Tuesday brought a Bull trap at the open.  SPY gapped up 0.27%, DIA opened 0.07% higher, and QQQ gapped up 0.44%.  However, as mentioned, this was a Bull Trap as all three major index ETFs sold off.  QQQ sold off most sharply, recrossing its opening gap by 10 a.m. and trading sharply lower until 1 p.m. Meanwhile, DIA diverged by following through until 10 a.m. and then sold off the slowest of the three, not really going negative, but reaching the lows at 1 p.m. At the same time, SPY was somewhere between QQQ and DIA, recrossing its opening gap by 10:30 a.m. and reaching the lows by 1 p.m.  From there, all three major index ETFs put in a modest rally in waves. This action gave us a black-bodied candle with modest upper wick and large lower wick in the SPY.  (SPY also retested and failed its T-line (8ema) during the day.  In the DIA, we saw a white-bodied Spinning Top type candle with the larger part of the wick at the top.  Finally, QQQ gave us a large black-bodied candle with a larger lower wick.  This happened on a bit below-average volume in the SPY, DIA, and QQQ.

On the day, the 10 sectors were evenly split with Financial Services (+0.86%) and Energy (+0.84%) leading the gainers. Meanwhile, Technology (-1.43%) was the biggest mover and way out in front leading the losing sectors lower.  At the same time, SPY fell 0.51%, DIA gained 0.48%, and QQQ dropped 1.37%.  VXX jumped 3.18% to close at 47.37.  Meanwhile, T2122 climbed into the very bottom of the overbought area at 80.39.  On the bond front, 10-year bond yields dropped to close at 4.14% and Oil (WTI) dropped another 0.71% to close at $75.28 per barrel.  So, we now find ourselves with SPY trying to hold on to the support of the June lows (and its 50sma) while QQQ being brutalized (both now in Dreaded h patterns).  However, DIA didn’t seem to get the message and remains in a short-term uptrend.  (QQQ is down more than 9% from its all-time, and recent, high while SPY is down just under 4% from its all-time high, and DIA is 1.5% from its own.)  Despite these divergences, the intraday volatility (whipsaw) remains rough in all three.

The major economic news scheduled Tuesday included July Conf. Board Consumer Confidence, which came in up and a touch stronger than expected at 100.3 (versus a forecast of 99.7 and the June reading or 97.8).  At the same time, the June JOLTs Job Openings were down, but still higher than predicted at 8.184 million (compared to a forecast of 8.020 million and the May value of 8.230 million).  Then, after the close, the API Weekly Crude Oil Stocks report showed a larger drawdown at 4.495 million barrels (versus the prior week’s -3.900-million-barrel drawdown).

After the close, AMD, ACGL, ANET, EQH, AXS, AX, BXP, CP, EA, EXR, FSLR, HLI, LFUS, MTCH, MSFT, MOD, NOG, PINS, QRVO, SWKS, SYK, UMBF, UNM, and WU all reported beats on both the revenue and earnings lines.  Meanwhile, FE, LSTR, LYV, MCY, MDLZ, MEOH, NGD, OI, OVV, PSA, QUAD, SBUX, and TEX missed on revenue while beating on earnings.  However, CZR, HA, SW, TX, and WERN missed on both the top and bottom lines. (After-hours trading was disappointed in MSFT cloud services despite beats on both lines. However, traders liked AMD after-hours and their raise of guidance on AI and otherwise strong chip demand.)

In stock news, on Tuesday, the Wall Steet Journal reported on the results of its own investigation of TSLA’s “Autopilot” system. The article highlighted longstanding “issues” after analyzing 200 TSLA Autopilot crashes. Later, Reuters reported the BRKB has sold more than $3 billion worth of BAC shares this month.  (This report came after the latest tranche of 18.4 million shares between July 25 and July 29.)  At the same time, SAVE (a no-frills, low-cost airline) announced plans to move into the higher-margin business class market in Europe.  Later, SLTA announced it is offering a new round of voluntary buyouts to US salaried workers.  (The company made the same offer twice in 2023.) 

Elsewhere, CNP (which has been in the crosshairs due to slow recovery of electric services in Houston after Hurricane Beryl) said that it now expects up to $1.3 billion in “restoration costs” from the storm.  Later, Reuters reported exclusively that BLK is in talks to acquire ROIC.  At the same time, Bloomberg reported INTC is now planning to cut thousands of jobs as part of a cost-cutting program.  (The report said the cuts could be announced this week.)  After the close, MSFT said it now expects an outage in its Azure cloud service and Office365 to be resolved by the end of the night.  MSFT said the outage, which began early Tuesday, was caused by a surge in usage.

In stock legal and governmental news, on Tuesday, META agreed to pay $1.4 billion to the state of TX to settle the state’s lawsuit accusing the company of illegally using its facial-recognition technology to collect user biometric data.  Separately, META agreed to pay $650 million to settle a class-action biometric data privacy lawsuit in IL.  Later, the NHTSA announced TSLA will recall 1.85 million 2021 to 2024 vehicles related to a software failure to detect an unlatched hood.  At the same time, the Consumer Product Safety Administration issued a directive stating that AMZN is responsible for the sale of any hazardous products by third-parties through their platform.  (AMZN said it would appeal the ruling.  Meanwhile, the FDA issued a similar directive to both AMZN and WMT related to products like chemical peels and other dangerous chemicals sold by third-parties through the company website. 

