Tuesday saw the bears in control all day.  After a modest gap-down open, stocks sold off all morning and then whipsawed along the bottom all afternoon.  The day ended near the lows.  This left us with large black candles in all 3 major indices and all 3 closing on an upswing, but well back below their T-lines and apparently working on a “Dreaded h” pattern.  On the day SPY lost 1.53%, DIA lost 1.80%, and QQQ lost 1.52%.  The VXX gained 11% to 26.67 and T2122 fell back to the mid-range at 50.94.  10-year bond yields fell dramatically (mostly in premarket) to 1.731% and Oil (WTI) shot over 9% higher to $104.49/barrel.

The Russian invasion continues to drive markets with Financials down hard Tuesday (XLF was down 3.66%) over fear about what sanctions might do to US credit markets. (Fear of US Bank exposure to loans made to Russian entities or companies that depend on Russian markets or components.)  Russia also instituted “capital controls” that prevent foreign companies from selling Russian assets in an effort to stop companies like BP and RDSA from exiting their energy sector projects.  The measures also prevent hard currencies (essentially anything except Rubles) from being sent abroad.  After the close, F reported that it is suspending all operations in Russia and AAPL has halted all product sales to that country.  Overnight, the EU extended sanctions to Belarus, which sent troops to help the Russians on Tuesday.    

Perhaps the biggest news out of the Russian invasion is the fact that Putin has managed to unite Europe (including Switzerland) and the US.  He even managed to bring the Democrats and Republicans in Congress together as both sides repeatedly applauded President Biden in a very rare show of bipartisan support for sanctioning Russia and supporting Ukraine.     

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This morning F announced it will split its Electric Vehicle (EV) and Internal Combustion Ending (ICE) businesses into separate divisions.  This will free up the divisions to focus instead of trying to build both ICE and EV vehicles.  The company said is has no plans to spinoff either division.  However, in the past all the major automakers have said they expect to have all new vehicles be EV sometime in the next 10-15 years.

In a story that broke over the weekend, but only noticed by financial press Tuesday, NVDA reported that discovered it had been hacked on Feb. 23.  The hack allowed the bad guys to steal over one terabyte of NVDA intellectual property.  Contrary to initial fears of it being tied to Russian cyber-attacks, it appears the hack came from a South American extortion group, which demanded ransom.  Interestingly, NVDA has in turn hacked the group (named LAPSU$) and encrypted the hacked data.  However, LAPSU$ claims it has backups of the data and will release it unless NVDA pays the ransom. Some of the data has been released online by LAPSU$ as a show they still have the information.

After the close, AMC, CRM, ROST, JWN, JAZZ, CNR, MCFE, and KRA all reported beats on both lines.  Meanwhile, HPE beat on earnings while missing on revenue.  On the other side, NFE and URBN beat on revenue but missed on earnings.

Overnight, the Asian markets leaned heavily to the red side.  Hong Kong (-1.84%), Japan (-1.68%), and Shenzhen (-1.05%) led the region lower.  In Europe, markets are mixed but lean to the upside at mid-day.  The FTSE (+0.96%), DAX (+0.70%), and CAC (+0.76%) lead the region higher as Athens (-2.10%) and Denmark (-1.39%) lead the smaller exchanges swimming against that rising tide.  Russian markets remain closed.  As of 7:30 am, US Futures are pointing toward a green open.  The DIA implies a +0.80% open, the SPY is implying a +0.78% open, and the QQQ implies a +0.82% open at this hour.  10-year bond yields are up a bit to 1.758% and Oil (WTI) is spiking another 6% to $109.54/barrel in early trading.

The major economic news scheduled for Wednesday includes an OPEC meeting (5 am), Feb. ADP Nonfarm Payrolls (8:15 am), Crude Oil Inventories (10:30 am), and the Fed Beige Book (2 pm).  There are also multiple Fed speakers (Hawkish Member Bullard at 9:30 am and Fed Chair Powell testifies at 10 am).  The major earnings reports scheduled for before the open include ANF, AMRX, BHG, CLTR, DCI, DY, and PDCO.  Then after the close, AEO, SQM, GEF, JXN, PSTG, SPLK, and VSCO report.

Volatility has not gone away, but it looks like the bulls will have the momentum at the open. This may prevent the bears from following through on yesterday’s bearish move. Again we need to resist the temptation to think “the bottom is in” regardless of what happens in the market today. Russia surrounded two more major cities overnight and the downside news from sanction impacts on the West has yet to really make news. In short, the bears (both Russian and market) still have plenty of ammo they have not yet put into action. So continue to be careful, nimble, hedged, and aware.

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. Remember that you don’t have to trade every day (or even week) and you definitely don’t need to chase moves. 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: SPCE, PLUG, XOM, PINS, QS, TECK, PENN, TWTR, ADM, BITO, INTC. 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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