The market opened pretty much flat on Friday.  SPY opened dead flat, DIA opened down 0.12%, and QQQ opened up 0.01%.  From that point, all three major index ETFs ground sideways until 12:30 p.m. Then, SPY, DIA, and QQQ sold off slowly until a small bounce the last 10 minutes of the day.  This action gave us black-bodied Spinning Top type candles in all three.  QQQ printed what could be called a Dark Cloud Cover and DIA printed a Bearish Harami.  This happened on below average volume in all three major index ETFs.

On the day, seven of the 10 of the sectors were in the green with Communications Services (+0.81%) leading the way higher.  On the other side, Energy (-0.75%) was the laggard.  At the same time, SPY lost 0.29%, DIA lost 0.28%, and QQQ lost 0.57%.  Meanwhile, VXX fell just slightly to close at 41.74 while T2122 climbed even further into the middle of its overbought range, closing at 90.79.  On the bond side, 10-Year Bond yields fell back to 4.617% and Oil (WTI) was just on the red side of flat, closing at $74.56 per barrel. So, Friday was a nothing day that drifted lower in the afternoon. This is probably a clue that traders are waiting on the Fed decision on Wednesday after Trump demanded that the FOMC immediately lower interest rates.

The major economic news on Friday, included S&P Global Mfg. PMI, which came in higher than expected at 50.1 (compared to a 49.8 forecast and December 49.4 value).  At the same time, the S&P Global Services PMI was lower than expected at 52.8 (versus a 56.4 forecast and December’s 56.8 reading).  Combined, this gave us a S&P Global Composite PMI of 52.4, down from December’s 55.4 number.  Later, December Existing Home Sales were higher than predicted at 4.24 million (compared to the 4.19 million forecast and November’s 4.15 million).  At the same time, Michigan Consumer Sentiment came in down to 71.1 (versus a 73.2 forecast and December’s 74.0 value).  Meanwhile, Michigan Consumer Expectations were at 69.3 (compared to the 70.2 forecast and December’s 73.3 reading).  On the forward-looking survey, Michigan 1-Year Inflation Expectations were 3.3% (right on the 3.3% forecast and up sharply from December’s 2.8% expectations).  Looking out further, Michigan 5-Year Inflation Expectations were up, just not as much as expected at 3.2% (versus a 3.3% forecast and up from December’s 3.0%).

There was no Fed news Friday as they prepare for next week’s FOMC meeting.  (That meeting is expected to be a hold by most analysts and 99.5% of Fed Futures traders.)

Overnight, Asian markets were mixed again as some exchanges remained closed for Lunar New Year holiday.  India (-1.14%), Japan (-0.92%), and Shenzhen (-1.33%) led most of the region lower.  In Europe, markets are mostly red as of midday.  The CAC (-0.73%), DAX (-1.08%), and FTSE (-0.21%) lead the way lower in early afternoon trade.  In the Us, as of 7:30 a.m., Futures are pointing toward a big gap down with the QQQ (-3.92%), SPY (-2.33%), and DIA (-0.96%) after a Chinese startup (DeepSeek) said their open-source AI model had been developed in two months at a cost of just $6 million. (And reportedly outperforms US-based big-dollar models in at least some third-party tests). The report sparked massive concern about the market value of AI leadership into which major tech firms have (and are) poured hundreds of billions of dollars.  On the bond side, 10-Year Bond yields dropped sharply to 4.518% and Oil (WTI) is down three-quarters of a percent to $74.10 per barrel in early trading.

The major economic news scheduled for Monday is limited to December Building Permits (8 a.m.) and December New Home Sales (10 a.m.).  The major earnings reports scheduled for before the open include T, AND SOFI.  Then after the close, ARE, BRO, CR, GGG, NUE, SANM, WRB, and WAL. 

