Markets gave us a mixed start to the day Friday.  SPY opened 0.09% higher, DIA gapped up 0.23%, and QQQ opened 0.08% lower.  We also saw a divergence from that point, at least early.  SPY immediately began to rally and chased new highs right up to 2:45 p.m.  From there, SPY saw profit-taking all the way into the close. At the same time, after the open, DIA sold for 10 minutes off from the open before joining SPY in a rally until 11:30 a.m.  It then chopped sideways until 2 p.m. before rallying again to the highs at 2:45p.m.  At that point, DIA also took profits into the close. For its part, QQQ sold off a quarter percent after the open, chopping around until 11 a.m. when it followed the larger-cap index ETFs in a rally that lasted until 1:45 p.m.  Then QQQ ground sideways for an hour only to selloff back to Thursday’s close and grind sideways just above that the rest of the day.

This action gave us, white-bodied candles in all three major index ETFs.  The DIA gave us a gap-up Spinning Top candle that registered as a new all-time high and a new all-time high close. SPY printed a gap-up, white-bodied candle with significant upper wick. It came within 36 cents of the $600 level while delivering a new all-time high and all-time high close.  Meanwhile, QQQ gave us a gap-down, white-bodied Spinning Top that also printed a new all-time high and all-time high close. For the week, QQQ gained 5.48%, SPY gained 4.76%, and DIA gained 4.69%. 

On the day, seven of the 10 sectors were green with Utilities (+1.21%) way out in front leading the gainers higher.  On the other side, Basic Materials (-1.10%) lagging way, way behind all other sectors (by more than 1%). At the same time, SPY gained 0.43%, DIA gained 0.62%, and QQQ gained 0.12%.  VXX dropped another 0.71% to close at 44.77 and T2122 fell back to just outside of its overbought territory, closing at 77.27.  Meanwhile, 10-Year bond yields fell to a still high 4.302% while Oil (WTI) dropped 2.63% to close at $70.46 per barrel.  So, Friday saw more of the Bulls being in control as the election day and post-election rally continued. 

The major economic news scheduled for Friday included Preliminary Michigan Nov. Consumer Sentiment, which came in up to 73.0 (compared to a forecast of 71.0 and a October reading of 70.5). At the same time, Preliminary Michigan November Consumer Expectations were also up to 78.5 (versus a 74.1 October value).  Meanwhile, the Preliminary Michigan November 1-Year Inflation Expectations fell a tick to 2.6% (compared to a forecast and October reading of 2.7%).  Finally, Preliminary Michigan November 5-Year Inflation Expectations were up a tick to 3.1% (versus a forecast and October value of 3.0%).

After the close, PBR reported a beat on both the revenue and earnings lines.

In stock news, on Friday, PNC announced plans to expand by adding 100 new bank branches with an investment of $500 million. Later, BA announced it plans to repay the employees it furloughed during the recent strike for the wages they lost.  However, BA still plans to proceed with the 10% cut in its global workforce (17,000 jobs worldwide). At the same time, Reuters reported that STLA and its Chinese partner Leapmotor have scrapped plans to build a second electric vehicle model at the STLA plant in Poland. Instead, the joint venture is considering making that second model a STLA plant in Germany.  Later, Bloomberg reported that BA is considering a sale of its Jeppesen navigation business for $6 billion.  Reportedly, potential suitors include private equity firms, which have expressed interest in that unit.  At the same time, Reuters reported exclusively that BA and SPR are very close to reaching a funding agreement that would give SPR a lifeline of cash.  (The deal will reportedly be announced as soon as this weekend. The exact details on amounts were not disclosed.) 

