The bulls turned the tables on the bears Tuesday.  Whether it was a short squeeze or a reversal, markets put in a small gap higher, but then kicked into overdrive, following through on the rally that actually started the last half hour of Monday.  This wiped out most of the losses from the previous day and left us with strong bullish candles in all 3 major indices.  However, just like Monday, markets changed direction the last 30 minutes of the day, this time selling off.  On the day, SPY gained 1.43%, DIA gained 1.53%, and QQQ gained 1.16%.  The VXX fell almost 9% to 31.97 and T2122 spiked from extremely oversold all the way up near the overbought territory at 76.19.  10-year bond yields jumped back up to 1.215% and Oil (WTI) climbed 1.36% to $67.32.

JNJ made news a couple of times during the day.  First, it spiked on leaked news that a settlement will be announced Wednesday between JNJ and 2 drug distributors and most of the plaintiffs in the thousands of opioid lawsuits totaling $26 billion in requested damages.  (It is reported that 40 states will agree to the settlement.  This includes NY, whose Attorney General tweeted that the state would get over $1 billion from the settlement.)  Secondly, late in the day, Bloomberg reported confirmation to a story from the weekend.  Apparently, JNJ has hired a law firm to organize the “Texas 2-Step” spinoff of Johnson Baby Powder into a separate company that will then immediately file bankruptcy.  This will shift liability for lawsuits related to the product containing carcinogens onto a bankrupt company and save JNJ potentially billions in damages.

After the close NFLX reported a beat on the revenue line, but missed on earnings.  It also beat on net subscriber growth but lowered guidance for Q3.  Meanwhile, CMG beat on both lines, with a significant beat on earnings ($7.46/share vs. $6.50/share est.).  Finally, while UAL lost money, it lost less than expected and therefore, delivered a beat on both lines.

This morning ANTM. KO, HOG, JNJ, VZ and most of the other major earnings reports came in with beats on both the top and bottom line.  Many, such as KO, raise full-year guidance as well.  For their part, JNJ said it expects over $2.5 billion in Covid-19 vaccine sales in 2021 alone.

Overnight, Asian markets were mixed but leaned to the green side.  Shenzhen (+1.34%) and Shanghai (+0.78%) led gainers.  Meanwhile, India (-0.76%) paced the losses.  In Europe, markets are strongly green across the board so far today.  The FTSE (+1.63%), DAX (+0.77%), and CAC (+1.27%) are typical for the continent at this point in the day.  As of 7:30 am, US Futures are pointing to a mixed and modest open.  The DIA is implying a +0.35% open, the SPY implying a +0.17% open, and the QQQ implying a -0.21% open.  10-year bond yields are up this morning to 1.237% with the dollar slightly stronger and commodities mixed in premarket trading.

The major economic news scheduled for release on Wednesday is limited to Crude Oil Inventories (10:30 am).  The major earnings reports scheduled for the day include ANTN, ASML, BKR, KO, CMA, HOG, HCSG, IPG, JNJ, KNX, LAD, MTB, NDAQ, NTRS, NVS, NVR, RCI, SAP, STX, and VZ before the open.  Then after the close, CCI, CSX, DFS, EFX, GGG, ICLR, KALU, KMI, LSTR, LVS, OMF, PLXS, SEIC, STC, FTI, THC, TXN, UFPI, and WHR report.

The bulls clearly showed up with strength Tuesday. However, that give back the last 30 minutes of the day certainly made it feel like much of the strength came from short-covering, with the squeezers taking profit at day end after sticking it to the squeezees all day. Technically, we filled the gaps in the QQQ and SPY, but potential resistance remains overhead in the form of prior trend lines and previous highs/lows. So, be careful trading in a still-undecided and volatile market.

Remember that you don’t have to trade every day. Trading a volatile market is difficult at best. So, manage your current positions first and if you do trade, stay nimble and cautious. Do not chase, stick with your trading rules, and maintain discipline. Trading success is all about consistency and that means taking singles and doubles. Unsettled markets is when we should be playing “small ball,” limiting losses and taking profits when we get them. Just keep piling up those trading goals met.

Ed

Swing Trade Ideas for your consideration and watchlist: NOK, MS, XLV, BCRX, CHHWY, ORCL, HD, PTON, UVXY. 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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