Monday was another lackluster day in the market.  The SPY gapped down 0.24%, the DIA gapped down 0.28%, and the QQQ gapped down 0.23%.  The three major index ETFs then vacillated back and forth across their opening gaps until 11:15 a.m., when the Bulls moved the SPY and QQQ back up above the Friday closing level and they traded sideways in a tight range until 3:55 p.m.  Meanwhile, the DIA continued its meandering in the morning gap until 3:55 p.m.  However, the strongest candle of the day for all three was the last 5-minutes which took all three out on their highs of the day.  This action gave us a large, white-body Marubozu (shaved head) in the SPY, a white-bodied Piercing Candle in the QQQ, and what could be seen as a large-body, white Hammer in the DIA.  This all happened on less-than-average volume in all three major index ETFs.

On the day, seven of the 10 sectors were in the green with Energy (+1.20%) way out front leading the other sectors higher.  Meanwhile, Communications Services (-0.93%) was by far the biggest laggard sector.  At the same time, the SPY gained 0.42%, DIA gained 0.12%, and the tech-heavy QQQ gained 0.47%.  VXX was just on the green side of flat to close at 22.90 and T2122 climbed but remains in the oversold territory at 14.13.  10-year bond yields spiked above four-and-a-half percent to 4.531% while Oil (WTI) was just on the red side of flat to end the day at $89.88 per barrel. So, in the first 90 minutes of the day markets were undecided. They then made a small move higher only to be undecided again until the last 5 minutes.  All-in-all, it was a nothing day that did not change the support or resistance levels and did not show much of a change in sentiment.  At best it gave us a little relief from Bearish over-extension.

There was no major economic news reported Monday.  However, MCO (Moody’s) warned that a government shutdown would be bad for the US creditworthiness and the US credit rating would come under pressure.  In the process, MCO essentially issued a stern warning to Congress (in a way to the House GOP since they have decided to not reach across the aisle in the hope of a much more conservative Budget).  MCO is the only rating agency that still gives the US its top credit rating.

In Autoworker contract talks and strike news, less than a day after it ratified its new contract with F (by 54% for versus 46% against), Unifor (Canadian version of UAW) announced that its next negotiation target is GM Canada.  (The F contract provides the reinstatement of defined benefit programs, double-digit percentage raises, and a one-time $10,000/employee bonus.)  Meanwhile, in the US, after the close, F announced it will stop construction work on its planned $3.5 billion battery plant in MI.  The company cited its uncertainty about the ability to remain competitive while locked in contract negotiations.  The UAW responded by calling the move a “thinly veiled threat to cut jobs.”

In stock news, OpenAI announced that its ChatGPT engine now has voice and image interaction capabilities similar to AAPL’s Siri and AMZN’s Alexa services.  These are likely to be quickly added to the MSFT AI assistants built into Office, Bing, and other MSFT products.  SPOT is also using this to translate content into different languages.  Later, analysts began reporting inside information indicating that TSLA will be revising its Q3 delivery numbers in the next few days.  The analysts expect about a 2.5% cut in the number of vehicles actually delivered in Q3.  At the same time, MSTR announced that it has recently purchased another $147.3 million worth of Bitcoin bringing their Bitcoin holdings to $4.68 billion. Elsewhere, PFE announced it has restarted production at its NC plant that was damaged by a tornado on July 19.  PFE says it will have all of the plant restarted by year-end but will continue to see lower-than-previous production until mid-2024.  At the same time, QCOM denied published reports that it is closing its Shanghai China R&D facility.  QCOM admitted it will be reducing headcount but will not close the facility.  Over in Europe, NSANY (Nissan) announced that all new vehicles it sells in Europe will be fully electric by 2030.  After the close, COST announced it is now offering its members access to a $29/visit online primary-care visit, a $72/visit virtual checkup (including a standard lab panel), and a $79 online therapy session.  The service is available in all 50 states.  COST won’t accept health insurance since the service is primarily aimed at uninsured Americans.

In stock government, legal, and regulatory news, a German court ruled that NFLX is infringing on an AVGO patent related to high-efficiency video encoding.  The court then issued an injunction requiring that NFLX quit using the technology in question.  (This could reshape NFLX service performance and/or result in a deal very favorable to AVGO.  Elsewhere, MGM has been named in a class-action lawsuit filed Friday.  The suit alleges the name, address, email address, date of birth, social security number, driver’s license number, and other personal information of MGM loyalty program members were taken by hackers as a result of lax security (no encryption) during the Sept. 7 cyberattack.  At the same time, a subsidiary of DB has been fined $25 million by the SEC for misstating ESG reporting (greenwashing).  Later, the NHTSA said that TM recalled nearly 22k Tundra and Tundra hybrid trucks due to wrongly labeled carrying capacities.  Meanwhile, YELP has asked a judge to disqualify a law firm from defending GOOGL because the firm previously represented YELP on matters related to the YELP suit against GOOGL.  After the close, the NHTSA announced it opened an investigation into a JBLU flight on Monday that experienced severe turbulence, injuring 7 of the passengers and one of the flight crew.  Also after the close, AAL filed an appeal of the court ruling requiring it to end its “alliance” with JBLU.  (JBLU previously said it would not appeal in order to protect its $3.8 billion acquisition of SAVE.)

After the close, THO reported beats on both the revenue and earnings lines.  However, despite being significant sales and earnings beats, the numbers showed a quarter-on-quarter decline of 28%.  So far this morning, FERG beat on both the revenue and earnings lines.  However, UNFI missed on revenue while beating on earnings.  It is worth noting that FERG raised its forward guidance while UNFI lowered guidance.  (SNX and CTAS report closer to the opening bell.)

Overnight, Asian markets were nearly red across the board with only Malaysia (+0.15%) hanging onto green territory.  Meanwhile, Hong Kong (-1.48%), South Korea (-1.31%), Japan (-1.11%), and Taiwan (-1.07%) led the rest of the region lower.  In Europe, we see a similar picture taking shape at midday.  Only Greece (+0.40%) and Denmark (+0.26%) are in the green while the CAC (-0.78%), DAX (-0.73%), and FTSE (-0.01%) lead the region lower.  In the US, as of 7:30 a.m., Futures are pointing toward a down start to the day.  The DIA implies a -0.39% open, the SPY is implying a -0.46% open, and the QQQ implies a -0.54% open at this hour.  At the same time, 10-year bond yields are back down to 4.493% and Oil (WTI) is off two-thirds of a percent to $89.08 pre barrel in early trading.

