Monday saw a modest gap higher in the markets.  SPY gapped up 0.35%, DIA gapped up 0.22%, and QQQ gapped up 0.51% with TSLA dragging markets higher on China FSD approval news.  From there, all three major index ETFs chopped sideways the entire day, meandering back and forth around that modest gap.  All three ended on an upswing the last 50 minutes.  This action gave us gap-up indecisive candles in all three with a Doji in the SPY and QQQ and more of a white-bodied Spinning Top in the DIA. All three closed above their respective T-lines (8ema).  This happened on well below-average volume in all three major index ETFs.

On the day, eight of the 10 sectors were in the green again with Utilities (+1.44%) way out in front leading the rest of the market higher. At the same time, the only red sectors were Financial Services (-0.12%) and Technology (-0.06%).  Meanwhile, SPY gained 0.35%, DIA gained 0.39%, and QQQ gained 0.41%.  VXX fell 1.71% to close at 13.20 and T2122 climbed but remained in the upper end of its mid-range at 75.00.  10-year bond yields fell to 4.609% and Oil (WTI) dropped 1.31% to close at $82.75 per barrel.  So, Monday was a typical indecisive pre-Fed day.  The TSLA news popped stocks higher at the open.  However, from there it was an all-day meander back-and-forth in and slightly above the opening gap.  At the end of the day, all three major index ETFs were little changed from their opens.

There was no major economic news scheduled for Monday.

After the close, AMKR, ACGL, CLW, FLS, ST, SUI, WELL, WWD, and YUMC all reported beats on both the revenue and earnings lines.  Meanwhile, CNO beat on revenue while missing on earnings.  On the other side, CCK, CWK, ESI, EG, FFIV, NXPI, PARAA, PARA, SBAC, and RIG missed on the revenue line while beating on earnings.  However, CVI and SANM missed on both the top and bottom lines.  It is worth noting that WWD raised its forward guidance.

In stock news, on Monday, UMBF announced a deal to acquire HTLF in a $2 billion all stock deal.  (Analysts expect the deal to create a strong regional bank with operations spanning 13 states.)  Later, Bloomberg reported that KO is gearing up to IPO its $8 billion African bottling operation.  At the same time, Reuters reported that BA tapped the debt market to raise $10 billion after burning through almost $4 billion of cash in Q1 amidst slowing production and sluggish sales.  Later, the CA New Car Dealers Assn. reported TSLA vehicle registrations in CA fell 8% during Q1, the second consecutive quarterly decline in those registrations (sales).  (CA is one of the most important EV markets.)  At the same time, MBGAF (Mercedes), BMWYY, RIVN, and HYMTF (Hyundai) saw increases in EV vehicle registrations.  Later, LUV announced it has launched a “delay compensation” program.  (This was part of the airline’s $140 million settlement with DOT over the airline’s December 2022 holiday debacle.)  The airline said the program actually launched April 16 and it has already heard from thousands of customers seeking compensation for delays.  After the close, PARA announced the widely-expected resignation of CEO Bakish as the board works on a merger/sale to Skydance.  Bakish will be replaced by a triumvirate of internal executives.

In stock legal and governmental news, on Monday, PHG announced it had reached a $1.1 billion settlement (many, many times smaller than the expected $4-$10 billion) to resolve all personal injury claims due to its respiratory devices.  Later, the Financial Times reported that the European Commission is opening an investigation into how META is handling Russian disinformation in political advertising on Facebook and Instagram.  (However, the investigation report is not expected to single out Russia, instead calling the sources “foreign actors.”)  At the same time, US House and Senate negotiators said they had reached a deal to boost air traffic controller staffing. However, the deal will not increase the mandatory airline pilot retirement age.  (Airlines had lobbied to increase the age of mandatory retirement to 67 from the current 65.)  Later, EU antitrust regulators announced that AAPL’s iPad operating system has been designated a “gatekeeper.”  This makes AAPL subject to the EU’s recent landmark DMA legislation for iPad users in addition to phone and Mac users.  At the same time, the NHTSA announced it is opening a probe into 130k F vehicles equipped with the company’s “hands-free driving” technology BlueCruise after two fatal crashes of those vehicles striking parked cars.  Later, the FCC fined T ($57 million), VZ ($47 million), and TMUS ($92 million) for illegally sharing phone service customer location data.  The TMUS fine included $80 million for T-Mobile and $12 million for Sprint.  The wireless carriers protested and said they would appeal.  At the same time, a US District Judge threw out challenges by BMY and JNJ, which had filed lawsuits challenging the law that requires them to negotiate prices with Medicare.  (This was the fourth federal judge to rule in favor of the Biden administration requirement that pharma companies negotiate price with Medicare in the same way it negotiates with insurers and foreign market entities.  The conservative 5^th-circuit Court of Appeals will hear an pharma trade group appeal to revive suits to challenge the law later this week.)

