Monday was a bullish, yet mostly sideways day in the market.  SPY gapped up 0.51%, DIA gapped up 0.41%, and QQQ gapped up 0.43%.  From there, all three major index ETFs traded sideways in roughly a half of a percent range.  The SPY and QQQ both had a slight bullish trend to that grind.  Meanwhile, DIA gave us a more volatile chop to the side and had a modest bearish trend to that sideways grind.  A late-day rally took all three out very near their highs of the day.  This action gave us gap-up large white-body candles with small lower wicks in the SPY and QQQ.  Meanwhile, the DIA printed a gap-up, white-body Doji.  All three remain above their T-line (8ema).  This all came on well-below-average volume in all three of those major index ETFs.

On the day, all 10 sectors were again in the green with Technology (+1.55%) once again out front leading the market higher.  Meanwhile, Consumer Defensive (+0.09%) lagged well behind the other sectors.  VXX dropped another 2.66% to close at 12.45 and T2122 jumped up well into the overbought territory at 90.48.  At the same time, 10-year bond yields fell again to 4.489% and Oil (WTI) gained half a percent to close at $78.55 per barrel.  So, once again Monday, most of the market’s move came at the open.  After a significant gap, the predominate direction of all three major index ETFs was to the side.  Most talking heads seem to think this is chiefly driven by hope for a Fed rate cut soon.  However, it is worth noting that three-fourths of the way through earnings season, five of the six “Magnificent 7” tickers have reported beats (only TSLA has missed, but it missed on both lines).  This leaves only the biggest dog of them all (NVDA) to report on Wednesday.  My point is that for those who believe in those seven tickers driving the market, they’ve gotten a lot of good news recently.

There was no major economic news scheduled for Monday.  

In Fed Consumer Expectations Survey news, on Monday the NY Fed released results of its survey.  The report found that respondents are bracing for higher housing costs again in the next year. On average that group predicts home prices will rise 5.1% (over the next year) which is far above the +2.6% increase they expected one year ago.  However, five years from now, they see home prices only up 2.7% from current.  So, on average the group expects home price inflation and then deflation.  In terms of rental prices, the survey found respondents expect a 9.7% increase in rent on average in the next 12 months.  (That is the second-highest expectation reading in history and up from the +8.2% in early 2023.)  In terms of mortgage rates, the group now expect the average mortgage to be at 8.7% in a year and 9.7% in three years.  (This survey was conducted while the average 30-year fixed-rate mortgage at Fannie Mae was at 7.22%.)

In Fed speak news, NY Fed President Williams said Monday that the FOMC’s next move is likely to be a cut in rates.  Williams said “Eventually we’ll have rate cuts” but for now monetary policy is in a “very good place.”  Williams did not offer a timetable for when a cut (next move) may take place. He also said the Fed’s shrinking of its Balance Sheet have gone well and have not rocked the boat.  Later, Richmond Fed President Barkin said that up to now the fight on inflation has been on the supply side.  However, to end inflation, the US will need to take a hit on the demand side.  Specifically, Barkin said, “We got a lot of benefit last year on the supply side,” … “I do tend to imagine that we’re going to need a little more edge off of demand to get all the way (back to target).”  He went on to say that he was optimistic that the current Fed Funds Rate was high enough to do the job.  Still, when asked where he felt the biggest risk to the economy was, Barkin replied “I still have the weight going toward inflation.” “It’s a stubborn road back…It doesn’t mean you won’t get back. It just means it takes a while…to corral price setters (businesses) into believing they don’t really have a chance (for price increases without losing sales).

After the close, ACM, ATSG, BCC, BWXT, CBT, COKE, COHR, CPS, FN, FIS, IFF, ITUB, VAC, PLTR, O, SPG, and VRTX all reported beats on both the revenue and earnings lines.  Meanwhile, AL, FMC, GT, JELD, MCHP, OTTR, RRX, and WMB missed on revenue while beating on earnings.  On the other side, COTY, NE, PARR, and PRI all beat on revenue while missing on earnings.  However, AAN, DOOR, and OGS missed on both the top and bottom lines.  It is worth noting that SPG raised its forward guidance.

