Markets started the day higher Wednesday with SPY gapping up 0.23%, DIA gapping up 0.16%, and QQQ gapping up 0.21%. After that open, QQQ led the way immediately rallying while the SPY took 15 minutes before following and DIA actually recrossed its opening gap before following in the rally that continued until 11 a.m. for all three.  At that point, all three major index ETFs traded in a long sideways trough that lasted until the Fed Chair Powell’s press conference.  However, once Powell spoke the Bulls were off to the races again in a sharp rally that lasted until 3:40 p.m. only to be very slightly blunted by profit-taking the last 20 minutes.  This action gave us gap-up, large white candles in the SPY and QQQ as well as a white-bodied Spinning Top in the DIA.  All three major index ETFs crossed back above their T-line (8ema) with SPY now located just below its 200sma.  All of this happened on above-average volume in the DIA and QQQ and average volume in the SPY. 

On the day, all 10 sectors were again in the green with Utilities (+1.57%) way out front leading the way higher and Consumer Defensive (+0.11%) lagging behind the other sectors.  At the same time, the SPY gained 1.05%, DIA gained 0.67%, and QQQ gained 1.74%.  The VXX fell 4.35% to close at 22.43 and T2122 climbed again to the center of its mid-range at 52.09.  10-year bond yields dropped to end the day at 4.747% and Oil (WTI) fell to close at $80.90 per barrel.  So, it seems the Bulls liked the ADP precursor to the October Payrolls data and popped markets at the open and for the first part of the day.  Then we saw hand-wringing and waiting on the widely expected Fed decision.  However, when Fed Chair Powell told markets we were in a goldilocks scenario, the Bulls ran again only taking profits in the last minutes of the day.

The major economic news reported Wednesday included the October ADP Nonfarm Employment Change, which came in lower than expected at 113k (compared to a 150k forecast but still higher than the September reading of 89k).  Later the S&P Global Mfg. PMI was reported in line with what was predicted at 50.0 (versus a forecast of 50.0 and slightly better than the September 49.8 value).  At the same time, the October ISM Mfg. PMI came in lower than anticipated at 46.7 (compared to a forecast of 49.0 and a September reading of 49.0).  October ISM Mfg. Employment was reported lower than expected at 46.8 (versus a forecast of 50.3 and well down from the September 51.2).  Meanwhile, Sept. JOLTs Job Opening remains stronger than predicted at 9.553 million (compared to a forecasted 9.250 million and even higher than the August value of 9.497 million).  Later EIA Crude Oil Inventories rose but by less than anticipated at +0.774 million barrels (versus a forecast of +1.261 million barrels and the prior week’s +1.371 million barrels number).  Then, as almost universally expected, the FOMC held the Fed Funds rate at 5.50%.

In his post-decision press conference, the key takeaways from Fed Chair Powell were that the US economy is strong, he is hesitant to advocate for a December rate hike, he is unwilling to commit to not hiking, and high treasury yields help but he was unwilling to say specifically how much they help.  In general, Powell implied that there is no hurry and things are going so well that we can wait and see. Powell said, “Recent indicators suggest that economic activity expanded at a strong pace in the third quarter.”  When asked if the Fed is done raising rates, he said, “We’re not confident at this time that we’ve reached such a stance.”  When pressed further about when the Fed will start cutting rates, he said “The question of rate cuts just doesn’t come up right now” adding “It’s fair to say the question we’re asking is should we hike more.”  When Powell was asked about whether rising bond yields are supplanting the need for additional hikes, the Chair said those yields would need to be substantially higher before they bear on specific hike decisions.  However, he added that higher Treasury yields “are showing through” to real-world borrowing costs (which helps discourage growth that is too strong) and “it remains to be seen” if persistently high yields could eliminate the need for more hikes down the road. 

In stock news, NIO announced its October deliveries of 16,074 vehicles (up 3% from September and up 60% from October 2022).  Competitor XPEV reported 20,002 cars sold (a whopping 31% increase versus September and a 292% increase over October 2022).  However, XPEV only delivered 8,741 cars, which while a company record was obviously far below demand.  LI (the other major Chinese EV competitor) delivered 40,422 cars in October (a 12% month-on-month increase and a 302% increase over Oct. 2022).  At the same time, NDAQ announced it had acquired Adenza from Thoma Bravo for $10.5 billion.  NDAQ said it expects Adenza to yield $80 million in cost-saving synergies and $100 million in long-term revenue increases.  Later, SCHW announced it had laid off 5% – 6% of its headcount (between 1,795 – 2,154 jobs).  By late morning, TM announced it is raising the wages and benefits of its US non-union workers in response to the UAW pay increases won from the Big 3 automakers. Later, Reuters reported that FUN and SIX are in merger talks.  After the close, DIS officially announced it is acquiring the remaining one-third stake in Hulu from CMCSA.  In the wide-expected deal, DIS will pay CMCSA $8.61 billion by December 1.  Also after the close, CLX said it expects to rebuild dwindling customer inventories by the end of Q4.  CLX has fallen way behind after an August cyberattack took its order fulfillment operation offline for more than a month starting in August.  Finally, late Wednesday evening, DAL announced it is laying off “some” corporate workers in order to cut costs.

