On Friday, markets opened basically flat before getting in.  SPY opened 0.09% higher, DIA opened 0.13% higher, and QQQ opened 0.08% lower.  From there, all three major index ETFs rallied until 11 a.m. when they chopped sideways until 12:30 p.m.  At that point, all three sold off sharply until 1:30 p.m.  Finally, about 2 p.m. a strong, market-wide rally took us to the close.  This action gave us large-body, white candles, which made the day seem stronger than it actually was.  DIA crossed back above its T-line (8ema) and 50sma while SPY printed a Bullish Harami candle.  This all happened on slightly above-average volume in the SPY, DIA, and QQQ.

On the day, all 10 of the sectors were in the green as Financial Services (+1.54%) and Utilities (+1.47%) led the gainers.  On the other side, Basic Materials (+0.34%) and Communications Services (+0.47%) lagged and were well behind the other sectors. At the same time, SPY gained 1.50%, DIA gained 1.42%, and QQQ gained 1.58%. Meanwhile, VXX fell 1.59% to close at 45.83 and T2122 popped all the way back up to the dead center of its mid-range at 50.66.  On the bond side, 10-Year Bond yields fell to 4.210% and Oil (WTI) fell 0.41% to close at $70.06 per barrel.  So, Friday was an indecisive day that ended up disguised as a strong bullish day in a downtrend.  The market didn’t like Trump and Vance’s ambush berating of Ukrainian President Zelensky in front of a room tightly packed with reporters, especially when the latter showed backbone and didn’t take the intended humiliation laying down. However, that wasn’t long-lived or perhaps it was month-end that led to the strong afternoon rally that took us out near the highs.  It’s worth noting that NVDA (+3.97%) and TSLA (+3.91%) on heavier-than-average volume from those big dogs.

The major economic news on Friday includes January Core PCE Prince Index (Month-on-Month), which was up a tick to +0.3% (compared to a +0.3% forecasted and the December +0.2% value).  On the annual basis, January Core PCE Prince Index (Year-on-Year) was DOWN to +2.6% (in-line with the +2.6% forecast but down sharply from December’s +2.9% reading).  On the headline number, the Jan. PCE Price Index (Month-on-Month) was flat at +0.3% (versus a +0.3% forecast and December number).  On the annual side, January PCE Price Index (Year-on-Year) was down a tick to +2.5% (compared to a +2.5% forecast but lower than December’s +2.6% value). At the same time, Jan. Goods Trade Balance was much worse than expected at -$153.26 billion (versus a -$116.90 billion forecast and December’s -$122.01 billion reading). On the spending front, Jan. Personal Spending was down sharply to -0.2% (compared to a +0.2% forecast and December’s +0.8% number).  Meanwhile, Jan. Retail Inventories were up sharply to +0.4% (versus December’s -0.1% reading).  Later, Chicago PMI was up strongly to 45.5 (versus a 40.5 forecast and January’s 39.5 value). 

In Fed news, on Friday, Cleveland Fed President Hammack said “baseline preference” is that the Fed continues to shrink its balance sheet (continue Quantitative Tightening) while the FOMC figures out how all of Trump’s tariffs, immigration policy, scrapped and unenforced regulation, etc. impacts the economy.  In the meantime, she said the Fed can use temporary bond repurchases (repos) if needed “”to put more (liquidity) back in the system until you figure out.”  On the Fed Funds Rate policy, Hammack said, “I believe that monetary policy has the luxury of being patient as we assess the path forward. … This will likely mean holding the federal funds rate steady for some time.” 

Overnight, Asian markets were evenly mixed with six exchanges in the red and six in the green.  South Korea (-3.39%) was by far the biggest mover and paced losses followed by Taiwan (-1.29%) and Thailand (-1.27%). Meanwhile, Japan (+1.70%) was far out front of the other gainers.  In Europe, with the exception of Portugal (-0.03%) we see green across the board at midday.  The CAC (+1.07%), DAX (+1.38%), and FTSE (+0.72%) are leading the region higher in early afternoon trade.  In the US, as of 7:15 a.m., Futures are pointing toward a green start to the week.  DIA implies a +0.31% open, the SPY is implying a +0.50% open, and QQQ implies a +0.70% open at this hour.  At the same time, 10-Year Bond Yields are back up to 4.254% and Oil (WTI) is just on the green side of flat at $69.86 per barrel in early trading.

The major economic news scheduled for Monday includes S&P Global Mfg. PMI (9:45 a.m.), Jan. Construction Spending, Fed. ISM Mfg. Employment, Feb. ISM Mfg. PMI, and Feb. ISM Mfg. Prices (all at 10 a.m.).  The major earnings reports scheduled for before the open include CRC, FTRE, NOMD, and SGRY.  Then after the close, MRC, NATL, and OKTA report.

In economic news later this week, on Tuesday API Weekly Crude Oil Stocks are reported and we hear from Fed member Williams.  Then Wednesday, we get Feb. ADP Nonfarm Employment Change, Feb. S&P Global Services PMI, Feb. S&P Global Composite PMI, Jan. Factory Orders, ISM Non-Mfg. Employment, ISM Non-Mfg. PMI, ISM Non-Mfg. Prices, EIA Crude Oil Inventories, and Fed Beige Book.  On Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q4 Nonfarm Productivity, Q4 Unit Labor Costs, Jan. Trade Balance, and Fed Balance Sheet are reported.  We also hear from Fed Governor Waller.  Finally, on Friday, we get Feb. Avg. Hourly Earnings, Feb. Nonfarm Payrolls, Feb. Private Nonfarm Payrolls, Feb. Participation Rate, Feb. Unemployment Rate, Fed. Monetary Policy Report, and Jan. Consumer Credit. We also hear from Fed members Bowman and Williams as well as Chair Powell.

In terms of earnings reports later this week, on Tuesday, we hear from AZO, BBY, PSFE, SE, TGT, SQM, CRWD, CTOS, EC, FLUT, INGM, JWN, and ROST.  Then Wednesday, ANF, BF.B, CPB, FL, REVG, THO, BBAR, MRVL, MDB, SOBO, VEEV, VSCO, and ZS report.  On Thursday, we hear from BJ, BTSG, BURL, CNQ, CBRL, GMS, JD, KR, M, PSNY, TTC, VG, AVGO, COST, GAP, HPE, and LOMA.  Finally, on Friday, ADV, AQN, GCO, and YPF report.

So far this morning, NOMD reported beats on both the revenue and earnings lines. At the same time, FTRE missed on both the top and bottom lines.

With that background, the market looks to gap higher at the open Monday, but this time not in an indecisive way.  All three major index ETFs opened the premarket higher and have printed strong, white-bodied, no-wick candles since that point.  SPY and DIA have crossed back above their T-line (8ema) while QQQ remains below but is headed in that direction.  So, the short-term trend is mixed.  Meanwhile, the mid-term trend remains a choppy sideways mess.  At the same time, the long-term trend remains bullish.  In terms of extension, with the premarket moves higher, none of the three is too far below their T-line.  Meanwhile, the T2122 indicator sits in the dead center of its mid-range.  So, both sides of the market have plenty of room to work today.  In terms of the Big Dogs, eight of the 10 are in the green in the premarket.  INTC (+5.18%) is well out front of TSLA (+3.60%) with the rest far behind.  On the downside, NVDA (-0.27%) and AAPL (-0.11%) are the only Big Dogs in the red.  As far as liquidity goes, TSLA leads NVDA by 50% with the next closest ticker having traded one-seventh as much dollar-volume as NVDA (and one-nineth as much as TSLA).

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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