Tuesday gave us some divergence between DIA and its broader index ETF peers.  SPY opened down 0.14%, DIA gapped down 0.42%, and QQQ opened up 0.05%.  At that point, SPY and QQQ started a long, slow, but steady rally that lasted until the end of the day.  During that last 30 minutes SPY and QQQ saw some profit-taking.  For its part, after the gap down, DIA rallied (more sharply than the others) to recross its gap by 10:15 a.m. and hitting the high of the day 15 minutes later.  From there, DIA gave us a long, slow, but steady selloff the rest of the day that took it back down into its gap area.  This action gave us white candles with significant wicks in all three major index ETFs.  SPY printed a white, Piercing Arrow, Spinning Top that gapped below and then closed back above its T-line (8ema).  DIA gave us a gap-down, white-bodied, Inverted Hammer candle that retested and failed its T-line from below.  Finally, QQQ printed a large-body white candle with wicks on both ends which retested and passed the test of its T-line from above. This happened on below-average volume in all three of the major index ETFs.

On the day, nine of the 10 sectors were in the red with Utilities (-1.60%) well out in front leading the way lower.  On the other side, Technology (+1.22%) was by far (by more than 1.4 percent) the strongest sector.  Meanwhile, SPY gained 0.16%, DIA lost 0.37%, and QQQ gained 0.96%.  VXX was down slightly to close at 52.48 and T2122 climbed just a little, but remains in the lower-end of its mid-range at 27.06. At the same time, 10-Year bond yields fell back to close at 4.256% while Oil (WTI) was just on the green side of flat to close at $67.49 per barrel. So, Tuesday was a divergent day where Tech drove the QQQ higher on the strength of AMD (+3.96%), META (+2.62%), and AVGO (+4.20%).  Meanwhile, SPY was little changed and poor DIA was dragged lower by bluebloods like HD (-1.94%), KO (-1.66%), and TRV (-1.47%).

The major economic news scheduled for Tuesday included Preliminary September Goods Trade Balance, which came in worse than expected at -$108.23 billion (versus a forecast of -$95.90 billion and the August reading of -$94.22 billion).  At the same time, Preliminary September Retail Inventories showed slower growth than the prior month at +0.1% (compared to August’s +0.5% value).  Later, the October Conference Board Consumer Confidence was much stronger than anticipated at 108.7 (versus a forecast of 99.5 and a September reading of 99.2).  Meanwhile, September JOLTS Job Openings were down (fewer open jobs) to 7.443 million (compared to a forecast of 7.980 million and August’s 7.861 million reading).  Then, after the close, API Weekly Crude Oil Stocks showed an unexpected drawdown of 0.573 million barrels (versus a predicted inventory build of 2.300 million barrels and the prior week’s 1.643-million-barrel inventory increase.)

After the close, AMD, ALHC, ALSN, GOOGL, BMRN, BXC, BXP, EXE, EIX, EXEL, EXR, FMC, GOOG, IEX, LBTYA, LFUS, MCY, MTH, MOD, MDLZ, QRVO, RUSHA, SNAP, SYK, UMBF, and V all reported beats on both the revenue and earnings lines.  Meanwhile, CAKE, CMG, CB, EQT, NGVT, NGD, PK, RSG, and UNM missed on the revenue line while beating on earnings.  On the other side, DVA, FE, RYI, and UIS beat on revenue while missing on earnings.  However, CZR, CHE, EA, FSLR, LSTR, OI, OKE, and WERN missed on both the top and bottom lines. (AMD disappointed with its forward guidance. However, GOOGL’s beat gave hope to all the big tech names as Ad revenue surged and the stock price went up almost 6% in after-hours trading.)

In stock news, on Tuesday, Reuters reported that VLKAF (Volkswagen) Audi division is in talks with a potential investor for its troubled Brussels plant.  (VLKAF announced in July it is considering closing the plant and laying off the 3,000 employees that work at that facility.)  At the same time, ADDYY (Adidas) announced that it saw strong growth in China during Q3 in contrast to rival brands.  The company said that as a result of demand, they have opened 200 new stores in smaller Chinese cities with a goal of getting to 300 stores by the end of year.  Later, Reuters reported that AVGO is working with OpenAI and TSM to create new AI chips.  (This was a relief for AVGO supporters that had been under pressure from fear that OpenAI would create competition for AVGO chips.)  At the same time, the Wall Street Journal reported that V is planning to lay off about 1,400 employees and contractors by the year end. Later, an SEC filing showed that Meme-stock influencer Keith Gill (Roaring Kitty) has liquidated his entire stake in CHWY.  This comes after he took a 6.6% ownership stake of the company in July.  (CHWY was down more than 10% in after-hours trading on the news.)

