Tuesday saw another gap higher to start the day.  SPY gapped up 0.43%, DIA gapped up 0.37%, and QQQ gapped up 0.50%.  From three, all three major index ETFs gave us follow through, which was stronger for 90 minutes and then slowed, but continued higher until 2:45 p.m.  From there, all three took profits very modestly into the close, to end the day not far below the highs.  This action gave us gap-up, white bodied candles with modest upper wicks in all three.  SPY crossed back above its T-line (8ema) while QQQ retested its own from below but came up just short of crossing.  DIA remained up above its 8ema.  If you squint, you might call the QQQ a Morning Star like pattern.  This all happened on less-than-average volume in all three major index ETFs.

On the day, all 10 sectors were in the green with Technology (+1.96%) well out in front, followed by Healthcare and Consumer Cyclical (both +1.53%) leading markets higher. At the same time, SPY gained 1.19%, DIA gained 0.69%, and QQQ gained 1.56%. VXX fell another 3.92% to close at 13.71 and T2122 climbed again toward the upper end of its mid-range at 70.87. 10-year bond yields fell to 4.602% and Oil (WTI) was up 1.72% to close at $83.31 per barrel.  So, Tuesday was a bullish day with DIA breaking up out of its consolidation while SPY and DIA turned higher.  However, the downtrend has only been broken in the DIA with the two broader index ETFs still below that falling line. None of the three has put in a higher low yet.  So, for now this must be considered a relief rally at the moment.

The major economic news scheduled for Tuesday included Building Permits, which came in stronger than expected at 1.467 million (compared to a forecast of 1.458 million but still down from the March reading of 1.524 million).  Later, S&P Global Mfg. PMI was lower than predicted at 49.9 (versus a 52.0 forecast and a March value of 51.9). At the same time, S&P Global Services PMI also came in low at 50.9 (compared to a forecast of 52.0 and a March 51.7 value).  This gave us an S&P Global Composite PMI of 50.9 that was down from March’s 52.1 reading.  Later, March New Home Sales were a bit better than anticipated at 693k (versus a 668k forecast and a 637k February value).  Finally, after the close, API Weekly Crude Oil Stocks showed an unexpected drawdown of 3.230 million barrels (compared to a forecast calling for an increase of 1.800 million barrels and the prior week’s 4.090-million-barrel increase).

After the close, BKR, CNI, CB, CSGP, EWBC, ENVA, EQR, MTDR, RUSHA, LRN, TXN, VLTO, V, WFRD, and WFG all reported beats on both the revenue and earnings lines.  Meanwhile, AGR, EQT, IEX, MAT, RRC, STX, STLD, all missed on revenue while beating on earnings.  On the other side, HA beat on revenue while missing on earnings.  Unfortunately, TSLA missed big (the steepest revenue decline since 2012) on both the top and bottom lines.  However, the master marketer Musk did immediately promise things for next year that made the stock soar. It is worth noting that LRN raised its forward guidance.

In stock news, on Tuesday, GOOGL announced it will invest $640 million in a new data center in Netherlands.  At the same time, Reuters reported that FSRN may file for bankruptcy sometime in the next 30 days if it is unable to get enough relief from creditors or otherwise raise capital. Later, SPWR announced that its previous financials should not be relied upon and it will need to restate some 2022 and 2023 financial statements.  At the same time, LHX announced it will cut 5% of its workforce during 2024 (about 2,500 employees) as part of a cost-savings push.  Later, JDSPY agreed to buy HIBB for $1.08 billion ($87.50/share, almost a 21% premium on Monday’s close).  Meanwhile, protest organizers say that GOOGL increased the number of employees fired over last week’s protests (over a deal with the Israeli military), bringing the total to 50.  At the same time, TLSA said it will lay off 6,020 employees (3,322 in CA and the rest in TX).  Later, the Wall Street Journal, reported that IBM is close to closing a deal to buy HCP.  At the same time, MSFT announced it had launched a “lightweight AI model” that will be more cost-effective for customers with more limited requirements. 

