Wednesday was a bullish, but also indecisive day as oil price stabilizing allowed markets to gap higher at the open (perhaps aided by hope for the near $500 billion extra stimulus coming this week).  Prices gapped about 2% higher at the open and wavered the rest of the day on the positive side of the gap.  However, a late selloff took prices back near the open.  The SPY closed up 2.22%, the DIA up 1.98%, and the QQQ up 2.97%.  All 3 of the indices printed Doji or Spinning-Top type candles. The VXX fell to 44.19 and the T2122 4-week New High/Low Ratio average climbed back to 71.59 (still in mid-range, but approaching overbought territory).  The 10-yr bond yield rose to 0.617% and Oil (WTI) closed 23% higher to $14.23/barrel.

On the stimulus/relief front, negotiations over “bill 4” are underway as bill 3.5 will be approved by the House Thursday, bringing total (non-Fed) relief spending to just under $3 trillion so far.  The next bill is initially targeted to focus on infrastructure and state and local government aid.  However, Senate Majority Leader McConnell says he favors allowing cities and states to declare bankruptcy to unburden them from high pension costs.  He feels this is preferable to giving those governments federal bailout funds.  On the opposite side of that argument, states and municipalities are already planning for massive layoffs and wage cuts due to revenue shortfalls caused by the virus.  Among these are Los Angeles, Detroit, and a number of states who are planning mass layoffs and forced furloughs.

On the Virus front itself, the global headline numbers are 2,656,627 confirmed cases and 185,166 deaths.  In Germany, face masks were made mandatory, following the Czech Republic, Slovakia, and Austria’s lead.  At the same time, in the US we now have 849,092 confirmed cases and 47,681 deaths.  Even so, more states have announced they plan to reopen at least partially in the next few days.  

The state of Georgia is seeing a lot of controversy over its reopening.  For his part, President Trump said he strongly disagrees with Georgia Governor Kemp’s decision to open close-contact businesses (theatres, bars, tattoo parlors, barbers, spas, gyms, etc.) Friday.  However, Trump also offered support and praise for the Governor for the move as well.  So, apparently he strongly supports the opening (demands it), but also doesn’t want to agree with any early-mover or risky parts of opening. Aside from that, at the nightly presser, Dr. Fauci (NIH) said he would advise the Governor not to do it.  He also pleaded with states not to open too early and for people to maintain strict guidelines even after reopening.  He said we will have COVID-19 in the fall and that if people don’t adhere to guidelines, we are likely to have a new case rebound and need to close the country again, maybe even before the fall.

Overnight, Asian markets were mixed again, close to the flat line with the exceptions of Japan (+1.5%) and India (+1.4%) as South Korea’s economy contracted 1.4% in Q1.  In Europe, markets are also mixed but lean toward the green so far today.  As of 7:30 am, US futures are just on the red side of flat as traders wait for the Weekly Jobless Claims (4.3 million new claims expected). 

Thursday’s major economic news includes Initial Jobless Claims (8:30 am), Apr Mfg. PMI and Apr. Services PMI (both at 9:45 am), and Mar. New Home Sales (10 am).  On the earnings front, APD, ALLE, ADS, CTXS, LLY, HSY, HBAN, IR, IVZ, PHM, TSCO, UNP, AND GWW all report before the open.  BMRN, COF, ETFC, EW, FE, INTC, PBCT, RHI, SIVB, VRSN, and VRTX all report after the close.  It is worth noting that so far this earnings season, just 17% of the S&P500 have reported.  While two-thirds of those have beaten lowered analyst estimates, they’ve still posted an average decline of 14% year-on-year in earnings

The uptrend remains broken, but not by much and Wednesday’s gap-up puts the bulls back in the game short-term.  Gaps and volatility remain the norm, with hope based on reopening, relief funds, and Oil price stabilization.  However, earnings and those Jobless Claims are likely to drive trading Thursday.  In this environment, traders need to continue to be very focused, and either be fast (day trade) or slow (long-term holds).  Be very cautious about any swing trades you take in this news-driven market.

Ed

No Swing Trade Ideas for your consideration and watchlist for Thursday. 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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