The major economic news scheduled for Tuesday includes Building Permits (8 a.m.), Conference Board Consumer Confidence and August New Home Sales (both at 10 a.m.) and API Weekly Crude Oil Stock report (4:30 p.m.).  We also have another Fed speaker (Bowman at 1:30 p.m.).  The major earnings reports scheduled before the opening bell are limited to CTAS, FERG, SNX, and UNFI.  Then after the close, AIR, COST, and MLKN report. 

In economic news later this week, on Wednesday, August Durable Goods, and EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Q2 GDP, Q2 GDP Price Index, Weekly Initial Jobless Claims, August Pending Home Sales, Fed Balance Sheet, and Fed Chair Powell speaks.  Finally, on Friday, the August PCE Price Index, August Goods Trade Balance, August Personal Spending, August Retail Inventories, Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflations Expectations, Michigan 5-year Inflation Expectations are reported and Fed member Williams speaks.

In terms of earnings reports later this week, on Wednesday, we hear from PAYX, CNXC, FUL, JEF, MU, and WOR.  On Thursday, CAN, KMX, JBL, and NKE report.  Finally, on Friday, CCL reports.

In miscellaneous news, Bloomberg reported that the major exchanges quietly changed the waiting period between listing and options being allowed to trade.  The waiting period was reduced from four to two days after listing to chase the volume.  (Options trading volume has more than doubled since 2019.)  Elsewhere, Reuters reported Monday that the SEC has collected WhatsApp, Signal, and other messaging service communications for thousands of major investment firm employees.  The report said the “illegal off-channel” communication investigation is expanding.  CG, APO, KKR, TPG, and BX, are among the listed companies involved in the expansion.  Meanwhile, financial services firm AON released a report saying that the pension plans of the largest US companies are the healthiest they have been in 12 years after years of record corporate profits.  The report said the average “funded ratio” of S&P 500 companies was 102% as of last Thursday.  (This is the highest ratio since prior to 2011.)

In late-breaking mortgage news, industry analyst Insider Intelligence reported this morning that META Threads is struggling to grow.  The report said Threads ranks above only Tumblr among the social media platforms in terms of US users.  In politics, Congress returns from the 4.5-day weekend they were given when the right-wing part of the GOP caucus killed Speaker McCarthy’s move for a continuing resolution last Thursday.  McCarthy said yesterday that the House will vote again on a 45-day CR and budget bills today with a government shutdown looming Saturday.  Elsewhere, President Biden will join the UAW on the picket line today (with the former President expected Wednesday so that he can counter-program the next GOP debate instead of participating).  Elsewhere, a senior AAPL VP will be testifying today in the GOOGL antitrust trial.  Sr. VP Cue will testify about how and why AAPL chose GOOGL as its default search engine for iPhones.

With that background, it looks like the Bears are gapping us down in premarket. So far in the early session, we are seeing small-bodied, white, indecisive, “inside day” candles in all three major index ETFs. All three remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with retests of the August and June lows as the apparent next target for the Bears (except in the SPY where those two targets have already been achieved). In terms of extension, as I said, all three major index ETFs are far below their T-line (8ema) and while the T2122 indicator is also in its oversold range, it has climbed up off the extreme end of that 20-point span. This tells us we remain a bit stretched, but the bounce Monday reduced the pressure at least a little.

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 absolutely 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 money is 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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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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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

Markets gave us a rest or modest rebound on Friday.  The SPY gapped up 0.27%, the DIA opened almost flat at +0.03%, and the QQQ gapped up a respectable 0.55%.  At that point, all three major market index EFS ground sideways for 30 minutes before putting in a modest morning rally that reached the highs of the day at about 11:40 a.m.  Then all three wobbled sideways for an hour.  However, the afternoon saw major whips in both directions, ending the day on the steepest selloff of the day in the last 30 minutes.   This action gave us black-bodied candles with significant upper wicks and tiny lower wicks.  All three major index ETFs remain extended below their T-line (8ema).  The DIA is also approached but not yet testing its 200sma.  This all happened on basically average volume in the SPY, DIA, and QQQ.

On the day, seven of the 10 sectors were in the red with Consumer Defensive (-0.45%), Consumer Cyclical (-0.43%), and Financial Services (-0.42%) leading the other sectors lower.  Meanwhile, Technology (+0.33%) and Energy (+0.25%) held up better than the other sectors.  At the same time, the SPY lost 0.22%, DIA lost 0.29%, and the tech-heavy QQQ gained 0.01%.  VXX gained a quarter of a percent to close at 22.87 and T2122 climbed but remains in the low end of the oversold territory at 4.95.  10-year bond yields fell down to 4.438% while Oil (WTI) gained 0.78% to end the day at $90.33 per barrel.  So, the first half of the day was the pause and modest bounce we might have expected after two strong days of bearish move.  However, then afternoon volatility took over with the Bears getting the best of the action.

The major economic news reported Friday was limited to Preliminary S&P Global Mfg. PMI which came in better than expected at 48.9 (compared to a forecast of 48.0 and the previous reading of 47.9).  However, while better than anticipated, the value below 50 indicates contraction.  At the same time, the S&P Global Services PMI came in a bit below the predicted at 50.2 (versus a forecast of 50.6 and the prior value of 50.5).  Just the opposite of Manufacturing, although the value was below expectation, a reading above 50 indicates expansion in the Services sector.  In addition, the S&P Global Composite PMI was reported at 50.1 (compared to a prior value of 50.2) 

In stock news, investing.com reported Friday that TSLA is in negotiations with the Indian government over opening a battery factory in that country.  At the same time, in non-strike news, SLTA announced it will invest $508 million into their plant in Brazil, in particular in new product development.  Elsewhere, MGM announced it has lost over $52 million in revenue due to the cyberattack suffered more than a week ago.  (This does not include cost to mitigate, instead referring only to lost sales.)  Later, AMZN said it would begin placing ads in Prime Video streaming shows in 2024, selling ad-free access for an extra fee on top of the Prime charge. In other AMZN news, the company said it would hold another two-day “Prime Day” to start on October 10 after previous successes.  After the close, BX announced it was canceling the planned conversion of Class A shares as less than 20% of the needed shares were tendered for conversion.  Meanwhile, GT announced it will cut 700 jobs in its Asia Pacific region, selling 100 retail stores in the process.  After the close, the EEOC sued UPS for disability discrimination in the company’s hiring practices.  After the close, the Wall Street Journal reported that RAD is negotiating with creditors over the terms of its bankruptcy and will liquidate 400-500 stores.  (RAD operates 2,330 stores in 17 states.)  Also after the close, Reuters reported that ORCL has prepaid $104.1 million for CPU chips from startup Ampere Computing according to ORCL’s regulatory filing Friday.  Ampere builds chips based on the newly-IPOed ARM architecture.  Finally, the UK competition watchdog agency signaled Friday that they are willing to approve the MSFT acquisition of ATVI.  This was the final hurdle to the $69 billion deal closing.

