Friday saw the market open lower.  SPY gapped down 0.61%, DIA gapped down 0.40%, and QQQ plummeted 1.11% at the open.  From there, all three major index ETFs sold off.  DIA sold off until 12:30 p.m. and then meandered sideways along the lows the rest of the day. Meanwhile, SPY and QQQ sold until 2 p.m. before following the DIA in sideways meanders the rest of the day.  This action gave us gap-down, large black-body candles in the SPY and QQQ.  At the same time, DIA printed a gap-down, black-body Spinning Top candle.  All three major index ETFs gapped down through and closed below their T-line (8ema).  This happened on above-average volume in the QQQ and slightly below-average volume in the SPY and DIA.

On the day, seven of the 10 sectors were red as Healthcare (-2.44%) and Technology (-2.22%) way out in front, like 1.30% out in front, leading the market lower.  On the other side, Utilities (+1.03%) was the far-and-away the strongest sector for the day.  At the same time, SPY lost 1.28%, DIA lost 0.73%, and QQQ lost 2.38%.  VXX spiked 7.15% to close at 46.59 and T2122 dropped into the top half of the oversold territory to close at 15.49.  Meanwhile, 10-Year bond yields fell just a bit to 4.445% while Oil (WTI) dropped 2.55% to close at $66.95 per barrel. So, Friday was a bearish day from before the open.  It continued South after the open and only found support mid-afternoon (or maybe traders just took off early for the weekend).

The major economic news scheduled for Friday included October Core Retail Sales, month-on-month, which came in lower than expected at +0.1% (compared to a forecast of +0.3% and far below September’s +1.0% value). On the headline side, October Retail Sales (month-on-month), which were stronger than expected at +0.4% (versus a forecast of +0.3% and well down from September’s +0.8% reading).  At the same time, the October Export Price Index was much higher than predicted at +0.8% (compared to a forecasted -0.1% and September’s -0.6% number).  On the other side, the October Import Price Index was also higher than anticipated at +0.3% (versus a forecasted -0.1% and September’s -0.4% reading).  Meanwhile, the NY Empire State Mfg. Index was MUCH stronger than predicted at 31.20 (versus a -0.30 forecast and a October -11.90 value).  Later, October Industrial Production was improved but down at -0.29% compared to September’s -0.73% number.  Then, September Business Inventories (month-on-month) grew less than expected at +0.1% (compared to a +0.2% forecast and an August +0.3% value).  Finally, September Retail Inventories increased less than predicted at +0.2% (versus a +0.3% forecast but up from August’s +0.1% number).

In Fed news, on Friday, Boston Fed President Collins warned about the risks of “technology developments.” She said, “We must all be attuned to the very real risks and challenges (of technical innovations).”  Later, Collins also spoke to Bloomberg, where she said, “I certainly wouldn’t take (a rate cut in) December off the table. But again, we’re not on a preset path and so we’ll have a look carefully at the data and see what makes sense when we get to that meeting.”  Later, Chicago Fed President Goolsbee told Bloomberg, “I think we are going to be looking at rates coming down over the next year along the line the dot-plot said.”  He went on to indicate that he sees a quarter point cut in December and another full percentage cut in 2025.  (This was a much more open and dovish stance than other Fed members, especially given the Trump inflationary tariff plans.) 

Overnight, Asian markets were mixed with six or the region’s 12 exchanges in red and the other 6 in green.  South Korea (+2.16%) was the biggest gainer while Shenzhen (-1.91%) paced the losses.  However, in Europe, we see a much bleaker picture with 13 of that region’s 14 bourses in the red.  The CAC (-0.16%), DAX (-0.26%), and FTSE (+0.06%) lead the region in early afternoon trade.  In the US, as of 8 a.m., Futures are mixed on modest trading.  The SIA implies -0.08% open, the SPY is implying a +0.11% open, and the QQQ implies a +0.38% open at this hour.  At the same time, 10-Year bond yields are up to 4.481% and Oil (WTI) is up half a percent to $67.40 per barrel in early trading.

There is no major economic news scheduled for Monday.  There are also no major earnings reports scheduled for before the open include.  However, after the close, BRBR and TCOM are scheduled to report. 

In economic news later this week, on Tuesday we get October Building Permits, October Housing Starts, and API Weekly Crude Oil Stocks report.  Then Wednesday, EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, October Existing Home Sales, US Leading Economic Index, and the Fed Balance Sheet.  Finally, on Friday, Preliminary November S&P Global Mfg. PMI, Preliminary November S&P Global Services PMI, Preliminary November S&P Global Composite PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer 1-Year Inflation Expectations, Michigan Consumer 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Tuesday, we hear from AS, ESLT, ENR, FUTU, LOW, MDT, VIK, VIPS, WMT, XPEV, QFIN, KEYS, LZB, SNEX, and ZTO.  Then Wednesday, RERE, BERY, DY, NIO, TGT, TJX, WSM, YSG, ZIM, BBAR, SQM, CPA, MMS, NVDA, PANW, and SNOW report.  On Thursday, we hear from ATKR, BIDU, BJ, ROAD, DE, IQ, BEKE, PDD, VSTS, WMG, CPRT, GAP, INTU, NTAP, ROST, and UGI.  Finally, on Friday, there are no major reports scheduled.

With that background, markets seem indecisive in a more volatile way early. The SPY and QQQ both gapped higher to start the early session, but both have printed decent-sized black candles since then, moving back toward flat. Meanwhile, DIA gapped lower to start the premarket, but has rallied back toward flat from the other side.  All three remain below their T-line (8ema), so, the short-term trend has turned down. However, the mid-term and longer-term trends remain bullish.  In terms of extension, none of the major index ETFs are stretched from their T-lines, but the T2122 indicator is now back in the upper part of its oversold territory.  So, there is room to run for either the Bulls or Bears, if either can get some momentum. In terms of the 10 Big Dogs, seven of the 10 are in the green this morning.  Again, TSLA (+5.65%) is way out front leading the gainers while NVDA (-2.65%) and NFLX (-2.05%) are far being the reset of the dogs.  It is worth noting that TSLA is again the leader in terms of dollar-volume traded with 1.5 times as much money changing hands on that ticker as NVDA, which itself has traded 11 times as much as the next closest 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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