Markets were flat most of the day with mid-afternoon volatility and a strong rally into the close.  SPY opened 0.16% lower, DIA opened down 0.10%, and QQQ gapped down 0.21%.  From there, all three major index ETFs meandered sideways in a tight range until 2 p.m.  At that point, all three sold off for 20 minutes, rallied back for 25 minutes, and then paused for 35 minutes.  Finally, the last 25 minutes of the day was a sharp rally into the close.  This action gave us white-bodied candles with significant lower wicks.  SPY printed a Bullish Engulfing signal and closed at another all-time high close after retesting (and passing the test of) its T-line (8ema) earlier in the day.  DIA gave us a white-bodied Hammer that also retested its T-line and closed at another all-time high close.  Meanwhile, QQQ also retested (and passed the test of) its T-line while printing a white-bodied big-bodied Hammer type.  The happened on well-below-average volume in the QQQ, slightly below-average volume in SPY, and just above-average volume in the DIA.

On the day, seven of the 10 sectors were green again with Healthcare (+0.42%) out in front, leading the rest of the market higher.  On the other side, Basic Materials (-0.57%) and Consumer Cyclical (-0.53%) were the laggard sectors.  Meanwhile, SPY gained 0.42%, DIA gained a slim 0.04%, and QQQ gained 0.27%. VXX dropped 2.35% to end at 49.54 and T2122 fell back to the bottom half of its overbought territory at 83.21.  At the same time, 10-Year bond yields rose to close at 3.785% while Oil (WTI) remained unchanged to close at $68.19 per barrel.  So, for the most part, the first 4.5 hours of the day were a boring market. Then Fed Chair Powell spoke. Initially, the market sold on Powell telling us that more, smaller cuts lay ahead.  (Coming into Powell’s speech, 53% of Fed Fund Futures bets expected a half-percent cut in November.  Afterward, only 36% expect the half-point cut.)  However, the Bulls stepped in to buy that dip. This may have been a reaction to Powell saying the economy was fine, or it may have been a month-end or quarter-end push.  Regardless of the cause, stocks rallied sharply the last 20 minutes with two of three major index ETFs closing at new all-time high closes.

The major economic news scheduled for Monday is limited to September Chicago PMI.  This came in better than expected at 46.6 (compared to a forecast and August value of 46.1). 

In Fed news, Atlanta Fed President Bostic told Reuters he was open to another half-percent cut in November if upcoming data shows job growth slowing.  Bostic said, “A surprise to the weak side …. would pull me much further into really needing another dramatic move.”  He continued, “If the story is that inflation is continuing its drop and the labor market is staying strong, I think we have the luxury of being a bit more patient with rate cuts.” … “If, on the other hand, the labor market comes in much weaker, I think that would add urgency to this (rate cutting cycle).”  Later, Chicago Fed President Goolsbee (in an interview with Fox Business) was even more definite in saying he feels quarter-point cuts are the way to go.  Goolsbee said, (With regard to monetary policy) “This is a process, over a year or more, that we’re trying to get the rates down to normal.”  He continued regarding the pace of cuts, saying, “(The Fed Funds rate) has got to come down a lot more than 25 basis points over the next 12 months. It’s going to be a lot of cuts.”

However, the headline speaker Monday was Fed Chair Powell, who spoke to the National Assn. for Business Economics.  Powell said, “Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance.”  He continued, “The path of future interest rates isn’t on any preset course. … It will continue to make our decisions meeting by meeting.”  Related to current inflation, he said, “Disinflation has been broad based, and recent data indicate further progress toward a sustained return to 2 percent.” Regarding the strength of the economy in terms of Gross Domestic Income versus GDP, Powell said, “That’s been a downside risk that we’ve been monitoring … but there’s now no gap between the two. … That, I would say, removes a downside risk to the economy.”  Powell’s most widely reported remarks were “This is not a committee that feels like it is in a hurry to cut rates quickly. … We will do what it takes in terms of the speed with which we move.”  In discussion, Powell indicated that the FOMC’s base case is for two additional quarter-point cuts for the remainder of 2024.