Elsewhere, SPR announced that it had reached a deal with BA and will receive $425 million in advanced payments to give it the capital to address higher inventories due to the slowdown of BA production amidst quality probes and concerns.  Later, TSLA said it will introduce “new models” by early 2025, which will include lower-cost vehicles to better compete.  (TSLA stock soared in after-hours trading on the news.)  Also after the close, SQ announced it is expanding its Bitcoin mining operation by developing its own mining system.  (Previously, SQ had just designed Bitcoin mining chips.)

In stock legal and governmental news, on Tuesday, the US Supreme Court heard the arguments on SBUX appeal against lower court rulings that it violated employee rights and must reinstate union organizing employees the company fired in retaliation for their union organization.  (Questioning by the Justices seemed to indicate the Conservative super-majority sides with the company and wants to rule against the NRLB…or any other agency…can dictate to companies.)  Later, in Canada, the merger of US-based BG with Viterra is facing pushback from the country’s Competition Bureau on anti-trust concerns.  At the same time, Bloomberg reported that JPM, C, and BAC are under investigation by the CFTC related to forcing would-be whistleblowers from speaking out by threatening civil penalties under company NDA policies.  In unrelated news, the FTC approved a ban on common NDA agreements required by companies preventing employees from joining or launching firms the company deems to be competitors.  (The rule will take effect in August and business groups have said they will sue to stop the rule.)  Later, Reuters reported that the FAA has opened an investigation into BA for having retaliated against two employees who had insisted (in 2022) that the company re-evaluate prior engineering work on 777 and 787 jets.  The investigation came after their union filed a complaint with the NRLB.

Overnight, Asian markets were nearly green across the board with the lone exception of Australia (-0.01%) which was barely in the red.  The big bullish move was led by Taiwan (+2.72%), Japan (+2.42%), Hong Kong (+2.21%), and South Korea (+2.01%).  Meanwhile, in Europe, markets are much more mixed at midday with six of 15 bourses in the red.  Still, the CAC (+0.36%), DAX (+0.31%), and FTSE (+0.49%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a mixed start to the day.  DIA implies a -0.05% open, the SPY is implying a +0.16% open, and QQQ implies a +0.58% open at this hour.  At the same time, 10-year bond yields are up to 4.644% and Oil (WTI) is down three-quarters of a percent to $82.75 per barrel in early trading.

The major economic news scheduled for Wednesday include March Core Durable Goods Orders and March Durable Goods Orders (both at 8:30 a.m.), and EIA Crude Oil Inventories (10:30 a.m.).  The major earnings reports scheduled for before the open include APH, T, AVY, BIIB, BA, BSX, BG, CME, KOF, CSTM, ETR, FTV, GD, GPI, HAS, HLT, HUM, IPG, LII, LAD, MHO, MAS, COOP, EDU, NSC, ODFL, OTIS, OC, PRG, RCI, SABR, SYF, TEL, TDY, TMO, TNL, UMC, VRT, WAB, and WSO.  Then, after the close, AGI, ALGN, AR, BMRN, CACI, CP, CLS, CCS, CHX, CHE, CMG, CHDN, CYH, EHC, F, GGG, ICLR, IBM, KALU, KNX, LRCX, LSTR, MTH, META, MEOH, MOH, NBR, ORLY, OII, PLXS, RJF, ROL, DEIC, NOW, TER, TX, TYL, URI, UHS, VALE, WCN, WU, WHR, and WM report. 

In economic news later this week, Thursday, we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Q1 GDP, Q1 GDP Price Index, March Goods Trade Balance, March Retail Inventories, March Pending Home Sales, and the Fed Balance Sheet.  Finally, on Friday, March Core PCE Price Index, March PCE Price Index, March Personal Spending, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations are reported.

