Wednesday was an up-and-down day in the market.  SPY gapped down 0.35%, DIA opened just 0.05% lower, and QQQ gapped down 0.69%.  At that point, all three major index ETFs rallied steadily until shortly after 11 a.m. when they hit the high of the day.  However, then we reversed again and all three sold off, reaching the lows of the day at about 3:15 p.m. only to bounce again the final 45 minutes.  This gave us white-bodied, Inverted Hammer type candles in all three major index ETFs.  DIA retested (and failed) its T-line (8ema) from below while SPY retested (and passed) its 50sma from above.  This happened on below-average volume in the SPY, DIA, and QQQ.

On the day, seven of the 10 sectors were in the red with Energy (-1.10%) way out front leading the market lower.  Meanwhile, Utilities (+1.00%) held up far better than any of the other sectors.  At the same time, SPY fell 0.23%, DIA gained 0.02%, and QQQ fell 0.26%. The VXX gained another 2.67% to close at 54.97% and T2122 pulled back a bit more into the mid-range at 56.19.  10-Year bond yields fell again to close at 3.759% while Oil (WTI) dropped again by 2.12% to close at $68.85 per barrel.  So, Wednesday was a volatile, but ultimately nothing day with traders waiting on Thursday’s Weekly Unemployment Claims or maybe even on Friday’s August Payrolls numbers. 

The major economic news scheduled for Wednesday included July Exports, which came in a bit higher than expected at $266.60 billion (compared to a June $265.30 billion value).  At the same time, July Imports also exceeded predictions at $345.40 billion (versus June’s $338.00 billion).  Together, those gave us a July Trade Balance that was exactly as expected at -$78.80 billion (compared to a -$78.80 billion forecast but up slightly from June’s -$73.00 billion reading).  Later, July Factory Orders were strong er than anticipated at +5.0% (versus a +4.7% forecast and vastly better than June’s -3.3% number).  At the same time, July JOLTs Job Openings were lower than predicted at 7.673 million openings (compared to a forecast calling for 8.090 million and a June reading of 7.910 million).  It is worth noting this is the lowest number of job openings since early 2021.  Finally, after the close, the API Weekly Crude Stocks report showed a MASSIVE drawdown of 7.400 million barrels (versus forecasts calling for 0.900-million-barrel drawdown and even relative to the prior week’s 3.400- million-barrel draw).

In Fed news, on Wednesday, Atlanta Fed President Bostic warned against holding rates too high for too long.  Bostic posted an essay on the Atlanta Fed website saying, “We must not maintain a restrictive policy stance for too long.”  He continued, saying that waiting on inflation to reach the 2% goal (before cutting) “would risk labor market disruptions that could inflict unnecessary pain and suffering.”  Bostic concluded by saying, “I do not sense a looming crash or panic among business contacts. However, the data and our grassroots feedback describe an economy and labor market losing momentum.”  Later, the Fed Beige Book showed that the economy expanded more slowly from the middle of July through August 26.  It stated, “Economic activity grew slightly in three districts, while the number of districts that reported flat or declining activity rose from five in the prior period to nine in the current period.”  The report continued, “Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook.”  Again, the report supports the idea of a rate cut in September.

After the close, HPE reported beats on both the revenue and earnings lines. At the same time, CASY missed on revenue while beating on earnings.  However, CPRT missed on both the top and bottom lines.

In stock news, on Wednesday, the Nordstrom family made an offer to take JWN private for $23 per share in cash.  (This offer was practically no premium compared to the Tuesday close, and JWN stock ended the day down 0.18%.)  At the same time, VLVLY (Volvo) announced plans to update its hybrid line as the company shifted away from its previously-stated “pure electric by 2030” strategy.  Later, X warned of thousands of job cuts if its acquisition by Nippon Steel is blocked. This came after reports the (President Biden is prepared to block the deal and with both Presidential candidates also vowing to block it.)  At the same time, NSC announced it had reached a tentative agreement with another union, this time the one representing conductors.  (This brings the total tentative union agreements in place to cover 65% of the NSC workforce.)  

Elsewhere, later, a GM joint venture (with Korean LG Energy) agreed to recognize the UAW union at its battery plant in TN.  At the same time, the founder of LOGI lost a proxy battle in which he had tried to oust current board chairman Becker.  (Becker was re-elected with 86% of the shareholder votes.)  Later, the Wall Street Journal reported that VZ is in “advanced talks” to acquire FYBR.  (FYBR closed up almost 38% on the report.)  At the same time, LYFT announced it will stop offering standalone dockless bikes and scooters and eliminate one percent of it jobs as part of a restructuring. Later, BX announced it will buy Aussie data center company AirTrunk for $16.10 billion.