In stock government, legal, and regulatory news, a UK-based retail conglomerate (Frasers) has asked a NY court to compel MS CEO Gorman to provide evidence in a UK lawsuit against MS.  (The suit revolves around a $1 billion option position margin call on Frasers.)  Elsewhere, the NHTSA announced Friday they have opened a new investigation into 240k F 2018-2021 EcoSport vehicles over consumer complaints of oil pump failures causing a loss of power while in motion.  At the same time, Politico reported that the FTC will file its long-awaited antitrust suit against AMZN on Tuesday. Later, GS agreed to pay a $6 million fine to the SEC for providing inaccurate and/or incomplete trading data regarding 163 million transactions over a decade.  ($0.036 per error seems like a pretty sweet deal for GS, but what do I know.)  At the same time, private broker/dealer Citadel (famous for buying orders) agreed to pay the SEC $7 million for illegal short sales.  By mid-afternoon, an auto industry group told Reuters that carmakers do not intend to “immediately comply” with an MA law requiring them to share vehicle data with independent repair shops, despite the NHTSA reversing course and saying it was safe for carmakers to do so.  This leaves auto manufacturers open to the possibility of state and federal (FTC) action.

In Autoworker contract talks and strike news, the UAW reported that it had made real progress in talks with F.  However, the union said there was no negotiation progress in talks with GM and SLTA.  As a result, the union expanded its strike to include 38 parts and distribution facilities of GM and STLA across 20 states.  This will increase the number of striking workers from 12,700 to 18,300.  (3,500 of the 5,600 newly striking people work for GM.)  After the UAW invited him, President Biden announced he would visit the picket line Tuesday.  (The leading GOP candidate then said he would visit MI on Wednesday to address autoworkers.)  Later, in a META live event, UAW President Fain detailed the progress that had been made with F including progress on pay, job tiers, profit sharing, and cost of living increases.  (That last issue was significant since the UAW says GM and STLA have not offered any cost-of-living increases over the next contract.  Of course, that is just the UAW side of that issue.)  Then on Sunday, the Canadian union Unifor (Canadian version of UAW) announced its members had voted to approve the tentative agreement the union reached with F last week.

Overnight, Asian markets were mixed with 5 in the red, 5 in the green, and 1 is unchanged.  Japan (+0.85%), Taiwan (+0.66%), and Singapore (+0.33%) pacing the gainers.  Meanwhile, Hong Kong (-1.82%), Shenzhen (-0.57%), and Shanghai (-0.54%) led the losses after fears of a liquidation of China Evergrande Group hit the Chinese markets late.  However, in Europe, we nearly see red across the board at midday with only Greece (+0.64%) hanging onto the green territory.  The CAC (-0.47%), DAX (-0.59%), and FTSE (-0.51%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a start just on the red side of flat.  The DIA implies a -0.04% open, the SPY is implying a -0.05% open, and the QQQ implies a -0.07% open at this hour.  At the same time, 10-year bond yields have jumped back up to 4.491% and Oil (WTI) is just on the green side of flat at $90.10 per barrel in early trading.

The major economic news scheduled for Monday is limited to Fed Member Kashkari speaking after the close at 6 p.m.  There are no major earnings reports scheduled before the opening bell.  However, after the close, THO reports. 

In economic news later this week, on Tuesday we get Building Permits, Conference Board Consumer Confidence, August New Home Sales, API Weekly Crude Oil Stock report, and we have another Fed speaker (Bowman at 1:30 p.m.).  Then Wednesday, August Durable Goods, and EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Q2 GDP, Q2 GDP Price Index, Weekly Initial Jobless Claims, August Pending Home Sales, Fed Balance Sheet, and Fed Chair Powell speaks.  Finally, on Friday, the August PCE Price Index, August Goods Trade Balance, August Personal Spending, August Retail Inventories, Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year inflation expectations, Michigan 5-year Inflation Expectations are reported and Fed member Williams speaks.

In terms of earnings reports later this week, on Tuesday, CTAS, FERG, SNX, UNFI, AIR, COST, and MLKN report.  Wednesday, we hear from PAYX, CNXC, FUL, JEF, MU, and WOR.  On Thursday, CAN, KMX, JBL, and NKE report.  Finally, on Friday, CCL reports.

In miscellaneous news, on Friday, House Speaker McCarthy told reporters that he felt no need to reach across the aisle to Democrats, instead saying Republicans have a majority and can solve the budget crisis themselves.  Since he gave the House 4.5 days off this weekend, a government shutdown is now a virtual certainty.  The House returns Tuesday.  The Speaker says the House GOP will rewrite the 12 appropriations bills themselves by lumping them into 4 bills (although decoupling was the whole idea being appropriations bills on top of a total spending amount in the first place) in order to obtain a much more conservative budget prior to entering into negotiations with the Senate…previous agreements and votes during the debt ceiling negotiations in June, be damned.  At the same time, the Dept. of Commerce finalized rules aimed at preventing China from gaining any benefit from the $52.7 billion provided by the Chips and Science Act.  (The rules aim to stop China from benefitting from and research, workforce development…hiring people trained with those funds…or actual production.)  Elsewhere, BAC reported Friday that a record $19 billion was withdrawn from the stock market in the ending then.  At about the same time, the Treasury Dept. reported that over the last year, US household (not institutional) holdings of US bonds have increased from $1 trillion to $2.5 trillion.

