Friday was a day mostly of fear and waiting on a firestorm from the White House, only to realize it was nothing but a little hot wind.  After the China presser amounted to nothing but “We’ll take action to eventually eliminate Hong Kong’s special treatment” markets rallied hard up off the lows the last hour of the day.  At the close, the SPY was up 0.45%, the DIA flat at negative 0.02%, and the QQQ up strongly at +1.47% as tech issues rallied hardest off the non-event.  The VXX closed down to 33.13 while the T2122 4-week High-Low Ratio fell slightly, but remains overbought at 85.29.  The 10-year bond yield fell to 0.653% and Oil (WTI) rallied yet again to $35.32/barrel. With that said about the day, it is also important to recognize that markets rose about 5-6% during May.

The big story this weekend was coast-to-coast protests and some riots. Some businesses and traffic have been temporarily disrupted in a large number of places.  The only major business responses have been that TGT (Minneapolis-based) and AAPL both closed stores, while AMZN closed distribution hubs located near protests.  These protests have mainly been peaceful dissent to racial injustice and killings of blacks by police.  But, some of the protesters have turned into rioters causing property damage, looting, injuries, and even a couple of deaths. 

Government responses have been declarations of curfews, unlawful assemblies, and no-go zones, as well as the use of tear gas, knight sticks, and rubber bullets.  There have been hundreds of arrests. Many states have also called out the National Guard.  Atty. Gen. Barr and President Trump claimed that rioters are “far-left extremists.”  So, on Sunday Trump declared ANTIFA to be terrorists.  However, there has been no evidence produced yet of any organized group organizing or leading riots locally, let along nationally. (Side note: This whole episode must give the Chinese leadership a belly laugh.  The US has denounced the Chinese for crack-downs, labeling protesters as terrorists, mass arrests, and employing similar tactics against public protests and riots over civil rights.)

On the Virus front, the global headline numbers are 6,290,758 confirmed cases and 374,335 deaths.  On Saturday India reported a record jump in new cases, extended its lockdown in “containment zones” through June 30, while also allowing retail, restaurant and religious buildings to open in the other parts of the country.  The EU adjusted its Steel Import Controls (the ones enacted in response to new US tariffs).  The new measures fall short of import quota cuts (as had been requested by European Steelmakers), but are aimed at prohibiting any stockpiling of foreign steel while European makers are not back to capacity. Finally, Russia claims to have an effective treatment drug for the virus (mentioning that the only other potentially-effective drug to their own is the GILD drug remdesivir).

In the US, we have 1,837,578 confirmed cases and 106,198 deaths reported to date. CNBC reports that AAPL data shows Americans are driving at almost the same rate they did prior to the shutdown (based on navigation map requests and geo-data from phones).  However, mass transit and restaurant bookings have barely recovered at all.  Hotel bookings are in between, having recovered about 35% of the reduction caused by the shutdown. 

An interesting tidbit from the supply chain.  Since the stimulus checks hit in the US, the demand for computers and PC components has skyrocketed.  Demand is as high now as at a normal December (Xmas season) and 25% higher than a normal May.  So, it seems the economic pain of the shutdown has been exaggerated and a bunch of that money is going straight to computer upgrades and purchases.  Combine this demand with a shipping bottleneck caused by port closures and the no passenger air flights (every passenger flight carries cargo in addition to people) and you get a May shortage of Motherboards, Graphics Cards, and Power Supplies (all sourced from China).  This should abate sometime in June as transport capacity works through the backlog.

Overnight, Asian markets were in the green across the board as May factory numbers overrode the US-China trade war fears.  However, European stocks are mixed, but mostly green so far today.  As of 7:30 am, US futures are flat and mixed, with the country preoccupied by the protests/riots and government responses.

Major economic news on Monday is limited to May Mfg. PMI (9:45 am) and May ISM Mfg. PMI (10 am).  There are also no major earnings reports on Monday.

The bulls continue to have the momentum and trend, but big intraday swings continue to be the norm.  Keep your eye on the short-term chart and don’t hesitate to lock in profits.  Above all, don’t chase or predict, and remain cautious about longer-term swing trades.

Ed

Trade ideas for your watchlist and consideration. PFE, ORCL, PANW, ENB, JNJ, SNAP, KHC, INTC, NDAQ, JNPR, ABBV. Trade your plan, take profits along the way, and smart. 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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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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