Friday was a day where most of the move came at the open.  SPY gapped down by 0.53%, DIA gapped down 0.46%, and QQQ opened 0.17%. From there, all three of the major index ETFs meandered sideways with QQQ having the most volatility, SPY the least, and DIA had a slight bullish trend. All three remain well above their T-line (8ema) and the only other retest was SPY retesting support from above and passing.  This all gave us indecisive candles across all three with long-legged Doji candles in SPY and QQQ while DIA printed a white-bodied Spinning Top candle.  This happened on below-average volume in the SPY, DIA, and QQQ.

On the day, nine of the 10 sectors were in the red, with Industrials (-0.83%) and Healthcare (-0.78%) in front of the others leading the rest of the market lower. On the other side, Utilities (+1.68%) were the only sectors in green and held up much, much better than the other sectors.  Meanwhile, SPY lost 0.52%, DIA lost 0.20%, and QQQ lost 0.19%.  VXX fell another 0.61% to close at 47.43 and T2122 fell just outside of its over-bought range to the top of its mid-range at 78.17. At the same time, 10-Year bond yields rose to close at 3.745% while Oil (WTI) fell just 0.25% to close at $71.77 per barrel.  So, Friday was basically modest gap lower and then a dead market as markets seemed to want to get past triple-witching and the weekend. 

There was no major economic news or earnings reports scheduled for Friday.

In Fed news, Fed Governor Waller discussed the FOMC’s half percent rate cut with CNBC.  Waller said that rate cut was the right decision because the economy is strong and inflation is coming down…and the Fed wants to keep it that way.  Waller said that recent data pushed him in the direction of a larger rate cut, while noting “estimates” suggest that core PCE is running below target and that was what pushed him over the edge toward supporting the larger rate cut.  As always, Waller said that future rate decisions will be data dependent and that the FOMC could pause if inflation progress stalls, but he’s also open to another larger cut if the jobs market makes it appropriate.  Finally, Waller said he does not believe the Fed is “behind the curve” (or ahead) and he thinks that inflation is “on the right path.”  Later, Fed Governor Bowman released a statement that her dissenting vote to the FOMC’s half percent rate cut, instead voting for a quarter-point cut, to avoid “a premature declaration of victory over inflation.” She echoed Chair Powell (and Governor Waller) in saying that the economy and job market remain strong, but that “core personal expenditure prices are still rising faster than 2.5% from 12 months earlier.”  Bowman continued, “We have not yet achieved our inflation goal. (So,) I believe that moving at a measured pace toward a more neutral policy stance will ensure further progress in bringing inflation down to our 2% target. This approach would also avoid unnecessarily stoking demand.”  (Her statement did not specifically say so, but apparently, she believes a measured pace is best defined as quarter point rate moves.)

In stock news, on Friday, CEG announced plans to restart the 3-Mile Island nuclear power plant, saying that it had contracted to sell the power to MSFT for use in AI data centers. CEG said it plans to invest $1.6 billion to upgrade and restart the plant. CEG stock gapped up 13% and closed up 22.31% on the news. (However, as of day end, the Nuclear Regulatory Commission said it had not received an application from CEG, which would need to be approved before restarting the plant.)  At the same time, NVO announced disappointing results from a phase 2a trial of its experimental oral anti-obesity drug monlunabant. The trial found patients lost just 6.5% of their body weight over 16 weeks using the once-daily pill.  (NVO fell nearly 5% on the news.)  Later, CAH announced it has agreed to buy private cancer center operator Integrated Oncology Network for $1.12 billion in cash. The move gives CAH access to 100 cancer treatment centers in 10 states for distribution of its drugs. 

Meanwhile, Bloomberg reported APOS has been given $5 billion by BNPQY to expand its private credit investments.  At the same time, the Wall Street Journal reported that QCOM made a buyout offer for INTC earlier in the week.  This news broke Friday afternoon, and INTC popped 7% on the news, but closed up 3.31%.  (No details on the offer or response were given. However, the Journal said it had three sources, including people on both sides of the offer.) It’s worth noting that even if INTC accepted the offer, there would be huge hurdles in getting regulatory approval…and that approval would need to come from several governments. After the close, BA’s new CEO Ortberg made his first major move by firing the head of the company’s Space and Defense unit, effective immediately. The company name the unit’s COO to assume the duties until a replacement can be found.