Elsewhere, AMP filed suit against LPLA alleging the latter systematically harvested and misused confidential client information in violation of multiple securities laws.  Later, the US Dept. of Justice filed a civil suit against NSC alleging the company is delaying passenger trains on the NYC to New Orleans route in violation of federal law.  At the same time, a VA Appeals Court overturned a $2 billion jury verdict against PEGA (payable to APPN) for trade secret theft.  The judge said the original court have committed a series of errors.  (APPN said it would appeal the loss.)  Later, a lawsuit was filed against WFC, alleging the company mismanaged the health insurance plan of tens of thousands of employees, causing them to overpay for prescription drugs.  (The suit claims examples where the plan caused 400% overcharges to employees on some drugs.)  After the close, Reuters reported that EADSY (Airbus) faces a criminal probe in the UK over potential violations of export control laws.

Overnight, Asian markets were nearly green across the board.  Only Taiwan (-0.11%) was in the red while Shenzhen (+3.37%), Shanghai (+2.06%), and Hong Kong (+2.01%) led the region higher.  (This came as the Bank of Japan raised interest rates a quarter percent and there was a Reuters report that the US will exempt its allies from restrictions against selling chipmaking equipment to China…which is why China stocks soared.)  Meanwhile, in Europe, we see green across the board at midday.  The CAC (+1.27%), DAX (+0.44%, lagging behind due to Tuesday’s report of contracting German GDP), and FTSE (+1.30%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a divergent green start to the day.  The DIA implies a flat +0.09% open, the SPY is implying a +0.94% gap higher, and the QQQ implies a 1.56% gap higher to open trading.  At the same time, 10-Year bond yields are down to 4.133% and Oil (WTI) is spiking, up 3.31% to $77.19 per barrel in early trading.

The major economic news scheduled for Wednesday includes July ADP Nonfarm Employment Change (8:15 a.m.), Q2 Employment Cost Index (8:30 a.m.), July Chicago PMI (9:45 a.m.), June Pending Home Sales (10 a.m.), Weekly EIA Crude Oil Inventories (10:30 a.m.), Fed Interest Rate decision and the FOMC Statement (both at 2 p.m.), and Fed Chair Press Conference (2:30 p.m.).  The major earnings reports before the open include 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, and WEC.  Then, after the close, 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. 

In economic news later this week, 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 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.

So far this morning, ADP, BLCO, COR, CHEF, CNH, DAN, DD, ENTG, GRMN, GSK, HSBC, HUM, KKR, OMF, OPCH, OSK, PSN, RITM, SMG, SITE, SHOO, TMUS, TEF, TKR, TT, ULS, UMC, and WAT all reported beats on both the revenue and earnings lines.  Meanwhile, BBVA, BWA, GIB, FTS, GEHC, GNRC, JCI, MAR, PAG, PNM, SLGN, VRSK, and WEC reported missed on revenue while beating on earnings.  On the other side, MO, CCJ, and UTHR beat on revenue while missing on earnings.  However, AN, BG, CDW, XRAY, EDU, and SCL missed on both the top and bottom lines.

In miscellaneous news, on Tuesday evening Republican members of the Judiciary Committee demanded that more than 130 investors explain how they justify their environmental, social, and governance guidelines used to guide their investments.  The GOP said those investing guidelines may be found to violate antitrust laws, but in reality, Republicans are looking to stoke the issue in support of the fossil fuel industries (coal, oil, and gas).  Meanwhile, the US Trade Representative said Tuesday that new tariffs on an array of Chinese imports will be delayed for at least two weeks.  This comes as the USTR reviews 1,100 comments (appeals) related to specific products.  (The tariffs were scheduled to take effect on August 1.)  Elsewhere, Eurozone GDP rose 0.3% in Q2, sustain the same pace as it had in Q1.  France and Spain had better than expected results while Germany showed a 0.1% contraction in the quarter.

In geopolitical news, Israel escalated its conflict with Hezbollah (not Gaza) by striking Beirut, Lebanon with a missile in what it said was aimed at killing a senior leader of the group.  Israel said the strike was in response to the recent rocket attack that hit the occupied Golan Heights, killing 12 children. The Israeli IDF said the strike had killed a senior Hezbollah military commander, but some news outlets disputed that claim.  Regardless, five stories of the building struck were collapsed.  Casualties are not yet known.  (Fears are that Israeli PM Netanyahu is attempting to escalate their conflicts in an effort to retain his position as head of a War Cabinet.  Obviously, every escalation has an impact on global oil markets and shipping via the Suez Canal and Red Sea.)  Elsewhere, Venezuela’s election commission announced vote totals from Sunday’s Presidential election that showed 109% of citizens had voted.  This came as protests have escalated across that country where strongman Maduro clearly stole the election.  So far, some 750 arrests, (including leading opposition figures) and several deaths have been reported. However, in other places, police fled rather than attack protesters and crowds have even taken some military outposts.

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. However, DIA has sold back down toward Tuesday’s close. Meanwhile, SPY is following through with a large white-bodied candle while QQQ is printing an indecisive Doji after the gap to start the premarket. DIA remains above its T-line (8ema) while SPY is crossing above in the early session. QQQ remains below its T-line but is getting closer to a retest from below. The very short-term trend is now Bullish. Meanwhile, in the mid-term and longer-term, there is no way to look at markets except to say they remain bullish and still not all that far from their 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 right at the edge of its overbought area this morning. So, there is still room to run either direction, but it would seem like again the Bears have a little more slack with which to work. With regard to those 10 big dog tickers, eight of the 10 are in the green so far in the premarket as AMD (+8.39%) is the leader on its strong report and guidance while MSFT (-3.36%) is by far the laggard as it is punished for a strong report but weaker than expected cloud sales. As usual, NVDA (+6.79%) is well out in front of the others in terms of dollar volume traded and is spiking in sympathy with direct competitor AMD’s good report.

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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