Markets were mostly undecided and treading water again Tuesday. To the extent there was any directionality, it was slightly bullish.  SPY opened 0.15% higher, DIA opened 0.12% higher, and QQQ gapped up 0.30%.  From there, all three major index ETFs sold off the first hour, rallied the second hour, and then ground sideways the rest of the day popping back up to the highs the last five minutes of the day.  All three major index ETFs remain above their T-line (8ema).  This action gave us a white-bodied Spinning Top in the DIA.  At the same time, SPY printed a white-bodied Hanging Man.  Finally, QQQ printed a white-bodied candle somewhere in between a Hanging Man and a Spinning Top, that sits right at a resistance level from the August highs. This happened on below-average volume in all three of the major index ETFs.

On the day, seven of the 10 sectors were in the green, with Basic Materials (+1.97%) well out in front leading the rest of the market higher. On the other side, Financial Services (-0.39%) and Utilities (-0.37%) lagged well behind the other sectors. At the same time, SPY gained 0.29%, DIA gained 0.24%, and QQQ gained 0.48%.  VXX was flat, ending up to 47.76 and T2122 climbed a bit into the middle of its over-bought range to close at 90.96.  At the same time, 10-Year bond yields fell a bit to close at 3.732% while Oil (WTI) gained 1.66% to close at $71.54 per barrel on supply fears led by Israeli escalation of attacks on Lebanon.  So, markets were slightly bullish on what was largely a non-committal, undecided day with traders making few bets as markets drifted sideways much of the day.  SPY and DIA both closed at new all-time high closes.

The major economic news scheduled for Tuesday was limited to Conference Board Consumer Confidence, which came in lower at 98.7 (compared to a forecast of 103.9 and well down from August’s 105.6 reading).  Later, after the close, Weekly API Crude Oil Stocks had a much larger drawdown than expected at -4.339 million barrels (compared to a forecasted 1.100-million-barrel drawdown and far different than the previous week’s 1.960-million-barrel inventory build). 

In Fed news, Fed Governor Bowman (probably the most hawkish permanent member of the FOMC board) explained her lone dissent to the FOMC’s half percent rate cut last week.  She told a KY Banker’s Assn. that inflation gauges “remain uncomfortably above” the Fed’s 2% target. Therefore, she opposed a half-percent cut and instead supported a quarter percent reduction.  Bowman said, “The U.S. economy remains strong and core inflation remains uncomfortably above our 2% target.” She continued, “I preferred a smaller initial cut in the policy rate while the U.S. economy remains strong and inflation remains a concern.”  Bowman explained, “I continue to see greater risks to price stability, especially while the labor market continues to be near estimates of full employment (4.2%).”  She also said that she feared a rate cut would “unleash a considerable amount of pent-up demand and cash on the sidelines” (thus, possibly reigniting inflation).

After the close, KBH reported beats on both the revenue and earnings lines.

In stock news, on Tuesday, oil and gas operators in the Gulf of Mexico scaled back or shut down operations ahead of a storm predicted to become a hurricane Wednesday.  SHEL, CVX, and BP were the headline names that evacuated rigs in the gulf.  At the same time, as previously revealed, SMAR announced it will be acquired by BX and Vista Equity Partners in a $8.4 billion all-cash deal ($56.50/share). Later, BIIB released results promising from a Phase 3 study of its lupus treatment.  At the same time, the Chairman of Nippon Steel publicly asked the United Steelworkers union to “come to the table” to find a resolution allowing Nippon Steel to acquire X.  Later, about 2,000 hotel workers walked off the job in a strike at the largest HLT hotel in the world in HI. (Overall, 4,000 hotel workers struck HLT in Honolulu, Sandiego, and San Francisco.)  At the same time, KO announced that it is pulling its “Spiced Coke” flavor and said it was discontinuing the flavor.  This comes less than six months after KO announced the new “permanent flavor” was intended to target younger drinkers.

Elsewhere, Elliott Management announced it would request a special meeting of the board of LUV as soon as next week as the activist investor seeks to push out the CEO.  Later, AMCI Testing announced that TSLA Full Self-Driving software is still “suspect” and requires improvement to ensure robotaxi safety.  (The testing company said that a 1,000-mile evaluation found that the software required human intervention 75 times and the time between required human interventions decreased as the test went on.)  At the same time, the Teamsters Unions announced it had reached a four-year deal with BWA, covering 700 workers.  (This ends a two-week strike at BWA.)  Later, MSFT announced it will spend $1.3 billion in Mexico over the next three years to build out cloud computing infrastructure.  After the close, Reuters reported that negotiations remain at a standstill between MPC and the Teamsters Union as the strike at MPC refineries enters its third week.  At the same time, regulatory filings showed that BRKB sold another $863 million of BAC stock between September 20 and September 24.

In stock legal and governmental news, on Tuesday the Dept. of Justice sued V for allegedly conducting an illegal monopoly over debit cards.  The suit accuses V of using “exclusionary agreements” with partners to prevent and smother potential rivals in that space. Later, BVNRY received a $63 million order from the US government to produce bulk and freeze-dried smallpox and Mpox vaccines.  At the same time, the UK anti-trust watchdog agency said that “concerns remain” over GOOGL ad-privacy plans.  (This is GOOGL’s plans to retain third-party cookies in the Chrome browser for better targeting ads.)  Later, the FTC announced that INVH agreed to pay a $48 million fine for deceiving renters about their lease costs. 

