Bears took back control Friday as the Russian attack on a Ukrainian nuclear reactor site (causing fires) led to a 1% gap-down in the large-dap indices and two-thirds of a percent in the QQQ.  From there we had a roller-coaster ride the rest of the day that ended on an upswing the last 15 minutes.  This left us with gap-down Spinning Top type candles in all 3 major indices.  On the day, SPY lost 0.81%, DIA lost 0.49%, and QQQ lost 1.45%.  The VXX rose over 4% to 26.20 and T2122 fell but remains in the middle of the range at 52.87.  10-year bond yields fell sharply to 1.736% and Oil (WTI) spiked over 7% to $115.37/barrel.

February Payrolls data came out on Friday.  The biggest news was Nonfarm Payrolls grew more than 50% more than expected (+687k vs +400k est.).  The Participation rate also inched up a tenth of a percent versus January.  However, Average Hourly Earnings grew less than expected (+5.1% vs. +5.8% expected) and continue to fall behind inflation.  Finally, the Unemployment Rate fell to 3.8% (versus 3.9% expected).   

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On the Russian Invasion/Sanctions front, Russia reneged twice on ceasefires for civilian evacuations of cities under bombardment, and the US is in talks with Poland and other NATO allies to give Ukraine F-16s, which the US would then replace. V, MA, and AXP all also turned off their payment networks in Russia. For his part, Putin signed a decree that forces creditors to set up bank accounts in Russia and accept payments in Russian Rubles for both sovereign and corporate debt.  The idea is to avoid defaults while also shifting the pain of sanctions onto Western creditors (who must now accept Rubles and then cannot move the money out of Russia).  It’s worth noting that Rosneft, Gazprom, the Railway, and the Russian government all have large dollar payments on outstanding debt due soon (about $800 billion in the next 30 days).  So, western funds, banks, or energy companies expecting payments, you not only can’t get the money you are “paid,” but those funds will also continue to depreciate as the Ruble loses value.

BBBY stock is surging in premarket (up as much as 80%) after it became known that the Chairman of GME owns as much as 10% of the BBBY stock. GME Chairman Ryan Cohen was formerly the founder of online retailer CHWY.  He wrote a letter to the BBBY board suggesting they selloff the BuyBuy Baby chain and consider taking the company private via sale to private equity firms.  However, he reiterated the main problems facing the company (supply chain issues and market share losses) can be solved longer-term.

Overnight, the Asian markets were down hard.  Hong Kong (-3.87%), Shenzhen (-3.43%), and Japan (-2.94%) led the carnage.  In Europe, markets are red at mid-day, but not as bleak as in Asia.  The FTSE (-0.30%), DAX (-1.11%), and CAC (-1.21%) lead because of their size, but some of the smaller exchanges are both much deeper in the red as well as even a couple are slightly in the green in early afternoon trading.  As of 7:30 am, US Futures are pointing to another gap down.  The DIA implies a -0.78% open, the SPY is implying a -0.70% open, and the QQQ implies a -0.80% open at this hour.  10-year bond yields are higher to 1.775% and Oil (WTI) has spiked another 4+% to $120.48/barrel in early trading.

There is no major economic news scheduled for release on Monday.  The major earnings reports scheduled for release before the open are limited to AMR and CIEN.  Then after the close IEA reports.  

The major economic news scheduled for Friday includes Feb. Nonfarm Payrolls, Feb. Avg. Hourly Earnings, Feb. The major economic news for later this week includes January Imports/Exports and Trade Balance on Tuesday.  Wednesday brings January JOLTS and Crude Oil Inventories.  Thursday brings inflation information with the February CPI as well as Weekly Initial Jobless Claims and the February Federal Budget Balance.  Finally, on Friday we get the Michigan Consumer Expectations. 

Once again markets are taking a beating as Russia continues to violate ceasefires and bomb civilian areas of major Ukrainian cities. Russian sanctions and the fallout (the IMF is now predicting a significant hit to global GDP) continue to lead markets lower, but volatility remains high and losses are uneven. So, remain very cautious. If you are trading, trade small, be nimble, and be prepared to accept volatility-caused pain.

Once again, 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: No trade ideas today. 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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