Markets opened just on the green side of flat Tuesday with the SPY opening up 0.16%, DIA opening up 0.34%, and QQQ opening up 0.12%.  However, at that point, the Bulls took over to drive a steady rally that took all three major index ETFs to the highs of the day at noon. Then we drifted sideways until a sharp 15-minute selloff hit at 1 p.m. From there, all three of the major index ETFs traded sideways in a tight range the rest of the day.  This action gave us something like white-bodied, Inverted Hammer candles in the SPY and QQQ.  Meanwhile, the DIA printed a gap-up, white-bodied Doji.  At the same time, QQQ retested and just managed to close above its 50sma while DIA retested but failed to cross up through its 200sma.  This happened on average volume in the DIA and a little less-than-average volume in the SPY and QQQ.

On the day, all 10 sectors were in the green again with Utilities (+1.59%) leading the way higher.  Meanwhile, Energy (+0.48%) lagged the other sectors.  At the same time, the SPY gained 0.52%, DIA gained 0.40%, and the tech-heavy QQQ gained 0.55%.  VXX fell 3.35% to close at 22.53 and T2122 climbed again to the top of the mid-range and near the overbought territory at 78.48.  10-year bond yields plummeted back down to 4.657% while Oil (WTI) closed down at $85.97 per barrel (essentially where it had opened the day after an overnight move down).  So, Tuesday the Bulls were in control overall. However, the early-afternoon pullback and then the drift sideways leaves not-so-bullish candles (indecisive) in all three major index ETFS.  It just feels like the Bulls have not fully committed (or maybe the Bears have not given up yet).

The only economic news reported Tuesday was Fed speak.  On that front, the day started when Atlanta Fed President Bostic said flat out that the FOMC does not need to raise rates any further and he sees no recession ahead.  Later, Fed Governor Waller reiterated that the Fed is committed to bringing inflation down to its 2% target.  He told a George Mason conference, “Price stability is a primary responsibility of the Federal Reserve.”  He continued, “This is why we have taken forceful steps aimed at reducing inflation – and why we will stay on the job to achieve our objective.”  However, Minneapolis Fed President Kashkari seemed to imply that recently-spiked 10-year bond yields might do some of the lifting, allowing the Fed to ease up.  Kashkari said, “It’s certainly possible that higher long-term yields may do some of the work for us in terms of bringing inflation back down.”  Later asked about a soft landing, Kashkari answered that the chances for a soft landing scenario are looking “favorable.” 

In Autoworker contract talks and strike news, Canadian autoworkers began their strike against GM Tuesday after no new deal was reached by the Monday midnight deadline.  However, Unifor (Canadian version of UAW) and GM reached a tentative deal by midday Tuesday, ending the strike.  The GM deal includes a 25% wage hike (significantly more than GM has offered the UAW in the US).

In stock news, reports emerged Tuesday that TFC is in serious talks to sell its insurance brokerage unit to a private equity firm for $10 billion.  (Semafor reported Stone Point bought 20% of that unit earlier this year and is now looking to buy the remaining 80%.)  Meanwhile, WMT announced it is expanding online healthcare benefits to workers in 28 states following recent acquisitions in that space.  At the same time, TSLA spokesmen denied union claims that health and safety provisions at its German gigafactory were inadequate.  Later, ADBE announced it is rolling out a new AI product that makes new images from uploaded samples.  At midday, an article from “The Information” claimed NFLX was having serious problems with ad sales and ad-supported subscriber acquisition.  NFLX stock closed down 3.27% on the news.  Elsewhere, BA reported 27 jet deliveries in September (a day after their main competitor EADSY reported 55 for the same period).  Later, PWFL stock surged, closing up more than 28% following the announcement of a merger between the company and MIXT.  (MIXT closed up 1.52% after both stocks had a hugely volatile day.)   At the same time, AKRO stock crashed after the company’s main drug failed to meet its goals in a drug trial.  After the close, the Wall Street Journal reported that BIRK has priced its IPO at $46/share.

In stock government, legal, and regulatory news, the CA Public Utilities Commission proposed a $45 million penalty against PCG related to the 2021 Dixie wildfire.  PCG replied by saying they do not contest the violations or conclusions of the investigation (and will pay).  At the same time, Reuters reported that the EU has agreed to undertake anti-subsidy investigations into Chinese steelmakers in a deal with the Biden Administration.  This will be part of ending Trump-era steel tariffs between the EU and US.   Elsewhere, the SEC shortened the deadline for reporting any stock purchase that results in an investor acquiring 5% or greater ownership of a listed company.  The deadline is now 5 business days, down from the previous 10 calendar days.  Later a US Bankruptcy judge approved the reorganization of MNKKQ, in a plan that cuts $1 billion for the settlement the drugmaker must pay victims as part of opioid-related settlements.  The deal also cancels $2 billion in company debt and wipes out existing equity shares.  (This is noteworthy because the bankruptcy was only filed on August 28 and comes just 14 months after the company’s previous bankruptcy.)  JPM is among the lenders that are taking a serious haircut from this bankruptcy plan.  At the same time, the US Supreme Court is hearing an important “whistleblower” case involving UBS, in which a former employee alleged had fired him over his reporting of company violations of investor-protection laws.  Lower courts had found this to be true and a jury has awarded the employee $900k over his wrongful dismissal.  However, company appeals caused the award to be set aside by a district appeals court and SCOTUS is now considering reinstating the award. (This case will have a much wider impact by setting a precedent on what companies can get away with in retaliating against whistleblowers.)

