Markets made a modest gap higher after the previous brutal day.  However, this turned into a “Dead Cat” bounce as waves of price action followed the volatility all day.  At the end of the day, we went out near the lows, leaving us with indecisive candles with larger upper wicks in all 3 major indices.  On the day, SPY gained 0.15%, DIA gained 0.25%, and QQQ lost 0.16%.  The VXX rose to 27.81 and T2122 popped out of the oversold territory at 34.25.  10-year bond yields fell slightly to 1.529% and Oil (WTI) dropped nine-tenths of a percent to $74.62/barrel.  Natural Gas plummeted 7.24% on the day (from a 7-year high) after having been down over 8% in the early afternoon.

During the day, Fed Chair Powell told a conference hosted by the ECB that inflation was “frustrating” and that he sees it continuing into next year.  He also expressed frustration that not enough people are getting vaccinated to stop the spread of the Covid Delta variant and that is having “important economic policy impacts.”  He is scheduled to testify before the House on Thursday.

Early this morning, the Senate reached a deal to avoid a government shutdown.  The deal would fund the government through December as well as provide funds for hurricane relief and Afghan refugee resettlement.  It seems Democrats were the ones that blinked in these negotiations because the bill does not address the debt ceiling (that now will require a separate bill and fight), which previously had been included in all Democratic proposals.  The House still needs to pass this bill, as -is before midnight to avoid the shutdown.

Z released a report saying that the national average rent skyrocketed by 11.5% (year-on-year) in August.  States like FL and GA saw much higher 25% average increases over the same time.  Another firm (Yardi) reported a “more reasonable” increase of 10.3% in August (again, year-on-year).  The Dallas Federal Reserve estimates over the next two years rents will continue to rise at the highest rate in more than 30 years.  These increases help underscore the dramatic real estate market price increases but also are likely to lead to dramatic housing problems with wages simply being unable to keep pace. 

Overnight, Asian markets were mixed.  Indonesia (+2.02%), Australia (+1.88%), and Shenzhen (+1.64%) led the gainers.  Meanwhile, Malaysia (-0.64%), India (-0.53%), and Hong Kong (-0.36%) were among the losers.  In Europe, markets are mostly green at mid-day in modest trading.  The FTSE (+0.21%), DAX (-0.20%), and CAC (+0.06%) are typical of the region.  As of 7:30 am, US Futures are pointing toward a green open.  The DIA is implying a +0.44% open, the SPY implying a +0.45% open, and the QQQ implying a +0.51% open at this hour.  Natural Gas continues its tear, up another 2+% in early trading.

The major economic news scheduled for release on Thursday is limited to Q2 GDP and Initial Jobless Claims (both at 8:30 am), Chicago PMI (9:45 am), and 4 Fed speakers (Chair Powell testifies at tbd, Williams at 10 am, Bostic at 11 am, and Harker at 11:30 am).  The major earnings reports scheduled for the day include BBBY, KMX, MKC, PAYX, and HNNMY before the open.  Then after the close, JEF reports.  The month and Q3 also come to an end today. 

As Q3 comes to an end today, beware of rotation as funds window-dress their portfolios prior to reporting. Also, keep in mind that we have 4 Fed speakers again today, including Fed Chair Powell for the third straight day. There is no reason to think the volatility will lesson today as stocks attempt to retest resistance above in the bearish trend.

Remember you don’t have to trade every day. Cash is a perfectly valid position. Nobody has ever consistently predicted reversals. So, don’t think you can either. Consider waiting if you want to be long this market and stay nimble if you trade short as bear moves end faster than bull moves. Focus on the process and on managing the things you can control. It’s discipline and good trading rules that separate trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.

Ed

Swing Trade Ideas for your consideration and watchlist: MRK, FCEL, XLK, TSLA, NFLX, SPXU, SPY, SDS, LUMN, SQQQ, 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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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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