After the severe disappointment of the Presidential debate and in the face of a bad GDP number, the bulls stood strong, gapping prices slightly higher on hope for a new stimulus deal.  However, later reports of more failure on that front led to a selloff, only to again bounce as the bulls refused to give up.  At the end of the day the 3 major indices were left with large upper wicks with the SPY having failed another test of the 50sma.  On the day the DIA gained 1.20%, SPY gained 0.83%, and QQQ gained 0.68%.  Given the debate fiasco, that was not too bad at all.  The VXX was flat at 24.86 and T2122 remained in mid-range at 54.74.  10-year bond yields rose to 0.686% and Oil (WTI) rose to $39.90/barrel.  This all closed out a down month for September and brought the quarter to an end.

Prior to the open, both Speaker of the House Pelosi and Treasury Sec. Mnuchin had said they were hopeful for a deal on another round of stimulus.  However, then mid-day Senate Majority Leader McConnell came out to say the two sides were far apart.  At day end Mnuchin said “they had made a lot of progress, but have no agreement” and that they would try again on Thursday.  For their part, House Democrats gave more time for progress, delaying a vote on their latest $2.2 Trillion stimulus bill.  It is notable that once again another trio of FOMC speakers called for more fiscal stimulus to get the economy out of a ditch.  In addition, Dallas Fed President Kaplan said interest rates near zero will be needed for as much as 3 more years until we have weathered this crisis.

After the close, ALL announced they are cutting 3,800 jobs.  JPM also said they will now resume job cuts, after pausing during earlier stimulus rounds, but only announced 400 cuts for now.  In addition, the Fed announced they are extending the limits on big bank dividends and stock buybacks through at least Q4 as new stress tests are kicking off.  UAL and AAL moved ahead with plans cut more than 32,000 jobs as the federal bailout funding ended Wednesday night and no new money has been approved.  Still, in other air industry news the FAA Chief was upbeat after flying in the BA 737 Max during the day, although he said more fixes are needed and gave no timeline for any recertification.

On the virus front, in the US, the numbers show we now have 7,450,637 confirmed cases and 211,778 deaths.  The 7-day average daily new case count is back up to 42,686, while the 7-day average of deaths is now 731.  MRNA said Wednesday that they do not expect to apply for an emergency use authorization for their vaccine candidate prior to the election.  They said the soonest they would have enough safety data would be November 25.  Meanwhile the AZN trial in the US is still on hold with FDA Chief Hahn refusing to say why, noting the reason is confidential.  However, in better news New York City, indoor dining is being allowed to resume at 25% capacity today.

Globally, the numbers rose to 34,201,965 confirmed cases and the confirmed deaths are now at 1,019,580 deaths. (An increase of about 315,000 cases and 6,200 deaths.)  Israel reported a record number of new cases, despite its recently-invoked second lockdown.  Spain announced new restrictions, reducing retail business capacities and outlawing gatherings of more than 6 people.  A large study in India (3 million subjects) has found that super-spreaders are a serious problem with 8% of the infected responsible for 60% of new cases.  The study also found that while children are spreaders, it is primarily among their age group and the much bigger threat of spread comes from people in their late teens and 20s.

Overnight, Asian markets were mostly green on mixed moves.  Australia (+0.98%) and South Korea (+0.86%) led the major markets, while only Shanghai (-0.20%) and Malaysia (-0.53%) showed in the red.  In Europe, we see a very similar story so far today with a lot of green, but uneven moves.  The FTSE (+0.82%) and CAC (+0.84%) are up nicely, but the DAX (+0.29%) has more modest gains.   As of 7:30am, US futures are following Europe and are pointing to significant gaps higher.  The QQQ is leading the way (implied +1.29% open), with both large-cap indices pointing toward a 0.80% gap up. 

The major economic news for Thursday includes August PCE Index, August Personal Spending, and Weekly Jobless Claims (all at 8:30 am), Sept. Mfg. PMI (9:45 am), Sept. ISM Mfg. PMI and Sept. ISM Mfg. Employment (both at 10 am) and another trio of Fed speakers (Harker at 9:30 am, Williams at 11 am), and Bowman at 3 pm).  Major earnings reports on the day include BBBY, CAG, STZ, and PEP before the open.  There are no major reports after the close.

Hope for a stimulus deal and good earnings reports from BBBY and PEP have the bulls charged up again this morning. However, considerable resistance levels remain overhead…and there is no deal in hand yet. So, be careful expecting politicians to do as you want or as they should. Again, we still do not have a bullish trend, but the bearish trend has been broken. All we know for sure is that volatility and a lack of deliberate tradings remains the norm.

As we start a new month and quarter, markets may be trying to turn the page after a down September by getting off to a fast start. Just don’t let market enthusiasm overtake your discipline or rational thought. Don’t try to predict, chase moves that got away, or break your trading rules. Follow the trend and keep locking in profits and reducing risk. Say it with me…singles and doubles are the keys to success not swinging for the fence. Welcome to October.

Ed

Swing Trade Ideas for your Consideration and Watchlist: DHI, SPCE, ETSY, QCOM, AAPL, INTC, LEN. 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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