Tuesday was a down then up day.  SPY gapped up 0.35%, DIA gapped up 0.26%, and QQQ gapped up 0.41%.  At that point, all three major index ETFs did some form of morning selloff that re-crossed the opening gap and reached the lows of the day about noon.  This was followed by a long, steady rally into the end of the day.  This action gave us gap-up candles with long lower wicks.  The SPY printed a white-bodied, small-body, long-handle Hammer, while DIA gave us a larger, black-bodied Hammer that retested and failed its T-line (8ema) from below.  For its part, QQQ made the most gain with a gap-up, larger white-body Hammer candle.  However, this all happened on much lower-than-average volume in all three major index ETFs.

On the day, six of the 10 sectors were in the green and, while it may be a data issue, TC200 showed Consumer Cyclical (+10.89%) way, way out front leading the market higher.  On the other side Energy (-1.60%) was by far the worst-performing sector. At the same time, SPY gained 0.44%, DIA lost 0.20%, and QQQ gained 0.92%.  VXX fell another 1.77% to close at 51.52% and T2122 was just shy of being flat to stay in the bottom portion of its mid-range at 34.25.  At the same time, 10-Year bond yields fell to close at 3.644% while Oil (WTI) dropped another 3.54% to close at $66.28 per barrel.  So, Tuesday did see some movement with a gap up, significant selloff and then steady rebound rally all afternoon.    

The major economic news scheduled for Tuesday are limited to EIA Short-Term Energy Outlook that showed power consumption was still on track to rise to new records in 2024 and 2025.  The EIA projects growing data center demand will increase electric usage to 4,101 billion kilowatt-hours in 2024 and then 4,185 billion kilowatt-hours in 2025.  (That compares to a 4,000 billion kilowatt-hours in 2023.)  Interestingly, solar accounted for 60% of all electric-generating capacity added in the first half of 2024 with TX leading the way by adding 16 billion kilowatt-hours in the first six months.  Later, Weekly API Crude Oil Stocks, which showed a bigger than expected drawdown of 2.790 million barrels (compared to the +0.700-million-barrel inventory build that was forecasted, but much less than the prior week’s 7.400-million-barrel drawdown) were reported.

After the close, PLAY, GME, and WOOF all missed on the revenue line while beating on the earnings line. 

In stock news, on Tuesday, TSM reported August sales that point toward a Q3 beat.  At the same time, BMWYY (BMW) cut its 2024 financial outlook, citing weaker sales, in particular in China, as well as supply issues. The cut was for EBIT range mid-point to 6.5%, down from 9.0%.  Later, VLKAF (Volkswagen) announced it is scrapping a range of labor agreements, including one that guaranteed a minimum number of jobs at six German plants through 2029.  The company is in serious negotiations with unions and this may be a negotiating tactic, but it raises the unheard-of prospect of job cuts or plant closures at VLKAF’s flagship German factories for the first time in 87 years. At the same time, NBTB announced it had agreed to buy EVBN for $236 million.  The deal will create a bank with $16 billion in assets.  Later, BA announced it delivered 40 jets in August, up five from August 2023 and up eight month-on-month.  In other BA news, Reuters exclusively reported BA had delayed supplier production milestones by six months for its 737 MAX.  (This is a sign BA is now struggling to get production back on schedule for its top-selling 737 MAX planes.)  Later, UPS announced it would acquire German healthcare logistics (temperature-control warehousing and shipping) firm Frigo-Trans and its sister company BPL for an undisclosed sum.

Elsewhere, NKE shareholders rejected (for the second straight year) a proposal that the firm enter into binding agreements to address the human rights of workers at its suppliers (where thousands of NKE garment makers are allegedly unpaid, forced labor).  At the same time, LUV Chairman Kelly announced he is stepping down amidst a board fight by activist investors and CEO Jordan.  Later, CPB announced it is dropping the word “Soup” from its name and will be known as “The Campbell Company” as it shifts into other packaged foods. At the same time, Reuters reported that GS is close to a deal to sell its GM credit card unit to BCS for an undisclosed sum.  (The GM card unit has about $2 billion of card balances outstanding.)  After the close, the CEO of RTX told a conference that the alarms are going off for it with massive problems like its supply chain having never recovered from COVID-19, being unable to find qualified labor for its production lines, and more.  Specifically, RTX CEO Hayes said that 2,000 of the company’s 14,000 suppliers are located in China.  He refused to define it, but said that if “if” ever happens, he doesn’t know what the company will deal with the situation.  After the close, AMZN announced it will invest $10.45 billion in UK Data Centers over the next five years as it builds out its Web Services offerings.

