Wednesday was pretty much all about the open.  SPY gapped up 0.30%, DIA gapped up 0.45%, and QQQ gapped up 0.66%.  From there, all three major index ETFs did some form of grinding sideways until 2 p.m.  At that point, all three started a steady, but modest, rally that ran into the close.  This action gave us gap-up, large-body, white body candles in all three major index ETFs.  All three printed new all-time highs and closed at new all-time high closes.  This happened on below-average volume in SPY and QQQ as well as average volume in the DIA.

On the day, six of the 10 of the sectors were in the red again and the other four in the green as Energy (-1.90%) was way, way out in front leading the majority of sectors to the downside.  On the other side, Technology (+1.67%) far ahead of any other sector.   Meanwhile, SPY gained 0.62%, DIA lost 0.68%, and QQQ gained 1.24%. VXX gained half a percent to close at 42.33 and T2122 dropped back a little more, but remains in the top part of the mid-range to close at 64.03. At the same time, 10-Year bond yields fell to 4.184% while Oil (WTI) dropped 1.73%, closing at $68.73 per barrel. What we saw Wednesday saw gaps higher across the market.  That was followed by a sideways grind most of the day and then a modest rally into the close. All three major index ETFs printed new all-time highs and closed at new all-time high closes. So, the Bulls were clearly in control…even if most of the gain came on the opening gap higher.

The major economic news scheduled Wednesday included November ADP Nonfarm Employment Change, which came in with lower growth than expected at +146k (versus a +166k forecast and October’s +184k reading).  Later, Nov. S&P Global Services PMI also came in light at 56.1 (compared to a 57.0 forecast, but up from October’s 55.0 value).  When combined with Tuesday’s Nov. S&P Global Mfg. PMI this gave us a Nov. S&P Global Composite PMI of 54.9 (versus a 55.3 forecast, but up from October’s 54.1 number).  Later, Oct. Factory Orders were lighter than predicted at +0.2% (compared to a +0.3% forecast but up significantly from September’s -0.2% reading).  At the same time, Nov. ISM Non-Mfg. Employment Index was down to 51.5 (versus a 53.0 forecast and October value).  Meanwhile, the Nov. ISM Non-Mfg. PMI itself was also low at 52.1 (compared to a 55.5 forecast and October’s 56.0 number).  Later, EIA Weekly Crude Oil Inventories showed a much bigger drawdown than anticipated at -5.073 million barrels (versus a forecasted draw of 1.600 million barrels and the previous week’s -1.844 million barrels).

In Fed news, on Wednesday, St. Louis Fed President Musalem told Bloomberg that he expected “additional easing of moderately restrictive policy toward neutral will be appropriate over time.” However, he hedged his bets on how much or how fast, saying, “Along this baseline path, it seems important to maintain policy optionality, and the time may be approaching to consider slowing the pace of interest rate reductions, or pausing, to carefully assess the current economic environment, incoming information and evolving outlook.”  Later, Fed Chair Powell told an interview, “We can afford to be a little more cautious as we as we try to find neutral rate.”  Powell continued, “The economy is stronger than we thought it was going to be in September … the labor market is is better, and inflation is coming a little higher.”  After his speech, Powell was asked about being undermined by a “Shadow Fed Chairman” (an idea broached by Trump’s nominated Treasury Sec.).  Powell said, “I don’t think that’s on the table at all … There’s a set of institutional relationships between the Fed and every administration … I fully expect that we’ll have the same general kinds of relationships (with Trump Admin. officials).  There’s got to be trust and mutual respect and acknowledgement of the different authorities and boundaries that we have.”

After the close, FIVE, PVH, and SNPS reported beats on both revenue and earnings lines.  Meanwhile, AEO missed on revenue while beating on earnings.  On the other side, GEF beat on revenue while missing on earnings.

Overnight, Asian markets were mostly green with just three of the 12 exchanges below the break-even level.  India (+0.98%) paced the gains while Hong Kong (-0.92%) and South Korea (-0.90%) were by far the biggest losers.  In Europe, we see a similar picture taking shape at midday with just four of 14 bourses in the red.  The CAC (+0.12%), DAX (+0.31%), and FTSE (-0.08%) lead the region modestly higher in early afternoon trade.  In the US, as of 7:40 a.m., Futures are pointing toward a start just on the red side of flat.  The DIA implies a -0.02% open, the SPY is implying a -0.05% open, and the QQQ implies a -0.06% open at this hour.  At the same time, 10-Year Bond yields are back up a touch to 4.217% and Oil (WTI) is back up a quarter-percent to $68.67 (after an overnight slump) in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Oct. Imports, Oct. Exports, Oct. Trade Balance (all at 8:30 a.m.), and Fed Balance Sheet (4:30 p.m.). The major earnings reports scheduled for before the open are limited to BMO, BF.A, CAL, CM, CSIQ, DG, GMS, KFY, KR, PDCO, SAIC, SIG, and TD.  Then, after the close, COO, DOCU, HPE, LULU, WOOF, ULTA, VEEV, and VSCO report.

In economic news later this week, on Friday, we get, Nov. Average Hourly Earnings, Nov. Nonfarm Payrolls, Nov. Private Nonfarm Payrolls, Nov. Participation Rate, Nov. Unemployment Rate, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations, October Consumer Credit.  We also hear from Fed members Bowman and Daily.

In terms of earnings reports later this week, on Friday, we hear from DOOO and GCO.

So far this morning, CM, KFY, and SAIC reported beats on both the revenue and earnings lines.  Meanwhile, CSIQ missed on revenue while beating on earnings. On the other side, BMO, DG, GMS, PDCO, and TD all beat on revenue while missing on the earnings line.  However, CAL and SIG missed on both the top and bottom lines.

With that background, markets seem undecided early in the premarket.  All three major index ETFs are just on the red side of flat.  QQQ started the early session with a gap down, but has rallied to print a white-bodied candle to get nearly back to even. Keep in mind that the SPY, DIA, and QQQ sit at all-time highs.  All three are above their T-line (8ema).  So, the short-term trend is now bullish.  Looking further out, obviously the mid-term and longer-term trends also remain bullish sitting at or near those all-time highs.  In terms of extension, only QQQ is now stretched above its T-line, but SPY and DIA are still not extended. The T2122 indicator remains in the top half of its mid-range. So, both sides of the market have room to move, but the Bears may have more slack to work with today. In terms of the 10 Big Dogs, nine of the 10 are in green numbers at this point of the morning again, albeit on modest moves. GOOGL (+0.44%) is leading the way higher while AMD (-0.22%) is the only big dog in the red.  In a return to post-election norm, TLSA (+0.39%) is leading in terms of dollar-volume traded, sitting at a little less than 1.5 times as much traded than NVDA (+0.10%), which itself has traded almost 9 times as much as the next one of the big dogs.  

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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