On Wednesday, the broader index ETFs gapped up while DIA started essentially flat. SPY gapped up 0.30%, DIA opened 0.08% higher, and QQQ gapped up 0.42%. From there, all three major index ETFs followed-through to the upside until about 11 a.m.  At that point, all three sold off steadily until 2 p.m.  All three spent the last couple hours of the day bobbing around near the lows.  This action gave us black-bodied Spinning Top candles in SPY, DIA (largest body of the three), and QQQ. (It should be noted that DIA held the support level that has propped it up the prior three days.)  This happened on modestly below-average volume in all three major index ETFs.

On the day, six of the 10 of the sectors were in the green as Technology (+0.95%) was well out in front of the rest of the gainers.  On the other side, Consumer Defensive (-1.01%) lagged behind the other sectors.  At the same time, SPY gained 0.05%, DIA lost 0.40%, and QQQ gained 0.24%. Meanwhile, VXX fell 2.30% to close at 44.10 and T2122 fell back to the bottom of the mid-range, just outside of oversold territory at 20.98.  On the bond side, 10-Year Bond yields plummeted again to 4.247% and Oil (WTI) dropped a quarter of a percent to close at $68.77 per barrel. So, Wednesday saw the results more-or-less determined by the opening.  After that, the market was indecisive but leaned slightly bearish.  It is worth noting that NVDA (+3.67%), META (+2.46%), and to a lesser extent INTC (+2.31%) accounted for Technology’s strength while TSLA (-3.96%) and to a lesser extent AAPL (-2.70%) were the anchors on the market…and in particular the DIA.

The major economic news on Wednesday was limited to January Building Permits, which came in a little low at 1.473 million (compares to a 1.483 million forecast and December’s 1.482 million value).  Later, EIA Weekly Crude Oil Inventories showed an unexpected drawdown of 2.332 million barrels (versus a +2.500-million-barrel forecast and last week’s 4.633-million-barrel inventory build).  At the same time, January New Home Sales were down sharply to 657k(compared to a 679k forecast and December’s 734k reading).

In Fed news, on Wednesday, the NY Fed released a new research paper the predicts a fresh jolt of inflation, based solely on Trump administration tariffs on Chinese imports.  In particular, the report spotlighted the administration’s announcement of those tariffs applying to “de minimis” (small value) shipments from China, which had been exempt from the first Trump administration tariffs.  (The study argued that was key to fighting inflation during 2017-2021 since many more small-scale importers avoided tariffs back then.)  The report said, “U.S. consumers could face larger consequences than meet the eye from the recent 10-percentage-point tariff increase if the de minimis exception is ended for China if Chinese sellers do not slash their profit margins by reducing their export prices.”  (The report went on to say it did not expect those margins to be slashed.)  Elsewhere, Atlanta Fed President Bostic told an audience that inflation is high, but we saw a lot of progress on that front in 2024.  (He is in favor of holding rates steady until Trump policy change chaos impact on the path of inflation is clearer.)

After the close, A, ARDT, CHE, EXE, DORM, HEI, HHH, VAC, NTNX, NVDA, PSTG, SNOW, SUI, SNPS, TKO, UHS, URBN, and WES all reported beats on both revenue and earnings lines. Meanwhile, APA, FRWD, KNTK, OVV, SRPT, and TDOC beat on revenue while they missed on the earnings line.  On the other side, CAPL, EBAY, GRBK, INVH, CRM, SBGI, and TALO missed on revenue while beating on earnings. However, AMED, ARKO, FE, GEF, MYRG, and PARA missed on both the top and bottom lines. 

Overnight, Asian markets were mixed but leaned toward the red side.  Taiwan (-1.49%) and Thailand (-1.25%) were by far the biggest movers in either direction in that region.  In Europe, with the lone exception of the FTSE (+0.34%) we see red across the board at midday.  The CAC (-0.32%) and DAX (-0.60%) lead the region lower in early afternoon trade.  In the US, as of 7:40 a.m., Futures are pointing toward a green start to the morning. DIA implies a +0.32% open, the SPY is implying a+0.67% open, and QQQ implies a +0.85% open at this hour.  At the same time, 10-Year Bond Yields are back up from overnight lows to 4.296% and Oil (WTI) is up 1.11% to $69.39 per barrel in early trading.

The major economic news scheduled for Thursday includes Jan. Core Durable Goods Orders, Jan. Durable Goods Orders, Q4 Core PCE Prices, Q4 GDP, and Q4 GDP Price Index, Weekly Initial Jobless Claims, and Weekly Continuing Jobless Claims (all at 8:30 a.m.), January Pending Home Sales (10 a.m.) and Fed Balance Sheet (4:30 p.m.).  We also hear from Fed members Vice Chair Barr (10 a.m.), Bowman (11:45 a.m.), and Harker (3:15 p.m.).  The major earnings reports scheduled for before the open include ADT, GBTG, AMBP, ARGX, BBWI, BECN, CM, XRAY, DCI, SATS, ERJ, EDR, EFXT, EVRG, FMX, GEO, GTN, HGV, HRL, IBP, SJM, KOP, LSEA, LTH, TIGO, VYX, NXST, NCLH, PZZAA, PENN, PLKT, RY, FUN, STGW, TD, FTI, TGNA, TFX, VRN, VTRS, VST, and WBD.  Then after the close, ACHC, ALHC, AMRC, AHR, ACA, ASTH, ADSK, BE, CODI, DELL, SSP, EOG, ERIE, HPQ, ICFI, ICUI, IHRT, MTZ, MNST, MOS, NTAP, OPEN, PGRE, PBA, PRGO, RKT, SOLV, RUN, and TTEC report. 

In economic news later this week, on Friday, Jan. Core PCE Prince Index, Jan. PCE Price Index, Jan. Goods Trade Balance. Jan. Personal Spending, Jan. Retail Inventories, and Chicago PMI are reported.

In terms of earnings reports later this week, on Friday, AES, AMR, AMRX, CLMT, GTLS, GLP, and OMI report.

So far this morning, ADT, AMBP, BBWI, BWLP, CM, ERJ, GTN, LTH, NCLH, PZZA, RY, and TD all reported beats on both the revenue and earnings lines. Meanwhile, GOLF, SATS, EFXT, IBP, SJM, STWD, TGNA, and TFX missed on revenue while beating on earnings. On the other side, ARGX, ONC, EVRG, HGV, HRL, VYX, NXST, PLTK, and STGW beat on revenue while missing on earnings.  However, BECN, XRAY, DCI, GEO, TIGO, PENN, FUN, VTRS, and WBD missed on both the top and bottom lines.

With that background, the market looks to gap higher but is also indecisive in the premarket.  All three major index ETFs opened the premarket higher, but all three are also printing Spinning Top or Doji type candles since then.  The short-term trend remains bearish. At the same time, the mid-term trend remains a choppy sideways mess, seeming to resolve itself bearishly at this point.  At the same time, the long-term trend remains bullish.  In terms of extension, with the premarket gaps higher, none of the three is too far below their T-line.  Meanwhile, the T2122 indicator sits just outside of its oversold territory.  So, while both sides of the market have room to work today, the Bears have the momentum while the Bulls have a little more room to move, if they can gain some momentum. In terms of the Big Dogs, nine of the 10 are in the green in the premarket.  NVDA (+3.03%) is way out in front leading the gainers followed by TSLA (+2.16%).  On the other side, AAPL (-0.49%) is the only Big Dog in the red.  As far as liquidity goes, NVDA leads TSLA by a factor of two and the next closest ticker has traded one-seventh as much dollar-volume as TSLA (and one-14^th as much as NVDA).

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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