Tuesday opened with gaps lower across all the major index ETFs.  SPY gapped down 0.74%, DIA gapped down 0.60%, and QQQ gapped down 0.63%. From there, all three major averages followed through to the downside with SPY and QQQ selling off sharply until 10:30 a.m.  DIA sold off more slowly but the downside continued until 11:30 a.m. Once they reached those points, all three began a slower rally that lasted until 3:25 p.m. However, then all three sold off sharply again the rest of the day. This action gave us gap-down, indecisive candles across the major index ETFs.  SPY printed a black-bodied, long-legged Spinning Top, QQQ printed a white-bodied, long-legged Spinning Top, and DIA printed a larger-body, black Spinning Top candle.  This happened on heavier-than-average volume in SPY and QQQ as well as average volume in DIA.

On the day, nine of the 10 sectors were in the red as Financial Services (-2.89%) led the others lower by mor (out front by more than one percent).  On the other side, the Technology (+0.03%) sector was the only one to hold onto the green.  At the same time, SPY lost 1.18%, DIA lost 1.47%, and QQQ lost 0.32%.  Meanwhile, VXX rose another 2.64% to close at 50.59 and T2122 dropped all the way back up to bottom of its oversold territory at 1.83. On the bond side, 10-Year Bond yields climbed to 4.225% and Oil (WTI) fell 0.12% to close at $68.29 per barrel.  So, Tuesday was another rough day for markets as Trump abandoned a democracy (whose security the US had guaranteed) in favor of pleasing his autocrat friend Putin whom Trump has been preemptively and unilaterally making concessions before negotiations and Trump’s trade war tariffs on close allies also took effect.

The major economic news on Monday includes S&P Global Mfg. PMI, which came in higher than expected at 52.7 (compared to a forecast of 51.6 and January’s 51.2 value).  Later, January Construction Spending was down notably to -0.2% (versus a -0.1% forecast but well down from December’s +0.5% reading).  At the same time, Feb. ISM Mfg. PMI was lower than anticipated at 50.3 (compared to a 50.6 forecast and January’s 50.9 number).  On the jobs side, Feb. ISM Mfg. Employment was down sharply to 47.6 (versus January’s 50.3 value).  On the cost side, the Feb. ISM Mfg. Price Index what SHARPLY higher at 62.4 (compared to a forecast of 56.2 and the January 54.9 reading). 

In response, Canada announced 25% retaliatory tariffs on US goods, China declared 15% tariffs on US grain and lumber, and Mexico said it will announce its own retaliatory tariff package against the US next weekend.)  Trump also threatened another 25% of tariffs on Canada and insulted the Canadian PM when the Canadian retaliatory tariffs were announced.)   Later in the day, the market reversal may well have been due to Commerce Sec. Lutnick saying that “Trump will probably announce a tariff deal with Canada and Mexico as soon as Wednesday.”  Still, Trump wanted his headlines and needed unannounced items so he could make a news splash at his Congressional (GOP) “non State of the Union” speech last night.

The major economic news on Tuesday was limited to API Weekly Crude Oil Stocks, which came in with a larger than expected inventory drawdown of 1.455 million barrels (compared to a forecasted -0.300 million barrels and the prior week’s 0.640-million-barrel draw).

In Fed news, on NY Fed President Williams spoke to a Bloomberg event.  Williams indicated he expects the Trump tariffs to cause inflation, saying “My view is, based on what we know today … I do factor in some effects from tariffs now on inflation, on prices, because I think we will see some of those effects later this year.”  However, he urged caution in jumping to conclusions about how much inflation or how fast. Williams said, “there’s a lot of uncertainty: We don’t know how long the tariffs will apply. We don’t know what other countries may do in response to this.”  He went on to say that some industries will see the inflation impacts almost immediately, while others may not feel the effect for months.  Related to future fed rate cuts, Williams said “it’s really hard to know” if there will be any further cuts this year due to all the uncertainty.  However, he did say, “I think the current place for policy is good. I don’t see any need to change it right away.”

