Friday saw the Bulls take back some ground after a bearish week.  The SPY gapped up 0.75%, DIA gapped up 0.59%, and QQQ gapped up 0.97%.  All three of the major index ETFs then followed through to the highs of the day at 1:30 p.m.  From there, all three sold off more modestly until 3 p.m. At that point, all three chopped sideways for the rest of the day.  This action gave us a gap-up, large white-bodied candle with an upper wick in the DIA.  In the SPY, we got a gap-up, white-bodied, Inside Day, Inverted Hammer type of candle. Meanwhile, QQQ printed a gap-up, white-bodied, Doji Harami. This happened on average volume in SPY and DIA as well as above-average volume in the QQQ.

On the day, all 10 sectors were in the green with Communications Services (+1.85%) out front leading the market higher.  On the other side, Energy (+0.57%) was the worst-performing sector.  At the same time, SPY gained 1.12%, DIA gained 1.62%, and QQQ gained 1.03%.  VXX plummeted 5.67% to close at 46.78.  Meanwhile, T2122 spiked up into the overbought territory at 90.27.  On the bond front, 10-year bond yields dropped to close at 4193% and Oil (WTI) dropped 2.32% to close at $76.46 per barrel.  So, we saw a gap higher and some follow-through on the PCE news.  However, there was still indecision, especially in the QQQ while DIA was stronger than its two peer index ETFs.  This was the second straight down week in SPY (-0.83%).  At the same time, QQQ (-2.58%) had its third down week in a row.  Finally, DIA (+0.75%) had its fourth straight up week.

The major economic news scheduled for Friday included the June Core PCE Price Index, which came in flat (Year-on-Year) at +2.6% (which was a tick higher than the +2.5% forecast but in line with May’s +2.6%).  On the Month-on-Month basis, the June Core PCE Price Index was up a tick at +0.2% (in line with the +0.2% forecast and up a tick from May’s +0.1%).  On the headline number, the June PCE Price Index (Year-on-Year) was down a touch to +2.5% (versus the +2.5% forecast and down a tick from May’s +2.6% reading).  For the Month-on-Month basis, the June PCE Price Index was up a tick to +0.1%, which was in line with the forecast but a tick higher than May’s 0.0% value.  At the same time, June Personal Spending was down a tick to +0.3% (versus a +0.3% forecast but a tick lower than May’s +0.4% reading).  Later, Michigan Consumer Sentiment fell but not as much as expected at 66.4 (compared to a 66.0 forecast but down from June’s 68.2 number).  In terms of outlook, Michigan Consumer Expectations were better than anticipated at 68.8 (versus a 67.2 forecast but down from June’s 69.6 reading).  The Michigan Consumer 1-Year Inflation Expectations were down to 2.9% (in line with a 2.9% forecast and down a tick from June’s 3.0% value).  Finally, the Michigan Consumer 5-Year Inflation Expectations were flat at 3.0% (compared to the 2.9% forecast but flat versus June’s 3.0%).   

In stock news, on Friday, Bloomberg reported that HON is considering a $10 billion IPO of its Quantinuum unit.  Later, MMM skyrocketed closing up 22.36% on the session.  That was the stock’s biggest one-day gain in more than 40 years as the new CEO used his first earnings call to lay out his plan for the future.  After the close, TM announced it has decided to put new engines into nearly 100k previously-recalled 2022-2023 Tundra pickup trucks and 3,500 previously-recalled Lexus SUVs.  (The June recall was for engines losing power while driving.) 

Meanwhile, INTC has serious problems. A design flaw in the last two generations of INTC desktop CPUs (13^th and 14^th generation) is causing a massive number of them to die (something between 50% and 100% after a couple of years of use).  This time to death can (and is) greatly accelerated when systems take advantage of configurations intended to improve the processor speed by increasing voltages. (As a side note, INTC has advertised they can be and worked with partners, i.e. motherboard manufacturers, to make it easier for users to accomplish.) For example, many users are reporting CPU failures after just a few months of use.  Then, over the weekend, it was reported that INTC’s next generation of CPU (still at least months, if not a year, from release) will have the same problem.  It is uncertain exactly how big a financial hit the company will take, but it will be significant.  In addition, INTC has been taking non-stop PR hits in the tech industry for three weeks now (when the nearly year-old story gained traction due to industry expert studies of the problem).  There is likely to be a revenue hit when next generation designs (and the ones that follow) must be reworked.

