhile, German private firm Robert Bosch announced it had agreed to buy JCI’s residential ventilation business for $8 billion.  After the close, BA announced it has resumed deliveries of 737 MAX jets to China.

In stock legal and governmental news, on Tuesday, AMZN unit Whole Foods reported it had reached a settlement in a lawsuit filed against it alleging the company fired an employee over refusing to remove a Black Lives Matter facemask.  Terms of the deal were not disclosed.  At the same time, the NHTSA announced that STLA has recalled 19,516 hybrid mini-vans in the US over fire potential from a battery pack, advising any customers to park the vehicles outside until they are repaired.  Later, Italy seized $131 million from the Italian unit of AMZN over alleged tax fraud and illegal labor practices.  At the same time, the US FTC has launched an investigation into individual pricing based on previous purchase history, consumer location data, and other personal data.  The FTC has asked MA, JPM, and six other companies to provide information on their “targeted pricing” practices.  The FTC is also seeking information from software providers and consultancies involved in implementing such systems. 

Elsewhere, the FAA launched a safety review of LUV after a series of near-misses involving their planes.  At the same time, the US Dept. of Transportation announced it has opened a probe into DAL related to the more than 5,000 flights the carrier has canceled due to the global cyber outage last Friday.  (DAL had canceled 30% of its flights Friday through Monday and 13% of its flights Tuesday, while other airlines recovered much more quickly.)  Among the complaints from stranded passengers was phone agent wait times of well over 12 hours for those trying to reroute. After the close, the state of CO announced it has ramped up its response to bird flu and now requires dairies to test their milk every week following outbreaks and many cases of bird to cow transmission in the state.  (CO found 47 cattle herds that have been infected so far, with 60% of those coming in the last month.  This comes after 3.1 million chickens were culled or died of the disease in that state.)

Overnight, Asian markets were mostly red.  Only Taiwan (+2.76%), the region’s biggest mover and New Zealand (+0.85%) were in the green.  Meanwhile, Shenzhen (-1.32%), Japan (-1.11%), and Hong Kong (-0.91%) led the rest of the region lower.  In Europe, we see a similar picture taking shape with only three of the 15 bourses in the green at midday.  The CAC (-1.00%), DAX (-0.71%), and FTSE (-0.19%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a gap lower to start the day.  The DIA implies a -0.45% open, the SPY is implying a -0.78% open, and the QQQ implies a -1.15% open after TSLA’s fourth consecutive quarterly miss.  At the same time, 10-Year bond yields are just on the green side of flat at 4.24% and Oil (WTI) is up nearly one percent to $77.71 per barrel in early trading. 