Overnight, Asian markets were mixed but leaned toward the green.  Japan (+1.24%) was by far the biggest mover in the region followed by Shenzhen (-0.90%) and the rest of the region was at least a half of a percent closer to even on the day.  In Europe, we see a similar mixed market leaning slightly to the red side with seven of the 15 bourses in the green.  Once again, the CAC (-0.04%), DAX (-0.33%), and FTSE (+0.59%) lead the region by far on volume in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward a start just on the red side of flat.  The DIA implies a -0.04% open, the SPY is implying a -0.10% open, and the QQQ implies a -0.18% open at this hour.  At the same time, 10-year bond yields are back up to 4.626% and Oil (WTI) is up four-tenths of a percent to $82.97 per barrel in early trading.

The major economic news scheduled for Tuesday includes Q1 Employment Cost Index (8:30 a.m.), Chicago PMI (9:45 a.m.), Conf. Board Consumer Confidence (10 a.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  The major earnings reports scheduled for before the open include MMM, APD, ATI, AEP, AMT, ARCB, ADM, BGC, EAT, CNP, KO, GLW, DAN, ETN, ECL, LLY, EPD, FELE, IT, GEHC, GPK, HSBC, HUBB, ITW, INCY, KBR, LEA, LDOS, MPC, MLM, MCD, MLCO, TAP, MPLX, NOG, OMF, PCAR, PYPL, PAG, PNM, PEG, QSR, RITM, SIRI, STLA, SCL, SYY, TMHC, THC, TKR, TT, and UFPI.  Then, after the close, ABRA, AMD, AMZN, AMCR, ASH, EQH, BXP, CZR, CC, CHK, CLX, FANG, EIX, EXR, FBIN, HI, INVH, LEG, LFUS, LPLA, LUMN, MATX, MCY, MDLZ, NGD, OI, OKE, PK, PINS, PSNY, PRU, PSA, QUAD, RNR, RSG, RYI, SWKS, SBUX, SYK, SMCI, UNM, and WERN report. 

In economic news later this week, on Wednesday, ADP Nonfarm Employment Change, March Construction Spending, April S&P Global Mfg. PMI, ISM Mfg. Employment, ISM Mfg. PMI, ISM Mfg. Price Index, March JOLTs Job Openings, EIA Weekly Crude Oil Inventories, FOMC Rate Decision, FOMC Statement, and Fed Chair Press Conference are reported.  On Thursday, we get March Exports, March Imports, March Trade Balance, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q1 Nonfarm Productivity, Q1 Unit Labor Cost, March Factory Orders, and Fed Balance Sheet.  Finally, on Friday, April Avg. Hourly Earnings, April Nonfarm Payrolls, April Private Nonfarm Payrolls, April Participation Rate, April Unemployment Rate, April S&P Global Services PMI, April S&P Global Composite PMI, ISM Non-Mfg. Employment, ISM Non-Mfg. PMI, ISM Non-Mfg. PMI Price Index, and Fed Member Williams speaks.

In terms of earnings reports later this week, on Wednesday, AER, ARCC, ADP, AVA, AVT, AXTA, GOLD, BLCO, CG, CRS, CDW, COR, CVE, CENX, GIB, CHEF, CLH, CNDT, CVS, DD, ENTG, ESAB, EL, EEFT, FLEX, FTS, GRMN, GTES, GNRC, GSK, GPN, IDXX, NSP, JCI, KKR, KHC, DRS, LTH, MAR, MA, NBIX, NCLH, OGE, PSN, PFE, PPL, SMG, SLGN, SR, STGW, TRN, TTMI, UTHR, VRSK, WEC, WLK, YUM, ACHC, AFL, ALB, ALL, AFG, AIG, AWK, ANSS, CAR, AXS, BALY, BBSI, BZH, BV, CHRW, CWH, CVNA, CF, CMPR, CTSH, CODI, CTVA, CW, DLX, DVN, DASH, EBAY, ENSG, NVST, ETSY, ES, EXPI, FLSR, FNV, GFL, GIL, THG, HLF, HST, JAZZ, KMPR, MRO, MKL, MET, MGM, MAA, MOS, MUSA, MYRG, PGRE, PTEN, PAYC, CNXN, PTC, QRVO, QCOM, RHP, SIGI, SCI, SFM, SUM, TTEK, TWI, TROX, UGI, VMI, VTR, VICI, ZG, and Z report.  On Thursday, we hear from AGCO, ATUS, AME, APA, APG, APO, APTV, MT, ARES, ARW, BHC, BAX, BCE, BDX, BDC, BWA, BTSG, BRKR, CNQ, CAH, CHD, CI, CNK, CNHI, CIGI, COP, CMI, XRAY, DBD, D, DRVN, DNB, ENOV, NVRI, EXC, ULCC, HWM, HII, NSIT, ICE, IQV, IRM, ITRI, ITT, JHG, K, KTB, LNC, LIN, MCO, MUR, NFG, NVO, ONEW, OGN, PH, PATK, PBF, BTU, PTON, PENN, PNW, PBI, PWR, REGN, RXO, SABR, SNDR, SEE, SHEL, SO, SWK, TRGP, TFX, TRI, UPBD, VAL, VSTS, VMC, W, WEN, WCC, WRK, XYL, ZBH, ZTS, AES, ALHC, AEE, AMGN, AAPL, ACA, BECN, SQ, BKNG, BFAM, CIVI, COIN, ED, CTRA, DVA, DLR, DKNG, EOG, WTRG, EXPE, FND, FTNT, GDDY, HOLX, HUN, ILMN, IR, LYV, MTZ, MODV, MNST, MSI, ZEUS, OTEX, OPEN, OEC, PTVE, PXD, POST, RGA, REZI, RKT, RYAN, SEM, SM, SWN, TXRH, X, and WSC.  Finally, on Friday, ADNT, AXL, AMRX, BEPC, BEP, CBOE, CBRE, GTLS, LNG, CRBG, FLR, FYBR, GPRE, HSY, KOP, MGA, NMRK, NVT, PAA, PAGP, TRP, TAC, TRMB, and XPO report.

