Markets did another trap Wednesday, this time trapping the Bulls.  The SPY gapped up 1.22%, Dia gapped up 0.72%, and QQQ gapped up 1.62%.  At the point, all three major index ETFs chopped sideways in a volatile manner until just after 11 a.m.  Then, the rout was on as the selling started and drove all three back down across the open gap and on to new lows at 3 p.m. From they all made a modest bounce that didn’t quite make it back to the previous close before rolling over again.  This led to the sharpest selling of the day during the last 10 minutes and led to SPY and QQQ closing very near their lows of the day while DIA closed not too far up from its own lows.  SPY and QQQ both retested and failed their T-line (8ema) during the day and DIA came close, but did not quite reach a retest before selling off.  This action gave us large, black-body candles with upper wicks in all three major index ETFs. SPY and QQQ printed Bearish Engulfing candles while DIA missed that shape by just a bit.  This all happened on just a tad more than average volume in all three major index ETFs.

On the day, six of the 10 sectors were red with Basic Materials (-1.75%), Healthcare (-1.40%), and Consumer Cyclical (-1.39%) being the biggest movers.  Meanwhile, Communications Services (0.46%), Utilities (+0.43%), and Energy (+0.36%) were the only appreciable gaining sectors.  At the same time, SPY lost 0.67%, DIA fell 0.57%, and QQQ dropped 1.08%. VXX fell 1.77% to close at 69.22 while T2122 dropped back down into the top end of its oversold area at 16.67.  On the bond front, 10-year bond yields jumped up to 3.95% and Oil (WTI) spiked 3.10% to close at $75.47 per barrel.  So, Wednesday was a Bull Trap with a large gap higher, followed by chop, and then the floor fell out.  (The gap was likely the result of US markets following the rest of the world higher on Bank of Japan calming tones leading traders to think the “Carry Trade” (borrowing money at cheap interest in Japan and investing it in higher-yielding stock in the US) may not be dead.  It felt like the Bears waited for Europe to close and then pulled the rug out from under the Bulls.

The major economic news scheduled for Wednesday was limited to EIA Crude Oil Inventories, which fell 3.728 million barrels (compared to a forecasted drawdown of 1.600 million barrels but only slightly larger than the previous week’s 3.436-million-barrel drawdown).  Later, the June Consumer Credit report showed a reduction to $8.93 billion (versus a $9.80 billion forecast and well down from the May $13.95 billion reading).  In other words, spending on credit cards and other borrowing dropped 30% month-on-month.

After the close, APP, CACI, CF, CPAY, CW, ENS, FWRD, HUBS, ICUI, JXN, LNW, MMS, MKSI, OXBC, PRI, HOOD, RGLD, SM, STN, TALO, UVV, VSAT, WES, WTS, ZG, and Z all reported beats on both the revenue and earnings lines.  Meanwhile, DOX, ATO, BHF, CENT, CENTA, CPA, EQIX, HI, MATV, MCK, MFC, OXY, SBGI, UGI, and MODG missed on revenue while beating on earnings.  On the other side, AE, CHRD, ET, MTW, and MRO beat on revenue while missing on earnings.  However, ALTG, NVST, MNST, MODV, and WBD missed on both the top and bottom lines.

In stock news, on Wednesday, Reuters reported that major US natural gas producers are preparing to further cut production in order to prop up natgas prices.  The article cites sources at EQT and APA indicate each will cut 90 billion cubic feet per day in production in the second half. In addition, CHK, AR, and EGO are deferring completion of natural gas projects.  Later, EQR announced that it had agreed to acquire 11 major apartment properties (nearly 3,600 apartments total) from BX for $964 million.  At the same time, during its earnings call, DIS announced it may have to pay $5 billion more to acquire CMCSA’s minority stake in Hulu.  The unexpected expense would stem from a CMCSA request that the deal’s appraiser value Hulu at $40 billion. 

Meanwhile, BA said it has ramped up “seeker” (a key component of Patriot anti-missile systems) production after a surge in demand.  BA says it expects 2024 annual production of seekers to beat its previous record production by 20%.  At the same time, Bloomberg reported that BHP is considering the sale of its Brazilian gold and copper mining assets that the company acquired during its buyout of much smaller peer Oz Minerals.  (BHP said the purchase of Oz was made to gain access to minerals used in batteries, as opposed to gold and copper.)  Later, after the close, NASA announced that BA’s stranded Starliner crew may return on a SpaceX Dragon capsule in February 2025 since it is still deemed too unsafe to return the Starliner to Earth.  (Meaning the planned 8-day Starliner flight would end up lasting 9-months.) Finally, overnight CNBC reported sources telling it that AAPL is planning to charge iPhone users roughly $20 per month for its AI offering, possibly as part of its “Apple One” subscription. This lucrative service will be rolled out across some AAPL devices later this year.

In stock legal and governmental news, on Wednesday, BLK and NDAQ jointly asked for an SEC rule change that would allow the listing and trading of options on Ethereum spot price ETFs.  (Comments on the rule request are open for 21 days.)  At the same time, KR won the dismissal of a lawsuit that alleged the grocery chain’s “Farm Fresh” label on eggs misled consumers not on the “fresh” claim but rather that industrial egg production plants are not “farms.”  Later, the NHTSA announced it has opened a new investigation into reports of a “steering rod failure” safety issue among more than 77k NSANY (Nissan) 2021 Rogue crossover vehicles.  At the same time, the Wall Street Journal reported that the Consumer Financial Protection Bureau is investigating JPM, BAC, and WFC in relation to the banks handling of peer-to-peer Zelle network funds transfers. (The banks told Reuters they are considering whether to sue the CFPB over the agency’s inquiries.) 

