On Wednesday, stocks opened up undecided.  SPY opened down 0.01%, DIA opened 0.10% higher, and QQQ opened 0.09% lower. From that point, DIA immediately began to sell off, reaching the lows of the day at 1:40 p.m.  Meanwhile, SPY and QQQ rallied modestly after the open, reversing and beginning to selloff at 10:20 a.m. They both reached their lows between 1 p.m. and 2 p.m.  After that, all three major index ETFs traded sideways in a tight range along the lows.  This action gave us a large black-bodied Bearish Engulfing candle that retested and stayed above its T-line (8ema).  At the same time, SPY printed a black-bodied, indecisive Spinning Top.  Finally, QQQ gave us a white-bodied Inverted Hammer type candle (not a Shooting Star due to a gap lower not up).  This happened on well-below-average volume in all three major index ETFs.

On the day, nine of the 10 sectors were in the red with Energy (-1.79%) far out in front leading the rest of the market lower. On the other side, Utilities (+0.26%) held up much better than the other sectors and was the only green on the sector board.  At the same time, SPY fell 0.22%, DIA dropped 0.71%, and QQQ gained 0.09%.  VXX closed up 1.36% to 48.41 and T2122 plummeted down to the center of its mid-range at 59.68.  At the same time, 10-Year bond yields jumped to close at 3.791% while Oil (WTI) dropped 2.40% to close at $69.84 per barrel. (The drop in oil came on a combination of factors.  Even mor China stimulus, a modest de-escalation in Israeli-Hezbollah attacks, and OPEC+ publishing a highly bullish long-term oil demand forecast.)  So, the three major index ETFs opened divergently, but on small moves.  From there the move happened in the morning with the afternoon being just a dead-money grind sideways. 

The major economic news scheduled for Wednesday included August Building Permits which came in up but slightly lighter than expected at 1.470 million (compared to forecast of 1.475 million and the July reading of 1.406 million). Meanwhile, August New Home Sales were down but better than predicted at 716k (versus a forecast of 699k and the July value of 751k).  This was a 4.7% decline on a month-on-month basis. Later, Weekly EIA Crude Oil Inventories showed a much bigger decline than expected at -4.471 million barrels (compared to a forecast calling for a 1.300-million-barrel draw and prior week reading of 1.630 million barrels. 

In Fed news, Fed Governor Kugler said Wednesday that she “strongly supported” the half percent rate cut at last week’s FOMC meeting.  Kugler said, “The labor market remains resilient, but the FOMC now needs to balance its focus so we can continue making progress on disinflation while avoiding unnecessary pain and weakness in the economy.”  She continued, “I strongly supported last week’s decision and, if progress on inflation continues as I expect, I will support additional cuts.”

After the close, MU and WS reported beats on both the revenue and earnings lines.  At the same time, CNXC bear on revenue while missing on earnings.  However, FUL and JEF missed on both the top and bottom lines.

In stock news, on Wednesday, the union that represents striking BA workers in the Pacific Northwest told Reuters that the workers are not interested in the latest offer from the company.  (BA called that offer their “best and final” offer.)  At the same time, unions for LUV workers announced company plans to reduce service to and from Atlanta in 2025 as part of cost cutting plans.  This will lead to the loss of an unspecified number of jobs.  Later, VLKAF (Volkswagen) flatly rejected union calls for more talks as the unions threaten strikes following a bitter first round of negotiations over potential German plant closures.  At the same time, META unveiled new Augmented Reality glasses and AI updates.  Later, STLA and French nuclear fuel firm Orano announced they are dropping a previously planned joint venture to recycle electric car batteries. Meanwhile, MRK announced bad results from a late-stage trial for its experimental colorectal cancer drug. (441 trial participants who took the drug did not show significant improvement in survival compared to existing treatments.) 

Later, PYPL announced it will allow merchants to buy, hold, and sell cryptocurrency from their business accounts.  After the close, PFE withdrew its sickle cell disease treatment Oxbryta from all markets worldwide and discontinued all studies and programs related to the treatment.  (This decision was “based on the totality of clinical data, which indicates the benefits of the drug o not outweigh the risks” according to a PFE statement.)  PFE reported $92 million in revenue from Oxbryta in Q2.  At the same time, SPR announced it will begin employee furloughs in three weeks unless the BA strike in the Pacific Northwest ends before that time.  Later, BX confirmed previous rumors that it has invested $13.3 billion in an AI data center in the Northeast England.  At the same time, Bloomberg reported that SDXOF (France’s Sodexo) is strongly considering a big to takeover rival ARMK.  (ARMK share spiked in after-hours trading.)

In stock legal and governmental news, on Wednesday, BAC (Merrill lynch subsidiary) agreed to pay $3.8 million to settle two SEC charges related to investment limits and fees. At the same time, Australia’s securities regulator fined fund giant Vanguard $9 million for misleading claims about its ethical and green investment funds.  Later, the NHTSA announced that STLA will recall 15,000 Fiat vehicles in the US due to software errors that may cause airbags to deploy with excessive force.  At the same time, GOOGL filed a complaint with the European Commission against what it alleges are anti-competitive practiced by MSFT to lock their customers into the MSFT Azure cloud computing platform.  Later, X announced that an arbitration board has ruled in favor of Nippon Steel’s $14.9 billion buyout of the company.  However, the United Steelworkers which represents the vast majority of X employees said it disagreed with the decision and this did not change its opposition to the deal. 

