Markets opened modestly on Monday as traders seem to be waiting (on elections, the Fed, or who knows what). SPY opened up just a tiny fraction of a percent, DIA opened down 0.13%, and QQQ opened down 0.12%. From there, SPY and QQQ meandered back and forth above and below the opening level all day. For its part, DIA sold off until noon, rallied half way back to the opening level by 1 p.m. before grinding sideways in a tight range the rest of the day.  This action gave us indecisive candles in all three major index ETFs.  SPY printed a black-bodied Spinning Top candle that retested its 50sma from above, but passed to closed back above that level.  DIA printed a black-bodied, large Hammer type candle that retested its 50sma after gapping below, but failed the test to close back below.  Finally, QQQ printed a black-bodied Spinning Top, Bear Harami for the day.  This happened on well-below-average in the SPY and QQQ as well as below-average volume in the DIA.

On the day, five of the 10 sectors were in the green with Energy (+1.38%) almost one percent out in front leading the gainers higher.  On the other side, Utilities (-0.54%) was two-tenths of a percent ahead of the rest of the losing sectors headed down. At the same time, SPY lost 0.22%, DIA lost 0.56%, and QQQ lost 0.29%.  VXX fell 4.19% to close at 54.47 and T2122 climbed a bit to just get above the edge of its oversold area, but is only in the bottom of its mid-range at 22.84.  Meanwhile, 10-Year bond yields fell to 4.289% while Oi (WTI) spiked 3.21% (on Israeli-raised fears of an Iranian retaliation for its bombing of Iran) to close at $71.73 per barrel. So, Monday was largely a “wait-and-see” day for traders. US Presidential and Congressional elections weigh on the market like a dark cloud that likely will not lift for at least days, maybe weeks, and possibly months. (The GOP has already filed more lawsuits than seen in any other US election and the number of their suits will skyrocket as votes are cast and counted. So, the normal schedule of democracy will likely not occur given the inability of one side to accept defeat or even reality.)

The major economic news scheduled for Monday is limited to September Factory Orders, which came in better than August but a tick worse than expected at -0.5% (compared to a -0.4% forecast and August’s -0.8%).

After the close, AIG, ANDE, AVB, EQH, BFAM, BWXT, CRUS, CWK, ES, FN, GXO, ILMN, NXPI, PARR, PLTR, PRIM, RHP, SANM, SLF, VVX, and VRTX all reported beats on both the revenue and earnings lines.  Meanwhile, CENX, CRBG, CRGY, GT, HUN, O, RRX, and ST missed on revenue while beating on earnings. On the other side, BCC, FANG, FWRD, and HOLX beat on revenue while missing on earnings. However, ATUS, CBT, CE, CLF, JELD and WYNN missed on both the top and bottom lines.

In stock news, on Monday, HXSCL (SK Hynix) stock spiked at the open after NVDA requested expedited delivery for the memory-maker’s new HBM-4 high-bandwidth memory chips.  (The NVDA desire to pull-forward it’s buying is a powerful indicator of high demand for the newer, faster memory chips.  The only other memory makers of any note globally are MU and Korea’s Samsung.)  Later, the Chinese Passenger Car Assn. reported that deliveries of Chinese-made TSLAs fell 5.3% year-on-year in October.  In addition, October sales of Chinese-made Model 3 and Model Y fell 22.7% from September.  At the same time, as reported Monday, ATSG confirmed that it has agreed to be taken private by equity firm Stonepeak for $22.50 per share (a 29.3% premium on Friday’s close).  Later, IT industry analysts reported Monday that NVDA has begun routing motherboard orders away from SMCI following its accounting scandal. (Taiwanese-listed competitors Gigabyte and ASRock seem to be the beneficiaries of the NVDA decision.) 

Elsewhere, F announced that its October sales were up roughly 15% year-on-year. Later, META announced it will extend its ban on new political ads beyond the election, at least until later this week.  After the close, Reuters reported that BCSF and private equity firm Silver Lake are among the potential buyers bidding for a minority stake in INTC’s Altera (programmable chips) unit, which INTC acquired for $17 billion in 2015. At the same time, Bloomberg reported that OpenAI is in talks with the state of CA on becoming a for-profit company (changing structure from a non-profit).  Later, DLTR announced that CEO Dreiling (who only joined the company in March 2022) is stepping down “for personal reasons.” (However, the more likely scenario is that he was ousted due to poor performance in what was supposed to be a turnaround.) No successor was named as of yet.

