Markets diverged on indecision (at least momentarily) at the open.  SPY opened flat, DIA gapped up 0.21%, and QQQ gapped down 0.35%.  However, then they all three ran modestly higher for the first hour, sold off sharply until 11:30 a.m. in the QQQ, and 12:20 p.m. in the SPY and DIA.  From that point, all three made a slow, steady rally part of the way back up before starting to sell modestly at 2:55 p.m. before chopping sideways the last 15 minutes (ending on an up-tick).  This action gave us indecisive, white-bodied Spinning Top type candles in the SPY and QQQ as well as a Bearish Engulfing candle in the DIA.  SPY retested and failed its 17ema while DIA retested and failed its T-line (8ema).  This happened on less-than-average volume in all three major index ETFs.

On the day, eight of the 10 sectors were in the red with Industrials (-1.15%) and Healthcare (-1.04%) way out front leading markets lower.  Meanwhile, Communication Services (+0.53%) held up better than the others and led the two gaining sectors higher.  At the same time, SPY fell 0.24%, DIA fell 0.48%, and QQQ gained 0.09%. The VXX fell almost 5% to close at 52.24% and T2122 dropped again, this time into the lower half of its mid-range at 37.30.  10-Year bond yields fell again to close at 3.731% while Oil (WTI) was just on the red side of flat to close at $69.12 per barrel.  So, Thursday saw the rollover continue (albeit slowly) in the SPY and DIA while the QQQ tried to hold us up in a consolidation.  It is worth noting that the big dogs tried to hold the rest of the market up with NVDA (+0.94%), TSLA (+4.90%), AAPL (+0.69%), and AMZN (+2.63%) being the four most traded (dollar-volume) in the market.  Still, this may have been a waiting day as traders wait on Friday’s August Payrolls numbers. 

The major economic news scheduled for Thursday included August ADM Nonfarm Employment Change, which came in significantly lower than expected at +99k (versus a +144k forecast and July’s +111k reading).  Later, Weekly Initial Jobless Claims were a bit lower than predicted at 227k (compared to a 231k forecast and the prior week’s 232k).  On the ongoing side, Weekly Continuing Jobless Claims were down to 1,838k (versus a 1,870k forecast and the prior week’s 1,860k value).  At the same time, Q2 Nonfarm Productivity was up BIG to +2.5% (versus a +2.3% forecast and especially versus Q1’s +0.2% reading).  Meanwhile, Q2 Unit Labor Costs were much lower than anticipated at +0.4% (compared to a +0.9% forecast and down sharply from Q1’s 4.0% value).  Later, August Global Services PMI was stronger than expected at 55.7 (versus a forecast of 55.2 and July’s 55.0 number).  At the same time, August S&P Global Composite PMI that was also stronger than predicted at 54.6 (compared to 54.1 that was forecast and the prior month’s 54.3).  Later, August ISM Non-Mfg. Employment was lower than anticipated at 50.2 (versus a 50.5 forecast and July’s 51.1 reading).  At the same time, August ISM Non-Mfg. PMI was a couple ticks better than expected at 51.5 (compared to a 51.3 forecast and July’s 51.4 number).  On the cost side, August ISM Non-Mfg. Prices were up three ticks to 57.3 (versus a 56.0 forecast and a 57.0 July reading).  Later, Weekly EIA Crude Oil Inventories showed a large drawdown of 6.873 million barrels (compared to a 0.600-million-barrel drawdown forecast and the prior week’s -0.668 million barrels value).  Finally, after the close, the Fed Balance Sheet showed a $10 billion reduction from $7.123 trillion to $7.113 trillion.

After the close, AVGO and DOCU reported beats on both the revenue and earnings lines.  In addition, both companies raised forward guidance.

In stock news, on Thursday, BNY announced it had agreed to acquire Archer (a private technology and operations service for banks).  Details were not disclosed.  At the same time, the Wall Street Journal reported on data leaked by DIS that disclosed customer and staff personal information as well as company financial and strategy information. Later, F announced that US vehicle sales increased 13.4% in August on strong SUV and pickup demand.  (In addition, in a much smaller segment, F all electric sales rose 29% while hybrid sales grew almost 50%.)  At the same time, TSLA announced plans to launch “Full Self-Driving” in China and Europe (pending regulatory approval) in early 2025.  TSLA CEO Musk said they were “likely” to get approval from both regulators by the end of the year.  (TSLA closed up 4.90% on the news.)  Later, APLD (which runs data centers) announced it will receive $160 million in funding from investors including NVDA.  (APLD closed up more than 65% on the news.)  At the same time, ABT said it will be launching a continuous glucose monitoring system, a multi-billion-dollar market. 

Meanwhile, CNOB agreed to buy smaller banking competitor FLIC for $284 million.  The combined banks will have $114 billion in assets.  At the same time, FDX announce it has invested in private AI robotics company Nimble to help scale up automation in the FDX fulfillment unit.  Later, Reuters reported that BX and Vista Equity Partners are in talks to acquire SMAR in a deal valued around $7 billion.  At the same time, T said it has made its “final offer” to the striking CWA union (which has 17,000 members on strike against T).  The union told Reuters “The offer did not meet expectations.”  Later, SLTA announced it will invest $385 million in a new plant in Argentina.  After the close, the Teamsters union threatened to expand its strike from just the Detroit MPC refinery to other refineries as the company has been unwilling to negotiate with the union.  (The Detroit refinery is one of 13 MPC refineries.)  At the same time, Bloomberg reported that after the deal with Skydance Media, ORCL co-founder Larry Ellison will control PARA and his son will serve as CEO.  Also after the close, CRM announced it would buy private firm “Own Company” for $1.9 billion to accelerate the growth of its data security and privacy products.