In late-breaking news, the Hollywood Writers Union has reached a tentative deal with studios. The hold-up over the weekend had to do with writers being replaced by AI. However, it should be noted that the final contract language is still not written. So, there is still a possibility of disagreement and the union members still have to approve. Regardless, the Actor’s union still remains on strike. Elsewhere, AMZN announced early today that it will invest up to $4 billion into startup AI firm Anthropic (which is a direct competitor to OpenAI that MSFT has put billions into). AMZN will have an unspecified “minority ownership” of Anthropic which recently put out its own AI product named Claude 2. This move will better position AMZN to compete in the AI space with MSFT, GOOGL, and the lesser competitor META. Finally, a senior Japanese Bank (Nomura) executive has been barred from leaving China. He apparently is not under arrest but is not allowed to leave the country. Reportedly, the restriction is linked to a job this executive held prior to joining Nomura in 2018.

With that background, it looks like the Bears have maintained control over the weekend. Premarkets all gapped up modestly but have then sold back down to just below Friday’s closing level, giving us black candles in the early session. So far, that does not seem like a motivated Bear move but the upper hand is still on their side and is picking up a little steam as we start the day. All three major index ETFs remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with a retest of the August and June lows as the apparent next target for the Bears (except in the SPY where those two targets have already been achieved). In terms of extension, as I said, all three major index ETFs are far below their T-line (8ema) and the T2122 indicator is also now at the low end of its oversold range. This tells us we remain stretched, with the possible exception of the stodgy, mega-cap DIA. So, we should see a pause or relief bounce soon.

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 absolutely 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 money is 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

It was all Bears, all the time on Thursday with the market gapping lower at the open (down 0.66% in the SPY, down 0.34% in the DIA, and down 1.03% in the QQQ).  At that point, all three major index ETFs ground sideways, with a modest bearish trend up until 1:30 p.m.  However, at that point, the news broke that the GOP members of the House had again rejected House Speaker McCarthy’s attempt to pass either a continuing resolution or a Defense Appropriations bill.  In response, McCarthy adjourned the House for the week, which makes a government shutdown on October 1 a high-probability event.  For the market, the route was on.  All three major index ETFs sold off hard and steadily the rest of the day, led lower by the QQQ.  All three closed near their low of the day. This action gave us gap-down, large, black candles with now lower wicks and only small upper wicks.  SPY broke down through any potential support from the August lows and now sits on the late-June lows.  DIA sits right at its August low and QQ still has about 0.9% before reaching that milestone.  All three could also be seen as Head & Shoulders patterns near, at, or just past the neckline.  This happened on well-above-average volume in the QQQ and just-above-average volume in the SPY and DIA.

On the day, all 10 sectors were in the red with Basic Materials (-2.19%) surprisingly out in front with Technology (-1.96%) next in line leading the other sectors lower.  At the same time, the SPY lost 1.65%, DIA lost 1.09%, and the tech-heavy QQQ lost 1.83%.  VXX gained 7.70% to close at 22.81 and T2122 dropped down to the low end of the oversold territory at 2.55.  10-year bond yields spiked up to 4.494% (a 16-year high) while Oil (WTI) sat basically flat on the day at $89.58 per barrel.  So, what happened?  It’s hard to tell if it was follow-through to the Fed’s hawkish tone or early morning rumblings of another GOP failure on the appropriations front (which first hit during premarket) that caused the gap lower.  Either way (or even if it was something else), the Bears started the day in charge and the best markets could do was tread water.  However, when Republicans definitely failed to support the Speaker’s move and he sent the House home in reaction, the bottom fell out, and the Bears got to stretch their legs the last couple hours of the day.

The major economic news reported Thursday included the Q2 Current Account (difference between imports and exports), which came in better than expected (but still a sizable deficit) at -$212.1 billion, compared to a forecast of -$221.0 billion and even slightly better than the Q1 reading of -$214.5 billion.  At the same time, Weekly Initial Jobless Claims also came in better than was expected at 201k (versus a forecast of 225k and the prior week’s value of 221k).  We also got the Sept. Philly Fed Mfg. Index, which came in worse than expected at -13.5 (compared to a forecast of -0.7 and much worse than the previous reading of +12.0).  The Sept. Philly Fed Employment Index improved a bit but remains negative at -5.7 (versus a -6.0 previous value).  Later, August Existing Home Sales were reported at 4.04 million (compared to a forecast of 4.10 million and the previous reading of 4.07 million).  This was a decline of 0.7% month-on-month, which is slightly better than the July decline of 2.2%.

In stock news, WMT is considering another significant expansion, looking to move into the healthcare sector.  Reports have emerged that talks are underway between WMT and private primary senior care provider ChenMed, which operates 100 health facilities across 15 southeastern states. Then at mid-morning, Rupert Murdoch announced he would step down as chair of FOXA and NWSA in November, naming his oldest son Lachlan as his successor. Elsewhere, GOOGL was in damage control mode Thursday, telling Reuters it does not foresee any change in its relationship with AVGO. This came after a media report said that GOOGL sources had said the company was considering dropping AVGO as a supplier of AI chips as early as 2027 (over a price dispute) and has already been working with MRVL to replace AVGO.  In acquisition news, CSCO announced it is acquiring SPLK for $157 per share ($28 billion) in an all-cash deal.  At the same time, MMP received shareholder (unit holder) approval for its acquisition of OKE for $19 billion.  Later, GFS was awarded a 10-year, $3.1 billion Dept. of Defense contract.  At the close, Reuters reported it has confirmed that CX is in talks with Mexican banks in a bid to refinance its $3 billion credit facility.  After hours, WBD announced it has expanded its UK studio production capacity by more than 50%.

In stock government, legal, and regulatory news, EU’s antitrust regulators announced they will decide whether to permit WHR to sell its European appliances business to Turkish firm Arcelik.  (Arcelik would own 75% with WHR retaining 25% ownership if the deal is approved.)  Later, the FAA followed the European lead and issued an alert to warn airlines that unapproved parts may be installed in the GE CF6 jet engines.  These fraudulent and unapproved parts may be present in thousands of jet engines globally.  At mid-afternoon, a US federal judge rejected moves by eight big banks to force cities to pursue claims individually.  The judge ruled that BAC, C, JPM, MS, WFC, GS, BCS, and RY must face a class-action suit brought by several cities over the bank’s alleged collusion to drive up interest rates on the cities’ municipal bonds.  After the close, the EPA announced that soil sampling near two PA towns indicates that there is “no immediate threat to the health of people nearby that would warrant a government response.”  This was in connection to testing done after a Wall Street Journal article outlining the paper’s investigation found lead-coated telecom cables buried near two towns in PA.  (VZ and T both initially said they would remove those cables but then declined and hired outside testing agencies once the removal cost was discovered.) 