In stock news, on Monday, STLA cut its 2024 profit forecast and warned it would burn through more cash that previously expected.  The company cited poor US sales and offering bigger discounts to revive US marketshare.  STLA said it now expects a negative cash flow of between $5.58 billion and $11.17 billion instead of positive cash flow.  At the same time, TPG announced it had acquired a minority stake in investment advisory Creative Planning for $2 billion.  Later, MMC announced it agreed to acquire private insurance brokerage McGriff Insurance Services for $7.75 billion.  At the same time, Reuters reported that PFE will sell 640 million shares in UK consumer healthcare company Haleon for about $3.25 billion. 

Elsewhere, Reuters reported that VZ had sold the right to lease, operate, and manage 6.339 mobile phone towers covering 50 states and Washington DC to Vertical Bridge.  The deal includes $2.8 billion in cash up front.  The company is expected to lease the towers back to VZ for 10 years with an option to extend up to 50 years.  At the same time, the Wall Street Journal reported that PEP is in advanced talks to buy private Siete Foods for more than $1 billion.  Later, the Teamster Union announced it had signed a tentative agreement with HTZ covering nearly 3k members.  (Union members had voted to strike if a deal was not reached Monday.)  At the same time, Reuters exclusively reported that CVS is considering strategic options including the break-up of the company.

In stock legal and governmental news, on Monday, Russia fined GOOGL $38k (which I have a feeling will cost GOOGL more than that just to pay that paltry amount) for not removing content Russia deems illegal.  Later, a trial against ABT, RBGPF (Reckitt Benckiser), and St. Louis Children’s Hospital began Monday with jury selection.  The companies are being sued over severe intestinal illness that the suit alleges a baby got from premature infant formula he was given after birth.  (There are nearly 1,000 similar cases pending nationwide.)  At the same time, Epic Games filed suit against AAPL and Korea’s Samsung, alleging the pair conspired to protect the Google Play Store from competition.  Later, the US Dept. of Commerce unveiled a new rule that could make it easier to ship AI chips to data centers in the Middle East.  NVDA is the primary winner from the new rule, but AMD and to a lesser extent INTC could receive some benefit as well.  At the same time, the NHTSA announced GM will pay a $1.5 million fine for failing to disclose details of an October 2023 crash involving one of its Cruise self-driving taxis. 

Elsewhere, BMY won the dismissal of a $6.4 billion lawsuit brought by CELG shareholders who had claimed that by delaying federal approval of the cancer drug Breyanzi, BMY had been able to acquire CELG at an artificially low price.  At the same time, the FCC reached a $31.5 million settlement with TMUS over issued related to significant data breaches of TMUS systems over 3 years.  Later, SEC filings showed that XOM, CVX, and COP paid $42 billion to foreign governments last year for oil and gas extraction rights.  This was about eight times what they paid the US government in 2023.  At the same time, the NHTSA announced that STLA is recalling 194k Jeep plug-in hybrids over fire risk following 13 fire reports.  Later, CA Governor Newsom vetoed an AI safety bill after strong opposition from GOOGL, META, MSFT and others.  (TSLA had been a proponent for the bill.)  At the same time, EBAY won the dismissal of a suit brought by the US Dept. of Justice.  The suit alleged EBAY violated environmental laws by allowing hundreds of thousands of polluting and toxic products to be shipped to the US.  The judge ruled Section 230 of the Communications Decency Act protects EBAY from any liability over user content and the company had not materially contributed to the products. 

Meanwhile, the FCC announced it is investigating VZ for a service outage that affected thousands of user and left some in “SOS mode.”  (There were over 105k new outage reports at the peak and 30k new outage reports at of 5 p.m. Eastern.)  At the same time, the US Dept. of Justice and SEC announced TD will pay more than $20 million to settle charges of US Treasury market manipulations using “Spoof” orders.  Later a federal judge ruled AMGN must face a class-action suit trial for waiting too long to tell shareholders it may owe $10.7 billion in unpaid taxes due to underreporting income for six years.  At the same time, a federal just dismissed a suit against TSLA and its CEO Musk, that alleged the company defrauded then by overstating the effectiveness and safety of the company’s self-driving technology.  (Even though he and the company had clearly lied about that for years, the judge ruled the plaintiffs had not proven they had directly said this would boost the stock price.)  Later, WMT announced that Mexico’s antitrust regulator will rule on the company’s liability for antitrust pricing and terms imposed on distributors and suppliers in the next few days.

