Markets opened basically flat (on average) Tuesday.  SPY opened dead flat, DIA gapped up 0.21% and QQQ opened down 0.13%.  At that point, all three major index ETFs took 15 minutes to figure out what they wanted to do before proceeding to put in a sharp selloff that lasted until 10:30 a.m.  After that, they bobbed along the lows for an hour before starting a modest, jagged rally that lasted until 3:25 p.m. before selling back down the last half hour.  This action gave us black-bodied, Hammer-ish candles in the SPY and QQQ (the latter having a very big hammed head).  For its part, DIA printed a white Spinning Top candle that may have found support at the same level it had for the prior two days.  This happened on very heavy volume in QQQ and average volume in SPY and DIA.

On the day, half of the 10 of the sectors were in the red as Technology (-1.46%) and Energy (-1.29%) were way out front leading the way lower. On the other side, Consumer Defensive (+91%) held up much better than the others and led the 5 green sectors up.  At the same time, SPY lost 0.48%, DIA managed to gain 0.38%, and QQQ lost 1.26%. Meanwhile, VXX gained almost one percent to close at 45.14 and T2122 climbed up out of its oversold territory into the bottom half of its mid-range, closing at 30.59.  On the bond side, 10-Year Bond yields plummeted to 4.300% and Oil (WTI) dropped 2.25%, closing at $69.12 per barrel. So, Tuesday saw a fourth straight lower close in both the SPY and QQQ.  TSLA (-8.39% on $40.2 billion traded) led that rout in the high-tech names which also saw INTC (-5.27%), AMD (-3.84%), and NVDA (-2.80%) take a beating.

The major economic news on Tuesday was limited to Conference Board Consumer Confidence, which disappointed at 98.3 (compared toa forecast of 102.7 and the January reading of 105.3).  Then, after the close, the API Weekly Crude Oil Stocks Report showed a surprise drawdown of 0.640 million barrels (versus a forecasted build of 2.300 million barrels and the prior week’s 3.339-million-barrel inventory build).

In Fed news, on Tuesday Vice Chair Barr discussed crisis management.  He used the example of poor risk management at Silicon Valley Bank (which failed in March 2023) as reason for strong bank oversight.  This comes just days before Barr steps down from the head of Bank Supervision and with the Trump Administration expected to nominate a replacement that is far more friendly toward the wishes of banks.  Later, Richmond Fed President Barkin told an audience that he FOMC needs to be cautious.  Barkin said Trump administration trade and other policy changes “argue for caution as we look to wrap up the inflation fight.” He went on to explain, “It’s hard to make significant monetary policy changes amid such uncertainty … So, I prefer to wait and see how this uncertainty plays out and how the economy responds.”  Meanwhile, the GOP has created a Congressional panel to investigate the Fed in an attempt to force the FOMC to support their political ends.  (Now that the GOP controls all parts of the government, inflation is not a priority and they want the Fed to focus on stimulating the economy.)  Representative Frank Lucas, an Oklahoma Republican, questioned, “Is there really a dual mandate?”  He continued, “A substantial number of my Financial Services Committee colleagues and the chairman want to discuss that issue.”  He went on to argue for a rule-based system where the FOMC just implements policy changes based on rules set by Congress (Republicans in this case). 

After the close, AXON, BGS, CWH, CHRD, FIHL, HY, INTU, JAZZ, KEYS, LNW, MASI, MATX, OUT, PARR, SPXC, and WDAY all reported beats on bot the revenue and earnings lines.  Meanwhile, CZR, CPNG, EXR, CART, PR, RRC, and STRL missed on revenue while beating on earnings. On the other side, AGL, AMC, FSLR, and GO beat on revenue while missing on the earnings line. 

Overnight, Asian markets were mixed but leaned toward the green side with just four of the 12 exchanges in the red.  Hong Kong (+3.27%), Thailand (+2.05%), and Malaysia (+1.32%) led the broad gains.  Meanwhile, in Europe, we see green across the board at midday.  The CAC (+1.13%), DAX (+1.34%), and FTSE (+0.56%) lead the region higher in early afternoon trade.  In the US, as of 6:40 a.m., Futures are pointing toward a higher start to the day.  The DIA implies a +0.30% open, SPY is implying a +0.49% open, and QQQ implies a +0.76% open at this earlier hour.  At the same time, 10-Year Bond Yields are up to 4.317% and Oil (WTI) is just on the green side of flat at $69.06 per barrel in early trading.

