The Bulls were in control from the jump on Friday. SPY gapped up 0.26%, DIA opened 0.28% higher, and QQQ gapped up 0.51%.  From that point, all three major index ETFs rallied steadily higher before plateauing in the last 90 minutes of the day, near their highs.  This action gave us gap-up, large, white-bodied candles in the SPY, QQQ, and DIA. All three closed at new all-time high closes after printing new all-time highs during the day.  SPY and QQQ have almost no wicks while DIA had some wick on both ends.  That meant that all three were above their T-lines (8ema).  This all happened on slightly above-average volume in DIA and QQQ and slightly below-average volume in the SPY.

On the day, all 10 sectors were in the red with Utilities (-1.36%) out in front leading the way lower.  At the same time, Consumer Defensive (-0.40%) and Financial Services (-0.46%) held up better than the other sectors.  At the same time, the SPY lost 0.56%, DIA lost 0.25%, and QQQ lost just 0.56%.  Meanwhile, VXX gained 3.65% to close at 15.92 and T2122 dropped even further into the oversold territory at 6.25.  10-year bond yields climbed to 4.102% and Oil (WTI) rose 0.60% to close at $72.83 per barrel.  So, after a significant gap lower, Mr. Market was indecisive with a very modest bias toward the bullish side.  This happened on less-than-average volume in the SPY, and average volume in both the QQQ and DIA.

On the day, nine of the 10 sectors were in the green with Technology (+2.00%) way out in front leading the way higher.  At the same time, Consumer Defensive (-0.29%) was by far the worst-performing sector and the only one in the red.  Meanwhile, the SPY gained 1.25%, DIA gained 1.01%, and QQQ gained 1.98%.  Meanwhile, VXX fell 2.53% to close at 15.00 and T2122 climbed back up into the upper side of its midrange at 69.04.  10-year bond yields spiked to 4.13% and Oil (WTI) fell 0.50% to close at $73.71 per barrel.  So, after a significant gap higher at the open, Mr. Market was dead set on achieving that all-time high in the SPY, led by the AI-crazed Tech big dogs (AMD was up 7.11%, NVDA up 4.17%, INTC up 3.03%, GOOGL up 2.02%, META up 1.95%, AAPL up 1.55%, MSFT up 1.22%, and AMZN up 1.20%).  Even beleaguered TSLA gained 0.15%.

The major economic news on Friday included December Existing Home Sales, which came in a bit lower than expected at 3.78 million (versus a forecast and November value of 3.82 million).  On a month-on-month basis, that was a 1.0% decline compared to a forecasted +0.3% and the prior month’s +0.8%.  At the same time, Michigan Consumer Sentiment was stronger than anticipated at 78.8 (versus a 70.0 forecast and December’s 69.7).  Meanwhile, Michigan Consumer Expectations also far exceeded the predictions at 75.9 (compared to a 67.0 forecast and a 67.4 December reading).  At the same time, the Michigan 1-Year Inflation Expectations were down at 2.9% (versus the forecast and prior value of 3.1%).  On a 5-year outlook, the Michigan Consumer Inflation Expectations also came in lower than expected at 2.8% (compared to a 3.0% forecast and the previous reading of 2.9%).

In Fed news, San Francisco Fed President Daly said Friday that she believes FOMC policy “is in a good place” now and that risks have become more balanced.  She said, “We have to calibrate very carefully to ensure that we continue to bring inflation down and we ensure that we do it gently, as gently as we possibly can.”  Daly went on to say, “The risks to the economy are balanced, and the risks to both sides of our mandate are balanced.”  She concluded by saying, “So while I think it’s appropriate for us to look forward and ask when would policy adjustments be necessary so we don’t put a stranglehold on the economy, it’s really premature to think that that’s (speaking of rate cuts) around the corner.”

