Broader markets gapped higher to start the day Wednesday while DIA diverged.  SPY gapped up 1.31%, DIA opened just 0.03% higher, gapped up a whopping 2.37%.  At that point, all three major index ETFs rallied for an hour.  From that point QQQ and SPY traded sideways and drifted back to their opening level by 1:30 p.m.  Meanwhile, DIA continued its post-open rally until 1:30 p.m.  From there, all three rallied until 3 p.m. when they rode a rollercoaster down and back up and then back down during the last hour as profit-taking kicked in. This action gave us gap-up, white-bodied Spinning Top candles in all three of those ETFs.  SPY and DIA had most of their wicks on top while QQQ had more balanced wicks and larger body.  SPY and QQQ also rejoined DIA above their respective T-lines (8ema).  This all happened on average volume in SPY and QQQ as well as well above-average volume in the DIA.

On the day, nine of the 10 sectors were in the green with Technology (+2.93%) way out in front of Basic Materials (+1.58%) and the rest of the sectors.  Meanwhile, it was Consumer Defensive (-0.09%) that was the only sector in the red (barely).  At the same time, SPY gained 1.63%, DIA gained 0.27%, and QQQ gained 2.96%.  VXX fell 2.36% to close at 46.25.  Meanwhile, T2122 gained a fraction, remaining at the very bottom of the overbought area at 80.54.  On the bond front, 10-year bond yields plummeted to 4.031% and Oil (WTI) spiked 5.02% to close at $78.47 per barrel.  So, the Bears got handed the heads at the open and in the first-hour follow-through.  Then the pre and during FOMC rally kicked them again.  However, the profit-taking eased their pain a bit at the end of the day.  Again, it was AI that led the day after AMD’s (+4.36%) great earnings Tuesday night and then the Reuter’s report that could stoke sales for NVDA (+12.81%) as the US supposedly will allow allies to ship chip-making equipment to China.  In short, it was a turn-around day for SPY and QQQ while DIA continues its rally, coming within less than half a percent of its all-time high. (It is also worth noting that NVDA traded more than three times as much dollar volume than the next closest ticker in the market Wednesday.)

The major economic news scheduled for Wednesday included the July ADP Nonfarm Employment Change, which showed a much smaller increase than expected at +122k (compared to a forecasted +147k and June’s +155k).  Later, the Q2 Employment Cost Index was better than anticipated at +0.9% (versus a +1.0% forecast and down significantly from the Q1 +1.2% number).  Then, the July Chicago PMI was down but still a bit better than predicted at 45.3 (compared to a 44.8 forecast and the June 47.4 reading).  Moments later, the June Pending Home Sales were much, much stronger than expected at +4.8% (versus a +1.4% forecast and May’s -1.9% value).  On the oil front, Weekly EIA Crude Oil Inventories showed a bigger drawdown that predicted at -3.436 million barrels (compared to a -1.600-million-barrel estimate and the prior week’s -3.741-million-barrel drawdown.  Later, as expected, the FOMC held rates steady.

In Fed speak news, at his FOMC Meeting press conference, Fed Chair Powell said that recent inflation data was giving the committee greater confidence that inflation is moving back toward the 2% target.  Powell said, “There has been some further progress toward the Committee’s 2% objective.”  He continued by saying there was a growing POSSIBILITY of a rate cut in September, saying, “there is a growing sense of confidence that you could move at the next meeting” (as long as inflation data reaffirms the current softening trend).  When pressed for a rate cut commitment by reporters, Powell replied, “We have made no decisions on future meetings.”

After the close, ACHC, AFL, AEM, ALGT, ALL, ANSS, APA, ARM, AVB, CHRW, CVNA, COKE, CTSH, COMP, CTVA, CACC, EBAY, EXAS, FMC, GNW, GRBK, IR, JAZZ, KGC, LRCX, LUNMF, META, MGM, MAA, NE, CNXN, PPC, QGEN, QCOM, QDEL, RRX, RUSHA, RHP, TTEK, VICI, and WDC all reported beats on both the revenue and earnings lines.  Meanwhile, AGI, BALY, BBSI, BV, CAKE, CMPR, CODI, CRBG, DLX, ES, GLF, GT, THG, HLF, HST, IEX, KD, MKL, MET, MUSA, NFG, PGRE, PK, PTC, PTVE, SON, SSRM, and TDOC missed on revenue while beating earnings.  On the side, ALB, AWK, ETSY, EXPI, SCI, and TS beat on revenue while missing on earnings.  However, AIG, AR, CWH, EG, VAC, MYRG, SUI, TWI, and RIG missed on both the top and bottom lines.

In stock news, on Wednesday, JBLU announced it has agreed to buy “sustainable aviation fuel” from VLO for use on NY flights. Later, Bloomberg reported that DIA is planning to eliminate around 140 jobs from its television unit (about 2% of that staff). It also plans to cut 13% of the NatGeo staff (number unknown).  At the same time, Reuters reported that C has repeatedly breached a Fed rule (regulations W) that limits intercompany transactions, leading to errors in internal liquidity reporting.  (No formal investigation by the Fed has been announced yet.)  Later, ALB (the world’s largest lithium producer) announced another round of cost-cutting, citing tumbling lithium prices globally.

