Markets sold off most of the day with the Bulls rallying to recover some ground during the last two hours.  SPY opened 0.06% lower, DIA opened 0.08% lower, and QQQ opened 0.10% lower as markets started the day little changed.  However, from there, QQQ immediately started to sell off.  Meanwhile, SPY and DIA chopped sideways until 11:10 a.m., when they got the message and followed QQQ in a selloff.  All three major index ETFs reached their lows of the day at 2 p.m., at which point a market wide rally began that lasted into the close.  This action gave us a black-bodied Spinning Top in the DIA which retested and passed the test of its T-line (8ema).  At the same time, SPY and QQQ were much larger-body, black, indecisive candles with SPY testing and staying above its T-line while QQQ fell down through its 8ema (and just barely held onto its 17ema). 

On the day, all 10 sectors were in the red with Technology (-1.24%) and Consumer Cyclical (-1.23%) leading the way lower ahead of NVDA earnings.  On the other side, Financial Services (-0.04%) held up better than the other sectors.  At the same time, SPY lost 0.60%, DIA lost 0.41%, and QQQ lost 1.18%.  The VXX spiked up 5.62% to close at a still low 47.52% and T2122 fell out of its overbought territory, but remains in the top end of its mid-range at 75.68.  10-year bond yields rose slightly to close at 3.839% while Oil (WTI) dropped 1.03% to close at $74.75 per barrel.  So, Wednesday technically saw a selloff followed by a bounce.  However, it really was a waiting game as the market anticipated the NVDA earnings.  This all happened on less-than-average volume in all three, with QQQ coming the closest to average and SPY coming in the furthest below its average.

The major economic news scheduled for Wednesday were limited to EIA Crude Oil Inventories, which came in with a much lower than expected drawdown of -0.846 million barrels (compared to a forecast of a 2.700-million-barrel drawdown and the prior week’s 4.649-million-barrel drawdown).

In the big news of Wednesday, NVDA beat on both lines.  The company reported a 154% surge in data center sales and “robust AI demand” that resulted in $30.04 billion in sales for the quarter (versus a $28.68 billion consensus forecast).  On the bottom line, NVDA delivered $0.68of earnings, again beating the $0.64 estimate.  NVDA also announced guidance of Q3 revenue of $32.5 billion (plus or minus 2%), which exceeded the $31.9 billion average estimate prior to the announcement.  In addition, NVDA said the board had approved an additional $50 billion share buyback program.  However, NVDA stock fell 5% in after-hours trading as it seems traders are concerned more about potential problems with NVDA’s next big AI money-printer (Blackwell) than they were elated by the big beats and big new buyback program from the green giant.

In Fed news, after the close Wednesday, Atlanta Fed President Bostic it was “time to move on.”  Essentially, Bostic was saying with inflation down farther (than before) and the unemployment rate up more than he anticipated, it was time to get to rate cuts.  Still, he then hedged his bets saying, “I don’t want us to be in a situation where we cut, and then we have to raise rates again: that would be a very bad outcome.”  He went on to say, “If I’m going to err on one side, it’s going to be waiting longer just to make sure that we don’t have that up and down.”  (So, it’s time to get to rate cuts…but I’m not sure…and it may not be time.  Very insightful.)

After the close, AFRM, COO, CRWD, FIVE, NTAP, NTNX, NVDA, OKTA, PSTG, CRM, VEEV, and VSCO all reported beats on both the revenue and earnings lines.  At the same time, GEF, GES, and HPQ all beat on revenue while missing on earnings.

In stock news, on Wednesday, SMCI delayed the reporting of its quarterly earnings on the heels of Tuesday evening’s report from short-seller Hindenburg, which alleged the company has “glaring accounting red flags.” (SMCI stock was hammered on the news.)  At the same time, SEC filing showed that BRKB sold an additional $982 million of BAC over August 23, 26 and 27.  Despite the sale, BRKB remains the largest shareholder of BAC, still holding almost 904 million shares.  In unrelated news, BRKB also became a member of the “Trillion-dollar market cap” club, becoming the first non-tech company to reach that milestone.  At the same time, DKS disclosed that it had found unauthorized third-party access to its IT systems (found a hack) which had exposed “certain confidential data.” Later, GOOGL announced it has updated its AI (Gemini) for image creation to fix inaccuracies such as the wrong number of fingers, etc.  The revised version will be made available later this week.  At the same time, UAL flight attendants voted to authorize a strike by a 99.99% margin.  Later, after the close, Bloomberg reported that BIG is considering filing for bankruptcy due to a persistent decline in sales.  (BIG shares fell 20% after hours on the report.)

