Markets gapped higher Friday about six-tenths of a percent on the back of huge beats by the major tech stocks.  However, this was met with an instant selloff that more than faded the gap.  The lows were reached about 1 pm, followed by an hour of sideways grinding.  However, at 2 pm a strong late-day rally drove prices higher right into the end of the day and saw prices close on the highs.  For the day, DIA gained 0.41%, SPY gained 0.79%, and QQQ gained 1.78% as those major FAANG stocks (particularly AAPL) led the market.  VXX fell to 28.52 and the T2122 4-week New High/Low Ratio fell to 59.68.  The 10-year bond fell slightly to 0.533% and Oil (WTI) rose to $40.45/barrel. 

The Enhanced Unemployment Benefit expired Friday as Congress, the Senate and the White House made little to no progress on negotiations.  Republicans blamed Democrats for not accepting partial stop-gaps and Democrats blamed Republicans for waiting months to get to work and not even arriving at a proposal half of their own caucus will support.  This all comes as rent and loan defaults are a growing concern in the real estate and banking sectors.  Somewhat related to more stimulus, this weekend Fitch reduced the US Debt outlook from stable to negative citing current high fiscal deficits, deteriorating public finances, and a likely path to increasing medium-term debt.

In the virus front itself, in the US, the virus numbers show we now have 4,813,984 confirmed cases and 158,375 deaths.  Friday saw over 71,000 new cases, well above the 7-day average. Deaths also remained far above the 7-day average at over 1,100 for the 5^th day in a row.  Dr. Fauci said this weekend that the virus is so contagious it is likely to never completely disappear, even with effective vaccines. On Sunday, his counterpart Dr. Birx warned that we are now in a new phase with “extraordinarily widespread” cases in the US.

Globally, the number of cases has reached 18,258,528 confirmed cases and 697,395 deaths.  On Friday the W.H.O. reported a single-day record of over 300,000 new cases across the world.  This weekend Russia said it is gearing up for a national vaccination program planning to start with healthcare workers and teachers.  They’ll use a vaccine supposedly developed by themselves, although no scientific study data on the vaccine has been released.  Western experts are skeptical that Russia really has an effective vaccine developed, tested, manufactured, and ready for rollout all 4-6 months ahead of the rest of the world.  However, that is the Russian claim.  In Australia, strict new measures including total curfews have been implemented in its second-largest state.

Overnight, Asian markets were mixed again, with Japan and China as big gainers (on private survey reports showing China’s PMI (not government numbers) came in at a blowout 52.8 (highest in 9 years).  In Europe, markets are basically green across the board, but there is a clear dichotomy so far today with the DAX up over 2% and the FTSE up less than seven-tenths of a percent on strong Eurozone Manufacturing PMI.  In the US, at 7:30 am futures are pointing to a higher open, but following the European example, with a large spread.  The DIA is looking to open up 0.30%, the SPY up 0.47%, and the QQQ up 0.91%. 

The major economic news for Monday is limited to July Mfg. PMI (9:45 am), July ISM Mfg. Employment and July ISM Mfg. PMI (both at 10 am).  The major earnings reports on the day include AHCO, ACM, AMCX, AME, ARMK, ATI, BP, EMR, EXC, EXPD, FIS, HSIC, LDOS, LEA, OMI, REZI, SPR, TDG, USFD, VMC, WEC, WRK, and ZBH all before the open.  Then after the close ACHC, ALL, ATVI, AIZ, BBSI, DIS, DK, ENLC, EQH, FNF, MCHP, OI, PAGP, PRU, PXD, TX, and WU report.  

The whiplash continued Friday with all three major indices printing Hammer or Hanging Man type candles. However, while both large-cap indices continue to consolidate, the mega-tech earnings blowouts saw the QQQ nearing a retest of the all-time highs. Manufacturing data that comes out this morning is expected to give the US a boost the way it did in Asia and Europe. However, remember that the virus remains much more of an unresolved problem here than elsewhere among the top economies.

The trend remains bullish, but volatility and certainty of direction also plays a significant role. So, continue to keep an eye on those mega-cap FAANG stocks as our “canary in the coalmine.”  Stick with your rules.  Follow the trend, don’t predict reversals or chase missed-moves, and always take profits as you go.  Our job is to achieve our trade goals on a consistent basis, not to hit home runs every time we swing the bat.

Ed

The Daily Swing Trade Ideas for today: RIOT, NAT, IAG, DXC, NLOK, CSCO, PYPL, MSFT, ADBE. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers 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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