NVDA Bounce Back, RIVN Screams Higher After Hours

Tuesday saw SPY and QQQ open higher and DIA opened down slightly.  SPY gapped up 0.23%, QQQ gapped up 0.446%, and DIA opened 0.12% lower.  From that point, the three major index ETFs diverged.  SPY spent the day grinding sideways.  At the same time, QQQ rallied modestly all day, closing near the highs.  However, DIA sold off with more vigor than the other two until 12:50 p.m. before grinding sideways near the lows the rest of the day.  This action gave us a white-bodied Spinning Top that retested and crossed above its T-line (8ema) again.  The QQQ gave us a gap-up, white-bodied candle the crossed back up above its T-line.  Meanwhile, DIA printed a gap-down, black-bodied candle that retested (from above) and closed still just above its T-line.

On the day, nine of the 10 sectors were in the red with Industrials (-0.84%) and Utilities (-0.83%) out front leading the red sectors lower. Meanwhile, Technology (+1.30%) was the biggest mover and only gainer.  At the same time, SPY gained 0.37%, DIA lost 0.75%, and QQQ gained 1.14%.  VXX fell another 1.79% to close at 11.00 and T2122 dropped back to the bottom of its mid-range, just outside oversold territory at 22.50. On the bond front, 10-year bond yields fell to 4.224% and Oil (WTI) fell 1.02% to close at $80.80 per barrel.  So, Tuesday saw the long-time leading index ETFs perhaps putting in a bottom to their pullback while the DIA might have started its own pullback after a six-day rally.  It is also worth noting that NVDA (+6.76%) broke its 3-day selloff to again lead tech names and the second most-traded name, TSLA, also gained 2.61%.  This put us back in the pattern the market has seen for months.

The major economic news scheduled for Tuesday was limited.  It included the June Conference Board Consumer Confidence Index, which came in above expectation at 100.4 (compared to a 100.0 forecast but down from May’s 101.3).  Then, after the close, the API Weekly Crude Oil Stocks, which showed an unexpected inventory build of 0.914 million barrels (versus a forecasted drawdown of 3.000 million barrels but lower than the prior week’s 2.264-million-barrel inventory build).

In terms of Fed speak, Fed Governor Bowman indicated she felt it is appropriate to hold rate policy steady (no hike or cut) for some time.  Very early Tuesday she did this by outlining scenarios or threats for both a hike or cut.  She said, “I have not written in further rate cuts in my statement of economic projections for the bulk of this year.”  She went on to say that she is open to a rate hike if inflation does not pull back further, but that is inflation is moving toward the 2% goal “it will eventually become appropriate to lower the federal funds rate.”  Later, Fed Governor Cook told the Economic Club of NY that the Fed is back on track for a rate cut…when the economy meets her expectation.  Specifically, Cook said, “With significant progress on inflation and the labor market cooling gradually, at some point it will be appropriate to reduce the level of policy restriction to maintain a healthy balance in the economy.”  (This seemed to be a bit more dovish than Bowman, although both Governors hedge their statements.)

After the close, FDX missed slightly on the revenue line while beating on the earnings line.  At the same time, WOR missed by quite a bit on both the top and bottom lines. However, FDX raised forward guidance and post-market trading reacted positively.

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In stock news, on Tuesday Reuters reported that BA and EADSY (Airbus) are near a deal to carve up their supplier SPR.  Reportedly, EADSY will take the SPR plant in Kinston, NC as well as the plant in Northern Ireland.  The remainder of the company would go to BA.  Later, XOM told Reuters it may need to suspend operations at its refinery in Northern France if strikers continue to block access to the plant.  (That plant produces 20% of the refining capacity for all of France.)  In fighting the union demands, XOM said that refinery has lost more than $535 million over the last 5.5 years.  At the same time, Bloomberg reported that takeover talks between DASH and its London-based rival Deliveroo have stalled.  (The two sides had far different valuations for the Deliveroo company.)  After the close, RIVN shares spiked more than 60% after VLKAF (Volkswagen) announced a $5 billion investment (by 2026) in RIVN as well as a joint venture with the EV carmaker. 

