As we turned the page to a new month, Friday turned a positive week negative.  Bad earnings news from AAPL and AMZN, and post-April profit-taking led to a 1.75% gap-down.  Then, after a late-morning selloff, markets spent the afternoon just grinding sideways near the lows.  For the day the SPY was down 2.74%, the DIA down 2.44%, and the QQQ down 2.82%.  The VXX rose on this performance to close at 41.19.  The 10-year bond yields fell slightly to 0.618% and Oil (WTI) rose again to get back to $19.69/barrel.

The big weekend news was that Berkshire lost $50 billion (largest ever) in the last quarter.  It sold its entire stake in 4 airlines at a big loss to get out of that industry altogether.  We also learned they had not bought the recent bottom.  In fact, Warren Buffett said “We’ve not bought anything because we don’t see anything that attractive (to buy).”  So, BRKB is still amassing cash and now has $137 billion of cash on hand. 

In other weekend news, Larry Kudlow (Chair NEC) told reporters on Sunday that the White House hasn’t yet made a decision on a third round of PPP, but said it may be needed.  In the meantime, he was promoting the administration’s ideas of a payroll-tax holiday as well as going back to 100%-deductibility for business meals and entertainment.

On the other side of the easing argument, Bloomberg reports economists are just starting to worry that ultra-loose monetary and fiscal policy may cause inflation.  In particular, economists at the Bank of England, International Monetary Fund, and some of the large banks are worried that pressure to keep easing in place will cause runaway inflation.  Concerns aren’t major at this point, but it points to the fine line the Fed must walk now that Congress and the Administration are in a “buy our way out of this” mode. 

On the Virus front itself, the global headline numbers are 3,584,116 confirmed cases and 248,641 deaths.  Russia has recorded 3 consecutive days of a record-high number of new cases (now well over 10,000 new cases per day).  However, the biggest international virus story seems to be the rise in the rhetoric of blaming China for the pandemic and “holding them accountable.” Of course, China responded with its own propaganda about the US.  In and of itself this is not important, but the war of words does raise the specter of another round in the trade war, particularly in an election year, which the global economy may not be in as good a position to handle as it was last year.

In the US, we have breached the million-case mark, with 1,188,826 confirmed cases and 68,606 deaths.  31 states had some easing or reopening as of the weekend.  Of those, only 17 have actually achieved the 14-day new case rate reduction that was recommended by administration guidelines.  Activity and hope are increasing.  Only time will tell if it was too soon or false hope.  However, it’s the course our leaders chose and all the rest of us can do is embrace it as cautiously as possible.

Overnight, Asian markets were mixed after a 3-day weekend.  Japan, Hong Kong, South Korea, and India were down sharply.  However, China, Australian, and smaller countries like Thailand were well in the green.  In Europe, markets are deeply in the red after their own 3-day weekend.  The FTSE is only off a third of a percent, but the set seem to be down over 2% at this point in the day.  As of 7:30 am, US futures are pointing to a half to one-percent gap lower at the open.

The uptrend was broken Friday on the first consecutive down day in over a week.  Still, there is potential support not far below and the Bulls have clearly been focusing on the good (and hope) and ignoring the bad news during the last 5+ weeks.  Volatility and gaps remain the norm.  We can also expect bad economic news to continue. 

So, all traders can do is focus on the chart in front of us.  However, in such uncertainty and somewhat unexplained strong rebound, we either need to be fast (day trade) or slow (longer-term holds).  Be very cautious about swing trades, unless you can handle significant short-term pain. 

Ed

No Trade Ideas for 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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