Tuesday was another sideways day.  SPY opened 0.19% higher, DIA opened 0.11% lower, and QQQ gapped up 0.30%. From there, all three major index ETFs meandered sideways in slightly different ways. SPY wandered back-and-forth across its opening gap until 3:50 p.m. when it spiked the last 10 minutes, closing on a new high for the day. Meanwhile, QQQ sold off modestly for an hour before chopping sideways around its prior closing level also until 3:50 p.m.  As with SPY, QQQ spiked the last 10 minutes to close in the upper part of its gap. For its part, DIA did a combination of the what SPY and QQQ did.  First it sold off for 40 minutes, rallying back to the opening level, and then falling back to grind in a tight range along the prior close before spiking the last 10 minutes to close very near a new high.  This action gave us Hammer / Hanging Man candles in all three major index ETFs. SPY and QQQ both printed new all-time highs and closed at new all-time high closes on different color tiny-body Hanging Man candles (SPY white and QQQ black).  At the same time, DIA printed a white-bodied Hammer that retested its T-line and closed above after opening and trading most of the day below that level.

On the day, nine of the 10 of the sectors were in the green with Energy (+1.22%) and Utilities (+1.16%) out front leading the way higher.  On the other side, Consumer Cyclical (-0.10%) was the only sector in the red and the laggard.  At the same time, SPY gained 0.29%, DIA was just on the green side of flat at +0.04%, and QQQ gained 0.23%.  Meanwhile VXX fell half a percent to close at 41.80 and T2122 climbed back to the top half of its mid-range to close at 68.81.  On the bond side, 10-Year Bond yields rose to 4.556% and Oil (WTI) gained 1.47%, closing at $71.78 per barrel.  So, Monday really was another sideways day where almost all of the moves came at the open and the close.  This came on below-average volume in the DIA and well-below-average volume in the SPY and QQQ. 

The major economic news on Tuesday was limited to NY Empire State Mfg. Index, which came in higher than expected at +5.70 (compared to a forecast of -1.90 and the January reading of -12.60).  Then, at the close, Dec. TIC Net Long-Term Transactions were lower than expected at $72.9 billion (versus a $149.1 billion forecast and up from November’s $53.2 billion value). 

In Fed news, on Tuesday, San Francisco Fed President Daly indicated that while there is no reason to panic, the FOMC should keep rates where they are (no more cuts) until there is more visible progress on inflation. Daly said, “Policy needs to remain restrictive until I see that we are really continuing to make progress on inflation.” She continued, “We want to be, in my judgment, careful … before we make the next adjustment.”  Daly went on to discuss the uncertainty caused by Trump policies on tariffs, immigration, and taxes, which could change the direction of the economy.

After the close, ANDE, ANET, BXC, CDNS, CE, COMP, CVI, DVN, ESI, GNW, IFF, LZB, MBC, MTDR, RBA, RUSHA, FOUR, and SPNT all reported beats on both the revenue and earnings lines.  Meanwhile, EQT, NGVT, JHX, OXY, QUAD, and UIS missed on revenue while beating on earnings. On the other side, CYH and CSGP beat on revenue while missing on earnings.  However, BKD, FLS, SON, TX, and TOL missed on both the top and bottom lines.

Overnight, Asian markets were mixed on modest moves with South Korea (+1.70%) and Shenzhen (+1.46%) well out front leading the gainers.  Meanwhile, Australia (-0.73%) was half a percent behind the rest pacing the losses.  In Europe, the bourses are mostly red with just two spots of green among the 14 exchanges.  The CAC (-0.68%), DAX (-0.78%), and FTSE (-0.33%) lead the region lower in early afternoon trade.  In the US, as of 7:40 a.m., Futures are pointing toward a mixed, flat start.  The DIA implies a -0.16% open, SPY is implying a -0.07% open, and QQQ implies a +0.03% open at this hour.  At the same time, 10-Year Bond Yields are up to 4.566% and Oil (WTI) is up 0.88% to $72.48 per barrel in early trading.