In Autoworker contract talks and strike news, the UAW is expected to expand its strike against the Big 3 automakers at Noon today.  Sources told Reuters that while all the parties remain at the bargaining table as of last night, GM had offered nothing but a restatement of its earlier offer on Thursday.  F said it remains at the table with no other comment.  STLA offered no comment at all Thursday but had said Wednesday that its Tuesday offer dealt with subcommittee demands (nonfinancial issues).

Overnight, Asian markets leaned toward the green side.  Only Japan (-0.52%), India (-0.34%), and South Korea (-0.27%) were in the red.  Meanwhile, Hong Kong (+2.28%), Shenzhen (+1.97%), and Shanghai (+1.55%) surged to lead most of the region higher.  In Europe, we see the opposite picture taking shape at midday. Only four bourses, led by Greece (+1.47%), are in the green.  On the other side, the CAC (-0.55%) and the DAX (-0.19%) lead the 11 down exchanges lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.05% open, the SPY implies a +0.17% open, and the QQQ implies a +0.37% open at this hour.  At the same time, 10-year bond yields a down a bit to 4.478% and Oil (WTI) is back up by 1.08% to $90.57 per barrel in early trading.

The major economic news scheduled for Friday includes S&P US Mfg. PMI, S&P US Services PMI, and S&P Global Composite PMI (all at 9:45 a.m.).  There are no major earnings reports scheduled for Friday, either before the opening bell or after the close. 

In miscellaneous news, Bloomberg reports that Canada is ready to change oil markets in 2024.  The completion of their internal Trans-Mountain pipeline will allow Canada to expand its daily oil output by 600k barrels piped directly to the port of Vancouver and WA state.  Then, overnight, MCD announced it is raising the royalty fees charged to its new franchisees for the first time in 30 years.  Beginning January 1, all new MCD restaurants will pay 25% more, up from 4% to 5% of sales back to the corporation. (The increase does not affect existing restaurants.  For reference, 95% of the 13,400 MCD restaurants are franchises.)  Finally, the proximate reason for China’s stock surge today is that the country’s leadership leaked to the press that is it considering relaxing the country’s rules on foreign ownership in publicly traded companies.  (Now, total foreign ownership is limited to 30%, and single-entity foreign ownership is capped at 10%.)  You see, China has a problem.  With corruption widespread (and the fighting of corruption creating headlines that make the perception of corruption even worse than the amount that does exist), the propensity for government leaders (and whole groups of company executives) to “just vanish,” and limits on the amount of ownership/control that non-Chinese can have, China is finding it hard to draw in new investors from abroad…despite a potential market of more than a billion people.  So, the loosening of foreign ownership restrictions is a first step toward addressing the issue and drawing in new capital to help jumpstart the country’s floundering post-COVID recovery.

With that background, the premarket is giving us small, gap-up, and white-bodied candles so far. There is nothing in that early session action that would indicate a significant shift from the uber-Bearish move of the last two days. All three major index ETFs remain well below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with a retest of the August and June lows as the apparent next target for the Bears. With that said, the SPY and QQQ are far below their T-line (8ema) and the T2122 indicator is now at the low end of its oversold range. This tells us we are very stretched, with the possible exception of the stodgy, mega-cap DIA. So, we should see a pause or relief bounce soon. Add to that the fact that this is Friday and you could very well see some Bullish action as the Shorts take profits heading into the weekend. Either way, you should prepare your own account for the weekend, taking profits where you have them, perhaps lightening up, and hedging individual positions or the whole portfolio’s Deltas.

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 absolutely 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 money is 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 a typical Fed Day.  Everybody seemed to be waiting on the FOMC.  The SPY gapped up 0.29%, DIA gapped up 0.27%, and QQQ gapped up 0.27%.  From there, SPY traded sideways in a tight range until 2 p.m.  Meanwhile, DIA drifted very, very slowly higher until 2 p.m.  QQQ took the opposite course selling off until 11:30 a.m. and then trading sideways back at Tuesday’s closing level until 2 p.m.  At 2 p.m., Mr. Market was disappointed by the Fed statement, jerking lower for 5 minutes only to recover over the next 30 minutes.  However, once Fed Chair Powell began speaking, it was “Katy bar the door” as all three major index ETFs sold off sharply and steadily right into the close.  This action gave us large black Bearish Engulfing candles in the SPY and QQQ.  The DIA printed a black-bodied candle with a large upper wick.  All three also failed a retest of their t-line (8ema).  This all happened on below-average volume in the SPY and QQQ with average volume in the DIA.

On the day, seven of the 10 sectors were in the red with Technology (-1.40%) way out in front leading the rest lower.  Meanwhile, Communication Services (+0.27%) held up better than the other sectors.   At the same time, the SPY lost 0.92%, DIA lost 0.22%, and the tech-heavy QQQ lost 1.44%.  VXX gained 3.77% to close at 21.18 and T2122 fell only slightly and remains at the low end of the mid-range at 23.21.  10-year bond yields spiked up to 4.395% while Oil (WTI) fell 1.02% to end the day at $90.27 per barrel.  So, again it was a typical Fed Wednesday where we saw price largely drift sideways until 2 p.m., followed by a fast knee-jerk, slow recovery, and then another strong move.  Just don’t be surprised if there is another reaction at the open or early Thursday after Mr. Market has had a night to sleep on it and get his emotions in check. 

The major economic news reported Wednesday included EIA Weekly Crude Oil Inventories which saw a drawdown of 2.135 million barrels.  This was interestingly far less of a draw than the API reported Tuesday night and was just slightly less than the forecast of 2.200 million barrels.  However, it was down sharply compared to the prior week’s 3.954-million-barrel inventory build.  With that said, the big show Wednesday was the Fed.  As expected, the FOMC kept the Fed Funds Rate unchanged at 5.25% – 5.50%.  The “Dot Plots” were also released showing the current Q3 Fed Funds Rate estimate is 5.6% (which is a bit odd since we are sitting well below that and there is not another FOMC meeting in Q3).  One year out, the Q3 projection is 5.1% (which is greatly increased from the prior prediction of 4.6%).  However, that implies two rate cuts between now and the end of 2024.  This is what really spooked markets as the prior plots implied four cuts next year.  Two years out, again we see a major revision upward in the forecast to 3.9% (up from 3.4%).  Three years out the Fed average forecast is for 2.9%, which is down from the previous 3.1%.  Then the Long-Term Fed Funds Rate Projection is 2.5%, which is unchanged from the previous forecast.  Also buried in the Fed report was a significant increase in the Fed expected GDP for 2023, up from 1.0% in June to now expected 2.1% growth this year.  They also expect far less unemployment than they previously did.  In June they expected unemployment to top out at 4.5% in 2024, now they see 4.1% as the terminal unemployment rate.  (We are currently at 3.8% unemployment.) 

