Thursday was a volatile, up-and-down day in the market.  SPY gapped down 0.22%, DIA opened flat, and QQQ gapped down 0.45%. From there, all three major index ETFs slowly rallied to the highs shortly after noon.  Then they slowly sold off to the lows at 2:45 p.m.  Finally, all three rallied back towards the highs again to end the day.  This action gave us indecisive (more wick than body) candles in the top half of the prior day’s candle.  The SPY printed a white-body Doji.  Meanwhile, DIA gave us a black-bodied Hanging Man or Hammer type candle.  Finally, the QQQ printed a white-bodied Spinning Top.  All three remain above their T-line (8ema).  This happened on below-average volume in the SPY, DIA, and QQQ.

On the day, eight of the 10 sectors were in the red with Communication Services (-0.72%) leading the way lower.  On the other end of the spectrum, Energy (+0.88%) was far out ahead of the other sectors.  Meanwhile, SPY lost 0.18%, DIA lost 0.09%, and QQQ lost 0.11%. VXX gained 1.26% to close at 54.71 and T2122 fell back to the lower half of its mid-range to 37.58.  At the same time, 10-Year bond yields fell slightly to close at 4.067% while Oil (WTI) jumped another 3.21% to close at $75.59 per barrel. In summary, Thursday was just an indecisive “pause day” where most of the day was spent in the upper half of Wednesday’s strong bullish candle.  There was no new all-time highs or new all-time high closes.  However, SPY and DIA are withing spitting distance of both. 

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, which came in significantly higher than expected at 258k (compared to a 231k forecast and the previous week’s 225k).  On the ongoing front, Weekly Continuing Jobless Claims were higher than expected at 1,861k (versus the 1,830k forecast and the prior week’s 1,819k).  At the same time, September Core CPI (month-on-month) was flat at +0.3% (which was higher than the +0.2% forecast, but in-line with August’s +0.3%).  On the annualized basis, September Core CPI (year-on-year) increased a tick to 3.3% (compared to an August reading and forecast of 3.2%).  On the headline number, September CPI (month-on-month) was flat at +0.2% (versus a +0.1% forecast and in-line with August’s +0.2% value). Later, after the close, the September Fed Balance Sheet stayed dead flat for the week at $7.047 trillion.

In Fed news, on Thursday, Chicago Fed President Goolsbee reiterate that he foresees a series of rate cuts over the next year. Goolsbee said, “Over a 12-18 month period, I think we are going to gradually, whatever word you want to use, move to a steady state policy rate.”  Later, NY Fed President Williams said he too expects more rate cuts lay ahead.  Williams said, “Based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time.” As usual, Williams indicated that all specific meeting decisions will be data driven.  He said, “the timing and pace of future adjustments to interest rates will be based on the evolution of the data, the economic outlook, and the risks to achieving our goals.” Later, Atlanta Fed President Bostic seemed to indicate the Fed may skip a rate cut in November.  Bostic said, “I am totally comfortable with skipping a meeting if the data suggests that’s appropriate.”  He went on to say, “I think we have the ability to be patient and wait and let things play out a little longer…. There are elements of today’s report which I think validate that view.”

In stock news, on Thursday, NVDA held an “AI summit” to outline the advancements in its next generation AI chips.  In an attempt to steal some of NVDA’s thunder, AMD also announced its own next generation AI chip (to be available in Q4 and ship in quantity in early 2025) at an event at the same time.  (The problem for AMD is that NVDA offers a proprietary on-chip technology called CUDA cores and most AI software is written to take advantage of that technology. This means those users are locked into NVDA AI processors.  AMD is still building out its competing tech called ROCm.) NVDA stock was up 1.,63% while AMD (-4.00%) got hammered.  Later, GM announced they will be offering new home energy storage and solar collection products to EV customers (just as TSLA offers).

Elsewhere, UBS said integration of CS data into the UBS systems is on track after a test run. (UBS acquired CS in March 2023 to prevent the latter’s collapse.)  Later, in a novel excuse, DAL warned of lower revenue and blamed the Q4 forecast reduction on the presidential election, saying that people are avoiding travel so they can stay home to vote.  At the same time, Bloomberg reported that TGI is exploring strategic options including a sale of the company. At the same time, SNY announced it had closed the sale of its consumer health unit for $16.4 billion (to a private equity firm). After the close, SEC filings showed that BRKB has now reduced its BAC holdings below 10% by selling another 9.5 million shares this week.  This sale netted BRKB $382.4 million.

In stock legal and governmental news, on Thursday, the Consumer Product Safety Commission announced MAT is recalling 21 different models of infant swings after five reported suffocation deaths.  In addition, MAT is offering a $25 partial refund to those customers who just cut off the headrest and body support pad (offending parts) on their own.  (About 2.2 million of the swings were sold in North American between 2012 and 2022.)  At the same time, the US Justice Dept. announced that TD has plead guilty to conspiracy to commit money laundering and will pay a massive $3.1 billion fine. TD will also be subject to an asset cap and other restrictions as part of the guilty plea.  Later, MSFT, GOOGL, META, and AMZN (among others) have proposed an “alternative framework” for how data centers pay for power in OH.  This is a direct challenge to the AEP proposal that cryptocurrency miners and data centers prepay or offer other financial assurances for their massive energy needs. 

