NOTE:  This will be the last daily blog for the foreseeable future

The Bears roared again Thursday at more indecision around the Trump tariffs (more temporary waivers on “some” Mexican products were announced) roiled markets.  SPY gapped down 1.30%, DIA gapped down 1.01%, and QQQ gapped down 1.66%.  After that open, all three major index ETFs rallied for 90 minutes, recovering about half of the gap.  However, by 11:30 a.m. the Bulls had left the building and the Bears drove all three sharply lower until 1 p.m. when all three started chopping sideways with a modest bearish trend the rest of the day.  This gave us gap-down, black-body candles in all three.  SPY gave us a long-wick, black Spinning Top, DIA gave us a long-legged, black Doji, and QQQ gave us large, black-body candle with large (mostly upper) wicks.  All three obviously remain below their T-line (8ema) and did not get close to making a retest from below.  QQQ also crossed down through its 200sma.  This all happened on slightly-above-average volume in the SPY and QQQ as well as just-below-average volume in the DIA.

On the day, nine of the 10 sectors were in the red as Technology (-3.07%) and Utilities (-2.81%) were well out front leading the pack lower.  On the other side, Communication Services (+1.18%) was BY FAR the strongest and only green sector. At the same time, SPY lost 1.78%, DIA lost 1.06%, and QQQ lost 2.75%. In terms of volatility, the VXX spiked 10.90% to close at 53.73.  Meanwhile, T2122 dropped back into the lower half of its oversold range, closing at 8.21.  On the bond side, 10-Year Bond yields climbed to 4.292% (which was actually significantly lower that early in the day) and Oil (WTI) was just on the red side of flat, closing at $66.26 per barrel.  

So, Thursday was a case of fatigue over Trump’s inconsistent, bullying way of using trade wars to get his way.  The on-off-on-off policy over tariffs against Canada and Mexico as well as uneven application based on political lobbying power has simply worn out the market.  QQQ closed near correction territory, down 9.68% from its all-time high (printed just 11 trading days ago).  Meanwhile, SPY is down 6.59% and DIA is off 5.53% from their recent highs. 

The major economic news on Thursday includes Weekly Initial Jobless Claims, which came lower than expected at 221k (compared to a 234k forecast and the prior week’s 242k reading).  For ongoing claims, Weekly Continuing Jobless Claims were higher than expected at 1,897k (versus the 1,880k forecast but well up from the prior week 1,855k value).  At the same time, Q4 Nonfarm Productivity was down but better than anticipated at +1.5% (compared to the +1.2% forecast but down from Q3’s +2.2% number). On the price side, Q4 Unit Labor Costs were up but also better than predicted at +2.2% (versus a +3.0% forecast but well up from Q3’s +0.8% reading).  At the same time, the Jan. Trade Balance was slightly worse than anticipated at -$131.40 (versus a -$128.40 billion forecast and December’s -$98.1 billion value).  Then, after the close, the Fed Balance Sheet came in $9 billion lower than the previous week at $6.757 trillion.)

In Fed news, on Thursday, Philly Fed President Harker said that the economy is in good shape now, but warning signs are starting to show.  Harker said, “Unemployment is still low, still getting growth, but there are threats to this. We’re starting to see that confidence is starting to wane on both the consumer and business fronts.” Related to inflation, Harker said, “I’m worried that right now that (2024 declines) is at risk, that the decline is at risk.”  On the topic of what the Fed should do with interest rates, he went on to say “I’m an avowed pragmatist when it comes to policy … you don’t go very fast in either direction.”  Later, Fed Governor Waller said he is unlikely to support a rate cut in March.  Waller told the Wall Street Journal, “I want to see what happens with the February inflation data. … Want to see a little bit more with what happens with tariff policies.”  However, he went on to say that it may be appropriate to cut as some future FOMC meeting.

After the close, AVGO and GAP reported beats on both the revenue and earnings line. Meanwhile, COO and LOMA missed on revenue while coming in in-line on earnings. On the other side, COST and HPE beat on revenue while missing on earnings.

Overnight, Asian markets were mostly red with only Thailand (+1.05%) and India (+0.03%) managing to stay green.  Meanwhile, Japan (-2.17%) and Australia (-1.81%) were way out front leading the 10 red exchanges.  In Europe we see a similar picture taking shape at midday with just three of 14 bourses in the green.  The CAC (-1.15%), DAX (-1.83%), and FTSE (-0.50%) lead the region lower in early afternoon trade.  In the US, as of 7:40 a.m., Futures are pointing toward a start to the day just on the green side of flat.  DIA implies a +0.08% open, the SPY is implying a +0.14% open, and QQQ implies a +0.22% open at this hour.  At the same time, 10-Year Bond Yields are down to 4.255% and Oil (WTI) is up 1.34% to $67.25 per barrel in early trading.

The major economic news scheduled for Friday include Feb. Avg. Hourly Earnings, Feb. Nonfarm Payrolls, Feb. Private Nonfarm Payrolls, Feb. Participation Rate, and the Feb. Unemployment Rate (all at 8:30 a.m.), Fed. Monetary Policy Report (11 a.m.), and Jan. Consumer Credit (3 p.m.).  We also hear from Fed members Bowman (10:15 a.m.), Williams (11:45 a.m.), and Fed Chair Powell (12:30 p.m.).  Trump is also expected to announce the elimination of the Dept. of Education at 3:30 p.m. according to the Wall Street Journal.  The major earnings reports scheduled for before the open include ADV, AQN, GCO, and YPF.  There are no earnings reports scheduled for after the close. 

So far this morning, ADV, AQN, and GCO have all reported MISSES on both the revenue and earnings lines.

With that background, the market are basically undecided ahead of data.  All three major index ETFs opened the premarket a bit higher, ran up and then reversed to retreat.  All three now have printed black candles with upper wicks and are sitting at the bottom of their early session candle, just above the Thursday close.  All three are still well below their T-line (8ema).  So, the short-term trend remains bearish.  At the same time, the mid-term trend remains a bearish, choppy mess.  Meanwhile, the long-term trend remains bullish, but is being severely tested.  In terms of extension, SPY and especially QQQ are now over-stretched to the downside but DIA remains within its normal range of the T-line.  At the same time, the T2122 indicator is now back down in the lower half of its mid-range.  So, once again, 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, eight of the 10 are in the red in the premarket.  TSLA (-1.92%) is well out in front leading the pack lower while NVDA (+0.66%) is by far the strongest big dog.  As far as liquidity goes, TSLA leads NVDA slightly which itself has traded nine times as much dollar-volume as the next closest ticker in the premarket.  (However, we should again note it is a very light premarket volume overall ahead of data.)

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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