Wednesday saw a mostly flat open after CPI data. SPY opened up 0.16%, DIA opened down just 0.03%, and QQQ “gapped” up 0.19%.  From there, the whipsaw was on for the SPY and QQQ, both of which saw a selloff the first hour followed by a strong rally until noon and another selloff the hour after that.  Meanwhile, DIA’s morning selloff was much smaller and its mid-morning rally was stronger and lasted longer.  Then in the afternoon, things settled down as the wave got smaller in all three major index ETFs.  This action gave us indecisive candles in the SPY and QQQ, but a more bullish candle in the DIA.  All three remained well above their T-line (8ema).  SPY printed a white-bodied Spinning Top, QQQ printed a black-bodied Spinning Top, and Dia printed a white-bodied candle with no lower wick and a modest upper wick.  This all happened on above average volume in the DIA as well as below-average volume in the SPY and QQQ.

On the day, six of the 10 sectors were green with Financial Services (+0.98%) well out in front leading the gainers higher. Meanwhile, Basic Materials (-0.39%) and Consumer Cyclicals (-0.33%) leading the losers lower.  At the same time, SPY gained 0.32%, DIA gained 0.57%, and QQQ gained 0.03%.  VXX dropped another 6.51% to close at 47.14 and T2122 dropped back a bit more toward the center of its mid-range at 65.04. On the bond front, 10-year bond yields fell a bit to 3.839% and Oil (WTI) fell another 1.61% to close at $77.09 per barrel. So, Wednesday was a bullish, but fairly volatile day with the mega-cap DIA leading the rest of the market higher.  This came after what analysts called “encouraging” CPI data that was the lowest since March of 2021.  (It might be of interest to note that prior to the CPI release, 47.5% of Fed Fund Futures expected a quarter point rate cut in September.  At the end of the day, 64.5% are now expecting a quarter-point rate cut.  In both cases, the entire remainder expects a half percent cut.)

The major economic news scheduled for Wednesday were limited to July Core CPI (Year-on-Year) that was down a tick, as expected, at 3.2% (compared to a forecast of 3.2% and down slightly from June’s 3.3%).  On the monthly basis, July Core CPI was actually up a tick as expected at +0.2% (versus a +0.2% forecast and June’s +0.1% reading).  On the headline number, July CPI (Year-on-Year) was down more than was predicted at +2.9% (compared to a +3.0% forecast and prior month value).  On the monthly basis, July CPI was up as predicted at +0.2% (versus a +0.2% forecast and the June -0.1% reading).  Later, the EIA Weekly Crude Oil Inventories showed an unanticipated build of 1.357 million barrels (compared to a forecasted drawdown of 1.900 million barrels and the prior week’s 3.728-million-barrel drawdown). 

After the close, CSCO reported beats on both the revenue and earnings lines.  (CSCO also raised its forecasts and guidance, yet still announced cutting as many as 6,000 jobs.)  Meanwhile, STNE beat on revenue while missing on earnings.

In stock news, on Wednesday, MU and Korea’s Samsung followed the third major computer memory manufacturer in raising prices by 15%-20%.  At the same time private company Mars (of candy bar fame) announced they have agreed to buy K for $36 billion.  Later, the CFO of UBS said the company would sell the CS mortgage servicing unit it acquired in the CS buyout.  (No buyer or financial terms were mentioned.)  At the same time, SHAK announced it has rolled out sidewalk robots to deliver orders in Los Angeles for those orders placed via the UBER Eats app.  Later, SEC filings showed that INTC liquidated its stake in ARM during Q2, raising almost $147 million for the 1.18 million shares it sold.  Meanwhile, as part of its earnings call, CSCO announced it will cut 7% of its global workforce.  This is the company’s second round of cuts in 2024, having cut 5% (about 4,000 jobs) in February.  At the same time, SEC filings showed that BRKB took new stakes un ULTA and HEI and increased its holdings of CB and SIRI during Q2.  The same report stated that BRKB reduced its positions in COF and FND.  Later, ALK flight attendants rejected the tentative contract deal the airline had struck with their union.

In stock legal and governmental news, on Wednesday, the state of TX added NWG to its list of “bad companies” that cannot do business with the state because they do not own oil and gas stocks.  At the same time, LLY sent “cease and desist” letters to spas, telehealth companies, wellness centers, and doctors demanding that they stop selling unapproved “copycat” versions of LLY’s Zephound and Mounjaro weight loss and diabetes drugs.  Later, D and EQNR were the winning bidders in the Dept. of Interior auction of offshore wind rights off DE, MD, and VA. At the same time, the FTC finalized its ban on companies buying or selling fake online reviews.  The new rules give the agency the power to levy fines of up to $51,744 per violation. The rules were supported by AMZN, GOOGL, and YELP.  (Surveys show the new rules are supported by 90% of online shoppers.) 

Elsewhere, a federal judge in Kansas City has blocked a state of MO state rule barring financial professionals from considering so-called ESG factors in any investment advice.  The rule had been supported by oil industry lobbyists.  At the same time, the federal judge in the case brought by Epic Games (Fortnite maker) issued an order requiring the company to give Android phone users more ways to download apps.  The judge expressed impatience with GOOGL’s stall tactics and protests about the cost and difficulty of implementing changes.  He also said he will appoint a three-person “compliance committee” to determine GOOGL compliance with orders.  Later, DIS filed “unique” (perhaps read that as preposterous) motion Wednesday, demanding that a wrongful death lawsuit be thrown out of court because the surviving spouse had signed up for a one-month trial of DIS+ years before the death.  DIS claims the terms of that trial would bar a consumer from ever filing a lawsuit against the company.  Later, the Committee on Foreign Investment fined TMUS $60 million for failing to prevent and report data breaches of sensitive data. (The agency scrutinizes national security risks of foreign investments and TMUS is majority owned by German DTEGY.) 