In stock legal and governmental news, on Tuesday, DE agreed to pay $9.93 million to settle SEC charges that its Thailand subsidiary offered massage parlor and other improper gifts to the government of that country from 2017 to 2020 as well as other commercial bribery to win contracts.  At the same time, the SEC fined KDP $1.5 million to settle charges of inaccurate statements regarding the recyclability of its K-cup coffee pods.  Later, the NHTSA announced that VLKAF (Volkswagen) is recalling 99k electric SUVs to fix door handles which allow water to seep into circuit boards and can lead to lock malfunctions. At the same time, a new lawsuit was filed against CHD that alleges the company’s Trojan Condoms are not safe because they contain “forever chemicals.”  Later, Fed Vice-Chair Barr announced revised capital requirement rules for banks in what is widely seen as a big win for major banks and their lobbyists.  (The increase in capital requirements will be roughly half of the increase initially proposed.) 

Meanwhile, the FTC told ANCTF (operator of Circle-K convenience stores) and SVNDF (operator of 7-eleven convenience stores) that it may probe any acquisition deal.  (If the two strike a deal, it would combine the two largest convenience chains in the world.)  Later, a former executive of NWSA testified in the GOOGL antitrust lawsuit, saying that NWSA would have lost $9 billion in 2017 if it had switched away from the GOOGL ad buying platform.  This, he said, kept NWSA captive to GOOGL and feeling like hostages.  After the close WBA and TEVA announced they had settled with the city of Baltimore MD over opioid crisis liability ahead of the trial which was to begin next week.  The two companies will pay $402.5 million to settle the case.  Also after the close, a TPR executive testified that if the company merges with CPRI, they will have room to raise prices and lower discounts, just as the FTC had charged.  However, while those things were also shown in a slide deck from TPR’s CEO, the executive said that did not necessarily mean the company would do those things.

In miscellaneous news, on Tuesday, OPEC+ revised its global oil demand forecast downward for both 2024 and 2025.  This was the second consecutive month OPEC+ has lowered its estimate of worldwide oil usage.  Still, the forecast calls for an increase of 2.03 million barrels per day on average for all of 2024 (down a bit from last month’s 2024 forecast of a 2.11 million barrels per day increase).  For 2025, OPEC+ is calling for an additional increase of 1.74 million barrels per day (versus last month’s estimate of a 1.78 million barrels per day increase).  Meanwhile, FDX warned that some areas of Louisiana may see pickup and delivery delays later in the week as storm Francine is expected to make landfall in the state Wednesday.   Elsewhere, the Census Bureau reported that the median US 2023 INFLATION-ADJUSTED Household income had recovered to pre-pandemic (2019) levels, even considering the inflation spikes of 2022 and 2023. Finally, Bloomberg reported that online grocery prices fell by 3.7% in August which was the largest monthly decline since 2014. 

Overnight, Asian markets were mostly red with just three of the 12 exchanges above break-even.  Japan (-1.49%), Malaysia (-1.24%), and Shanghai (-0.82%) led the region lower.  In Europe, we see the opposite picture taking shape at midday with 11 of the 14 exchanges in the green.  The CAC (+0.29%), DAX (+0.39%), and FTSE (+0.07%) lead the region higher in early afternoon trade.  Meanwhile, in the US, at 7:15 a.m., Futures point toward a down start to the morning.  The DIA implies a -0.40% open, the SPY is implying a -0.30% open, and the QQQ implies a -0.35% open at this hour.  At the same time, 10-Year bond yields are down to 3.627% and Oil (WTI) is up 2.16% to $67.17 per barrel in early trading.

The major economic news scheduled for Wednesday is limited to August Core CPI and August CPI (both at 8:30 a.m.), and EIA Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled for before the open include DBI, HEPS, and TEN.  Then, after the close, there are no major reports scheduled.

In economic news later this week, on Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, August Core PPI, August PPI, WASDE Ag report, August Federal Budget Balance, and the Fed Balance Sheet are reported.  Finally, on Friday, we get August Export Price Index, August Import Price Index, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Thursday, we hear from BIG, CAL, KR, SIG, ABDE, and RH.  Finally, on Friday, there are no reports scheduled.

So far this morning, DBA reported misses on both the top and bottom lines.  This included a significant (48%) downside earnings surprise.

With that background, all three major index ETFs opened modestly lower in the premarket. Since that point, all three have printed indecisive (largely wick) candles that are back to little-changed from their early session open. All three remain below their T-line (8ema). So, the short-term trend is bearish. At the same time, the mid-term trend is mixed at best with the QQQ now bearish. In the longer-term we still have a Bull trend with the DIA, SPY, and QQQ. In terms of extension, the 8ema has caught up and none of the three major index ETFs are too stretched below it. At the same time, the T2122 indicator is back in the lower half of its mid-range. So, markets have room to run either direction if one side or the other can find momentum. However, the Bulls have a bit more slack to play with. Just remember the mantra “follow, don’t lead, but also don’t chase” in mind. With regard to those 10 big dog tickers, six of the 10 are in the red this morning, led again by TSLA (-0.45%). On the other side, AMZN (+0.25%) is holding up best. Oddly enough, TSLA has traded more in the premarket in terms of dollar-volume than NVDA (-0.21%), which normally has 2-5 times as much dollar-volume as the next closest ticker. So, there may be changes afoot or perhaps traders are just waiting on the CPI numbers.

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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