In stock legal and governmental news, on Friday, India’s central bank fined V (just $288,000) for using an unauthorized payment transfer method after it had ordered V to stop.  At the same time, the SEC filed charges against short seller Left from Citron Capital for running a $20 million “fraud scheme” (reverse pump and dump).  Later, the FDA warned patients using NVO’s wildly popular weight-loss drug about over-dosing risks.  At the same time, INDV reached a $86 million opioid settlement with 16 states.   Later, Reuters reported that Italian sources confirmed that AMZN is now under a second investigation for tax evasion. 

Elsewhere, a US federal judge blocked a Dept. of Labor rule from taking effect.  The rule would have expanded the types of retirement advisors who must act with fiduciary responsibility (in the client’s interest).  Later, MSFT agreed to pay $6.625 million to settle a proposed class action lawsuit that alleged the company has overcharged its advertisers on its LinkedIn service.  At the same time, the Federal Railroad Administration told the Senate Commerce Committee that UNP interfered with a federal safety audit by coaching employees how to respond to questions.  This caused the agency to end the audit.  Meanwhile, Europe’s drug regulator rejected BIIB’s Alzheimer’s treatment Leqembi (which had already received approval in the US from the FDA).

Overnight, Asian markets were mostly green with only two of the twelve exchanges in the red.  Japan (+2.13%), Hong Kong (+1.28%), South Korea (+1.23%), and Thailand (1.21%) led the region higher.  In Europe, we see a similar picture taking shape with 13 of the 15 bourses in the green at midday.  The CAC (-0.32%), DAX (+0.31%), and FTSE (+0.75%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.42% open, the SPY is implying a +0.45% open, and the QQQ implies a +0.71% open at this hour.  At the same time, 10-Year bond yields are down briskly to 4.158% and Oil (WTI) is off 0.61% to $76.65 per barrel in early trading.

There are no major economic news scheduled for Monday.  The major earnings reports before the open include AMG, ARLP, CTRI, CAN, MCD, ON, RVTY, and PHG.  Then, after the close, AMKR, CHK, CNO, CR, CWK, CVI, ESI, EQR, FFIV, FLS, HOLX, SANM, SBAC, ST, SFM, VIV, WELL, and WWD report.

In economic news later this week, on Tuesday we get July Conf. Board Consumer Confidence and the API Weekly Crude Oil Stocks report.  Then Wednesday, July ADP Nonfarm Employment Change, Q2 Employment Cost Index, July Chicago PMI, June Pending Home Sales, Weekly EIA Crude Oil Inventories, Fed Interest Rate decision, the FOMC Statement, and Fed Chair Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q2 Nonfarm Productivity, Preliminary Q2 Unit Labor Costs, July S&P Global Mfg. PMI, June Construction Spending, July ISM Mfg. Employment, July ISM Mfg. PMI, and July ISM Mfg. Prices.  Finally, on Friday, July Avg. Hourly Earnings, July Nonfarm Payrolls, July Private Nonfarm Payrolls, July Participation Rate, July Unemployment Rate, and Jun Factory Orders are reported.

