Friday was a non-committal day on Wall Street.  SPY gapped up 0.34%, DIA gapped up 0.29%, and QQQ gapped up 0.33%.  At that point, we saw a divergence with DIA riding waves sideways along the open while SPY and QQQ faded the opening gap. (QQQ recrossed the gap by 10:45 a.m. and SPY did so by 11 a.m.)  QQQ continued to ride waves below the Thursday close and never quite made it past that level. At the same time, SPY crossed and recrossed the gap…spending the rest of the day inside it.  DIA fell back to the open level at 12:30 p.m. and traded inside the upper end of the gap the rest of the day.  This action gave us gap-up, black-body candles in all three major index ETFs.  The SPY printed a Spinning Top, the DIA printed something like a Shooting Star, and QQQ gave us a Dark Cloud Cover with wicks at both ends.  On the day, all three printed new all-time highs while the two large-cap index ETFs printed new all-time high closes. 

On the day, six of the 10 sectors were in the green as Industrials (+0.60%) was out in front leading the way higher and Energy (-0.45%) lagged and was by far the biggest loser.  At the same time, the SPY gained 0.07%, the DIA gained 0.19%, and the tech-heavy QQQ pulled back 0.27%. VXX fell 3.67% to close at 13.93 and T2122 climbed to the very top of its mid-range at 78.48.  10-year bond yields dropped back to 4.25% and Oil (WTI) dropped 2.62% to close at $76.55 per barrel.  So, on Friday was a gap-up and then mostly indecisive and non-descript day.  That being said, the Bulls are still in charge with markets printing all-time highs with prices above rising T-lines (8ema).  At the same time, this happened on below-average volume in all three major index ETFs and it just feels like we are pushing closer to at least a pullback.   

There was no major economic news released Friday.

In earnings news, Reuters reported Friday after the close that the vast majority of S&P 500 companies have already reported and, to this point, LSEG reports the index companies are on track to grow earnings 10% in Q4 compared to the prior Q4.  This would be the biggest earnings increase since Q1 of 2022.  The article continued by saying that the glowing results have allowed the market to ignore the rise in bond yields.  However, as the report ends, it quoted analysts as saying the focus on the path of rates and yields may well come back to the forefront.  (The implication is that if markets look at bond rates, a pullback/correction may be in order.)

In Fed news, NT Fed President Williams reiterated the company line Friday, saying that rate cuts are likely, later this year, but more confidence in the decline of inflation was needed.  Williams said, “My overall view of the economy basically hasn’t changed … the economy more broadly are headed in the right direction.”  “At some point, I think it will be appropriate to pull back on restrictive monetary policy, likely later this year.” “It’s really about reading that data and looking for consistent signs that inflation is not only coming down but is moving towards that 2% longer-run goal.” Related to reducing the Fed Balance Sheet, Williams said, “The goal is to make sure we get a nice, smooth process of continuing to reduce the balance sheet … allowing us to monitor, analyze and understand how that reduction … is meeting (our test) for ultimately stopping.” 

In stock news, on Friday, LUNR stock soared on a very volatile day after the company successfully landed its spacecraft on the moon.  (LUNR closed up 15.82% after being up more than 43% during the day.  The late-day slump came after LUNR announced its lander was actually “tipped over.”)  In other stock news, NVDA briefly hit $2 trillion in market cap for the first time Friday.  This came one day after their global record $277 billion single-day increase in cap on Thursday.  (NVDA closed up 0.36% after being up almost 5% earlier in the day.  Still NVDA closed at a new all-time high close.)  Later, HII announced the successful launch of its 25^th Virginia-class submarine, a significant milestone toward delivery to the US Navy. At the same time, an American carmaker trade group urged Congress and the Biden Administration to block the introduction of cheap Chinese vehicle imports from Mexico.  The group representing US automakers urged a ban on auto and auto part imports from Mexico.  However, many of the group’s members have plants in that country.  Two days after AAL did the same thing, UAL raised its checked bag fee to exactly the same price of $40 for a first bag, $35 if bought in advance as of Saturday. (I’m sure it’s purely coincidental that UAL and AAL’s fees are exactly the same.)  Later, CPHI announced a 1-for-5 reverse split as of March 6.  (CPHI closed at $0.09 Friday.)  At the same time, BODY announced it will change its ticker symbol to BODI before the open March 4.  Elsewhere, ACDVF (Air Canada) announced it would cap airfares and add more than 6,000 seats in light of the pending suspension of operations by budget airline Lynx Air.  Later, F announced it had halted the shipments of new F-150 Lightning EVs.  (The halt actually began on February 9.)  At the same time, the American Pharmacists Assn. announced that patients are seeing delays as many pharmacies could not transmit insurance claims after UNH subsidiary CHNG reported a hack earlier in the week. (In short, patients must pay themselves and hope to get reimbursed by insurance or wait on their prescriptions.)

