Markets opened higher on Friday after good earnings news and poor payroll data (that can be interpreted as a rationale for another or a bigger Fed rate cut).  SPY gapped up 0.49%, DIA gapped up 0.50%, and QQQ opened up 0.31%. From there, all three major index ETFs followed-through with a strong rally for the first hour.  At that point they all slowly meandered back toward their open.  This action gave us Inverted Hammer type candles in all three major index ETFs.  SPY printed a black-bodied Inverted Hammer.  DIA gave us a gap-up white-bodied, Inverted Hammer that retested its T-line (8ema) from below and failed.  However, DIA did recross its 50sma to the upside.  Finally, QQQ printed a white-bodied, big Inverted Hammer Body candle that was also a Bullish Harami candle.  This all happened on average volume int SPY and QQQ as well as above-average volume in the DIA.

On the day, six of the 10 sectors were in the green with Healthcare (+1.00%) well out in front leading the way higher.  On the other side, Utilities (-1.85%) performed far, far worse (one percent worse) than the next worse sector, Energy (-0.86%).  Meanwhile, SPY gained 0.42%, DIA gained 0.66%, and QQQ gained 0.74%.  VXX fell 1.76% to close at 56.85 and T2122 fell slightly further into oversold territory, but remains in the top of that area at 16.44.  At the same time, 10-Year bond yields spiked again all the way up to 4.386% while Oil (WTI) fell to close at $69.49 per barrel. So, Friday was the Bulls day early but then turned into a long, slow drift lower after the first hour.  Among the big market-movers were the big dogs INTC (+7.81%) and AMZN (+6.19%) as well as earnings moves by CHTR (+11.87%), LULU (+7.81%), and CAH (+7.01%).

The major economic news scheduled for Friday included October Average Hourly Earnings, which was up more than expected at +0.4% (compared to a forecast and September value of +0.3%).  At the same time, October Nonfarm Payrolls were FAR below expectations at +12k (versus a forecast of +106k and the September 223k reading).  On the private side, October Private Nonfarm Payrolls actually fell at -28k (compared to a forecasted +90k and September’s +192k number).  Meanwhile, the October Participation Rate fell a tick to 62.6% (versus the forecast and September 62.7% value).  Together, this gave us an October Unemployment Rate that remained at 4.1% (in-line with the forecast and September reading of 4.1%).  Later, October S&P Global Mfg. PMI was better than predicted at 48.5 (compared to a forecast and Sept. value of 47.8). Shortly after that, September Construction Spending was better than anticipated at +0.1% (versus a 0.0% forecast and in-line with August’s +0.1% reading). At the same time, October ISM Mfg. Employment was up less than expected to 44.4 (compared to a 45.0 forecast but up from September’s 43.9 value).  In the meantime, October ISM Mfg. PMI was lower than predicted at 46.5 (versus a 47.6 forecast and a 47.2 September reading).  This came on October ISM Mfg. Prices were up much more than anticipated at 54.8 (compared to a 49.9 forecast and September’s 48.3 value).  It is worth noting that the weak October Payrolls growth was skewed by hurricanes and the impact of the BA strike, which also impacted BA suppliers.

In stock news, on Friday, WEN announced it is closing 140 restaurants (in addition to 100 closings announced in May) over the months ahead.  (It is worth noting that the hamburger chain is opening 250-300 new location and has 6,000 stores in the US at the moment.)  Later, in a regulatory filing showed that AAPL will invest $1.5 billion in GSAT which will give GSAT funds to expand its satellite coverage.  This includes a 20% stake in GSAT for $400 million as well as $1.1 billion in cash.  After the close, Bloomberg reported that SHOCF and their private-equity peer Silver Lake Mgmt. are in talk about combining their veterinary business units and adding $4 billion in new capital to the combined company. 

Elsewhere, S&P announced that NVDA will replace INTC in the DJIA (DIA) as of November 8.  On Saturday, BRKB announced they have now amassed a $325.2 billion cash stockpile through sales of AAPL and BAC.  Warren Buffett said the company had sold another 100 million shares, which was about 25% of its holdings of AAPL during Q3 (600 million total to date for 2024).  Interestingly, BRKB also did not buy back any of its own stock during the quarter, which suggests company executives do not feel it is a bargain now.  On Sunday, Reuters reported that private equity firm Stonepeak is in advanced talks to acquire ATSG for about $3.1 billion or $22.50 per share (a 29% premium on Friday’s close of $17.40).

