On Thursday, the Bears started off looking for follow-through to Wednesday’s black candle by opening lower (gapping down 0.47% in the SPY, gapping down 0.31% in the DIA, and gapping down 0.66% in the QQQ).  However, the Bulls met the lower open with a slow, meandering rally that lasted until early afternoon when a modest selloff took over and drove into the close.  This action gave us white-bodied candles in all three major index ETFs with the DIA and SPY both printing Spinning Top candles with a larger upper wick than lower wick.  For its part, the QQQ printed a white-bodied Inverted Hammer-type candle with no lower wick. This happened on less-than-average volume in all three of the major index ETFs.

On the day, seven of the 10 sectors were in the red with Utilities (-2.14%) way, way out in front (by 1.5%) leading the way lower while Energy (+1.02%) held up far better (by almost three-quarters of a percent) than other sectors.  At the same time, the SPY lost 0.29%, DIA lost 0.21%, and QQQ lost 0.16%.  The VXX fell slightly to 24.96 and T2122 climbed toward the center but remains in the lower half of the mid-range at 41.32.  10-year bond yields spiked to 4.187% while Oil (WTI) jumped 2.84% to close at $81.78 per barrel.  So, on Thursday we saw an opening gap follow through by the Bears, a “slow but steady” rebound rally by the Bulls that recrossed that gap, and then a “slow but steady” selloff that took us back down into the gap by the close.  All three major index ETFs remain at minor potential support levels that were tested during the day.

The major economic news reported Thursday included Weekly Initial Jobless Claims, which came in exactly as predicted at 227k (compared to a forecast of 227k and higher than the prior week’s 221k).  At the same time, Preliminary Q2 Nonfarm Productivity (quarter-on-quarter) came in much higher than expected at +3.7% (versus a forecast of +2.0% and a Q1 decline of 1.2%).  Meanwhile, the Preliminary Q2 Unit Labor Cost was reported much lower than anticipated at +1.6% (compared to a forecast of +2.6% and less than half of the Q1 reading of +3.3%).  Later, the July S&P Global Composite PMI was reported just as predicted at 52.0 (versus a 52.0 forecast and down a bit from the June value of 53.2).  At the same time, the July S&P US Services PMI came in slightly low at 52.3 (compared to a forecast of 52.4 and the June reading of 54.4).  After that, June Factory Orders were a bit better than expected at +2.3% (versus a forecast calling for +2.2% and far above the +0.4% in May).  The July ISM Non-Mfg. Employment Index came in a bit low at 50.7 (compared to the 51.1 forecast and the June value of 53.1).  Simultaneously, the July ISM Non-Mfg. PMI was also light at 52.7 (compared to a 53.0 forecast and a June reading of 53.9).  Finally, after the close, the Fed’s Balance Sheet showed another reduction.  The week ended at $8.207 trillion down $36 billion from the previous week’s $8.243 trillion.

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In stock news, HAS announced plans to sell its eOne film and TV studio to LGF by the end of the year for about $500 million.  Elsewhere, Reuters reported that two sources tell it TSLA executives met with India’s Commerce Minister to discuss plans to build a plant in India.  At the same time, MRNA announced a forecast of as much as $4 billion in revenue in 2023 from its COVID-19 vaccine when sales shift from government to private markets and expects further growth in 2024.  Meanwhile, Teamsters began the vote on their tentative deal with UPS.  The 340,000 workers will continue voting until August 22 as union leaders are urging members to accept the deal.  (Local Teamster leaders voted 161-1 to support and “sell” the deal to their union members.)  After the close, JPM announced it is expecting to pay nearly $3 billion to replenish its share of the FDIC insurance deposit fund once FDIC rules are finalized.  Also after the close, NKLA announced it has received enough shareholder support to allow it to increase the number of shares it can issue to raise much-needed capital.  At the same time, Reuters reported that KKR is in advanced talks to buy Simon & Schuster from PARA for $1.65 billion.

In stock legal, REGN told Reuters it expects an approval decision from the FDA during Q3 related to a higher-dose version of its blockbuster Eylea drug.  This comes after the FDA has completed an inspection of REGN’s contract manufacturer (CTLT) for the new dosage.  Elsewhere, securities regulators in MA have opened an investigation into major financial firms using AI technology in interactions with customers.  The investigation will include JPM and MS.  Later, TEVA announced it has agreed to pay US hospitals $126 million (over 18 years) to settle claims that marketing of its opioid drugs raised the operating costs of hospitals.  The agreement also includes TEVA supplying another $49 million of the overdose drug naloxone.  At the same time, HYMLF (Hyundai) and KIMTF (Kia) recalled 91,000 2023-2024 cars over a fire risk.  Simultaneously, a panel of US judges denied GOOGL’s request to pause a TX antitrust lawsuit against the online ad giant.  This came after TX got the case transferred back from NY to a TX court known as “the rocket docket.”