The Fed statement still implied one more rate hike this year and stiffened the hawkish “higher for longer” stance.  Then during his press conference, Chair Powell said that a soft landing is not the base case.  He said, “No, I would not do that … I’ve always thought that the soft landing was a plausible outcome … I do think it’s possible.”  Still, regardless of his words, the data released absolutely screams “soft landing” with higher GDP estimates, reduced unemployment expectations, and projected rate cuts (new cycle) starting in a year or less.  So, the bottom line is that the Fed did exactly what was expected, holding rates steady.  They also reinforced what they said they were going to do…keep rates higher longer.  Finally, they told us they are very nearly done raising rates and see us having the softest of landings, just as we have seen in the economy.  (Yet the market took the news poorly because it was hoping for rate cuts to come early in 2024 and continue steadily that year.)

In stock news, UL has hired MS in a new effort to sell its Q-tips and other personal care brands.  At the same time, French supermarkets announced they would be pressing suppliers to cut prices by up to 5%.  Reuters reports this move is expanding in Europe and companies like the aforementioned UL, PEP, KO, and other food and consumer goods companies will face pricing pressure going forward.  Later, Reuters reported that a consortium including KKR and APO is looking to buy the GreenSky Lending unit from GS.  The transaction is now expected to be in the $500 million range, which is a significant haircut from the $2.4 billion GS paid to buy it in September 2021.  At the same time, QCOM announced it is now entering the WIFI Router market.  (It was already a major supplier to the companies in that market.)  In the announcement, QCOM said it has orders in place from CHTR for this new line of products. Elsewhere, BAC announced it is raising the company’s minimum wage to $23/hour effective in October, with a target of raising it to $25/hour by 2025.  (This was a $1/hour increase over the company’s current minimum of $22/hour.)  Later, AMZN announced it plans to hire 250k extra holiday workers for its distribution and delivery units.  By mid-afternoon, it was announced that WDC is considering a split (splitting its hard drive unit from its flash memory business) of the company based on calls from activist investors Elliott Investment Mgmt.  At the same time, it emerged that WDC is also in merger talks with the owners of Kioxia (formerly Toshiba’s flash memory division).

In stock government, legal, and regulatory news, a federal judge in New York rejected an NFLX dismissal motion and ordered the company to face a defamation lawsuit from a Manhattan prosecutor portrayed in one of their crime dramas.  Later, a federal court in TX dismissed the shareholder case against TSLA related to a toxic workplace causing financial harm to the plaintiffs.  However, it was dismissed for evidential deficiencies without prejudice, meaning the plaintiffs can amend the suit and resubmit it later. Later, Bloomberg reported that XOM is lobbying President Biden and other administration officials to allow hydrogen derived from natural gas to be eligible for environmental tax credits available under the 2022 Inflation Reduction Act.  (Those credits are currently reserved for solar, wind, battery minerals, and “pure” hydrogen projects.  Elsewhere, GE filed suit against a supplier (AOG Technics) who was implicated in a scandal over fake components and forged certifications identified by the EU Aviation Safety Agency.  At the same time, RYAAY (Ryanair) has been notified that Italy’s antitrust agency has opened an investigation of the company over potential abuse of a dominant market position.  Later, AZN was sued in the US by a former senior director who claimed the company had refused to pay $189k in owed bonuses and stock options because she worked from home more than two days per week.  In the “you can’t make this stuff up” department, attorneys who sued TSLA board members, forcing them to return $700 million in excess pay have now filed with the court seeking $229 million ($10,690/hour) in attorney fees.  After the close, AMZN said it would be dropping a planned new fee for merchants who do not use its shipping services in the face of an expected FTC lawsuit.

In Autoworker contract talks and strike news, Canadian Unifor union workers will vote on the tentative deal reached with F on Saturday.  Meanwhile, in the US, UAW strikes are expanding with 190 union workers going on strike against an MBGAF (Mercedes) supplier in AL.

After the close, KBH reported beats on both the revenue and earnings lines.  It also raised its forward guidance.  Meanwhile, FDX missed on revenue while beating quite significantly ($4.55/share actual vs. $3.70/share consensus estimate) on earnings.

Overnight, Asian markets were nearly red across the board with only Thailand (+0.42%) staying in the green.  Meanwhile, South Korea (-1.75%), Japan (-1.37%), and Australia (-1.37%) led the region lower.  In Europe, we see the same picture taking shape at midday.  Only Greece (+0.11%) is in the green while the CAC (-1.56%), DAX (-1.20%), and FTSE (-0.71%) lead that region lower.  In the US, as of 7:30 a.m., Futures are pointing to a down start to the day.  The DIA implies a -0.52% open, the SPY is implying a -0.77% open, and the QQQ implies a -1.02% open at this hour.  At the same time, 10-year bond yields are spiking to 4.441% and Oil (WTI) is down two-thirds of a percent to $89.08 per barrel in early trading.

The major economic news scheduled for Thursday includes Q2 Current Account, Weekly Jobless Claims, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 a.m.), August Existing Home Sales (10 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for Thursday include DRI and FDS before the open.  Then, after the close, there are no earnings reports scheduled.

