Tuesday saw the markets start the day flat.  SPY opened 0.06% higher, DIA opened dead flat, and QQQ opened up 0.07%. From there, SPY and QQQ rallied (QQQ’s rally being sharp).  However, after that rally, those two chopped sideways all the way into the close.  For its part, after the open, DIA sold off for 20 minutes before beginning a much slower rally that lasted the rest of the day.  This action gave us white-bodied candles in all three.  DIA printed a white, small-wick, Spinning Top candle that crossed back above its T-line.  Meanwhile, SPY and QQQ printed large-body, white candles with tiny upper wicks that also crossed back above their T-lines as well.  Both SPY and QQQ also crossed back above their 50sma.  This happened on less-than-average volume in all three major index ETFs.

On the day, eight of the 10 of the sectors were in the green with Energy (+1.90%) well out in front leading the market higher.  On the other side, the Utilities (-0.62%) and Consumer Defensive (-0.39%) sectors were the only ones in the red. At the same time, SPY gained 0.67%, DIA gained 0.28%, and QQQ gained 1.23%. (QQQ was led by AMD’s +4.58% gain.) Meanwhile VXX lost 3.06% to close at 43.69 while T2122 spiked all the way back up to just outside the edge of its overbought territory, closing at 79.37. On the bond side, 10-Year Bond yields fell to close at 4.513% and Oil (WTI) was flat, closing down a penny at $72.75 per barrel.  So, Tuesday seemed to be a calming after the reaction and re-reaction to the Trump tariffs and then pushback of same. 

The major economic news on Tuesday were limited to December Month-on-Month Factory Orders which were lower than expected at -0.9% (compared to a forecast of -0.7% and November’s -0.8% reading).  At the same time, Dec. JOLTs Job Openings were also much lower than expected at 7.600 million (versus an 8.010 million forecast and November’s 8.156 million value).  Then, after the close, the API Weekly Crude Stocks Report showed a larger-than-expected inventory build of 5.025 million barrels (compared to a +3.170-million-barrel forecast and the prior week’s 2.860-million-barrel number).

In Fed news, on Tuesday, Atlanta Fed President Bostic told an audience that since the FOMC has already slashed rates one percent and there was much greater economic uncertainty given the new administration’s volatile policies, there is no hurry to make any change to rates.  Bostic specifically mentioned the ambiguous impact of US tariffs and potential retaliatory tariffs abroad.  The bottom line of Bostic’s presentation was that the economy is now much more uncertain and will likely remain this way for quite a while.  Therefore, the Fed must sit on its hands and wait to see how things shake out.  Later, San Francisco Fed President Daly echoed Bostic’s point.  She commented, “Growth is solid, the labor market is solid, and inflation is coming down, albeit gradually, but we’re heading toward our 2% target.”  However, noting the uncertainty from the new administration, she continued, “In my time at the Fed, I’ve lived through a financial crisis and a pandemic, and those were extraordinarily uncertain times. Uncertainty is not a paralysis. It just means we have to watch and be careful and thoughtful as we navigate the information we have.”  She went on to say, “The way we have to think about it (Trump’s immigration and tariff policies) as policy makers is to [focus on the] net effect of all of those, and we don’t know what it is yet.” She concluded that the Fed can’t be proactive given the volatility and uncertainty of Trump’s policy proposals.  She said, “If you take preemptive action…you can end up making a policy mistake.”

After the close, AMD, ALGT, GOOGL, AMGN, CRUS, GOOG, LUMN, MOD, NOV, SPG, SKY, SNAP, and VOYA all reported beats on both the revenue and earnings lines.  Meanwhile, DOX, AFG, COLM, MTCH, and WU beat on revenue while missing on earnings.  On the other side, ATO, CMG, DXC, ENVA, FMC, THG, JKHY, JNPR, MAT, OI, and OMC missed on revenue while beating on earnings.  However, CSL, EA, MDLZ, OSCR, PRU, and UNM missed on both the top and bottom lines.

Overnight, Asian markets were evenly split with six gaining exchanges and six losing ones.  Taiwan (+1.61%), and South Korea (+1.11%) were way ahead leading the gainers while Thailand (-1.10%) and Hong Kong (-0.93% paced the losses.  In Europe, we see a similar mixed picture taking shape on modest moves at midday.  The CAC (-0.19%), DAX (-0.05%), and FTSE (+0.08%) lead the region in early afternoon trade. Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a lower start to the day.  The DIA implies a -0.10% open, the SPY is implying a -0.45% open, and the QQQ implies a -0.81% open at this hour.  At the same time, 10-Year Bond Yields are down to 4.466% and Oil (WTI) is off one percent to $71.97 per barrel in early trading.