In stock legal, governmental, and regulatory news, on Friday, the SEC removed some its most ambitious greenhouse gas disclosure requirements from its rule change proposal first made in March 2022.  Later, China’s market regulator (counterpart to the US NHTSA) announced TSLA would fix the software on 8,700 vehicles to reduce the chance of accidents.  Later, a US judge ruled that BCS must face a class-action lawsuit brought by shareholders alleging securities fraud related to the sale of $17.7 billion more debt than regulators allowed.  Elsewhere, MGM said Friday that it has been informed of investigations by both state and federal regulators related to the September cyber attack that took its systems offline.  CZR also confirmed it has been informed it is under investigation over the same matters.  Later, DAL petitioned the Biden administration to reverse the decision to scrap the airline’s antitrust immunity for its partnership with Aeromexico.  DAL claims the loss of that immunity would result in the loss of nearly two dozen flight routes.  After the close, the FTC accused HRB of deceptive marketing for claiming its online tax filing is free, when most consumers end up being required to pay.  The complaint also alleges HRB deletes customer tax prep records if they downgrade to the advertised “free filing” service level.

BRKB earnings merit their own mention.  Over the weekend, Warren Buffett’s company reported another record profit for Q4, up 28% from the prior Q4 (2022).  In addition, BRKB continues to hoard cash as it reported holding $167.6 billion in cash to end the quarter.  (This smashes the $157.2 billion record amount it had on hand to end Q3.)  The resulting premarket trading now has BRKB valued at nearly $1 trillion.

Overnight, Asian markets were mostly in the red with only three of twelve exchanges in the green.  Shanghai (-0.93%), South Korea (-0.77%), and Hong Kong (-0.54%) led the region lower. In Europe, we see a similar picture taking shape at midday with a notable exception in Russia (+2.04%).  The CAC (-0.31%), DAX (+0.08%), and FTSE (-0.32%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed, flat open.  The DIA implies a -0.08% open, the SPY is implying a -0.04% open, and the QQQ implies a +0.01% open at this hour. At the same time, 10-year bond yields are back down to 4.242% and Oil (WTI) is off 0.54% to $76.09 per barrel in early trading.

The major economic news scheduled for Monday is limited to Building Permits (8 a.m.) and January New Home Sales (10 a.m.).  The major earnings reports scheduled for before the open include AMR, BRKB, CCO, DPZ, ELAN, FIS, ITRI, KOS, LI, PPC, PLTK, PEG, AND SGRY.  Then, after the close, AAN, AES, ATSG, CAPL, DORM, ERIE, HEI, OKE, SBAC, STRL, U, VLRS, WDAY, and ZM report. 

In economic news later this week, on Tuesday, we get Jan. Durable Goods Orders, Feb. Conf. Board Consumer Confidence, and API Weekly Crude Oil Stocks.  Then Wednesday, Q4 GDP, Q4 GDP Price Index, Jan. Goods Trade Balance, Jan. Retail Inventories, EIA Weekly Crude Oil Inventories, and two Fed speakers (Bostic at noon and Williams at 12:45 p.m.) are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Jan. PCE Price Index, Jan. Core PCE Price Index, Jan. Personal Spending, Feb. Chicago PMI, Jan. Pending Home Sales, Fed Balance Sheet, and three Fed speakers (Bostic at 10:50 a.m., Mester at 1:15 p.m., and Williams (8:10 p.m.).  Finally, on Friday, S&P Global Mfg. PMI, Jan. Construction Spending, Feb. ISM Mfg. Employment, Feb. ISM Mfg. PMI, Feb. ISM Mfg. PMI Price Index, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, Michigan 5-year Inflation Expectations, and two Fed speakers (Bostic at 10 a.m. and Daly at 1:30 p.m.) are reported.

In terms of earnings reports later this week, on Tuesday we hear from AHCO, AEP, AMT, AZO, BMO, BNS, CRI, CLVT, CBRL, DK, HSIC, SJM, JLL, DRS, LOW, M, EYE, NCLH, PRGO, PNW, RCM, SEE, SRE, STGW, ACHC, A, AGL, ARKO, BGS, BECN, BWXT, CRC, CHE, CIVI, COMP, CPNG, DAR, DVN, EBAY, EXR, FSLR, GO, ICFI, ICUI, LNW, MASI, OVV, PARR, PK, PR, RSG, RYAN, SPLK, TKO, UHS, URBN, and VZIO.  Then Wednesday, AAP, APG, BIDU, GTLS, DQ, DCI, DY, EME, EDR, GLP, IEP, ICL, IQ, KTB, KOP, LSXMK, LSXMA, LTH, NXST, NRG, ODP, PDCO, QRTEA, RY, SWX, SRCL, SHOO, TJX, BLD, VTNR, VTRS, VIPS, VST, AMC, BMA, BBSI, SQM, CC, CODI, EFXT, GEF, HPQ, JAZZ, MNST, MYRG, NTNX, OKTA, PARAA, PARA, PSTG, CRM, SNOW, STN, and TPC report.  On Thursday, we hear from BUD, BBWI, BBY, BCO, CNQ, COMM, CPG, CRH, XRAY, DDL, DOLE, NVRI, ESAB, EVRG, GMS, HGV, HRL, IHRT, MLCO, NTES, NFE, NOMD, PZZA, PSNY, TD, TGNA, ADSK, COO, DELL, EC, GRBK, MTZ, NTAP, PTVE, TTEC, VEEV, and ZS.  Finally, on Friday, AMRX reports.

