Markets gave us divergent gaps to start the day.  However, by mid-morning the three major index ETFs had gotten their direction synchronized again.  SPY gapped up 0.29%, DIA gapped down 0.26%, and QQQ gapped up 0.77%.  However, after the gap up and bobbing around for 45 minutes, SPY sold off sharply until 12:30, bounced for an hour, and then started another leg lower.  It ended the day on a modest bounce.  At the same time, after its open, DIA followed-through to the upside for an hour.  Then, it too also sold off sharply until 12:30, ground sideways for 75 minutes, and then started its own second leg lower, ending the day on a small 30-minute bounce.  Meanwhile, after the large gap higher, QQQ immediately sold off sharply until noon, bounced significantly for 75 minutes, and then started another leg back toward the noon lows.  Still, QQQ bounced more sharply than its peer EFTs over the final 40-minutes.  This action gave us large-body, black candles in all three major index ETFs.  SPY had wicks at both ends, failing a retest of the T-line (8ema) from below.  QQQ had a wick only at the lower end and it was a larger wick than the other two had.  However, DIA printed a new all-time high, leaving a large upper wick but did not even approach its own T-line from above. 

On the day, all 10 sectors were in the red with Healthcare (-2.22%) way out front (by almost 0.75%) leading the market lower.  On the other side, Energy (-0.06%) held up much better than the other sectors.  At the same time, SPY fell 0.77%, DIA fell 1.26%, and QQQ fell 0.47%.  VXX gained another 2.88% to close above 11 at a still very low at 11.06.  T2122 dropped out of its overbought territory, all the way down to the center of its mid-range at 46.34.  On the bond front, 10-year bond yields popped to 4.197% and Oil (WTI) fell 0.78% to close at $82.20 per barrel. This happened on heavy volume in DIA, above-average volume in QQQ, and average volume in the SPY.  So, again on Thursday we saw a head fake move higher at the open.  However, the Bears were in command all day after the open. 

The major economic news scheduled for Thursday included Weekly Initial Jobless Claims, which came in higher than expected at 243k (compared to a forecast of 229k and the prior week’s 223k).  On the ongoing side, Weekly Continuing Jobless Claims were also up and above predictions at 1,867k (versus the 1,860k forecast and the prior week’s 1,847k reading).  At the same time, the Philly Fed Mfg. Index was up to 15.2 (compared to the June -2.5 value).  Later, the June US Leading Economic Indicators Index was up and a tick better than anticipate at -0.2% (compared to a -0.3% forecast and May’s -0.4%).  Then, after the close, the Fed’s Weekly Balance Sheet showed a $16 billion reduction, from $7.224 trillion to $7.208 trillion.

In economic speak news, on Thursday, Dallas Fed President Logan lauded progress made by the Fed in making sure that banks can tap Fed emergency liquidity if needed.  Logan said, “(The Fed Discount Window) has been effective in supporting the stability of the banking and financial systems and, in turn, the flow of credit to households and businesses.”  She continued, “A critical element of ensuring the safety of the banking system is making sure banks are prepared to use the discount window if circumstances call for it.”  Logan said more than 5,000 deposit-taking banks have completed the paperwork to be able to access the Discount Window in a crisis.  In addition, those banks have increased the pool of collateral available to back loans through the window from $1 trillion in 2023 to $3 trillion now.

After the close, DIT, ISRG, NFLX, and WAL all reported beats on both the revenue and earnings lines.  Meanwhile, AIR and PPG reported misses on revenue while beating on earnings.  However, SCHL missed on both the top and bottom lines.

In stock news, on Thursday, the Financial Times reported that WBD is discussing the potential to break up the company to boost stock valuations.  At the same time, F laid out plans to rework a Canadian plant that had been intended to build a future electric vehicle (starting in 2025) to instead build larger, gasoline-powered F-series pickup trucks.  Later, the Financial Times reported that META is in talks to purchase a 5% stake in eyewear maker ESLOF (EssilorLuxottica, which makes Ray-Ban).  At the same time, Adobe Analytics said that AMZN Prime Day boosted US online retail shopping to a record $14.2 billion.  This was up 11% from the event in 2023.  Later, Bloomberg reported that AAPL is in talks to license more Hollywood films, in order to boost its streaming content portfolio.  Elsewhere, NFLX announced it is discontinuing its cheapest “$11.99 Basic Plan” (the lowest ad-free plan).  NFLX had stopped taking new Basic Plan subscriptions in January.

Meanwhile, SPWR plummeted 40% after it informed clients that it was pausing some operations.  The cessations include ending some leases and power purchase agreements as well as halting new product shipping.  Elsewhere, SMAR share spiked (but ended only 5.45% higher) after Reuters reported the company is considering buyout offers from private equity firms.  After the close, Reuters reported that OpenAI has begun talks with AVGO over the development of a new AI chip, in an effort to overcome shortages of AI chips from NVDA and AMD.  (Earlier this year, OpenAI CEO Altman made news when he announced plans to raise billions to be used to set up AI chip manufacturing plants in partnership with TSM, INTC, and Korean Samsung.)

