Despite much higher-than-expected producer prices (wholesale inflation), markets gapped up on Wednesday.  However, the rest of the intraday action was a sideways grind with a slightly bearish trend.  This left us with black Spinning Top type candles in all 3 major indices.  In fact, the QQQ closed at another all-time high, despite the black body.  On the day, SPY gained 0.18%, DIA gained 0.15%, and QQQ gained 0.18%.  This all happened on very narrow breadth as a handful of FAANG stocks kept markets green on the day.  (AAPL in particular had a tremendous day on heavy volume, closing at another new all-time high.)  VXX fell over 2% to 28.91 and T2122 fell further into the oversold territory at 16.73.  10-year bond yields fell sharply to 1.351% and Oil (WTI) dropped 3.36% to $72.72 on news that OPEC+ had reached a deal that will raise their production quotas significantly.

As expected, Fed Chair Powell told Congress that the FOMC can wait before it starts to ease bond purchases, let alone taking rate action, despite surging inflation data.  He stuck to the story that indications are that the inflationary surge will be transitory and that the economy is still a long way off from reaching the “substantial further progress” bar the committee has set before changing policy. Powell testifies again before the Senate this morning.

Last night China reported that its GDP grew 7.9% in Q2.  This was lower than the expected 8.1% growth for the quarter.  In other data released, Chinese retail sales jumped 12.1% in June (versus an 11% increase expected).  And Chinese Industrial output also rose 8.3% year-on-year in June, versus the analyst estimates of a 7.8% increase.  As mentioned yesterday, this would seem to indicate the Chinese recovery was losing steam in Q2, but came on strong in June, reacting to the newest Chinese stimulus policies.

US Consumer debt soared in Q1, reaching an all-time high of $14.64 trillion.  The increase came despite average credit card balances have declined by the second-largest amount on record.  (Only 5.63% of the total is credit card debt, which is the lowest percentage since records have been kept.)  This paradox seems to be because there is a huge amount of student loan debt and increases in home-equity balances as consumers lock in ultra-low-rate debt and auto loans also soared (despite price increases).  While most of the major banks have reported blowout quarters, BAC got hammered Wednesday after reporting it had lower than expected interest income.

Overnight, Asian markets were mixed but mostly green on the Chinese data.  Shanghai (+1.02%), Taiwan (+1.06%), and Indonesia (+1.13%) led the gainers.  Meanwhile, Japan (-1.15%) was an outlier to the downside, with the other three losses in the region being modest.  However, in Europe, we are seeing significant losses across the board so far today.  The FTSE (-0.84%), DAX (-1.08%), and CAC (-0.88%) are typical of the continent at mid-day.  As of 7:30 am, US Futures are pointing to a red open as well.  The DIA is implying a -0.59% open, the SPY implying a -0.45% open, and the QQQ implying a -0.09% open an hour in front of the data dump at 8:30 am.  At this point, the dollar is slightly higher and 10-year bond yields are falling again at 1.327%.  Commodities are mixed, with Oil down almost 2% and metals unchanged to slightly higher.

Major economic news scheduled for Thursday includes Import/Export Price Index, Weekly Jobless Claims, NY Empire State Mfg. Index, and Philly Fed Mfg. Index (all at 8:30 am), June Industrial Production (9:15 am), and Fed Chair Powell testifies again (9:30 am).  The major earnings reports scheduled for the day include BK, CTAS, MS, PGR, TSM, TFC, USB, UNH, and WIT all before the open.  Then, after the close, AA and WAL report.

It looks like the bears will make at least the first move today, trying to reverse the trend after yesterday’s indecisive Spinning Top candles. The Chinese data did not help, but Jobless Claims and Manufacturing indexes at 8:30 may well end up calling the tune early. Also, remember that earnings are underway with everything reporting so far this morning coming in as beats to the upside. Markets are still sitting near all-time highs, look extended, and are looking for direction. While it would be unlikely Fed Chair Powell would say anything new relative to his testimony to the other chamber yesterday, he does testify again this morning. So be aware of that potential driver as well.

Focus on your open positions first, don’t chase new ones, and remain nimble. The odds still favor sticking with the trend in terms of overall posture. And the long and mid-term trends remain bullish and have not been broken yet. So, stick to your trading rules, taking your profits, moving your stops, and maintaining your discipline. It is all about your decisions. Act with intention…don’t just react emotionally. Remember it is consistency that remains the key to long-term success.

Ed

Swing Trade Ideas for your consideration and watchlist: PM, LB, CEIX, TD, CLX, CSCO, WMT, DIS, CCRN. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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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