In stock news, the CEO of STLA told an audience Friday that his company will not sell electric vehicles below cost to boost sales the way TSLA and other competitors do.  He said, “I am trying to avoid a race to the bottom.” He went on to imply that TSLA stocks’ slide since last summer was a result of price cuts to maintain sales.  At the same time, SCGLY (major French bank Societe Generale) announced it would cut hundreds of jobs in France in order to cut costs.  Later, CVX announced it plans to sell its Canadian Duvernay Shale natural gas business between now and 2028.  CVX hopes to get between $10 billion and $15 billion for the unit.  Elsewhere, F announced it is reducing the production of F-150 Lightning pickups starting April 1.  However, at the same time, F said it is adding a third shift of production for Bronco SUVs and Ranger pickups. (This means no job cuts with employees transferred rather than laid off.)  After the close, BX announced its acquisition of TCN for $3.5 billion ($11.25 per share).

In stock government, legal, and regulatory news, a major Chinese bank (ICBC) agreed to pay $32.4 million to the Fed in penalties for unauthorized use and disclosure of confidential supervisory information. At the same time, Reuters reported that the AMZN acquisition of IRBT will be blocked by the EU Antitrust regulator. (IRBT shares plunged nearly 27% on the story.)  Later, the EPA sent its proposed standards calling for major reductions in new vehicle emissions to the White House for review.  (The auto industry lobbying group called the standards “neither reasonable nor achievable.”  Meanwhile, TSLA and environmental groups called on even tougher standards.)  At the same time, a class-action shareholder suit was filed against VNET alleging the company provided false and misleading information about financial stability. Later, Reuters reported that the FDA had found new manufacturing and quality control problems at a LLY plant in NJ.  (LLY released a statement saying that it has asked the FDA for “added flexibility” to manufacture a migraine medicine at a different production line in light of the findings.)  Elsewhere, a federal Court of Appeals upheld a previous ruling in favor of UEIC which prevents ROKU from importing and selling streaming products that were found to violate UEIC’s patents.  At the same time, Reuters reported that the European Commission has asked for public comment on AAPL’s offer to settle EU antitrust charges by opening up its “tap and go” payment technology to rivals.  (By this, they mean they want competitor comments.)  Later, the CDC warned against charcuterie meat being sold at COST and WMT after a multi-state salmonella outbreak. The private brand in question issued a “voluntary recall” after the announcement.  At the same time, JBLU and SAVE filed an appeal of a federal judge’s ruling that blocked the tie-up that the Dept. of Justice opposed and the FTC both had previously blocked. Later, a US court approved $20.8 billion in claims made by 17 creditors, including COP, to be paid from proceeds of an auction of Venezuelan-owned Citgo Petroleum.  The first bids on the auction of the assets of Citgo are due Monday.

Overnight, Asian markets were evenly split with the exception of Chinese markets which were all three down sharply.  (This fall was said to be due to market expectations of a rate cut by the PBOC, which kept rates steady.  As a result, China tightened liquidity in the offshore foreign exchange market while selling US Dollars onshore to stabilize the Yuan.)  Shenzhen (-3.50%), Shanghai (-2.68%), and Hong Kong (-2.27%) were far and away the biggest losers.  Meanwhile, Japan (+1.62%), Taiwan (+0.76%), and Australia (+0.75%) paced the gainers.  In Europe, except two small exchanges, we see green across the board at midday.  The CAC (+0.42%), DAX (+0.45%), and FTSE (+0.18%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a green start to the day.  The DIA lags as it implies a +0.16% open, the SPY is implying a +0.31% open, and the QQQ implies a +0.58% open at this hour.  At the same time, 10-year bond yields are down to 4.096% and Oil (WTI) is up 0.42% to $73.72 per barrel in early trading.

The major economic news scheduled for Monday is limited to the December Index of US Leading Economic Indicators (10 a.m.).  There are no major earnings reports scheduled for before the open Monday.  However, after the close, BRO, LOGI, UAL, and ZION report.

In economic news later this week, on Tuesday we get API Weekly Crude Stocks Report.  Then Wednesday, S&P Global Manufacturing PMI, S&P Global Services PMI, S&P Global Composite PMI, and EIA Crude Oil Inventories. On Thursday, Building Permits, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Durable Goods Orders, Q4 GDP, Q4 GDP Price Index, Dec. Goods Trade Balance, Dec. Retail Inventories, Dec. New Home Sales, and Fed Balance Sheet are reported.  Finally, on Friday, we get the Dec. Core PCE Price Index, Dec. PCE Price Index, Dec. Personal Spending, and Dec. Pending Home Sales.