Meanwhile, the US Dept. of Justice announced that TEVA has agreed to pay $450 million to resolve allegation it used charities to help cover Medicare patient out-of-pocket drug costs as a way to pay kickbacks to boost sales of its multiple sclerosis drug.  (12 other drugmakers had previously settled over the same charges to the tune of $1 billion in fines.  However, the case against REGN remains pending.)  Later, a Philadelphi jury ordered BAYRY (Bayer) to pay $78 million to a PA man who had alleged he got cancer from using the company’s Roundup weedkiller.  At the same time, a US Bankruptcy Judge overruled the motion from the US Justice Dept., ruling in favor of LNJ which is now allowed to pursue a third attempt to get a bankruptcy judge to end tens of thousands of lawsuits over talc cancer risks.  (JNJ had “venue shopped” by filing the latest bankruptcy in TX after twice being denied by NJ bankruptcy courts.)  Later, following a decade of unfulfilled promised and missed deadlines, TSLA held an event Thursday night to unveil their robotaxi, which they dubbed “Cybertaxi.”

In miscellaneous news, on Thursday, the largest US power grid operator issued a warning over potential disruptions which may be caused by a massive solar flare. (The warning expired very early Friday morning.  Meanwhile, the Center for Disease Control said it had identified a cluster of 18 cases of MPOX (formerly Monkey Pox) that are drug-resistant across five states.  Elsewhere, the FTC finalized changes to a rule covering what information companies must turn over when seeking approval for proposed mergers.  Finally, Hurricane Milton appears to have killed 10 and left three million customers without power at one point Thursday.  However, the damage was much less than had been expected, with the bulk coming from flooding due to intense rain as well as 27 tornadoes spawn by the storm.  (After the close, DIS and CMCSA announced their theme parks in Orlando would resume operations Friday.)

In Middle East news, Israeli campaigns in Lebanon and Gaza continued Thursday.  Israel killed 30 in the bombing of a school/shelter in Gaza and dozens more in attacks on buildings in central Beirut. In addition, Israel injured two UN peacekeepers in a tank fire accident. (The peacekeepers have been in place between Israel and Hezbollah in southern Lebanon since 1978, following a previous Israeli invasion.)  In Europe, on the heels of France’s call for an arms embargo on Israel, Italy summoned the Israeli ambassador to make formal complaints over “unacceptable” actions in Southern Lebanon. 

In other war news, it was confirmed Thursday that Russia has attacked three civilian ships under foreign flag (not Russian or Ukrainian) that were carrying commercial grain shipments.  (None of the ships have been sunk.  However, they were damaged and this is an escalation from early in Russia’s invasion when it boarded, inspected, and/or turned back ships.)  In response, insurance rates on a $50 million ship increased by $125k per voyage in the Black Sea.

Overnight, Asian markets were mixed but leaned toward the red side.  Shenzhen (-3.92%) and Shanghai (-2.55%) were far out front in terms of losses while Hong Kong (+2.98%) and Taiwan (+1.07%) were way out front leading the gainers.  In Europe, we nearly see green across the board at midday the sole exception of London.  The CAC (+0.10%), DAX (+0.19%), and laggard FTSE (-0.08%) lead the region higher in early afternoon trade.  In the US, as of 8 a.m., Futures point toward a slightly lower start to the day.  The DIA implies a -0.04% open, the SPY is implying a -0.10% open, and the QQQ implies a -0.30% open at this hour.  At the same time, 10-Year bond yields are up to 4.098% and Oil (WTI) is down 0.71% to $75.29 per barrel in early trading.

The major economic news scheduled for Friday include September Core PPI and September PPI (both at 8:30 a.m.), Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations (all at 10 a.m.), and the WASDE Ag report (noon).  We also hear from Fed Governor Bowman at 1:10 p.m.  The major earnings reports scheduled for before the open are limited to BK, BLK, FAST, JPM, and WFC as earnings season kicks into gear again. Then, after the close, there are no major reports scheduled.

So far this morning, BK, BLK, JPM, and WFC show a clean sweep of beats on both the revenue and earnings lines by the big banks.  However, FAST missed on revenue even as it came in in-line on earnings.

With that background, markets are just on the red side of flat again at this point of the premarket. QQQ has the worst-looking candle and, even so, it is just a black spinning top inside the top half of yesterday’s inside candle. All three major index ETFs are above their T-line (8ema). So, the short-term trend remains modestly bullish. The mid-term trend remains bullish. In the longer-term we still have a strong Bull trend in all three major index ETFs. With regard to extension, none of the major index ETFs are extended from its T-line (8ema). In addition, the T2122 indicator remains in the lower half of its mid-range. So, markets have room to run either direction, if either the Bulls or Bears can find momentum. With regard to those 10 big dog tickers, six of the 10 are in the red this morning. TSLA (-6.01%) is getting hammered after a very unimpressive reveal of its robotaxi late last night. AMD (+0.96%) leads the gainers and for the first time in a long time, TSLA leads in terms of dollar-volume traded even on not heavy trading as NVDA (-0.01%) has EXTREMELY light, as in 10% of normal, volume in the premarket. This is very abnormal premarket trading. Don’t forget its Friday. So, prepare 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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