Thursday saw a modest start and then a divergence. SPY gapped up 0.29%, DIA gapped up 0.16%, and QQQ opened 0.03% higher.  From there, SPY and QQQ chopped sideways all day with one modest “selloff about 2 p.m. and then a rally back that lasted the rest of the day.  Meanwhile, DIA sold off steadily until after 2:30 p.m. before it too rallied modestly the rest of the day.  This action gave us white candles in the SPY and QQQ and a black candle in DIA.  SPY printed something like a Dragonfly Doji that retested and bounced up off its T-line (8ema).  QQQ printed a white, mostly-body candle with a modest lower wick.  At the same time, DIA gave us a black-bodied Hammer-type candle that also retested and bounced up off its T-line.  This happened on well-below-average volume in all three major index ETFs.

On the day, seven of the 10 of the sectors were in the green with Financial Services (+0.82%) and Consumer Defensive (+0.79%) in front leading the market higher.  On the other side, the Energy (-1.39%) and Healthcare (-1.17%) were by far the biggest losers and two of the only three red sectors.  At the same time, SPY gained 0.35%, DIA lost 0.28%, and QQQ gained 0.52%.  Meanwhile VXX lost two-thirds of a percent to close at 42.53 while T2122 dropped back out of the overbought territory, into the top half of its mid-range, closing at 69.48.  On the bond side, 10-Year Bond yields rose to close at 4.44% and Oil (WTI) dropped 0.70%, closing at $70.53 per barrel.  So, Thursday was a bit of a Bear trap with a move lower, followed by a sharp reversal and the Bulls not giving up the momentum the rest of the day. 

The major economic news on Thursday includes Weekly Initial Jobless Claims, which came in a bit higher than expected at 219k (compares to a forecast of 214k and the prior week’s 208k value).  On the ongoing side, Weekly Continuing Jobless Claims were also higher than expected at 1,886k (versus a 1,870k forecast and the previous week’s 1,850k reading).  At the same time, Preliminary Q4 Qtr.-on-Qtr. Nonfarm Productivity was down sharply to +1.2% (versus at +1.5% forecast but down sharply from Q3’s +2.3% value). On the cost side, Preliminary Q4 Qtr.-on-Qtr. Unit Labor Costs was up sharply but lower than predicted at +3.0% (compared to a+3.4% forecast and Q3’s +0.5% reading).  Then, after the close, the Fed Balance Sheet showed a $7 billion decline to $6.811 trillion.

In Fed news, on Thursday, Chicago Fed President Goolsbee clarified his remarks from earlier this week.  He said, “We (economy) have kind of settled in at full employment. Inflation is looking better. If conditions keep like that (they are), rates will be lower (at the end of 2025) than they are today.”  However, he continued to say that uncertainty brought by Trump administration proposals (and their lack of clarity or consistency) will mean a slower pace of cuts. “The more dust we (Trump administration) throw in the air…that makes it hard for us to calibrate what the conditions actually are (and) the more we have to wait and see. We (FOMC) just want to be confident we are not overheating and that the job (reducing inflation) is in fact done.” Later, the Boston Fed released a report that said “the full suite of tariffs sought by the Trump administration would create notable upward pressure on inflation.”  The reports estimate that upward inflation due to the tariffs to be as much as 0.8% (based on the PCE Index).  After the close, Dallas Fed President Logan indicated she was prepared to hold the Fed Funds Rate steady (no cuts) “for quite some time”…even if inflation continues to drop closer to the FOMC’s 2% target.  She said that recent data “would strongly suggest that we’re already pretty close to the neutral rate, without much near-term room for further cuts.” She indicated that she was looking at the labor market as her signal for further rate cuts, saying, “if the labor market or demand cools further, that could be evidence it’s time to ease.”

After the close, AFRM, AMZN, BYD, CNO, EHC, EXPE, LION, FTNT, G, LGF.B, MTD, MHK, MPWR, OTEX, SENEA, and SSNC all reported beats on both the revenue and earnings lines.  Meanwhile, AMRK, ILMN, PINS, PFG, and ULH beat on revenue while missing on earnings.  On the other side, ATR, HUBG, MTX, POST, and TTWO missed on revenue while beating on earnings.  However, FBIN, MCHP, NBIX, RGA, SKX, VSAT, and WERN missed on both the top and bottom lines.

Overnight, Asian markets were mixed but leaned toward the green side.  Shenzhen (+1.75%), Thailand (+1.59%), Hong Kong (+1.16%), and Shanghai (+1.10%) led the region higher.  At the same time, South Korea (-0.59%) was by far the worst loser on the day.  In Europe, the bourses are mixed, but lean toward the red side at midday in modest trading.  The CAC (-0.09%), DAX (+0.02%), and FTSE (-0.35%) lead a mixed region in early afternoon trade.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a mixed, flat open ahead of January Payroll data.  The DIA implies a +0.08% open, the SPY is implying a dead-flat open, and the QQQ implies a -0.01% open at this hour.  At the same time, 10-Year Bond Yields remain at 4.44% and Oil (WTI) is up 0.75% to $71.14 per barrel in early trading.

The major economic news scheduled for Friday includes Jan. Avg. Hourly Earnings, Jan. Nonfarm Payrolls, Jan. Private Nonfarm Payrolls, Jan. Participations Rate, and Jan. Unemployment Rate (all at 8:30 a.m.), Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations (all at 10 a.m.), and Dec. Consumer Credit (at 3 p.m.).  The major earnings reports scheduled for before the open include AVTR, CBOE, ROAD, FLO, FTV, ULCC, GPRE, KIM, NWL, PAA, and PAGP.  Then after the close, there are no earnings reports scheduled. 

So far this morning, ROAD, KIM, and UI have reported beats on both the revenue and earnings lines.  Meanwhile, AVTR, FLO, and NWL missed on revenue while beating on earnings.  However, GPRE, PAA, and PAGP missed on both the top and bottom lines.

With that background, it looks like the market is undecided again this morning ahead of the January Payrolls data.  All three major index ETFs are little moved from Thursday’s close and have printed small-body, white-bodied candles in the premarket.  All three are above their T-line (8ema), meaning the short-term trend is bullish.  The mid-term downtrend (if you want to call it a trend) remains a mess.  In terms of extension, as mentioned, all three are back close above their T-line.  Meanwhile, T2122 in its mid-range.  So, both sides have room to work today if they can find momentum. In terms of the Big Dogs, seven of the 10 are in the red with AMZN (-2.79%) far out front leading the losses (as it is being punished for a poor forecast in Thursday night’s report). On the other side, META (+0.31%) leads the three green Big Dogs.  As far as liquidity goes, NVDA (+0.15%) leads with TSLA (-0.74%) and AMZAN having traded about one-third less and then the next closest being 12 times less dollar volume.  However, bear in mind that it is light premarket in terms of liquidity. Also, remember that its Friday and we need to prepare for the weekend news cycle.

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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