Meanwhile, Transportation Sec. Buttigieg and Acting Labor Sec. Su wrote a letter to the CEOs of CSX, CNR, and CP urging the companies to guarantee paid sick leave for all workers. (The letter said 10k of their workers do not have paid sick leave.  A rail trade group responded by saying that 60% of rail workers do have paid sick leave…as if that was something to exclaim.) Later, GOOGL, GS, BCSF, BNS, LEGH, and CELH agreed to pay a combined $3.8 million in penalties to the SEC to settle charges over late filings and disclosures.  At the same time, CSLLY received a $121 million contract from the HHS Dept. to increase the US stockpile of bird flu vaccine to 40 million doses.  After the close, AEO sued AMZN alleging the ecommerce giant infringed on its Aerie trademarks on clothing and accessories.

In miscellaneous news, on Wednesday, US ports along the East Coast and Gulf Coast extended their delivery hours for importers as companies rush to clear cargo through the ports ahead of a potential and looming strike on October 1.  (The strike could cover five of the top 10 busiest ports in the US.)  Elsewhere, a global banking trade group (Inst. Of Intl. Finance) reported Wednesday that global debt rose to a record $312 trillion at the end on Q2. This resulted in a global debt-to-GDP ratio of 327%.  Oddly, the “developed countries” ratio fell to its lowest level since 2018, driven by declines in household and non-financial corporate sector borrowing.  Later, a group of House GOP members, led by the Chair of the Select Committee on China, said Wednesday that the panel’s top priority is legislation to prevent US investment in China.  The group painted the issue as needing to stop US investors from funding our own country’s demise (by funding the enemy China).  Many Democrats are more than willing to go along with such initiatives as Populism and Nationalism has apparently completely replaced free trade and “the invisible hand of the market” philosophies.

In government funding news, after the close, the House passed a stop-gap spending continuing resolution to fund government operations through December 20.  The move comes after MAGA extremists lost their bid to tie a voter suppression amendment to the bill.  The bill passed 341-82 with all “no votes” being cast by Republicans.  (As a side note, this leaves House Speaker Johnson in the same predicament as his ousted predecessor, having had to go against the MAGA wing of his party in order to actually govern.  There is no word on whether a move will be made to oust Johnson, but it is doubtful prior to the election since Republicans don’t want to refresh the view of their party as wholly dysfunctional, having passed no legislation of any meaning and caused potential shutdowns seven different times since January 2023.  Number eight comes on December 20.)  Senate Majority Leader Schumer had prepared for the last-minute wrangling by putting a placeholder on the Senate schedule.  So, the Senate voted on the bill from the House and passed it 78-18.  The bill now goes to the President, where it will be signed.

Overnight, global markets have been given a leg up by MU’s beat and forecast raise last night. MU raised Q3 guidance a half billion higher than estimates to $8.7 billion for the quarter. As a result, all tech-related and chip names in particular soared higher. Asian markets were mostly green with just three of the 12 exchanges in the red.  Shenzhen (+4.44%), Hong Kong (+4.16%), and Shanghai (+3.61%) led broad and strong gains across the region.  In Europe, we see a similar picture taking shape as 12 of the 14 bourses are well into the green.  The CAC (+1.50%), DAX (+1.14%), and lagging FTSE (+0.16%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m.), Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.42% open, the SPY is implying a +0.76% open, and the QQQ implies a +1.42% open at this hour.  At the same time, 10-Year bond yields are down to 3.77% and Oil (WTI) has dropped another 2.73% to $67.77 per barrel in early trading.

The major economic news scheduled for Thursday include Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, August Core Durable Goods Orders, August Durable Goods Orders, Q2 Core PCE Prices, Q2 GDP, and Q2 GDP Price Index (all at 8:30 a.m.), August Pending Home Sales (10 a.m.), and the Fed Balance Sheet (4:30 p.m.).  We also hear from Fed Governor Bowman (9:15 a.m.), Fed Chair Powell (9:20 a.m.), Fed member Williams (9:25 a.m.), Fed Vice Chair Barr (10:30 a.m.), Treasury Sec. Yellen (11:15 a.m.), Fed Vice Chair Barr (1 p.m.), and Fed member Kashkari (1 p.m.). The major earnings reports scheduled for before the open are limited to ACN, KMX, JBL, and SNX.  Then, after the close, BB, COST, and SCHL report.

In economic news later this week, on Friday, August Core PCE Price Index, August PCE Price Index, August Personal Spending, August Goods Trade Balance, August Retail Inventories, 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 Friday, there are no earnings reports scheduled.

So far this morning, ACN and JBL reported beats on both the revenue and earnings lines.  Meanwhile, KMX beat on revenue while missing by a penny on earnings.

With that background, it looks like the Bulls are charging this morning on that MU forecast optimism. All three major index ETFs gapped up significantly to start the premarket. However, SPY and DIA have printed tiny Doji candles since while QQQ has followed-through with a decent-size white-body candle that is now within 2% of its all-time highs. It is worth noting that SPY sits at a new all-time high by three-quarters of a percent in the early session. Obviously, all three remain above their T-line (8ema). So, the short-term trend is still bullish. The mid-term trend is now also bullish with QQQ the laggard but now well over its downtrend line going back to the July all-time high. In the longer-term we still have a strong Bull trend all three major index ETFs and remain near all-time highs. With regard to extension, QQQ is extended far above its T-line (8ema) after the premarket gap up. However, the other two major index ETFs are not yet too far extended above their T-lines. However, the T2122 indicator is back down in the middle of its mid-range. So, markets may have room to run either direction, but the Bulls clearly have momentum early and the Bears have much more slack to work with today if they can reverse sentiment. With regard to those 10 big dog tickers, all 10 are in the green with INTC (+2.89%), AMD (+2.54%), and NVDA (+2.27%) leading the gains. As usual, However, that biggest dog, NVDA, is leading the dollar-volume traded this morning by a factor of three compared to any other ticker.

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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