In stock legal and governmental news, on Friday, a German court ruled against AMZN and in favor of NOK in the phone company’s patent infringement suit. (The case is over video technologies in streaming devices that AMZN is selling without a NOK license.)  At the same time, AAL asked the US Dept. of Transportation to let it to delay resuming two daily flights to China from the US.  AAL cited lags in travel demand for China that have not recovered from pre-pandemic levels (COVID being the reason the flights were discontinued originally).  (DAL and UAL had both sought the same permission earlier.)  Later, the US Dept. of Energy announced plans to award $3 billion across 25 projects in 14 states in support of battery manufacturing.  ALB, HON, and LUNMF are among the companies receiving these grants.  At the same time, the NHTSA said that F will recall 144k vehicles over rearview camera freezing problems.  Later, the FDA approved AZN’s self-administered nasal spray flu vaccine.  (This is the first of its kind drug approved.) 

Elsewhere, the FDA also approved ZVRA’s drug for a rare and fatal genetic disorder.  (The FDA had previously declined to approve the ZVRA drug and ordered an extended review.)  Later, the SEC ruled that FOX can avoid a vote by shareholders asking it to consider labeling news and opinion shows to distinguish them for viewers as activist investors.  The SEC agreed with FOX that the matter is not a shareholder matter, but rather an “ordinary business decision.”  At the same time, and Italian judge ordered a $84 million seizure of assets and money from the Chairman of STLA related to alleged tax fraud.  Later, the FTC sued UNH, CI, and CVS, alleging that their pharmacy benefits manager units steered patients away from lower-cost insulin to higher-cost products by excluding the lower-cost products from their lists of covered drugs distributed to patients.  At the same time, the NHTSA announced that GM is recalling 450k pickups and SUVs in the US over an inoperative warning light for low brake fluid.

Meanwhile, the conservative US 5^th District Court of Appeals revived a suit brought by drug companies and their trade groups challenging the right of the government to negotiate drug prices.  The court did not address the merits of the case but instead found the TX judge was wrong to dismiss the case in February, saying he did not have jurisdiction to hear the case, even though it was brought in his court. At the same time, SATS received approval from the FCC to buildout the company’s 5G network for Boost Mobile.  (SATS says it plans to cover 80% of the US by the end of 2024.)  Later, the JNJ subsidiary used for the “Texas Two-Step” attempt to avoid the liability of talc lawsuits filed for bankruptcy again (a third time) to advance JNJ’s $10 billion settlement plan that would end tens of thousands of lawsuits.  (JNJ says that 83% of lawsuit claimants have accepted the settlement offer.  JNJ is hoping that the bankruptcy judge will order the settlement to apply to all plaintiffs, instead of just the 83%.)  After the close, the SEC approved options trading on BLK’s Bitcoin spot-price ETF.

In miscellaneous news, on Friday, the Biden Administration announced it is preparing a new $375 million military aid package for Ukraine.  This package will include HIMARS missiles (made by LMT), as well as 155mm and 105mm artillery shells (made by BAESF).  Elsewhere, in government shutdown news, on Sunday afternoon Speaker of the House Johnson decided to remove the MAGA voter suppression amendment from the government funding continuing resolution.  The revised bill only funds government operations until December 20 (9 weeks) as the GOP hopes to get past this, its SEVENTH shutdown fiasco since taking power in January 2023 (with an eighth cliff-edge then scheduled the week before Christmas).  The Speaker indicated in a letter to his caucus that he would bring a vote on the measure this week, with details still unknown.