The major economic news scheduled for Wednesday includes Preliminary January Building Permits and January Housing Starts (both at 8:30 a.m.), FOMC Meeting minutes (2 p.m.), and the API Weekly Crude Stocks report (4:30 p.m.).  The major earnings reports scheduled for before the open include ADI, BLCO, CRL, CNK, CLVT, CLH, ETSY, GRMN, GIL, HSBC, HBM, JLL, LPX, OGE, PSN, PRG, PHG, SCL, TECK, TNL, TRMB, and WWW.  Then after the close, AGI, AWK, ANSS, BTG, BHC, BMRN, CVNA, CF, CAKE, CHDN, EQX, EXAS, HLF, HST, ICLR, JXN, KALU, MFC, NGD, NDSN, NOG, NTR, OII, OGS, PAAS, PK, RS, SM, TS, TFII, TOST, VALE and VTLE report. 

In economic news later this week, on Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Employment, Philly Fed Mfg. Index, US Leading Economic Indicators, EIA Weekly Crude Oil Inventories, and the Fed Balance Sheet are reported.  Finally, on Friday we get Preliminary S&P Global Mfg. PMI, Preliminary S&P Sevices PMI, Preliminary S&P Global Composite PMI, January Existing Home Sales, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer 1-Year Inflation Expectations, and Michigan Consumer 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Thursday, BABA,ALIT, COLD, BAX, BILI, BLDR, CCJ, CVE, CNP, LNG, CSTM, CNR, CWK, DAN, DNB, NVRI, EPAM, ESAB, AG, FCN, GTX, HAS, DINO, HNI, LAMR, DRS, LKQ, NETS, NICE, POOL, PRMB, PWR, SABR, SO, TRGP, TPX, TAC, ULS, UPBD, VAL, WMT, W, AKAM, LNT, AMN, XYZ, BCC, BKNG, CGAU, CENX, ED, CPRT, DBX, EGO, EVH, EXPI, FG, FND, FNF, FYBR, GLOB, GMED, IAG, PODD, LYV, MELI, NEM, NU, RXT, REZI, RNG, RIVN, RYAN, RYI, RHP, SEM, SFM, TXRH, ICI, and WSC report.  Finally, on Friday, we hear from TDS, TXNM, VIPS, and HE.

So far this morning, ADI, BLCO, CRL, CLVT, CLH, GRMN, GIL, JLL, LPX, OGE, PRG, TNL, TRMB, and WWW all reported beats on both the revenue and earnings lines. At the same time, ETSY and HBM missed on revenue while beating on earnings. On the other side, CNK, PHG, and SCL beat on revenue while missing on earnings. However, PSN missed on both the top and bottom lines.

With that background, all three major index ETFs opened the premarket slightly higher, but then have printed small black-body, indecisive (wicky) candles. DIA is retesting its T-line (8ema) from above and has so far crossed just below that average. Meanwhile, SPY and QQQ remain above their respective T-lines. It is also worth noting that SPY and QQQ are doing this while sitting at all-time highs.  Regardless, the short-term trend is modestly bullish with the DIA challenging that bias. The mid-term trend remains a choppy sideways mess that is trying to resolve itself bullishly. At the same time, the long-term trend remains bullish.  In terms of extension, none of the three are stretched too far from their T-line.  However, the other two major index ETFs remain close to their T-line and T2122 sits in the top half of its mid-range.  So, both sides of the market have room to work today if they can find momentum. In terms of the Big Dogs, six of the 10 are in the green with AMD (+0.79%) leading the tech sector higher.  On the other side, INTC (-2.88%) is by far (by 2.5%) the laggard after rumors of a TSM and AVGO buyout did not gather strength yesterday. As far as liquidity goes, NVDA (+0.41%) has traded almost twice as much dollar volume as TSLA (+0.12%) with INTC 40% behind TSLA.

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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