Thursday started with a small Bull trap, that once washed out led to a strong gain.  SPY gapped up 0.49%, DIA gapped up 0.34%, and QQQ gapped up 0.58%.  However, all three major index ETFs immediately sold off, recrossing their gaps in less than 10 minutes.  DIA hit its low of the day at 9:40 a.m., while SPY and QQQ hit their low at 10:30 a.m. From there all three rallied to the highs at about 1:35 p.m. before wobbling sideways the rest of the day.  (DIA definitely had a slight bearish trend to its late-day meander to the side.)  This action gave us divergent, but all indecisive candles across the three major index ETFs.  SPY printed a gap-up, long-legged Doji that crossed above, retested from above, and passed the test of its T-line.  QQQ printed a similar candle, but its version was a gap-up, black-bodied long, lower-wick Spinning Top. It also gapped above, retested from above, and passed the test of its T-line.  Finally, the DIA printed a gap-up, large-body, white-body Spinning Top that gapped up to its 8ema, retested that T-line and closed above that average.  This all happened on below-average volume in the SPY, average volume in the QQQ, and very heavy volume in the DIA.

On the day, all 10 of the sectors were in the green as Industrials (+1.40%) and Utilities (+1.38%) led the pack higher. On the other side, Communication Services (+0.51%) and Consumer Cyclicals (+0.52%) were the laggards.  At the same time, SPY gained 0.54%, DIA gained 1.07%, and QQQ gained 0.36%.  VXX fell slightly to close at 47.65 and T2122 jumped up into its overbought territory to close at 88.38.  Meanwhile, 10-Year bond yields rose again to 4.428% while Oil (WTI) popped 2.14% to close at $70.21 per barrel.

The major economic news scheduled for Thursday included Weekly Initial Jobless Claims, which came in a bit better than expected at 213k (compared to a forecast of 220k and a prior week reading of 219k).  On the ongoing front, Weekly Continuing Jobless Claims were considerably higher than expected at 1,908k (versus a forecast of 1,870k and last week’s value of 1,872k).  At the same time, the Philly Fed Mfg. Index was worse that anticipated at -5.5 (compared to the +7.4 forecast and the October +10.3 number).  On the jobs side, the Philly Fed Mfg. Employment Index was up at 8.6 (versus the October reading of -2.2).  Later, October Existing Home Sales were slightly better than predicted at 3.96 million (compared to a 3.95 million forecast and the Sept. 3.83 million value).  At the same time, the US Leading Economic Indicator Index was down a tick to -0.4% (versus a forecast and previous reading, which were both -0.3%).  Then, after the close, the Fed Balance Sheet showed a reduction of $43 billion for the week to $6.924 trillion.

In Fed news, on Thursday, Chicago Fed President Goolsbee reiterated his support for more rate cuts.  However, he also indicated that he is open to lowing the pace of cuts.  Goolsbee said, “My view is that the long arc over the last year and a half, inflation is way down and on its way to 2 percent. Labor markets have cooled to something close to stable full employment.” He went on to say, “interest rates should be a fair bit lower than where they are today.” However, he continued by saying that “(given uncertainties such as what the Trump Administration ends up doing,) it may make sense to slow the pace of rate cuts as we get close (to the terminal rate).”

After the close, CPRT, GAP, INTU, and NTAP reported beats on both the revenue and earnings lines.  Meanwhile, ROST and UGI both missed on revenue while beating on the earnings line.

Overnight, Asian markets were mostly green with the clear exception of China.  India (+2.39%), New Zealand (+2.17%) and Taiwan (+1.55%) paced the nine gainers.  On the other side, Shenzhen (-3.52%), Shanghai (-3.06%), and Hong Kong (-1.89%) were the only losers in that region.  Meanwhile, in Europe, 12 of the 14 bourses are in the green at midday.  The CAC (+0.1%), DAX (+0.24%), and FTSE (+0.86%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly lower start to the morning.  DIA implies a -0.01% open, the SPY is implying a -0.12% open, and the QQQ implies a -0.24% open at this hour.  At the same time, 10-Year bond yields are down to 4.39% and Oil (WTI) is off just under a percent to $69.45 per barrel in early trading.

The major economic news scheduled for Friday includes Preliminary November S&P Global Mfg. PMI, Preliminary November S&P Global Services PMI, and Preliminary November S&P Global Composite PMI (all at 9:45 a.m.), Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer 1-Year Inflation Expectations, and Michigan Consumer 5-Year Inflation Expectations (all at 10 a.m.).  After the close, we hear from Fed Governor Bowman again at 6:15 p.m.  There are no major earnings reports scheduled for either before the open or after the close Friday. 

So far this morning, there are no notable earnings reports before the open.

With that background, it looks like markets are indecisive this morning.  All three major index ETFs opened the premarket slightly lower. At that point, all three continued lower before reversing to run back up toward the start of the early session.  SPY is printing a Doji that has passed a retest of its T-line (8ema) from above.  Meanwhile, DIA is giving us a Dragonfly Doji after not quite retesting the T-line from above.  Finally, the QQQ is showing us a black-bodied Hammer that sits just above its T-line after a retest from above.  So, the short-term trend is now slightly bullish-to-indeterminant with all three major index ETFs sitting very near above their T-line. 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 center of its overbought range. So, the Bears may have a little more slack to work with today, but there is still room to run higher if the bulls find traction.  In terms of the 10 Big Dogs, seven of the 10 are in the red at this point of the early session morning.  GOOGL (-0.85%) is leading the way lower while TSLA (+0.52%) is holding up best. being punished for last night’s strong earnings report.  NVDA (-0.54%) is the leader in dollar-volume traded this morning, having traded almost 1.5 times as much stock as TSLA, which itself has traded almost 9 times as much as the next premarket volume leader.

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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