In stock government, legal, and regulatory news, in the UK, a court ruled the British equivalent of a $2 billion class-action lawsuit against AAPL can proceed for allegedly hiding defective batteries by throttling performance in millions of iPhones.  In other European news, the EU announced a ban related to META’s handling of user data on FaceBook and Instagram.  The ban (which may be finalized as soon as next week) would require META to explicitly ask for and receive user permission before using any personal information to deliver targeted advertising.  This would be a huge blow to META, GOOGL, AAPL, AMZN, and other companies that sell targeted ads.  Later a US Court of Appeals judge ordered the SEC to “fix” what he called defects in its rule on share buybacks.  The rule (adopted in May) requires disclosure of share buyback data.  The decision was a significant win for corporate lobbyists who had argued for keeping such data undisclosed.  In late afternoon, the FDIC suspended the auction of assets of FBNC following the bank’s striking a deal with investors to pump $35 million into the delisted bank.  After the close, a (now former) GS investment banker was sentenced to three years in prison for passing tips on mergers GS was working on to accomplice traders.  Also after the close, the SEC announced it is investigating WFC related to conflicts of interest in its customer cash sweep choices.  At the same time, the Dept. of Energy warned NFE that if any of its Altamira floating LNG project was actually located onshore in Mexico, the company needs to reapply for a new export permit.  The project was expected to start shipping LNG this month. Elsewhere, the SEC filed charges SWI and its Chief Info. Security Officer alleging fraud and regulatory control violations related to the MOVEit cyberattack where Russian hackers compromised companies and Pentagon email addresses.  Finally, the NHTSA announced late Wednesday that TM is recalling 1.85 million RAV4 SUVs over fire risks related to replacement battery installation defects.

After the close, AFL, ABNB, ALL, ATUS, AIG, AWK, APA, ACA, AVT, AXS, BXP, BFAM, BWXT, CPE, CWH, CLX, COKE, CW, DASH, EA, ET, ETSY, EXAS, GFL, HST, IR, MTW, MRO, MCK, MELI, MKSI, MOD, MDLZ, MUSA, PK, PYPL, QRVO, QCOM, QDEL, REZI, SCI, SBGI, SP, SUM, SMCI, WTS, Z, and ZG all reported beats on both the revenue and earnings lines.  Meanwhile, ANSS, CAR, BKH, CHRW, CRC, CTSH, DXC, THG, PTVE, CNXN, PRU, RNR, RUN, TYL, WES, WMB, and WSC all missed on revenue while beating on earnings.  On the other side, AFG, CHRD, ESTE, HLF, ROKU, SIGI, and WERN beat on revenue while missing on earnings.  However, ALB, BALY, BMRN, CF, CAKE, EIX, NVST, EXEL, LNC, VAC, MET, NOG, NUS, NTR, PTC, RRX, SEDG, TS, and VSTO all missed on both the top and bottom lines.  It is worth noting that ABNB, EXAS, HST, IR, PTVE, PYPL, QRVO, QCOM, and SMCI all raised their forward guidance.  Unfortunately, ANSS, BXP, CTSH, VAC, NTR, PTC, and SEDG lowered their guidance.

Overnight, Asian markets leaned strongly to the green side.  Only Shenzhen (-0.94%) and Shanghai (-0.45%) were in the red.  Meanwhile, Taiwan (+2.23%), South Korea (+1.81%), New Zealand (+1.78%), and Thailand (+1.74%) led the rest of the region higher.  In Europe, we see strong green numbers across the board at midday.  The CAC (+1.77%), DAX (+1.51%), and FTSE (+1.26%) lead the region higher on volume with several of the smaller bourses up well more than the volume leaders in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing to a higher start to the day.  The DIA implies a +0.37% open, the SPY is implying a +0.55% open, and the QQQ implies a +0.84% open at this hour.  At the same time, 10-year bond yields a down slightly to 4.711% and Oil (WTI) is up more than 1.5% to $81.71 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Preliminary Q3 Nonfarm Productivity, and Preliminary Q3 Unit Labor Costs (all at 8:30 a.m.), September Factory Orders (10 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for before the open include GOLF, ADT, WMS, ATI, ALGT, AMR, AEP, APG, APTV, ARW, AVNT, BALL, GOLD, BHC, BAX, BCE, BDC, BWA, BR, CNQ, FUN, CVE, LNG, CI, CIGI, COP, COR, CPG, CROX, CMI, DLX, XRAY, DUK, LLY, ENTG, NVRI, EPAM, EXC, RACE, FOXA, GIL, DINO, HWM, HII, H, NSIT, ICE, IRM, ITRI, ITT, JLL, KBR, KTB, LAMR, DRS, MKL, MAR, MDU, MRNA, TAP, MUR, NVO, DNOW, NRG, OGE, OGN, PLTR, PZZA, PARA, PH, PBF, MD, PTON, PENN, PNW, PBI, PPL, PRMW, PWR, RCM, REGN, ROK, SPGI, SABR, SNDR, SEE, SHEL, SHOP, SO, STGW, TRGP, TFX, TPX, TRN, UPBD, VNT, WEN, WCC, WLK, and ZTS.  Then, after the close, ACHC, ACCO, AES, AGL, ASTL, LNT, COLD, AMN, AAPL, TEAM, BECN, SQ, BKNG, CVNA, CVCO, COIN, CODI, ED, BAP, DKNG, DBX, EVH, EXPI, EXPE, FND, FTNT, GDDY, ACFI, LYV, MTZ, MCHP, MODV, MNST, MSI, ZEUS, OTEX, OPEN, OEC, PBA, PXD, RGA, RKT, RYAN, SBAC, SEM, SWKS, SM, SWN, SBUX, SYK, and VTR report.

