Friday saw stocks open modestly lower on stronger-than-expected May Payroll data. SPY opened down 0.18%, DIA started down 0.10%, and QQQ opened 0.11% lower. At that point, all three major index ETFs rallied, recrossing that modest gap and getting to highs at 10:50 a.m. Then all three sold off for 20 minutes part way back to the lows before meandering sideways with a slight bullish trend reaching highs at about 1:25 p.m. From there, all three had another sharp 20-minute move back lower and then bounced before selling off again the last hour. This action gave us indecisive, Doji-like candles in all three major index ETFs. The SPY and QQQ printed white-body, high-wick Doji while the DIA printed a black-body, high-wick Doji. All three remained above their T-line (8ema) with only DIA retesting. However, SPY and QQQ also gave us new all-time highs.
On the day, all 10 sectors were in the red with Basic Materials (-1.92%) way out in front leading the market lower. At the same time, Financial Services (-0.32%) held up better than the other sectors. Meanwhile, SPY lost 0.12%, DIA lost 0.23%, and QQQ lost 0.09%. VXX fell 1.24% to close at a very low 11.11 and T2122 dropped into oversold territory, closing at 13.54. On the bond front, 10-year bond yields surged higher to reach 4.434% and Oil (WTI) dropped 0.37% to close at $75.27 per barrel. So, Friday was a non-committal day that essentially was flat, near the all-time highs in SPY and QQQ. At the same time, DIA continued its begrudging uptrend with its own flat day. On the week, SPY gained 1.25%, DIA gained just 0.26%, and QQQ gained 2.72%.
In other market news, Gold fell by the most in two years on Friday, closing down 3.34%. However, that was nothing compared to Copper which fell 4.94% and Silver which was down 6.69% on the day.
The major economic news scheduled for Friday include May Avg. Hourly Earnings (Month-on-Month) came in a tick hotter than expected at +0.4% (compared to a +0.3% forecast and April’s +0.2% value). On a Year-on-Year basis, May Avg. Hourly Earnings were also up to 4.1% (versus the +3.9% forecast and the April +4.0% reading). At the same time, May Nonfarm Payrolls showed much stronger job growth than predicted at +272k (compared to the +182k forecast and the April +165k number). On the private side, May Private Nonfarm Payrolls were also stronger than anticipated at +229k (versus a forecast of +170k and the April +158k reading). Meanwhile, we saw the May Participation Rate fall to 62.5% (compared to the previous value of 62.7%). This all led to a May Unemployment Rate that ticked higher to 4.0% (versus the forecast and April number of 3.9%). For context, that breaks an all-time record of 27 straight months with Unemployment under 4.0%. Despite conspiracy theorists mistaken beliefs, this sure seems to check out since the recent JOLTs data also showed job openings at a 3-year low. Later, April Consumer Credit came in much lower than predicted at $6.40 billion (compared to a $9.30 billion forecast but far above the March -$1.10 billion value).
In stock news, on Friday, TSLA released a software update for Chinese customers giving them detailed navigation information, including lane-level guidance. (It was reported that BIDU was the supplier of the detailed map data TSLA used.) At the same time, Korean giant Samsung Electronics suffered its first ever strike walk-out by employees. 28k employees rallied on the day, but it was nothing but a PR event since it was held on a public holiday in order to not impact the operations. Later, SAVE said, perhaps ominously, Friday that it is not considering Chapter 11 bankruptcy and is encouraged by its own plan following the JBLU deal being killed. At the same time, Bloomberg reported that WBA had shelved its plans to IPO the Boots portion of its business. However, WBA is still in talks to sell that Boots unit. After the close, it was announced that KKR, CRWD, and GDDY will join the S&P 500 before the market open on June 24. At the same time, RHI, CMA, and ILMN will be dropped by the S&P 500.
In stock legal and governmental news, on Friday, the NHTSA issued a warning to owners of 463k KIA 2020-2024 Telluride SUVs, warning the customers to park outside and away from structures until KIA can complete recall repairs. (The NHTSA said there are reports of under seat fires and melting engines as well as many reports of smoke.) At the same time, a UK Court ruled that V and MA must face a set of lawsuits over the fees it charges British retailers. Later, TSLA filed court documents seeking to pay only a tiny fraction of the legal fees of the lawyers who sued (first in 2018 with the case running until 2023) to reduce CEO Musk’s pay. Those lawyers won, throwing out Musk’s $56 billion pay package. The lawyers billed for $5.6 billion but TSLA is fighting the fees, seeking to pay only $13.6 million. TSLA claims there was no value to the company since Musk has re-submitted his $56 billion pay package and seems to have the votes to get it past by shareholders. (In other words, we are too stupid to take advantage of the court decision, so we should not need to pay the lawyers who won it.) At the same time, a federal court ruled GOOGL will pay a paltry $2.3 million (which will be tripled per law) to cover damages and, as a result, won’t have to stand jury trial in its digital advertising antitrust case. Instead, the antitrust trial over GOOGL dominance of the digital ad market will be heard by the judge (not jury) on Sept. 9.