The major economic news scheduled for Wednesday is limited to January Building Permits (8 a.m.) and EIA Weekly Crude Oil Inventories and January New Home Sales (both at 10 a.m.).  We also hear from Fed Member Bostic twice (midnight and noon). The major earnings reports scheduled for before the open include AAP, AER, ABEV, BUD, APG, AVA, BLMN, BCO, CTRI, COMM, DOLE, DY, EME, ENOV IEP, ICL, LINE, LOW, NRG, ODP, OPCH, SWX, SHOO, TJX, UTHR, UWMC, and VRSK.  Then after the close, A, APA, ARDT, ARKO, BBSI, CHE, CRGY, EXE, CRH, CAPL, DORM, EBAY, WTRG, FE, FRWD, GRBK, DEF, HG, HEI, HHH, INVH, KNTK, VAC, MYRG, NTNX, NVDA, OVV, PARA, PSTG, CRM, SRPT, SBGI, SNOW, SUI, SNPS, TALO, TDOC, TKO, UHS, URBN, and WES report.

In economic news later this week, on Thursday we get Jan. Core Durable Goods Orders, Jan. Durable Goods Orders, Q4 Core PCE Prices, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, January Pending Home Sales, and Fed member Harker speaks.  Finally, on Friday, Jan. Core PCE Prince Index, Jan. PCE Price Index, Jan. Goods Trade Balance. Jan. Personal Spending, Jan. Retail Inventories, and Chicago PMI are reported.

In terms of earnings reports later this week, on Thursday, we hear from ADT, GBTG, AMBP, ARGX, BBWI, BECN, CM, XRAY, DCI, SATS, ERJ, EDR, EFXT, EVRG, FMX, GEO, GTN, HGV, HRL, IBP, SJM, KOP, LSEA, LTH, TIGO, VYX, NXST, NCLH, PZZAA, PENN, PLKT, RY, FUN, STGW, TD, FTI, TGNA, TFX, VRN, VTRS, VST, WBD, ACHC, ALHC, AMRC, AHR, ACA, ASTH, ADSK, BE, CODI, DELL, SSP, EOG, ERIE, HPQ, ICFI, ICUI, IHRT, MTZ, MNST, MOS, NTAP, OPEN, PGRE, PBA, PRGO, RKT, SOLV, RUN, and TTEC.  Finally, on Friday, AES, AMR, AMRX, CLMT, GTLS, GLP, and OMI report.

So far this morning, AAP, AER, BUD, BLMN, COMM, DOLE, DTM, DY, ENOV, LOW, NRG, OPCH, SHOO, and UTHR all reported beats on both the revenue and earnings lines.  Meanwhile, ABEV, AVA, ODP, and TBLA beat on revenue while missing on the earnings lines.  On the other side, ICL and LINE missed on revenue while beating on earnings. 

With that background, the market again looks undecided again this morning.  All three major index ETFs started the premarket by gapping up modestly, but have printed tiny, indecisive candles since that point.  The short-term trend remains bearish. At the same time, the mid-term trend remains a choppy sideways mess, with only the DIA resolving it bearishly at this point.  At the same time, the long-term trend remains bullish.  In terms of extension, QQQ is now stretched below its T-line (8ema), but better than Tuesday while SPY and DIA are a bit better.  Meanwhile, the T2122 indicator is back up into the lower half of its mid-range. So, while both sides of the market have room to work today, the Bulls have more room to move, if they can some momentum. In terms of the Big Dogs, nine of the 10 are in the green in the premarket.  NVDA (+2.38%) is way out in front leading the gainers.  On the other side, AAPL (-0.36%) is the only Big Dog in the red.  As far as liquidity goes, NVDA leads TSLA (+1.30%) are neck-and-neck with the next-closest ticker having traded 6.5 times less than those two.

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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