Monday saw the bulls in control from the start.  SPY gapped up 0.29%, DIA opened 0.10% lower, and QQQ gapped up 0.49%.  From there, the Bulls took over in all three major index ETFs.  The QQQ rallied sharply for 30 minutes, SPY rallied strongly tor 60 minutes, and DIA rallied more modestly, but steadily all day.  After their initial rallies, SPY and QQQ traded mostly sideways with a slight bullish lean the rest of the day. It is worth noting that there was profit-taking across the board in the last 10 minutes.  This action gave us large-body, white body candles in the SPY and DIA as well as a white-bodied candle in the QQQ.  SPY gapped up and printed a new all-time high and new all-time high close. DIA opened a bit lower but gave us a large white-body candle that also printed a new all-time high and new all-time high close.  QQQ gapped up well out of its range going back to late September.  It closed as a white Spinning Top with the larger wick at the top and ended 1.25% below its all-time high.  This all happened on well-below average volume in all three major index ETFs.

On the day, nine of the 10 sectors were in the green with Utilities (+1.27%) out in front leading the market higher.  On the other side, Energy (-0.36%) was by far the laggard.  Meanwhile, SPY gained 0.82%, DIA gained 0.50%, and QQQ gained 0.84%. VXX fell another 3.55% to close at 52.15 and T2122 fell but remained in the top half of its overbought territory, closing at 91.78.  At the same time, 10-Year bond yields were flat at 4.096% while Oil (WTI) dropped 3.72% to close at $72.75 per barrel.  So, the Bulls were again in control from the open.  This led to a morning rally and then a drift higher the rest of the day in SPY, QQQ, and DIA. Once again, only a little profit-taking the last few minutes of the day stopped the SPY and DIA from closing on the highs.  

There was no major economic news or earnings reports scheduled for Monday.  

In Fed news, on Monday, Minneapolis Fed President Kashkari indicated that more rate cuts lie ahead, but guided expectations toward more modest rate cuts.  Kashkari said, “As of right now, it appears likely that further modest reductions in our policy rate will be appropriate in the coming quarters to achieve both sides of our mandate.” As usual, he promoted the “data driven” mantra, saying “ultimately, the path ahead for policy will be driven by the actual economic, inflation and labor market data.”  He went on to say that the economy is not on the verge of a rapid slowdown, but the Fed is “in the final stages of bringing inflation down to our 2% target.”  Later, Fed Governor Waller called for “more caution” (smaller rate cuts) in the interest reductions ahead.  Waller said, “Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year.”  While saying that there is “considerable room” to cut rates, he said “We are in the sweet spot right now, we got to keep it there, that’s our job.”  He continued, “I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting.”  Waller concluded, “I will be watching to see whether data, due out before our next meeting, on inflation, the labor market and economic activity confirms or undercuts my inclination to be more cautious about loosening monetary policy.”  (When asked what the word “gradually” means, Waller said, “It’s in the eye of the beholder, … That’s for you guys to figure out.”

In stock news, on Monday, ADBE said it has begun rolling out its Firefly AI model that can generate video from text prompts.  Later, activist investor Elliott Investment Mgmt. has formally requested a shareholder meeting of LUV.  (Elliott plans to put forward its own slate of eight directors against eight existing board members. For reference, LUV has a 12-member board with three open seats.)  At the same time, GM and BCS both announced they have signed a long-term credit card partnership.  Later, Danish drug maker Lundbeck A/S agreed to acquire LBPH for $2.6 billion ($60/share), which was a 54% premium on Friday’s close price.  At the same time, GOOGL announced it had signed an agreement to buy 500 megawatts of electricity from multiple small modular nuclear reactors from Kairos Power.  This will help support GOOGL’s AI processing.  Later, VNDA rejected a second ($8/share) takeover bid from UK-based Cycle Pharmaceuticals.  (VNDA closed a $4.44 prior to the $8/share offer and closed up to $4.81 on the news.) 

Elsewhere, TSLA took another hit related to its Robotaxi “unveil” event last week. This came as Bloomberg reporting confirmed that the TSLA Optimus humanoid robots highlighted at the event were actually just radio-control units being controlled by human “driver.”  At the same time, HYMTF (Hyundai) sold part of their Indian unit “Hyundai India” via a $989.4 million IPO.  BLK, Fidelity, and the government of Singapore each bought $77 million stakes while Indian mutual funds bought $340 million. (At that valuation, the unit represents 40% of the HYMTF market cap.)  Later, the Wall Street Journal reported that SBUX will offer fewer discounts and promotions as part of a plan to reposition SBUX as a premium brand and getting customers to pay full price.  After the close, PSX announced it will sell 49% of its Coop Mineraloel AG to its Swiss joint venture partner for $1.24 billion.  (The joint venture operates 324 petrol stations across Switzerland.)

In stock legal and governmental news, on Monday, acting US Labor Sec. Su flew to Seattle to meet with both sides in the BA strike that is entering its fifth week. (In related news, BA said it will issue “60-day” notices to another tranche of engineering union workers on November 15, with a second wave of 60-day notices going out in December if the strike had not been resolved.)  After the close, Blue Cross Blue Shield agreed to pay $2.8 billion to settle class action lawsuits from hospitals, physicians, and other healthcare providers who alleged they had been underpaid for reimbursements.  (The deal is still subject to approval by a US District Judge in Alabama.)

