“Gap and crap” may be crude, but it is a very accurate description of the market on Tuesday.  After a 3.5% gap higher at the open and a little roller-coaster ride, markets slid all afternoon to close flat on the day.  The SPY gained 0.12%, the DIA gained 0.07%, and the QQQ lost 0.04% for the day.  Oil fell during the session as hope for an announcement of major production cuts on Thursday faded some from Monday.  The closing price (WTI) was $24.10/barrel while 10-year bond yields rose to 0.734%.

Related to the economic stimulus, during the day Tuesday President Trump fired the acting Pentagon IG (Bush appointee) who was to oversee the $2 Trillion package. This is part of his much broader plan to replace IGs across all agencies, as he seeks more personal loyalty to himself.  Add this termination to his written statement that he would not allow the fund watchdog to make a report to Congress about any bailout decisions (as required by law) without his express permission. What you get is a valid concern about the fairness and transparency of stimulus operations.  Since both Republicans and Democrats have already voiced opposition to the move, it is likely to cause political rancor soon.

In business news, a Fed survey was reported.  The survey stated only 20% of small businesses had the money to withstand two months without revenue.  This led to Treasury Sec. Mnuchin to seek and Majority Leader McConnell to announce that the Senate will vote Thursday on a new bill offering an additional $250 billion in small business bailout loans/grants.  It is unclear how this will work since only the House has the right to approve spending and the House is not scheduled to resume session until April 20th.  Larry Kudlow (White House) also told Fox News that early planning for reopening the economy was underway and that reopening might begin in 4-8 weeks. 

At the daily presser, the President again looked for a scapegoat to blame.  This time he claimed the WHO caused months of delay in US response and (probably more importantly), criticized him as his attempt to rewrite history continues.  He said “we’re going to look into them (WHO) and put a powerful hold on their funding because we fund them, provide the majority of their funding and they’re very China-centric.”  When pushed on the funding pull, he back-tracked to say he will consider it.  This came as he also claimed that his own downplaying of and calling the virus a hoax for 6 weeks was because he was just acting as a cheerleader for the country.  However, the idea that the WHO knew about the virus for months, downplayed, and/or hid it, is ridiculous and does not match the facts.

On the virus front itself, the world is nearing 1.5 million diagnosed cases of COVID-19.  The global headline virus numbers have now reached 1,446,557confirmed cases and 83,149 deaths.  On the positive side, China has lifted the quarantine (some restrictions remain) for Wuhan after 76 days.  Assuming no additional outbreaks there, this could be seen as a hopeful sign.

Meanwhile, in the US we now have 400,549 confirmed cases and 12,911 deaths.  In mixed news, New York recorded its worst day for deaths, but the rate of new cases is plateauing in the state.  At the daily event, Dr. Birx (White House) said we have a million-test backlog (more kits are available now, but labs don’t have the capacity to process them all as received).  However, she hoped that bringing existing ABT test-processing machines online can add 100,000/day capacity soon.  Current test result time varies from place to place and by case priority but ranges from 2 to 5 days for the vast majority of tests at the moment (few instant tests are in place just yet).

Overnight, Asian markets were mixed, but mostly red with the exceptions of Japan and India, which were both strongly green.  In Europe, markets are red across the board at this point in their day.  As of 7:30 am, US futures are all on the green side this morning, but looking at less than a half percent gap higher.

The only major economic news for Wednesday are Crude Oil Inventories (10:30 am) and FOMC Minutes (2 pm).  Once again, there are no major earnings on the day.

The truth is that the economy (US and global) will recover.  It’s really just a question of when.  We should expect news cycles to continue to be bad and we’ll probably see fits and starts in the recovery.  Still, in the long run, we’ll be fine and a fast economic restart is not a nicety, not a primary concern.  It will work itself out once the virus is totally under control.  So, for long-term investors, it’s definitely time to go bargain shopping with the money we can afford to forget about for quite some time. 

However, as traders, it’s a different story.  We have a short-term bullish trend, but after Tuesday’s candle we very well could see markets go back down to test the uptrend. It is still likely going to be a long time until we see markets relentlessly rip higher the way we did back before mid-February.  So, as we’ve said, even with a lot of bad news already “baked into” markets, we need to continue to be attentive, and either be very fast (day trade) or very slow (long-term holds).  It’s still not a good swing trading market yet with all the gaps and volatility.  Be cautious on any swing trades you take.

Ed

There are no Swing Trade Ideas for your watchlist today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 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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