The good news is that Tuesday was a bit less volatile than Monday.  However, we opened with a 1%-2% gap lower.  This led to a roller-coaster in all 3 indices, with the SPY and DIA completely fading the gap before rolling over again.  Meanwhile, the QQQ roller-coaster stayed around the gap-down level before also closing on a downswing.  This left us with long-legged, Spinning Top (indecisive) candles in all 3 major indices.  On the day, SPY lost 1.19%, DIA lost only 0.21%, and QQQ lost 2.32%.  The VXX rose slightly to 23.82 and T2122 climbed just out of the oversold territory to 23.16.  10-year bond yields closed up to 1.781% and Oil (WTI) rose almost 2.5% to $85.38 on continued fear of a Russian invasion of Ukraine.

After hours, the Commerce Department released a report that said due to supply chain problems, some US manufacturers are down to less than 5 days’ worth of inventory of computer chips (semiconductors).  The report summarized survey finding from 150 manufacturers, which said on average they had maintained 40 days of supply in 2019, but were down to 5 days of inventory last fall and have not recovered.  While the report did not name any specific companies, it did cite the auto, consumer electronics, and medical device industries.  The report also said the worst-hit businesses are those that use older “legacy” (low margin) chips in their products.

After the close Tuesday, MSFT, COF, FFIV, and TXN all reported beats on both lines.  So far this morning, ADP, T, TEL, NDAQ, and GLW have all reported beats on both lines.  However, ANTM and GD both beat on earnings but came in light on revenue.

Overnight, Asian markets were mixed.  Australia (-2.49%) was an outlier with Japan (-0.44%) and South Korea (-0.41%) pacing losses and India (+0.75%), Shenzhen (+0.70%), and Shanghai (+0.66%) leading the gains.  In Europe, stocks are strongly green across the board at mid-day.  The FTSE (+1.80%) lags, while the DAX (+2.28%) and CAC (+2.26%) are typical of the continent in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a strong start to the day.  The DIA implies a +0.94% open, the SPY is implying a +1.28% open, and the QQQ implies a +1.81% open at this hour.  10-year bond yields are up to 1.79% and Oil (WTI) is also up three-quarters of a percent in early trading.

The major economic news scheduled for release Wednesday includes Dec. Trade Goods Balance and Dec. Retail Inventories (both at 8:20 am), Dec. New Home Sales (10 am), Crude Oil Inventories (10:30 am), and then the FOMC Interest Rate Decision and FOMC Statement (both at 2 pm), followed by the FED Chair Press Conf. (2:30 pm).  Major earnings reports scheduled for before the market include ABT, APH, ANTM, ADP, T, BA, NSC, FCX, GD, GLW, HES, KMB, KNX, NDAQ, NSC, PGR, ROL, and TEL.  Then after the close, AMP, AVT, AXS, CACI, CLS, CCI, EW, FLEX, INTC, LRCX, LSTR, LVS, LEVI, MTH, MEOH, MKSI, PKG, PLXS, PTC, RJF, STX, SEIC, NOW, TER, TSLA, URI, VRTX, WHR, and XLNX report.

While we have other economic data and earnings, the Fed decision (and especially the statement and presser) will call the market tune today. Bull traders seem to be anticipating no shocks, as they’re trying to front-run the announcements. That leaves the real risk exposure to the downside. However, don’t be surprised if markets lose their nerve and decide to drift into the announcement today. Either way, we can expect tremendous volatility right after the announcement as traders reset positions once the outcome is known. So, as I continue to say, markets will not fall forever. Now is the time to be preparing for the rally that will follow (whenever it comes). Get those trading plans and rules tuned up, decide on your watchlists for a potential rotation, and be prepared. However, it is not time to predict a turn or chase moves you have missed. Trade carefully.

The first rule of making money in the market is to not lose big money in the market. So, stick to your trading rules and manage the things you can control. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Don’t be stubborn. When you’re wrong, just admit it and take your loss. (That’s why we set stops.)

Ed

Swing Trade Ideas for your consideration and watchlist: CF, FANG, APA, USO, WSM. 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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