In geopolitical news, Israel ramped up regional tensions with more bombing attacks Friday, Saturday and Sunday.  Initially, Lebanon’s Hezbollah group initially responded with rhetoric, but as Israeli attacks continued the group conducted missile attacks further into Israel than has been seen for a long time, with rockets landing near Haifa (on the Mediterranean coast). Meanwhile in Russia, Ukrainian drone attacks destroyed three armament depots in the Moscow region on Saturday and Sunday.  These attacks blew up 60,000 tons of armaments ranging from artillery shells, to rockets, to bombs, to cruise missiles. This included shipments from North Korea. (The value of the destroyed munitions is very likely in the range of many billions of dollars.)

Overnight, Asian markets were mixed with five red exchanges and seven green ones.  Japan (+1.53%) led the gains while Australia (-0.69%) paced the losses.  In Europe, we see a similar picture taking shape as there are six red bourses and eight green ones at midday.  The CAC (-0.321%), DAX (+0.48%), and FTSE (-0.20%) lead the region on volume as always.  In the US, as of 7:30 a.m., Futures are pointing toward a start modestly on the green side of flat.  The DIA implies a +0.06% open, the SPY is implying a +0.14% open, and the QQQ implies a +0.22% open at this hour.  At the same time, 10-Year bond yields are up t o3.751% and Oil (WTI) is up half a percent to $71.32 per barrel in early trading.

The major economic news scheduled for Monday is limited to S&P Global Mfg. PMI, S&P Global Services PMI, and S&P Global Composite PMI (all at 9:45 a.m.). However, we also hear from Fed members Bostic (8 a.m.) and Kashkari (1 p.m.).  There are no major earnings reports scheduled for before the open.  However, after the close, AIR reports.

In economic news later this week, on Tuesday, we get Conference Board Consumer Confidence and Weekly API Crude Oil Stocks.  Then Wednesday, August Building Permits, August New Home Sales, and Weekly EIA Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, August Core Durable Goods Orders, August Durable Goods Orders, Q2 Core PCE Prices, Q2 GDP, Q2 GDP Price Index, August Pending Home Sales, and the Fed Balance Sheet.  We also hear from Fed Chair Powell, Fed member Williams, Fed Vice Chair Barr, Treasury Sec. Yellen, Fed Vice Chair Barr, and Fed member Kashkari. Finally, on Friday, August Core PCE Price Index, August PCE Price Index, August Personal Spending, August Goods Trade Balance, August Retail Inventories, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Tuesday, we hear from AZO, THO, KGH, and WOR.  Then Wednesday, CTAS, CNXC, FUL, JEF, MU, and WS report. On Thursday, we hear from CAN, KMX, JBL, SNX, BB, COST, and SCHL.  Finally, on Friday, there are no earnings reports scheduled.

In last minute news, APO (Apollo Global Mgmt.) offered to make a $5 billion “equity-like” investment into INTC. This is both a vote of confidence in INTC, but depending on the board mindset may also offer an alternative to the friendly take-over offer from QCOM. Either way, INTC shares spiked in premarket on the news.

With that background, it looks like the market is indecisive and just on the plus side of break-even in the early session. All three major index ETFs have printed more wick than body, with QQQ having the only appreciable body among those candles. All three remain above their T-line (8ema). So, the short-term trend is still bullish. The mid-term trend is now also bullish with QQQ the laggard but now well over its downtrend line going back to the July all-time high. In the longer-term we still have a strong Bull trend all three major index ETFs and remain near all-time highs. With regard to extension, none of the three major index ETFs are too far extended above their T-lines. In addition, the T2122 indicator has dropped out of its overbought range, but sits in the top of its mid-range. So, markets may have room to run either direction, but the Bears still have more slack to work with today. With regard to those 10 big dog tickers, six of the 10 are in the green with INTC (+4.01%) way, way out in front leading gains. However, that biggest dog, NVDA (-0.09%) is among the laggards.

