Wednesday saw a sideways grind all morning. After reaching all-time highs again early in the day, the release of FOMC Meeting Minutes at 2pm gave us a steep selloff into the close.  The Fed discussion told traders that the FOMC expects the virus to be a major overhang on the economy and “represents a considerable risk over the medium term” (18-24 months).  On the day, SPY closed down 0.45%, DIA down 0.29%, and QQQ down 0.67%.  The VXX rose slightly to 24.75 and T2122 fell to 40.52.  10-year bond yields rose slightly to 0.685% and Oil (WTI) was flat at $42.82/barrel.

The state of CA continues to see several major plagues.  Rolling power outages, more than 370 wildfires statewide, 110-degree temperatures, and a little virus pandemic to boot.  On top of these, there are economic issues such as both UBER and LYFT shut down their CA operations. The ride-sharing duo of companies are threatening to shut down CA service permanently in the wake of the state declaring that their drivers are not independent contractors and must be treated as employees.

After the close Wednesday, Larry Kudlow (White House) told reporters “the President wants to prevent China from collecting some form of proceeds” from the forced sale of Byte Dance’s TikTok App North-American operations that the President has ordered.  There was no word on how this would be done (since any sale would be a private transaction), although Kudlow said the fact it had never been done before does not mean it can’t be done now. This follows the President’s previous assertion that the US Government should get a significant cut of any deal since he was the one making any purchase possible through his orders.  Perhaps a scary precedent for free markets when the government decides who can own what, forces sales, decides who gets paid and demands a cut of the deal. At the moment MSFT, ORCL, and TWTR are all in talks with Byte Dance over a purchase.

On the virus front, in the US, the numbers show we now have 5,701,390 confirmed cases and 176,365 deaths.  While the new cases are down (over 46,000) from the highs, the 7-day averages remain stubbornly at 48,000 new cases and 1,030 deaths per day.  So, there are hopeful trends in the US.  However, Adm. Giroir (Admin. Testing Tzar) said that this hopeful situation “could turn around very quickly if we are not careful.  We saw that after Memorial Day”.  (He was referring to all the progress made through the May partial lockdown being lost in just a couple weeks when the states and public ignored reopening, mask and social distancing guidelines.)

Globally, the numbers rose to 22,607,156 confirmed cases and 791,622 deaths.  Over in Europe, Spain, France, Germany, and Italy all reported a post-lock-down record increase in new cases on Wednesday.  Meanwhile, Sweden (which went the “herd immunity” route some support in the US), reported that it had the highest death count in more than 150 years during the first half of 2020.  In Asia, South Korea had a 7^th straight day of triple-digit new cases as its curve is growing exponentially again for the first time since February. On the sub-continent, India also continues to see exponential growth in cases, but the numbers are orders of magnitude larger in India with over 69,000 new cases and an average of 980 deaths on average.

Overnight, Asian markets were deep into the red Thursday as fear from the US-China Trade War, the Fed Minutes from July and new case growth in the region spook trades.  South Korea and Taiwan set the pace, both down over 3.25%.  The same thing is true so far today in Europe.  European bourses are down across the board with the FTSE (-1.18%), CAC (-1.10%), and DAX (-1.01%) leading the way.  In the US, as of 7:30 am, the futures are pointing to a modestly lower (a quarter percent or less) open this morning.   

The major economic news for Thursday is limited to Weekly Initial Jobless Claims and Philly Fed Mfg. Index (both at 8:30 am) and a Fed speaker (Quarles at 1 pm).  Major earnings reports include BABA, BJ, and EL before the open.  Then after the close ROST reports.

Wednesday’s black candles show resistance at the all-time highs remains significant in the SPY.  However, the trend remains bullish in the SPY and QQQ with only the DIA doing anything resembling a pullback. I think this is partially summer doldrums, partially waiting on a stimulus deal, and partially due to waiting out the political conventions.  In short, this week and next were destined to be good times for traders to take some time off.

Since we weren’t bright enough to join the vacationers, all we can do is follow the trend and stick to our trading rules.  Don’t try to predict any reversals or breakouts.  Don’t chase moves you have missed.  Above all, keep taking profits as you go.  Remember, our job is to be consistently profitable, not get rich in a few months. 

Ed

The Daily Swing Trade Ideas for today: CSCHW, UBER, WEN, EBAY, HLF, TEAM, OSTK, PLNT, AA. 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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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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