In stock legal and governmental news, on Friday, the NY State Supreme Court ruled in favor of PEP, dismissing the state’s case alleging the company of pollution for using plastic single-use plastic packaging.  At the same time, the Federal Energy Regulatory Commission held a hearing on concerns generated by the recent trend of planning to build datacenters on the sites of US power plants.  (The main focus was concerns over system-wide reliability as well as passing more cost onto public electric consumers in favor of the co-located datacenter.)  Later, trade groups for the major airlines criticized the US Justice Dept. review of airline competition in America and demanded that public comment on the review be extended another 60 days beyond the Dec. 23 deadline (in hope a GOP administration could kill the antitrust review for them).  At the same time, the Commerce Dept. imposed a $500k fine on GFS (third-largest chipmaker, with huge market share in lower-end chips) for selling semiconductors to blacklisted Chinese chipmaker SMIC.  Later, COF disclosed (in and SEC filing) that it is being investigated and may face enforcement action from the Consumer Financial Protection Bureau for alleged misrepresentations related to savings accounts.

In miscellaneous news, on Friday, China loosened its foreign investment rules in an effort to increase the amount of foreign funds flowing into the country.  Overseas investors are now allowed to take non-controlling “strategic stakes” in publicly-traded Chinese firms with a $300 million position. (The previous rule required foreigners to take at least a $500 million stake for a “strategic position” designation, but it was still non-controlling.)  Elsewhere, remember that BA has a binary event Monday with a union vote on the tentative deal reached last week.  (Results are not expected until at least the afternoon Monday and probably the evening.)

In Middle East news, over the weekend, Israel claimed it captured a “senior Hezbollah operative” in a raid in Northern Lebanon.  Elsewhere, Israeli airstrikes continued with several dozen killed and hundreds injured in weekend bombings in Lebanon.  In Gaza, at least 13 were killed and several dozen injured in an airstrike of two houses and the refugee camps located next to them.  On the other side, Israel said 11 people were injured in the city of Tira (central Israel) when three Hezbollah rockets hit the city.

Overnight, Asian markets were mostly green with just two of the 12 exchanges in the region under water.  Shenzhen (+1.99%), South Korea (+1.83%), and Shanghai (+1.17%) paced the gainers.  Meanwhile, India (-1.27%) was the only appreciable loser for the day.  (Japan was closed for holiday.)  In Europe, we see a very similar picture taking shape with just two of 14 bourses showing red (barely) at midday.  The CAC (+0.26%), DAX (+0.02%), and FTSE (+0.63%) lead the region higher in early afternoon trade.  In the US, as of 7 a.m., Futures are pointing toward a modest green start to the day.  The DIA implies a +0.10% open, the SPY is implying a +0.20% open, and the QQQ implies a +0.17% open at this hour.  At the same time, 10-Year bond yields are down to 4.277% and Oil (WTI) has spiked 3.09% to $71.65 in early trading.

The major economic news scheduled for Monday is limited to September Factory Orders (11 a.m.).  The major earnings reports scheduled for before the open include FOX, AMG, BRKB, BAM, CC, CNA, CEG, ENTG, FIS, BEN, FTDR, KNF, KOS, MAR, NYT, OMI, PEG, RVTY, YUMC, and ZTS.  Then, after the close, ATUS, AIG, AVB, EQH, BCC, BFAM, BWXT, CBT, CE, CENX, CRUS, CLF, CRBG, CRGY, CWK, FANG, ES, FN, FWRD, GT, GXO, HOLX, HUN, ILMN, ITUB, JELD, NXPI, PLTR, PARR, PRIM, PGR, O, RRX, RHP, SANM, ST, SLF, VVX, VRTX, and WYNN report.