In earnings news later this week, on Tuesday we hear from MMM, DHI, ERIC, GE, HAL, IVZ, JNJ, LMT, PCAR, PG, RTX, SYF, VZ, WBS, BKR, CNI, EWBC, ISRG, NFLX, STLD, LRN, and TXN.  Then Wednesday, ABT, APH, ASML, T, BOKF, ELV, FCX, GD, KMB, EDU, PGR, SAP, TEL, TDY, TXT, AMP, CACI, COLB, CNXC, CCI, CSX, HXL, IBM, KNX, LRCX, LVS, LVRO, LBRT, PKG, PLXS, RJF, RMD, STX, NOW, TSLA, URI, and WRB report.  On Thursday, we hear from ALK, AAL, AIT, BX, BFH, CRS, CMCSA, CFR, DOW, EXP, HUM, HZO, MMC, MKC, MBLY, MUR, NEE, NOK, NOC, ORI, BPOP, SDVKY, SHW, LUV, STM, UNP, VLO, VLY, XEL, XRX, AJG, COF, INTC, KLAC, LHX, LEVI, OLN, TMUS, V, WAL, WDC, AND WY.  Finally, on Friday, AXP, ALV, BAH, CL, FCNCA, GNTX, and NSC report.

In miscellaneous news, on Friday, Axios reported the results of an Axios – Harris poll of 2,120 US adults conducted in mid-to-late December.  According to the poll, 63% of Americans rate their own current financial situation as “good” or “very good.”  At the same time, 66% expect 2024 to be better than 2023 economically and a whopping 85% feel their personal financial situation will be better at the end of the year than at the end of 2023.  Part of the reason for that is that 63% of respondents feel their job security is “a sure thing.”  I guess the moral of the story is that things may not be as bad as some report.  Elsewhere, on Friday, the bipartisan tax cut deal (restoring research and development deductions for business and child tax credits for families) passed out of the Ways and Means Committee by a vote of 40-3.  Perhaps due to the GOP House majority, the tax cuts lean heavily in favor of businesses with child tax credits growing at $100 per year to just $2,000 in 2025.  (For reference, those deductions were $3,600 per child in 2021.)  Interestingly, Congress reports that only $399 million of the $77.5 in reduced revenue will add to the federal deficit.  This is because their estimates assume $77.1 billion in savings will be obtained from previous fraudulent COVID-relief claims.  (Although, I have no idea what this has to do with the tax cuts and I won’t hold my breath that they actually recover that much.)

In other news, MSFT reported that Russian state-sponsored hackers had broken into company systems to spy on top company executives.  The breach resulted in some lost emails and documents from senior staff.  Elsewhere, the Biden Administration issued another purchase of 3.2 million barrels of oil to refill the US Strategic Petroleum Reserve.  (Delivery is in April for this batch.)  At the same time, in what may become a much wider trend, 26 states (led by deep red TX) asked a US Appeals Court to delay deciding whether or not to block a US Dept. of Labor rule until after the US Supreme Court decided whether (and, if so, how) to black the executive branch from issuing rules (and interpreting the law) to achieve laws.  SCOTUS is expected to announce its decision on the matter in June.  (The lawsuit in question seeks to block retirement plans from being allowed to consider ESG factors in any way when choosing where to invest retirement funds and the suit was brought by Republicans because the Dept. of Labor does not explicitly forbid retirement funds from considering those factors.)

With that background, all three major index ETFs gapped higher to start the premarket session. However, all three are also printing small, white-bodied candles so far in the early session indicating some indecision early. The SPY, DIA, and QQQ remain above their T-line (8ema) and sitting at all-time highs, obviously the Bulls are in control of the trend in the short-term. In the longer term, we are also clearly bullish in all three. In terms of extension, the QQQ is getting a little stretched above its T-line, while the other major index ETFs are still well inside the normal range. The T2122 indicator is also sitting in its midrange. So, both sides have room to run if they can gather the momentum to do it. As I’ve been saying for some time, keep watching those Tech Big Dogs. If they make a move as a group, it is almost impossible for the rest of the market to do anything but follow given their trading volumes.

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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