The Bulls were in charge again all day Friday with the SPY gapping 0.54% higher, the DIA gapping up 0.50%, and the QQQ gapping up a smaller 0.36%.  From there, all three of the major index ETFs put in a long slow rally that meandered its way to the highs of the day at 3:05 p.m. only to take modest profits the last hour of the day.  This action gave us gap-up, white-bodied candles in all three.  The SPY and QQQ had no lower wick but did have upper wicks from the late afternoon profit-taking.  However, DIA printed a gap-up Spinning Top candle.  All three major index ETFs are now extended above the T-line (8ema) and are now sitting at or near a resistance level.  DIA also crossed up through both the 50sma and 200sma (which are squeezed), while the QQQ crossed up through its own 50sma and SPY just crossed up through its 50sma.  This all happened on average volume in the DIA and the QQQ and slightly lower-than-average volume in the SPY. 

On the day, nine of the 10 sectors were again in the green with Consumer Cyclical (+2.46%) way out front leading the way higher and Energy (-0.69%) lagging far behind (by almost 1.5%) the other sectors.  At the same time, the SPY gained 0.91%, DIA gained 0.65%, and QQQ gained 1.17%.  The VXX fell another 2.35% to close at 21.18 and T2122 climbed even further into its overbought territory at 96.33.  10-year bond yields dropped again to end the day at 4.572% and Oil (WTI) dropped over 2% to close at $80.78 per barrel.  So, just like every day last week, on Friday the markets opened higher and continued North.   For the week, SPY gained 5.85%, DIA gained 5.06%, and QQQ gained 6.49% on 5-straight higher closes in all three major index ETFs.

The major economic news reported Friday, October Average hourly Earnings came in lower but above expectations at 4.1% (year-on-year) compared to a September value of +4.3% and a forecast of +4.0%.  On a month-on-month basis, this was lower than expected at +0.2% (versus a forecast of +0.3% and a September reading of +0.3%).  At the same time, October Nonfarm Payrolls increased but also less than predicted at +150k (compared to a forecast of +180k and down tremendously from the September value of +297k).  October Private Nonfarm Payrolls also were up but far less than was anticipated at +99k (versus a forecast of +158k and September’s +246k).  At the same time, the October Participation Rate fell to 62.7% (compared to a forecast and prior reading that were both 62.8%).  Together, this led to a tick higher in the October Unemployment Rate to 3.9% (versus the forecast and September value of 3.8%). Later the October S&P Global Services PMI came in lower than expected at 50.6 (compared to a forecast of 50.9 but up from September’s 50.1).  The Oct. S&P Global Composite PMI then was also a bit lower at 50.7 (versus a forecast of 51.0 but still up from a September reading of 50.2).  Later, the October ISM Non-Mfg. PMI came in soft but still indicated expansion at 51.8 (compared to a forecast of 53.0 and a September value of 53.6).  Lastly, the October ISM Non-Mfg. Price Index were hotter than planned at 58.6 (versus the forecast of 56.6 but still down slightly from the September reading of 58.9).

In stock news, the Wall Street Journal reported Friday that NFLX is considering entry into the live-sport streaming by buying the rights to Premier Boxing.  AMZN is already bidding on that series of events after PARA announced it would be exiting the boxing broadcasting arena at the end of 2023.  Later, BMWYY (BMW) released a strong Q4 sales forecast saying that its order book is filled into even the first few months of 2024.  The luxury car company said it had no interest in or need for price cuts the way several of its competitors (such as TSLA in the electric arena) have engaged.  At the same time, JLL announced it has expanded its borrowing limit to $3.3 billion and pushed out the maturity of its debt to November 2028 (from April 2026).  This was done to shore up the real estate giant’s balance sheet.  Later, reports surfaced that HLI is in talks to acquire private investment firm Triago.  Elsewhere, the union representing pilots told Reuters that contract negotiations with FDX are now scheduled to restart Monday. The negotiations will be under new union leadership after the union rejected a tentative deal (for a 30% pay increase) reached by the company and prior union leadership.  At the same time, LGF.A and LGF.B subsidiary Starz announced restructuring including laying offs 10% of its staff and exiting operations in the UK and Australia.  Later, LCID announced price cuts on its Air luxury electric sedans by 7.9% – 9.1%.  In the same industry (but other end of the price range) Chinese EV-maker NIO announced it will cut 10% of its workforce and may divest non-core branches across China.  At the same time, S&P and MCO both upgraded the credit rating of F after nearly 4-years of their bonds being rated as “junk.” At the close, KHC announced a major leadership shakeup with reshuffling happening at the beginning of fiscal year 2024. 

