Markets started modestly lower on Friday, with SPY gapping down 0.24%, DIA gapped down even stronger (by 0.36%), but QQQ opened just 0.06% lower).  At that point, the Bulls took over, recrossing the open gap and leading a rally that lasted until 1:30 pm. However, then the Bulls checked out for the week and the Bears led a steady selloff that lasted the rest of the day, reaching new lows for the day in the last few minutes of the session.  This action gave us large-upper wick, black-bodied candles in all three major index ETFs.  SPY printed a Gravestone Doji that failed the T-line (8ema).  DIA and QQQ both printed a black-bodied Inverted Hammer that also failed the T-line.

On the day, seven of 10 sectors were in the green with Energy (+2.25%) being by far the leading sector while Consumer Defensive (-0.64%) being the laggard.  At the same time, SPY lost 0.25%, DIA lost 0.53%, and QQQ lost 0.33%.  The VXX fell 2.5% to end at 25.83 and T2122 jumped back up to the top end of the mid-range at 70.69.  10-year bond yields rose to 4.066% while Oil (WTI) popped up 2.60% to close at $73.67 per barrel.  So, Friday saw a gap lower followed by the bulls running the first half of the day and the bears roaring the last 2.5 hours to drive the indices back below the lower opens.  This all happened on less-than-average volume in all three major index ETFs with DIA coming close to making it to average volume.

In major economic news Friday, surprisingly after Thursday’s ADP Payrolls number, June Nonfarm Payrolls came in well below the expected level at +209K (compared to a forecast of +225k and a May reading of +306k).  In addition, June Private Nonfarm Payrolls also came in well below the anticipated level at +149k (versus a forecast of +200k and May’s +259k reading).  Combined, this was the smallest increase in new jobs in 2.5 years.  So, the economy continues to add jobs but has reduced the pace of increases by almost 50%.  At the same time, June Average Hourly Earnings were reported at +4.4% (versus a forecast of +4.2% but in line with the May value of +4.4%).  The June Participation Rate also remained steady at 62.6%.  Finally, the June Unemployment Rate came in as expected at 3.6% (compared to a forecast of 3.6% and a tick lower than the May value of 3.7%).  In Fed Speak news, on Friday Chicago Fed President Goolsbee told CNBC that he expects inflation to be tamed without a recession, even with additional rate hikes.  Goolsbee said, “The Fed’s overriding goal right now is to get inflation down. We’re going to succeed at it and to do that without a recession would be a triumph,” … “That’s the golden path, and I feel like we’re on that golden path.”  He went on to say, “Overall, the jobs market is outstanding and is getting back to a balanced, sustainable level.”  He ended by confirming that “almost all” of the FOMC voters’ projections point to one or two more hikes. “(So,) there are some modest increases to come, but we’ve done a lot of the lifting and now we’re waiting for the impact.”

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In stock news, FSLR announced Friday that it has obtained a $1 billion revolving credit facility.  At the same time, in China, TSLA announced a new program offering a $500 “cash bonus” (discount) to new customers if they are referred by an existing TSLA owner.  Elsewhere, EADSY (Airbus) announced it will be doing inspections and any needed repairs of its A380 superjumbo jets for customer Emirates Air.  This move comes after increased cracking of wing spars on the A380s in the Emirates fleet.  At the same time, MRNA announced it has signed a deal with China to set up plants and produce mRNA-based medicines in Shanghai China.  (The focus of the deal will be treatments for cancer as well as cardiovascular and autoimmune diseases.)  By day end on Friday, META said that it has more than 70 million users of its 24-hour-old Instagram Threads “friendlier” competitor to Twitter.  (Analysts say META only needs 1-in-4 of its Instagram users to use Threads in order to eclipse Twitter as the largest social-networking app.)

In stock legal and regulatory news, CEO Jamie Dimon urged a dismissal (petitioning both the court and plaintiffs) of a shareholder lawsuit related to the JPM relationship with Jeffrey Epstein Friday.  Elsewhere, the CA State Supreme Courted ruled that CA businesses cannot be sued for negligence related to workers who contracted COVID-19 on the job and then spread the disease to family members.  At the same time, TSLA put more pressure on the US EPA to finalize tougher emissions standards (that would essentially mean more vehicles would need to be electric).  Immediately after the TSLA statement, a group representing GM, TM, VLKAF, and other automakers put out their own statement strongly opposing tighter emissions rules.  Meanwhile, the US Postal Service hiked the price of first-class postage from 63 cents to 66 cents (+4.7%) as of Sunday.  Obviously, this impacts any companies mailing paper documents.  At the same time, US Labor Sec. Su said Friday that she sees no need to step into the UPS-Teamsters negotiations at this time.  However, she (obviously) urged the sides to come to an agreement soon.  (The contract between those two parties ends July 31 and UPS delivers goods worth just over six percent of the US GDP.)   In other news, the US Court of Appeals rejected Venezuela’s motion aimed at preventing six companies joined a court-proposed auction of the assets of Citgo Petroleum as a way to settle past expropriation claims against Venezuela.  Among the companies are OI and HII.  Later, a group of 15 Republican State Attorney’s General sent a letter to BLK questioning whether the mutual funds run by BLK were sufficiently independent as part of their crusade against ESG (which BLK supports considering).  After the close, the NTSB said it is investigating an engine fire on a BA 737-900 MAX operated by UAL which happened at the Newark NJ airport last week.  (The engine was built by a firm partially owned by GE.)  Finally, a NY judge sided with UBER and DASH (as well as others) and issued a temporary restraining order prohibiting the enforcement of the New York City $17.96 minimum wage for app delivery drivers.

