Bond yields pulled back overnight, leading to a gap strong gap higher by markets on Tuesday.  After this, markets rallied all morning (strongly in the QQQ and more slowly in the large-caps).  The afternoon saw more sideways action across all 3 major indices until a selloff the last 30 minutes of the day.  This left us with gains, but large high-side wicks, especially the large-caps.  On the day, QQQ +3.94% led the way higher, with SPY +1.40%, and DIA +0.11% flat on the day.  The VXX fell 4% to 14.77 and T2122 fell a bit, but remains in over-bought territory at 85.11.  10-year bond yields fell sharply, but remain elevated at 1.537% and Oil (WTI) fell almost 2% to $63.83/barrel.  It’s worth noting that after a brutal week or so, TSLA led the way in the Nasdaq at +19.64%.

Bloomberg reported an interesting fact on Tuesday afternoon.  Bear in mind, it’s quite possible to drown in a river that is “on average” half an inch deep.  In the article and story Bloomberg reported that analysts have looked at the S&P500 during periods of interest rate increases of at least 1.5%.  That had happened 13 times since 1962 and 10 of those 13 times the S&P500 also rose.  The average across all 13 instances was an S&P gain of 15%.  While rates have not currently risen 1.5%, they are headed that direction with many traders eyeing inflation with fear.  It’s worth considering.

The OECD released its economic forecast for 2021.  They are predicting global economic growth of 5.6% on the year, with +6.5% in the US, +7.8% in China, +12.6% in India, and +3.9% in the EU compared to last year.  In other economic news, US mortgage refinancing demand is down 43% from a year ago even as home purchase loan demand rose 75 for the week.  This comes as average loan rates rose three basis points on the week. In addition, the $1.9 trillion covid relief bill is expected to pass today and head to the President’s desk for signing.

Related to the virus, US infections are starting to plateau at a level above the fall level after a month and a half of steep and steady decline in new cases. The totals have risen to 29,801,506 confirmed cases and deaths have now passed half a million at 540,574 deaths.  As mentioned, the number of new cases fell again to an average of 58,564 new cases per day.  Deaths, which have always lagged, was flat at 1,640 per day.

Globally, the numbers rose to 118,257,673 confirmed cases and the confirmed deaths are now at 2,624,252 deaths.  The trends have been good, but we saw a significant uptick today.  The world’s average new cases have up-ticked again slightly to 404,475 per day.  Mortality, which lags continued to tick down slowly, now at 8,649 new deaths per day.  Mexico announced it should see results of the NVAX vaccine phase 3 trials in April.  Meanwhile, Brazil reported its highest daily death total of almost 2,000.  

Overnight, Asian markets were mixed again on more modest moves.  Australia (-0.84%) led the losses while smaller country exchanges led the gains.  China and Japan were flat on the day. In Europe, so far today markets are mostly green.  The FTSE (-0.18%) is down, but the DAX (+0.36%) and CAC (+0.68%) are more typical of the continent as of mid-day.  As of 7:45 am, US Futures are mixed and flat.  The QQQ is pointing to a -0.13% open, the SPY to a +0.11% open and the DIA to a +0.35% open.

The major economic news on Wednesday includes Feb. CPI (8:30 am), Crude Oil Inventories (10:30 am), and Feb. Federal Budget Balance (2 pm).  Major earnings reports before the open include CPB and UNFI.  Then after the close, BEST and ORCL both report. However, there is a US bond auction today and given the focus that has been placed on rising bond rates recently, this auction may be a larger driver of markets than a typical auction.

With the relief bill and reopening of the economy now priced into markets, inflation has been a key focus of traders. The handicapping seems to be that if rates rise too fast, even at low levels, markets fear the Fed going to a more hawkish stance. On the contrarian side, as I pointed out above, analysis shows that most of the time, as rates rise the market goes up. Either way, that seems to be the backdrop of market direction now. As always, it’s not the news, but how the market reacts to the news this time that matters.

Follow the trend, respect support and resistance, and don’t chase those moves that you miss.  Another trade will come along any minute. Don’t try to predict reversals, just follow the market. Keep taking your trade goals (profits) off the table when you can and stick to your discipline.  Consistency is the key, not ocassinoal home runs.

Ed

Swing Trade Ideas for your consideration and watchlist: SNDL, MSFT, MOMO, BCRX, AA, FTNT. You can find Rick’s review of tickers on his YouTube Channel here. 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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