After the close, CRWD, CTOS, EC, FLUT, and INGM all reported beats on both the revenue and earnings lines. Meanwhile, ROST missed on revenue while beating on earnings.

Overnight, Asian markets were mostly green.  Only Australian (-0.70%) was in the red while Hong Kong (+2.84%) and Thailand (+2.49%) were far out front leading the 11 gaining exchanges.  In Europe, we see green across the board at midday.  The DAX (+3.19%) spiked and led Europe higher as the coalition parties seeking to form the new German government agreed on a $530 billion infrastructure fund as well as overhaul of German borrowing rules.  (This was a direct response to Trump abandoning Ukraine and aligning himself with Putin.)  The CAC (+2.06%) and lagging FTSE (+0.32%) filled out the leaders taking Europe higher in early afternoon trade. In the US, as of 7:30 a.m., Futures point to modestly higher open.  The DIA implies a +0.27% open, SPY is implying at +0.36% open, and QQQ implies a +0.54% open at this hour. At the same time, 10-Year Bond Yields are back up to 4.236% and Oil (WTI) is off another 1.74% to $67.07 per barrel in early trading.

The major economic news scheduled for Wednesday, we get Feb. ADP Nonfarm Employment Change, Feb. S&P Global Services PMI, Feb. S&P Global Composite PMI, Jan. Factory Orders, ISM Non-Mfg. Employment, ISM Non-Mfg. PMI, ISM Non-Mfg. Prices, EIA Crude Oil Inventories, and Fed Beige Book.  The major earnings reports scheduled for before the open include ANF, BF.B, CPB, FL, REVG, and THO. Then after the close, BBAR, MRVL, MDB, SOBO, VEEV, VSCO, and ZS report. 

In economic news later this week, on Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, Q4 Unit Labor Costs, Jan. Trade Balance, and Fed Balance Sheet are reported.  We also hear from Fed Governor Waller.  Finally, on Friday, we get Feb. Avg. Hourly Earnings, Feb. Nonfarm Payrolls, Feb. Private Nonfarm Payrolls, Feb. Participation Rate, Feb. Unemployment Rate, Fed. Monetary Policy Report, and Jan. Consumer Credit. We also hear from Fed members Bowman and Williams as well as Chair Powell.

In terms of earnings reports later this week, on Thursday, we hear from BJ, BTSG, BURL, CNQ, CBRL, GMS, JD, KR, M, PSNY, TTC, VG, AVGO, COST, GAP, HPE, and LOMA.  Finally, on Friday, ADV, AQN, GCO, and YPF report.

So far this morning, ANF and REVG have reported beats on both the revenue and earnings lines.  Meanwhile, CPB and FL missed on revenue while beating on earnings.  On the other side, THO beat on revenue while missing on earnings.

With that background, the market looks indecisive after a modest gap higher to start the premarket.  All three major index ETFs opened the premarket higher, but have printed large-wick, black-bodied Spinning Top candles since that point indicating indecision that leans bearish.  All three are well below their T-line (8ema).  So, the short-term trend is clearly bearish.  Meanwhile, the mid-term trend remains a choppy sideways mess resolving bearishly.  At the same time, the long-term trend remains bullish, but tested.  In terms of extension, with the premarket moves higher, none of the three are too far stretched below their T-line (although QQQ is still close to that mark).  However, the T2122 indicator is now buried deep at the bottom of its oversold territory.  So, the Bulls clearly have a little more slack to work with today, but the Bears have the momentum behind them.  In terms of the Big Dogs, all 10 are in the green in the premarket.  TSLA (+1.60%) and NVDA (+1.57%) are well out front leading the pack higher while NFLX (+0.26%) and AAPL (+0.29%) lag. As far as liquidity goes, TSLA and NVDA are neck-and-neck and about 12 times ahead of the next closest ticker in terms of dollar-volume traded in the premarket.  (However, we should note it is a very light premarket volume overall.)

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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