In stock legal and governmental news, on Tuesday, the news got worse for BA as the Dept. of Defense Office of Inspector General released a report alleging that the company overcharged the Air Force nearly 8,000% for soap dispensers and $1 million for a dozen spare parts.  Later, the US State Dept. approved the sale of $744 million of RTX-made medium-range air-to-air missiles to Denmark.  At the same time, MCD was sued in what is proposed to be a class-action lawsuit stemming from last week’s E.coli outbreak linked to onions on MCD’s Quarter Pounder burgers.  After the close, Reuters reported that BAC is in talks with the CFPB in an effort to settle the agency’s charges related to fraud and scams on the bank-owned Zelle payment app.  (The report said BAC is also considering litigation against the CFPB if a settlement can’t be reached.)

In miscellaneous news, on Tuesday, Reuters reported that sources tell it China is now considering approving $1.4 trillion in additional debt in the next few years, with money earmarked for reviving its economy.  Other news out of the same Chinese government meetings said President Xi urged provincial officials to pursue the reform initiatives that were identified for them.  Xi also “urged” those officials to meet their assigned social and economic targets.  Elsewhere, in Canada, Canadian deputy foreign minister Morrison told Parliament that Indian Home Affairs Minister Shah was the one who authorized a wave of violence (including homicide) while attempting to suppress Sikh activists on US soil. 

In Middle East news, on Tuesday, Hezbollah named cleric Naim Qassem as its new leader.  The Israeli Defense Minister responded by saying that it was a “Temporary appointment…not for long.”  In the streets, Isael conducted 150 airstrikes on Tuesday.  To the north, Israeli strikes killed 82 and wounded many times that number in Lebanon.  Further South, in Gaza, an IDF air attacks killed 110 with dozens more still missing as it collapsed a five-story residential building.

Overnight, Asian markets were almost red across the board.  Only Japan (+0.96%) was in the green, while Hong Kong (-1.55%), South Korea (-0.92%), and Australia (-0.83%) led the region lower.  In Europe, we see the same picture taking shape with only Norway (+0.46%) in the green at midday.  The CAC (-1.39%), DAX (-0.84%), and FTSE (-0.26%) lead the region lower in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed open.  The DIA implies a -0.20% open, the SPY is implying a +0.12% open, and the QQQ implies a +0.23% open at this hour.  At the same time, 10-Year bond yields are down sharply to 4.218% and Oil (WTI) is up 1% to $67.89 per barrel in early trading.

So far this morning, AER, ADP, AXTA, BLCO, BIIB, EAT, BG, CRTO, EXC, GRMN, GEHC, HUM, JKS, KEX, LKNCY, OMF, OPCH, OSK, PSN, REYN, TEL, TEX, TT, UMC, UTHR, VRSK, and XPO all reported beats on both the revenue and earnings lines.  Meanwhile, CHEF, KHC, and NI missed on revenue while beating on earnings. On the other side, ARCC, CWEN, GPN, GPI, NBIX, SITE, SW, and ZBH beat on revenue while missing on earnings.  However, CAT, CDW, DAN, LLY, MLM, OTIS, and SLGN missed on both the top and bottom lines.