In economic news later this week, on Friday, Oct. Nonfarm Payrolls, Oct. Private Nonfarm Payrolls, Oct. Participation Rate, Oct. Unemployment Rate, Oct. Avg. Hourly Earnings, S&P Global Services PMI, S&P Global Composite PMI, Oct. ISM Non-Mfg. Employment, Oct. ISM Non-Mfg. PMI, and Oct. ISM Non-Mfg. Price Index are reported.

In terms of earnings reports later this week, on Friday, AMCXM AXL, BSAC, BLMN, BBU, BEPC, BEP, CAH, CBOE, CHD, CNK, CRBG, D, ENB, EOG, FLR, FWONK, FWONA, IT, GTES, IEP, KOP, LSXMK, LSXMA, MGA, OMI, PAA, PAGP, PRVA, QRTEA, QSR, SRE, TDS, TIXT, USM, WPC, and TSE report.

In miscellaneous news, BAC said Wednesday that its “Sell-Side Indicator” is at levels of extreme bearishness, which is bullish for stocks.  (In essence, they are saying their proprietary indicator says the market is extremely oversold.)  The indicator value implies a 15.5% return on the SPY in the next 12 months.

In miscellaneous news, BAC said Wednesday that its “Sell-Side Indicator” is at levels of extreme bearishness, which is bullish for stocks.  (In essence, they are saying their proprietary indicator says the market is extremely oversold.)  The indicator value implies a 15.5% return on the SPY in the next 12 months.  Elsewhere, JPM CEO Dimon criticized the state of TX (and by extension the other GOP-led states of similar ilk) which has passed laws designed to punish banks for any policies that stop them from working with fossil fuel industries.  Meanwhile, SBUX gave another hint that the economy remains strong.  The coffee company reported same-store sales grew 8% mostly attributed to higher average purchases but also a 3% increase in customers.

So far this morning, FOX, GOLF, WMS, APTV, BAX, BR, BRKR, COR, CI, COP, CRTO, DLX, DFH, LLY, NVRI, EPAM, FOXA, GCI, GEL, DINO, HWM, HII, ITT, KTB, LAMR, MAR, TAP, MUR, NVO, PLTR, PBF, PENN, PWR, REGN, ROK, SPGI, SEE, SHOP, SBUX, TFX, VIRT, and VNT all reported beats on both the revenue and the earnings lines.  Meanwhile, ADT, AEP, APG, AVNT, BALL, GOLD, BDC, BWA, CVE, XRAY, DUK, ENTG, H, ING, IRM, KBR, DNOW, NRG, OGE, PBI, PRMW, SHEL, SRCL, WEN, WLK, and ZTS all missed on revenue while beating on the earnings line.  On the other side, EXC, PTON, RCM, and TRN beat on revenue while missing on the earnings line.  However, CIGI, PZZA, MD, STGW, and TPX missed on both the top and bottom lines.

With that background, it looks like the Bulls are in full control in the premarket this morning. All three major index ETFs opened the early session higher and have put in large, white-bodied candles with little wick since then. All three of the major index ETFs are now above their T-line (8ema) and SPY is crossing back above its 200sma in the premarket. Keep in mind that all three still remain near correction territory, being down 6%-7% from their summer highs. So, the Bears remain in control of the longer-term trend while the Bulls have control this week. In terms of extension, none of the three major index ETFs are extended from their T-line while the T2122 indicator is back in its mid-range. So, there is room to run in either direction if the Bulls or Bears can find the momentum. This morning we seem to be getting energy from good earnings reports and Fed decision, statement, and comments yesterday. However, there is some news in the premarket and day that could give us volatility. So, be aware of that potential volatility.

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 absolutely 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 money is 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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