Markets opened just on the green side of flat Monday (up 0.10% in SPY, up 0.04% in the DIA, and up 0.10% in the QQQ).  From that point, the three major index ETFs just meandered sideways around that small gap.  This action gave us indecisive candles in the QQQ (a Doji) and a white-bodied Spinning Top candle in the SPY (which closed at the high from Friday).  Meanwhile, the DIA gave us a white-bodied candle that closed on the highs (and above Friday’s high).   All three also remained above their T-line (8ema).  All of this happened on very low volumes in all three major index ETFs.  This ended another strong month, where the SPY gained 3.27%, DIA gained 3.41%, and QQQ gained 3.86%.

On the day, seven of the 10 sectors were in the green with Energy (+1.80%) way out front (by two-thirds of a percent) leading the way higher while Consumer Defensive (-0.38%) lagged behind the other sectors.  At the same time, the SPY gained 0.19%, DIA gained 0.30%, and QQQ gained 0.05%.  The VXX dropped 1.35% for the day to 22.59 and T2122 popped back up well into the overbought territory at 92.88.  10-year bond yields remained basically flat at 3.959% while Oil (WTI) jumped up another 1.6% to close at $81.88 per barrel. So, Monday was mostly an indecisive day with the mega-cap DIA showing a little strength the last 10 minutes of the day. 

The major economic news reported Monday was limited to Chicago PMI which can in a bit below expectation at 42.8 (compared to a forecast of 43.0 but above the June value of 41.5).  Elsewhere, a Fed survey found that US banks reported that they are using tighter credit standards and are seeing weaker loan demand from both businesses and consumers.  In addition, the Senior Loan Officers also expect to tighten their standards further later this year.

In the oil market, both Brent and WIT rallied to new three-month highs on Monday. The rally was driven by tightening supplies as rumors of Saudi Arabia extending their voluntary production cuts swirled.  In addition, the Kingdom reported their oil output fell 840,000 barrels per day in July.  In addition, widespread belief that the US is likely to avoid a recession has sparked demand-side pressures.  One analyst told Reuters, “After the end of SPR releases … which caused the markets to ignore a looming supply squeeze, the coming supply deficits are getting too big to ignore.” 

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In stock news, WMT announced it had bought out the hedge fund (Tiger Global) which had owned the remaining 23% of Indian e-commerce company Flipkart for $1.4 billion.  (WMT had bought the other 77% of the company in 2018 for $16 billion.) Unlike AMZN, Flipkart focuses on smaller cities and towns in India.  Elsewhere, NKLA stock got a big boost Monday when it was announced that JBHT has placed a contractual order to buy 13 of the NKLA zero-emission (class 8) trucks with deliveries scheduled to begin in August.  At the same time, AMC announced Monday that the Barbie and Oppenheimer movies drove ticket sales, giving the theatre chain its best-ever week of ticket sales.  Meanwhile, NEWR announced it has entered an agreement to be taken private at a buyout price of $87/share in an all-cash deal with two private equity firms.  At midday, ARCHR stock spiked 33% after the Air Taxi company announced the US Air Force had signed a deal to purchase six of the company’s “Midnight” aircraft.  North of the border, BB announced it has been chosen as the mobile software platform by a consortium of contract manufacturers led by Taiwanese Foxconn.  The consortium’s electric vehicle platform will integrate BB’s operating system into six and nine-seat EVs aimed at the Asian market.

In stock legal and regulatory news, on Sunday, YELL ceased operations and filed for Chapter 11 Bankruptcy after failing to be able to restructure over $1 billion in debt.  ($700 million of that debt is a US pandemic-relief government loan from the Trump era, which gave the Us government a 30% interest in the company).  Then on Monday, and quite interestingly, the UK antitrust watchdog called for public comment on the MSFT acquisition of ATVI ahead of the already-scheduled August 29 “final decision” on deal approval.  Elsewhere, the US NIH announced it has launched a mid-stage clinical trial of four treatments (including PFE’s Paxlovid) for the treatment of “long COVID.”  Later, a class-action suit was filed against YUM’s Taco Bell unit for its “Mexican Pizza” (and several other products) only containing half as much beef and beans as advertised.  It is worth noting that the claimant filed similar suits (which are still pending) against MCD and WEN last year.  Meanwhile, Bloomberg reported that XOM is in talks with TSLA, F, VLKAF (Volkswagen), and other automakers about supplying them with lithium.  Last month XOM entered a deal with TTI to develop 6,100 acres of lithium-rich land in AR.  Finally, the CA Privacy Protection Agency has launched an investigation into the privacy practices of automakers related to the data collected by cars, including internal cameras and navigation monitors.  (The companies being probed were not disclosed.)

