Markets gapped lower on Tuesday. SPY gapped down 0.42%, DIA gapped down 0.49%, and QQQ gapped down 0.33%. From there, all three major index ETFs meandered around their opening level, but DIA was the weakest, never quite getting back to the open in the afternoon. (It is worth noting this was DIA’s nineth-consecutive black, candle and down day…its worst streak since 1978.) This action gave us Doji-like, indecisive candles in all three. QQQ was the best-looking candle, printing a black, Spinning Top of Doji-like candle that was also a Bearish Harami (inside day). At the same time, SPY gapped down below its T-line (8ema) and retested and failed that level on the way to printing a Doji. Finally, DIA made a big gap-down, black-bodied Spinning Top candle that retested its 50sma and closed above.
On the day, eight of the 10 of the sectors were in the red as Communications Services (-1.13%) and Financial Services (-1.07%) leading the way lower. On the other side, Healthcare (+0.16%) held up better than any of the other sectors. Meanwhile, SPY lost 0.41%, DIA lost 0.65%, and QQQ lost 0.44%. VXX climbed 2.48% to close at 44.29 and T2122 dropped back into the bottom of its oversold territory to close at 6.09. On the bond side, 10-Year bond yields reversed after an overnight move higher to close down to 4.397% while Oil (WTI) dropped 0.74% to close at $70.19 per barrel. So, on Tuesday, the market was all about the open. After that start, all three major index ETFs just meandered in waves back-and-forth across the opening level. This all happened on not far below-average volume in SPY, DIA, and QQQ.
The major economic news scheduled for Tuesday included Nov. Month-on-Month Core Retail Sales, which came in flat at +0.2% (compared to a +0.4% forecast but in-line with October’s +0.2% reading). On the headline side, Nov. Month-on-Month Retail Sales were up +0.7% (higher than the +0.6% forecast and October’s +0.5% number). Later, the Nov. Month-on-Month Industrial Production was up but still down at -0.1% (versus the +0.3% forecast but better than October’s -0.4% value). On an annualized basis, Nov. Year-on-Year Industrial Production were down at -0.90% (compared to a forecasted +0.10% and worse than October’s -0.45% reading). Later, Oct. Business Inventories were up +0.1% (versus the forecasted +0.2% and September’s flat 0.0%). At the same time, Oct. Retail Inventories were steady at +0.1% (compared to the forecast and prior month value of +0.1%). Then, after the close, the API Weekly Crude Oil Stocks report showed an unexpectedly large 4.700-million-barrel drawdown (versus a forecasted 1.850-million-barrel drawdown and the previous week’s 0.499-million-barrel inventory build).
In Fed news, the Fed quiet period ends Wednesday with the rate decision, statement, and Fed Chair Press Conference. So, no Fed news Tuesday.
After the close, HEI reported a miss on revenue while beating on earnings.
Overnight, Asian markets were mixed, but leaned toward the green side with seven of the 12 exchanges above break-even while another was unchanged. South Korea (+1.12%) was by far the biggest mover and gainer. On the other side, Japan (-0.72%) paced the losses. In Europe, the market outlook is brighter with 12 of the 14 bourses in the green at midday. The CAC (+0.27%), DAX (+0.29%), and FTSE (+0.15%) lead the region higher in early afternoon trade. In the US, as of 7:30 a.m., Futures are now pointing to a moderate gap up to start the morning. The DIA implies a +0.30% open, the SPY is implying a +0.31% open, and the QQQ implies a +0.29% open at this hour. At the same time, 10-Year Bond yields are back up to 4.413% and Oil (WTI) is up 0.86% to $70.68 per barrel in early trading.
The major economic news scheduled for Wednesday include Preliminary Nov. Building Permits, Q3 Current Account, and Nov. Housing Starts (all at 8:30 a.m.), EIA Weekly Crude Inventories (10:30 a.m.), Fed Interest Rate Decision, FOMC Statement, Q4 Current Year Interest Rate Projection, Q4 1st Year Interest Rate Projection, Q4 2nd Year Interest Rate Projection, Q4 3rd Year Interest Rate Projection, Q4 Longer-Term Interest Rate Projection (all at 2 p.m.), and the FOMC Chair Press Conference (2:30 p.m.). However, the major earnings reports scheduled for before the open include ABM, BIRK, GIS, JBL, and TTC. Then, after the market, LEN, MU, MLKN, SCS, and WS report.
In economic news later this week, on Thursday we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q3 Core PCE Price Index, Q3 GDP, Q3 GDP Price Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, Nov. Existing Home Sales, Nov. US Leading Economic Indicator Index, Oct. TIC Net Long-Term Transactions, and the Fed’s Balance Sheet. Finally, on Friday, November Core PCE Price Index, Nov. PCE Price Index, Nov. Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.
In terms of earnings reports later this week, on Thursday, we hear from ACN, KMX, CTAS, CAG, DRI, FDS, LW, PAYX, BB, FDX, AVO, NKE, and SCHL. Finally, on Friday, CCL and WGO report.
So far this morning, AMTM beat on both the top and bottom lines.
With that background, the market seems bullish so far in the premarket early session as more than 95% of Fed Fund Futures trades are expecting a quarter-point cut this afternoon. All three major index ETFs gapped up to open the premarket and have followed through with white-bodied candles to this point. SPY has crossed back above its T-line (8ema) and QQQ is headed back toward its all-time high. With two of the three above their T-line and one below its 8ema, the short-term trend has to be seen as weakly bullish. However, further out, obviously the mid-term and longer-term trends also remain bullish with index ETFs sitting near those all-time highs. In terms of extension, yesterday’s pullback helped the T-line make up some ground on the QQQ and this morning’s premarket move higher is helping DIA relieve some of its stretch to the downside. So, none of them are overly extended from the 8ema. Meanwhile, the T2122 indicator is deep in its oversold territory. So, the Bulls have more room to run today. In terms of the 10 Big Dogs, seven of the 10 are in green numbers at this point of the morning. NVDA (+2.76%) is far and away the leader of the group. On the other end, TSLA (-1.94%) is the biggest loser by 1.80%. Once again, TSLA is the leader in terms of dollar-volume traded by about 1.75 times over NVDA (with the next closest 15 times less in dollar-volume than NVDA).
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.
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🎯 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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