Meanwhile, a DE judge upheld the $267 million legal fee request for legal firms that represented shareholders in the $1 billion settlement against DELL.  (This was the largest-ever legal fee approved for a shareholder lawsuit.)  After the close, the Dept. of Justice filed a motion urging the court to accept the BA revised plea deal including the company pleading guilty to a criminal conspiracy to commit charge and paying $243.6 million fine after breaching a 2021 deferred prosecution agreement.  (Relatives of many of the 346 people killed in the two fatal 737 crashes that preceded the 2021 agreement have urged the plea be rejected.)  Also after the close, the SEC and CFTC announced that another group of Wall Street firms have agreed to pay $470 million to settle charges they violated recordkeeping and communications rules (using off the record texting to communicate between firms).  AMP, LPLA, RJF, BK, TD, LTSAP, and TFC were among the companies that settled. 

Overnight, Asian markets were mostly green with just three of the 12 exchanges in the red.  New Zealand (+1.10%), Shanghai (+0.94%), and Singapore (+0.90%) paced the gains while Taiwan (-0.60%) was by far the biggest loser.  In Europe, the picture is even more green at midday with only one of 15 bourses in the red. The CAC (+0.02%), DAX (+0.32%), and FTSE (+0.06%) lead the region modestly higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modest green start to the day here as well.  The DIA implies a +0.21% open, the SPY is implying a +0.10% open, and the QQQ implies a +0.15% open at this hour.  At the same time, 10-Year bond yields are up a bit to 3.845% and Oil (WTI) is up nine-tenths of a percent to $77.67 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, July Core Retail Sales, July Export Price Index, July Import Price Index, NY Empire State Mfg. Index, Philly Fed Mfg. Index, Philly Fed Mfg. Employment Index, and July Retail Sales (all at 8:30 a.m.), July Industrial Production (9:15 a.m.), June Business Inventories and June Retail Inventories (10 a.m.), TIC Net Long-Term Transactions (4 p.m.), and the Fed Balance Sheet (4:30 p.m.).  We also hear from Fed member Harker (1:10 p.m.).  The major earnings reports scheduled for before the open include BABA, AIT, DE, GRAB, JD, NICE, SPTN, TPR, and WMT.  Then, after the close, AMCR, AMAT, COHR, GLOB, and HRB report. 

In economic news later this week, on Friday, July Building Permits, July Housing Starts, 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 Friday we hear from FLO.

So far this morning, DE, NICE, TPR, and WMT all reported beats on both the revenue and earnings lines.  Meanwhile, BABA, AIT, GRAB, JD, and SPTN missed on revenue while beating on earnings. There were no tickers on the other side this morning.  However, DDS missed on both the top and bottom lines.

In miscellaneous news, on Wednesday, Reuters reported that a potential seaport strike is looming in September that would impact East and Gulf Coast ports.  The report cites a shipping industry expect saying the strike could back up and reroute cargo for weeks or potentially months. However, major importers such as WMT have been rushing their orders to get the shipments through the ports prior to the September 30 expiration of the current dockworkers contract. (Industry analysts say it takes about six days to clear the backlog caused by a one-day strike.  So, a strike lasting weeks would delay both import and export shipments for months.)  Elsewhere, Reuters reported that the US, which is one of the largest plastic producers in the world, will back a global treaty that calls for a reduction in plastic production.

In late-breaking news, WMT raised its guidance for the full year citing steady consumer health and the relative strength of the overall economy. WMT CFO Rainey said, “…our members and customers…remain choiceful, discerning, value-seeking, focusing on things like essentials rather than discretionary items, but importantly, we don’t see any additional fraying of consumer health.”  Still, while raising its full-year 2024 forecast, the numbers do point to a second half that is not quite as strong as the first six months.  They are just stronger than earlier predicted.  Elsewhere, the Biden Administration released the prices for the first 10 drugs that resulted from the first-ever Medicare price negotiations. BMY, LLY, JNJ, MRK, AZN, NVS, AMGN, ABBV, and NVO are makers of those first 10 drugs subject to price negotiation and the White House says the lower prices will save Medicare $6 billion in the first year (based on 2023 drug demand data).

With that background, it looks as if markets are indecisively bullish again this morning. All three major index ETFs opened the premarket higher, but had all traded in an uncertain manner since then, producing more wick than body in all cases. All three are above their T-line (8ema) and the short-term trend is clearly bullish (or could be said to be in strong Bear Flag patterns). Meanwhile, the mid-term trend remains bearish, but with the downtrend line under pressure. In the long-term, while the bullish trend line is broken, the longer-term charts remain bullish. In terms of extension, the SPY and especially QQQ remain a little stretched above their T-line but the DIA is in better shape. At the same time, the T2122 indicator remains in its mid-range. So, the market has some room to run if either side can find the momentum (which has been on the Bulls side for a little over a week). However, the Bears have more slack to work with at this point. With regard to those 10 big dog tickers, eight of the 10 are in the green led by AMZN (+0.85%). However, the biggest dog, NVDA (-0.49%) paces the losers and is once again the dollar-volume trading leader. (This time only leading by a factor of 3.5.)

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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