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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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Markets gapped strongly higher at the open Thursday.  SPY gapped up 1.73%, DIA gapped up 1.39%, and QQQ gapped up a whopping 2.39%.  From that point, all three major index ETFs saw volatility in the first hour, followed by a rally that lasted until about 2 p.m., when a modest selloff took over and lasted the rest of the day.  This action gave us gap-up, indecisive, Doji-type candles.  SPY was a true Doji that printed new all-time high and new all-time high close.  DIA gave us a black Spinning Top that also printed new all-time high and all-time high closes.  Meanwhile, QQQ gave a white Spinning Top that broke its downtrend line (going back to the all-time high in July) and retested, but did not close above, a resistance line running back through the August 22 high.  This all happened on average volume across all three major index ETFs.

On the day, eight of the 10 sectors were in the green, with Technology (+2.73%) out in front of the others leading the rest of the market higher. On the other side, Utilities (-0.21%) and Consumer Defensive (-0.13%) were the only sectors in red.  Meanwhile, SPY gained 1.71%, DIA gained 1.25%, and QQQ gained 2.53%.  VXX fell 4.33% to close at 47.72 and T2122 climbed back into the top half of its over-bought range at 94.74.  At the same time, 10-Year bond yields rose to close at 3.719% while Oil (WTI) popped 1.61% to close at $72.05 per barrel on supply fears caused by Israeli bombing in Lebanon and the Hezbollah Leader saying Israel “crossed red lines” and there would be a reckoning.  So, Thursday was basically a re-think of the Fed policy change resulting in a gap higher.  After that gap, it was just volatility the rest of the day. 

The major economic news scheduled for Thursday included the Weekly Initial Jobless Claims, which came in lower than expected at 219k (compared to the 230k forecast and prior week’s 231k).  On the ongoing front, Weekly Continuing Jobless Claims were also down at 1,829k (versus a forecast of 1,850k and a prior week value of 1,843k). At the same time, the Q2 Current Account was lower at -$266.8 billion (compared to a forecast of -$259.0 billion and a Q1 reading of -$241.0 billion).  Meanwhile, the Philly Fed Mfg. Index was much better at 1.7 (versus a forecast of -0.8 and much better than the August -7.0 value).  At the same time, the Philly Fed Mfg. Employment Index was much higher at 10.7 (compared to August’s -5.7 reading).  Later, August Existing Home Sales were lower than predicted at 3.86 million (versus a forecast of 3.92 million and July’s 3.96 million number).  At the same time, the August US Leading Economic Index was better than anticipated at -0.2% (compared to a forecast of -0.3% and much better than July’s -0.6% value).  Finally, after the close, the Fed Balance Sheet showed a $6 billion decrease at $7.109 trillion (versus the prior week’s $7.115 trillion balance).

After the close, LEN reported beats on both the revenue and earnings lines.  However, FDX and MLKN missed on both the top and bottom lines.  (FDX missed on earnings by more than 25%.)

In stock news, on Thursday, INTC said it has no plans to divest its majority stake in MBLY.  At the same time, BABA accelerated its efforts to compete in the AI market by releasing 100 open-source large language models and text-to-video AI technology.  (BABA’s competitors like BIDU are primarily pursuing a closed-source approach.) Later, the Wall Street Journal reported that DIS is dumping the CRM-owned worker collaboration tool Slack after the recent hack that exposed more than a terabyte of DIS data.  At the same time, GM’s Cruise unit announced it will begin testing up to five autonomous vehicles in the San Francisco Bay area later this fall.  Later, BRKB’s railroad (BNSF) announce it had reached a tentative deal with the SMART union on a 5-year labor contract.  At the same time, KO announced plans to invest $1 billion in Nigeria operations over the next five years.  Later, TLSA rival NIO announced price cuts on its first car, now starting at $21,210 in China.

Elsewhere, the CWA union announced NYT workers had approved a strike, with 95% voting in favor of a strike.  At the same time, NKE announced its CEO (Donahoe) will step down on October 14 and will be replaced by former NKE senior executive Elliott Hill, who had left after 32 years at NKE.  (CNBC reported Donahoe was being forced out as the board seeks to restructure the company.)  Later, MA announced that they forecast holiday spending will grow by 3% again this year during a shorter-than-usual holiday window.  Meanwhile, GOOGL announced that ads will now be able to run, even when a YouTube video has been paused.  This annoyance may well just be intended to increase sales of YouTube Premium subscription accounts ($13.99/month) which avoids ads altogether. Later, after the close, the CEO of MASI was ousted after activist investor Politan won two board seats during a shareholder proxy vote.  Finally, Bloomberg reported the EU has warned AAPL that it must open up its extremely-guarded iPhone and iPad operating systems to rival technologies OR it will face significant (unspecified) fines.  The report says AAPL was given six months to do this before penalties will begin.

