Markets gapped lower to start the week on Monday.  SPY gapped down 0.82%, DIA opened 0.14% lower, and QQQ gapped down 1.18%.  From that point, all three major index ETFs put in a choppy all-day rally. The only difference between the three was the size of the gap down they were trying to overcome.  This action gave us gap down, large-body, white candles in all three.  QQQ did not quite make it back up inside the body of Friday’s candle, but did close inside Friday’s lower wick.  SYP made back up inside Friday’s candle body.  However, DIA won the prize, printing a Bullish Piercing Arrow signal by closing more than half way up Friday’s candle body after gapping down below Friday’s low.  This all happened on average volume in SPY and QQQ and below-average volume in DIA.

On the day Monday, eight of the 10 sectors were in the green with Energy (+1.25%) and Basic Materials (+1.18%) out front leading the market higher.  On the other side, Technology -0.86%) and Utilities (-0.78%) were the laggards. At the same time, SPY gained 0.16%, DIA gained 0.87%, and QQQ lost 0.32%.  At the same time, VXX fell 0.78% to close at 48.52 while T2122 popped up out of its oversold territory to the lower half of its mid-range at 31.38.  On the bond side, 10-Year Bond yields rose again to 4.788% and Oil (WTI) jumped another 2.76% to $78.68 per barrel.  So, after the gap down, Monday was really the Bulls’ day.  It was choppy, but the trend was bullish from the open, and it was just a quested of whether the gap could be overcome. 

The major economic news Monday was limited to December NY Fed 1-Year Consumer Inflation Expectations, which came in flat at +3.0% (compared to November’s +3.0% reading). 

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

Overnight, Asian markets were mixed, but leaned toward the green side.  Shenzhen (+3.77%), Shanghai (+2.54%), and Hong Kong (+1.83%) led the gains perhaps on the release of Chinese Trade data or follow-up on the US’s all-day rally following its gap down from Monday.  Regardless, Japan (-1.83%) was the big loser on the day in that region.  In Europe, the market is decidedly bullish at midday with 13 of 14 exchanges showing green.  The CAC (+0.84%), DAX (+0.65%), and laggard FTSE (-0.11%) lead the region in early afternoon trade.  Meanwhile, in the US, as of 7:30 a.m., Futures are pointing toward a modest green start to the day.  The DIA implies a +0.13%) open, the SPY is implying a +0.14% open, and the QQQ implies a +0.15% open at this hour.  At the same time, 10-Year Bond yields sit at 4.79% and Oil (WTI) is down four-tenths of a percent to $78.50 per barrel in early trading.

The major economic news scheduled for Tuesday includes Dec. Core PPI and Dec. PPI (both at 8:30 a.m.), Dec. Federal Budget Balance (2 p.m.), and API Weekly Crude Oil Stocks (4:30 p.m.).  Fed member Williams also speaks at 3:05 p.m.  There are no major earnings reports scheduled for either before the open or after the close on Tuesday. 

In economic news later this week, on Wednesday, Dec. Core CPI, Dec. CPI, NY Empire State Mfg. Index, EIA Weekly Crude Oil Inventories, and Fed Beige Book are reported.  We also hear from Fed members Kashkari and Williams.  On Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Dec. Export Price Index, Dec. Import Price Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment, Dec. Core Retail Sales, Dec. Retail Sales, Nov. Business Inventories, Nov. Retail Inventories, and the Fed Balance Sheet.  Fed member Williams also speaks again.  Finally, on Friday, Dec. Building Permits, Dec. Housing Starts, Dec. Industrial Production, and Nov. TIC Net Long-Term Transactions are reported.

In terms of earnings reports later this week, Wednesday, BK, BLK, C, JPM, WFC, CNXC, FUL, and SNV report.  Then Thursday, we hear from BAC, FHN, GS, INFY, MTB, MS, PNC, TSM, USB, UNH, and JBHT.  Finally, on Friday, CFG, FAST, RF, SLB, STT, TFC, WBS, and WIT report.

With that background, the market seems undecided early.  All three major index ETFs gapped up to start the premarket, but have shown indecision.  DIA has printed a black body, tiny hammer that gapped up to its T-line and has, so far, backed off, but is also up off its premarket lows.  SPY has given us a tiny black-body, Spinning Top after its gap higher in the early session. Meanwhile, QQQ gapped higher, but has printed a black candle since then which is just now up off its lows.  All three remain below their T-line (8ema).  So, the short-term trend is bearish.  The same is true in the mid-term.  However, in the long-term, only DIA has broken its uptrend line.  So, on balance, long-term the market remains Bullish.  In terms of extension, all three of the major index ETFs are now back closer to their T-line given the premarket gap.  For its part, T2122 is in the lower half of its mid-range. So, both sides have room to work but the Bulls have slightly more slack to work with today.  In terms of the 10 Big Dogs, nine of the 10 are in the green with TSLA +1.41%) leading the way while META (-0.55%) is the laggard. Related to volume, TSLA is back as the early leader, having traded about $600 million so far, which is 1.5 times as much as NVDA (+1.10%) and NVDA has traded 6.5 times as much as the next most liquid stock.

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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