Markets diverged at the start of the day on Tuesday. SPY gapped up 0.23%, DIA gapped down 0.19%, and QQQ gapped up 0.32%. At that point, QQQ chopped to the side along its opening level for the rest of the day. Meanwhile, SPY ground sideways along the open until 10:45 a.m. when it started a long, very slow, melt higher rally that lasted all day.  For its part, after the gap down, DIA followed through to the downside for the first hour.  Then it rallied in a steady fashion the rest of the day, recrossing its gap by 1:30 p.m. and continuing higher.  They all three took a tiny bit of profit the last 10 minutes of the day. This action gave us white-bodied candles on all those three major index ETFs.  SPY printed a gap-up, large-bodied, white candle with tiny wicks at both ends.  DIA printed a white-bodied candle with significant lower wick.  Both of them printed new all-time highs and new all-time high closes.  Meanwhile, QQQ printed a gap-up, white-bodied, Bullish Harami Spinning Top candle. 

On the day, five of the 10 of the sectors were in the green and the other five in the red as Utilities (+1.06%) was well out in front (by 0.44%) leading the way higher. On the other side, Basic Materials (-0.99%) was by far the laggard (by 0.51%).  Meanwhile, SPY gained 0.52%, DIA gained 0.29%, and QQQ gained 0.54%. VXX fell slightly again to close at 43.61 and T2122 dropped back out of its overbought territory into the top of the mid-range to close at 75.97.  At the same time, 10-Year bond yields climbed a bit to 4.295% while Oil (WTI) fell 0.45% to close at $68.63 per barrel. So, Tuesday was a day where SPY and QQQ gapped up, but then diverged with SPY melting higher.  At the same time, DIA gapped down and sold off before reversing to rally more strongly the rest of the day.  This all happened on above-average volume in the DIA and a bit below-average volume in the SPY and QQQ.

There was no major economic news scheduled for Tuesday included October Building Permits, which came in a bit higher than expected at 1.419 million (compared to a forecast of 1.416 million and a September reading of 1.425 million).  Later, November Conference Board Consumer Confidence was down a tick to 111.7 (versus a forecast of 111.8 but still up from the October 109.6 value).  At the same time, October New Home Sales were down sharply to 610k (compared to a 725k forecast and September reading of 738k).  Later, after the close, API Weekly Crude Oil Stocks report showed an unexpected 5.935-million-barrel drawdown (versus an expected +0.250 million barrels and the prior week’s 4.753-million-barrel inventory build).

In Fed news, the November FOMC Meeting Minutes indicated that Fed members see more cuts ahead, but in a more gradual pace.  The minutes said, “If the data comes in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, then it would likely be appropriate to move gradually toward a more neutral stance of policy over time.”  The continued by saying that progress on inflation continues to hold sway. They indicated some Fed members supported accelerated rate cuts should the labor market or economic growth deteriorate faster than expected. While other members floated the idea of a pause if inflation remains elevated.  In addition, there was some “discussion” on where rates will end up (the so-called neutral rate) that neither stimulates nor drags on economic growth.  That uncertainty “complicated the assessment of the degree of restrictiveness” needed among Fed members. 

After the close, ADSK, CRWD, JWN, NTNX, URBN, and WDAY all reported beats on both the revenue and earnings lines.  Meanwhile, DELL missed on revenue while beating on earnings. On the other side, HPQ beat on revenue while missing on earnings.  However, GES missed on both the top and bottom lines.

Overnight, Asian markets were mixed but leaned toward the green side with big gains in China.  Hong Kon (+2.31%), Shenzhen (+2.25%), and Shanghai (+1.53%) led the gainers while Taiwan (-1.52%) was by far the biggest loser.  In Europe, the bourses are mostly red at midday with just three of 14 exchanges above break-even.  The CAC (-1.08%) is an outlier, while the DAX (-0.49%) and FTSE (+0.05%) are more typical in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed, flatish start to the day.  The DIA implies a +0.07% open, the SPY is implying a -0.09% open, and the QQQ implies a -0.25% open at this hour.  At the same time, 10-Year bonds are down to 4.26% and Oil (WTI) is up 0.48% in early trading.

The major economic news scheduled for Wednesday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Oct. Core Durable Goods Orders, Preliminary Oct. Durable Goods Orders, Preliminary Q3 GDP, Preliminary Q3 GDP Price Index, Preliminary Oct. Goods Trade Balance, Preliminary Oct. Retail Inventories (all at 8:30 p.m.), Chicago PMI (9:45 a.m.), October Core PCE Price Index, October PCE Price Index, October Pending Home Sales, and October Personal Spending (10 a.m.), and Weekly EIA Crude Oil Inventories (10:30 a.m.). There are no major earnings reports scheduled for either before the open or after the close. 

In economic news later this week, on Thursday, markets are closed and there is no planned news due to the Thanksgiving holiday.  Finally, on Friday we get Chicago PMI and markets close early at 1 p.m. for additional holiday time off.

In terms of earnings reports later this week, there are no reports of note Wednesday.  Again, Thursday there are no notable reports scheduled with markets closed.  Finally, on Friday, MNSO reports.

So far this morning, YY missed on revenue while beating on the earnings line.

With that background, I suspect a good portion of traders are already gone for the holiday or are waiting for the 8:30 a.m.  and 10 a.m. data dumps before heading out the door.  Either way, so far in premarket there is broad indecision with all three major index ETFs printing Doji or small-body Spinning Top candles for the early session.  It is worth noting that SPY and DID sit at all-time highs while QQQ is only 1.25% below its own all-time high.  All three are above their T-line (8ema).  So, the short-term trend is now bullish.  Looking further out, obviously the mid-term and longer-term trends also remain bullish sitting at or near those all-time highs.  In terms of extension, DIA is still getting a bit stretched above its T-line, but the other two are not far from their 8ema. The T2122 indicator is now back in the top end of its mid-range. So, either side has room to move, but the Bears may have a more slack to work with today. In terms of the 10 Big Dogs, six of the 10 are in the red at this point of the early morning session. TSLA (+0.49%) is leading the way higher while NVDA (-1.33%) is by far the main laggard of the group.  In a reversion to pre-election form, NVDA is leading in terms of dollar-volume traded, sitting at almost 3 times as much traded than TSLA, which itself has traded 3 times as much as the next premarket volume leader.  Finally, if you follow Trader Almanac logic, remember it says that the day preceding a holiday (especially effectively a 4-day holiday) is often bullish with traders in great spirits.

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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