In economic news later this week, on Friday, S&P US Mfg. PMI, S&P U Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Friday, there are no major earnings reports scheduled

The following long paragraph is about dysfunctional government.  Skip it if you prefer.  I feel this is important to the market because stock markets tend to go down in the face of dysfunctional government, including shutdowns, and the credit rating of the US is directly related to downgrades from rating agencies likely…which affects bonds and then markets as well.  At any rate, in the Senate Majority Leader Schumer had to use a fairly rare procedural maneuver Wednesday night to sidestep culture war obstructionist Senator Tuberville’s non-filibuster hold on government business.  (Tuberville did not fight Schumer’s move because the move relieved pressure he had been getting from colleagues in his own party while still allowing him to continue his farce blockage).  The move by Schumer let the Senate vote on the appointment of a new Chair of the Joint Chiefs of Staff (Air Force General Brown), which they confirmed by a vote of 83-11.  Two other high-profile positions (Commandant of the Marine Corps and Army Chief of Staff) are expected to be voted on today using the same procedural move, with similar results expected.  However, more than 300 other senior military officers (unit and base commanders in many cases) remain blocked (leaving their positions filled by “acting commanders” due to the anti-governance Senator. The Senate rules allow any single obstructionist Senator to halt governance for any even completely unrelated reason.  Meanwhile, in the House, after the close, Speaker McCarthy said he will try again today to pass the Defense Appropriations bill (which failed its vote on Tuesday).  It appears McCarthy thinks he has now placated the 5 extremists from his party who voted against the bill Tuesday.  (As opposed to compromising with the other party to gain a broad consensus, because party is more important than country.  Besides the job of Congress is not to pass laws in the interest of all the people, but instead to rule over the opposing party and take as much as you can from “their side” while blaming them for doing what you’re doing.)  The fear, of course, is that if those 5 were bought off, that in itself is a good incentive for another tiny group to bolt (or threaten to do so) in order to get their share of the appeasement. Another example of the tyranny of the minority. And with that taking place, there are eight business days left for the House to pass a continuing resolution to avoid a government shutdown (or, in a less likely scenario, pass 12 appropriations bills, get them through the Senate, reconcile the two versions, pass the revisions in both Houses and get President Biden’s signature). 

With that background, the premarket is telling us the rout is continuing with Bears on the warpath. All three of the major index ETFs gapped down to start the early session and have followed through with strong bearish moves. All three remain below their T-line (8ema) and 50sma. So, for now, the short-term trend is clearly headed lower with a retest of the mid-to-late-August low in the cards for SPY today with DIA headed in that direction and QQQ probably still a day or so away from such a retest. In terms of extension, the premarket move has all three major index ETFs stretched below their T-line (although QQQ is clearly the most stretched). However, the T2122 indicator is still just in the lower side of its mid-range. So, it is not extremely clear whether we are stretched enough to see a reversal soon.

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 absolutely 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 money is 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

On Tuesday, stocks gapped modestly lower at the open (down 0.21% in the SPY, down 0.21% in the DIA, and down 0.34% in the QQQ).  At that point, all three major index ETFs followed through to sell off sharply until 10:45 a.m.  However, then we saw some divergence as the two large-cap index ETFs continued in a much slower selloff until 12:50 p.m.  Meanwhile, the QQQ began to rally at 10:45 a.m. and kept it up until 2 p.m.  SPY and QQQ reached their high of the day at 2:45 p.m. while DIA did not quite make it up to the levels of the open.  The last 75 minutes of the day saw all three swing lower and then back higher. This action gave us a black-bodied, long-legged Doji in the SPY, a black-bodied, long-legged Doji in the DIA, and a white-bodied Spinning Top in the QQQ.  All three remain below their T-line (8ema) and 50sma. Perhaps more importantly, all three also dropped just below a potential support level. This all happened on below-average volume in all three major index ETFs.

On the day, nine of the 10 sectors were in the red.  Utilities (-0.59%), Energy (-0.58%), and Industrials (-0.52%) were out in front leading the market lower, as Communication Services (+0.26%) was the only sector to hang onto green territory.   At the same time, the SPY lost 0.21%, DIA lost 0.29%, and QQQ lost 0.21%.  VXX fell 0.49% lower to close at 20.41 and T2122 fell again but remained in the low end of the mid-range at 24.58.  10-year bond yields spiked again to close at 4.365% while Oil (WTI) fell slightly to end the day at $91.66 per barrel.  So, again it was a typical pre-Fed Tuesday where the price whipped back and forth but ended up not changing much.  Everyone is still just waiting on the Fed decision.  However, this time around, the entire market thinks (well 99.0% according to the Fed Futures) they already know the Fed decision.  So, if we are actually waiting on the Fed verbiage and tone of Fed Chair Powell’s statement.

The only major economic news reported Tuesday included Preliminary August Building Permits, which came in above expectations at 1.543 million (compared to a forecast of 1.440 million and a July reading of 1.443 million).  This amounted to a 6.9% increase over the prior month.  At the same time, August Housing Starts were lower than predicted at 1.283 million (versus a forecast of 1.440 million and a previous month 1.447 million).  This was the lowest level since June 2020 and that also amounted to an 11.3% decrease month-on-month.  Finally, after the close, the API Weekly Crude Oil Stocks report showed a larger drawdown than was anticipated at -5.250 million barrels (compared to a forecast of -2.667 million barrels and an increase of 1.174 million barrels last week).

In stock news, MS debuted an AI Investing assistant designed to help investment advisors sift through over 100,000 research reports.  At the same time, NIO announced it plans to sell $1 billion in senior convertible notes.  The market seems to believe most will be converted into shares, diluting existing stockholders.  As a result, NIO dropped more than 17% on the day.  At the other end of the financial strength spectrum, MSFT increased its quarterly dividend by 10% to $0.75/share.  Elsewhere, on Tuesday, HBI announced it was exploring strategic alternatives for the company’s Champion brand.  Later, DIA announced that it expects to make $10 billion in profits from theme park operations up from $2.2 billion a decade ago. At the same time, DIS said it plans to invest $60 billion to expand its theme parks globally as well as to build a DIS brand cruise line.  (That is double what was spent on that business unit in the prior 10 years.)  Later TGT, announced they will hire 100,000 workers for the holiday season and will begin holiday promotions in October.  Reuters reported that the hacking group that breached MGM and before that CZR had also hacked 3 other clients of OKTA.  The article reported that the hackers gained access to MGM’s OKTA identity management account and used it to gain other credentials to further their attacks.  At the same time, INTC held an event where it highlighted that its upcoming new line of CPUs will allow consumers to run their own AI applications rather than buying those as a service from a cloud-computing company.  INTC did not explain what need or application would require on interest consumers in running their own AI models.  However, if they want to, INTC’s line of chips due out in December will be able to do so on the low end of that spectrum.

