Tuesday saw just under a one percent gap higher in the QQQ and a half percent gap up in the SPY.  This was followed by intraday fading of the gap followed by the normal volatility up to mid-day. At that point, a rally lasting all afternoon ran all 3 major indices to close near their highs.  This gave us white hammer type candles in all those indices.  On the day, DIA closed up 0.50%, SPY up 1.02%, and QQQ up 1.86%.  VXX also gained slightly to 25.36 and T2122 rose, but still remains in the oversold territory at 14.47.  10-year bond yields were flat at 0.672% and Oil (WTI) rose slightly to $39.55/barrel. All-in-all, not a bad day given the September selloff we have seen so far.

As expected, Fed Chair Powell told Congress more fiscal stimulus is needed in his testimony.  Treasury Sec. Mnuchin agreed, but put in a qualifier on the statement, saying “I believe a targeted package is still needed”  However, Chief Economic Advisor Kudlow told reporters that more stimulus was not needed, but a targeted package could be a great help to a V-shaped recovery.  In an unrelated story, a deal was reached overnight to keep the government open and was passed by the House last night and sent to Senate. The deal includes more funds for school meals and more funds for farm aid.

Bloomberg reported interesting news in the vaccine race.  PFE has said they will do a results analysis as soon as they reach 32 vaccinated but also infected patients (vaccine failures) and expect this to be next week. They will consider any participant who both tests positive and has any symptom to be one of their cases. So, I guess a positive test alone does not count as a vaccine failure.  (32 seems like an awfully small number to draw any conclusions from in a test planned to use 44,000 subjects, but they are looking at failures.)  This will also be the first of four attempts (an unprecedented number apparently) with the last being when they reach 164 cases, to find a good enough ratio to prove efficacy.  This approach gives PFE a leg up on finding a “first proven vaccine” over rivals like MRNA (which won’t take a first peek until they find 53 failure cases on their way to 151 cases) and AZN (which will take its first look at 75 cases on the way to 150 cases).

In addition, apparently none of the current Phase 3 trials will know if their vaccine candidate actually lowers the number of hospitalizations until February.  Yet PFE is said to expect to have reached a conclusion on their candidate sometime in October, based on an extrapolation from a much smaller dataset than the actual whole trial.  This multi-look approach gives PFE an edge on being first to find a “viable vaccine,” which is all the market likely cares about at least initially.  In an unrelated story, the FDA said Tuesday it is tightening the approval standards, which may well slow vaccine emergency use approval.  This seems contrary to the Bloomberg article, but the FDA “tightening” may just be a vaccine acceptance PR tactic.  Additionally, JNJ has said this morning they are also entering Phase 3 trials of their own candidate vaccine with hopes of enrolling 60,000 participants in the weeks and months to come.

On the virus front itself, in the US, the numbers show we now have 7,098,291 confirmed cases and 205,491 deaths.  The daily new case count was down at less than 36,000, but the 7-day average of new cases remains over 41,000 per day.  Deaths came back to a more typical number of 969 after the unexpected drop on Monday.  However, that drop did pull down the average deaths to 735/day.  The President said Tuesday that the US will remain open regardless of the new measures underway in Europe or the UK. 

Globally, the numbers rose to 31,824,908 confirmed cases and 976,155 deaths.  So, the globe is seeing about 300,000 newly reported cases and 6,000 reported deaths per day.  As expected, the UK re-entered a partial national lockdown Tuesday.  UK PM Johnson urged workers to work from home if at all possible, reduced pub/restaurant hours, reduced permissible gathering sizes, etc. However, he stopped short of an actual 14-day national lockdown that some advisors were urging.

Overnight, Asian markets were mixed on moderate moves with the obvious exception of Australia which was up almost 2.5%.  Japan, South Korea, and Shanghai were just on the green side of break-even while Japan was on the red side of flat.  Taiwan was down half a percent.  However, in Europe we are seeing green across the board so far today on significant moves.  The FTSE is up 2.3%, DAX up 1.65%, and CAC up 1.9% at midday.  As of 7:30am, US futures are pointing higher.  The QQQ is lagging with an implied open up 0.2%, but the SPY is looking toward a 0.4% gap up and the DIA 0.8% higher open. 

The major economic news for Wednesday is limited to September PMI (9:45 am), Oil Inventories (10:30 am), and 3 Fed Speakers (Chair Powell testifies again at 10 am, Mester at 9 am, and Quarles at 2 pm).  However, there are major earnings reports with CTAS, GIS, and JKS before the open. Then FUL reports after the close.

The strong close Tuesday and apparent gap coming this morning certainly look like the rebound is in play. Remember that we still have a number of potential resistance levels above, but price gets the only vote that counts (especially in the short term). Continue to be wary of volatility and keep in mind that the trend still remains bearish. So, be careful chasing unless you are fast or can take the heat. However, it looks like a bulish morning. Stick to your rules, keep locking-in profits, and remember trading is a job for the long-haul…not a get rich quick scheme. 

Ed

Swing Trade Ideas for your Consideration and Watchlist: DG, PENN, DHI, CZR, FSLY. 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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