In stock legal and governmental news, on Monday, Reuters reported that EU antitrust regulators have opened an investigation into whether AAPL’s iPad operating system complies with the EU’s Digital Markets Act. (At question is whether AAPL’s prohibition on other app stores for iPad apps violates the law.) That antitrust commission has just begun soliciting comment from all interested stakeholders. Later, the same EU antitrust regulators announced they will rule on NVO’s $16.5 billion acquisition of CTLC by December 6.  Meanwhile, the Texas Railroad Commission (which, oddly, regulates the TX oil and gas industry) requested state lawmakers for $100 million in emergency funding to keep up with the growing number of leaking or erupting wells in TX oilfields.  (That amount is equivalent to 44% of TX’s entire two-year budget.)  In addition, the head of the agency said that request DID NOT include enough money to protect TX groundwater from well blowouts.

Elsewhere, the NHTSA announced it has closed a probe into 411k F’s SUV and pickups. The probe was started after more than 1,000 complaints of loss of power during operations.  The end of the investigation comes after F acknowledged the problem and recalled 90k of the vehicles.  Later the US State Dept. approved the sale of $4.92 billion of BA military aircraft to South Korea. At the same time, China filed a WTO complaint alleging the EU has improperly set anti-subsidy tariffs on China’s electric vehicles.

In miscellaneous news, on Monday, MS reported that their survey of consumers has found sentiment was the highest in three years at the end of October. Meanwhile, C reported that its survey of chipmakers found that September saw a massive 8.8% month-on-month increase in global semiconductor sales, reaching $61.1 billion for the month.  Elsewhere, the Chinese National People’s Congress Standing Committee held a meeting Monday to discuss moving “off balance sheet debt” of local governments to their official accounts.  Additional talks included increasing local government debt ceilings in order to allow the move. Bloomberg also reported that they are considering permitting local governments to sell $845 billion in bonds by 2027 to finance the hidden debt. 

In Middle East news, on Monday Israel officially ended its recognition of the UN’s Relief and Works Agency for Palestinian Refugees.  This put the previously-voted ban of the organization into effect.  Dismantling UNWRA has long been a goal of Israel, but global humanitarian support for the organization made that move politically untenable.  Israel’s defiance and disregard for international pressure (assured of US support) over the last year allowed Israel to justify the move, blaming support of Hamas for the move.  (Since UNWRA is by far the largest aid and services distributor to Palestinians, the impact is expected to be dire in Palestine.)  Attacks on the day were lighter than recently (mostly due to the Israelis lightening up) as they continue to push the narrative that Iran is “just about” to retaliate for their airstrikes in Tehran last week.

Overnight, Asian markets were mostly strongly green.  Shenzhen (+3.22%), Shanghai (+2.32%), Hong Kong (+2.14%), Thailand (+1.28%), and Japan (+1.11%) led that region higher.  Meanwhile, in Europe, most bourses are green but there is more red showing than in Asia as of midday with five of 14 exchanges below break-even. The CAC (+0.14%), DAX (+0.17%), and FTSE (+0.12%) lead the region higher in early afternoon trade.  In the US, as of 7 a.m., Futures are pointing toward a higher start to the day.  The DIA implies a +0.15% open, the SPY is implying a +0.25% open, and the QQQ implies a +0.41% open at this hour.  At the same time, 10-Year bond yields are back up to 4.311% and Oil (WTI) is up a third of a percent to $71.73 per barrel in early trading.

The major economic news scheduled for Tuesday includes Sept. Exports, Sept. Imports, and Sept. Trade Balance (all at 8:30 a.m.), Oct. S&P Global Services PMI and Oct. S&P Global Composite PMI (9:45 a.m.), Oct. ISM Non-Mfg. PMI, Oct. ISM Non-Mfg. Employment, and Oct. ISM Non-Mfg. Price Index (all at 10 a.m.), and API Weekly Crude Oil Stocks report (4:30 p.m.).  However, the main news of the day will be the US elections (although, as mentioned, the results are not likely to be known Tuesday or maybe even this week).  The major earnings reports scheduled for before the open include AHCO, AGCO, GBTG, APO, ARCH, ADM, BR, BRKR, BLDR, CIGI, CEIX, CMI, DD, EMR, EXPD, RACE, FTS, IT, GGB, GFS, HSIC, HY, INGR, LGIH, LPX, MPC, MLCO, MPLX, NMRK, OGE, ACDC, QSR, TRGP, TRI, TKR, BLD, TAC, ULS, WLK, and YUM.  Then, after the close, AFG, AIZ, CRC, CPNG, DVN, EXAS, FYBR, GMED, GO, IFF, JKHY, KGC, LUMN, MASI, MCHP, MRC, NE, NOG, PAAS, PBA, SMCI, VIV, and TX report.