After the close, ANET, AVB, BHE, BCC, CWK, HOLX, SBAC, THC, VNO, WELL, WDC, and WWD all reported beats on both the revenue and earnings lines.  At the same time, AAN, AMKR, CAR, BMRN, CVI, RSG, SANM, and YUMC missed on revenue while beating on earnings.  On the other side, CNO, CRC, beat on revenue while missing on earnings.  Unfortunately, FANG, HUN, LEG, RYI, SON, TFII, and RIG missed on both the top and bottom lines.  It is worth noting that ANET, BMRN, RSG, and WWD all raised their forward guidance.  However, AMKR, SON, and WDC all lowered their guidance.

Overnight, Asian markets were mixed.  South Korea (+1.31%), Japan (+0.92%), and Thailand (+0.83%) led the gainers while New Zealand (-0.63%), Malaysia (-0.56%), Shenzhen (-0.36%), and Hong Kong (-0.34%) paced the losses.  In Europe, the bourses are leaning toward the red side at midday.  The CAC (-0.80%), DAX (-0.83%), and FTSE (-0.15%) are leading the region lower in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a modestly down start to the morning.  The DIA implies a -0.15% open, the SPY is implying a -0.21% open, and the QQQ implies a -0.28% open at this hour.  At the same time, 10-year bond yields have risen to 3.985% and Oil (WTI) is off 0.46% to $81.42 per barrel in early trading.

The major economics news scheduled for Tuesday includes July S&P US Mfg. PMI (9:45 am), July ISM Mfg. PMI and July ISM Mfg. Prices, and JOLTs Job Openings (all at 10 am), and API Crude Oil Stocks Report (4:30 pm).  The major earnings reports scheduled for before the opening bell include MO, AME, ARES, BLMN, BP, CAT, CEQP, DORM, ETN, ECL, EPD, ESAB, IT, GPN, GPK, HWM, HSBC, IDXX, ITW, INCY, NSP, IGT, IQV, JBLU, KMT, LEA, LDOS, LGIH, MPC, MAR, MLCO, MRK, TAP, MPLX, NCLH, OSK, PFE, PEG, ROK, SIRI, SWK, SPWR, SGRY, SYY, TM, TRN, UBER, WSO, WEC, ZBRA, and ZBH.  Then, after the close, AMD, AFL, ALIT, ALL, AIG, AIZ, AXTA, AXS, BXP, BFAM, CZR, CWH, CHK, COLM, DVN, EA, EHC, EXAS, FLS, ULCC, GNW, GTE, JBT, LFUS, LUMN, MTCH, MATX, MOS, NUS, PINS, PXD, PRU, KWR, SCI, SEDG, SFM, SBUX, STE, SU, TEX, TX, UNM, VRTX, and VFC report.     

In economic news later this week, on Wednesday, ADP Nonfarm Employment Change, and EIA Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Preliminary Q2 Nonfarm Productivity, Preliminary Q2 Unit Labor Costs, July S&P Global Composite PMI, July S&P US Services PMI, June Factory Orders, ISM Non-Mfg. Employment, July ISM Non-Mfg. PMI, and Fed Balance Sheet.  Finally, on Friday, July Avg. Hourly Earnings, July Nonfarm Payrolls, July Participation Rate, July Private Nonfarm Payrolls, and July Unemployment Rate are reported.