Meanwhile, the US State Dept. approved the sale of $740 million of Stinger missiles (made by RTX) to Egypt.  At the same time, a Brazilian state announced they had signed a $180 million deal with AMZN and five other companies, selling the companies carbon credits and the money to purportedly be used for conservation of the Amazon region.  After the close, META announced it will not immediately join the EU’s AI Pact ahead of bloc’s new AI law comes into effect.  At the same time, a federal judge ruled a NY City law requiring DASH, GRUB, and UBER to share the end customer data with restaurants.  The judge ruled the law violated the First Amendment by regulating commercial speech.

In geopolitical news, on Tuesday, Israel continued its new campaign of attacks on Lebanon (Hezbollah).  After 1,300+ Israeli attacks Monday killed more than 500 and wounded thousands, on Tuesday they launched several dozen additional attacks, killing at least dozens more.  In response, Hezbollah fired 300 rockets into Israel.  As the rest of the world called for de-escalation and the stop of illegal bombings, Israeli PM Netanyahu said the attacks will not end.  He urged the Lebanese people to change governments and throw out Hezbollah “before that group leads them into the abyss” (i.e. gets them bombed to rubble by Israel).  Meanwhile, the IDF spokesman called on the people of Southern Lebanon to move away from buildings and gatherings “for their own safety.”  Oil prices initially spiked on Monday, but retreated as the attacks cooled Monday night.  However, another spike took place Tuesday as the attacks resumed.

In overnight news, Asia was buoyed Wednesday by more stimulus from Beijing.  The People’s Bank of China (central bank) lowered the rate charged on one-year loans by more than it has ever been lowered before.  This comes on top of the broad package of stimulus announced Tuesday.  As a result, the Chinese yuan rose to more the seven per US dollar for the first time in 16 months. Elsewhere, SAP stock took a hit on news that the US is investigating the German software giant for over-charging US agencies over the course of a decade.

Overnight, Asian markets were evenly mixed with six exchanges in the red and six in the green.  Taiwan (+1.47%), Shenzhen (+1.21%), and Shanghai (+1.16%) led the gainers while South Korea (-1.34%) and Singapore (-1.09%) were by far the biggest losers.  In Europe, markets are mostly green at midday with four of 14 bourses in the red.  The CAC (-0.33%), DAX (-0.43%), and FTSE (+0.27%) lead the region on volume as usual in early afternoon trade.  In the US, as of 7:15 a.m., Futures are pointing toward a mixed, flat start to the day.  The DIA implies a +0.07% open, the SPY is implying a -0.01% open, and the QQQ implies a -0.15% open at this hour.  At the same time, 10-Year bond yields are up to 3.76% and Oil (WTI) is down 0.63% to $71.10 per barrel in early trading.

The major economic news scheduled for Wednesday includes August Building Permits (8:30 a.m.), August New Home Sales (10 a.m.), and Weekly EIA Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled for before the open are limited to CTAS.  Then, after the close, CNXC, FUL, JEF, MU, and WS report.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, August Core Durable Goods Orders, August Durable Goods Orders, Q2 Core PCE Prices, Q2 GDP, Q2 GDP Price Index, August Pending Home Sales, and the Fed Balance Sheet.  We also hear from Fed Chair Powell, Fed member Williams, Fed Vice Chair Barr, Treasury Sec. Yellen, Fed Vice Chair Barr, and Fed member Kashkari. Finally, on Friday, August Core PCE Price Index, August PCE Price Index, August Personal Spending, August Goods Trade Balance, August Retail Inventories, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Thursday, we hear from CAN, KMX, JBL, SNX, BB, COST, and SCHL.  Finally, on Friday, there are no earnings reports scheduled.

In last minute news mortgage news, the Mortgage Bankers Assn. reports a surge in demand for loans last week.  This was led by a 20% increase in refinance loan applications on the week (week-on-week).  (This was a massive 175% increase over the same week one year earlier.)  Meanwhile, the loan applications for the purchase of a new home rose 1% week-on-week, but were also 2% higher than the same week of 2023.  The national average 30-year, fixed-rate, conforming-loan interest rate was 6.13% down from 6.15% the week prior., APO (Apollo Global Mgmt.) offered to make a $5 billion “equity-like” investment into INTC. This is both a vote of confidence in INTC, but depending on the board mindset may also offer an alternative to the friendly take-over offer from QCOM. Either way, INTC shares spiked in premarket on the news.

With that background, it looks like the SPY is flat and undecided in the premarket. At the same time, QQQ gapped down a bit but is also undecided at that point. Meanwhile, DIA gapped down the most in the early session, but also has a strong white-bodied candle so far that had climbed back up to positive territory early. All three remain above their T-line (8ema). So, the short-term trend is still bullish. The mid-term trend is now also bullish with QQQ the laggard but now well over its downtrend line going back to the July all-time high. In the longer-term we still have a strong Bull trend all three major index ETFs and remain near all-time highs. With regard to extension, none of the three major index ETFs are too far extended above their T-lines. However, the T2122 indicator has climbed back into the top half of its overbought range. So, markets may have room to run either direction, but the Bears still have more slack to work with today. With regard to those 10 big dog tickers, seven of the 10 are in the red with AAPL (-0.99%) well out in front leading the losses. However, that biggest dog, NVDA (+0.26%) is among the leader among the gainers and has traded 3x the dollar-volume of any other ticker so far today (normal for NVDA).

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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