After the close, ABNB, AMZN, AMGN, AAPL, ACA, ATSG, TEAM, SQ, BKNG, BWXT, COIN, DVA, DKNG, DBX, EOG, GEN, ICFI, LNT, MTZ, MODV, MSI, OPEN, PBA, POST, RKT, RYAN, SYK, and VTR all reported beats on both revenue and earnings.  Meanwhile, AL, BGS, BIO, ED, CTVA, FND, FTNT, MCHP, MNST, ZEUS, and SWN all missed on revenue while beating on earnings.  On the other side, AES, AGL, EXPI, GDDY, GILD, OTEX, TPC, and RBA all beat on revenue while missing on earnings.  Unfortunately, COLD, REZI, RMD, and WERN missed on both the top and bottom lines.  It is worth noting that ABNB, COLD, DVA, DKNG, DBX, MODV, MSI, and POST all raised their forward guidance.  However, AMN, MTZ, and OPEN all lowered their guidance.

Overnight, Asian stocks leaned toward the green side on modest moves.  India (+0.70%), Shenzhen (+0.67%), and Hong Kong (+0.61%) paced the gainers while Singapore (-0.35%), Taiwan (-0.21%), and South Korea (-0.10%) were the only losers in the region.  Meanwhile, in Europe, the bourses are more mixed with eight markets in the red and seven in the green at midday.  The CAC (+0.15%), DAX (-0.30%), and FTSE (-0.30%) lead on volume while Russia (+1.34%) is the only exchange to move more than a percent in either direction in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a modestly higher start to the day.  The DIA implies a flat open, the SPY is implying a +0.16% open, and the QQQ implies a +0.27% open at this hour.  At the same time, 10-year bond yields are flat at 4.188% and Oil (WTI) is up another 0.28% to $81.78 per barrel in early trading.

The major economics news scheduled for Friday includes July Avg. Hourly Earnings, July Nonfarm Payrolls, July Participation Rate, July Private Nonfarm Payrolls, and July Unemployment Rate (all at 8:30 am).  Major earnings reports scheduled for before the opening bell include ADV, AMR, AXL, AMRX, BSAC, BBU, BEPC, BEP, CLMT, CNK, CRBG, D, ENB, EVRG, FLR, FYBR, GTES, GLP, GTN, GPRE, LSXMK, LSXMA, LYB, MGA, OMI, PAA, PAGP, PPL, QRTEA, TU, TIXT, TNC, and XPO. There are no reports scheduled for after the close. 

So far this morning, AMRX, CNK, CRARY, CRBG, ENB, FLR, FYBR, GTN, KUBTY, MGA, OMI, PNM, QRTEB, and WPP all reported beats on both the revenue and earnings lines.  Meanwhile, EVGR, LYB, QRTEA, TIXT, and XPO reported misses on revenue while beating on earnings.  On the other side, Unfortunately, ADV, BEP, PNM, and TU missed on both the top and bottom lines.  It is worth noting that GTN also lowered its forward guidance.

In miscellaneous news, Bloomberg reported Thursday that S&P 500 companies may be tipping their hand on economic prospects.  Their data shows that major companies have increased capital expenditures (expansion) by 15% in Q2 while buyback program spend is down.  Elsewhere, Saudi Arabia announced it is extending its 1 million barrel per day oil production cut again, this time through the end of September.  Finally, it is worth expanding on the two big reports from Thursday night.  AMZN blew past analyst expectations reporting double-digit growth and gave rosy guidance.  Meanwhile, AAPL beat analyst expectations but reported sales that were down one percent year-over-year.  The company’s main product (iPhones) revenues are down from even earlier in the year (a third consecutive decline) while predicting similar results for the current quarter.

With that background, it looks like markets are trying a modest premarket move. However, the candles of all three major index ETFs are black-bodied, indicating we have fallen down off the premarket highs. All three may try to retest their T-line (8ema) from below today with DIA doing so now. Once again the large-cap indices (SPY and DIA) are also testing a support level. (QQQ’s premarket move higher has it up away from its support level.) As far as extension goes, all of them are close to T-line and T2122 is in the mid-range. So, both sides of the market have plenty of room to run…if they can find momentum. Don’t forget we get July Payrolls data before the opening bell. So volatility remains likely. Also, keep in mind that it’s Friday, Payday. So, take some money off the table to pay yourself and prepare your account for the weekend news cycle.

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 absolutely 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 money is 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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