So far this morning, MMM, ATI, AMT, EAT, KO, ETN, ECL, EPD, IT, HUBB, KBR, LEA, LDOS, LKNCY, MPC, TAP, OMF, PYPL, QSR, RITM, SIRI, TMHC, THC, TKR, TT, and ZBRA all reported beats on both the revenue and earnings lines.  Meanwhile, APD, ADM, CNP, GLW, LLY, GEHC, GPK, MLM, and SCL all missed on revenue while beating on earnings.  On the other side, ARCB, DAN, and PEG beat on revenue while missing on earnings.  However, AEP, INCY, MCD, MPLX, PAG, and PNM all missed on both the top and bottom lines.  It is worth noting that KO, LLY, LDOS, and TMHC all raised their forward guidance.

In geopolitical news, on Monday, the Yemeni Houthi rebels fired missiles at a British-owned, Panamanian-flagged ship in the Red Sea.  At least one missile struck the vessel, causing unknown damage.  At the same time, the Houthi fired three missiles at a Malta-flagged container ship which was in the Gulf of Aden travelling from Djibouti to Saudi Arabia.  This comes after the Houthi shot down a US military MQ-9 Reaper drone on Saturday.  In short, the Houthi threat to Red Sea and Suez Canal merchant traffic has ticked up the last few days.

In miscellaneous news, on Monday S&P reported that margins shrank at all five of China’s top banks in Q1.  This came as those banks are under pressure, supporting weak property developers while new loan demand is weak.  Elsewhere in Asia, the Japanese Yen surged Monday on speculation that the Bank of Japan will intervene to support the currency, which was at a 34-year low versus the US Dollar.  Ban in the US, the Philly Fed released data Monday showing that only one in 50 employees changed employers in March (going directly from one employer to another).  This is near the historic lows of 2020 and 2010-2011.  (This suggests employees may be unsure of the job market and headhunting firms are less active.  Both potential forerunners of a weakening labor market…which is what the Fed is looking to cause with high rates.)

With that background, it looks as if the markets are opening indecisive and just on the red side of flat. QQQ is showing us the largest premarket candle body and its still just a small, black-body, Spinning Top candle. The two large cap index ETFs are tru Doji at this point. All three major index ETFs remain above their T-line (8ema), although the DIA is just barely so. So, the short-term trend is bullish but under pressure. Meanwhile, the mid-term remains bearish but under pressure from Bulls. The longer-term market remains Bullish but trend has been broken and is clearly under pressure. Therefore, in general we can say we have a choppy, undecided market. In terms of extension, none of the major index ETFs is too far extended from their T-line and the T2122 indicator is in its mid-range, although now at the top end. So, both sides have room to run if they can gain the momentum to do so. In terms of those 10 big dog tickers, seven of the 10 are in the red with TSLA (-1.95%) out front leading the way lower. Keep in mind that we’ve seen a lot of whipsaw lately. So, be careful not to chase a gap. Also remember that this is a Fed week and the last day of April, meaning we’ll get April Jobs data on Friday as well as a ton of earnings over the week. There will be a tendency to “wait and see” and a ton of ammunition for over-reaction on news this week. Just be careful.

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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