Markets opened flat Wednesday and then spent the day meandering back-and-forth across the opening level.  SPY opened 0.02% higher, DIA opened dead flat, and QQQ opened down 0.01%.  As mentioned, all three major index ETFs rode a roller coaster all day with peaks in the late morning and mid-afternoon as well as troughs during the first 90 minutes and early afternoon.  This action gave us white-bodied, indecisive, Doji or small-body Spinning Top candles in all three.  SPY may have just retested its T-line (8ema) from below (failing that test) while the DIA and QQQ did not quite retest that level.  This happened on below-average volume in all three major index ETFs (and well below average volume in the DIA).

The major economic news Wednesday included ADP December Nonfarm Employment Change, which showed much slower growth than expected at +122k (compared to a +139k forecast and a November +146k number).  Later, Weekly Initial Jobless Claims were fewer than was predicted at 201k (versus a 214k forecast and a 211k prior week value).  At the same time, Weekly Continuing Jobless Claims were 1,867k (less than the 1,870k forecast but up from the previous week’s 1,834k).  Later, EIA Weekly Crude Oil Inventories showed a smaller-than-anticipated drawdown of 0.959 million barrels (compared to a -1.800-million-barrel forecast and the prior week’s 1.178-million-barrel reading).  Finally, Nov. Consumer Credit came in much lower than anticipated at $7.49 billion (versus a $10.30 billion forecast and massively lower than October’s $17.32 billion number).

On the day Wednesday, six of the 10 sectors were in the green as Basic Materials (+0.32%) and Industrials (+0.22%) led the gainers.  On the other side, Technology (-0.37%) and Utilities (-0.32%) paced the losses.  Meanwhile, SPY gained 0.15%, DIA gained 0.19%, and QQQ gained 0.02%.  At the same time, VXX was on the red side of flat at 46.34 while T2122 rose, but remained in the oversold territory at 18.91.  On the bond side, 10-Year Bond yields were at 4.693% and Oil (WTI) fell 1.24% to $73.33 per barrel.  So, Wednesday was an indecisive day.  Markets all opened flat and then went back-and-forth from green to red and back to green all day long.

The December FOMC Minutes also came out Wednesday.  Those minutes indicated that Fed members are concerned about the unknown impacts of Trump’s threatened policies.  (With at least four mentioned about the impacts of changes in immigration and trade policies on the economy.)  The minutes also said, “The committee would likely slow the pace of further adjustments to the stance of monetary policy” and that the decision to make another cut in December was a close call.  Specifically, the Dec. minutes said “judgments about this meeting’s appropriate policy action had been finely balanced.”  The notes also said, “Almost all participants judged that upside risks to the inflation outlook had increased.” …  “As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”

After the close Wednesday, GBX and JEF reported beats on both the revenue and earnings lines.  However, PSMT missed on both the top and bottom lines.

On Thursday, markets were closed for President Carter’s funeral.  However, Philly Fed President Harker spoke, saying, “I still see us on a downward policy rate path.” He continued, “It’s appropriate for us to take a bit of a pause right now and see how things shake out … We’re not talking about a long pause potentially, but let’s see how things shake out. There’s a lot of uncertainty.”  He went on, “Looking at everything before me now, I am not about to walk off this path or turn around.”  Later, Boston Fed President also seemed to signal a pause, saying, “With an economy that is in a good place overall and policy already closer to a more neutral stance, I view the current nature of uncertainty as calling for a gradual and patient approach to policymaking.”  Elsewhere, Kansas City Fed President Schmid indicated a reluctance to cut rates again, saying, “We are currently pretty close to meeting our dual mandate of price stability and full employment and, with inflation close to target and growth showing continued momentum, I believe we are near the point where the economy needs neither restriction nor support and that policy should be neutral.” 

Finally, Fed Gov. Bowman (the most hawkish FOMC member) said December’s rate cut should be the last for this cycle.  She said that she continues to feel that inflation is “uncomfortably above” the Fed’s 2% goal while she also thinks the current Fed policy rate is near “neutral.”  Beyond that, Bowman seemed to be lobbying for Trump’s favor or perhaps endorsement as new Vice Chair for Bank Supervision. She said, “We (Fed) should also refrain from prejudging the incoming administration’s future policies.”  She went on to say, “Bank regulation and supervision need not be an adversarial system, with banks and regulators acting in opposition. Rather, banks and regulators often have the shared goal of a banking system that is safe, sound, and effective, with each serving an important role in furthering these objectives.” 

Overnight, Asian markets were mostly in the red.  Shenzhen (-1.80%), Singapore (-1.58%), and Japan (-1.05%) led the losses.  In Europe, the bourses are more mixed at midday with seven gainers and seven losers.  The CAC (+0.22%), DAX (+0.34%), and FTSE (-0.40%) lead the region in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a down start to the day ahead of data.  The DIA implies a -0.14% open, the SPY is implying a -0.28% open, and the QQQ implies a -0.35% open at this hour.  At the same time, 10-Year Bond yields are at 4.687% and Oil (WTI) is spiking, now up 3.11% to $76.21 per barrel in early trading.

The major economic news scheduled for Friday, we get Dec. Average Hourly Earnings, Dec. Nonfarm Payrolls, Dec. Private Nonfarm Payrolls, Dec. Participation Rate, Dec. Unemployment Rate, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations.  The major earnings reports scheduled before the open are limited to STZ, DAL, SNX, and WBA.  Then after the market close, WDFC reports. 

So far this morning, DAL, and WBA have reported beats on both the revenue and earnings lines.

With that background, it looks like the market is undecided ahead of Jobs Data this morning.  All three major index ETFs are on the red side of flat, but have given us Doji type candles so far in the premarket.  All three remain below their T-line (8ema) (although DIA did retest briefly in the early session).  That being the case, the short-term trend is bearish. If we look further out, SPY and QQQ are below their downtrend lines, meaning the mid-term trend is also bearish.  (DIA is to the right of is downtrend but still printing lower highs and lower lows.)  However, in the long-term, looking at higher-timeframe charts, the market remains in a strong bull trend.  In terms of extension, none of the three are extended from their T-line.  However, T2122 sits in the top of its oversold area.   So, the market has room to run either direction, but the Bulls have more slack to work with again today.  In terms of the 10 Big Dogs, nine of the 10 are in the red with AMD (-2.03%) being the worst off by more than half a percent.  On the other side, TSLA (+0.27%) is by far the strongest of that group and only one in the green.   For a third-straight day, NVDA leads in dollar-volume traded by about 25% over TSLA (which itself has traded six times as much as the next most liquid stock). Don’t forget that it’s Friday. So prepare for the weekend news cycle.

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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