In stock legal and governmental news, on Thursday, the SEC announced that MQBKY (investment advisor) had agreed to pay $79.8 million to settle charges of overvaluing collateralized mortgage obligations held in its advisory accounts between 2017 and 2021.  At the same time, the Bureau of Land Mgmt. published a key environmental report, which was the last step to approval of IONR’s Rhyolite Ridge lithium mine in NV.  (The mine will produce enough lithium for 370k electric vehicles per year.  F and TM have both agreed to buy lithium from that mine.)  Later, Reuters reported that a criminal investigation is underway at the ET natural gas liquids plant that exploded and has been burning in La Porte TX since Monday. (A body was found in the car that hit the pipeline.)  At the same time, the FDA approved ELAN’s skin disease treatment for dogs.  After the close, the Anti-Defamation League joined a lawsuit alleging INTC has a hostile workplace and has wrongfully discriminated and terminated a former Israeli employee, after that employee accused two executives of openly posting anti-Semitic propaganda tied to the Israeli-Hamas war.

In miscellaneous news, on Thursday, Reuters reported that pro-Ukraine congressional leaders and the Biden administration are very near an agreement to extend expiration of $6 billion in military aid for Ukraine.  The report indicated that the deal would extend the period during which the President us able to drawdown US military supplies and use the $6 billion to replenish.  If not extended, the $6 billion expires at the end of the month.  Elsewhere, not waiting on the dysfunctional GOP House, the Senate Majority Leader moved a placeholder stop-gap bill through procedural hurdles.  This will allow the Senate to vote on a government funding continuing resolution almost immediately, if the House can get one passed and send it to the Senate.  Meanwhile, Freddie Mac reported Thursday that the national average 30-year, fixed-rate, conforming mortgage rate dropped to 6.09% (down from 6.20% a week prior). 

In Fed rate forecasting, the day following the Fed’s 50-basis-point cut, the Fed Funds Futures market closed while expecting a quarter-point cut in early November and then a half point cut in mid-December.  Specifically, 60.9% of trades expect a quarter-point cut in September, with the other 39.1% predicting a half percent cut at that meeting.  For December, 29.0% forecast a cut to 4.25%-4.50% (a total of a half of a percent lower than the current rate) while 50.5% expect 4.00%-4.25% (three-quarters of a percent lower than current), and 20.5% of trades predict a cut to 3.75%-4.00% (a full percent lower than current, or in other words, expect two cuts of half a percent during the last two meetings of the year).

Overnight, Asian markets were mixed, but leaned toward the green side with just four of the 12 exchanges in the red in that region.  (Note that the Bank of Japan held rates steady.) However, in Europe, we see red across the board at midday after the Bank of England and Norway’s central bank both held rates steady in contrast to the Fed’s big cut Wednesday.  The CAC (-0.72%), DAX (-0.86%), and FTSE (-0.49%) lead the region lower in early afternoon trade.  In the US, as of 7:15 a.m., Futures are pointing toward a mixed but down start to Friday.  The DIA implies a +0.03% open, the SPY is implying a -0.25% open, and the QQQ implies a -0.43% open at this hour.  At the same time, 10-Year bond yields are at 3.732% and Oil (WTI) is off 0.43% to $71.64 per barrel in early trading.

The only major economic news scheduled for Friday is Fed member Harker speaking at 2 p.m.  There are also no major earnings reports scheduled for either before the open or after the close.

In overnight news, MBGAF (Mercedes Benz) gave a profit warning and lowered its guidance, citing slow sales in China.  The CEO of Mercedes promised a sales push in China, presumably meaning a lowering of prices as well as introducing new “products” to the Chinese market.  Also, after their bad report, FDX is down more than 12% in premarket trading.  Early Friday, CEG announced it will restart the Three-mile Island nuclear power plant and have contracted to sell the power produced to MSFT.