In terms of earnings reports later this week, on Thursday, we hear from AOS, ADT, ALFVY, ALLE, MO, AAL, HOUS, AIT, ARCH, AMBP, ABG, AZN, BFH, BMY, BC, CARR, CAT, CBZ, CX, CHKP, CMS, CMCSA, CFR, DAR, DOV, DOW, DTE, EQNR, FCNCA, FCFS, FCN, GTX, GEV, HOG, HP, HTZ, HES, HON, IP, KDP, KEX, LH, LAZ, LECO, HZO, MRK, NDAQ, NEM, NOC, ORI, OSK, PCG, PHIN, POOL, RS, RCL, SPGI, SNY, SAH, LUV, SRCL, STM, FTI, TECK, TXT, TSCO, TRU, TPH, UNP, VLO, VC, GWW, WST, WEX, WTW, XEL, AEM, AB, ALSN, GOOGL, ATR, AJG, TEAM, AVB, BYD, COF, CSL, CINF, COLM, DXCM, EMN, EW, EGO, ERIE, FE, GILD, GOOG, TV, HIG, HUBG, INTC, JNPR, KLAC, LHX, MSFT, MTX, MHK, NOV, DOC, PFG, RMD, RHI, ROKU, SKX, SKYW, SNAP, SSNC, TMUS, TDOC, TS, TEX, TFII, TBBB, TPC, WDC, WY, and WKC.  Finally, on Friday, ABBV, AON, ALV, AN, AVTR, BALL, CNC, CHTR, CVX, CL, XOM, FMX, GNTX, HCA, IMO, LYB, NWL, PSX, POR, ROP, SAIA, and TROW report.

So far this morning, AVY, BA, BXMT, BSX, CME, HAS, HELE, HLT, HUM, IPG, COOP, NKYDY, OC, RCI, TEL, TMO, TNL, VIRT, and WAB all reported beats on both the revenue and earnings lines.  Meanwhile, T, BIIB, BG, LII, MAS, ODFL, OTIS, and VRT missed on the revenue line while beating on earnings.  On the other side, CSTM, GD, GPI, EDU, SF, SYF, and WNC all beat on revenue while missing on earnings.  Sadly, ETR, EVR, LAD, TDY, and UMC all missed on both the top and bottom lines.  It is worth noting that BSX, EDU, and WAB raised their guidance.  However, HELE and TEL lowered their forward guidance.

In miscellaneous news, on Tuesday, Reuters reported that State Dept. officials have said the Biden Administration are discussing sanctions on Chinese banks, but are not looking at imposing them in the near-term.  However, the Wall Street Journal reported late Monday that sanctions were being drafted to stop Chinese banks from supporting Russia’s military production.  Elsewhere, JPM CEO Dimon said Tuesday the economy “is booming” and the strength is “unbelievable.”  He went on to say, “Even if we go into recession, the consumer’s still in good shape.”  However, he also warned about the potential (longer-term) impacts of the national debt and (shorter-term) harms of inflation and geopolitical conflicts.  Finally, in political news, the Senate passed the 4-bill package of foreign aid and TikTok forced sale or ban.  The bill passed 79-18 and was forwarded to the President for signature.

With that background, it looks as if the market remains undecided so far this morning. The bulls opened the premarket higher in the QQQ and SPY but also slightly lower in the DIA. Since then, all three major index ETFs are giving us small and very wicky candles, showing uncertainty. The bias is on the Bulls’ side this morning, but just barely. All three are back above their T-line (8ema) showing that the Bulls have retaken the short-term trend. Meanwhile, the mid-term remains bearish but is under pressure. The longer-term market remains Bullish but trend has been broken and is clearly under pressure. In terms of extension, none of the major index ETFs is too far extended from their T-line and the T2122 indicator remains in its mid-range. So, both sides have plenty of room to run if they can gain the momentum to do so. In terms of those 10 big dog tickers, seven of the 10 are in the green with only AAPL, GOOGL, and NFLX in the red this morning. The oddity is TSLA, which is up more than 12% on a huge miss…but as the huckster is wont to do, Musk promised new models early next year (things are always just around the corner with him) that are going to make TSLA cars more affordable and revolutionize the EV market. (The same was said last year about this year.) With that all said, be careful. We’ve see a lot of those widowmaker whipsaws lately.

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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