In economic news later this week, on Tuesday, we get Preliminary December Durable Goods Orders, January Conf. Board Consumer Confidence, and the API Weekly Crude Oil Stocks report.  Then Wednesday, Preliminary December Goods Trade Balance, Preliminary December Retail Inventories, EIA Weekly Crude Oil Inventories, FOMC Interest Rates Decision, FOMC Statement, and Fed Chair Press Conference are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q4 Core PCE Prices, Preliminary Q4 GDP, Preliminary Q4 GDP Price Index, December Pending Home Sales, and Fed Balance Sheet. Finally, on Friday, December PCE Price Index, December PCE Price Index, December Personal Spending, Q4 Employment Cost Index, and Chicago PMI are reported.

In terms of earnings reports later this week, on Tuesday, we hear from ADNT, BA, GM, IVZ, JBLU, KMB, LMT, PCAR, PII, BPOP, RCL, RTX, SYF, SYY, XRX, BXP, CB, FFIV, HLI, LFUS, LOGI, NXT, PKG, QRVO, RNR, SAP, SBUX, LRN, and SYK.  Then Wednesday, AIT, ASML, ADP, AVT, EAT, GIB, GLW, DHR, EXP, FLEX, GD, GPI, HES, LII, MHO, MSCI, NDAQ, NSC, OTIS, PGR, SLGN, SF, TMUS, TEVA, VFC, AMP, AXS, CHRW, CP, CLS, CCS, CMPR, IBM, LRCX, LSTR, LVS, LEVI, LBRT, MTH, META, MEOH, MSFT, NFG, RJF, RHI, SEIC, SIGI, NOW, TER, TSLA, TTEK, URI, WDC, WHR, and WM report.  On Thursday, we hear from FLWS, AOS, MO, ABG, AVY, BBVA, BX, BFH, BC, CAH, CRS, CAT, CHKP, CI, CMCSA, CFR, DOV, DOW, IP, KEX, LHX, LAZ, MAN, MMC, MA, MBLY, MUR, NOK, NOC, OSK, PH, PHM, DGX, RCI, ROP, SNY, SCSC, SNDR, SHW, SIRI, LUV, STM, TMO, TSCO, TT, UPS, VLO, AAPL, AJG, TEAM, BKR, BOOT, CNI, CACC, DECK, EMN, GEN, HIG, INTC, KLAC, LPLA, OLN, PFSI, PPG, RMD, SKYW, X, V, and WY.  Finally, on Friday, ABBV, AON, ARCB, ALV, BSAC, BAH, BR, BEPC, BEP, CHTR, CVX, CHD, CL, ETN, XOM, BEN, GNTX, IMO, JHG, LYB, NVS, OMF, PSX, RVTY, VSTS, and GWW report.

So far this morning, T, RYAAY, and SPFI have all reported beats on both the revenue and earnings lines.

With that background, the market looks mostly decided bearish early today.  All three major index ETFs opened the premarket with a big gap lower.  SPY and QQQ gapped down through to well below their T-line (8ema).  Since then, QQQ and SPY both charged even further down, but have come up well off their lows.  For its part, DIA gapped down to retest its T-line, but has since rallied to show up the only white-body pre-market candle of the three major index ETFs.  With that said, the short-term trend is on the bearish side of mixed.  The mid-term downtrend is now a mess and can best be described as broad-range chop.  In the long-term all three are bullish.  In terms of extension, QQQ is now extended below its T-line while SPY remains below but not stretched and DIA is above and not stretched. For its part, T2122 is back in the middle of its overbought range. So, we need more of a pause or pullback to keep the rally healthy (and it sure looks like we’re getting it).  In terms of the 10 Big Dogs, nine of the 10 are in the red with NVDA (-11.87%) far out in front leading the market lower.  On the other side, INTC (+0.34%) is the only green spot and is holding up much better than the others.  As far as liquidity goes NVDA also leads the way, having traded 5 times as much dollar-volume as TSLA, which itself has traded twice as much as MSFT.  In short, a tech blood-bath seems to be the order of the morning.

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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