Tuesday was a sideways day as it seems the market is waiting on NVDA earnings Wednesday evening.  SPY gapped down 0.23%, DIA opened down 0.14%, and QQQ gapped down 0.35%.  However, after the opening bell, all three major index ETFs rallied steadily back across the gap and reached the highs shortly after 11 a.m.  From there, all three drifted lower and slowly drifted back up toward the highs in a sideways grind.  All three closed in the upper part of their candles.  This action gave us white-bodied candles with DIA printing a Hammer or Hanging Man type.  DIA also eked out a new all-time high close while QQQ retested (and passed the test) of its T-line (8ema).  This happened on well below-average volume in all three major index ETFs.

On the day, six of the 10 sectors were in the red with Energy (-0.89%) out front leading the others lower.  Meanwhile, Technology (+0.29%) and Financial Services (+0.19%) held up better than the rest of the market.  At the same time, SPY gained 0.13%, DIA gained 0.03%, and QQQ gained 0.30%.  VXX was down almost 2% to close at 44.99% and T2122 fell but remains in its overbought territory to close at 83.76.  10-year bond yields rose to close at 3.831% while Oil (WTI) dropped 2.23% to close at $75.68 per barrel on the lack of escalation in the Middle East.  So, Tuesday was a blah day that felt as if traders were waiting on the NVDA earnings (or maybe Friday’s PCE data) to figure out their next move.  On the other hand, it’s possible most of the traders (or at least the big money traders) took the week off ahead of the Labor Day holiday.

The major economic news scheduled for Tuesday was limited to Conference Board Consumer Confidence, which came his stronger than expected at 103.3 (compared to a forecast of 100.9 and a July reading of 101.9).  That reading was a six-month high. Then after the close, the API Weekly Crude Oil Stock report showed a slightly larger-than-expected drawdown of 3.400 million barrels (versus a forecasted 3.000-million-barrel drawdown and the prior week’s 0.347-million-barrel inventory build). 

In Fed news, Reuters reported Tuesday that both the Chicago and NY Presidents (Goolsbee and Williams respectively) voted in favor of a quarter-point rate cut in the Discount Window rate at the July FOMC meeting.  The other 10 voters had voted to hold rates steady.  While not exactly tied to the Fed Funds rate, the Discount Window rate (what banks pay to borrow from the Fed overnight) is a good indicator of where monetary policy is headed.  This provides additional detail to the Meeting Minutes summary that was recently released. 

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

In stock news, on Tuesday, the CEO of RYAAY (Ryanair) told Reuters that the new management of BA “continue to disappoint” and that deliveries are behind schedule.  He said, “Things are continuing to slip slightly, it’s been disappointing” as he noted his airline now expects to take delivery of just 20-25 of the 737 MAX planes (rather than the 29 they had ordered) during the summer of 2025 after receiving 5 of 10 jets they had expected in July 2024.  At the same time, LLY announced a 50% price cut on the single-dose vials of its blockbuster Zepbound obesity and diabetes drug.  The price cut was part of LLY’s announcement of the new single-dose size of the drug.  Later, XPEV announced it has priced its first budget EV “MONA” starting at $16,813 (without auto-driving technology).  It also launched a $21,866 model uses a self-driving technology very similar to TSLA’s “full self-driving.”  At the same time, BUSE announced it has agreed to acquire smaller rival CFB for $916.8 million in cash.  (The deal creates a combined regional bank with $20 billion in assets in the Kansas City to Denver to Phoenix to Dallas area.)

Elsewhere, META announced it is closing the augmented reality studio intended to be used by third-party creators so they could make content for the company’s whole “Metaverse” vision.  The release said the funds would be rerouted into other priorities, notably AI.  After the close, Reuters reported that the options on NVDA imply that its earnings reports Wednesday evening will result in a $300 billion swing (positive or negative) in the company’s market cap.  That would be about 9.8% of the company’s $3.11 trillion market cap as of Tuesday’s close.  It would also dwarf the entire market cap of 95% of the S&P 500 members. At the same time, the NFL announced it had voted to allow private equity firms to buy up to a 10% stake in NFL teams.  The first firms approved include ARES, BX, CG, TSLX, and other unlisted firms.  Later, WMT announced new third-party seller services very similar to those offered by AMZN (fulfillment by Amazon). WMT will offer sellers import, warehousing, and shipment services ahead of the holiday selling season.  At the same time, the AP reported that two workers were killed and a third seriously injured when a tire exploded at a DAL maintenance facility at the Atlanta airport.

In stock legal and governmental news, on Tuesday, the highest court in DE said it will hear an appeal from GSK, who is seeking to reverse a lower court ruling that allows more than 70,000 lawsuits alleging Zantac caused cancer to proceed. Meanwhile, the US DEA postponed its decision on reclassifying cannabis until December, after the election.  (Pot stocks such as CGC, TLRY, and GTBIF all fell sharply on the delay.) At the same time, the Dept. of Agriculture announced that a genetically-modified wheat developed by BIOX is safe to grow and breed in the US.  After the close, the CFTC (US commodities market regulator) announced it has ordered TTE to pay $48 million in fines for attempting to manipulate benchmark European gasoline futures.  Also after the close, the CFPB (Consumer Financial Protection Bureau) announced that at least three of the eight major retailers it investigated are now charging a fee to process any transaction where the consumer is given cash back from a credit or debit card charge.  The three are KR, DLTR, and DG.  (Others surveyed, but not charging the fee include ACI (which KR is trying to acquire), CVS, WBA, TGT, and WMT.

