Monday was another day of incredible volatility with a 1% – 1.5% gap-down open, a late morning rally that filled the gap, an afternoon selloff that took us to the lows of the day, and then a late-day rally to take us out not far off the highs.  This left us with gap-down large-body white candles with wicks on both ends and the SPY and QQQ able to climb back above their T-lines.  On the day, SPY lost 0.25%, DIA lost 0.40%, and QQQ gained 0.38%.  The VXX rose to 24.00 and T2122 was relatively flat, still inside the edge of the overbought territory at 83.17.  10-year bond yields dropped dramatically to 1.83% and Oil (WTI) spiked almost 4.6% to $95.78/barrel.

Of course, the big story was and continues to be the Russian invasion of Ukraine and the sanctions placed on Russia in return.  On the ground, a 40-mile-long Russian armored column has reached the outskirts of Kyiv and bombing continues in the second largest city Kharkiv.  However, Ukrainian resistance remains stiff.  After the close Monday, CA announced they will be banning the import of Russian Oil (symbolic since CA only imports about $560 million per year).  In the US, the national average gas price has reached $4/gallon for the first time since 2008.  Two weeks ahead of the Fed meeting, talk has begun about whether and how the FOMC will adjust its timeline in the face of an uncertain impact of this war on the US (and) global economy.  Fed member Waller said normally a half percent hike would be in order, but in the wake of Ukraine, a more modest approach may be required.   

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After the close, HPQ, WDAY, ZM, ENDP, ACHC, and PDCE all reported beats on both lines.  Meanwhile, SBAC, DAR, VRM, HY, and OKE all missed one earnings but beat on revenue.  On the other side, SGRY and PRIM beat on earnings but missed on revenue.  It is worth noting that HPQ said they expect Russian sanctions to cut their profits by 3 cents per share for the current quarter. Elsewhere, ZM issued revenue guidance for the year that disappointed by coming in below analyst estimates.

So far this morning, APG, BNS, BMO, BAYRY, BIDU, AZO, HRL, OPYGY, and BLDR have all reported beats on both lines.  SE, IQ, and GOLF all missed on earnings but beat on revenue.  Meanwhile, KTB beat on revenue but missed on earnings.

Overnight, the Asian markets were almost green across the board, with only Malaysia (-0.74%) printing any red.  However, Taiwan (+1.39%), Japan (+1.20%), and Singapore (+1.12%) led a broad-based rally.  In Europe, we see the mirror image at mid-day.  Only Norway (+1.58%) shows any green with the FTSE (-1.25%), DAX (-2.70%), and CAC (-2.90%) leading the continent lower in early afternoon trading.  As of 7:30 am, US Futures are pointing toward another red open.  The DIA implies a -0.74% open, the SPY is implying a -0.81% open, and the QQQ implies a -0.87% open at this hour.  10-year bond yields are dropping sharply (-1.738%) and Oil (WTI) is up another 4.41% in early trading.

The major economic news scheduled for Tuesday includes Feb. Mfg. PMI (9:45 am), ISM Feb. Mfg. PMI (10 am), and President Biden’s State of the Union Address (8pm-ish).  The major earnings reports scheduled for before the open include ADT, AZO, BIDU, BMO, BNS, BLDR, CHS, CLVT, DPZ, HGV, HZNP, HRL, IGT, IQ, SJM, KSS, KTB, PRGO, REGI, SE, TGT, TMX, and UWMC.  Then after the close, ADV, AMC, BGS, CNR, FSLR, GO, HPE, JAZZ, JWN, ROST, CRM, SGMS, SWX, TTEC, URBN, and VGR report.

With no major new developments on the Russian invasion or sanctions fronts overnight, this might be a day for markets to reconsider. However, uncertainty reigns, and volatility will most likely continue to be the order of the day. So, continue to be cautious and continue to only take trades if you are willing to suffer the pain of reversals and volatility. With that said, if this is like similar past events, expect the fear to wear off over time as the impacts have had a chance to settle in. Try to ride out the shocks and take a little longer-term view. The situation does not fundamentally change global economics, but it produces uncertainty and markets hate uncertainty.

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: Rick is out sick today, so no trade ideas. 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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