The major economic news scheduled for Wednesday includes, Building Permits, June Goods Trade Balance, and June Retail Inventories (all at 8:30 a.m.), S&P Global Mfg. PMI, S&P Global Services PMI, S&P Global Composite PMI, and June New Home Sales (all at 10 a.m.), and EIA Weekly Crude Inventories (10:30 a.m.).  Fed Governor Bowman also speaks at 4:05 p.m.  The major earnings reports before the open include Wednesday, we hear from, ALLE, APH, T, BSX, CHKP, CME, EQNR, EVR, FI, FLEX, FMX, FTV, GEV, GD, GPI, IP, IPG, KBR, LW, LII, NEE, ODFL, ORAN, OTIS, BPOP, PRG, RCI, ROP, TMHC, TEL, TECK, TDY, THC, TMO, TNL, VRT, and WAB.  Then after the close, ALGN, AMP, ASGN, CSL, CLS, CCS, CHE, CMG, CHDN, CYH, EW, FAF, F, GL, GGG, ICLR, IBM, INVH, KALU, KLAC, KNX, LVS, MTH, MOH, NEM, ORLY, OII, PTEN, PLXS, RJF, RNR, RSG, ROL, NOW, TER, TYL, URI, UHS, VMI, WCN, WFG, WHR, WM, and WH report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, June Core Durable Goods Orders, June Durable Goods Orders, Preliminary Q2 PCE Prices, Preliminary Q2 GDP, Preliminary Q2 GDP Price Index, Preliminary Goods Trade Balance, Preliminary Retail Inventories, and the Fed Balance Sheet.  Finally, on Friday, June Core PCE Price Index, June PCE Price Index, June Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer 1-Year Inflation Expectations, and Michigan Consumer 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Thursday, ABBV, AAL, ARCH, AMBP, AZN, BFH, BC, CRS, CARR, CBRE, CX, CMS, CFR, DAR, DOV, DOW, DTE, FCNCA, FCFS, FSV, FCN, GTX, HOG, HAS, HP, HNI, HON, KDP, LAZ, LEA, LKQ, MAS, NDAQ, NYCB, NOC, ORI, PCG, POOL, RS, RCL, RPM, RTX, R, SNY, LUV, STLA, STM, FTI, TSCO, TRU, TPH, UNP, VLO, VC, WST, WEX, WTW, XRX, ALSN, ATR, AJG, BKR, SAM, BYD, CINF, COLM, DECK, DXCM, DLR, EMN, EIX, EGO, FBIN, HIG, JNPR, LHX, LPLA, MTX, MHK, NSC, NOV, OLN, DOC, PFG, SKX, SKYW, SSNC, TXRH, TFII, VLTO, WY, and WKC report.  Finally, on Friday, we hear from MMM, AB, AON, AVTR, BAH, BMY, CNC, CHTR, CL, BEN, GNTX, NWL, POR, SAIA, and TROW.

So far this morning, ALLE, BXMT, BSX, CHKP, CME, EVR, FI, IPG, NAVI, BPOP. SF, TMHC, THC, TMO, TNL, VRT, WNC, and WAB all reported beats on both the revenue and earning lines.  Meanwhile, EQNR, GEV, GPI, IP, KBR, LII, ODFL, OTIS, RCI, ROP, TEL, TECK, and TDY all missed on revenue while beating on earnings.  On the other side, GD beat on revenue while missing on earnings.  However, T missed on both the top and bottom lines.

In miscellaneous news, a US District Judge in Philadelphia rejected a lawsuit seeking to block the FTC rule which prohibits “non-compete agreements” as a condition of employment.  Elsewhere, the Equip. Leasing and Finance Assn. (ELFA) said Tuesday that companies borrow 4% less to finance equipment in June. (This came after double-digit growth in the borrowing the two prior months.)  Later, Bloomberg reported that an Pentagon technology services provider owned by LMT was recently hacked, resulting in internal documents being stolen.  (In addition to the Dept. of Defense, the Dept. of Homeland Security, NASA and numerous other agencies and foreign entities were among the customers of that LMT unit.)  Meanwhile, KHC suffered a little blow when its iconic “Wienermobile” hit another car and flipped on a Chicago highway Tuesday.  (Fortunately for hot dog fans, KHC has several Wienermobiles it can roll out to fill the void.)

With that background, it looks as if the Bears are in control early in the premarket. All three major index ETFs gapped down significantly to start the early session. However, they have printed small, indecisive candles since that gap lower. So, there is no unanimity of feeling among traders. All three major index ETFs are below their T-line (8ema), meaning the DIA lost its test from above as of the Tuesday close. So, the premarket looks solidly Bearish and the short-term is likewise pointing down. Meanwhile, in the mid-term and longer-term, there is no way to look at markets except to say they remain very bullish and still not far from all-time highs. In terms of extension, QQQ is getting a little stretched below its T-line by the morning gap down. At the same time, the T2122 indicator remains in the overbought area. Therefore, those mixed signals mean the market has room to run in either direction if the market can find momentum. With regard to those 10 big dog tickers, all 10 are strongly red in the early session with TSLA (-8.37%) leading by a wide margin in terms of move and dollar-volume traded early. AAPL (-0.12%) and NFLX (-0.52%) are holding up better than the other big dogs.

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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