Tuesday saw a modest divergence at the opening bell.  SPY opened 0.04% lower, DIA opened 0.10% higher, and QQQ gapped down 0.27%.  From there, SPY and QQQ just meandered sideways in a tight channel before making a modest and slow afternoon rally.  QQQ printed a new all-time high and new all-time high close.  SPY printed a new all-time high close.  At the same time, after its lower open, DIA followed-through to the downside until 11:45 a.m.  Then it rallied almost back to the prior close level before meandering sideways the rest of the day. This action gave us Spinning Top candles in the SPY and DIA as well as a large-body white candle.  SPY was a white-body Spinning Top and DIA was a black-body Spinning Top. This all happened on well below-average volume in all three major index ETFs.

On the day, six of the 10 of the sectors were in the red again and the other four in the green as Utilities (-0.78%) was out in front pacing the losses and leading the market to the downside.  On the other side, Communications Services (+0.60%) led the gainers.   Meanwhile, SPY gained 0.05%, DIA lost 0.19%, and QQQ gained 0.31%. VXX fell half a percent to close at 42.07 and T2122 dropped back a little more, but remains in the top part of the mid-range to close at 69.79. At the same time, 10-Year bond yields rose a bit to 4.226% while Oil (WTI) popped 2.76%, closing at $69.98 per barrel. So, what we saw Tuesday was basically consolidation by the SPY and DIA (even though SPY did print a new all-time high close).  However, QQQ continued its rally despite a gap down to start the day.  META (+3.51%), AMZN (+1.30%), AAPL (+1.28%), and NVDA (+1.18%) led that rally in the QQQ.

The major economic news scheduled for Tuesday was limited to October JOLTs which came in higher than expected at 7.744 million (compared to a 7.510 million forecast and a September 7.372 million reading).  Then, after the close, the API Weekly Crude Oil Stock Report showed an unexpected inventory build of 1.232 million barrels (versus a forecasted 2.060-million-barrel drawdown and the prior week’s 5.935-million-barrel drawdown).

In Fed news, on Tuesday, FOMC members steered away from providing rate guidance ahead of December’s meeting.  San Francisco Fed President Daly told Fox Business “I think we need to have an open mind here.”  Later, Chicago Fed President Goolsbee said, “Over the next year it feels to me like rates come down a fair amount from where they are now, but we meet every six weeks because the conditions change.”  For her part, Fed Governor Kugler simply gave backward-looking comments to a Detroit event, saying, “I view the economy as being in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices.” 

After the close, PSTG, OKTA, and MRVL reported beats on both the revenue and earnings lines.  Meanwhile, CRM beat on revenue while missing on earnings.

Overnight, Asian markets were mixed with six exchanges in the red, five in the green, and one unchanged.  South Korea (-1.44%) paced the losses, as expected given the political turmoil of the last 24 hours in that country.  Meanwhile, Taiwan (+0.99%) led the gainers.  In Europe, the bourses are mostly green at midday with four in the red and 10 in the green.  The CAC (+0.52%), DAX (+1.05%, and FTSE (-0.23%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a green start to the day.  The DIA implies a +0.42% open, the SPY is implying a +0.30% open, and the QQQ implies a +0.64% open at this hour.  At the same time, 10-Year Bond yields are up to 4.261% and Oil (WTI) is just on the green side of flat at $70.00 per barrel in early trading.

The major economic news scheduled for Wednesday includes Nov. ADP Nonfarm Employment Change, Nov. S&P Global Services PMI, Nov. S&P Global Composite PMI, Oct. Factory Orders, Nov. ISM Non-Mfg. Employment, Nov. ISM Non-Mfg. PMI, EIA Crude Oil Inventories, and Fed Beige Book.  We also hear from Fed Chair Powell. The major earnings reports scheduled for before the open are limited to CPB, CHWY, CBRL, DLTR, FL, HRL, RY, and THO.  Then, after the close, AEO, FIVE, GEF, PVH, and SNPS.

In economic news later this week, on Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Oct. Imports, Oct. Exports, Oct. Trade Balance, and Fed Balance Sheet.  Finally, on Friday, we get, Nov. Average Hourly Earnings, Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, October Consumer Credit.  We also hear from Fed members Bowman and Daily.

In terms of earnings reports later this week, on Thursday, BMO, BF.A, CAL, CM, CSIQ, DG, GMS, KFY, KR, PDCO, SAIC, SIG, TD, COO, DOCU, HPE, LULU, WOOF, ULTA, VEEV, and VSCO report.  Finally, on Friday, we hear from DOOO and GCO.

So far this morning, CPB, DLTR, and RY reported beats on both the revenue and earnings lines. Meanwhile, CHWY beat on revenue while missing on earnings. However, FL, HRL, and THO missed on both the top and bottom lines.

With that background, markets seem bullish early in the day.  All three major index ETFs gapped up a bit to start the premarket and all three have printed small white-bodied candles since that point.  However, it is worth noting all three have backed off just slightly from their absolute high of the early session.  In addition, keep in mind that the SPY and QQQ sit at all-time highs while DIA is less than half a percent below its own all-time high.  All three are above their T-line (8ema).  So, the short-term trend is now bullish.  Looking further out, obviously the mid-term and longer-term trends also remain bullish sitting at or near those all-time highs.  In terms of extension, QQQ is now stretched above its T-line, but SPY and DIA are still not too far extended. The T2122 indicator is now back in the top half of its mid-range. So, either side has room to move, but the Bears may have more slack to work with today. In terms of the 10 Big Dogs, nine of the 10 are in green numbers at this point of the early morning session. NVDA (+1.16%) is leading the way higher while META (-0.27%) is the only big dog in the red and by far the laggard of the group.  In a return to pre-election norm, NVDA is leading in terms of dollar-volume traded, sitting at a little less than 1.5 times as much traded than TSLA, which itself has traded almost 4 times as much as the next one of the big dogs.  

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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