The volatility train kept rolling Tuesday with premarkets falling back to nominally flat opens that were followed by an all-day roller-coaster.  We closed on a downswing.  This gave us huge, high-wick, inverted hammer (I don’t believe those are bullish) type candles in the SPY and DIA.  Meanwhile, the QQQ printed a black, long-legged Doji.  All 3 major indices are close to challenging the breakout of their “dreaded-h” patterns.  On the day, SPY lost 0.74%, DIA lost 0.58%, and QQQ lost 0.46%.  The VXX was down 1% to 28.15 and T2122 remains in the low end of the midrange at 29.12.  10-year bond yields rose to 1.852% and Oil (WTI) spiked almost 4.5% to $124.75/barrel.

The Russian invasion and sanctions continue to be the story driving markets.  MCD stock took a big hit (almost 5%) Monday as it was noted over the weekend that MCD has a larger footprint in Russia than other fast-food chains.  After the close, Russia threatened to stop gas flows to Europe and said the world will see $300 Oil if the WOn the Russian invasion and sanctions front, MCD and SBUX both announced they are closing all Russian locations (MCD has 850) until further notice.  KO followed suit by also suspending business in Russia.  PEP announced they have suspended soda sales, but will continue to sell snacks and other products to Russia.  President Biden also announced a ban on the import of Russian Oil/Gas and the UK announced they will be completely out of Russian oil by the end of this year.  Then overnight, commodity prices fell as traders at least temporarily came to the conclusion the initial reaction (such as a 350% spike in Nickel prices) was an over-reaction.

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AAPL had a blasé product announcement event Tuesday.  The company unexpectedly raised the price of their replacement entry-level iPhone SE by 7.5% (to $429 from $399), showing that they are not concerned about gaining market share in the mid-range phone market (the one phone segment AAPL lags far behind).  Other announcements were as expected, with new iPhone colors, a new iPad, a faster Mac, and a 27” display, all of which are priced at the extreme end of those product categories relative to competitors.

Overnight, President Biden issued an executive order on cryptocurrencies.  The order basically sets up a framework for regulating cryptocurrencies to protect consumers, businesses, and investors while mitigating systemic risk.  He also directed the government to explore the technology and capacity needs for a potential Central Bank Digital Currency (such as China now has).  While critics immediately said they fear the move will make the US fall behind other countries due to the regulation, others such as exchange managers say it is a constructive approach.  In either case, Bitcoin spiked 8% on the news as markets love the removal of uncertainty.

After the close, CASY, ABM, and SFIX all beat on both lines.  However, SFIX shares plummeted after the company announced that it is slashing forecasts for the full year.  So far this morning, ZIM, THO, KFY, and REVG have all reported beats on both lines.  However, ADDYY, CPB, and DSEY all reported beats on earnings while missing on revenue.

Overnight, the Asian markets were mixed but leaned slightly green.  Shanghai (-1.13%), Shenzhen (-1.12%), and South Korea (-1.09%) paced the losers with India (+2.07%), Thailand (+1.52%), and Singapore (+1.48%) leading the more plentiful gainers.  In Europe, stocks are mostly (and strongly) green at mid-day.  The FTSE (+1.35%) lags with the DAX (+4.50%) and CAC (+4.53%) leading most of the rest in a bull charge.  Only Norway and Denmark see any red and they are only fractionally down.  As of 7:30 am, US Futures are pointing toward a strong gap higher.  The DIA implies a +1.44% open, the SPY is implying a +1.58% open, and the QQQ implies a +1.98% open at this hour.  10-year bond yields are up to 1.91% and Oil (WTI) is down 2.26% to $120.87 in early trading.

The major economic news scheduled for release on Wednesday is limited to January JOLTS (10 am), Crude Oil Inventories (10:30 am), and the WASDE report (noon).  The major earnings reports scheduled for release before the open are limited to ADDYY, CPB, PLCE, DSEY, KFY, REVG, THO, UNFI, and ZIM.  Then after the close SID, BEKE, LU, and NTCO report.  

Once again, volatility is king as it appears we will see a significant gap at the open. However, Russian bombing of Ukrainian cities is picking up pace as it now appears the Russian strategy is to reduce the major cities to rubble before entering. The question is whether the bulls can sustain the early momentum after the open given the various threats to European gas supplies and the increasing likelihood of at least partial western energy sanctions. Remain very cautious. A gap up DOES NOT indicate a bottom has been put in. So, if you are trading, trade small, be nimble, and be prepared to accept volatility-caused pain.

Trading is a marathon, not a sprint. So, 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 gaps and moves. 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: BITO, WOOF, ZIM, OSTK, DLTR, PLUG, TSLA, MDT, MVIS, AAPL, CLOV, FSK, OLED, ENPH. 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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