On Tuesday markets gapped higher on better-than-expected PPI numbers.  The SPY gapped up 0.49%, DIA gapped up 0.49%, and QQQ gapped up 0.63%. From there, DIA meandered back-and-forth across its opening gap all day, ending up just above its open.  For their part, SPY and QQQ gave us a similar motion, but did it with a slight bearish trend.  This produced indecisive candles in all three major index ETFs.  SPY printed a black-bodied Hammer-type candle that did not quite make it up to retest its T-line (8ema) from below.  QQQ printed a larger-body, black-bodied Hammer-type candle that similarly did not quite make it up to retest the T-line.  Meanwhile, DIA gave us a white-bodied Doji-type candle that retested and closed just above its T-line.

On the day Tuesday, nine of the 10 sectors were in the green with Financial Services (+1.59%), Industrials (+1.34%), and Basic Materials (+1.34%) leading the way higher.  On the other side, Healthcare (-1.13%) was by far the laggard. At the same time, SPY gained 0.14%, DIA gained 0.52%, and QQQ lost 0.09%.  At the same time, VXX fell another 2.27% to close at 47.42 while T2122 popped up to the top of its mid-range at 76.00.  On the bond side, 10-Year Bond yields rose again to 4.792% and Oil (WTI) fell 1.09% to $77.96 per barrel.  So, after the gap higher, Tuesday was a volatile day that sold off and rallied over and over.  This choppy day really did nothing to change the trends and can be written off to noise within the downtrend. This happened on average volume in the SPY and QQQ but less-than-average volume in DIA.

The major economic news Tuesday included Dec. Core PPI, which came in flat at 0.0% (compared to a forecast +0.3% and a November reading of +0.2%).  On the headline side, December PPI was +0.2% (well below the forecast and November +0.4% value).  Later, the December Federal Budget Balance came in at -$87.0 billion (compared to a forecasted -$80.0 billion but far better than November’s -$367.0 billion number).  After the close, the API Weekly Crude Oil Stocks report showed a smaller than anticipated drawdown of 2.600 million barrels (versus a 3.500-million-barrel draw that was forecast and the previous week’s -4.022-million-barrel reading). 

In Fed news, on Tuesday New York Fed President Williams told an audience that housing affordability was the main concern facing the NY Fed District.  (He did not comment on Monetary Policy.)  Meanwhile, Kansas City Fed President Schmid told a different audience that it is too early to tell what policies the new Trump administration will enact or how they will impact the US economy.  Schmid went on to say he feels the economy is near the point where it doesn’t need either restrictive or expansionist Fed policy.

Overnight, Asian markets were mostly red.  Taiwan (-1.24%) and Shenzhen (-1.03%) paced the losses while Thailand (+0.96%) was by far the leader among gainers.  Yet in Europe we seen green across the board at midday. The CAC (+0.72%), DAX (+0.92%) and FTSE (+0.79%) lead the region higher in early afternoon trade.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a move higher to start the day.  DIA implies a +0.53% open, SPY is implying a +0.33% open, and QQQ implies a +0.33% open at this hour.  At the same time, 10-Year Bond Yields have fallen to 4.757% and Oil (WTI) is up half a percent to $77.89 per barrel in early trading.

The major economic news scheduled for Wednesday includes Dec. Core CPI, Dec. CPI, and NY Empire State Mfg. Index (all at 8:30 a.m.), EIA Weekly Crude Oil Inventories (10:30 a.m.), and Fed Beige Book (2 p.m.).  We also hear from Fed members Kashkari (10 a.m.) and Williams (11 a.m.).  The major earnings reports scheduled for before the open are limited to BK, BLK, C, GS, JPM, and WFC.  Then, after the close, CNXC, FUL, and SNV report. 

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Export Price Index, Dec. Import Price Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, Dec. Core Retail Sales, Dec. Retail Sales, Nov. Business Inventories, Nov. Retail Inventories, and the Fed Balance Sheet.  Fed member Williams also speaks again.  Finally, on Friday, Dec. Building Permits, Dec. Housing Starts, Dec. Industrial Production, and Nov. TIC Net Long-Term Transactions are reported.

In terms of earnings reports later this week, Thursday, we hear from BAC, FHN, GS, INFY, MTB, MS, PNC, TSM, USB, UNH, and JBHT.  Finally, on Friday, CFG, FAST, RF, SLB, STT, TFC, WBS, and WIT report.

So far this morning, BK, BLK, GS, JPM, and WFC have all reported beats on both the revenue and earnings lines.  (C does not report until 8 a.m.) 

With that background, the market seems modestly bullish so far in the premarket. All three major index ETFs made a modest gap higher and have followed-through with small white-body candles that are mostly body (small wicks).  It is worth noting that only DIA has stayed above its T-line (8ema), which is about where it closed Tuesday. So, two of the three remain below their T-line (8ema).  This means the short-term trend remains bearish.  The same is true in the mid-term where only DIA is challenging its downtrend line.  However, in the long-term, all three are above their uptrend line (DIA just climbing back above).  So, in the long-term the market remains Bullish.  In terms of extension, all three of the major index ETFs are now back close to their T-line and, for its part, T2122 is at the top part of its mid-range. So, both sides have room to work but the Bears have slightly more slack to work with today.  In terms of the 10 Big Dogs, all 10 are in the green with TSLA (+1.09%) leading the way while INTC (+0.05%) is the laggard. Related to volume, TSLA and NVDA (+0.36%) are neck-and-neck on what is a light-volume premarket session.  The next closest ticker has traded 10 times less dollar-volume than those two.

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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