On Monday, we saw a pop at the open (a relief bounce from Friday’s selloff).  SPY gapped up 0.34%, DIA gapped up 0.38%, and QQQ gapped up 0.30%.  However, from there, all three major index ETFs sold off, recrossing the opening gap for 40 minutes. At that point, all three bounced in a divergent way with QQQ not getting back to the Friday close, SPY making back into the opening gap, and DIA crossing its opening gap. Those bounces only lasted until 1 p.m., when the Bears led the market to roll over that really picked up steam the last 10 minutes.  This took us out very near the lows.  This action gave us black body candles in all three major index ETFs.  SPY and QQQ both printed black body candles with small upper wicks and virtually no lower wick.  At the same time, DIA gave us a black-bodied Spinning Top candle.

On the day, seven of the 10 of the sectors were in the red as Technology (-1.49%) was out front leading the way lower. On the other side, Communication Services (+0.63%) held up much better than the other sectors.  At the same time, SPY lost 0.46%, DIA managed to gain 0.09%, and QQQ lost 1.18%. Meanwhile, VXX gained 0.83% to close at 44.93 and T2122 climbed slightly but remained in the top end of oversold territory, closing at 17.78.  On the bond side, 10-Year Bond yields fell slightly to 4.400% and Oil (WTI) climbed just a bit, closing at $70.83 per barrel. So, Monday was a bit of a Bull trap with a modest gap higher, met by selling and then, after a modest bounce, a roll over ending the day in a sharp move lower.  This all happened on below-average volume in the SPY, average volume in the QQQ, and above-average volume in DIA.

There was no major economic news on Monday.  However, the 2-Year Bond auction came in at a lower yield than expected at 4.169% (compared to the previous auction’s 4.211% yield result). It is also worth noting that at the end of the day, the Trump administration said its plans for tariffs on Canada and Mexico remain “on track” and “will go forward.” The phony pretexts (fentanyl) of the tariffs were always irrelevant as the White House now says these are a negotiation tactic for renegotiation of the trade deal he struck in his last administration.

After the close, BWXT, CTRA, FANG, GFL, KBR, OKE, PRIM, SBAC, MODG, TCOM, UCTT, VVX, and ZM all reported beats on both the revenue and earnings lines. However, CLF, CIVI, O, and PSA missed on both the top and bottom lines.

Overnight, Asian markets were red across the board.  Thailand (-2.38%), Japan (-1.39%), and Hong Kong (-1.32%) led the region lower.  In Europe, the opposite picture is taking shape with 12 of 14 bourses in the green at midday. The CAC (+0.01%), DAX (+0.13%), and FTSE (+0.34%) are leading the region higher in early afternoon trade. Meanwhile, in the US, as of 7:20 a.m., Futures are pointing toward a start just on the red side of flat.  The DIA implies a -0.01% open, the SPY is implying a -0.06% open, and QQQ implies a -0.22% open at this hour.  At the same time, 10-Year Bond Yields dropped sharply to 4.323% and Oil (WTI) is off three-tenths of a percent to $70.50 per barrel in early trading.

The major economic news scheduled for Tuesday is limited to Conference Board Consumer Confidence (10 a.m.) and the API Weekly Crude Oil Stocks Report (4:30 p.m.).  The major earnings reports scheduled for before the open include AHCO, AS, AMT, BMO, BNS, CRI, CYD, DK, DRVN, ELAN, HSIC, HD, IGT, ITRI, KDP, KTB, LGIH, MIDD, PNW, PEG, SEE, SRE, STN, SGHC, BLD, and YSG.  Then after the close, AGL, AMC, AXON, BGS, CZR, CWH, CHRD, CPNG, EXR, FIHL, FSLR, GO, HY, CART, INTU, JAZZ, KEYS, LNW, MASI, MATX, OUT, PARR, PR, RRC, STRL, and WDAY report. 

In economic news later this week, on Wednesday, EIA Weekly Crude Oil Inventories and January New Home Sales are reported.  We also hear from Fed Member Bostic twice (midnight and noon). On Thursday we get Jan. Core Durable Goods Orders, Jan. Durable Goods Orders, Q4 Core PCE Prices, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, January Pending Home Sales, and Fed member Harker speaks.  Finally, 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 Wednesday, AAP, AER, ABEV, BUD, APG, AVA, BLMN, BCO, CTRI, COMM, DOLE, DY, EME, ENOV IEP, ICL, LINE, LOW, NRG, ODP, OPCH, SWX, SHOO, TJX, UTHR, UWMC, VRSK, A, APA, ARDT, ARKO, BBSI, CHE, CRGY, EXE, CRH, CAPL, DORM, EBAY, WTRG, FE, FRWD, GRBK, DEF, HG, HEI, HHH, INVH, KNTK, VAC, MYRG, NTNX, NVDA, OVV, PARA, PSTG, CRM, SRPT, SBGI, SNOW, SUI, SNPS, TALO, TDOC, TKO, UHS, URBN, and WES report.  On Thursday, we hear from 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, WBD, 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.  Finally, on Friday, AES, AMR, AMRX, CLMT, GTLS, GLP, and OMI report.

So far this morning, AS, AMT, BMO, BNS, CRI, DRVN, HD, KDP, KTB, SEE, and BLD all reported beats on both the revenue and earnings lines. Meanwhile, HSIC missed on revenue while beating on earnings.  On the other side, ELAN beat on revenue while missing on earnings.  However, IGT and LGIH missed on both the top and bottom lines.

With that background, the market again looks undecided at this point of the premarket.  All three major index ETFs gapped modestly lower to open the early session, but all three have printed white-body candles since that point.  It looks as if DIA is trying to find support off a level stretching back to the October highs.  However, there is no obvious support level apparent for SPY or QQQ.  So, the short-term trend is bearish. At the same time, the mid-term trend remains a choppy sideways mess, with only the DIA resolving it bearishly at this point.  At the same time, the long-term trend remains bullish.  In terms of extension, QQQ is now stretched below its T-line (8ema) and SPY and DIA are not far behind.  Meanwhile, the T2122 indicator is in the top part of its oversold range.  So, while both sides of the market have room to work today, the Bulls have more room to move, if they can some momentum. In terms of the Big Dogs, eight of the 10 are in the red in the premarket.  NVDA (-0.78%) and INTC (-0.70%) are out in front pacing the losses while TSLA (+0.28%) and AAPL (+0.08%) are the only big dogs holding on to green territory.  As far as liquidity goes, NVDA leads TSLA by 10% with the next closes tickers trading six times less dollar-volume than the electric car maker.

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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