Markets started the week on a positive note, but ended the day less positive than they started.  SPY gapped up 0.74%, DIA gapped up “just” 0.40%, and QQQ gapped up 1.04%.  From there, all three major index ETFs rallied into midday, but then the selling took over.  QQQ rallied until 11:30 a.m. selling steadily and crossing back into the top of its gap by 1:50 pm. and reversed by 3 p.m. to close just above its open.  Meanwhile, SPY began its own selling at 11:45 a.m. and sold steadily back down into the gap by the close.  At the same time, DIA kept its rally going until noon, but rolled over harder selling back down across the gap by 3 p.m. and closed just below Friday’s close.  This action gave us gap-up indecisive candles in all three major index ETFs.  SPY retested its downtrend and failed the test, printing a black-body Spinning Top with larger upper wick. DIA gapped up through its downtrend, printing a larger-body, black, Spinning Top that retested its 8ema and failed that test, but stayed above the downtrend line. Finally, QQQ gave us a gap-up, white-bodied Spinning Top / Doji type candle that tested its downtrend and closed right at that level.

On the day, six of the 10 of the sectors were green as Technology (+1.65%) was way, way out in front (by 1.2%) leading the other gainers higher.  On the other side, Utilities (-0.69%) and Communication Services (-0.67%) were the laggards.  Meanwhile, SPY gained 0.58%, DIA lost 0.01%, and QQQ gained 1.15%.  VXX fell 0.45% to close at 43.90 and T2122 dropped back to the bottom of its mid-range, closing at 23.44.  On the bond side, 10-Year bond yields continue their post-election rally to close up at 4.618% while Oil (WTI) fell two-thirds of a percent for the day to close at $73.49 per barrel.  So, Monday saw the Bulls gap us higher and rally all morning.  However, the sentiment changed midday and the afternoon was a steady selloff.  As was the case on Friday, this happened on average volume in the QQQ, as well as below-average volume in the SPY and DIA.

The major economic news scheduled for Monday included December S&P Global Services PMI, which came in higher but below expectation at 56.8 (compared to a 58.5 forecast and a November 56.1 reading).  At the same time, December S&P Global Composite PMI was in the same situation, higher but below expectation at 55.4 (versus a 56.6 forecast but above November’s 54.9 number).  Later, November Factory Orders were worse than expected at -0.4% (compared to a -0.3% forecast and October’s +0.5% value).

In Fed news, on Monday, Fed Governor Cook joined the chorus of FOMC members who now say the group can be cautious.  She said, “the labor market has been somewhat more resilient, while inflation has been stickier than I assumed (it would be)” … “Thus, I think we can afford to proceed more cautiously with further cuts.” Cook went on, “Over time, I still think it will likely be appropriate to move the policy rate toward a more neutral stance. (However, cuts to date) have notably reduced the restrictiveness of monetary policy and all along, I envisioned moving more quickly in the early stages of our easing campaign and then easing more gradually as the policy rate came closer to neutral.”  Later, in yet another pre-emptive surrender to the coming Trump Administration, Fed Vice Chair of Supervision Barr announced his decision to resign that post on February 28, 2025. (It should be noted Barr intends to remain as a Fed Governor through Feb. of 2026.)  This paves the way for the incoming President to appoint a much more bank-friendly “supervisor.” However, unless Trump is able to remove a sitting Fed Governor, he would have to appoint that person from among the other six existing Fed Governors. 

Overnight, Asian markets were green across the board (remember that China is closed for holidays).  Japan (+1.97%) led the region higher Tuesday.  In Europe, we also see mostly green with just four of the 14 bourses showing red at midday.  The CAC (+0.66%), DAX (+0.32%), and FTSE (-0.30%) are typical and lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed flat open to start the day.  DIA implies a +0.11% open, the SPY is implying a +0.06% open, but QQQ implies a -0.08% open at this hour.  At the same time, 10-Year Bond yields continue to jump, now at 4.642% and Oil (WTI) is up eight-tenths of a percent to $74.15 per barrel in early trading.

The major economic news scheduled for Tuesday include November Exports, Nov. Imports, and November Trade Balance (all at 8:30 a.m.), Dec. ISM Non-Mfg. PMI, Dec. ISM Non-Mfg. Employment, and Dec. ISM Non-Mfg. Price Index, as well as the Nov. JOLTS Job Openings (all at 10 a.m.).  Then after the close, we get the API Weekly Crude Oil Stocks report at 4:30 p.m.  The major earnings reports scheduled before the open are limited to Tuesday we hear from RPM.  Then after the market close, AIR reports.

So far this morning, RPM reported beats on both the revenue and earnings lines.

In economic news later this week, on Wednesday we get ADP December Nonfarm Employment Change, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, EIA Weekly Crude Oil Inventories, December FOMC Minutes, and Nov. Consumer Credit.  We also hear from Fed Governor Waller.  On Thursday, we have a National Holiday for President Carter’s funeral.  (However, Fed members Harker and Bowman are still on the schedule to speak as well as the release of the Fed Balance Sheet.  I would not be surprised if those were not moved.)  Finally, on Friday, we get Dec. Average Hourly Earnings, Dec. Nonfarm Payrolls, Dec. Private Nonfarm Payrolls, Dec. Participation Rate, Dec. Unemployment Rate, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Wednesday, AYI, ACI, HELE, MSM, RDUS, UNF, JEF, and PSMT report.  On Thursday, we hear from KBH.  Finally, on Friday, STZ, DAL, SNX, WBA, and WDFC report.

With that background, it looks like the market is undecided so far in the premarket with all three major index ETFs giving us small-body (indecisive) candles that sit not too far from Monday’s close.  DIA is retesting its T-line (8ema) and at this point is just above. This puts all three above their T-line at the moment and, that being the case, the short-term trend is bullish. Looking further out, QQQ is again testing its downtrend line that stretches back to the all-time high in December.  SPY is also not far below a retest of its own downtrend line.  Meanwhile, DIA has broken through its own downtrend just by moving sideways. In the long-term, looking at higher-timeframe charts, the market remains in a strong bull trend.  In terms of extension, none of the three are extended from their T-line (8ema) based on the early session.  Meanwhile, T2122 sits just outside of its oversold territory.  So, the market has room to run either direction, but the Bulls have more slack to work with today.  In terms of the 10 Big Dogs, they are split 50/50 with NVDA (+2.48%) way out front leading gainers while TLSA (-1.79%) is far behind pacing the losses.  Reverting back to the pre-election norm, NVDA leads in dollar-volume traded by about 1.5 times over TSLA (which itself has traded five times as much as the next most liquid stock).

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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