In stock legal and governmental news, on Thursday, the NHTSA announces that HYMTF (Hyundai) will recall 67k vehicles over fuel pump issues that can cause a loss of power during operation.  Later, C announced it had reached a settlement with a Montreal exchange to resolve claims the bank had failed to report options trades over the exchange’s reporting threshold.  The amount of the settlement was about $150k.  At the same time, the highest court in Trinidad and Tobago reaffirmed a decision that recognizes COP’s $1.33 billion arbitration claim against the country of Venezuela. The decision will enable COP to begin legal action to seize Venezuelan assets in that country to satisfy the claim.  Later, the NHTSA announced that STLA will recall 24k Chrysler hybrid minivans over fire risk. 

Overnight, Asian markets were mostly down with only three of the 12 exchanges hanging onto green territory.  Taiwan (-2.26%) and Hong Kong (-2.03%) were the worst performers (by a percent), but losses were widespread.  In Europe, we see a similar picture taking shape as only three of 15 bourses are in the green at midday.  Russia (+1.39%) is a notable outlier.  However, the CAC (-0.56%), DAX (-0.70%), and FTSE (-0.54%) lead the region lower in early afternoon trade.  In the US, as of 7:15 a.m., Futures are pointing toward a modestly lower start to the day.  The DIA implies a -0.16% open, the SPY is implying a -0.06% open, and the QQQ implies a -0.15% open at this hour.  At the same time, 10-Year bond yields are rising again to 4.203% and Oil WTI) is off 0.39% to $82.50 per barrel in early trading.

There is no major economic news scheduled for Friday.  However, Fed members Williams (10:40 a.m.) and Bostic (12:45 p.m.) speak.  The major earnings reports before the open include AXP, ALV, CMA, EEFT, FITB, HAL, HBAN, RF, SDVKY, SLB, TRV, and WIT.  There are no major reports scheduled for after the close.

So far this morning, CMA, FITB, HBAN, RF, and SLB all reported beats on both the revenue and earnings lines.  (Apparently, the hand-wringing over regional banks and loans is misplaced so far.)  Meanwhile, AXP, EEFT, HAL, SDVKY, and TRV all missed on revenue while beating on earnings.  However, ALV missed on both the top and bottom lines.

In miscellaneous news, after the close Thursday, a federal appeals court blocked the Biden Administration from continuing to implement a new student debt relief plan at the request of seven GOP-led states.  (The Dept. of Education said it had already granted $5.5 billion in debt relief to 414k borrowers under that “SAVE” plan.)  At the same time, the IMF said the US should raise taxes to reduce the US federal debt and put off any rate cut until at least late 2024.  Meanwhile, mortgage finance agency Freddie Mac told Reuters Thursday that the US 30-year fixed-rate mortgages fell to the lowest rate since mid-March, with the national average down to 6.77% from the prior week’s 6.89%.  Finally, Reuters reported that the state of CA reported that TSLA car registrations fell in Q2.  TSLA’s 52,211 new registrations for Q2 was down and a third consecutive quarter of falling new registrations. 

In overnight news, computer systems around the world failed Friday.  This took firms from banking, to stock exchanges, to airlines offline.  So far, there seem to be two unrelated causes.  The first was a MSFT Windows crashing due to a conflict between that system and CRWD’s security software.  Separately, MSFT reported outages of its Azure and Office 365 cloud systems.  Combined, this caused an unprecedented and widespread computer outage globally.  The exact causes are unknown, but it is likely to be related to a software update, possibly by MSFT since it had two separate set of issues.

With that background, it looks as if the markets are indecisive again this morning. SPY and QQQ gapped higher while DIA gapped a bit lower to start the premarket. All three major index ETFs have put in mostly wick since that point as the Bulls and Bears remain uncertain who has the strength in the early session. Overall, the short-term trend is Bearish. The rotation out of tech and into small-caps and the traditional mega-cap names also took a break (or stopped) on Thursday. However, for the mid-term and longer-term, there is no way to look at markets except to say they remain very bullish. In terms of extension, none of the three major index ETFs are stretched away from their T-line (8ema). Meanwhile, the T2122 indicator is back down into the center of its mid-range. Therefore, the market has room to run in either direction if the Bulls or Bears can find momentum. With regard to those 10 big dog tickers, eight of the 10 are in the green this morning. AAPL (+0.83%) and GOOGL (+0.74%) lead the way. Obviously, due to the overnight issues, MSFT (-1.38%) lags far behind and leads the morning dollar-volume traded. Lastly, don’t forget that it is Friday, Pay Day, and there is a weekend news cycle ahead. So, prepare your account for that situation.

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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