With that background, it looks like the Bears have control early Friday. All three major index ETFs gapped modestly lower and have printed black-bodied candles since then in the premarket. However, all three remain well above their T-line (8ema). So, the short-term trend is still bullish. The mid-term trend is now also bullish with QQQ the laggard but now well over its downtrend line going back to the July all-time high. In the longer-term we still have a strong Bull trend all three major index ETFs. With regard to extension, none of the three major index ETFs are too far extended above their T-lines given the premarket action, but they were getting close as of Thursday’s close. However, the T2122 indicator is back in the top half of its overbought range. So, markets may have room to run either direction, but the Bears definitely have more slack to work with today. With regard to those 10 big dog tickers, eight of the 10 are in the red with the two remaining just barely holding onto green territory. NVDA (-0.87%) and INTC (-0.85%) lead the losses while NVDA and TSLA (-0.72%) lead the dollar-volume traded as usual. GOOGL (+0.16%) is holding up better than the other big dogs. Also, bear in mind that today is Friday, pay day, and also triple witching day. So, prepare your account for potential volatility in the afternoon as well as 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 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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription Plans • Private 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

Wednesday was about what we (or at least I) had expected.  SPY opened up 0.09%, DIA opened up 0.05%, and QQQ gapped up 0.24%.  From there, all three major index ETFs immediately crossed back below the prior close before grinding sideways in a tight range for two hours.  Then we saw a modest selloff followed by a modest rally back to the same level waiting on the Fed. At 2 p.m. we had a 5-minute rip upward and volatility followed by a drift higher into Chair Powell’s presser at 2:30 p.m.  After Powell started, we sold off the rest of the day. This action gave us black-bodied, Inverted Hammer candles in all three major index ETFs.  SPY and DIA printed new all-time highs, while QQQ again retested and closed below its downtrend line running back to Mid-July.  None of the three retested or crossed below their T-line (8ema).  This all happened on slightly below-average volume in SPY, DIA, and QQQ.

On the day, all 10 sectors were in the red, with Utilities (-0.60%) out in front of the others leading the market lower. On the other side, Healthcare (-0.03%), Financial Services (-0.05%), Communications Services (-0.09%) and Consumer Cyclical (-0.09%) were all clustered as laggards. Meanwhile, SPY fell 0.30%, DIA lost 0.26%, and QQQ lost 0.43%.  VXX fell 0.83% to close at 49.88 and T2122 fell slightly again but remains in the middle of its over-bought range at 87.50. At the same time, 10-Year bond yields actually gained to close at 3.704% while Oil (WTI) fell 1.55% to close at $70.09 per barrel.  So, Wednesday was all about the Fed.  the Bulls get their new all-time highs in the large-cap indexes.  However, then traders took profits, afraid to hold too much long risk going into tomorrow’s Fed decision, statement, and press conference.

The major economic news scheduled for Wednesday include August Building Permits, which were stronger than expected at 1.475 million (compared to the 1.410 million forecast and a 1.406 million July reading).  At the same time, August Housing Starts were strongly higher at 1.356 million (versus a 1.310 million forecast and 1.237 million July value).  This was a 9.6% month-on-month increase.  Later, Weekly EIA Crude Oil Inventories showed a bigger than anticipated inventory drawdown at -1.630 million barrels (compared to a -0.200 million barrels forecast and the prior week’s +0.833-million-barrel inventory build). Then, at the close, July TIC Net Long-Term Transactions indicated a net inflow of $135.4 billion. 

