On Tuesday, markets opened modestly higher and followed-through with a rally until about 1 p.m.  SPY gapped up 0.18%, DIA opened just 0.03% higher, and QQQ gapped up 0.34%.  From there, all three major index ETFs rallied, more quickly at first and then slower after the first hour, but reaching about 1 p.m. before slumping sideways.  SPY and DIA rallied the last few minutes to go out at or near highs while QQQ never quite regained the highs.  This action gave us large, white-bodied candles in all three of the major index ETFs.  SPY printed a Best Friend type candle (Spinning top followed by a gap-up Marubozu candle) to cross back above its T-line (8ema).  Meanwhile, DIA gave us a large, white-bodied candle with small wicks at each end that crossed above its T-line and above its 50sma.  For its part, QQQ printed another Best Friend type signal with a small wick at the top, but it also crossed above its T-line.  This happened on average volume in the DIA, and below-average volume in the SPY and QQQ.

On the day, all 10 sectors were green with Utilities (+1.90%) and Industrials (+1.76%) out front leading the market higher.  On the other side, Communication Services (+0.62%) lagged behind the other sectors.  At the same time, SPY gained 1.20%, DIA gained 1.02%, and QQQ gained 1.28%.  VXX dropped 5.36% to close at 51.55 and T2122 jumped higher to the top end of its mid-range, closing at 72.41.  Meanwhile, 10-Year bond yields fell slightly to 4.289% while Oil (WTI) rose 0.88% to close at $72.10 per barrel.  So, Tuesday was a bullish day across the market, maybe on relief election advertising is done or anticipation one way or the other in the election outcome. No matter the reason, it was the Bulls’ day as Bears never found any traction.  For what it is worth, DIA broke through its downtrend line. 

The major economic news scheduled for Tuesday includes Sept. Exports, which came in down a bit to $267.90 billion (compared to an August reading of $271.80 billion). At the same time, Sept. Imports were up to $352.30 billion (versus an August value of $342.20 billion).  Together, this gave us a Sept. Trade Balance with a larger than predicted deficit of -$84.40 billion (compared to a forecast of $83.80 billion and an August reading of -$70.80 billion).  Later, the Oct. S&P Global Services PMI was down to 55.0 (versus a forecast of 55.3 and a September reading of 55.2).  At the same time, Oct. S&P Global Composite PMI was up, but not as much as anticipated at 54.1 (compared to forecast of 55.3 and a September value of 55.2).  Later, Oct. ISM Non-Mfg. PMI were stronger than expected at 56.0 (versus a 53.8 forecast and a Sept. reading of 54.9).  This included an Oct. ISM Non-Mfg. Employment Index that was up more than predicted at 53.0 (compared to forecast of 48.0 and a September value of 48.1).  At the same time, the Oct. ISM Non-Mfg. Price Index were down but also a tick higher than predicted at 58.1 (versus a forecast of 58.0 and down from September’s 54.9 number).  Then, after the close, the API Weekly Crude Oil Stocks were reported with a significantly larger inventory build than anticipated at +3.132 million barrels (compared to forecast of +1.800 million barrels and a previous week value of -0.573 million barrels).

After the close, AIZ, CRC, CPNG, DVN, GMED, GO, JKHY, KGC, LUMN, MASI, MCHP, MRC, NOG, VIV, and TX all reported beats on both the revenue and earnings lines.  Meanwhile, AFG, FYBR, IFF, and NE beat on revenue while missing on earnings.  On the other side, PAAS missed on revenue while beating on earnings. However, EXAS and PBA missed on both the top and bottom lines.

In stock news, on Tuesday, Reuters reported a survey that found that the major mass retailer like WMT, TGT have imported less holiday product this year than recent years based on the shorter and expected to be weaker holiday sales.  However, even more discounted retailers like DG and DLTR imported the same amount of Christmas items than in past years.  The article also noted that the US National Retail Foundation has reported that November-December sales grew 2.5%-3.5% in 2023.  This was the slowest year-on-year holiday sales growth since 2018.  Later, EMR proposed a buyout of the rest of AZPN at an offer of $240 per share (or $6.53 billion). This was a modest premium on Monday’s closing price for AZPN of $237.59. 

Elsewhere, TSLA CEO Elon Musk responded to previous Reuters reports related to the company’s long-promised and never delivered $25k electric vehicle.  Musk responded Tuesday that it was “pointless” to build a cheap electric vehicle that was not a robotaxi.  Later, CVX, BP, SHEL, and OXY announced they were temporarily halting operations in the Gulf of Mexico as Tropical Storm Rafael strengthens and is expected to become a Category 1 hurricane by Wednesday morning.  At the same time, Reuters reported that ADM has found additional accounting errors after the company was forced to restate six years of financials in March. (ADM will amend its 2023 annual report as well as Q1 and Q2 reports of 2024 following the finding of the new error.)