In economic news later this week, on Wednesday, EIA Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q3 Nonfarm Productivity, Preliminary Q3 Unit Labor Costs, Sept. Retail Inventories, Fed Interest Rate Decision, FOMC Statement, Fed Chair Press Conference, Sept. Consumer Credit, and Fed Balance Sheet. Finally, Friday brings Michigan November Consumer Sentiment, Michigan November Consumer Expectations, Michigan November 1-Year Inflation Expectations, and Michigan November 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Wednesday, AEP, BCO, COR, CTRI, GIB, CRL, CLVT, CNDT, CVS, DK, ENOV, HMC, HWM, IRM, JCI, JLL, LINE, NVO, ODP, OC, PFGC, PRGO, PNW, RPRX, SNDR, SRE, FUN, SWX, STWD, SUN, TEVA, TM, TRMB, VSH, AMRK, AGI, ALB, AMC, AEE, APA, APP, ARDT, ARM, ASH, ATO, BTG, BALY, BBSI, BKD, CHRD, COHR, CCU, CTVA, COTY, CAPL, DLX, ET, EMS, ENLC, EQX, FG, FNF, FBIN, FNV, GFL, GILD, HG, HST, HUBS, JXN, JAZZ, KD, LILA, LYFT, MFC, MRO, VAC, MTCH, MATV, MCK, MELI, MEOH, MKSI, MODV, NTR, PAM, PR, PRI, PTC, QGEN, QCOM, RNR, RGLD, SVC, SBGI, SSRM, STE, STRL, SUI, TTWO, TKO, TS, TRIP, TTEC, TPC, UHAL, VSAT, VSTO, WES, WMB, ZG, and Z report.  On Thursday, we hear from GOLF, ADV, APD, AQN, COLD, HOUS, MT, AVAH, GOLD, BCE, BDX, CCJ, CG, COMM, CRH, DDOG, ZRAY, DBD, DUK, EPC, ELAN, EDR, EPAM, EVRG, GEO, HAL, HBI, HSY, HGV, IHRT, IBP, KVUE, LCII, MRNA, TAP, MUR, VYX, NXST, DNOW, OSCR, PZZA, PENN, PCG, PLTK, PRMW, RL, ROK, RXO, SCSC, SEE, SPTN, STGW, SHOO, TPR, TRP, TGNA, TEF, TPX, TDG, UAA, PRKS, USFD, UWMC, VTRS, VST, WBD, KLG, AFRM, AGL, AL, ABNB, AKAM, AMN, ANET, ARKO, AXON, SQ, BHF, CPRI, CIVI, ED, CPAY, BAP, DKNG, DBX, DXC, SSP, EOG, EVH, EXPI, EXPE, FTNT, G, PODD, MTD, MNST, MSI, NWSA, OPEN, OVV, PACS, PINS, QDEL, REZI, RNG, RIVN, SOLV, RUN, TOST, and TTD.  Finally, on Friday, ADNT, WMS, ATSG, AMCX, AXL, AMRX, BAX, BLMN, BEPC, BEP, CLMT, CNH, ERJ, FLO, FLR, FTRE, GLP, GTN, IEP, KOP, LAMR, NRG, PAA, PAGP, RBA, SONY, TIXT, and PARA report.

In overnight news, BA union members voted to accept the latest tentative contract and thus end the 7+ week strike.  It is worth noting that only 59% of the machinists voted to accept the deal, which includes a 38% pay increase over four years and either a $12k ratification bonus or $7k bonus plus $5k contribution to the employees 401(k). While some workers could return to the job as soon as Wednesday, the official return to work date is November 12.

With that background, it looks like the market is modestly bullish but indecisive again early Tuesday. All three major index ETFs gapped modestly higher to start the premarket. Since that point, all three have also printed Doji-like candles. With all three still below their T-line (8ema), the short-term trend is bearish. However, the mid-term trend is now undetermined (seeming to turn over to bearish but not definitive yet) and the longer-term trend is still solidly Bullish in all three. (Again, despite the recent pullback, they all still within three percent of all-time highs.) With regard to extension, none of the major index ETFs are too far extended from its T-line (8ema). In addition, the T2122 indicator has climbed just outside of its oversold area and into the bottom of the mid-range. So, markets do have room to run either direction if traders can find momentum, but the Bulls have more slack to work with today. With regard to those 10 big dog tickers, eight of the 10 are in the green this morning. TSLA (+1.86%) is by far the leading gainer (a full percent ahead of the next best-performing ticker) while AAPL (-0.15%) is the laggard. Once again, overall the premarket volume is light today. However , TSLA is leading NVDA in terms of dollar-volume traded (early) and those two are far out in front of all other tickers.

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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