In stock government, legal, and regulatory news, the US Dept. of Transportation said that it agrees with a complaint made by JBLU (and co-signed by a US Airline Industry group) against the Netherlands and the EU.  (The Dutch government had denied JBLU 339 landing slot at Amsterdam Schiphol airport in order to east noise pollution.)  As a result, JBLU had asked the US to delay granting a landing license to German or KLM (French-Dutch) airlines at NY airports.  Later, ALK was sued by three passengers after an off-duty pilot traveling in the cockpit jump seat tried to crash a flight headed for San Francisco on Oct. 22.  The plane was forced to make an emergency landing in Portland, where the offender was arrested.  However, the suit claims the airline was at fault for allowing non-duty people to travel on the flight deck.  Later, BCS was sued by investors who claimed the company should have known of its former CEO’s close ties to disgraced financier Jeffrey Epstein (and that lack of control cost those investors money as the ties between Epstein and the former CEO came to light).  In late afternoon, Reuters reported that the US Financial Stability Oversight Council agreed to expand their oversight of non-bank asset managers and hedge funds which pose a systemic risk to the financial system.  (This is the reinstatement of oversight and reporting scrapped by the ex-President.)  Among those impacted will be BLK.  After the close Friday, Reuters reported that the FTC used a secret algorithm called “Project Nessie” to push up prices by punishing its own sellers who also sold via WMT’s e-commerce system.  At the same time, in an unexpected twist, the US Forest Service announced Friday that it wants to allow carbon capture and storage projects inside national forest lands.

After the close Friday, TSE reported a miss on revenue while beating on earnings.

Overnight, Asian markets were nearly green across the board with only Thailand (-0.18%) in the red.  Meanwhile, South Korea (+5.66% not a typo, huge rally after a ban on short-selling), Japan (+2.37%), Shenzhen (+2.21%), and Hong Kong (+1.71%) led a huge rally.  In Europe, bourses are more mixed with an even split of green and red at midday.  With that said, the big boys of Europe are red with the CAC (-0.36%), DAX (-0.21%), and FTSE (-0.05%) leading the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modest green start to the day.  The DIA implies a +0.06% open, the SPY is implying a +0.13% open, and the QQQ implies a +0.18% open at this hour.  At the same time, 10-year bond yields are up slightly to 4.595% and Oil (WTI) is up 1.42% to $81.65 per barrel in early trading.

There is no major economic news scheduled for Monday.  The major earnings reports scheduled for before the open include AMG, AL, BNTX, BAM, DISH, SATS, ES, GOL, HGV, KNF, THS, and VVX.  Then, after the close, ATSG, ARKO, BKD, CBT, CE, CLOV, CNO, COMP, CTRA, CXW, CRGY, FANG, FN, GT, ICUI, IFF, ITUB, JELD, NXPI, PARR, O, RNG, RHP, SANM, SVC, STRL, TRIP, and VRTX report.

