Friday brought us a modest gap higher in all 3 major indices.  This let into initial selling the first 30 minutes and then a significant rally that lasted the rest of the morning.  The afternoon gave us a sideways chop that ended on an upswing the last half hour and saw all 3 major indices closing very near the highs of the day.  As a result, we printed shite candles and broke through the T-line in all 3.  However, the downtrend from the last couple of weeks has not yet been broken.  On the day, SPY gained 2.21%, DIA gained 2.47%, and QQQ gained 1.55%.  VXX fell 4% to 22.95 and T2122 spiked up into the overbought territory at 85.08.  10-year bond yields were up slightly to 1.97% and Oil (WTI) fell nine-tenths of a percent to $92.00/barrel.

The main story continues to be the Russian invasion of Ukraine and the Western sanctions that have resulted.  Over the weekend, some Russian banks were kicked out of the SWIFT payment system.  (Some credit cards just won’t work in Russia now as well as hitting foreign trade.) This is a way to target all non-energy and non-ag exports by Russia (which while significant are still minor relative to their Energy and Ag exports).  The EU also closed its airspace to Russian planes. Much more importantly, the EU banned all transactions with the Russian Central Bank, which will prevent Russia from accessing a little over half of their country’s bank reserves.  This forced the Russian Central Bank to raise rates 20% (to discourage borrowing from their depleted reserves).  On Monday emerging market currencies were slumping and the Ruble is down 30%.  As a safe haven, the dollar is climbing versus all currencies. In non-economic fallout, on Sunday, BP announced it will be selling (presumably at a loss) its nearly 20% state in the Russian state-owned energy company Rosneft. 

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In other news, during the day Friday, the SEC proposed new Short Selling rules.  The rules focus on larger traders, defined as those with at least $10 million or 2.5% of the float short for any stock.  The regulation would require the shorts to submit monthly data to the SEC and also require brokerages or funds that lend shares for shorting to submit data on the transaction within 15 minutes of loaning the stock.  However, these proposals are still far from certain as the agency has extended the public comment period on these proposed regulations and we know large funds and brokerages oppose them.

This week also includes a broad range of economic data.   Monday and Tuesday see Mfg. PMI data.  Meanwhile, Wednesday brings both an OPEC meeting and US Oil Inventories (which may be important depending on the Russian invasion impacts on oil markets) as well as Fed Chair Powell beginning 2 days of Congressional testimony.  Then Thursday gives us Jobless Claims, Q4 Productivity, and Services PMI.  Finally, on Friday we get February Payrolls, Unemployment, and Participation data.  In addition to all of this, there will be several Fed speakers during the week.

Overnight, the Asian markets were mostly green.  Singapore (-1.59%) was an extreme outlier and one of only two exchanges in the red, but Shanghai (+0.32%), Japan (+0.19%), and South Korea (+0.84%) are representative of the region.  In Europe, markets remain in the red, with a few smaller exchange outliers.  For some reason, Denmark (+2.25%) is an extreme outlier to the green side.  The FTSE (-1.24%), DAX (-2.35%), and CAC (-2.95%) are typical of the region as Europe anticipates the pain of sanctions on their own economies.  As of 7:30 am, US Futures are pointing toward another significant gap down.  The DIA implies a -0.84% open, the SPY is implying a -0.87% open, and the QQQ implies a -0.81% open at this hour.  10-year bond yields have dropped sharply to 1.918% as money flees to bonds and Oil (WTI) shot up about 5% to 96.12 in early trading.

The major economic news scheduled for Monday includes Jan. Goods Trade Balance and Jan. Retail Inventories (both at 8:30 am) and Chicago PMI (9:45 am).  The major earnings reports scheduled for before the open include BRK.B, CANO, DQ, XRAY, FMX, GLP, ITRI, JLL, KOS, NLSN, PRTY, TGNA, VEON, and VTRS.  Then after the close, ACHC, CAPL, DAR, ENDP, HPQ, OKE, PDCE, PRIM, SBAC, SGRY, VRM, WDAY, and ZM report.

Once again today we face another wave of shock from the Russian invasion (and sanctions) and yet again this is a situation where the market will likely over-react and then whipsaw. If you were not hedged or in cash going into the weekend, it is very likely too late to avoid some pain. However, you can avoid the panic and mistake of selling into the initial over-reaction this morning. Expect massive volatility today, but try to remain calm. If this is like similar past events, expect the fear to wear off as the impacts have had time to settle in. Try to ride out the initial shock this morning and be very, very, leery of chasing any new trades (either direction) until things settle down. Once again, today would be a good day to turn off the TV and 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: RUN, SQQQ, ZEN, RWM, SNAP, SPCE, TMUS, TECK. 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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