In stock legal and governmental news, on Thursday, the SEC announced it will no longer conduct misconduct proceedings against accountants who allegedly perform malpractice or submit fraudulent audit reports for public companies.  The move comes after the pro-business, ultra-conservative SCOTUS recently rules to curtail the agency enforcement powers. Later, the EU’s highest court rejected an appeal against antitrust fines imposed by the EU antitrust regulator on AFLYY, SINGY, and British Airways.  At the same time, TX energy regulators denied a funding request for a new power plant project that would be a joint-venture of NEE and private Aegle Power.  (This is worthy of mention because TX had named the project a finalist for award of state grants to increasing state electric generation, but NEE denied being involved or consenting to be listed as an applicant for the program.)  Later, HSY filed a motion seeking the dismissal of a lawsuit which alleges the company misled consumers with holiday-themed candy packaging (when the actual product did not contain the same festive designs and/or colors).

Elsewhere, After the close, SNAP was sued by the state of NM, which alleged the platform failed to protect children from sexual exploitation.  At the same time, Nikkei reported that TM (Toyota) and NSANY (Nissan) will invest nearly $7 billion with Japanese government support to expand battery production by 50%.  Later, the Dept. of Trans. announced it is opening an inquiry into AAL, DAL, LUV, and UAL rewards and frequent flyer programs over potential unfair, anticompetitive, and deceptive practices.  At the same time, AMZN sued the NRLB, challenging the agency which had ruled AMZN must negotiate with a union after an election at the company’s New York City warehouse.  AMZN’s suit followed the conservative playbook, saying the agency’s structure is unconstitutional and had no right to rule the election results were fair.  Later, China arrested five AZN oncology division employees in Shenzhen, possibly related to the collection of patient data that infringed China’s data-privacy laws.

In miscellaneous news, OPEC+ announced they had agreed to delay a previously planned October and November oil production increase after oil prices hit their lowest levels in nine months.  Meanwhile, the Committee on Foreign Investment in the US (made up of cabinet-level members of many departments and chaired by Treasury Sec. Yellen) sent a letter to both X and Nippon Steel.  The letter said the acquisition could create US national security risks and could lead to a reduction in domestic steel production.  (This letter reflects the feelings of the vast majority of politicians on both sides of the aisle.)  However, in Japan, the Japanese PM hopeful and current Digital Minister Kono told reporters that “Governments should not intervene in deals in an arbitrary manner.”  He went on to say, “Perhaps it is the presidential election and everyone wants the labor vote, but I would hope that the market will not be distorted by such a situation.” 

Overnight, Asian markets were mostly red with just three of the 12 regional exchanges in the green. Shenzhen (-1.44%) and South Korea (-1.21%) paced the more numerous losers while Thailand (+1.66%) and Taiwan (+1.17%) led the gainers.  In Europe, with the sold exception of Belgium (+0.16%) we see red across the board at midday.  The CAC (-0.25%), DAX (-0.54%), and FTSE (-0.24%) lead the region lower in afternoon trade.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a gap lower to start the day.  The DIA implies a -0.36% open, the SPY is implying a -0.61% open, and the QQQ implies a -1.06% open at this hour (ahead of PCE data).  At the same time, 10-Yead bond yields have dropped to 3.699% and Oil (WTI) is on the green side of flat at $69.27 per barrel in early trading.

The major economic news scheduled for Friday includes August Avg. Hourly Earnings, August Nonfarm Payrolls, August Private Nonfarm Payrolls, August Participation Rate, and the August Unemployment Rate (all at 8:30 a.m.). We also hear from Fed member Williams (8:45 a.m.) and Fed Governor Waller (11 a.m. and 11 p.m.).  The major earnings reports scheduled for before the open include ABM, BIG, DOOO, and GCO. Then, after the close, there are no earnings reports scheduled.

In late-breaking news, AAPL has approved a version of the TCEHY (Tencent) WeChat app for its phones ahead of next Monday’s iPhone 16 launch. (WeChat is China’s most used social media platform.)  This move is a nod to the fact Chinese phone makers have been taking market share from AAPL.  There was no word on the financial terms, but there had been a pushback from TCEHY about the cut AAPL was taking from app store apps.  Elsewhere, in another sign of corporate power, PriceWaterhouseCoopers (one of the “big four” accounting firms globally) has told 26,000 UK employees it will begin to use location data to track employees in order to ensure they spend at least 60% of their time each week in the office or at a client location.  Meanwhile, the US announced new export controls on advanced technology (particularly quantum computers and the chip-making tools needed to build them).  This brings the US in-line with allies such as the Netherlands (basically limiting ASML tech exports to China) and the UK.

So far this morning, ABM and GCO reported beats on both the revenue and earnings lines. Meanwhile, DOOO missed on revenue while posting a MASSIVE (+104.5%) beat on earnings.

With that background, it looks as if the Bears are in control ahead of data. All three major index ETFs gapped lower to start the premarket. Since then, all three have given us plenty of wick, but SPY does have a black-body candle in the early session, indicating some bearish follow-through. All three remain below their 8ema. So, the short-term trend is bearish. At the same time, the mid-term trend is mixed with the QQQ now bearish and in the long-term we still have a Bull trend with DIA and SPY. In terms of extension, QQQ remains a bit 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 lower half of its mid-range. So, the market is not “too extended” but the QQQ will need more 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, nine of the 10 are in the red this morning. Only INTC (+0.10%) holds on to green territory. However, NVDA (-1.30%) and TSLA (-0.66%), which are by far the biggest dogs in terms of dollar-volume traded, are pulling tech and the whole market lower early. Finally, don’t forget this is Friday, payday, and time to ready your account for the weekend.

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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