In stock legal and governmental news, on Wednesday, INTC won the London case in which its private rival R2 had sought an injunction preventing the sale of INTC chips due to patent infringement.  (A similar case is pending in the US.)  At the same time, MO said it had sent data to the FDA on the growth of illegal “nicotine pouches” telling the agency this is the early stage of a massive black market for vape products in the US.  (MO and BTI say they have lost substantial US sales to illegal, unapproved nicotine products.)  Later, DAL put a number on its losses from the CRWD-caused IT outage that caused it to cancel thousands of flights.  DAL said it lost $500 million after announcing Tuesday it would take legal action against CRWD and MSFT over the disaster. Separately, CRWD shareholders filed suit against the company related to the outage, alleging the company defrauded them by concealing the inadequate state of its software quality system. 

Elsewhere, UBS filed suit against BAC for $200 million over allegations stemming from the 2008 global financial crisis. The suit alleges that BAC refused to cover the cost of risky mortgages issued prior to the crisis, which Countrywide had sold as bundles and had agreed to indemnify against being poorly written or fraudulent.  BAC later acquired Countrywide.  Later, Russia fined GOOGL $58k for failing to restore pro-Russia disinformation YouTube channels that GOOGL had banned.  At the same time, the NHTSA announced that HYMTF (Hyundai) will recall 49k vehicles over unintentional airbag deactivation or deployment.  Later, Reuters reported that a TSLA vehicle that hit and killed a Seattle motorcyclist was in “Full Self-Driving” mode.  The NHTSA acknowledged the incident and said it already had an investigation underway related to similar cases.

Overnight, Asian markets were mixed with half of the 12 exchanges in the red and half in the green.  Japan (-2.49%) and Singapore (-1.04%) paced the losses while Taiwan (+1.99%) and New Zealand (+0.67%) led the gainers.  In Europe, we see a similar mixed picture at midday with eight of the 15 bourses in the red while seven are showing green.  The CAC (-0.83%), DAX (-0.68%), and FTSE (+0.29%) lead the region on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward modest follow-through on Wednesday’s gains.  The DIA implies a flat +0.05% open, the SPY is implying a +0.44% open, and the QQQ implies a +0.53% open at this hour.  At the same time, 10-Year bond yields are at 4.063% and Oil (WTI) is up almost a percent to $78.63 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q2 Nonfarm Productivity, and Preliminary Q2 Unit Labor Costs (all at 8:30 a.m.), July S&P Global Mfg. PMI (9:45 a.m.), June Construction Spending, July ISM Mfg. Employment, July ISM Mfg. PMI, and July ISM Mfg. Prices (all at 10 a.m.) and the Fed Balance Sheet (4:30 p.m.).  The major earnings reports before the open include 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, and XPO. Then, after the close, 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 report.

In economic news later this week, 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 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, AER, ABEV, BUD, AXTA, BIIB, BIP. CNQ, CI, CROX, DLAKY, ETN, ETR, NVRI, EXC, GCI, GEL, GIL, GVA, DINO, HII, ING, IRM, KIM, KTB, LH, LAUR, LTH, LNC, LAD, REGN, SCGLY, STGW, SCMWY, TRP, TRI, TIPT, TM, TRN, and UPBD all reported beats on both the revenue and earnings lines.  Meanwhile, APD, ALE, AME, APTV, BALL, BDX, LPG, ITT, MIDD, SHEL, TFX, W, and XPO all missed on revenue while beating on earnings.  On the other side, APO, CVE, NBIX, PBF, PWR, and VNT beat on revenue while missing on earnings.  However, ADT, ATUS, MT, BCE, COP, HSY, SAVE, WEN, WCC, and XEL missed on both the top and bottom lines.

In miscellaneous news, on Wednesday, Reuters reported that US restrictions on the export of chipmaking equipment to China will exempt some US allies.  However, later, Bloomberg reported that the US is considering new restrictions on AI memory chip sales to China.  (MU is the main US supplier of such chips.)  Meanwhile, billionaire Bill Ackman canceled the IPO of his Pershing Square US Closed-end fund (scheduled for Tuesday) when it became clear he would not raise nearly as much money as he had hoped. 

In geopolitical news, Israel escalated and expanded its conflicts by killing the Hamas political leader (and main negotiator with Israel related to a cease fire and release of hostages) by missile strike in Iran.  This raises fears of a broader regional conflict.  It also helps PM Netanyahu keep the conflicts going, which ensures his continuing as PM.  Elsewhere, Ukraine received the first group of F-16 fighter-bombers.  These are not coming directly from the US (although LMT and GD will get significant parts and maintenance supply contracts from this transfer).  However, the US will also sell F-35s (made by LMT and sub-contractor NOC) to back-fill the jets sent to Ukraine.

With that background, it looks as if the market is indecisively looking to follow-through on Wednesday’s gains. All three major index ETFs are higher. SPY and QQQ both gapped higher, traded back down, then reversed and are near the highs of the premarket at the moment. This leaves them with a lot of wick and white-bodied Hammer type candles. Meanwhile, DIA gapped down, immediately reverses and has printed a white-bodied candle with no wick, sitting at early session highs. So, the Bulls are in control in the premarket, they just did it different ways between the narrower DIA and broader SPY and QQQ ETFs. All three major index ETFs are above their T-line (8ema) and pushing higher from the previous session. This means the short-term, mid-term, and longer-term, the trends are all bullish and within a few percent of 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 bottom 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, seven of the 10 are in the green so far in the premarket as META (+8.12%) is the leader followed by NVDA (+2.93%) which brings heavy volume in addition to its price move. TSLA (-0.55%) is by far the laggard of the 10. So, the wind seems behind those tech big dogs this morning.

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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