Tuesday brought us a gap-down (on Putin nuke threat) bullish action day. SPY gapped down 0.58%, DIA gapped 0.80% lower, and gapped down 0.53%.  From there, DIA made a small detour lower, but then followed the SPY and QQQ in a consistent rally by all three major index ETFs until 2 p.m.  Then they all three sold off for 40 minutes before drifting modestly higher the rest of the day.  This action gave us white candles in the SPY, DIA, and QQQ.  SPY gave us a large, gap-down, white-bodied outside day candle that retested its T-line (8ema) from below…and closed right on the average (to the penny).  Meanwhile, DIA printed more of a gap-down, white-bodied fat Spinning Top.  Finally, QQQ gave us a gap-down, large, white-bodied candle with a small upper wick. QQQ came close, but did not quite retest its T-line from below. This all happened on below-average volume in all three major index ETFs. (Well below-average in QQQ.)

On the day, seven of the 10 sectors were green as Technology (+1.11%) and Utilities (+0.83%) were way out front leading the rest of the market higher. On the other side, Communications Services (-0.53%) was by far the worst-performing sector.  At the same time, SPY gained 0.37%, DIA lost 0.31%, and QQQ gained 0.69%.  VXX climbed 3.32% to close at 46.38 and T2122 climbed slightly, but remains in the bottom half of its mid-range to close at 46.38.  Meanwhile, 10-Year bond yields fell to 4.392% while Oil (WTI) gained 0.61% to close at $69.58 per barrel.  So, Tuesday was a day marked by Putin’s bellowing that led the West to knee-jerk into fear of nuclear war.  However, almost as soon as the market opened, traders regained their senses to realize that like everything in life, it’s not as bad a feared (or as good as hoped).  So, we rallied off the lows in a steady pace until some mid-afternoon profit-taking.

The major economic news scheduled for Tuesday was limited, but included Preliminary October Building Permits, which came in a bit lower than expected at 1.416 million (compared to a forecast of 1.440 million and a September reading of 1.425 million). At the same time, October Housing Starts were also a little light at 1.311 million (versus a forecast of 1.340 million and the September 1.353 million value).  Then, after the close, the API Weekly Crude Oil Stocks report showed a larger inventory build than predicted at +4.753 million barrels (compared to a forecasted 0.800-million-barrel build and the prior week’s 0.777-million-barrel drawdown).

In Fed news, on Tuesday, Kansas City Fed President Schmid said, “The decision to lower rates is an acknowledgement of the … growing confidence that … inflation is on a path to reach the Fed’s 2% objective.  A confidence based in part on signs that both labor and product markets have come into better balance in recent months.”  Schmid continued, “(It) remains to be seen how much further interest rates will decline or where they might eventually settle.”  He went on to warn against worrying about inflation from too much government spending, saying, “Large fiscal deficits will not be inflationary because the Fed will do its job. … However, that could mean persistently higher interest rates.” (A back-handed warning about too much spending and cutting of taxes.)

After the close, KEYS, LZB, QFIN, and SNEX reported beats on both the revenue and earnings lines.  At the same time, ZTO missed (massively) on revenue while beating on earnings.

Overnight, Asian markets were mixed again.  Shenzhen (+0.78%) and Shanghai (+0.66%) were the biggest gainers while Taiwan (-0.70%) was by far the biggest loser on the day.  In Europe, with two minor exceptions, we see green across the board at midday.  The CAC (+0.13%), DAX (+0.25%), and FTSE (-0.07%) lead the region higher on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.23% open, the SPY is implying a +0.18% open, and the QQQ implies a +0.24% open at this hour.  At the same time, 10-Year bond yields are back up to 4.43% and Oil (WTI) is up 0.65% to $69.84 per barrel in early trading.

The major economic news scheduled for Wednesday is limited to EIA Weekly Crude Oil Inventories (10:30 a.m.).  However, we also hear from Fed Governor Bowman at 12:15 p.m.  The major earnings reports scheduled for before the open include RERE, BERY, DY, NIO, TGT, TJX, WSM, YSG, and ZIM.  Then, after the close, BBAR, SQM, CPA, MMS, NVDA, PANW, and SNOW report. 

In economic news later this week, 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 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.

So far this morning, RERE, DY, TJX, and ZIM all reported beats on both the revenue and earnings lines.  However, NIO and TGT missed on both the top and bottom lines.

With that background, it looks like the market is indecisively positive so far this morning in the premarket.  All three major index ETFs made a small gap higher to start the early session, but all three have printed Doji-like candles since that start.  SPY and QQQ are above their T-line (by virtue of the gap and only barely) while DIA remains below.  So, the short-term trend is indeterminant-to-bearish. Still, 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 and the T2122 indicator is now back in center of its mid-range.  So, there is plenty of room to run for either the Bulls or Bears, if either can get some momentum. In terms of the 10 Big Dogs, exactly half are in the green and the other half in the red so far this morning.  NFLX (+0.69%) is leading the way for the gainers while AMZN (-0.31%) is the worst laggard.  In a reversion to the way things were prior to the election, NVDA (+0.44%) is the leader in dollar-volume traded this morning, having traded about 1.5 times as much stock as TSLA (-0.18%).

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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