On Monday, the large caps gapped up about one-half of one percent and then the bulls followed through strongly for 30 minutes.  Meanwhile, the QQQ opened only a modest 0.15% higher and the bulls moved it only modestly higher until 10 am.  However, at that point, the whipsaw kicked in to see a very strong selloff in the next 30 minutes across all 3 of the major indices.  At 10:30, markets reversed again as we saw a more modest rally that lasted 2 hours.  Then, after 12:30 pm, we saw a sideways rollercoaster ride until all 3 indices broke out of the range to the new highs at 2:45 pm.  That afternoon rally continued until 3:30 pm when we saw a modest selloff in the last half-hour of the day.  This action is giving us white-bodied candles with wicks at both ends, but a larger lower wick.  (The QQQ also bounced up off its T-line or 8ema.)

On the day, seven of the ten sectors are in the green.  Basic Materials (-1.01%) was the lagging sector, while the Consumer Defensive (+1.22%) sector lead the market higher.  The SPY has gained 1.22%, DIA gained 1.34%, and QQQ gained 1.10%. Meanwhile, the VXX was down 1.53% to 19.94 and T2122 is now in the overbought territory at 84.03.  10-year bond yields have recovered from an early pullback to be at 4.247% and Oil (WTI) is down one-third of a percent to $84.83/barrel.  Overall, a bullish day with considerable intraday whipsaw taking out the gap chasers and weak hands.  Still, the market did end up higher, if a tad indecisive.

In economic news, Manufacturing PMI came in below expectations at 49.9 (versus 51.0 forecast and 52.0 in September).  Services PMI also came in even further below expectations at 46.6 (versus 49.2 forecast and 49.3 in September).  These numbers show contractions in US economic activity (for the fourth straight month).  Elsewhere, Treasury Sec. Yellen also spoke in the afternoon to a securities industry group.  She acknowledged a liquidity problem in the bond markets, which are raising costs (prices) and said her department was looking at ways to enhance stability and increase liquidity.  She also declined to comment on Japanese intervention to prop up the Yen.  She said she was not aware of any measures Tokyo was taking and had not been recently notified of such steps by them (although they were notified of a previous intervention by the BoJ, which Japan claimed was to offset volatility).

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In stock news, TSLA cut the price of its Model 3 and Model Y cars in China by about 5% in an effort to stimulate demand.  On the other side of such action, AAPL raised prices on its Apple TV+ and Apple Music subscription services.  After the close, the SEC charged CRON and its former Chief Commercial Officer with accounting fraud.  The FTC also proposed a settlement with UBER (which acquired the sanctioned company Drizly in 2021) over a lack of security standards which resulted in a data breach that exposed the personal data of 2.5 million consumers in 2020.

In energy news, Natural Gas prices in the Permian Basin (West Texas) plunged on Monday (down to as low as $0.20 / million BTU) as booming production overwhelmed the pipeline networks.  (This compares to the US benchmark now trading at about $5.)  This stems from KMI pipeline maintenance in its Gulf Coast Express and El Paso pipeline networks.

After the close, CDNS, CLS, SUI, ARE, AAN, SSD, RRC, and CADE all reported beats on both the top and bottom lines.  Meanwhile, DFS and ZION both reported a beat on the revenue line while missing on earnings.  On the other side, WRB, PKG, and CR all missed on the revenue line while beating on earnings.  However, CCK and BRO both reported misses on the revenue and earnings lines.

So far this morning, CNC, GM, ADM, KO, UBS, SHW, SYF, HAL, BIIB, PII, GPK, PNR, POR, and ARCC all reported beats on the revenue and earnings lines.  Meanwhile, GE, SAP, JBLU, and IVZ all beat on revenue while missing on earnings.  On the other side, VLO, UPS, NVS, MMM, TRU, MSCI, and TRN all missed on revenue while they also beat on earnings.  However, HSBC, CLF, PHM, XRX, MCO, and ST all missed on both the top and bottom lines.

Overnight, Asian markets were mixed in much more modest moves than the Chinese plunge on Monday.  Taiwan (-1.48%) Shenzhen (-0.51%), and India (-0.42%) paced the losses.  Meanwhile, New Zealand (+1.11%), Japan (+1.02%), and Thailand (+0.59%) led the gainers.  In Europe, we see a similarly mixed picture at midday.  The FTSE (-0.71%), and DAX (-0.84%) are negative while the CAC (+0.33%) is among the green exchanges in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a modestly red start to the day.  The DIA implies a -0.40% open, the SPY is implying a -0.28% open, and the QQQ implies a -0.03% open at this hour.  10-year bond yields remain volatile as they have plunged back down to 4.177% while Oil (WTI) is off 1.47% to $83.31/barrel in early trading.