In stock legal and governmental news, on Wednesday, tow of the Consumer Products Safety Commission Commissioners called for the agency to investigate two Chinese e-tailers (Temo, owned by PDD, and Shein) after products the agency has labeled “deadly baby and toddle products” were sold from the site to US customers. At the same time, the NHTSA announced it has closed an investigation into 1.3 million GM vehicles over seatbelt issues.  Later, EU antitrust regulators announced they are seeking comment on GOOGL’s proposed resolution to comply with EU fair competition rules. (The GOOGL proposal is to create a separate “product box” for competitors to be located below the GOOGL “featured products” box on its various pages.  The idea is expected to face stiff opposition from competitors.) 

Elsewhere, at the same time, a DE judge ruled JNJ owes Auris Health shareholders $1 billion in damages for breaching a 2019 agreement to acquire the private robotics developer.  Later, Reuters reported that JNJ plans to add another $1.1 billion to its settlement proposal over talc damage claims. (The previously announced settlement was $8 billion over 25 years.)  After the close, Reuters reported that ASML CEO Fouquet is pushing back against restrictions.  He told the news outlet that the US-led campaign (which the Dutch government supports) to restrict technology exports to China is “economically motivated” and that making a case for the sanctions based on national security “is getting harder and harder.” Later, HOOD agreed to pay $3.9 million to settle allegations brought by the CA Attorney General for failing to allow customers to withdraw cryptocurrency from their accounts from 2018 to 2022.

In miscellaneous news, C reported the results of its survey of 500 brokers and other firms that are involved in trade settlement.  The survey found that the shift to “T+1 settlement” had a bigger impact than expected for 44% of firms on both the buy and sell side.  Both sides also cited “stock lending” (shorting) as the most impacted and challenging.  52% reported they needed to add staff, which interestingly showed they had a preference for adding headcount rather than using automation and indicated a risk (according to C) because hiring was not scalable in short timeframes.  Meanwhile, the job openings data on Wednesday caused a shift in the Fedwatch September rate cut outlook.  On Tuesday 38% of Fed Fund Futures contracts predicted a half point cut while 62% were betting on a quarter point cut. (Zero current contracts expect no cut or a raise.)  However, as of Wednesday’s close that had shifted to 45% expecting a 50-basis point cut on the 18^th while 55% expect only the quarter-point reduction.

Overnight, Asian markets were mixed but leaned toward the green with seven of the 12 exchanges in the region posting gains.  Thailand (+2.94%) was by far the biggest gainer while Japan (-1.05%) was by far the big loser.  In Europe, we also see a mixed picture taking place at midday with six of the 14 exchanges above water.  The CAC (-0.28%), DAX (+0.30%), and FTSE (-0.10%) leading the region in early afternoon trade.  In the US, as of 7:45 a.m., Futures are pointing toward a mixed and flat start.  The DIA implies a +0.08% open, the SPY is implying a +0.03% open, and the QQQ implies a -0.11% open at this hour.  At the same time, 10-Year bond yields are at 3.77% and Oil (WTI) is up 0.33% to $69.42 per barrel in early trading.

The major economic news scheduled for Thursday include August ADM Nonfarm Employment Change (8:15 a.m.), Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q2 Nonfarm Productivity, and Q2 Unit Labor Costs (all at 8:30 a.m.), August S&P Global Composite PMI and August Global Services PMI (both at 9:45 a.m.), August ISM Non-Mfg. Employment, August ISM Non-Mfg. PMI, and August ISM Non-Mfg. Prices (all at 10 a.m.), Weekly EIA Crude Oil Inventories (11 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for before the open include GIII, KFY, NIO, SAIC, and TTC.  Then, after the close, AVGO and DOCU report.

In economic news later this week, on Friday, we get August Avg. Hourly Earnings, August Nonfarm Payrolls, August Private Nonfarm Payrolls, August Participation Rate, and the August Unemployment Rate.  We also hear from Fed members Williams and Waller (twice).

In terms of earnings reports later this week, on Friday, we hear from ABM, BIG, DOOO, and GCO.

So far this morning, KFY, NIO, and SAIC reported beats on both the revenue and earnings lines.  Meanwhile, GIII missed on revenue while beating on earnings.

With that background, it looks as if markets are undecided. All three major index ETFs gapped modestly higher to start the premarket. However, all three have also printed small black-body candles since then to get back to either side of flat in the early session. DIA retested its T-line, but all three remains below their 8ema. So, the short-term trend is bearish. At the same time, the mid-term trend is still bullish (although it is being pressed hard in the QQQ) and in the long-term, remains in a Bull trend with DIA and SPY still close to all-time highs. In terms of extension, QQQ remains stretched below its T-line but the other two are not far from that average. At the same time, the T2122 indicator is back in the middle of its mid-range. So, the market is not “too extended” but the QQQ will need a pause, bounce, or reversal soon to avoid becoming out of whack in its decline. Just remember the mantra “follow, don’t lead, but also don’t chase” in mind. With regard to those 10 big dog tickers, seven of the 10 are in the red this morning. However, TSLA (+3.03%) is by far the biggest mover both in terms of price and not far from leading in volume. (TSLA has traded nearly the same amount as that biggest dog NVDA (-0.10%) and both are about 10 times as much dollar volume traded as the next most traded ticker 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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