In miscellaneous news, the Equipment Leasing and Finance Ass. Said that US borrowing to finance equipment rose 6% in January. Its report said credit approvals came in a 76% (up slightly from 75% in December).  However, the $9.3 billion amount of equipment credit was down 26% month-on-month.  Elsewhere, Bloomberg reported that NVDA is the third-most-shorted stock in the market, with $18.3 billion of shorts. On Thursday alone, those shorts lost $3 billion (on paper).  They lost even more on Friday as NVDA was up 4.6% at one point during the day before closing up 0.36%.  This all happened as NVDA is right on the brink of having a $2 trillion market cap.  Is NVDA over-priced?  Almost undoubtedly.  Will it collapse…and by a enough…before the big number of shorts are forced to cover, driving NVDA even higher?  That is unknown.  Meanwhile, JPM announced that CEO Jamie Dimon sold $150 million of its stock, as had been announced last year (as part of a diversification of his holdings). Finally, Friday (March 1) is the first of House Speaker Johnson’s two cliffs (two partial shutdowns). So, the countdown is on and the House does not resume session until Wednesday with the Senate not scheduled to return until March 4. (Of course, both bodies “could” be called back early.)

In geopolitical news. the most recent Russian invasion of Ukraine passed its second anniversary Saturday.  (It’s actually been 10 years since Russia invaded Crimea and Eastern Ukraine, via what was colloquially known as “little green men.”)  The Biden Administration marked that grim milestone by adding additional sanctions on Russia.  Of course, this is a drop in the bucket with Ukrainian aid dead in the US House as the MAGA-controlled Speaker refuses to bring the Senate aid package to the floor for discussion.  This comes as poll released Friday from Pew Research finds that 74% of Americans (and 69% of Republicans) believe defending Ukraine is “important to US national interests” and 59% (56% of Republicans) said it was “important to them personally.”)  Meanwhile, in the Middle East, Israel continues its invasion of Gaza with plans for their invasion of Rafah (a Gaza city) continuing.  As a result, the Palestinian-supporting Houthi continue their attacks on shipping in the Red Sea and Gulf of Aden.  Of course, this has resulted in a continuation of US and UK airstrikes in Yemen as well as sea-based anti-drone military actions over the weekend. On the political side of this, US Sec. of State Blinken said Friday that Israeli settlements in conquered lands (as have been going on for decades) are contrary to international law. Of course, the Israeli government quickly denounced this as nobody’s business but their own and pledged to continue placing new settlements in the West Bank and other conquered lands. On Sunday, there was word of a proposal for a six-week ceasefire including the exchange of 40 hostages held by Hamas in exchange for hundreds of Palestinians the Israelis have essentially taken hostage (detained without a legal process). However, Israeli PM Netanyahu told CBS Face the Nation it was Hamas blocking the deal with their unrealistic demands. In either case, if a ceasefire does happen, Netanyahu says it will be a pause, not an end of the Israeli invasion of Gaza.

So far this morning, BRKB, CCO, FDP, KOS, LI, and PPC all reported beats on both the revenue and earnings lines.  Meanwhile, DPZ missed on revenue while beating on earnings.  On the other side, ELAN and PLTK beat on revenue while missing on the earnings line.  Unfortunately, FIS missed on both the top and bottom lines.  It is worth noting that LI lowered its forward guidance.

With that background, it appears the market is undecided early Monday. All three major index ETFs gapped down to start the premarket. However, all three are also printing shite-bodied candles that have price back near early session highs, if still just on the red side of flat. All three remain above their T-lines in the premarket. So, the short-term trend remains bullish. Meanwhile, the longer-term strong bullish trend continues to hang in (despite DIA testing it strongly). In terms of extension, none of the three major index ETFs is too far from its T-line and the T2122 indicator is at the very top of its mid-range. So, both sides of the market have room to run if they can gather the energy to do so. Continue to watch those 10 Big Dog tech names. As mentioned above, they represent a huge portion of the market and if they move together in one direction, it’s hard for indexes to go the other way. Right now, they are evenly split, but the bullish members of this group are moving much more than the five in the red.

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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