The Bears just couldn’t stand their success from the day prior and let the Bulls run on Friday. SPY gapped up 0.23%, DIA gapped up 0.30%, and QQQ opened up by 0.12%.  From there, all three major index ETFs rallied sharply until 11:30, took a one-hour rest and then rallied again to the highs of the day at 1:55 p.m.  At that point, we saw very modest profit-taking and a sideways grind until 3:30 p.m.  However, traders took profits hard the last 30 minutes, giving back half or more of the day’s gains.  This action gave us gap-up, white-bodied candles in all three with large upper wicks.  SPY and QQQ printed Bullish Harami candles with QQQ crossing back above its T-line (8ema).  SPY also printed another new all-time high.  Meanwhile, DIA also printed a new all-time high and new all-time high close.  This happened on well above-average volume in DIA, as well as just below-average volume in the SPY and QQQ.

On the day, all 10 sectors were in the green with Consumer Cyclical (+1.17%) out in front leading the rest of the sectors higher.  Meanwhile, Energy (+0.31%) was the laggard sector. At the same time, SPY gained 0.61%, DIA gained 0.68%, and QQQ gained 0.59%. VXX fell 1.74% to close at an extremely low at 10.16.  T2122 fell just a bit to remain in the top end of its overbought territory at 96.34.  On the bond front, 10-year bond yields dropped to 4.181% and Oil (WTI) was down almost half a percent to close at $82.24 per barrel.  So, Friday was the Bull’s day all day with significant profit-taking the last 30 minutes giving back a fair amount of the daily gains. It is worth noting that INTC (+2.96%), IBM (+2.55%), and AMGN (+1.77%) led the DIA to its new all-time highs…but it was a broad-based move with 22 of the 30 DIA tickers in the green.  Meanwhile, 401 of 501 of the SPY were green and 81 of 101 of the QQQ were above break-even.

The major economic news scheduled for Friday included June Core PPI, which came in hotter than expected at +0.4% (compared to a +0.2% forecast and May’s +0.3%).  This led to a June PPI of +0.2% (versus a forecasted +0.1% and May’s 0.0% value).  Later, Preliminary July Michigan Consumer Sentiment was lower than predicted at 66.0 (compared to the 68.5 forecasted and June’s 68.2 reading).  At the same time, the July Preliminary Michigan Consumer Expectations were also lower than anticipated at 67.2 (versus the 69.8 forecast and June’s 69.6 value).  On the forward-outlook side, the July Michigan 1-Year Inflation Expectations were 2.9% (in-line with the forecast and a tick better than June’s 3.0% number).  In the longer term, July’s Michigan 5-Year Inflation Expectations were better than predicted, also at 2.9% (versus a 3.0% estimate and June reading).

The US Dept. of Agriculture WASDE report also came out Friday.  It raised estimates for US corn production and reduced the soybean production estimate.  (Forecasts of large US crops in both have pushed both commodity prices down since the Spring.  The USDA also lowered its US national corn inventory (not growing, in storage) estimate by 8.4% from June.  (This could mean short-term prices may increase, which is what Friday’s market saw.) 

In stock news, on Friday, LUV and ACHR announced they have agreed to mutually develop operational plans for electric air taxis in CA and TX airports.  At the same time, Reuters reported exclusively that EADSY (Airbus) has launched a cost cutting program that includes a headcount freeze aimed tackling a problem with increased per jet cost of production.  (No layoff plans were reported, but “all costs” were on the table per the article.)  Meanwhile, the Financial Times reported that UL is planning massive layoffs in Europe, with layoffs of a third of officer workers (roughly 3,200) taking place between now and the end of 2025.  Later, T announced (after an SEC filing revealed) that it had suffered a massive hack, losing data from 109 million customer accounts (nearly all of its cellular or landline customers) text and calls from six months in 2022.  (The FBI is investigating and at least on person has been arrested so far.)  After the close, Reuters reported that BHP and LUNMF are in talks about making a joint bid for copper miner FLMMF.  Then, on Sunday, the Wall Street Journal reported that GOOGL is near to striking a deal to acquire cybersecurity firm Wiz for roughly $23 billion.  (If completed, it would be GOOGL’s largest acquisition ever.)

In stock legal and governmental news, on Friday, India’s antitrust regulator said AAPL exploited its position in the app market.  Later, Reuters reported that BG and GLNCY (Glencore)-backed Viterra have offered to sell off their assets in two EU countries in order to get European Commission approval of their $34 billion merger.  At the same time, a US District Court of Appeals rejected appeals made by DISH and an amateur astronomer group, upholding the lower-court decision in favor for FCC approval for SpaceX to deploy thousands (up to 7,500) of Starlink satellites.  Later, C asked a judge to dismiss a conservative racial discrimination lawsuit that alleged the bank violated civil rights law by waiving ATM fees for customers of minority-owned banks.  At the same time, Bloomberg reported that federal prosecutors are investigating ABR over allegations (that were made by short sellers) of lending practices and financial disclosures.  Later, a US Appeals Court has temporarily put the FCC’s reinstatement of net neutrality rules on hold until August 5.  The court will consider appeals by the telco companies.  (The rule which was set to go back into effect July 22 requires internet service providers to treat all network traffic equally, rather than throttling some and charging higher rates for certain types of traffic.)  At the same time, a NY Federal Judge ruled AMZN must comply with an EEOC subpoena related to its investigation into allegations that company discriminated against pregnant workers.

