Tuesday saw SPY and QQQ open higher and DIA open lower.  QQQ opened 0.14% higher, QQQ gapped up 0.20%, and DIA opened down 0.07%.  From there, SPY and QQQ meandered sideways until 1 p.m.  Meanwhile, DIA sold off the first 5 minutes and then traded sideways in a very tight range, also until 1 p.m.  At that point, all three major index ETFs rallied very modestly the rest of the day.  This gave us indecisive candles in all three.  The SPY and QQQ both printed white-body small-body Hammers.  At the same time, DIA gave us a black-body, larger-body Hammer that bounced up off its T-line (8ema).   Once again, this came on well below-average volume across the board.

On the day, all 10 sectors were in the green as Utilities (+1.56%) was way out in front (by more than half of a percent) leading the way higher and Energy (+0.06%) lagged behind the other sectors.  At the same time, the SPY gained 0.19%, the DIA lost 0.27%, and the tech-heavy QQQ gained 0.24%.  VXX fell another 1.74% to close at 13.55 and T2122 climbed back up to the top of its mid-range at 78.67.  10-year bond yields climbed to 4.307% and Oil (WTI) rose 1.35% to close at $78.63 per barrel.  So, Tuesday was a blah day where the Bears had modest control early and the Bulls had modest control the last half of the day, resulting in not much change.  However, all three remain above their T-line (8ema) and the T-lines are also rising.  (Oddly, once again, IWM was the strongest of the index ETFs gapping 0.95% higher and closing up 1.39%.  

The major economic news released Tuesday included January Durable Goods Orders, which came in well below expectation at -6.1% (compared to a forecast of -4.9% and far below the December reading of -0.3%).  Later, February Conf. Board Consumer Confidence also came in low at 106.7 (versus a forecast of 114.8 and below the Jan. value of 110.9).  Finally, after the close, API Weekly Crude Oil Stocks showed a larger inventory build than planned at +8.428 million barrels (compared to a forecast for a 1.5-million-barrel build and a previous week’s value of +7.168 million barrels).

In Fed news, Fed Governor Bowman indicated that (like other Fed members) she is in no rush to cut interest rates Tuesday. Bowman said, “My baseline outlook continues to be that inflation will decline further with the policy rate held steady.”  She continued, “I will remain cautious in my approach to considering future changes in the stance of policy.”  Bowman concluded, “Reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run.” 

After the close, ACHC, A, BECN, BGS, BWXT, CHE, CPNG, DVN, EBAY, GO, ICUI, MASI, OVV, PR, RSG, RYAN, SPLK, UHS, and VZIO all reported beats on both the revenue and earnings lines.  Meanwhile, AGL, CRC, EXR, HY, LNW, and PARR beat on revenue while missing on earnings.  On the other side, CIVI, COMP, FSLR, and ICFI all missed on revenue while beating on earnings.  Unfortunately, ARKO, DAR, TKO, and URBN missed on both the top and bottom lines.  It is worth noting that ACHC and EXR lowered their guidance.  However, AGL, CHE, and EBAY raised forward guidance.

In stock news, APO co-founder Black has sold $172.8 million of APO stock according to Reuters.  At the same time, WBD announced it had halted merger talks with PARA. Later, EGIO announced a 1-for-40 reverse (as of 3/1) split to keep it in compliance with NASDAQ rules.  At the same time, SONY announced it would lay off 900 employees from its PlayStation division (located in the UK).  Later, AAPL discontinued its electric car project (Titan) and shifted its focus toward AI.  This was a major multi-year project for AAPL, with 2,000 employees assigned to that project. (There was no word on whether the employees will be reassigned or laid off.) At the same time, Bloomberg reported that AAL has tilted its 100-jet order of narrowbody jets away from BA and toward EADSY (Airbus) due to BA quality problems. Later, CIVI announced it had reached a definitive agreement to repurchase 876k shares of common stock from a hedge fund at $65.54 per share.  Elsewhere, CBRE announced it has completed the acquisition of J&J Worldwide Services for $800 million plus a potential additional $250 million in 2027 (depending on earnings in the meantime).  At the same time, NTR announced it would buy back up to 5% of its outstanding shares between March 1 and Feb 28, 2025.  Later, SHC announced it would launch a secondary offering of 25 million new shares.  After the close, BMBL announced it would cut 350 jobs after the dating app forecasted weak Q1 numbers.  Also after the close, BYND said it would hike prices and “steeply reduce” costs this year even after beating earnings estimates.  (Details of the steep reduction were not provided.)

