Monday started with a gap higher.  SPY gapped up 0.24%, DIA gapped up 0.21%, and QQQ gapped up 0.19%.  From there, all three major index ETFs rode the whipsaw in descending-magnitude waves and a slight bearish trend the rest of the day. This action gave us a gap-up black-bodied Spinning Top in the SPY, a gap-up, white-bodied Doji-type candle in the QQQ, and a gap-up, black-bodied Bearish Engulfing candle in the DIA.  That meant that DIA retested and failed its T-line (8ema) while SPY and QQQ both retested and passed (stayed above) their own T-lines.  This happened on lower-than-average volume in all three major index ETFs.

On the day, eight of the 10 sectors were red with Communication Services (-0.76%) leading the way lower.  Meanwhile, the biggest mover was Energy (+0.95%) and by far the leader of the two sectors that held up best.   At the same time, SPY gained 0.05%, DIA lost 0.34%, and QQQ gained 0.22%. VXX fell another 1.83% to close at 54.76 and T2122 fell back into the top of the oversold territory at 18.18.  On the bond front, 10-year bond yields fell to 3.905% and Oil (WTI) spiked another 3.62% on Middle East war fears to close at $79.62 per barrel.  So, Monday was a whipsaw day with violent whips the first two hours of the day and then continuingly decreasing waves the rest of the day.  In general, it felt like a waiting day with traders wanting to see Tuesday’s PPI data.

The major economic news scheduled for Monday includes NY Fed 1-Year Consumer Inflation Expectations, which came in flat at 3.0% (the same as June’s 3.0% reading).  In addition, the Fed report showed a big drop in the medium-term (3-Year) inflation expectations from 2.9% in June to 2.3% in July.  However, the longer-term (5-Year) expectations stayed flat (the same way 1-Year expectations had) at 2.8%.  Later, the Fed Budget Balance came in lower than expected at -$244.0 billion (versus the -$254.3 billion forecast but far above June’s -$66.0 billion).

After the close, AGRO and SLF missed on revenue while beating on earnings.  On the other side, PACS beat on revenue while missing on earnings.

In stock news, on Monday, Canadian bank BNS announced it is buying a 14.9% stake in US regional bank KEY for $2.8 billion ($17.17 per share).  Later, both S&P and MCO (Moody’s) downgraded JBLU credit rating after JBU announced plans to raise $3 billion in debt.  (JBLU intends to use its flier rewards program as collateral for the new debt.)  Meanwhile, BAC CEO Moynihan told CBS that he is urging the Fed to “consider lowering rates to prevent a potential economic downturn.”  (He said he is basing that request on seeing BAC customers spending at a 3% growth rate in July and August, which is half as fast as the July-August spending increase in 2023.)  On the other hand, UBS reported that their research indicates that the probability of a US recession fell from just a few months ago.

Elsewhere, CVX announced Monday that it has begun production in the world’s first “ultrahigh pressure” oil field.  The field, located under US waters in the Gulf of Mexico is now set to open up many deep-sea oilfield projects that are only accessible using 20,000 pounds per square inch of pressure.  The single well platform opened Monday will produce 75k barrels of oil and 28 million cubic feet of natural gas per day for the next 30 years. (However, the project did cost $5.7 billion and nobody has ever operated at those pressures, let alone over long periods of time.)  BP hoped to match the CVX feet by 2029.  Later, after the close, XOM laid off 59 employees as it begins the job cuts related to the acquisition of Pioneer Natural Resources.

In stock legal and governmental news, on Monday, GOOGL announced that it is deactivating Russian-based AdSense (advertising) accounts.  The search giant said its decision was due to “the ongoing developments in Russia.”  However, some analysts said this was a response to Russia slowing down YouTube service in that country.  Later, Bloomberg reported JNJ now has the support of 75% of the tens of thousands of lawsuit plaintiffs to propose the $6.5 billion talc settlement for court approval.  (75% is the US Bankruptcy Court approval standard.)  If the story is true, the court could impose the settlement terms on all of the 61,000 claimants.  Later, the TX Attorney General announced his office has formally launched an election year investigation into CNP (Houston electrical utility) related to “fraud and waste” in the wake of the Hurricane Beryl power outages. 

Elsewhere, Bloomberg reported Monday that its own investigation has uncovered that store-brand versions of Mucinex Extended Release sold at WBA, CVS, TGT, and WMT contain cancer-causing agent Benzene.  The report says the news agency information has been sent to the FDA.  However, neither the agency nor any of the retailers would comment for the report.  Meanwhile, the Biden Administration announced new proposed rules aimed at reducing consumer wait times, cumbersome forms, and hard-to-cancel subscriptions.  The FTC has begun accepting comments on the proposed rules while the FCC is already moving toward a similar settlement with the major telecom providers.  The Dept. of HHS said it will introduce similar rules for major healthcare and insurance providers in the near future as well. 