In stock legal and governmental news, on Tuesday, AMZN announced that it remains committed to a nuclear power plant adjacent to its PA data center campus…despite the plant project (from TLN) being rejected by the Federal Energy Regulatory Comm. (The deal was opposed by some utility industry groups.)  It is unclear how TLN and/or AMZN intend to overcome the regulatory denial.  At the same time, Reuters reported that a Moscow Court fined AAPL about $37k on Tuesday for refusing to delete two podcasts from the Apple Music platform. (This is the opposite of the ruling against GOOGL, which was for deleting YouTube channels of Moscow propaganda.) There was no word on whether the AAPL fine doubles daily after the payment deadline the way GOOGL’s fine has doubled to now be more money than exists in the world. Later, a federal judge dismissed a proposed class-action lawsuit that had been filed against GOOGL.  (The case alleged GOOGL was profiting by refusing to refund millions of dollars stolen from victims in Google Play Store gift card scams.)

Elsewhere, the UK Anti-trust Regulator approved the $19 billion merger of VOD with British firm Hutchinson’s Three UK, stating that the country’s need for investment outweighed the competition concerns. (The agency had blocked the merger nine years prior on the basis of its anti-competitive impacts.)   Later, Reuters reported that NFLX is under investigation for tax fraud in France and the Netherlands with searches of the offices of the company in the two countries took place Tuesday. At the same time, South Korea fined META $15.67 million over its collection of user personal data and giving it to advertisers without user consent.  Later, Reuters reported that AAPL will be the first company y to face fines under the EU’s Digital Markets Law after regulators found that AAPL did violate the law back in June. The report said the fine will likely be announced this month.  (The maximum fine would be 10% of AAPL’s global sales.)  After the close, the FTC sued DAVE, alleging the fintech company misleads consumers by claiming to offer cash advances to gain users of its app, but which few users receive.

In miscellaneous news, on Tuesday, NVDA passed AAPL to again become the world’s most valuable company based on market cap.  NVDA closed at a market value of $3.43 trillion, slightly ahead of AAPL’s $3.38 trillion.  (Poor MSFT is a distant third at $3.06 trillion.)  Elsewhere, Bloomberg reported Tuesday that bond investors have priced in scenarios that would benefit from a Harris election victory while under-investing on positions likely to benefit from a Trump victory.  (They gave no specifics on the exact trades or amounts or how they came to the conclusion one trade would benefit from a Harris win and the other would benefit from a Trump win. However, I wanted to include the info for anyone who is a savvier bond trader.)

In geopolitical news, on Tuesday, Israeli PM Netanyahu fired his rival and now-former Defense Minister Gallant. Netanyahu promoted his ally Foreign Minister Katz to take the Defense Minister spot and unassigned cabinet member Sa’ar to replace Katz as the new Foreign Minister.  Protests erupted across Israel over the firing.  In unrelated news, Israeli police arrested a Netanyahu aid over accusations of leaking information (that gave Netanyahu cover for refusing cease fire proposals) after an Israeli court loosened a government gag order on the info that underlies the case.  Meanwhile, on the ground, an Israeli strike in the north of Gaza killed 30 (mostly women in children according to the AP) on Tuesday.  Elsewhere, in Russian invasion news, in the Kursk region, Ukrainian forces clashed with North Korean troops for the first time Tuesday. (Some North Korean troops were killed a week ago, but that turned out to be due to “friendly fire” from Russian artillery.)  The skirmishes were small-group in nature and there was no word on casualties.

Overnight, Asian markets were mixed with half of the 12 regional exchanges in the red and the other half in the green.  Japan (+2.61%) was by far the biggest gainer while Hong Kong (-2.23%) was by far the biggest loser.  Meanwhile, in Europe, the bourses lean toward the upside at midday with just four of the 14 exchanges below break-even.  The CAC (+1.20%), DAX (+0.83%), and FTSE (+1.27%) lead the region higher in early afternoon trade.  In the US, as of 6:40 a.m., Futures are pointing toward a significant gap higher.  The DIA implies a +2.93% open, the SPY is implying a +2.22% open, and the QQQ implies a +1.63% open at this hour.  At the same time, 10-Year bond yields are spiking higher to 4.477% and Oil (WTI) has fallen 1.40% to $70.98 per barrel in early trading.