In stock news, on Monday, KKR announced it will buy Indian medical device maker Healthium Medtech from UK-based Apax Partners for roughly $839 million.  At the same time, Reuters reported that DIS and CMCSA are seeking to hire a third-party financial advisor to resolve their dispute over the valuation of Hulu.  (DIS will acquire a 33% stake in Hulu from CMCSA according to a deal struck in 2023, but value was undecided.  JPM told DIS Hulu was worth $27.5 billion while MS told CMCSA that Hulu was worth $40 billion.) Later, Chinese premium EV-maker NIO announced it will launch its first mass-market EV by the end of this month, in Europe, for under $30k.  At the same time, industry publication Electrek reported that TSLA laid off more employees Monday in its Software, Service, and Engineering departments.  (Employees received layoff emails on Sunday.)  Later, ALE announced it would go private at a $6.2 billion valuation (including debt to be assumed). This will result in a $67/share cash offer.  Elsewhere, tech publication “The Information” reported Monday that MSFT is training a new, in-house AI model named MAI-1.  The model, much bigger than any MSFT has trained internally in the past, is intended to compete with GOOGL and OpenAI.  (The project is being headed by the co-founder of GOOGL’s DeepMind unit.)

In stock legal and governmental news, on Monday, HOOD received notice from the SEC that its cryptocurrency unit has been “preliminarily found” to have engaged in securities violations and will likely face either “cease and desist” action, civil court injunctions, or other penalties relate to the broker’s listings and crypto transactions.  Later, the highest state court in MA began hearing a challenge to ballot initiatives proposed and paid for by LYFT and UBER, which would define gig workers explicitly as contractors, not eligible for benefits, minimum wage laws, worker protection laws, and tax withholding.  (No timeframe for a decision is available.)  At the same time, the Wall Street Journal reported that the FAA has opened a new investigation into BA over inspections the company recently admitted its employees skipped on 787 Dreamliner planes in order to maintain production schedules.  The investigation will also determine whether the documentation submitted to the FAA indicated those inspections had been made and passed (if documents were falsified).  Later, a Us judge formally ended the US Dept. of Justice case against GS related to the bank’s work with corrupt Malaysian fun 1MDB, accepting the $2.9 billion in penalties GS paid.  Elsewhere, Reuters reports that crypto “Super PACs” have raised more than $102 million to spend on the 2024 Congressional elections.  ($54 million of this reportedly came from COIN and Ripple Labs.)  Reports say much of this will be focused on defeating Democratic Senators Brown (OH) and Tester (MT) who have been critical of crypto.

Overnight, Asian markets were mixed but leaned to the bullish side with seven of the 12 exchanges in the green.  South Korea (+2.16%), Japan (+1.57%), and Australia (+1.44%) were by far the biggest movers and led the region higher.  However, in Europe, 13 of the 15 bourses are in the green at midday with only Russia (-0.44%) worse than flat.  The CAC (+0.37%), DAX (+0.63%), and FTSE (+1.03%) are leading the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed open near flat.  The DIA implies a +0.07% open, the SPY is implying a dead flat open, and the QQQ implies a -0.20% open at this hour.  At the same time, 10-year bond yields are down to 4.461% and Oil (WTI) is off four-tenths of a percent to $78.15 per barrel in early trading.

The major economic news scheduled for Tuesday includes the EIA Short-Term Energy Outlook (noon), March Consumer Credit (3 p.m.), and API Weekly Crude Stocks (4:30 p.m.).  Fed member Kashkari also speaks (11:30 a.m.).  The major earnings reports scheduled for before the open on Tuesday include GOLF, AHCO, ALGT, GBTG, ARMK, ATKR, AVNT, BLMN, BP, BLDR, CEIX, CROX, DDOG, DK, DUK, ERJ, ENR, EXPD, RACE, FTRE, GEO, GTN, HSIC, J, KVUE, NJR, NRG, OSCR, MD, PRGO, ROK, SCSC, SRE, SPR, SGRY, TPX, BLD, TDG, UBS, VVX, and DIS.  Then, after the close, KLG, AMRK, AGL, ARKO, AIZ, BTG, BIO, BRFS, BHF, CRC, CHRD, CPNG, EC, EA, GMED, GO, GXO, HY, IAC, ICUI, JKHY, KGC, KD, LYFT, MTW, MASI, MTCH, MCK, OXY, OVV, PR, RYAM, RRR, RNG, RIVN, SU, VIV, TOST, TWLO, and WYNN report. 

In economic news later this week, on Wednesday, EIA Weekly Crude Oil Inventories are reported.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, and the Fed Balance Sheet.  Finally, on Friday, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, the WASDE report, and April Federal Budget Balance as well as Fed members Bowman and Vice Chair Barr speak.