In stock legal and governmental news, on Tuesday, the NHTSA announced that F will recall 668k F-150 pickup trucks over a transmission issue.  At the same time, TSLA announced another recall of its Cybertrucks, this time requiring physical (not software) updates.  The cause of this recall is wiper and trim defects in 11,000 vehicles.  Later, VZ agreed to pay a $1 million fine over repeated 911 outages in six states during 2022.  At the same time, a US District Judge rejected a $30 billion antitrust settlement where V and MA agreed to limit the fees they charge merchants.  (The objecting majority of merchants who had opposed the settlement allege that the fees remain too high for the service being provided by V and MA.)  After the close, the NTSB charged NSC for its venting and burning of hazardous materials after the February 2023 train derailment in East Palestine OH.  (Last month NSC agreed to a $15 million penalty and $57.1 million in reimbursement for government cleanup costs to resolve a US lawsuit on the event.)  Also after the close, firefighters in the state of CT sued DD, MMM, and HON over protective “turnout gear” that was contaminated with forever chemicals (PFAS). (Last year the three companies reached an $11 billion settlement over the same chemicals being in firefighting foam and other products that then polluted drinking water supplies.)

Overnight, Asian markets were green across the board with the lone exception of Australia (-0.71%).  Meanwhile, Shenzhen (+1.55%), Japan (+1.26%), and New Zealand (+1.01%) led the region higher.  In Europe, markets are mixed but lean toward the red side at midday.  The CAC (-0.56%), DAX (+0.11%), and FTSE (+0.01%) lead the region lower while Russia (+1.39%) is an outlier to the upside in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed, flat start to the day.  The DIA implies a -0.21% open, the SPY is implying a -0.03% open, but the QQQ implies a +0.12% open at this hour.  At the same time, 10-Year Bond yields are up to 4.283% and Oil (WTI) is up two-thirds of a percent to $81.36 per barrel in early trading.

The major economic news scheduled for Wednesday includes Building Permits (8:30 a.m.), May New Home Sales (10 a.m.), EIA Crude Oil Inventories (10:30 a.m.), and the Fed Bank Stress Test Results (4:30 p.m.).  The major earnings reports scheduled for before the open include GIS, PAYX, and UNF.  Then after the close, BB, CNXC, FUL, JEF, LEVI, MU, MLKN, and WS report. 

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, May Core Durable Goods, May Durable Goods, Q1 Core PCE Prices, Q1 GDP, Q! GDP Price Index, May Goods Trade Balance, May Retail Inventories, and May Pending Home Sales.  Finally, on Friday, May Core PCE Price Index, May PCE Price Index, May Personal Spending, Jun Chicago PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.  We also hear from Fed Governor Bowman.

In terms of earnings reports later this week, on Thursday, AYI, MKC, WBA, and NKE report.  Finally, on Friday, there are no earnings reports scheduled.

In miscellaneous news, on Tuesday, Reuters reported that the state of DE is close to approving a new law that will drastically change corporate governance for companies incorporated in that state.  The law would allow corporations to enter into contracts giving specific shareholders outsized power over board decisions.  For example, in February a DE Court invalidated an agreement that had given one shareholder (the founder) veto power over all board decisions of MC.  Under the new law, that contract would stand.  Elsewhere, after the close, Reuters reported an internal memo obtained from CDK Global (software) indicates the company does not expect to recover from the outage caused by hacker attacks before the end of the month.  (That CDK software powers the internal operations of 15,000 car dealers and service centers in the US and Canada.  As a result of the outage, those businesses are operating on paper without visibility into parts inventories, online ordering of parts, insurance pricing, or buyer vetting.)  Finally, the Equipment Leasing and Finance Assn. (ELFA) announced that May business equipment financing borrowing increased 11% in May versus the same month in 2023.  However, this was down 7% from April 2024.  ELFA speculated that businesses are holding off on equipment spending until interest rates drop.

So far this morning, GIS reported a miss on the revenue line while beating on earnings.

With that background, it looks as if markets are indecisive this morning, perhaps waiting on data later in the week. All three major index ETFs opened the premarket slightly higher, but have printed small, black-bodied candles since then with varying degrees of pullback. SPY and QQQ both remain above their T-line (8ema) while DIA is retesting its own T-line from above in the early session. Before you get caught up in the tick-level movements, just bear in mind that all three major index ETFs are still quite near their all-time highs. So, the short-term trend is mixed. However, the mid-term and especially the longer-term trend in all three major index ETFs remains very bullish. In terms of extension, none of those three are extended above their T-line and the T2122 indicator is still in its mid-range (albeit the very bottom of that mid-range). Therefore, the market still has room to run in either direction. With regard to those 10 big dog tickers, six of the 10 are in the red this morning. However, that biggest dog, NVDA (+2.48%) continues its Tuesday bounce-back and will do much to pull other indexes (and the whole market) higher.

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.


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