Markets made a modest rebound Wednesday.  SPY opened down 0.04%, DIA opened down 0.10%, and QQQ opened up 0.09%.  From there, all three major index ETFs chopped sideways until 11 a.m.  From there, all three sold off for an hour, then rallied until 3:15 p.m. before pulling back slightly the last 45 minutes.  The action gave us Bullish Engulfing candles with in the SPY and DIA as well as a white-bodied candle with more wick than body (but too large a body to be a Spinning Top).  All three remain below their T-line (8ema) and did not get close to making a retest from below.  This all happened on above-average volume in the SPY and QQQ as well as average volume in the DIA.

On the day, eight of the 10 sectors were in the green as Basic Materials (+3.42%) was well out front (by 1.30%) leading the gainers higher.  On the other side, Energy (-0.53%) and Utilities (-0.20%) lagged behind and were the only sectors in the red.  At the same time, SPY gained 1.07%, DIA gained 1.15%, and QQQ gained 1.30%.  In terms of volatility, VXX fell 4.23% to close at 48.45.  Meanwhile, T2122 popped up out of its oversold territory to the bottom of its mid-range to 24.30. On the bond side, 10-Year Bond yields climbed to 4.278% and Oil (WTI) dropped another 2.75% to close at $66.38 per barrel.

So, Wednesday was a day when it seemed the Administration manipulated (or at the very least drove) markets a bit.  The market news early was from Commerce Sec. Lutnick who told Bloomberg that all the recent bad economic data was “Biden Data.”  He also promised a White House announcement of a deal on end tariffs by the afternoon. That seemed to lead to the mid-day rally.  There were also other press leaks about Trump being open to tariff exemptions for the Auto industry (and perhaps others).  However, after the close, Trump told the press Canada’s effort to appease him was “not good enough,” but he was open to some exemptions.  He went on to announced a one-month exemption for the big three automakers.

The major economic news on Wednesday included Feb. ADP Nonfarm Employment Change, which came in far below expectations at +77k (compared to a +141k forecast and dramatically lower than January’s +186k number).  Later, Feb. S&P Global Services PMI, was above expectation at 51.0 (versus a 49.7 forecast, but down from January’s 52.9 reading).  For the combined number, Feb. S&P Global Composite PMI was above expectation at 51.6 (compared to a 50.4 forecast but down from January’s 52.7 value).  Later, Jan. Factory Orders, were up as anticipated to +1.7% (in-line with the +1.7% forecast and better than December’s -0.6% reading).  At the same time, ISM Non-Mfg. Employment Index was up to 53.9 (compared to January’s 52.3 value).  For the headline, ISM Non-Mfg. PMI was also up to 53.5 (versus a 52.5 forecast and the 52.8 number in January).  In terms of cost, ISM Non-Mfg. Price Index was up sharply to 62.6 (compared to a 60.0 forecast and the 60.4 January reading).  Later, EIA Crude Oil Inventories showed a large unexpected build of 3.614 million barrels (versus a +0.600-million-barrel forecast and the prior week drawdown of 2.332 million barrels). 

In Fed news, on Wednesday, the Fed Beige Book reported that eight of the 12 Fed districts saw flat or slightly negative growth in February.  The report mentioned Trump’s tariffs 50 times as essentially every district cited them as reasons for uncertainty among the businesses in their area.  Some quotes from the report were Kansas City reporting “the outlook among community service organizations was reportedly much less favorable.”  Meanwhile, a St. Louis district food-service distributor said “consumers were buying less, buying less often, and trading down.”  In the Boston region, restaurant sales were down, but some contacts reported this may be due to “dry January.”  Several districts reported that inflation worries continue with an uptick in the rate of price increases among district businesses.  However, several districts also said wage increase pressures were easing.

After the close, MRVL, MDB, VEEV, VSCO, and ZS all reported beats on both the revenue and earnings lines. Meanwhile, BBAR beat on revenue while missing on the earnings line. 

Overnight, Asian markets were mixed but leaned toward the green side.  Hong Kong (+3.29%) was by far the biggest gainer followed by Shenzhen (+1.77%).  On the downside, Thailand (-1.44%) was far-and-away the biggest loser.  In Europe, bourses are mixed but lean toward the red side.  The CAC (-0.44%), DAX (+0.50%), and FTSE (-0.86%) lead the region in early afternoon trade.  In the US, as of 7:20 a.m., Futures are pointing toward a gap down to start the morning.  DIA implies a -0.85% open, the SPY is implying a -1.07% open, and QQQQ implies a -1.32% open at this hour.  At the same time, 10-Year Bond Yields have spiked back up to 4.317% and Oil (WTI) is up three-quarters of a percent to $66.80 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, Q4 Unit Labor Costs, and Jan. Trade Balance (all at 8:30 a.m.), and Fed Balance Sheet (4:30 p.m.).  We also hear from Fed member Harker (8:45 a.m.) and Governor Waller (3:30 p.m.).  Fed member Bostic also speaks at 7 p.m.  The major earnings reports scheduled for before the open include BJ, BTSG, BURL, CNQ, CBRL, GMS, JD, KR, M, PSNY, TTC, and VG.  Then after the close, AVGO, COST, GAP, HPE, and LOMA report. 

In economic news later this week, 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 Friday, ADV, AQN, GCO, and YPF report.

So far this morning, BTSG and JD reported beats on both the revenue and earnings lines.  Meanwhile, BJ, BURL, DDL, M, and VG missed on revenue while beating on the earnings line.  On the other side, CNQ beat on revenue while missing on earnings. However, GMS missed on both the top and bottom lines.

With that background, the market looks bearish in the early premarket.  All three major index ETFs gapped lower to open the early session and have printed black-body candles since that point.  (It is worth noting that SPY and DIA have printed more indecisive, black Spinning Top, Bear Harami type candles so far in the premarket.) 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 is being tested.  In terms of extension, SPY and QQQ are not over-stretched but are pushing that level of being oversold in the early session.  DIA remains within its normal range of the T-line.  At the same time, the T2122 indicator is now back out of its oversold territory (barely) and sits in the lower end of its mid-range. So, the Bulls clearly have a more rope to work with today, but the Bears still have the momentum behind them.  In terms of the Big Dogs, all 10 are in the red in the premarket.  NVDA (-2.59%) and TSLA (-2.31%) are well out front leading the pack lower while AAPL (-0.48%) is holding up best.  As far as liquidity goes, NVDA leads TSLA by 35% which itself has traded six times as much dollar-volume as the next closest ticker 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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