In economic news later this week, on Tuesday, Sept. Imports, Sept. Exports, Sept. Trade Balance, EIA Short-Term Energy Outlook, and Weekly API Crude Oil Stocks are reported.  We also hear from Fed members Waller and Williams.  Then Wednesday, we get EIA Crude Oil Inventories and hear from Fed Chair Powell as well as Fed member Williams again.  On Thursday, we have the Weekly Initial Jobless Claims, WASDE Ag Report, and Fed Chair Powell speaks again.  Finally, on Friday, 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, AHCO, ADV, APD, GBTG, AMRX, BCO, CG, CLVT, CNHI, DHI, DDOG, DK, ELAN, EMR, EVRG, FIS, GEN, GEO, GFS, INGR, KKR, LCII, MLCO, PRGO, RXO, TAC, UBER, VTNR, VST, WAT, ZBH, AMRK, AKAM, AEL, ANDE, BHF, CIVI, COTY, CPNG, CAPL, DAR, DVA, DVN, EBAY, EC, PLUS, EXR, FNF, GILD, GO, GXO, IAC, IOSP, JKHY, JHX, KD, MASI, DOOR, MOS, MRC, OXY, OVV, PAAS, PR, PRI, PRIM, RXT, RIVN, HOOD, SNBR, STE, TKO, TOST, and VTRS report.  Then Wednesday, we hear from ADNT, BIIB, GIB, CRL, CCO, SID, EDR, GTN, IBP, BEKE, K, MIDD, NFE, NYT, NXST, ODP, PTEN, PFGC, PLTK, PSNY, RL, RPRX, REYN, RBLX, SEAS, FOUR, SWX, SPTN, STWD, SHOO, TRP, TEVA, UAA, UWMC, VSH, WBD, KLG, AE, AFRM, ALTG, AMC, APP, ASH, ATO, GBS, ATG, CENX, CTVA, ENS, FLT, G, HP, HUBS, JXN, JAZZ, KGC, LYFT, MFC, MATV, MGM, SU, TTWO, MODG, TTEC, TWLO, UHAL, VSAT, and DIS.  On Thursday, AEE, MT, BDX, CLMT, TAST, COMM, DBD, EPC, GLP, GRAB, HBI, HE, HBM, IHRT, KELYA, LI, EYE, NOMD, ACDC, RCI, SN, SCSC, SONY, SLVM, TPR, TDG, USFD, WRK, WWW, YPF, CANO, CPRI, FLO, HOLX, ILMN, LNW, MTD, NWSA, NGL, PBR, RBA, STN, TTD, TPC, U, and WYNN report.  Finally, on Friday, AQN, AU, and STNE report.

In miscellaneous news, major US banks including BAC, CCF, USB, TFC, and WFC all experienced disruptions in processing deposits Friday due to problems with Automated Clearing House (a major network for processing transactions).  Elsewhere, it has come out that as part of its deal with the UAW, GM has agreed to invest $13 billion in US facilities by April 2028.  Meanwhile, Warren Buffett’s BRKB announced a huge blowout earnings that featured a 41% increase in operating earnings and a record amount of cash on hand of more than $157 billion.  (It is worth noting that Buffett is buying short-term Treasury bonds with his massive pile of cash.)  However, it was not all sunshine and rainbows for BRKB as the company announced a $24.1 billion loss on investments in Q3 (mostly on its massive AAPL stake).

In still other news, Elon Musk’s xAI company (not to be confused with his X platform, formerly Twitter) released its own AI tool named “Grok” over the weekend.  The late-to-the-party AI, was trained on data from X…so, it will have all the intelligence and correct answers Twitter has been known for over the last decade.  (That was a joke in case anyone actually thinks social media is accurate on average.)  Elsewhere, Bloomberg reports the hedge funds made a terrible trade last week by taking the largest short position in Treasuries Futures since 2006.  The levered funds did this just before a weak US bond sale and weak jobs data led to a big bond rally.  Finally, the ex-president is scheduled to testify in the damages portion of the NY state trial meant to determine what he, his adult children, and his company must pay for their civil fraud conviction in NY state.  (The guilty verdict on the main count was reached summarily based on the mountain of evidence. The trial is not about guilt, which has been established, only about how many tens or hundreds of millions of dollars they are ordered to pay and what other penalties, like loss of business licenses, might be imposed.)

So far this morning, AMG, BRKB, KNF, and PHIN have all reported beats on both the revenue and earnings lines.  Meanwhile, BNTX and THS reported misses on revenue while beating one earnings.  However, DISH, and ES missed on both the top and bottom lines.  It is worth noting that BNTX and THS both also lowered their forward guidance.  (AL, BAM, GOL, HGV, and VVX all report closer to the opening bell.)

With that background, it looks like Mr. Market has not yet decided on what to do today. All three major index ETFs opened the premarket higher but had put in small, indecisive, and mixed-color candles in the early session since that higher open. All three remain well above their T-line (8ema) and 50smas. So, the Bulls are still in full control of the short-term trend. Keep in mind that all three remain 4%-5% below their summer highs. So, the Bears remain in control of the longer-term trend. In terms of extension, all three are a bit stretched from their T-line and the T2122 indicator is deep in its over-bought territory. So, while there is some room to run in either direction, the market is in need of a pause or pullback just to relieve extension. (However, as always, remember that the market can stay stretched longer than we can stay afloat knowing it has to turn soon.) So, be aware of that potential volatility.

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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