On Monday, markets gapped higher at the open (up 0.89% in the SPY, up 0.78% in the DIA and up 1.11% in the QQQ).  All three major indices then shopped sideways for just over an hour.  However, at that point, a slow selloff took hold for the rest of the day with price closing not far up off the bottom in all three.  This action left us with gap-up, black-bodied, indecisive Spinning Top candles in the SPY, DIA, and QQQ.  All three very nearly touched their T-line (8ema) at the high of the day.  In addition, the SPY closed up above its 50sma…but just barely above.  This all happened on less-than-average volume in all the major indices.

On the day, eight of the 10 sectors were in the green with Consumer Cyclical (+0.79%) and Basic Materials (+0.77%) leading the way higher and Utilities (-0.50%) lagging behind the other sectors.  At the same time, the SPY was up 0.34%, the DIA was up 0.29%, and QQQ was up 0.72%.  The VXX fell 3.59% to 11.81 and T2122 climbed up out of the oversold territory to 39.22.  10-year bond yields fell back a bit to 3.928% and Oil (WTI) fell three-quarters of a percent to $76.75 per barrel.  So, overall, Monday was a gap-up, indecisive day where the bears seemed to have more strength than the bulls after the first hour.

In economic news, January Durable Goods Orders came in below expectation at -4.5% (compared to a forecast of -4.0% and far below the December reading of +5.1%).  The bulls took this as good news, probably under the theory that bad economic data may give the Fed a reason not to raise rates as much in March.  However, later in the morning, January Pending Home Sales came in extremely hot at +8.1% (versus a forecast of +1.0% and a December value of +1.1%).  This news may have helped the bears during the mid-morning start to the selloff.  However, the staying power was not long-lived and seemed to dissipate quickly.  Meanwhile, Treasury Sec. Yellen made a surprise trip to Ukraine.  She called for a “fully funded and appropriately conditioned” (meaning funded by Russian asset seizures and conditioned to avoid/limit corruption) IMF bailout plan for Ukraine by the end of March.  However, she did acknowledge a significant set of legal hurdles to accessing those assets being held in the US and Europe.  Yellen also called for sanctions on the Russian uranium commodity, which had escaped sanctions thus far.

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In stock news, PLTR announced they are cutting 2% of their workforce.  (However, this only amounts to 75 jobs.)  Elsewhere, car maker STLA announced it has purchased a 14.2% stake in MUX (a copper mine located in Argentina, whose largest shareholder is RIO).  In other auto news, FSR told Reuters on Monday that it has increased orders for its “Ocean” sport utility EV and was on track to produce 42,400 vehicles in 2023.  (The Ocean EV starts at $37,500 compared to TSLA Model Y which starts at $54,990.)  At the same time, the Wall Street Journal reported PFE is in talks to buy cancer drugmaker SGEN.  However, there are many hurdles for the deal to clear including a potential major antitrust review.  Meanwhile, WMT, TGT, BABA, HD, LOW, COST, DLTR, IP, DOLE, and NKE are benefitting from plummeting ocean shipping prices (as the largest importers or exporters of containers).  At its peak, the cost was $20,000 per TEU and now the price is $1,150.  However, shipping firms (pink sheet listed) are now canceling voyages and storing containers in a frantic effort to prop up prices.

In stock legal and regulatory news, TD has agreed to pay $1.205 billion to a court-appointed receiver (who will pay back victims) related to an infamous Ponzi scheme 10 years ago.  The bank avoided admitting to doing any wrong, but paid since it repeatedly ignored red flags and funneled all of Allen Stanford’s ill-gotten gains to his offshore accounts in Antigua.  Elsewhere, Politico reported late Monday that the FTC is going to challenge the ICE (owner of NYSE) $13 billion deal to buy BKI.  This move comes after many months of investigation of the pricing power ICE would gain in the mortgage data market.  In Ohio, residents have asked a judge to block NSC from doing cleanup (destroying potential lawsuit evidence) related to the February 3 train derailment and chemical spill.  This came after NSC had only allowed 2 days for the inspection of dozens of rail cars.  However, NSC is also under a tight deadline due to a March 10 deadline from the EPA to clean up residues.  Elsewhere, a Delaware court ruled that it will hold a hearing on April 27 regarding the conversion of APE (AMC Preferred shares) into AMC common shares.  AMC soared on the news, which implies the stock may not be diluted 10-1 on March 14.  (This extends the time for a long APE / Short AMC trade by 1.5 months.)  Meanwhile, LYV has asked a US federal judge in CA to throw out a class action lawsuit related to the sale of Taylor Swift concert tickets.  LYV claims that the ticket buyers (plaintiffs) had all repeatedly agreed to the terms of service which call for confidential arbitration.  After the close, DDD agreed to pay $27 million to the US government to settle its violations of export restrictions to China.