In stock legal, governmental, and regulatory news, after an outcry in Europe, MSFT’s recently announced (Monday) deal with French AI startup Mistral faces investigation with EU lawmakers telling both companies the deal likely violates EU antitrust rules. At the same time, the NHTSA announced that TM is recalling nearly 281k vehicles over unexpected movement caused by faulty software.  Later, the FDA warned patients and healthcare providers about the potentially serious risks of using HOLX devices implanted in soft tissue. At the same time, Reuters reported that the EU antitrust fine of $543 million related to the antitrust findings against the company brought by SPOT.  Later, the FDA announced that INCY had received a “priority review” designation for its treatment for GVHD. Elsewhere, AMAT received a subpoena from the SEC related to its shipments to China.  This is in addition to a subpoena from the US Dept. of Justice.  After the close, Reuters reported that SBUX has agreed to a “framework” to guide union organizing and collective bargaining to resolve dozens of pending lawsuits.  Workers United Union also announced the agreement with SBUX.  Also after the close, the Wall Street Journal reported that the US Dept. of Justice has launched an antitrust investigation into UNH.

Overnight, Asian markets were nearly red across the board.  Only South Korea (+1.04%) was in the green while Shenzhen (-2.40%), Shanghai (-1.91%), and Hong Kong (-1.51%) lewd the other 11 exchanges lower.  In Europe, we see a similar pattern taking shape with just four exchanges in the green at midday.  The CAC (-0.16%), DAX (+0.06%), and FTSE (-0.80%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures point toward a gap lower to start the day.  The DIA implies a -0.35% open, the SPY is implying a -0.37% open, and the QQQ implies a -0.44% open at this hour.  At the same time, 10-year bond yields backed down to 4.286% and Oil (WTI) is off 1.13% to $77.99 per barrel in early trading.

The major economic news scheduled for Wednesday includes Q4 GDP, Q4 GDP Price Index, Jan. Goods Trade Balance, and Jan. Retail Inventories (all at 8:30 a.m.), EIA Weekly Crude Oil Inventories (10:30 a.m.), and two Fed speakers (Bostic at noon and Williams at 12:45 p.m.).  The major earnings reports scheduled for before the open include AAP, APG, BIDU, GTLS, DQ, DCI, DY, EME, EDR, GLP, IEP, ICL, IQ, KTB, KOP, LSXMK, LSXMA, LTH, NXST, NRG, ODP, PDCO, QRTEA, RY, SWX, SRCL, SHOO, TJX, BLD, VTNR, VTRS, VIPS, and VST.  Then, after the close, AMC, BMA, BBSI, SQM, CC, CODI, EFXT, GEF, HPQ, JAZZ, MNST, MYRG, NTNX, OKTA, PARAA, PARA, PSTG, CRM, SNOW, STN, and TPC report. 

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Jan. PCE Price Index, Jan. Core PCE Price Index, Jan. Personal Spending, Feb. Chicago PMI, Jan. Pending Home Sales, Fed Balance Sheet, and three Fed speakers (Bostic at 10:50 a.m., Mester at 1:15 p.m., and Williams (8:10 p.m.).  Finally, on Friday, S&P Global Mfg. PMI, Jan. Construction Spending, Feb. ISM Mfg. Employment, Feb. ISM Mfg. PMI, Feb. ISM Mfg. PMI Price Index, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-year Inflation Expectations, Michigan 5-year Inflation Expectations, and two Fed speakers (Bostic at 10 a.m. and Daly at 1:30 p.m.) are reported.