Overnight, Asian markets were heavily on the green side again.  Singapore (-0.19%) was the only exchange in the red.  Meanwhile, South Korea (+1.98%), Thailand (+1.50%), and Hong Kong (+1.29%) led the other 11 exchanges in the region higher.  In Europe, we see a similar picture taking shape with only the CAC (-0.34%) on the red side while the other 14 exchanges are in the green at midday.  The DAX (+0.11%) and FTSE (+0.19%) lead the region higher on volume while a couple of the smaller bourses are up well over 1% in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing to a solidly green open at this point.  The DIA implies a +0.31% open, the SPY is implying a +0.32% open, and the QQQ implies a +0.40% open.  At the same time, 10-year bond yields are plummeting again, now down to 4.56%, and Oil (WTI) is off another 0.38% to $85.64 per barrel in early trading.

The major economic news scheduled for Wednesday includes Sept. PPI (8:30 a.m.), EIA Short-Term Energy Outlook (noon), FOMC Meeting Minutes (2 p.m.), and API Weekly Crude Oil Stocks report (4:30 p.m.).  We also hear from Fed members Bowman at 4:15 a.m., Waller at 10:15 a.m., and Bostic at 12:15 p.m.  There are no significant earnings reports scheduled for Wednesday (it’s the rest day before earnings season begins again on Thursday).

In economic news later this week, on Thursday, Sept. CPI, Weekly Initial Jobless Claims, EIA Crude Oil Inventories, Federal Budget Balance, and the Fed’s Balance Sheet are reported.  Finally, on Friday, we get the September Export Price Index, Sept. Import Price Index, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, and Michigan 5-year Inflation Expectations.  Fed member Harker also speaks at 9 a.m.

In terms of earnings reports later this week, on Wednesday, again there are no reports.  However, earnings season starts again on Thursday, as CMC, DAL, DPZ, FAST, INFY, SVNDY, and WBA report.  Finally, on Friday, we hear from BLK, C, JPM, PNC, PGR, UNH, and WFC all report as earnings season kicks off again.

In miscellaneous news, in what some analysts believe to be a probable Russian action both a undersea gas pipeline and an undersea telecommunication cable between Finland and Estonia were damaged by an explosion Sunday.  The Finnish government said on Tuesday that this was likely done by a deliberate act, not an accident.  Meanwhile, Bloomberg reported that the Chinese government is looking at another round of stimulus by selling $137 billion in bonds and investing money in infrastructure projects (a traditional CCP stimulus approach). 

In late-breaking news, mortgage rates climbed again last week with the national average 30-year, fixed-rate, conforming loan rising from 7.53% the week prior to 7.67%.  Applications for refinance loans were flat (up 0.3%) while new home purchase loan applications rose 1% on the week.  However, both numbers were down significantly from a year earlier.  Elsewhere, XOM did reach an agreement to buy PXD for $59.5 billion (which is $253 per share) in an all-stock deal.  (This will greatly expand XOM’s footprint in the Permian Basin Shale area and comes on interesting timing since XOM’s executive leading its Shale Oil and Gas unit was arraigned for Sexual Assault in Texas yesterday.)  Finally, early this morning, the Biden Administration (led by the FTC and CFPB) announced major steps toward banning “junk fees” (read nickel and diming us to death) from banks.  The rules will not become effective until after a 60-day comment and review period.

With that background, it looks like the Bulls are making another modest move this morning, opening the premarket higher and, so far at least, printing white-body candles with tiny wicks in the early session. During this premarket, the DIA is testing its 200sma from below and QQQ is moving just a bit away from its 50sma after Tuesday’s recross to the upside. We do have modest news today including FOMC Minutes and 3 Fed speakers that could lead to a little market reaction. (There could also be some modest reaction to Congress if the GOP is able to become a little less dysfuntional and choose a replacement House Speaker. Though that may be tough since they need a nearly unanimous choice given their tiny majority.) However, it feels like Mr. Market is waiting on something (CPI, Jobless Claims, and/or the start of earnings season). So, don’t be surprised if today is yet another drift-like day. In terms of extension, none of the three major index ETFs are too far above their T-line (8ema) yet and the T2122 indicator is now at the top of its mid-range and just about to enter into the overbought territory. So, we still have room to run in either direction. However, this short Bull run of the last 4 days is starting to get just a little long in the tooth.

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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