In geopolitical news, it is worth noting that Russia’s invasion of Ukraine passed the 500-day make over the weekend. Elsewhere, ahead of the NATO meeting this week, NATO has removed the Membership Action Plan (MAP) which was a long process designed to slow and modify prospective member’s militaries to better fit. This is seen as shortening the path for Ukraine to join, without just outright granting membership in the middle of the war inflicted upon them.  (If they were members, all NATO countries would be at war with Russia if Ukraine requested it.) Speaking of Russia, the Kremlin spokesman told reporters today that five days after the coup, Putin met with 35 members of Wagner PMC, including Prigozhin and Wagner unit leaders. The meeting lasted more than three hours.

Overnight, Asian leaned to the green side on modest moves with only 3 exchanges in the red numbers.  Hong Kong (+0.62%), Shenzhen (+0.50%), and Thailand (+0.43%) led the region higher while Japan (-0.61%), Australia (-0.54%) and South Korea (-0.24%) were the only red.  In Europe, we see green across the board at midday.  The CAC (+0.55%), DAX (+0.45%), and FTSE (+0.23%) lead the region higher in early afternoon trade.  In the US, as of 7:30 am, Futures are pointing toward a mixed open on either side of flat.  The DIA implies a +0.10% open, the SPY is implying a -0.07% open, and the QQQ implies a -0.24% open at this hour.  At the same time, 10-year bond yields are up to 4.054% and Oil (WTI) is down two-thirds of a percent to $73.35 per barrel in early trading.

The major economic news events scheduled for Monday are limited to three Fed speakers (Daly at 10:30 am, Mester at 11 am, and Bostic at noon). The major earnings reports scheduled for the day are limited to HELE before the open.  There are no major earnings reports scheduled for after the close.         

In economic news later this week, on Tuesday we get the API Weekly Crude Oil Stocks Report.  Then Wednesday, the June CPI, EIA Crude Oil Inventories, WASDE Ag report, and Fed Beige Book are reported.  There are also two more Fed Speakers (Kashkari and Mester).  On Thursday, we get June PPI, Weekly Initial Jobless Claims, June Federal Budget Balance, and Fed Balance Sheet.  Finally, on Friday, the June Import Price Index, June Export Price Index, Preliminary July Michigan Consumer Sentiment, and Preliminary July Michigan Consumer Expectations are reported.        

In terms of earnings reports, on Tuesday there are no major earnings reports scheduled.  Then Wednesday, MLKN reports.  On Thursday, CTAS, CAG, DAL, FAST, PEP, PGR, and WIT report.  Finally, on Friday, we hear from BLK, C, ERIC, JPM, STT, UNH, and WFC..        

In miscellaneous news, US natural gas prices fell 8% last week after updates to US weather models showed an easing of the heatwave which has gripped much of the South for three weeks.  Also impacting the price was the Weekly Nat Gas Storage report, which showed an unexpectedly large 72 billion cubic foot build in inventories.  Elsewhere, the credit issued by US commercial banks rose slightly in the prior week, reaching $17.31 trillion (unadjusted) for the week ending June 28.  However, the part of that lending going to small and medium-sized businesses fell slightly from $2.78 trillion to $2.77 trillion.  On the deposit side, commercial bank deposits fell slightly, down $900 million to $17.343 trillion.  Meanwhile, as Treasury Secretary Yellen returns from Beijing, we get word that China’s CPI was dead flat +0.00% year-on-year in June. This brings hope and expectations that Chinese stimulus will come soon and will help bolster global markets, including the US.

With that background, it looks like all three major index ETFs are at their premarket highs at the moment after another gap down to start the early session. With today only having Fed speakers as news drivers and with CPI and the start of earnings again coming later in the week, it would not be surprising to see a “drift day” in the market. Overall, the pullback in an uptrend continues. However, we should note that DIA (laggard all year) is the weakest of the three and most recently printed a lower high. So, it is either acting as the canary in the coal mine or it is just the anchor that the leaders have to drag along with them. As far as extension goes, none of the three major index ETFs is very far from their T-line and the T2122 indicator remains in the mid-range. So, if either the bulls or the bears did find the energy to run today, there is slack (still buyers and sellers available).

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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