Markets were dead on Monday opening a bit lower and then meandering around that “gap” the rest of the day.  SPY and QQQ both “gapped” down 0.13% while DIA opened 0.05% lower.  After that, none of the three major index ETFs moved more than half of a percent, and when they did move, did so in a slow, methodical, meander.  This action gave us indecisive Doji candles in all three major index ETFs. This consolidation also helped the T-line (8ema) to catch up, relieving some of the overbought condition.  This all happened on well-below-average volume in all three major index ETFs.

On the day, nine of the 10 sectors were in the red with Healthcare (-0.58%) and Energy (-0.55%) out front leading the way lower as Utilities (+0.05%) was the only sector in the green.  At the same time, the SPY lost 0.18%, DIA lost 0.14%, and QQQ lost 0.09%.  The VXX gained slightly to close at 17.54 and T2122 fell back a bit but remained in its overbought range at 89.51.  10-year bond yields plummeted to 4.39% and Oil (WTI) fell 0.69% to close at $75.02 per barrel.  

The major economic news reported Monday included Building Permits, which came in above expectation at 1.498 million (compared to a forecast of 1.487 million and a prior reading of 1.471 million).  Thie was a 1.8% month-on-month increase (versus a +1.1% forecast and the prior month’s -4.5%).  Later, October New Home Sales came in lower than anticipated at 679k (compared to a forecast of 721k and the previous month’s value of 719k).  That amounted to a 5.6% month-on-month decline (versus a forecast expecting a 4.5% decline and September’s huge 8.6% increase).  Later, Bloomberg reported that the national average gasoline price has fallen for 60 straight days, the longest streak in more than a year.  (14 states report average prices below $3 per gallon.)

In Fed news, the St. Louis Fed issued a report after the close that said losses caused by the FOMC’s rate hike cycle had caused historic operating losses.  The report also says that these losses may cause the Fed to wait another four years to recoup its loss and begin returning profits to the US Treasury.  The other mitigating factor is that the Fed is also reducing its balance sheet over this same time.  The Fed sat at a -$120.4 billion income as of November 22.  However, the report repeatedly stressed that the current situation and long period of recouping losses in no way impacts its ability to operate and conduct monetary policy.

In Black Friday news, updated data now shows that the big shopping day brought in $9.8 billion in the US, a 7.5% increase over Black Friday 2022.  Meanwhile, Adobe Digital Insights says Cyber Monday sales are on track to reach a record $12.4 billion, which is a 5.4% increase over 2022.  At midday, Adobe pointed out AMZN, WMT, and AAPL as big winners according to preliminary data.

In stock news, Reuters reported Monday that VLKAF (Volkswagen) will begin cutting staff at its “no longer competitive” namesake VW brand.  The number of job cuts was not specified and it is part of the company’s current $11 billion savings program.  In the US, KHC launched a $3 billion share buyback program (set to run through Dec. 26, 2026) on Monday.  At the same time, Reuters reported that AMZN reached a deal with 20,000 Spanish warehouse and delivery workers who had been striking.  The deal avoided one-hour shutdowns in that country on Cyber Monday.  Later, PNC Bank announced it is closing 19 branches by mid-February 2024, joining the likes of JPM in consolidating to reduce costs compared to previous growth strategies.  Elsewhere, RIVN announced that it had begun leasing its R1T electric pickup trucks in CA, NY, FL, and TX.  Later, the Wall Street Journal reported that AMZN is now the biggest delivery company in the US, surpassing both UPS and FDX in the volume of parcels.  (Prior to Thanksgiving, AMZN had already delivered 4.8 billion packages, and it expects to deliver 5.9 billion by year-end 2023.)  At the same time, Chinese online retailer Shein has filed (confidentially) for a US IPO.  Later, SHEL, XOM, and TTE have all been delaying the return of 5 million barrels of oil they “borrowed” from the US Strategic Petroleum Reserve.  On Monday the three were granted another extension, letting them put off returning the oil until 2024-2025.

In stock government, legal, and regulatory news, labor trouble with unions in Sweden forced TSLA to sue Sweden’s Transport Agency and state-run postal service after union strikes had halted the distribution of license plates for new TSLA cars.  However, the state of Sweden stands behind labor unions and collective agreements.  So, TSLA’s policy of not engaging in collective bargaining at all will cause it to have a steep hill to climb to continue operations there.  However, a Swedish Court ruled that the agencies need to find a way to begin delivering TSLA vehicle license plates within a week (or face a $93k fine).  Later, the EU antitrust regulator issued a statement of objections to the AMZN acquisition of IRBT for $1.4 billion.  Elsewhere, Reuters reported that a new policy was put in place in China, preventing major shareholders from selling stocks.  The rule defines a “major shareholder” as anyone who owns 5% of a given stock.  At the same time, in the US, a federal District judge ruled against META in its suit filed against the FTC, ruling that the FTC can limit the amount of money social media companies make from data collected about children.  After the close, an NRLB board dismissed claims that TSLA had illegally fired employees for attempting to organize a union.  However, the board found merit in two claims that TSLA maintained unlawful rules against the acceptable use of technology by employees.  Also after the close, FMC was hit with a class-action lawsuit alleging the company misled investors about its business prospects following patent protection losses in China, India, and Brazil (key FMC markets).  Also after the close, SWTX was given FDA approval for adult use of its noncancerous tumor treatment.  (The company expects the treatment to be available to patients in 10 days.)  Finally, a US Appeals court handed a massive win to MMM, CTVA, and DD by rejecting a lower court ruling that would have allowed 11.8 million Ohioans to sue the companies as a group over toxic “forever chemicals.”  The ruling will force the companies to be sued by each individual (instead of as a class action).  The ruling found that the lead claimant had not proven the forever chemicals found in his body had originated from those three dumpers of those chemicals and not some other unknown source.  (Which in essence is a hurdle far too high for any claimant to prove.)