In terms of earnings reports later this week, on Thursday, we hear from BUD, BBWI, BBY, BCO, CNQ, COMM, CPG, CRH, XRAY, DDL, DOLE, NVRI, ESAB, EVRG, GMS, HGV, HRL, IHRT, MLCO, NTES, NFE, NOMD, PZZA, PSNY, TD, TGNA, ADSK, COO, DELL, EC, GRBK, MTZ, NTAP, PTVE, TTEC, VEEV, and ZS.  Finally, on Friday, AMRX reports.

In miscellaneous news, a conservative federal judge in TX (which is why it was brought there) ruled in favor of a GOP-filed suit, holding that the 2022 $1.7 trillion US government funding bill was unconstitutional.  The reason given was that the law was passed under a pandemic-era rule that allowed US House members to vote by proxy rather than in person.  (The judge said the “quorum clause” of the constitution actually means all members must vote in person, rather than only meaning more than half need to be present to conduct business. That ruling seems dubious at best in a world with the Internet and ubiquitous Zoom meetings)  The judge also said his ruling was “limited” in that it does not block all of the spending and other provisions in the law…only the two provisions that gave pregnant workers stronger legal protections. I’m not sure how only two provisions of the massive law were unconstitutional since the whole law was approved under the same rule.  However, if upheld on appeal, this precedent would seem to open up lawsuits from other entities to challenge all of the other individual aspects of the law for the same reason. Who knows what that means since most of that money has been spent and the government has operated for more than a year under that funding bill.

In late-breaking news, the White House announced Wednesday a new executive order intended to safeguard personal data online.  The order focuses on businesses selling of personal information (you as the product) for advertising and other purposes (US police and intelligence agencies freely buy such data routinely because it is illegal to surveil Americans…but perfectly legal for phones and websites to do so and then sell the information to any and everyone who wants to buy).  While politicians from both sides of the aisle have long “expressed concern” (made political headlines) over the matter, until today, none had taken any real action on it.  (Big tech and the major phone companies, who mostly do the data collecting are massive lobbyists and political contributors directly and via dark-money super PACs.)  Details are not yet available, but I would not be surprised if there is some carve-out that allows US agencies to continue to buy such data.  Regardless, this could be a threat to META, GOOGL, AAPL, MSFT, AMZN, T, VZ, and other major tracking and data collection companies.

So far this morning, APG, DCI, EME, ICL, LTH, RY, SHOO, TJX, and VIPS reported beats on both the revenue and earnings lines.  Meanwhile, BIDU, GTLS, IQ, ODP, SRCL, and BLD reported misses on revenue while beating on earnings.  On the other side, EDR and NRG beat on revenue while missing on earnings.  Unfortunately, AAP, DQ, DY, KTB, NXST, PDCO, and VRTS all missed on both the top and bottom lines.  It is worth noting that AAP, PDCO, TJX, and VIPS lowered their guidance.  However, GTLS and DCI raised forward guidance.

With that background, it appears the market is gapping lower and retesting the T-line (8ema) in all three of the major index ETFs in the premarket. All three are also printing black body, but indecisive candles in the early session. However, at the moment, all three remain above their T-lines in the premarket. So, the short-term trend remains bullish. Meanwhile, the longer-term strong bullish trend continues to hang on (despite being tested). In terms of extension, none of the three major index ETFs is too far from its T-line and the T2122 indicator is in its mid-range, albeit at the very top of its mid-range. So, both sides of the market still have room to run if they can gather the momentum. Continue to watch those 10 Big Dog tech names. As mentioned above, they represent a huge portion of the market and if they move together in one direction, it’s hard for indexes to go the other way. Right now, nine of the 10 are red with TSLA only modestly above break-even.

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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