Meanwhile, a federal judge ruled YELP may sue (for trademark infringement and unfair competition) a business review website that claimed businesses could pay Yelp to get artificially higher star ratings. Later, after months of lobbying by automakers, the NHTSA said on Friday that it will increase federal truck and SUV fuel economy requirements only to 50.4 mpg (fleet average for each carmaker) for 2031. This is BARELY above the previous 49mpg that was requirement for 2026. (The NHTSA original proposal was to hike it to 58 mpg by 2031.) It should be noted that cars will have to average 38 mpg by 2031, which is a 2% per year increase (not starting until 2027) from the current standard. At the same time, the FCC requested a change of venue for the case challenging its reinstitution of net neutrality. (The case was filed by the major telecom companies in Cincinnati, OH with the 6th Circuit and the FCC has now requested moving the case back to Washington DC.) After the close, the FDA approved GSK’s treatment for RSV for patients 50-to-59-years in age. This expands the market which was previously limited to patients 60 and older.
Overnight, Asian markets were mostly in the red with only three of 12 exchanges holding onto green territory. Thailand (-1.06%), Shenzhen (-0.90%), and South Korea (-0.79%) led the region lower. In Europe, the picture is even more bearish with all 15 bourses in the red at midday. The CAC (-1.76%), on EU election results and PM Macron dissolving Parliament to call for snap elections, DAX (-0.66%), and FTSE (-0.34$) lead the region lower in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a start just on the red side of flat. The DIA implies a -0.17% open, the SPY is implying a -0.09% open, and the QQQ implies a -0.04% open at this hour. At the same time, 10-year bond yields are popping higher to 4.465% and Oil (WTI) is up 0.26% to $75.75 per barrel in early trading.
There is no major economic news scheduled for Monday. There are no major earnings reports scheduled for before the open or after the close Monday.
In economic news later this week, on Tuesday, we get the EIA Short-Term Energy Outlook and API Weekly Crude Oil Stocks report. Then Wednesday, May Core CPI, May CPI, EIA Weekly Crude Oil Inventories, NY Fed 1-Year Consumer Inflation Expectations, May Federal Budget Balance, FOMC Interest Rate Decision, Fed Statement, FOMC Economic Projections, Q2 Current Interest Rate Projection, Q2 1st Year Interest Rate Projection, Q2 2nd Year Interest Rate Projection, Q2 3rd Year Interest Rate Projection, and Fed Chair Press Conference are reported. On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, May Core PPI, May PPI, Fed Balance Sheet, and we hear from Fed member Williams. Finally, on Friday, May Import Price Index, May Export Price Index, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, and the Fed Monetary Policy Report are reported.
In terms of earnings reports later this week, on Tuesday ASO, CSAY, and ORCL report. Then Wednesday, we hear from AVGO and PLAY. On Thursday, KFY, SIG, ADBE, and RH report. Finally, on Friday, there are no reports scheduled.
In miscellaneous news, C changed its Fed rate cut forecast on Friday. Previously, C had expected a first cut in July, but after the May Payrolls Report, C moved that date to the September meeting. Meanwhile, the Fedwatch tool showed that traders are pricing in only a 49% chance of a September rate cut with November having a 65% probability and December showing an 84.5% chance of a rate cut. Elsewhere, Federal Reserve data released Friday showed that US Household Wealth hit a record $160 trillion in Q1 2024. This was a 3.2% (or $3.8 trillion) increase over Q4’s record value. Most of the gain came from the stock market rally. Separately, CNBC reported that the US created 600,000 new millionaires in 2023, a 7.3% increase in the total to 7.5 million people. (This was using the definition of millionaire as those with $1 million in investible assets, excluding primary residence, collectibles like art, or consumer durables.)
In other news, the Dept. of Energy announced Friday that it has sped up the purchase of oil to replenish the Strategic Petroleum Reserve to take advantage of current lower oil prices. The DoE issued two solicitations to buy 6 million barrels for September – December delivery. This is a massive money-maker by the Biden administration which sold oil in 2022 for an average of $95 per barrel and is replenishing at an average of $77 per barrel. (Current prices are well below that, so the new solicitations should lower the average even more.) This is one of the few times the government ever made money. Furthermore, it makes perfect sense since the US is the world’s largest oil producer, meaning we have much less reason to have a strategic reserve than when we were importing most of our oil in the 1970s. Finally, the Port of Baltimore fully reopened on Saturday for the first time since the Francis Scott Key bridge was struck and collapsed, closing the main channels in the process.
With that background, it looks as if the market is tepidly bearish but largely undecided in the premarket. QQQ made the biggest move, gapping down a bit to start the early session but has rallied the most on a white-body candle. Meanwhile, SPY and DIA are printing Doji-type candles not too far below Friday’s close. The DIA has given back its T-line (8ema) at this point, but not by much. With that said, only the DIA is below its T-line as the other two, broader, index ETFs remain above theirs. So, the Bulls have the upper hand in the short-term but not decisively. At the same time, the mid-term remains bullish in all three major index ETFs and the longer-term market remains very Bullish in trend. In terms of extension, none of the three are too stretched from their T-line (8ema). However, the T2122 indicator is in oversold territory. The bottom line is that the market has room to run in either direction but the Bulls have a little more slack to play with here. With regard to those 10 big dog tickers, they are evenly split. AMD (-2.33%) is the biggest mover of that group. Also, don’t forget that today is NVDA’s first day of trading at the new 10-for-1 split price. (TC2000 still is not reflecting it correctly. It has the correct price, but is indicating a 90% move lower rather than this was a split.)
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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