In stock legal and governmental news, on Wednesday, AVAV announced it had been awarded a $990 million contract from the US Army to build SwitchBlade drones.  At the same time, DIS announced it had won approval for the $8.5 billion merger of its Indian media assets with Reliance Industries (large Indian media company).  To secure the approval, the two firms had to promise not to raise advertising rates on the cricket matches the merged company will broadcast.  Later, the NHTSA announced it closed two separate investigations into now bankrupt Fisker’s Ocean SUVs after the startup issued recalls to fix problems with door malfunctions and a loss of braking. At the same time, KVUE (maker of Tylenol) won a ruling by a US District judge, which preempts a consumer’s lawsuit under NY State law.  (The case alleged packages labeled “Extra Strength” and “Rapid Release” had been found to not relieve pain better or faster than the “Regular Strength” version, and in fact took longer to act.) 

Elsewhere, META lost a lawsuit in Brazil, which alleged the social media company accepted ads that used the name of a Brazilian department store (without the store’s permission) to fraudulently deceive consumers.  META faces a $3.62 million fine as a result of the loss but has the right to appeal.  After the close, the Fed announced new capital requirements for US banks (following the recent stress tests).  The Fed agreed to reduce GS’s required capital cushion from 6.4%, which the test suggested was needed, to 6.2% after GS lobbying.  Later in the evening, YELP sued GOOGL alleging the search giant used its search monopoly (as found by federal ruling) to dominate local search and advertising. 

In miscellaneous news, on Wednesday, WFC issued a commodity investor advisory noting that the rapid increase in supply of liquified natural gas poses a substantial risk to natural gas prices through the end of the decade.  The report said WFC expects the annual growth of LNG supply to grow 10% per year in 2026 and 2027, while exceeding 8% annually in 2028 and 2029.

Overnight, Asian markets were mostly in the red with just four of the 12 regional exchanges above break-even.  Malaysia (-1.29%), South Korea (-1.02%), and New Zealand (-0.94%) paced the losses while Shenzhen (+0.94%) was by far the biggest gainer.  In Europe, we see the opposite picture taking shape with just three of 14 bourses in the red.  The CAC (+0.72%), DAX (+0.65%), and FTSE (+0.29%) lead the region higher in early afternoon trade.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a green start to the morning.  The DIA implies a +0.53% open, the SPY is implying a +0.18% open, and the QQQ implies a +0.19% open at this hour.  At the same time, 10-Year bond yields are down slightly to 3.833% and Oil (WTI) is up a third of a percent to $74.77 per barrel in early trading.

So far this morning, BBY, BURL, and CM have all reported beats on both the revenue and earnings lines.  Meanwhile, TITN missed on revenue while beating on earnings.  However, BIRK, DG, and GMS missed on both the top and bottom lines.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q2 GDP, Preliminary Q2 GDP Price Index, July Goods Trade Balance, Preliminary July Retail Inventories (all at 8:30 a.m.), July Pending Home Sales (10 a.m.), and the Fed Balance Sheet (4:30 p.m.). We also hear from Fed member Bostic (3:30 p.m.).  The major earnings reports scheduled for before the open include AEO, BBY, BIRK, BF.B, BURL, CPB, CM, DG, GMS, OLLI, PSNY, and TITN.  Then, after the close, AMRK, ADSK, DELL, GAP, LULU, MRVL, and ULTA report.

In economic news later this week, 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 JKS and MNSO report.

With that background, SPY and QQQ gapped down to start the premarket in the NVDA results and fears. QQQ in particular has been volatile in the early session. Meanwhile, DIA made a modest gap higher to start the premarket. Since that start, all three major index ETFs have printed large white-body candles in the early session. DIA is back trading a new all-time highs this morning. SPY retested and is now back above its T-line, At the same time QQQ remains below and DIA remains above their respective 8emas. All three sit on the green side of flat from Wednesday’s close. So, despite Wednesday’s pullback, 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. In terms of extension, SPY and QQQ are fine relative to their T-line, but DIA is getting a little stretched above this morning. However, even though it has pulled back some and is out of the overbought territory, the T2122 indicator remains at the top end of its mid-range. So, again the Bears might have a little more slack to play with than the Bulls this morning. Just 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, eight of the 10 are in the green with the biggest dog NVDA (-4.24%) acting as an anchor, apparently on “sell the news” trader thinking.

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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