The major economic news scheduled for Wednesday includes EIA Weekly Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled for before the open include AEP, BCO, COR, CTRI, GIB, CRL, CLVT, CNDT, CVS, DK, ENOV, HMC, HWM, IRM, JCI, JLL, LINE, NVO, ODP, OC, PFGC, PRGO, PNW, RPRX, SNDR, SRE, FUN, SWX, STWD, SUN, TEVA, TM, TRMB, and VSH.  Then, after the close, AMRK, AGI, ALB, AMC, AEE, APA, APP, ARDT, ARM, ASH, ATO, BTG, BALY, BBSI, BKD, CHRD, COHR, CCU, CTVA, COTY, CAPL, DLX, ET, EMS, ENLC, EQX, FG, FNF, FBIN, FNV, GFL, GILD, HG, HST, HUBS, JXN, JAZZ, KD, LILA, LYFT, MFC, MRO, VAC, MTCH, MATV, MCK, MELI, MEOH, MKSI, MODV, NTR, PAM, PR, PRI, PTC, QGEN, QCOM, RNR, RGLD, SVC, SBGI, SSRM, STE, STRL, SUI, TTWO, TKO, TS, TRIP, TTEC, TPC, UHAL, VSAT, VSTO, WES, WMB, ZG, and Z report.

So far this morning, AEP, COR, GIB, CRL, CRARY, CVS, DK, DDL, ENOV, KMT, ADRNY, OC, TEVA, TRMB, and VWDRY all reported beats on both the revenue and earnings lines.  Meanwhile, CLVT, HWM, IRM, JCI, LINE, and PRGO missed on revenue while beating on earnings.  On the other side, HMC and PFGC beat on revenue while missing on earnings. However, NVO, ODP, SUN, TM, and VSH all missed on both the top and bottom lines.

In economic news later this week, on Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q3 Nonfarm Productivity, Preliminary Q3 Unit Labor Costs, Sept. Retail Inventories, Fed Interest Rate Decision, FOMC Statement, Fed Chair Press Conference, Sept. Consumer Credit, and Fed Balance Sheet. Finally, Friday brings Michigan November Consumer Sentiment, Michigan November Consumer Expectations, Michigan November 1-Year Inflation Expectations, and Michigan November 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Thursday, we hear from GOLF, ADV, APD, AQN, COLD, HOUS, MT, AVAH, GOLD, BCE, BDX, CCJ, CG, COMM, CRH, DDOG, ZRAY, DBD, DUK, EPC, ELAN, EDR, EPAM, EVRG, GEO, HAL, HBI, HSY, HGV, IHRT, IBP, KVUE, LCII, MRNA, TAP, MUR, VYX, NXST, DNOW, OSCR, PZZA, PENN, PCG, PLTK, PRMW, RL, ROK, RXO, SCSC, SEE, SPTN, STGW, SHOO, TPR, TRP, TGNA, TEF, TPX, TDG, UAA, PRKS, USFD, UWMC, VTRS, VST, WBD, KLG, AFRM, AGL, AL, ABNB, AKAM, AMN, ANET, ARKO, AXON, SQ, BHF, CPRI, CIVI, ED, CPAY, BAP, DKNG, DBX, DXC, SSP, EOG, EVH, EXPI, EXPE, FTNT, G, PODD, MTD, MNST, MSI, NWSA, OPEN, OVV, PACS, PINS, QDEL, REZI, RNG, RIVN, SOLV, RUN, TOST, and TTD.  Finally, on Friday, ADNT, WMS, ATSG, AMCX, AXL, AMRX, BAX, BLMN, BEPC, BEP, CLMT, CNH, ERJ, FLO, FLR, FTRE, GLP, GTN, IEP, KOP, LAMR, NRG, PAA, PAGP, RBA, SONY, TIXT, and PARA report.

In overnight news, America chose four more years of the felon, ex-President as it elected him again over current-VP Harris. The country also gave his party control of both the Senate and House, ensuring that faction now has complete control over all three branches of the US government as of January. Markets seem to love the idea, or are at least expressing relief that the election process is done, and are looking like they want to revisit the recent all-time highs.  The Dollar is spiking, which at least in part helps explain the 10-Year bond yield spike, which is contributing to falls in commodity prices early. 

With that background, it looks like the market is spiking higher and strongly bullish again early on Wednesday. All three major index ETFs gapped higher to start the premarket. Since that point, all three have also printed large white-bodied candles. (DIA is back at all-time highs.) With all three gapping far above their T-line (8ema), the short-term trend is bullish. However, the mid-term trend is also reversed and is now again bullish and the longer-term trend remains strongly Bullish in all three. With regard to extension, all three major index ETFs will open extended far above their T-line. However, at least until the market opens the T2122 indicator remains in the top end of its mid-range. So, the Bulls will run this morning. However, markets will also be stretched. Just remember that markets can remain too far extended longer than you can stay solvent betting on the reversal. With regard to those 10 big dog tickers, eight of the 10 are in the green again this morning. TSLA (+12.64%) is getting paid back for Musk getting in bed with Trump. TSLA is also far-and-away the largest dollar-volume trader, having traded nearly six times the traditional leader NVDA (+1.12%). The laggard of the group is META (-1.00%), perhaps on the premise that it will be punished by a pro-Musk government since it competes with Musk’s own social media company.

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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