In analyst news, heading into earnings season, Bloomberg Intelligence reported that the data they have collected show analysts expect S&P 500 firms to report a 4.2% increase in third-quarter earnings versus a year earlier. However, company guidance, implies a jump of about 16%.  This unusually large difference between the forecasts suggest to Bloomberg that companies should easily beat the estimates on average.

In miscellaneous news, on Monday, FEMA reported that over the weekend contractors in NC were forced to cease work and return to their hotels Sunday while security was arranged. This came after some of the lies of the disgraced ex-President and his conspiracy-loving minions came home to roost. On Sunday, active military units that had been deployed to help recovery came across a militia group out “hunting FEMA workers” (based on the militia’s belief of the lies spread by the MAGA fools).  Separately, the Sheriff arrested one man armed with a handgun and semi-auto rifle, apparently from the same militia, who was out menacing recovery efforts, but he was later released on bond.  Two full days of recovery in Western NC and Eastern TN lost thanks to the right-wing stirring hatred and distrust for the political gain of one man. Elsewhere, in Russia that man’s friend invited fellow BRICS members to join together to create an alternative to the IMF to counter Western political influence throughout the world.

In Middle East news, on Monday, Israel continued strikes in both Gaza and Lebanon. One of the strikes in Gaza hit a Palestinian hospital and refugee camp located beside the medical building. (There was video of patients burning alive in their hospital beds.)  more than two dozen were killed including many children.  Meanwhile, Israeli PM Netanyahu again demanded that the UN remove peacekeepers and observers from Lebanon, falsely claiming UN troops were shields for Hezbollah. On the other side, Hezbollah made a drone attack on an IDF base, killing four Israeli soldiers and injuring 60.

Overnight, Asian markets were mixed with China out front leading the losers down.  Hong Kong (-3.67%), Shenzhen (-2.53%), and Shanghai (-2.53%) saw by far the biggest losses.  Meanwhile, Taiwan (+1.38%), Australia (+0.79%), and Japan (+0.77%) paced the six gainers.  In Europe, we see a similarly mixed picture that leans toward the red at midday.  The CAC (-0.90%), DAX (+0.15%), and FTSE (-0.56%) lead the region with just five green bourses versus nine red ones in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing to a start just on the red side of flat.  The DIA implies a -0.05% open, the SPY is implying a -0.01% open, and the QQQ implies a -0.06% open at this hour.  At the same time, 10-Year bonds are down to 4.073% and Oil (WTI) has plummeted another 4.66% to $70.41 per barrel in early trading.

The major economic news scheduled for Tuesday is limited to NY Empire State Mfg. Index (8:30 a.m.), September NY Fed 1-Year Inflation Expectations, and September Federal Budget Balance (2 p.m.).  We also hear from Fed members Daly (11:30 a.m.) and Bostic (7 p.m.).  The major earnings reports scheduled for before the open include ACI, BAC, SCHW, C, ERIC, GS, JNJ, PNC, PGR, STT, UNH, and WBA. Then, after the close, IBKR, JBHT, OMC, and UAL report.

In economic news later this week, on Wednesday, September Export Price Index, September Import Index, and API Weekly Crude Stocks are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September Core Retail Sales, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, September Retail Control, September Retail Sales, September Industrial Production, August Business Inventories, August Retail Inventories, Weekly EIA Crude Oil Inventories, and the Fed Balance Sheet.  Finally, on Friday, Preliminary September Building Permits and Preliminary September Housing Starts are reported.  We also hear from Fed Governor Waller.

In terms of earnings reports later this week, on Wednesday, ABT, ASML, CFG, FHN, MS, PLD, SYF, USB, AA, CCI, CSX, DFS, EFX, KMI, LBRT, PPG, STLD, and SNV report.  On Thursday, we hear from, BX, CMC, ELV, HBAN, INFY, KEY, MTB, MAN, MMC, SNA, TSM, TRV, TFC, WBS, WIT, CCK, ISRG, NFLX, WDFC, and WAL.  Finally, on Friday, ALLY, AXP, ALV, CMA, FITB, PG, RF, and SLB report.

So far this morning, BAC, ERIC, GS, JNJ, PNC, STT, UNH, and WBA all reported beats on both the revenue and earnings lines.  STT in particular had huge beats (+29.6% on revenue and +8.7% on earnings) while BAC managed +10.0% on revenue and +3.8% on earnings.  GS was the king on profit, delivering a 22.6% beat on the earnings line.

With that background, it seems the premarket is undecided with all three major index ETFs basically flat and giving use Doji candles in the early session. The SPY, DIA, and QQQ all remain above their T-line (8ema). So, the short-term trend remains bullish. The mid-term and longer-term trends are also strongly Bull in all three. With regard to extension, none of the major index ETFs are too far extended from its T-line (8ema), although it is worth noting that DIA is getting close to extended. However, the T2122 indicator remains in the upper half of its overbought range. So, markets have room to run either direction, if traders can find momentum, but the Bears have more slack to work with today. With regard to those 10 big dog tickers, six are in the green this morning. AAPL (+0.88%) leads the way in gain while AMD (-1.59%) is the laggard in that regard. That biggest dog, NVDA (-0.62%) is back to leading all other tickers by a factor of three in terms of dollar-volume traded.

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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