The major economic news events scheduled for Tuesday include Conf. Board Consumer Confidence (10 am), API Weekly Crude Oil Stock (4:30 pm), and Fed member Waller speaks (1:55 pm).  The major earnings reports scheduled for the day include MMM, ALFVY, ADM, ARCC, BIIB, CNC, CLF, KO, GLW, FELE, GE, GM, GPK, HAL, HSBC, HUBB, ITW, IVZ, JBLU, KMB, MCO, MSCI, NVS, ONB, ORAN, PCAR, PNR, PII, POR, PHM, RTX, SAP, ST, SHW, SYF, TRU, TRN, UBS, UPS, VLO, and XRX before the open.  Then, after the close, GOOGL, AMP, AGR, AXTA, BXP, BYD, CNI, CHX, CC, CMG, CB, CSGP, WIRE, ENPH, EQR, FFIV, FE, GOOG, HA, JNPR, MTDR, MAT, MSFT, NBR, NCR, NEX, RUSHA, SKX, SPOT, TER, TXN, UHS, and V report. 

In economic news later this week, on Wednesday, Sept. Goods Trade Balance, Sept. Retail Inventories, Sept. New Home Sales, and EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Sept. Durable Goods Orders, Q3 GDP, and Weekly Initial Jobless Claims.  Finally, on Friday, Sept. PCE Price Index, Q3 Employment Cost Index, Sept. Personal Spending, Michigan Consumer Sentiment, and September Pending Home Sales are reported.

This is a huge earnings week as on Wednesday, APH, ADP, AVY, BSBR, BA, BSX, BCO, BMY, BG, CHEF, CME, SID, CSTM, CPG, DRVN, EXP, EVR, FSV, FTV, GRMN, GTX, GD, GPI, HOG, HES, HLT, IEX, IQV, KBR, KHC, MHO, MAS, EDU, NSC, OTIS, OC, PAG, BPOP, PRG, ROL, ROP, R, STX, SLGN, TMHC, TDY, TMO, TKR, UMC, VRT, WNC, WM, WFRD, AEM, ALGN, ALSN, AMED, NLY, AR, ACGL, ASGN, AVT, AXS, BMRN, CACI, CP, CCS, FIX, CYH, DLR, ESI, EHC, EQT, RE, FLEX, F, FBHS, FWRD, ULCC, GGG, INVH, JBT, KLAC, MTH, META, MEOH, MAA, MOH, MUSA, MYRG, ORLY, OII, OLN, OMF, PTEN, PPC, PLXS, RJF, SEIC, NOW, SNBR, STC, FTI, TDOC, TROX, UCTT, URI, VMI, VFC, and WFG  report.  On Thursday, we hear from AOS, ALLE, MO, AEP, AMT, BUD, HOUS, AIT, ARCH, AMBP, ARES, ABG, AN, BAX, BWA, BFH, BC, CRS, CARR, CAT, CBRE, CX, CHKP, CMS, CNX, CMCSA, CS, DAN, DQ, CTE, EME, FAF, FCNCA, FCFS, FISV, FCN, GEO, GOL, GVA, GBX, HTZ, HON, IP, JHG, KDP, LH, LAZ, LII, LECO, LIN, LKQ, MDC, MMP, HZO, MA, MCD, MRK, NOC, OPCH, OSK, OSTK, PATK, PBF, PCG, RS, SPGI, SNDR, SHEL, SHOP, SAH, SO, LUV, SWK, STM, TROW, TECK, TFX, TXT, TNL, TPH, VC, WST, WDC, WEX, WTW, XEL, AMZN, AAPL, ATR, AJG, BSMX, BIO, COF, CSL, COLM, DECK, DXCM, EMN, EW, ERIE, FSLR, GILD, HIG, HUBG, INTC, LHX, LPLA, MTX, MHK, MPWR, NEXA, NOV, ORI, PINS, PXD, PFG, RSG, RMD, SKYW, SWN, SSNC, TMUS, TEX, TXRH, TFII, X, VRTX, VICI, WY,  and INT.  Finally, on Friday, ABBV, AB, AVTR, BBVA, BSAC, BLMN, BAH, CHTR, CVX, CHD, CL, DVA, EQNR, XOM, FMX, FTS, GNTX, IMO, JKS, LYB, NWL, NMRK, NEE, NVT, SNY, and GWW report.

Earnings continued to grind on with a flood of reports this morning. So far, the premarkets are on pause (just on the red side of flat) as it digests the deluge of news. In late news, Bloomberg is reporting that the Fed is among the group holding huge paper losses from all the bonds they bought up during the pandemic QE phase. With that backdrop, the QQQ and DIA have broken their downtrend lines and SPY is challenging that level now. markets are looking to challenge their bearish trends. All 3 major indices have also broken out of crooked type (non-flat neckline) “inverted head and shoulders” (bottoming) patterns. The market extension is not extreme but is starting to be a minor factor. However, intraday reversals and indecision remain the issues traders need to have a handle on (the biggest threat). So, continue to be cautious and show patience (wait for confirmation). With high volatility and less certainty at the moment, you either need to be able to handle that pain or this may be the time to pursue more cautious trading strategies (options spreads for example), including remaining hedged, quick, and/or small.

Don’t be stubborn. If you have a loss, just admit you were wrong and take it before it grows. And when price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Also, keep in mind that trading is not a hobby. It’s a job. 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. Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: UPS, GSK, RBLX, INTC, DVN, FCX. You can find Rick’s review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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