In terms of earnings reports later this week, on Tuesday, we hear from AGCO, AEP, AMT, ADM, ARCC, BGC, BP, CNP, GLW, EXP, ECL, EPD, IT, GPK, HWM, HUBB, ITW, INCY, IGT, JBLU, LDOS, DRS, LGIH, MHO, MRK, ONEW, PYPL, PFE, PSX, PHIN, PG, PEG, SPGI, SOFI, SWK, SYY, UFPI, WSO, XYL, ZBRA, AMD, ACGL, ANET, EQH, AXS, BXP, CZR, CP, EA, EXR, FSLR, FE, HA, HLI, LSTR, LFUS, LYV, MTCH, MCY, MEOH, MSFT, MOD, MDLZ, NGD, NOG, OI, OVV, PINS, PSA, QRVO, QUAD, SWKS, SBUX, SYK, TEX, TX, UNM, WERN, and WU.  Then Wednesday, MO, ADP, AN, BBVA, BLCO, BA, BWA, BG, CDW, COR, GIB, CHEF, CLH, CNH, DAN, XRAY, DD, ENTG, FTS, GRMN, GTES, GEHC, GNRC, GGB, GSK, HES, HUM, HCM, JCI, KKR, KHC, LECO, MAR, MA, EDU, NCLH, OMF, OPCH, OSK, PSN, PAG, PNM, RITM, SMG, SLGN, SITE, SCL, SHOO, TMUS, TEF, TEVA, TKR, TT, TTMI, ULS, UMC, UTHR, VRSK, WAT, WEC, ACHC, AFL, AEM, AGI, ALB, ALGT, ALL, AIG, AWK, ANSS, AR, APA, ARM, AVB, BALY, BBSI, BV, CHRW, CWH, CVNA, CAKE, CMPR, CTSH, CODI,  COMP, CRBG, CTVA, DLX, EBAY, ETSY, EG, ES, EXAS, EXPI, FMC, GLF, GT, THG, HLF, HST, IEX, IR, JAZZ, KGC, KD, LRCX, MKL, VAC, META, MET, MGM, MAA, MUSA, MYRG, NFG, NE, PTVE, PGRE, PK, CNXN, PTC, QGEN, QCOM, QDEL, RRX, RUSHA, RHP, SCI, SON, SSRM, SUI, TDOC, TS, TTEK, TWI, RIG, VICI, and WDC report.  On Thursday, we hear from ADT, AER, APD, ALE, ATUS, AME, BUD, HOUS, APG, APO, APTV, MT, ARW, AXTA, BALL, BHC, BCE, BDX, BDC, BIIB, OWL, CNQ, CVE, CI, CIGI, COP, CROX, CMI, D, LPG, DRVN, DNB, ETN, ETR, NVRI, EXC, RACE, AG, FTDR, GIL, HSY, HTZ, DINO, HII, NSIT, NSP, IBP, ICE, IRM, ITRI, ITT, JHG, K, KIM, KEX, KTB, LH, LAUR, LTH, LNC, LAD, MIDD, NBIX, PATK, PBF, BTU, PNW, PWR, REGN, RBLX, SABR, SNDR, SHEL, SIRI, SO, STGW, TRGP, TFX, TRI, TM, TAC, UPBD, VAL, GWW, W, WEN, WCC, XEL, XPO, AES, AL, ALHC, LNT, AMZN, AEE, AAPL, ACA, TEAM, BECN, BZH, BIO, SQ, BKNG, BFAM, CE, CGAU, CC, CIVI, CLX, COIN, ED, CTRA, DASH, DORM, DKNG, EOG, ERO, FND, GEN, GDDY, HUBG, ICFI, INTC, LEG, MTZ, MATX, MELI, MTD, MCHP, MSI, NXT, OTEX, OPEN, OEC, POST, PRU, RGA, RMD, RNG, RKT, ROKU, RYAN, SEM, SNAP, SWN, TROX, TPC, TWLO, X, VTR, VRTX, and WSC.  Finally, on Friday, ARCB, ARES, ABG, BSAC, BERY, BTSG, BEPC, BEP, CBOE, GTLS, CVX, CHD, CNK, ENB, ESAB, XOM, FLR, FYBR, IMO, LIN, LYB, MGA, NMRK, OMI, PRGO, PAA, PAGP, PPL, TIXT, USM, and AMC report.

With that background, it looks as if the Bulls are in control in the premarket. All three major index ETFs gapped higher to start the early session and have put in white-bodied candles (very little wick) since that point. SPY looks as if it will try to retest it T-line (8ema) from below today and DIA is already challenging Friday’s high. The very short-term trend is now Bullish. However, QQQ and SPY remain below their T-line. 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 all that far from all-time highs. In terms of extension, none of the major index ETFs are too stretched from their T-line. At the same time, the T2122 indicator is now in its over-bought range, but not pegged to the top end. So, this means the market still has room to run in either direction if the market can find momentum. With regard to those 10 big dog tickers, all 10 are in the green in the early session with TSLA (+1.77%) well out in front of the others while AAPL (+0.01%) is the laggard and just barely green.

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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