After the close, UHS, RRC, WDAY, CAPL, ZM, HHC, MKSI, TTEC, HEI, HY, and WMK all reported beats on both the revenue and earnings lines.  Meanwhile, OKE, ARKO, PRGO, TWI, PRIM, and ICUI all missed on revenue while beating on earnings.  On the other side, DAR, ACHC, BMRN, and OVV all beat on revenue while also missing on the earnings line.  Unfortunately, OXY and ARGO missed on both the top and bottom lines.  It is worth noting that OKE and ALC both raised forward guidance.  However, MKSI, TTEC, and BMRN all lowered their own forward guidance.

Overnight, Asian markets were mixed and leaned to the downside.  Hong Kong (-0.79%), Taiwan (-0.71%), and India (-0.51%) paced the losses.  Meanwhile, Shenzhen (+0.70%), Shanghai (+0.66%), and Australia (+0.47%) led the gainers.  In Europe, we see the opposite picture at midday with most of the bourses in the green.  The FTSE (-0.43%), DAX (+0.17%), and CAC (+0.13%) lead the way with all but three of the other exchanges modestly green in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a green start to the morning.  The DIA implies a +0.32% open, the SPY is implying a +0.36% open, and the QQQ implies a +0.43% open at this hour.   

The major economic news events scheduled for Tuesday include January Trade Goods Balance and Jan. Retail Inventories (both at 8:30 am), Chicago PMI (9:45 am), Conf. Board Consumer Confidence (10 am) and API Crude Oil Stocks Report (4:30 pm).  Major earnings reports scheduled for the day include AHCO, ADT, AAP, AMWD, APG, AZO, BMO, BNS, BLDR, CHS, CCO, CLOV, CBRL, DQ, DK, XRAY, IGT, SJM, JLL, KTB, NFE, NXST, NCLH, OMI, PLTK, PRVA, SRE, FOUR, TGT, VRTV, and VTNR before the opening bell.  Then after the close, A, AMC, BGS, COMP, CPNG, EDR, EXPI, FSLR, FRG, GO, HPQ, ICFI, IHRT, JXN, MASI, MNST, RIVN, RKT, ROST, SKWD, SWX, URBN, VRSK, and VZIO report.

In economic news later this week, on Wednesday, Mfg. PMI, ISM Mfg. PMI, and EIA Crude Oil Inventory are reported.  On Thursday, we get Q4 Nonfarm Productivity, Q4 Unit Labor Cost, and Weekly Initial Jobless Claims.  Finally, on Friday, Services PMI, S&P Global Composite PMI, and ISM Non-Mfg. PMI are reported.

In terms of earnings later in the week, on Wednesday, ANF, BHG, CLVT, CLH, DLTR, DCI, DY, FWONK, HGV, HZNP, JACK, KSS, LSXMA, LOW, EYE, NIO, ODP, PBR, QRTEA, RY, SGRY, VST, WB, WEN, AAN, ADV, AGL, AEO, CANO, SQM, CODI, ERIE, GEF, JAZZ, LNW, OKTA, PFG, CRM, SNOW, SPLK, and VEEV report.  On Thursday, we hear from AER, AMRX, BUD, BBY, BIG, BILI, BURL, CPG, GMS, HRL, KR, M, PDCO, SFM, STGW, TD, AVGO, COO, COST, DELL, HPE, MRVL, JWN, VVX, and VSCO.  Finally, on Friday, HIBB reports.

So far this morning, TGT, BMO, AZO, AAP, APG, XRAY, IGT, KTB, PLTK, BLDR, CCO, FOUR, VTNR, and CLOV have all reported beats on both the revenue and earnings lines.  Meanwhile, SRE, SJM, and NFE missed on revenue while beating on earnings.  On the other side, BNS, OMI, ADT, NCLH, DORM, and FRO all beat on revenue while missing on earnings.  Unfortunately, AHCO, AMWD, CHS, and DQ missed on both the top and bottom lines.  It is worth noting that TGT, ADT, CHS, NCLH, and CLOV all lowered their forward guidance.  However, CCO and KTB both raised their own forward guidance.

With that background, it looks like the bulls want to gap markets back up toward their T-lines (8ema) again this morning. This time, it is looking to be a less dramatic inside candle gap up. So, over-extension is not a problem either in terms of the T-line or T2122 indicator. Still, this leaves all three major indices in a downtrend. However, if they can reach yesterday’s highs again (and hold them) they will be testing that downtrend line. I see support just below (bouncing up off it in premarket) in the QQQ and SPY. However, I also see resistance just above in the DIA and probably in the SPY too. So, continue to respect trend and support and resistance. And beware of the recent tendency toward intraday reversals which might point toward a shorter/faster trade, longer/slower trade, and/or the ability to withstand the pressure (sized small enough).

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 absolutely 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 money is 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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