After the close, ZS reported beats on both the revenue and earnings lines.  ZS also raised its forward guidance.

Overnight, Asian markets were mixed but leaned to the green side with seven of 12 exchanges in the green, one unchanged, and four in the red.  Taiwan (+1.19%) and South Korea (+1.05%) were by far the largest gainers while Hong Kong (-0.98%) was by far the biggest loser.  Meanwhile, in Europe, a different picture is taking shape with only Portugal (+0.53%) in the green as the continent is nearly red across the board.  The CAC (-0.56%), DAX (-0.14%), and FTSE (-0.34%) lead the way on volume in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward an open just on the red side of flat.  The DIA implies a -0.02% open, the SPY is implying a -0.09% open, and the QQQ implies a -0.08% open at this hour.  At the same time, 10-year bond yields are up to 4.408% and Oil (WTI) is up 1.10% to $75.68 per barrel in early trading.

The major economic news scheduled for Tuesday includes November Conf. Board Consumer Confidence (10 a.m.) and API Weekly Crude Oil Stocks (4:30 p.m.).  We also hear from Fed members Waller (10:05 a.m.) and Bowman (10:45 a.m.).  The major earnings reports set for before the open include BNS, ESLT, and PDD.  Then, after the close, CRWD, FLNC, HPE, INTU, NTAP, SPLK, and WDAY report. 

In economic news later this week, on Wednesday, Q3 GDP, Q3 GDP Price Index, Oct. Trade Goods Balance, Oct. Retail Inventories, Weekly EIA Crude Oil Inventories, and Fed Beige Book are reported.  On Thursday, we get Oct. Core PCE Price Index, Oct. PCE Price Index, Weekly Initial Jobless Claims, Oct. Personal Spending, Nov. Chicago PMI, and Oct. Pending Home Sales.  We also hear from Fed member Williams (9:05 a.m.).  Finally, on Friday, we get Nov. S&P Global Mfg. PMI, Nov. ISM Mfg. Employment, Nov. ISM Mfg. PMI, and Nov. ISM Mfg. Price Index.  We also hear from Fed Chair Powell at 11 a.m.

In terms of earnings reports later this week, on Wednesday, BILI, DLTR, DCI, FTCH, FL, HRL, PDCO, WOOF, VSTS, CG, FIVE, YY, LZB, NOAH, NTNX, OKTA, PSTG, PVH, CRM, SNOW, SNPS, and VSCO report.  On Thursday, we hear from ASO, BIG, DOOO, CM, CBRL, EXPR, KR, RY, TD, TITN, AMWD, DELL, MRVL, and ULTA.  Finally, on Friday, GCO and BMO report.

In miscellaneous news, the SEC adopted a long-blocked Dodd-Frank rule prohibiting traders in asset-backed securities from betting against the same assets that they are selling to other investors.  However, in a nod to the power of US financial companies, the adopted rule exempts “risk hedging” and “market-making” from coverage under the rule.  Elsewhere, Reuters reported that both the NYSE and NASDAQ are very close to enforcing its rule that companies must clawback executive incentives in the event of financial statement amendments due to material noncompliance.  The rule would require listed companies to have a clawback policy in place by Dec. 1, 2023.

In European Economic News, the German ruling coalition unveiled a new budget that temporarily lifts the country’s self-imposed ban on borrowing.  This comes after the top German Court threw out the government’s budget by forbidding the use of unused COVID funds.  The new plan calls for Germany to borrow $49 billion as well as cutting $16.5 billion from the budget to balance the books.  Meanwhile, in the UK, the British Retail Consortium reported Monday night that British shops saw the slowest increase in prices (lowest inflation) since June 2022, at 4.3% annually. 

So far this morning, PDD reported beats on both the revenue and earnings lines.  Meanwhile, BNS and ESLT both reported beats on revenue while missing on the earnings lines.

With that background, it looks like markets are doing the same thing this morning that they did during the premarket on Monday. All three major index ETFS opened the early session slightly lower and have put in very small and indecisive candles since that time. All three remain well above their T-line (8ema) and 50smas. So, the Bulls are still well in control of both shorter and longer-term trends. In terms of extension, the major index ETFs are a bit closer to their T-lines (8emas) as those averages have had another day to catch up during yesterday’s dead market. Meanwhile, the T2122 indicator is now in the middle of its overbought territory. So, we do have some slack if the Bulls want to make another move but, of course, the Bears have the most room to run. With that all said, remember that the market can remain extended longer than we can stay solvent being right too early.

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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