In miscellaneous news, on Monday, the Dept. of Energy bought 6 million barrels of oil for the Strategic Petroleum Reserve for $68.50/barrel.  The oil will be delivered at a rate of 1.5 million barrels per month from February – May 2025. Elsewhere, analysts now estimate the financial cost of Hurricane Helene may be $160 billion (well above the $95 billion to $110 billion estimated prior to the storm).   Meanwhile, Libyan oil production is set to resume in days after a political deal approved the appointment of an interim Libyan Central Bank Governor.  (This comes after a month-long shutdown of Libyan oil production.)  Finally, the East Coast and Gulf Coast port strike began at midnight.  (For reference, it typically takes three days to recover for each day of shutdown.)

In Middle East news, Israel began what it says is a “limited ground operation” invasion of Lebanon Monday evening.  The IDF said it has no plans for long-term occupation of Lebanon, but (as makes operational sense) gave no indication of goals or timeline.  At the same time, Israel also began bombing the southern side of Beirut.  This all comes after more than a million Lebanese have become refugees, 1,700 have been killed, and multiple thousands of casualties have been reported in the last two weeks.

Overnight, Asian markets were mixed but leaned toward the green even as Chinese markets are closed the rest of the week for their national holiday.  Japan (+1.93%) and Thailand (+1.09%) led the gainers while Australia (-0.74%) paced the losses.  In Europe, we see mostly green with only three of 14 bourses in the red at midday. The CAC (+0.02%), DAX (+0.45%), and FTSE (+0.46%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed open.  DIA implies a -0.20% open, the SPY is implying a +0.01% open, and QQQ implies a +0.17% open at this hour.  At the same time, 10-Year bond yields are down to 3.743% and Oil (WTI) is oddly (given the Israeli invasion of Lebanon) down 0.75% to $67.69 per barrel in early trading.

The major economic news scheduled for Tuesday includes September S&P Global Mfg. PMI (9:45 a.m.), August Construction Spending, September ISM Mfg. PMI, Sept. ISM Mfg. Employment, September ISM Mfg. PMI Price Index, and August JOLTs Job Openings (all at 10 a.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  We also hear from Fed Member Bostic twice (11 a.m. and 6:15 p.m.).  The major earnings reports scheduled for before the open are limited to AYI, MKC, PAYX, and UNFI.  However, after the close, CALM, LW, and NKE report.

In economic news later this week, on Wednesday, September ADP Nonfarm Employment Change, and EIA Weekly Crude Oil Inventories are reported.  We also hear from Fed Governor Bowman at 11 a.m.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September S&P Global Services PMI, September S&P Global Composite PMI, August Factory Orders, September ISM Non-Mfg. Employment, September ISM Non-Mfg. PMI, September ISM Non-Mfg. PMI Price Index, and Fed Balance Sheet.   We also hear from Fed member Bostic at 10:40 a.m.  Finally, on Friday, September Avg. Hourly Earnings, September Nonfarm Payrolls, September Participation Rate, September Private Nonfarm Payrolls, and September Unemployment Rate.  We also hear from Fed member Williams.

In terms of earnings reports later this week, on Wednesday, CAG, RPM, and LEVI report.  On Thursday, we hear from STZ.  However, on Friday, there are no earnings reports scheduled.

So far this morning, AYI, MKC, and UNFI all reported beats on both the revenue and earnings lines.

With that background, markets look indecisive so fat in the premarket. All three major index ETFs opened the early session flat and have printed mostly wick since that point. 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, none of the major index ETFs are extended above its T-line (8ema). However, the T2122 indicator is still in the bottom of its overbought range. So, markets have room to run either direction, but the Bears have just a bit more slack to work with today if they can find momentum. With regard to those 10 big dog tickers, six of the 10 are in the green. GOOGL (+1.32%) leads the gainers while AAPL (-1.26%) paces the losses. It is worth noting that the biggest dog, NVDA (+0.24%) has traded only a little more than 1.5 times the dollar-volume as TSLA (+0.37%). This is typically a factor of at least two to three.

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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