In terms of earnings reports later this week, on Wednesday, AFRM, BUD, BCO, BR, CLVT, SID, SATS, EPC, ELAN, EMR, FWONK, FOXA, GLP, DINO, IEP, INGR, KMT, LCII, LSXMA, LPX, MIDD, EYE, NEUE, NFE, NYT, NI, ODP, PFGC, RCM, REYN, SHOP, SWX, STWD, SUN, TGNA, TEVA, TM, UBER, VSH, VST, AE, ABNB, AMC, APP, ARM, ATO, CE, CENTA, CENT, CAKE, CCU, COMP, CPAY, CAPL, ET, EXAS, FG, FLNC, FNF, FWRD, HLI, HUBS, CART, JXN, MFC, MATV, MMS, MKSI, MRC, NWSA, NTR, PAAS, QDEL, RGLD, SBGI, SSRM, STN, STE, SNEX, RUN, TKO, MODG, TSE, TTEC, VSTO, WTS, and WES report.  On Thursday, we hear from ADV, ALE, AZUL, BERY, CSIQ, CRL, COMM, CEG, EDR, EPAM, EVRG, HBI, HGV, H, ICL, IHRT, IBP, KELYA, NXST, NOMD, PZZA, PLTK, ACDC, RPRX, RBLX, SBH, SN, SOLV, SPB, TPR, TEF, TIXT, VTNR, VTRS, WBD, WMG, AKAM, COLD, AMN, BAP, DBX, SSP, EVH, FIHL, GEN, G, HRB, IAG, IOSP, MTD, PBA, RXT, RBA, and SLF.  Finally, on Friday, AQN, AMCX, CLMT, CPG, CRH, ENB, HMC, and DNOW report.

So far this morning, GOLF, AVNT, BLDR, CEIX, CROX, DDOG, ENR, RACE, GFS, GTN, J, OSCR, ROK, SGRY, TDG, UBS, VVX, and WAT all reported beats on both the revenue and earnings lines.  Meanwhile, ARMK, ATKR, DK, DUK, HSIC, NJR, NRG, MD, PRGO, TPX, BLD, and DIS all missed on revenue while beating on earnings.  On the other side, AHCO and GEO beat on revenue while missing on earnings.  However, BLMN and BP missed on both the top and bottom lines.

In miscellaneous news, the largest physician-run hospital network in the US (Steward Health Care), which operates 31 hospitals, filed for Chapter 11 bankruptcy Monday after failing to secure a new loan from its landlord MPW.  Steward has nearly 30,000 employees, including 4,500 doctors and operates 400 locations (not just the 31 hospitals).  Elsewhere, the CDC said Monday that it had asked state health depts. And asked that they provide protective gear to farm workers to reduce the risk of H5N1 bird flu transmission to (and then between) humans.  (There has already been one case of a farm work contracting bird flu from a dairy herd, which had been contaminated.  The case was mild, similar to traditional flu.)  The USDA had previously said that H5N1 had likely been circulating in poultry and dairy animals since November and was first found on March 25.  So far, test have found pasteurized milk contains remnants but remains safe for human consumption.

In other news, Hamas made news Monday by announcing they had agreed to a ceasefire plan proposed by Egypt and Qatar.  (Reports had said Israel had signed off on the deal before it was proposed.)  However, Israel said what Hamas agreed to was nowhere close to what they could accept…implying Hamas agreed to its own counter to the deal shown to them.  In the meantime, Israeli Defense Forces announced it has begun a “limited” ground offensive into Rafah (city of 1.4 million).  This includes the takeover of the Rafah side of the border crossing to Egypt.  While oil markets calmed on the news midday Monday, the IDF operation in Rafah (where explosions were heard Monday night) is likely to stoke oil fears again.  In the meantime, Israeli negotiators said they will travel to resume ceasefire talks as both sides work to blame the other for no halt to fighting.

With that background, it looks as if traders are undecided this morning. The two large-cap index ETFs opened the premarket flat and have printed mostly wicks since that point. Meanwhile, the QQQ gapped down to start the early session and then has printed its own indecisive candle. All three remain above their T-line (8ema). So, the short-term trend is now bullish again. Meanwhile, the mid-term remains sideways. The longer-term market remains Bullish as all three major index ETFs have returned within a few percent of all-time highs. Overall, the character of the market is gappy, choppy, and volatile. In terms of extension, none of the three major index ETFs are “too far” extended above their T-line, but the QQQ is starting to push that level. However, at the same time, the T2122 indicator is now well inside of its overbought area. So, while both sides still have room to run if they can gain the momentum to do so, the Bears have more slack to play with. In terms of those 10 big dog tickers, eight of the 10 are in the red with the two biggest dogs TSLA (-1.46%) and NVDA (-1.34%) leading the QQQ (and probably overall market) lower. Again, keep in mind that this is not a heavy news week but we do have a lot of earnings reports. Perhaps more importantly, there are several Fed speakers and undoubtedly a few others will also pop off. Any of those statements could swing markets, especially as Bulls are now dreaming of Fed rate cuts again.

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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