The major economic news scheduled for Wednesday include October ADP Nonfarm Employment Change (8:15 a.m.), Preliminary Q3 PCE Prices, Preliminary Q3 GDP, Preliminary Q3 Price Index (all at 8:30 a.m.), September Pending Home Sales (10 a.m.), and EIA Weekly Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled for before the open include ABBV, AER, ARCC, ADP, AVT, AXTA, SAN, BSAC, BLCO, BIIB, EAT, BG, CAT, CDW, CHEF, CLH, DAN, LLY, ENIC, EXC, FLEX, FTV, GRMN, GTES, GEHC, GSK, GPI, HES, HUM, ITW, JKS, KEX, KHC, DRS, MHO, MLM, NBIX, NI, OMF, OPCH, OSK, OTIS, PSN, REYN, SLGN, SITE, SW, SCL, TEL, TEX, TT, UMC, VRSK, VMC, XPO, and ZBH.  Then, after the close, ACHC, AFL, AEM, ALGT, ALL, AWK, AMGN, AR, ACGL, ACA, AXS, BHC, BECN, BIO, BKNG, CHRW, CVNA, CF, CMPR, CLX, CTSH, COIN, COLM, CODI, COMP, CACC, CW, DASH, EBAY, NVST, EQIX, EQR, ETSY, EG, FND, GEN, GDDY, GRBK, THG, HLF, HLI, HUBG, INVH, KMPR, KLAC, LPLA, MTW, MATX, META, MET, MGM, MSFT, MAA, MPWR, MUSA, MYRG, NXT, PGRE, CNXN, PSMT, PRU, PSA, HOOD, ROKU, RYAN, SCI, SFM, APXC, SBUX, SUM, TDOC, TWI, RIG, TTMI, TWLO, VTR, WTS, and WSC report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, September Core PCE Price Index, September PCE Price Index, September Personal Spending, Q3 Employment Cost Index, October Chicago PMI, and the Fed Balance Sheet.  Finally, on Friday, October Average Hourly Earnings, October Nonfarm Payrolls, October Private Nonfarm Payrolls, October Participation Rate, October Unemployment Rate, September Construction Spending, October ISM Mfg. Employment, October ISM Mfg. PMI, October ISM Mfg. Employment, October ISM Mfg. Prices, and October S&P Global Mfg. PMI are reported.

In terms of earnings reports later this week, on Thursday, we hear from ALNY, MO, AME, BUD, APG, APTV, ARGX, ARW, AVNT, BALL, BBVA, BDC, BGC, OWL, BWA, BMY, CNQ, CVE, LNG, CI, CNK, CCO, CMS, CMCSAA, COP, CFR, DRVN, DNB, ETN, EME, ETR, NVRI, EL, GNRC, GIL, GPRE, DINO, HII, H, IDA, IDXX, NSIT, NSP, ICE, IP, IQV, ITRI, JHG, K, KIM, KTB, LAZ, LECO, LNC, LIN, HZO, MA, MRK, MIDD, NCLH, OTEX, OGN, PH, PATK, PBF, BTU, PTON, PHIN, PWR, REGN, RBLX, SABR, SN, SHEL, SIRI, SO. STLA, STM, TFX, UBER, UPBD, VAL, VRN, GWW, WEC, WEN, WCC, WTW, XEL, XYL, AES, LNT, AMZN, AMCR, AAPL, TEAM, CAR, CGAU, CNO, CTRA, DORM, EMN, EGO, ERIE, ICFI, IR, INTC, JNPR, MTZ, RGA, SEM, SKYW, SM, X, and VICI.  Finally, on Friday, AMR, ARCB, ARES, BTSG, CAH, CBOE, GTLS, CHTR, CVX, CHD, D, ENB, XOM, IMO, LYB, MGA, NVT, MD, PPL, SPG, TROW, TXNM, USM, WAT, and W report.

With that background, it looks like the market is undecided early this morning. QQQ gapped higher on the strength of GOOGL (+6.64%) earnings and despite the drag from AMD (-7.95%). However it has printed a Doji since that premarket gap. For their part, SPY and DIA opened closer to flat and have also printed indecisive candles in the early session. With QQQ and SPY above their T-line, the short-term trend remains tepidly bullish. The mid-term and longer-term trends are obviously still strongly Bullish in all three, as they all sit within striking distance of another all-time high. With regard to extension, none of the major index ETFs are too far extended from its T-line (8ema). In addition, the T2122 indicator remains at the bottom portion of its mid-range. So, markets do have room to run either direction if traders can find momentum, but the Bulls have just a little more slack to work with today. With regard to those 10 big dog tickers, six of the 10 are in the green again this morning. As mentioned, AMD is by far (by more than 7%) the anchor on that group while GOOGL is 4% out in front leading the gainers higher in premarket. GOOGL has also surpassed normal leader NVDA (-0.37%) in terms of leading dollar-volume trading. Once again, premarket volume is very light today.

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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