Elsewhere, TSLA closed above the $1 trillion market cap level for the first time.  This comes after a massive 29% gain for the week on speculation the Trump administration will pay back CEO Musk for hi support.  After the close, BNKG announced it expects to cut jobs as part of a broader cost-cutting program.  (No specifics were announced.)  At the same time, ENPH said it would be cutting about 500 employees and contractors (about 17% of the workforce). Later, BROS CEO Barone told CNBC that it plans to open 160 new coffee shops in 2025. (BROS currently has 950 locations.) Meanwhile, CRM announced it needs to hire more than 1,000 workers to help it sell its generative AI agent product. 

In stock legal and governmental news, on Friday, China approved a $1.4 trillion plan to bolster its economy by selling bonds and allowing local governments to refinance their massive, “hidden” (off books) debt loads.  The theory is that this will free up resources for the local governments to spend elsewhere, thus stimulating the economy.  At the same time, a US District Judge in CA ruled that META CEO Zuckerberg is not personally liable in the 25 lawsuits alleging that his company purposefully addicted children to social media.  However, the cases against META itself (brought both by many States Attorney General and the families of alleged victims) were allowed to proceed.  Later, TM “announced” that CA-led (but now in place in 12 states and the District of Columbia) electrical vehicle mandates that begin being phased in next year are “impossible to meet.”  TM went on to say, if the mandates are not changed, US customers will see fewer car choices in many states. 

In stock legal and governmental news, on Thursday, the NHTSA announced that VLKAF (Volkswagen) is recalling 114k vehicles in the US over airbag concerns. Later, TPR announced it has paused integration of CPRI while it appeals a US court decision to clock the $8.5 billion acquisition. At the same time, a US federal appeals court ruled that WBD’s CNN unit must face a now-revived defamation lawsuit from “Project Veritas” which CNN had reported was responsible for promoting disinformation and doxing.  Later, the CA Public Utilities Commission increased reporting requirements on autonomous vehicle “incidents” (now at a trip level) for collisions, traffic citations, and stoppage events (when the self-driven vehicles get stuck).  GM, GOOGL, and TSLA are the companies immediately impacted.

Meanwhile, AAL lost its appeal of the US Justice Dept. decision to block the airline’s partnership with JBLU.  The US  1^st District Court of Appeals three judge panel ruled unanimously that the lower court judge’s decision was correct in siding with the Justice Dept. and FTC.  (However, this may be a non-event as the Trump administration is widely expected to be more corporate-friendly, including in terms of mergers and acquisitions.  So, the partnership could be floated again after January.)

In miscellaneous news, on Friday, the New York Times reported sources tell it the new Trump administration is preparing to withdraw from the Paris climate agreement and also shrink the size of some national parks and monuments to open up land for the oil industry to drill.  (The US is already the world’s largest oil producer, but one campaign mantra of Republicans was “drill baby drill.”)  In other oil news, the Dept. of Energy announced Friday that it had purchased its last batch of oil to replenish the Strategic Petroleum Reserve with a contract to buy another 2.4 million barrels for delivery in April through May.  (This is the final batch because the Republican House rescinded about $2.05 billion of the funds the previous Democratic House had earmarked to replenish the reserve.)  So, 180 million barrels was released from the reserve at a sale price of $95/barrel.  Then the Dept. of Energy has replenished 59 million barrels at an average cost of $76/barrel, netting about $3.5 billion in profit but leaving the reserve 121 million barrels short of full capacity but also with $20.5 billion more money in hand and presumably falling oil prices under the new administration should they decide to complete the replenishment.  Elsewhere, MCO said Friday that the risks to US fiscal health increased after the election of Trump. (However, this is based on an assumption that Trump will actually implement the policies he promised during the campaign.  This includes corporate and personal tax cuts, across the board import tariffs, and deporting a significant chunk of the US labor force. That is far from certain as Trump isn’t known for keeping promises.)