Overnight, Asian markets were mostly green with just four of the 12 exchanges in the red.  Malaysia (+1.39%) and Taiwan (+0.84%) led the gainers while Hong Kong (-1.02%) was by far the biggest loser.  In Europe, 12 of the 14 bourses are in the green at midday.  The CAC (+0.35%), DAX (+0.58%), and FTSE (+0.03%) lead the region higher in earlier-than-usual afternoon trade.  Meanwhile, in the US, as of 6 a.m., the Futures are just waking up and are pointing to a start just on the green side of flat.  The DIA implies a +0.01% open, the SPY is implying a +0.05% open, and the QQQ implies a +0.08% open at this early hour. At the same time, 10-Year bond yields are down a little to 3.82% and Oil (WTI) is off 1.03% to $74.73 per barrel in early trading.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q2 GDP, Preliminary Q2 GDP Price Index, July Goods Trade Balance, Preliminary July Retail Inventories, July Pending Home Sales, and the Fed Balance Sheet.  We also hear from Fed member Bostic.  Finally, on Friday, we get July Core PCE Price Index, July PCE Price Index, July Personal Spending, Aug Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, Michigan 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Thursday, we hear from AEO, BBY, BIRK, BF.B, BURL, CPB, CM, DG, GMS, OLLI, PSNY, TITN, AMRK, ADSK, DELL, GAP, LULU, MRVL, and ULTA.  Finally, on Friday, JKS and MNSO report.

The major economic news scheduled for Wednesday are limited to EIA Crude Oil Inventories (10:30 a.m.).  However, we also hear from Fed Governor Waller (1:15 a.m.) and Fed member Bostic (6 p.m.).  The major earnings reports scheduled for before the open is limited to ANF, BBWI, CHWY, DCI, FL, HMY, SJM, KSS, LI, PDCO, and RY. Then, after the close, AFRM, COO, CRWD, FIVE, GEF, GES, HPQ, NTAP, NTNX, NVDA, OKTA, PSTG, CRM, VEEV, and VSCO report.

In miscellaneous news, on Federal Housing Finance Administration said Tuesday that, in June, the average US single-family home price fell by 0.1% on a month-on-month basis.  On an annual basis, those prices rose 5.1% through June, which was the smallest year-on-year increase in nearly a year (since July 2023). This annual increase is a significant change from just a month earlier, when the annual increase through May was revised up to +5.9%.  Elsewhere, one of the last bright spots in the Chinese economy took a hit Tuesday when PDD (which own deep-discount online retailer Temu) missed analyst estimates. In addition, Bloomberg reported that the CEO of PDD mentioned eight different times during his earnings call that “revenue and profits must inevitably decline” as economic growth slows (referring to the Chinese economy).

Overnight, Fed Governor Waller was in India.  He pushed back on the feasibility of interlinking instant payment systems across the globe.  (That is a pet idea of India’s central bank Governor Das.)  Waller expressed concerns over whether domestic fast payment systems can practically be linked.  In addition, he indicated he was not sure it was even something worth attempting.  Waller said, “Variation around the world in domestic fast payment network adoption means that the value of globally interlinked systems is not yet clear.”  Waller went on to cite the potential costs, operational complications, increased costs to banks, and additional oversight needed to make such a global system feasible as hurdles to such as system.  Despite all his concerns, Waller said the US remains committed to researching new technologies and ways to enhance cross-border payment systems.

With that background, and earlier than normal for this report, all three major index ETFs are giving us white-body, indecisive Doji-like candles so far in the premarket. All three major index ETFs sit just on the green side of flat from Tuesday’s close. However, there is also nothing to indicate the wait on NVDA or PCE data or after the holiday has subsided. All three are above their T-line and the short-term trend is still bullish. At the same time, the mid-term trend is bullish and in the long-term, we are now clearly back in a Bull trend. Remember that DIA sits at all-time highs while SPY is less than half a percent from its own. QQQ remains the laggard, sitting 5.4% from its own all-time high. In terms of extension, none of the three are stretched above their T-line. However, even though it has pulled back some, the T2122 indicator is still in its overbought range. So, again the Bulls could use a little more rest or pullback. However, keep in mind that the market can remain overdone longer than you can stay solvent predicting turns. Remember the mantra “follow, don’t lead, but also don’t chase” in mind. (In a volatile market, that may mean sitting on your hands.) With regard to those 10 big dog tickers, all 10 are modestly in the green with the biggest dog NVDA (+0.30%) leading the way higher in percentage and dollar-volume of stock traded. The second-biggest dog, TSLA (+0.04%) lags that group so far this morning.

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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