However, the big news of the day came from the FOMC.   At 2 p.m. Fed announced a half-percent rate cut (down to the 4.75%-5.00% range) for Fed Funds.  At the same time the Current Q3 Interest Rate Projection was down to 4.4% (down from 5.1%).  For the 1^st-Year Out Q3 Interest Rate Projection (2025) the average estimate is now 3.4% (down from the prior 4.1%).  Meanwhile, the 2^nd-Year (2026) Q3 Interest Rate Projection is now 2.9% (down from 3.1%). At the same time, the 3^rd-Year (2027) Q3 Interest Rate Projection remained steady at 2.9% (from the previous 2.9% forecast). The Longer-Term Q3 Interest Rate Projection was also 2.9% (which was up a tick from the previous average forecast of 2.8%). 

In his press conference, Fed Chair Powell said he does not see the risk of economic downturn as heightened.  He said, “I don’t see anything in the economy right now that suggests that the likelihood of a recession, sorry, of a downturn, is elevated.”  He continued, “You see growth at a solid rate. You see inflation coming down. You see a labor market that’s still at very solid levels. So, I don’t really see that now.”  Powell said that there was “broad support” for Wednesday’s half-point cut. However, Fed Governor Bowman (a hawk) dissented, instead calling for a quarter-point cut.  Looking forward, at the moment, the Dot Plots indicate two (of 19) board members feel there should be no more cuts in 2024.  At the same time, seven of the 19 think one additional quarter point cut will be appropriate.  However, the median view is that two more quarter-point cuts will be needed in 2024.  On the other end, one of the 19 feels more than half a percent of additional cut in 2024 will be appropriate.

After the close, SCS missed on revenue while beating on earnings.

In stock news, on Wednesday, GM reached a tentative deal with Unifor (the Canadian version of the UAW union) over its Ontario, Canada plant.  At the same time, a day after the Dept. of Justice approved the deal, ALK completed the $1.9 billion acquisition of HA.  Later, BA began furloughing thousands of workers via a one week off every four weeks scheme.  BA announced this will last for the duration of the strike by 33k of its workers in the Pacific Northwest.  At the same time, the UAW announced it is considering multiple US strikes against STLA for breaking the contract promises it made a year ago.  (The six-week strike a year ago cost the company $834 million.) Later, ROG announce it will buy a controlling stake in the Toronto Raptor’s NBA team and NHL’s Toronto Maple Leafs from BCE for $3.46 billion. 

Elsewhere, the UAW said that they have set a September 26 strike deadline for the F River Rouge complex near Dearborn MI.  500 of the complex’s 6,000 workers would participate if a strike takes place.  Later, AMZN announced it is raising the pay of its fulfillment and transportation employees by at least $1.50 per hour (and giving them a free Amazon Prime membership) as the company fights unionization and internal pressure for better pay and conditions. At the same time, GM announced it is offering adapters to its electric vehicle owners that would allow them to use the TSLA network of chargers. Finally, TUP did file for bankruptcy Wednesday as was rumored earlier in the week.

In stock legal and governmental news, on Wednesday, GSK announced it has agreed to settle two lawsuits in CA that had claimed its discontinued Zantac heartburn drug caused cancer.  (No financial details were released.)  Later, the CEO of GME (Cohen) agreed to pay a $1 million penalty to the FTC for failing to disclose that he purchased $100 million of voting shares in WFC in 2018.  (He did so not as an investment, but as a way to influence WFC operations and in pursuit of a board seat.)  At the same time, GOOGL won a legal challenge against a $1.7 billion fine from EU antitrust regulators.  The court agreed with the regulator, but threw out the fine.  The antitrust commission can appeal. 

Meanwhile, a separate ruling announced at the same time, went against QCOM as it got the court to trim the fine from $269.07 million to $265.40 million.  Later, GOOGL asked a UK tribunal to throw out a $9.3 billion lawsuit alleging the company abused its dominance in the online search market.  Back in the US, OCFC agreed to pay a $15.1 million settlement for “redlining” via loan discrimination against Black, Hispanic, and Asian loan applicants between 2018 and 2022.  At the same time, a second “Zantac trial,” this one against private German firm Boehringer Ingelheim rather than partners GSK, PFE, or SNY ended in a hung jury.  Later, FHN agreed to pay $325k to settle SEC charges in relation to the bank’s recommendations of certain products.