Overnight, Asian markets were mostly in the red with just four of the 12 exchanges above break-even.  Shenzhen (+2.03%) was by far the biggest gainer while Hong Kong (-1.45%) and South Korea (-1.15%) paced the losses.  However, in Europe, we see green across the board at midday Monday.  The CAC (+1.17%), DAX (+1.37%), and FTSE (+0l.75%) lead the region high on broad-based gains in early afternoon trade.  In the US, as of 7:45 a.m., Futures are pointing toward more gains.  The DIA implies a +0.43% open, the SPY is implying a +0.38% open, and the QQQ implies a +0.39% open at this hour.  At the same time, 10-Year Bonds are down to 4.306% and Oil (WTI) is down 1.85% to $69.08 per barrel in early trading.

There is major economic news scheduled for Monday due to Veteran’s Day.  US Bond markets are closed for the day, but stock markets are open as usual. Major earnings reports scheduled for before the open include ARMK and ICL.  Then, after the close, GRAB, IAC, LYV, and TALO report.

In economic news later this week, on Tuesday, NY Fed 1-Year Consumer Inflation Expectations are reported.  We also hear from Fed members Waller, Kashkari, and Harker.  Then Wednesday, we get October Core CPI, October CPI, EIS Short-Term Energy Outlook, October Federal Budget Balance, and API Weekly Crude Oil Stocks. We also hear from Fed Member Williams.  On Thursday, Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, October Core PPI, October PPI, EIA Weekly Crude Oil Inventories, and Fed’s Balance Sheet.  We also heat from Fed Chair Powell and Fed member Williams.  Finally, on Friday, October Core Retail Sales, October Retail Sales, October Export Price Index, October Import Price Index, Ny Empire State Mfg. Index, October Industrial Production, September Business Inventories, September Retail Inventories are reported.

In terms of earnings reports later this week, on Tuesday, we hear from ALIT, AZN, SID, SATS, HTZ, HD, IGT, MOS, ONON, PTVE, SE, SHOP, SGRY, TME, THS, TSN, AE, DOX, AHR, ARMN, CAE, PLUS, FIHL, FLUT, ICUI, CART, LNW, NATL, NGL, OXY, RXT, RKT, SWKS, SPOT, STNE, SU, and MODG.  Then Wednesday, ARCO, BKKT, DOLE, GFF, KMDA, AGRO, BZH, BRFS, BV, CSCO, DADA, EC, HP, HI, NU, SARO, and TTEK report.  On Thursday, we hear from AAP, AZUL, BILI, EFXT, JD, NTES, NICE, NOMD, SBH, TLN, DIS, ZK, AMAT, GLOB, and POST. Finally, on Friday BABA and SPB report.

So far this morning, ICL reported beats on both the revenue and earnings lines. At the same time, ARMK missed on revenue while reporting in-line on earnings.

With that background, it looks like the market is bullish again early Monday. All three major index ETFs made modest gaps higher to start the premarket. Since then, they have all followed-through with white-body candles so far in the early session. SPY, DIA, and QQQ all sit at new all-time highs again as we await the opening bell. Obviously, all three being far above their T-lines (8ema), the short-term trend is very bullish. The mid-term trend is now also very bullish and the longer-term trend remains strongly Bullish in all three as it has been for years. However, with regard to extension, all three major index ETFs are extended far above their T-line while the T2122 indicator remains just outside the bottom of its overbought territory. So, the market is stretched, but theoretically still has some room to push even higher. (Just remember that markets can remain too far extended longer than we can stay solvent betting on the reversal.) At the very least, we can say the Bulls have momentum but are in need of at least a rest, if not pullback. With regard to those 10 big dog tickers, seven of the 10 are in the green this morning with TSLA (7.09%) far out in front of the rest on what presumably is more of the “Trump paying back Musk” trade. INTC (-0.61%) is by far the weakest of the 10. In terms of trading volume, TSLA has traded five times more than NVDA (+0.70%), which is usually the dollar-volume leader. (That situation has been the new normal under the post-Trump win market, but is exactly the opposite of the “AI is the new thing” trade of the last 18 months.) Finally, do not forget that it’s Veteran’s Day, with Bond markets closed, but not a stock market holiday.

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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