In stock government, legal, and regulatory news, in Europe, GOOGL made a last-ditch effort to overturn a $2.6 billion EU antitrust fine (imposed for abuses of its shopping service). The company told the 15-judge panel of Europe’s top court that the European Commission had failed to prove GOOGL’s actions were anti-competitive and anyway the fines themselves were abusive and undermined competition by hurting GOOGL.  Later, the IRS approved MULN’s “qualified manufacturer” status, meaning customers who purchase one of two MULN models will qualify for up to $7,500 in tax credits per cargo van bought.  Elsewhere, the SEC and Dept. of Justice have begun investigating whether CS misled investors about its financial health prior to its Swiss-state-backed rescue buyout by UBS.  Reuters reported the two agencies have requested documents from both CS and UBS as well as current and former directors.  At the same time, the CEO of CBOE resigned after a late-August outside investigation found he failed to disclose “personal relationships” with his colleagues.  Later, the Wall Street Journal reported that the Dept. of Justice is investigating perks TSLA CEO Musk has received from the company (including designing a proposed house for him).  The article claims employees were the source of the allegations, including the former CFO.  Meanwhile, LLY announced they are suing 10 medical spas across the US which LLY alleges are selling products claiming to contain the active ingredient in its Mounjaro diabetes drug (which is expected to be approved for weight-loss use later this year).  Later, a federal judge in NY ruled that DASH, GRUB, and UBER can sue New York City over its law capping how much they could charge restaurants for delivering meals.

In Autoworker contract talks and strike news, Reuters reported that UAW workers are bracing for more strikes as talks between the union and Big 3 automakers show no sign of significant progress.  However, in hopeful news, F announced late last night that it had reached a tentative deal with its Unifor Canadian auto workers.  The deal still must be ratified by union members and neither the company or the union released and contract details.  (Although it beggars belief that the Canadian and US unions don’t talk.  So, the reason for the obfuscation is not clear.)

So far this morning, GIS beat on both the revenue and earnings lines.  This was a very modest upside surprise on modest 4% growth.  In other morning news, US mortgage demand increased despite interest rates rising.  The US average for a 30-year, fixed-rate, conforming loan rose from 7.27% to 7.31%.  Despite this, refinancing applications jumped 13% compared to the prior week.  The number of new home purchase loans also increased 2% on the week.  Meanwhile, across the pond, the Bank of England has a rate hike pause back in play as a possibility after the UK reported its August CPI fell from 6.8% to 6.7% defying forecasts that had predicted an increase to 7%.

Overnight, Asian markets leaned heavily to the red side.  Only Singapore (+0.04%) and South Korea (+0.02%) were able to hang onto green while India (-1.15%), Thailand (-0.99%), and Japan (-0.66%) led the rest of the region down.  However, in Europe we are seeing the opposite picture taking shape at midday.  Only Russia (-0.58%) and Greece (-0.34%) are in the red.  Meanwhile, The FTSE (+0.77%), DAX (+0.60%), and CAC (+0.42%) lead the 13 green bourses higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.21% open, the SPY is implying a +0.19% open, and the QQQ implies a +0.12% open at this hour.  At the same time, 10-year bond yields have backed down just a bit to 4.347% and Oil (WTI) is off by two-thirds of a percent to $90.64/barrel in early trading. 

The major economic news scheduled for Wednesday include EIA Weekly Crude Oil Inventories (10:30 a.m.), FOMC Rate Decision, FOMC Statement, FOMC Q3 Interest Rate Projection, Q3 1st Year Interest Rate Projection, Q3 2nd Year Interest Rate Projection, Q3 3rd Year Interest Rate Projection, and Q3 Long-Term Interest Rate Projection (all at 2 p.m.), and the Fed Chair Press Conference (2:30 p.m.).  The major earnings reports scheduled for Wednesday include GIS before the open.  Then, after the close, FDX and KBH report.

In economic news later this week, on Thursday, Q2 Current Account, Weekly Jobless Claims, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, August Existing Home Sales, and Fed Balance Sheet.  Finally, on Friday, S&P US Mfg. PMI, S&P U Services PMI, and S&P Global Composite PMI are reported.

In terms of earnings reports later this week, on Thursday, we hear from DRI and FDS.  Finally, on Friday, there are no major earnings reports scheduled.

In miscellaneous news, CART opened Tuesday at $41.38 after pricing its IPO at $30 (a 39% opening gain).  However, the stock sold off the rest of the day to close at $33.70.  In good news, former IN Congressman Buyer was sentenced to 22 months in prison for insider trading.  This trading did not happen while he was in Congress, but his ties to Washington are likely why he was hired by TMUS as a consultant, gained info on their plans to buy Sprint and traded ahead of the news.  Elsewhere, the Institute of International Finance said global debt hit a record $307 trillion in Q2.  This was a $10 trillion increase over year-end 2022 and a $100 trillion increase over the last decade.  The US, Japan, Britain, and France accounted for the largest increases with China, India, and Brazil having the largest increases among emerging markets.  Finally, the in-fighting among the GOP in the House continues.  Speaker McCarthy tried to open debate on revisions to the $886 billion fiscal defense appropriations bill (widely seen as the easiest of the 12 needed funding bills).  However, five of the hardline MAGA GOP members voted against the motion, causing it to fail 214-212.  Those 5 and about 15 of their colleagues are demanding $120 billion (about 12% overall) is guaranteed to be cut out of domestic spending.  However, there are also calls (GOP and Democrat) to increase the $886 billion military spending budget, which would increase the required domestic spending cuts to achieve the same total budget.  With that giant task ahead, there are 7 business days left to resolve all 12 appropriations bills or pass a continuing resolution to avoid a government shutdown.

With that background, markets are little moved again and trading indecisively this morning. All three major index ETFs gapped up to start the early session, but have traded in a very tight range when they traded at all in the premarket. All three remain below their T-line (8ema) but DIA is getting close to a retest from below. So, for now, the trend of the last two weeks continues to be choppy. If you are looking at a very short timeframe, the momentum has switched from bearish to bullish and back several times during that period. In the mid-term the trend is bearish. A longer outlook shows a bullish long-term trend. The premarket session is just up off the obvious potential support levels that were just below the SPY, QQQ, and DIA on the close Friday. In terms of extension, none of the major index ETFs are far from their T-line and the T2122 indicator is now in the lower side of its mid-range. So, there is plenty of slack for either the Bulls or the Bears to make a move.

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 absolutely 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 money is 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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