In terms of earnings reports, on Wednesday, we hear from ADNT, ATI, ALGT, ABC, BLCO, BWA, BLDR, BG, CG, CDW, SID, CVS, DD, DVRN, EMR, EXC, RACE, FIS, FDP, FTDR, GRMN, GNRC, GFF, HUM, IBP, JCI, KHC, LPX, DNOW, PSN, PSX, QUAD, RCM, RXO, SMG, SGEN, SPR, SUN, TEVA, TRI, TT, VRSK, VRT, WAT, XYL, YUM, ALB, ATUS, DOX, AEE, AFG, ANSS, APA, ATO, BKH, CHRW, CPE, CENT, CF, CAKE, CHRD, CIVI, CLX, COKE, CTSH, CYH, CODI, CCRN, CW, DASH, ET, ETSY, FMC, GT, GXO, HLF, HI, HUBS, NGVT, KGC, LNC, MRO, MKL, VAC, MMS, MCK, MELI, MET, MGM, MKSI, MOD, NFG, NCR, NTR, OXY, PTVE, PK, PYPL, CNXN, PR, PSA, QRVO, QCOM, O, HOOD, SHOP, SPG, SBGI, RUN, TRIP, UFPI, UGI, U, WCN, WTS, WMB, WSC, ZG, and  Z.  On Thursday, GOLF, WMS, APD, BUD, APG, APO, APTV, ARW, BALY, BHC, BCE, BDX, BV, BIP, BRKR, CNQ, FUN, CQP, LNG, CI, CLVT, COMM, COP, CEG, CMI, DQ, DLX, DNB, EPC, ENTG, EPAM, EXPE, FCNCA, FOCS, HAS, DINO, HGV, HII, H, ICE, IRM, ITRI, ITT, K, MMP, MDU, MIDD, MUR, NJR, ONEW, PZZA, PH, PBF, PNW, PBI, PRVA, PWR, REGN, SABR, SBH, SNDR, SRE, FOUR, SO, SAVE, STWD, TRGP, TGNA, TFX, TPX, TKR, BLD, TRMB, VC, VMC, WBD, W, WCC, WLK, WRK, AES, AGL, AL, ATSG, ABNB, LNT, AMZN, COLD, AMGN, AAPL, ACA, TEAM, BGS, BIO, SQ, BKNG, BWXT, ED, CTVA, DVA, DKNG, DBX, EOG, EXPI, FND, FTNT, GEN, GILD, GDDY, ICFI, MTZ, MCHP, MODV, MNST, MSI, ZEUS, OTEX, OPEN, PBA, PBR, POST, RMD, RBA, RKT, RYAN, SWN, SYK, TPC, VTR, and WERN report.  Finally, on Friday, we hear from ADV, AMR, AXL, AMRX, BSAC, BBU, BEPC, BEP, CLMT, CNK, CRBG, D, ENB, EVRG, FLR, FYBR, GTES, GLP, GTN, GPRE, LSXMK, LSXMA, LYB, MGA, OMI, PAA, PAGP, PPL, QRTEA, TU, TIXT, TNC, and XPO report.

In miscellaneous late-breaking news, overnight AMZN expanded its “Virtual Clinic” telemedicine nationwide.  The service, which was launched on a trial basis in November, will connect patients to healthcare providers for common ailments in all 50 states.  (AMZN does not provide the medical care, but instead works through unlisted medical practice partner firms.)  Also overnight, China survey data showed manufacturers reporting “muted” foreign demand in July.  Meanwhile, Chinese home sales fell the most they have in a year hitting that country’s beleaguered real estate market yet again.

So far this morning, MO, AME, ARES, BLMN, CAT, ETN, ESAB, IT, GPN, HWM, IGT, HSBC, IDXX, INCY, IQV, JBLU, LEA, LDOS, LGIH, MAR, MPC, MRK, TAP, MPLX, OSK, SIRI, SWK, TM, and ZBH all reported beats on both the revenue and earnings lines.  Meanwhile, CEQP, PFE, and WEC missed on revenue while beating on earnings.  On the other side, TRN beat on revenue while missing on the earnings line.  Unfortunately, BP, EPD, GPK, KMT, ROK, UBER, and ZBRA missed on both the top and bottom lines.  (DORM, ECL, ITW, NSP, MLCO, NCLH, PEG, SPWR, SGRY, SYY, and WSO all report closer to the opening bell.)   It is worth noting that MRK has raised its forward guidance.

With that background, it looks like the Bears are working on a modest inside-day push within the recent consolidation. All three index ETFs are giving us small, black-body candles that are making modest losses versus Monday’s close. The SPY, DIA, and QQQ all remain above their T-lines (8ema), but the QQQ and SPY look like they may try a retest this morning. As far as extension goes, none of them are far from their T-line. However, the T2122 indicator is now well into (though not at the top-end of) the overbought region. So, there is room to run in either direction. Remember that this is a heavy earnings week (Q2 earnings have been modestly good so far) and that we get July Payrolls data at the end of the week.

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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