In government funding news, Speaker of the House Mike Johnson brought a six-month government funding extension (continuing resolution) including a completely unrelated MAGA voting restriction rider to a vote.  (As instructed and demanded by the GOP’s disgraced Presidential candidate.)  It failed by a vote of 202-220, as 14 GOP members voted against the ridiculous electioneering stunt.  (The main point of the amendment is requiring people to prove their citizenship before voting. This is stupid since it is already illegal for non-citizens to vote and there are only a miniscule number of such cases ever found. This plan would also not even take effect this election cycle as the GOP imply and would like the public to believe. So, it’s an expensive, unfunded, and difficult to implement solution to a non-problem that would not be implemented when the GOP wrongly claims it is needed. In other words, the GOP is happy to risk the economic impact and disruption of government shutdown for yet another attempt to whip up fear and “other” the groups the GOP sees as “they.”)  Even more silly is the fact that the whole bill would be dead on arrival in the Senate. Unfortunately, Johnson and other GOP Congressmen then told reporters that the Republicans have no “Plan B” for government funding.  So, this does increase the probability of a government shutdown on October 1. 

In miscellaneous news, the SEC unanimously (5-0) voted to approve a rule change to allow exchanges to price stocks in half penny increments.  There is no word on when such a change might be implemented.  However, NDAQ immediately said it would study the matter, but that it would hurt stock markets in the long run (for unspecified reasons).  Elsewhere, the US has sued the owner and operator of the Singapore-flagged ship that hit the Baltimore bridge earlier this year, killing six and causing massive damage. The Dept. of Justice is seeking more than $100 million (just for costs incurred in the recovery, expect other suits to cover rebuilding and economic damages) and are alleging the company cut corners on maintenance to save costs, causing the crash.

Overnight, Asian markets were green across the board.  Japan (+2.13%), Hong Kong (+2.00%), and Taiwan (+1.68%) led the region higher on the day.  Meanwhile, in Europe, with the minor exception of Portugal (-0.31%) we see the same green picture at midday.  The CAC (+2.01%), DAX (+1.52%), and FTSE (+1.20%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a gap higher to start the day.  The DIA implies a +1.13% open, the SPY is implying a +1.62% open, and the QQQ implies a +2.07% open at this hour.  At the same time, 10-Year bond yields are up to 3.713% and Oil (WTI) is up 0.75% to $71.42 per barrel in early trading.

The major economic news scheduled for Thursday includes the Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q2 Current Account, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 a.m.), August Existing Home Sales and August US Leading Economic Index (both at 10 a.m.), and Fed Balance Sheet (4:30 p.m.).  The only major earnings reports scheduled for before the open is CBRL, DRI, and FDS.  Then, after the close, FDX, LEN, and MLKN report.

In economic news later this week, on Friday, there is no major news, but Fed member Harker speaks. In terms of earnings reports later this week, on Friday there are no earnings reports of note.

So far this morning, FDS reported beats on both the revenue and earnings lines.  At the same time, DRI missed on both the top and bottom lines.  (CBRL is scheduled to report at 8 a.m.)

With that background, it looks like the Bulls are running this morning. All three major index ETFs gapped higher to start to premarket and have printed larger, white-body candles since then in the early session. SPY and DIA are sitting at new all-time highs again in the premarket. All three remain well above their T-line (8ema). So, the short-term trend is bullish. The mid-term trend is now also bullish with QQQ the laggard gapping well over its downtrend line going back to July. In the longer-term we still have a strong Bull trend all three major index ETFs. In terms of extension, none of the three major index ETFs are too far extended above their T-lines, but they are starting to get close in the early session today. However, at the same time, the T2122 indicator is still in the middle of its overbought range. So, markets have room to run either direction (if one side or the other can find momentum), but the Bears have a little more slack to work with today. With regard to those 10 big dog tickers, all 10 are strongly green so far this morning. AMD (+334%), NVDA (+3.15%), and TSLA (+3.00%) lead the gains while NVDA and TSLA lead the dollar-volume traded as usual. NFLX (+1.52%) is the “laggard” among those 10 bellwethers.

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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