Elsewhere, during its hearings into BA safety issues, the NTSB announced it will conduct a survey of 737 MAX factory workers related to safety (quality) culture after determining the mistakes that led to January’s mid-air blowout of a fuselage panel should have been caught years earlier (and the company could not identify what factory workers had even worked on the blown-out panel and removed the missing bolts).  At the same time, passengers filed a proposed class-action suit against DAL for refusing refunds after its recent massive computer outage and thousands of flight cancellations (and thousands more delayed).  Later, INTC was sued by shareholders alleging the company fraudulently concealed the problems that led to its poor Q2 results and plans to cut more than 15% of its workforce.  (INTC CEO and CFO are also defendants in the suit.)

Overnight, Asian markets were mostly in the red with just three of 12 exchanges above break-even. Taiwan (-2.00%), Japan (-0.74%), and India (-0.74%) led the region lower.  In Europe, we see red across the board at midday on stronger moves than Asia.  The CAC (-1.13%), DAX (-0.77%), and FTSE (-1.12%) lead the region lower 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 -0.14% open, the SPY is implying a +0.06% open, and the QQQ implies a +0.16% open at this hour.  At the same time, 10-Year bond yields have backed down to 3.925% and Oil (WTI) is unchanged at $75.23 per barrel in early morning trading.

The major economic news scheduled for Thursday is limited to Weekly Initial Jobless Claims and Weekly Continuing Jobless Claims (both at 8:30 a.m.), and Fed Balance Sheet (4:30 p.m.).  The major earnings reports scheduled for before the open include WMS, COLD, AVAH, AVT, AZUL, FUN, CQP, LNG, COMM, DDOG, ELAN, LLY, EDR, EPAM, FWONK, ULCC, GTN, HBI, HGV, IHRT, KELYA, KOP, LAMR, LSXMK, LSXMA, MLM, MUR, NXST, NRG, PZZA, PH, PENN, ACDC, RPRX, QSR, SBH, SEE, SN, SPB, TKO, UAA, UA, USFD, VTNR, VTRS, VST, and WMG.  Then, after the close, ATSG, AKAM, AMN, BTG, CIB, CPRI, CENX, BAP, DBX, DXC, SSP, EVH, EXPE, G, GILD, IAG, NWSA, NGL, PAAS, PARAA, PARA, PBA, PBI, RXT, REZI, SOLV, TTWO, TTD, and TTEC report. 

In economic news later this week, on Friday, there are no major economic news scheduled.

In terms of earnings reports later this week, on Friday, AQN, AMCX, AXL, AMRX, CLMT, ROAD, ERJ, EVRG, and NFE report.

So far this morning, ALIZY, AVAH, BN, CEIX, DDOG, ELAN, LLY, EPAM, LAMR, NRG, PENN, QSR, SBH, SEE, SN, FOUR, UA, and UAA all reported beats on both the revenue and earnings lines.  Meanwhile, WMS, COLD, CQP, GTN, HBI, MUR, PZZA, and VTRS missed on revenue while beating on earnings.  On the other side, COMM, PRMW, SPB, TKO, USFD, and VTNR beat on revenue while missing on earnings.  However, ATS, MLM, and NXST missed on both the top and bottom lines.

In miscellaneous news, on Wednesday, global container shipping company Maersk (AMKAF) announced that it expects global container shipping (which is a measure of global GDP) to slow in the second half. The company cited blow-ups in the Middle East (following Israel’s targeting killings in Lebanon and Iran, along with Hezbollah, Iran, and Hamas retaliation expected).  For the full year, Maersk expects global container demand to increase 4% – 6%, which is down significantly from the 7% growth seen in the first half of 2024.  Elsewhere, GS reported hedge funds had the best first half returns that they have seen since 2021.  GS said their survey of 314 hedge funds fount that the average fund made a 5.7% return during the first half, which was not far from 2023’s full-year 7.1%.

With that background, it looks as if the market has settled a bit this morning. All three major index ETFs gapped down a little to start the premarket. However, from there they have put in white-bodied candles to recover most or all of the gap. DIA is the most indecisive of the three and the QQQ gap down took it near to retesting its 200sma which may have aided its bounce in the early session. The short-term trend remains clearly bearish as is the mid-term trend. However, while the bullish trend line is broken, the longer-term charts are not yet bearish. (For example, look at a Monthly chart. There is no way to call SPY, DIA, or QQQ bearish based on those monthly charts.) In terms of extension, all three major index ETFs are a bit stretched below their T-line (8ema). At the same time, the T2122 indicator is now back down in its oversold range. So, the market is in need of some rest or a relief bounce. However, the extension is not overwhelming and the bounce does not need to be today. With regard to those 10 big dog tickers, nine of the 10 are in the green this morning with INTC (+0.95%) leading the tech in terms of gain. However, NVDA (+0.28%) is again by far the largest dollar-volume traded (as usual).

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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