In economic news later this week, on Tuesday we get Sept. Exports, Sept. Imports, Sept. Trade Balance, Oct. S&P Global Services PMI, Oct. S&P Global Composite PMI, Oct. ISM Non-Mfg. PMI, Oct. ISM Non-Mfg. Employment, Oct. ISM Non-Mfg. Price Index, and API Weekly Crude Oil Stocks report.  However, the main news of the day will be the US elections (although the results are not likely to be known that night and, if one side loses, turmoil may not end for months).  Then Wednesday, EIA Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q3 Nonfarm Productivity, Preliminary Q3 Unit Labor Costs, Sept. Retail Inventories, Fed Interest Rate Decision, FOMC Statement, Fed Chair Press Conference, Sept. Consumer Credit, and Fed Balance Sheet. Finally, Friday brings Michigan November Consumer Sentiment, Michigan November Consumer Expectations, Michigan November 1-Year Inflation Expectations, and Michigan November 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Tuesday, we hear from AHCO, AGCO, GBTG, APO, ARCH, ADM, BR, BRKR, BLDR, CIGI, CEIX, CMI, DD, EMR, EXPD, RACE, FTS, IT, GGB, GFS, HSIC, HY, INGR, LGIH, LPX, MPC, MLCO, MPLX, NMRK, OGE, ACDC, QSR, TRGP, TRI, TKR, BLD, TAC, ULS, WLK, YUM, AFG, AIZ, CRC, CPNG, DVN, EXAS, FYBR, GMED, GO, IFF, JKHY, KGC, LUMN, MASI, MCHP, MRC, NE, NOG, PAAS, PBA, SMCI, VIV, and TX.  Then Wednesday, AEP, BCO, COR, CTRI, GIB, CRL, CLVT, CNDT, CVS, DK, ENOV, HMC, HWM, IRM, JCI, JLL, LINE, NVO, ODP, OC, PFGC, PRGO, PNW, RPRX, SNDR, SRE, FUN, SWX, STWD, SUN, TEVA, TM, TRMB, VSH, AMRK, AGI, ALB, AMC, AEE, APA, APP, ARDT, ARM, ASH, ATO, BTG, BALY, BBSI, BKD, CHRD, COHR, CCU, CTVA, COTY, CAPL, DLX, ET, EMS, ENLC, EQX, FG, FNF, FBIN, FNV, GFL, GILD, HG, HST, HUBS, JXN, JAZZ, KD, LILA, LYFT, MFC, MRO, VAC, MTCH, MATV, MCK, MELI, MEOH, MKSI, MODV, NTR, PAM, PR, PRI, PTC, QGEN, QCOM, RNR, RGLD, SVC, SBGI, SSRM, STE, STRL, SUI, TTWO, TKO, TS, TRIP, TTEC, TPC, UHAL, VSAT, VSTO, WES, WMB, ZG, and Z report.  On Thursday, we hear from GOLF, ADV, APD, AQN, COLD, HOUS, MT, AVAH, GOLD, BCE, BDX, CCJ, CG, COMM, CRH, DDOG, ZRAY, DBD, DUK, EPC, ELAN, EDR, EPAM, EVRG, GEO, HAL, HBI, HSY, HGV, IHRT, IBP, KVUE, LCII, MRNA, TAP, MUR, VYX, NXST, DNOW, OSCR, PZZA, PENN, PCG, PLTK, PRMW, RL, ROK, RXO, SCSC, SEE, SPTN, STGW, SHOO, TPR, TRP, TGNA, TEF, TPX, TDG, UAA, PRKS, USFD, UWMC, VTRS, VST, WBD, KLG, AFRM, AGL, AL, ABNB, AKAM, AMN, ANET, ARKO, AXON, SQ, BHF, CPRI, CIVI, ED, CPAY, BAP, DKNG, DBX, DXC, SSP, EOG, EVH, EXPI, EXPE, FTNT, G, PODD, MTD, MNST, MSI, NWSA, OPEN, OVV, PACS, PINS, QDEL, REZI, RNG, RIVN, SOLV, RUN, TOST, and TTD.  Finally, on Friday, ADNT, WMS, ATSG, AMCX, AXL, AMRX, BAX, BLMN, BEPC, BEP, CLMT, CNH, ERJ, FLO, FLR, FTRE, GLP, GTN, IEP, KOP, LAMR, NRG, PAA, PAGP, RBA, SONY, TIXT, and PARA report.

So far this morning, BNTX, CC, CNA, CEG, L, OMI, and RVTY all reported beats on both the revenue and earning lines.  Meanwhile, BAM, KOS, and YUMC missed on revenue while beating on earnings. On the other side, BRKB came in in-line on revenue while missing on earnings.  However, ENTG missed on both the top and bottom lines.

With that background, it looks like the market is modestly bullish again early Monday. The SPY and QQQ gapped up slightly to start the premarket while DIA opened the early session flat. All three major index ETFs have printed white-body candles, but only DIA is decisive with the two broader ETFs more wick than body so far. With all three below their T-line (8ema), the short-term trend is bearish. However, the mid-term trend is weakly bullish and the longer-term trend is still solidly Bullish in all three. (Again, despite the recent pullback, they all still sit not too far from all-time highs.) With regard to extension, none of the major index ETFs are too far extended from its T-line (8ema). In addition, the T2122 indicator remains just inside the oversold area. So, markets do have room to run either direction if traders can find momentum, but the Bulls have more slack to work with today. With regard to those 10 big dog tickers, six of the 10 are in the red this morning. TSLA (-2.17%) is by far the biggest loser while NVDA (+2.15%) is by far the biggest gainer. Once again, overall the premarket volume is light today. However , NVDA leads TSLA slightly in early dollar-volume traded (and those two are well out in front of all other tickers).

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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