Markets started the day mostly flat.  SPY opened dead flat, DIA gapped up 0.15%, and QQQ opened 0.05% lower.  From there, all three major index ETFs sold off sharply for the first hour before meandering along a volatile bottom until 2:30 p.m.  At that point, we saw a sharp rally back to flat (or even positive in DIA) by day end.  This action gave us Dragonfly Doji candles in the SPY and QQQ while DIA printed a white-bodied, long-handled Hammer candle.  SPY closed just pennies above its T-line (8ema) while DIA retested and failed its retest from below of its own T-line. (It was not a huge fail, as it came up about 40 cents short of that average.)  This all happened on below-average volume in the SPY and QQQ while DIA delivered average volume.

On the day, eight of the 10 sectors were green as Healthcare (+0.81%) and Energy (+0.77%) were out front leading the rest of the market higher. On the other side, it was Consumer Defensive (-0.19%) and Financial Services (-0.14%) were the laggards that were in the red.  At the same time, SPY gained 0.03%, DIA gained 0.33%, and QQQ lost 0.06%.  VXX climbed 3.56% to close at 48.03 and T2122 climbed again to the center of the mid-range to close at 53.79.  Meanwhile, 10-Year bond yields rose again to 4.416% while Oil (WTI) fell 0.63% to close at $68.95 per barrel. So, Wednesday was a day marked by fears about NVDA earnings and, secondarily, the end of the world in a nuclear flash.  However, either NVDA news leaked or traders same to their senses late and drove the major averages back to flat.

The major economic news scheduled for Wednesday was limited to EIA Weekly Crude Oil Inventories, which came in with a just slightly larger than expected inventory build at +0.545 million barrels (compared to a forecast of +0.400 million barrels and down from the prior week’s +2.089-million-barrel reading).

In Fed news, on Wednesday, Fed Governor Bowman (the most hawkish FOMC member) said she backs a cautious approach to further rate cuts.  Bowman said, “I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognizing that we have not yet achieved our inflation goal and closely watching the evolution of the labor market.”  She continued, saying, “My estimate of the neutral policy rate is much higher than it was before the pandemic, and therefore we may be closer to a neutral policy stance than we currently think.” Unlike Chairman Powell (and most other Fed members), Bowman said she still does not see the risks to the dual mandates as balanced.  She said, “I see greater risks to the price stability side of our mandate, especially while the labor market remains near full employment, but it is also possible that we could see a deterioration in labor market conditions.” Later, Boston Fed President Collins reiterated that she sees more FOMC rate cuts ahead. Collins told an audience Wednesday that, “I expect additional adjustments will likely be appropriate over time, to move the policy rate gradually from its current restrictive stance back into a more neutral range.” She went on to say that she thought the economy was “in a good place” with inflation continuing to fall.  Collins said, “I see little scope for wages to disrupt the ongoing disinflation progress.”  At the same time, Fed Governor Cook indicated she was much more in Collins’ camp (as compared to Bowman’s camp).  Cook told an audience, “The totality of the data suggests that a disinflationary trajectory is still in place and that the labor market is gradually cooling.” She went on, “Going forward, I still see the direction of the appropriate policy rate path to be downward.”

After the close, BBAR, KLC, NVDA, PANW, and SNOW all reported beats on both the revenue and earnings lines.  (NVDA had a 10% revenue beat, which amounted to nearly doubling sales from one year prior, and a 9.5% earnings beat.  They also said they expect to beat on revenue in Q4 as well. HOWEVER, the Q4 sales forecast will not beat estimates by as much as Q3 beat them. So, NVDA stock is trading lower.)  Meanwhile, MMS beat on revenue while missing on earnings.  On the other side, CPA missed on revenue while beating on earnings.  However, SQM missed on both the top and bottom lines.

Overnight, Asian markets were nearly all red with the lone exception of Shanghai (+0.07%).  Thailand (-1.51%) was the biggest loser, followed by Japan (-0.85%), and India (-0.72%).  In Europe, the picture leans toward the green side with eight of the 14 bourses above break-even at midday.  The CAC (-0.13%), DAX (+0.37%), and FTSE (+0.39%) lead the region modestly higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day ahead of data.  The DIA implies a +0.33% open, the SPY is implying a +0.24% start, and the QQQ implies a +0.17% open at this hour.  At the same time, 10-Year bond yields are down to 4.398% and Oil (WTI) has popped +2.07% to $70.17 per barrel in early trading.

The major economic news scheduled for Thursday include Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Philly Fed Mfg. Index, and Philly Fed Mfg. Employment (all at 8:30 a.m.), October Existing Home Sales and US Leading Economic Indicator Index (both at 10 a.m.), and the Fed Balance Sheet (4:30 p.m.). Then, after the close (4:30 p.m.) we also hear from Fed Vice-Chair Barr.  The major earnings reports scheduled for before the open include ATKR, BIDU, BJ, ROAD, DE, IQ, BEKE, PDD, VSTS, and WMG.  Then, after the close, CPRT, GAP, INTU, NTAP, ROST, and UGI report. 

In economic news later this week, on Friday, Preliminary November S&P Global Mfg. PMI, Preliminary November S&P Global Services PMI, Preliminary November S&P Global Composite PMI, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan Consumer 1-Year Inflation Expectations, Michigan Consumer 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Friday, there are no major reports scheduled.

So far this morning, DE reported beats on both the revenue and earnings lines.  At the same time, BJ, IQ, and BEKE missed on revenue while beating on earnings.  On the other side, ATKR and BIDU beat on revenue while missing on earnings.  However, PDD missed on both the top; and bottom lines.

With that background, it looks like the Bulls have control at this point of the morning.  All three major index ETFs gapped down modestly to start the premarket and followed through at least a little (especially in the QQQ).  However, then the Bulls stepped in and drove price back up, creating white-bodied candles that are back above their T-lines (8ema).  Although, to be fair, QQQ is the laggard and barely above its T-line. So, the short-term trend is now bullish-to-indeterminant. Still, the mid-term and longer-term trends remain bullish.  In terms of extension, none of the major index ETFs are stretched from their T-lines and the T2122 indicator is now back in center of its mid-range.  So, there is plenty of room to run for either the Bulls or Bears, if either can get some momentum going. In terms of the 10 Big Dogs, eight of the 10 are in the green at this point of the early session morning.  META (+0.49%) is leading the way for the gainers while NVDA (-1.02%) is being punished for last night’s strong earnings report.  Again, in a reversion to the way things were prior to the election (and probably due to earnings), NVDA is the leader in dollar-volume traded this morning, having traded almost 4 times as much stock as TSLA (+0.03%), which itself has traded almost 10 times as much as the next premarket volume leader.

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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