Overnight, Asian markets were nearly green across the board.  Only India (-0.85%) kept the Bulls from a clean sweep.  Among the gainers, Japan (+3.45%) was far out front, followed by Singapore (+0.72%) and Shenzhen (+0.43%) leading markets higher.  In Europe, the picture is much more dour at midday with only four of 15 exchanges in the green.  The CAC (-0.19%), DAX (-0.03%), and FTSE (-0.08%) are typical of the modestly red trading in the region in the early afternoon.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a mixed and modest start to the morning.  The DIA implies a -0.08% open, the SPY is implying a +0.18% open, and the QQQ implies a +0.28% open at this hour.  At the same time, 10-Year bond yields are down to 3.904% and Oil (WTI) is off a quarter percent to $79.88 per barrel in early trading.

The major economic news scheduled for Tuesday includes July Core PPI and July PPI (both tat 8:30 a.m.) and API Weekly Crude Oil Stocks report (4:30 p.m.).  In addition, Fed member Bostic speaks at 1:15 p.m.  The major earnings reports scheduled for before the open include Tuesday, HD, JHX, MLCO, ONON, SE, and TME.  Then, after the close, CIG, FNV, and NU report.

In economic news later this week, on Wednesday, July Core CPI, July CPI, and EIA Weekly Crude Oil Inventories report.  On Thursday, we get Weekly Initials Jobless Claims, Weekly Continuing Jobless Claims, July Core Retail Sales, July Export Price Index, July Import Price Index, NY Empire State Mfg. Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment Index, July Retail Sales, July Industrial Production, Jun Business Inventories, June Retail Inventories, TIC Net Long-Term Transactions, and the Fed Balance Sheet.  We also hear from Fed member Harker.  Finally, on Friday, July Building Permits, July Housing Starts, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Wednesday, ARCO, EAT, CAE, CAH, DOLE, ESLT, ICL, PFGC, UBS, CSCO, and STNE report.  On Thursday, we hear from BABA, AIT, DE, GRAB, JD, NICE, SPTN, TPR, WMT, AMCR, AMAT, COHR, GLOB, and HRB.  Finally, on Friday, FLO reports.

So far this morning, HD, JHX, and TLN reported beats on both the revenue and earnings lines.  Meanwhile, SE beat on revenue while missing on earnings.  However, ONON and TME missed on both the top and bottom lines.

In miscellaneous news, on Monday afternoon there was a 4.4 magnitude earthquake in Los Angeles (centered about 7.5 miles Northeast of downtown LA). Fortunately, there were no immediate reports of structural or infrastructure damage.  At the same time, Bloomberg reported foreign investment in China has fallen again this year, resulting in a net outflow.  Elsewhere, in Russia, Putin replaced the Chief of his General Staff (head of military) Gerasimov with the head of the FSB (successor to KGB) Bortnikov.  The move came after Ukrainian President Zelenskyy held a public staff meeting in which the Ukrainian military claimed they now control 1000 sq. km. of Russia’s Kursk region after seven days of their attack into the invader’s own country. Finally, in China, Bloomberg reports that Beijing has ordered rural banks to not settle recent bond purchase transactions as the central authorities attempt to control the country’s bond market rally. (In other words, Beijing is trying to force money into stocks.)

With that background, it looks as if markets are uncertain ahead of PMI data. All three major index ETFs gapped higher to start the premarket. However, all three have also sold off since then, printing black-bodied candles in the early session and taking price back to one or the other side of flat. DIA retested and has so far failed the retest of its T-line (8ema) while the SPY and QQ remain above their own T-line. The very short-term trend remains bullish while the mid-term trend is bearish. In the long term, while the bullish trend line is broken, the longer-term charts remain bullish. In terms of extension, all three major index ETFs are now back to being close to their T-line (8ema). At the same time, the T2122 indicator is back into the top of its oversold range. So, the market has some room to run if either side can find momentum. However, the bulls have slightly more slack to work. With regard to those 10 big dog tickers, nine of the 10 are in the green led by the biggest dog, NVDA (+1.61%), which also leads on the dollar-volume traded by a factor of six. TSLA (-0.28%), which is usually the second heaviest dollar-volume traded stock is the only red in the group, but is also working on very low dollar volume compared to the normal premarket.

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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