The major economic news scheduled for Wednesday includes the ADP Nonfarm Employment Change (8:15 a.m.), Dec. Exports, Dec. Imports, and Dec. Trade Balance (all at 8:30 a.m.), S&P Global Services PMI and S&P Global Composite PMI (both at 9:45 a.m.), ISM Non-Mfg. PMI, ISM Non-Mfg. Employment, and ISM Non-Mfg. Price Index (all at 10 a.m.), EIA Weekly Crude Oil Inventories (10:30 a.m.).  We also hear from Fed member Bowman at 3 p.m.  The major earnings reports scheduled for before the open include ARCC, ARES, BSX, BG, CPRI, CDW, COR, EMR, EQNR, EVR, FSV, FI, GSK, GFF, HOG, IEX, ITW, JCI, NYT, NVO, ODFL, PFGC, REYN, RXO, SR, SWK, TROW, TKR, TM, UBER, VSH, and DIS.  Then after the close, AFL, ALGN, ALL, ARM, ASGN, AVB, EQH, BV, CENT, CTSH, COHR, CPAY, CTVA, CCK, DLX, ENS, ENSG, NVST, PLUS, F, GL, HI, HOLX, ITUB, KMPR, MCK, MET, MAA, MOH, MUSA, NWSA, ORLY, CNXN, PTC, QGEN, QCOM, RRX, SWKS, STE, SNEX, SU, TTMI, UHAL, UGI, VLTO, WFRD, and WEX report. 

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q4 Nonfarm Productivity, Preliminary Q4 Unit Labor Costs, Fed Balance Sheet, and we hear from Fed members Waller and Daly.  Finally, Friday, Jan. Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Jan. Private Nonfarm Payrolls, Jan. Participations Rate, Jan. Unemployment Rate, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and Dec. Consumer Credit are reported.

In terms of earnings reports later this week, Thursday, we hear from WMS, AGCO, APD, AB, APTV, MT, ARW, AZN, BCE, BDX, BDC, OWL, BWA, BMY, CX, CMS, CIGI, COP, DAR, LLY, ENTG, EFX, GTES, HP, HSY, HLT, HON, HII, NSIT, ICE, IQV, ITT, K, KVUE, LH, LEA, LNC, LIN, MKL, MMS, MDU, NVT, PATK, PTEN, BTU, PTON, PM, RL, RITM, RBLX, SNA, SPB, TPR, TEX, TRI, UAA, WMG, XEL, XPO, YUM, YUMC, ZBH, AMRK, AFRM, AMZN, ATR, BYD, CNO, EHC, EXPE, LION, FTNT, FBIN, G, HUBG, ILMN, MTD, MCHP, MTX, MHK, MPWR, NBIX, OTEX, PINS, POST, PFG, RGA, SKX, SONO, SSNC, TTWO, VSAT, and WERN.  Finally, on Friday, AVTR, CBOE, ROAD, FLO, FTV, ULCC, GPRE, KIM, NWL, PAA, PAGP report.

So far this morning, BSX, CDW, CMRE, COR, CRTO, EVR, FI, GSK, JCI, NYT, NVO, ODFL, REYN, RXO, SWK, TKR, TTE, TM, and UBER all reported beat on both the revenue and earnings lines. Meanwhile, ARES, BG, CPRI, HOG, and PFGC beat on revenue while missing on earnings. On the other side, EMR, KMT, and DIS missed on revenue while beating on earnings.  However, ARCC, EQNR, SR, TROW, and VSH missed on both the top and bottom lines.

With that background, it looks like the market is modestly bearish this morning.  All three major index ETFs gapped down a little to start the premarket.  Since that point, they have printed indecisive (mostly wick) candles.  SPY and QQQ are back below their T-line (8ema) while DIA is retesting that level in the early session.  As a result, the short-term trend is bearish.  The mid-term downtrend (if you want to call it a trend) remains a mess.  In terms of extension, as mentioned, all three are back close to their T-line.  Meanwhile, T2122 is just outside of its overbought territory.  So, both sides have room to work today if they can find momentum, but the Bears may have a little more slack to work with today.  In terms of the Big Dogs, nine of the 10 are in the red with AMD (-9.81%) out in front leading the pack lower.  (Although AMD beat last night, it is being punished for lower-than-expected server revenue.)  On the other side, NVDA (+0.94%) is holding up better than the others and is the only Big Dog in the green.  As far as liquidity goes, it is a low-volume premarket but NVDA leads, followed by AMD with TSLA (-0.94%) not far behind.  

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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