The bears sprang a bull trap on Wednesday as all 3 major indices gapped higher 0.70%-1% at the open.  This came after there was no active fighting between Russia and Ukraine overnight.  However, that was the highs of the day, and markets sold off from that point (with a brief lunchtime rebound) and drove lower all the way into the close.  This left us with big, ugly black candles and gave us the lowest close since June 2021 in all 3 major indices.  On the day, SPY lost 1.75%, DIA lost 1.35%, and QQQ lost 2.56%.  The VXX was up 5 and a half percent to 24.64 and T2122 fell even further into the oversold territory to 8.04.  10-year bond yields spiked to 1.986% and Oil (WTI) was flat at $92.02/barrel.

During the day Wednesday, Ukraine called up 36,000 reserves to support their active military and have declared a state of emergency (allowing them to set curfews, restrict travel, and control press). Ukraine also had to deal with a cyber-attack that took many of its government and banking computer systems offline.  Then overnight, Russia launched its full-scale invasion of Ukraine as had been predicted by the US and NATO allies.  The incursion is on 3 fronts at the moment and Kyiv has been shelled.  So, expect more sanctions and whatever retaliatory measure (cyber and cold war) that may result.  Oil has already spiked above $100/barrel and the safety trade will be the order of the day in markets.

SNAP Case Study | Actual Trade

Not that it matters today, but after the close, FNF, EXR, LYV, LNVGF, BBWI, LILA, UCTT, EVH, EBAY, NTAP, BKNG, HTZ, MYRG, AMED, and BMRN all reported beating on both lines.  Meantime, BTG, LHCG, LILAK, RCII, and PTVE all missed on earnings while beating on revenue.  On the other side, MANT missed on revenue but beat on earnings.  However, WES, HLF, FLS, FTI, and SNBR all reported misses on both lines.

Again, not that it matters today, but so far this morning RY, BUD, DDAIF, NTES, MRNA, NEM, ABEV, AEP, CBRE, PWR, ARKAY, and PZZA have reported beats on both lines.  Meanwhile, BABA, TECK, DISH, NOMD, and SPTN have reported beating on earnings while missing on revenue.  On the other side, AMT, KDP, LYG, DISCA, WPP, NCLH, AHEXY, AHCO, JMIA, and MITT reported earnings misses but beat on revenue.  However, W, UTHR, PAAS, PRMW, and GCI have missed on both lines.

Overnight, the Asian markets were red across the board as is to be expected in time of war impacting global trade in at least Oil, Natural Gas, and Wheat along with any sanctions that may prevent business of any sort with Russia.  India (-4.78%) was the big loser, but the damage was more than 2% everywhere except Malaysia (-0.77%).  Hong Kong (-3.21%), South Korea (-2.60%), and Shenzhen (-2.20%) are pretty representative of the regional reaction.  In Europe, again as would be expected, the reaction has been worse.  The FTSE (-3.01%) is the least impacted, the DAX (-5.01%) and CA (-4.69%) are typical.  Interestingly, the Russian exchange (-34.10%) has suffered a massive hit.  As of 7:30 am, US Futures are pointing to a major gap down at the bell.  The DIA implies a -2.35% open, the SPY is implying a -2.41% open, and the QQQ implies a -2.92% open at this hour.  10-year bond yields dropped dramatically to 1.859% as traders bid up bonds on the safety trade and Oil (WTI) shot up over 8.2% but has “backed off” to $98.93/barrel at the moment (it was well over $100 earlier).

The major economic news scheduled for Thursday includes Q4 GDP and Weekly Initial Jobless Claims (both at 8:30 am), Jan. New Home Sales (10 am), Crude Oil Inventories (11 am), and a trio of Fed speakers (Bostic at 11:10 am, Mester at noon, and Waller at 8 pm).  The major earnings reports scheduled for before the open include AHCO, BABA, AEP, AMT, BUD, AZUL, BALY, CRC, CBRE, CQP. LNG, CCO, DISCA, DISH, SATS, ELAN, EME, EXPI, FCN, GCI, IBP, IRM, KDP, MRNA, NTES, NOMD, NCLH, NRG, OGE, PZZA, PRMW, PEG, PWR, RY, SJI, SPTN, SRCL, SHOO, TRGP, TECK, VIV, TFX, TEN, TNC, and W.   Then after the close, ADSK, SQ, CVNA, CENX, CHE, COIN, CODI, CVET, CWK, DELL, EIX, EBS, ERIE, ETSY, FTCH, FND, INTU, MTZ, MNST, OXY, ZEUS, OPEN, OVV, PBA, RKT, SEM, SM, SWN, SFM, TPC, UNVR, UHS, VMW, WSC, and INT report.

In the face of the Russian invasion, we can expect wholesale selling and rotation toward safety trades (Bonds, Gold, Utilities, etc.). Expect massive volatility today, but it is likely too late to do much damage control unless you were hedged before the shock. If this is like similar past events, expect the fear to wear off as the sanctions and impacts have had time to settle in. However, that won’t help today, at least not early. Personally, I will be looking to ride out the initial shock in positions where it’s too late to be ahead of the news and I definitely won’t chase any new trades until things settle down. In short, today would be a good day to go fishing or sit on your hands if you were not prepared ahead of time.

Remember that you don’t have to trade every day and you definitely don’t need to chase the premarket moves by trading early. Ask yourself whether you have an edge in this sort of volatility. If not, sitting on your hands may be the best move you could make. Trading is a marathon, not a sprint. So, stick to your trading rules and manage the things that 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. The first rule of making money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.)

Ed

Swing Trade Ideas for your consideration and watchlist: No trade ideas today – this is not the time to step in front of fear and massive volatility. 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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