Overnight, Asian markets were evenly mixed, but the biggest movers were to the red side.  Japan (-2.45%) and Hong Kong (-1.52%) led half of the region lower.  In Europe, the bourses are much more bearish with only four of 15 exchanges in the green at midday.  Russia (+1.39%) is a notable outlier.  The CAC (-.044%), DAX (-0.21%), and FTSE (-0.23%) are leading the region lower in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a gap higher.  The DIA implies a +0.56% open, the SPY is implying a +0.43% open, and the QQQ implies a +0.49% open at this hour.  At the same time, 10-Year bond yields are up to 4.221% and Oil (WTI) is off slightly to $82.13 per barrel in early trading.

The major economic news scheduled for Monday is limited to NY Empire State Mfg.  Index (8:30 a.m.).  However, Fed Chair Powell speaks at noon and Fed member Daly speaks at 4:35 p.m.  The major earnings reports before the open include BLK and GS.  Then, after the close, there are no major reports scheduled.

In economic news later this week, on Tuesday we get June Import Price Index, June Export Price Index, June Core Retail Sales, June Retail Sales, May Business Inventories, May Retail Inventories, and API Weekly Crude Oil Stocks report.  On Wednesday, June Building Permits, June Housing Starts, June Industrial Production, EIA Crude Oil Inventories, and Fed Beige Book are reported.  Fed Governor Waller also speaks.  Then Thursday, we get Weekly, Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, US Leading Economic Indicators Index, Fed’s Balance Sheet.  We also hear from Fed member Daly and Fed Governor Bowman.  Finally, on Friday, Fed members Williams and Bostic speak.

In terms of earnings reports later this week, on Tuesday we hear from BAC, SCHW, MS, PNC, PGR, STT, UNH, IBKR, JBHT, and OMC.  Then Wednesday, ALLY, ASML, CFG, ELV, FHN, JNJ, NTRS, PLD, SYF, USB, AA, CCI, DFS, EFX, KMI, LBRT, STLD, SNV, UAL, and WTFC report.  On Thursday, ABT, ALK, BX, CTAS, CHI, DPZ, HXL, INFY, KEY, MTB, MAN, MMC, NOK, NVS, SNA, TSM, TXT, AIR, ISRG, NFLX, PPG, and SCHL report.  Finally, on Friday, AXP, ALV, CMA, EEFT, FITB, HAL, HBAN, RF, SDVKY, SLB, TRV, and WIT report.

So far this morning, GS reported beats on both the revenue and earnings lines.  BLK missed on revenue while beating handily on earnings.

In miscellaneous news, Reuters reported that rating agencies (MCO and Fitch) said Friday that office and other commercial real estate loan delinquencies ticked up in June.  The report said that overall commercial mortgage-backed loans delinquency rate rose to 2.45% (from 2.42% in May).  (This is the rate of loans with payments at least 30-days in arrears.)  Elsewhere, Israeli PM Netanyahu reversed (reneged) on a previous major point in ceasefire negotiations with Hamas.  Israel now says it demands to control the flow of Palestinians back to the North during any ceasefire versus a prior concession of “free Palestinian movement” during a ceasefire.  This essentially ended the talks for now as Netanyahu tries to shore up his extreme right-wing alliances.  On Sunday, CNP (the main electric provider in the Houston area) said half a million residences and businesses remain without power going into the new week.

In way too early earnings season news, Friday saw the early reporting big bank stocks punished, despite all of them reporting beats versus consensus estimate. For example, WFC closed down 6.02%, C down 1.81%, and JPM down 1.21%.  Some analysts attributed this to the constituent details of the reports.  (For instance, WFC reported less interest income than expected although it did beat over overall revenue estimates by $440 million.)  Other analysts said they believed it had to do with forward outlook such as JPM’s Jamie Dimon warning that inflation and interest rates may stay higher than the market expects and may hurt the overall economy.  However, still others said it was pure profit-taking.  Whatever the reason, it was worth noting that only Energy underperformed the Financial Services sector on Friday, despite reports that were good at first glance.

With that background, it looks as if the Bulls want to run this morning. All three major index ETFs gapped higher to start the premarket and have printed white-body candles with no wicks since that start. DIA is testing Friday’s all-time high again in the early session. All three remain above their T-line (8ema). So, regardless of your timeframe, the market trend (short-term, mid-term, or longer-term) remains very bullish. In terms of extension, DIA is now the only one of the three major index ETFs stretched above its T-line. However, the T2122 indicator is in the top end of its overbought range. Therefore, the market may be in need of some rest or a pullback. With regard to those 10 big dog tickers, eight of the 10 are in the green this morning. TSLA (+4.07%) is the biggest mover and also leading the market in premarket volume. Only MSFT (-0.12%) and META (-0.21%) are below break-even among those market-moving stocks.

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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