Markets made a massive gap higher (2% to 2.5%) Wednesday after commodity prices began to fall the previous night.  However, the rest of the day was a roller-coaster ride with a slightly bullish trend.  This resulted in the best day since the recovery from the Covid Crash (June 2020).  We were left with a Spinning Top in the SPY, a Doji in the DIA, and a white candle with larger wicks on both ends in the QQQ.  All 3 of the indices did test, but none of them was able to break through, their T-line by day end.  On the day, SPY gained 2.66%, DIA gained 2.10%, and QQQ gained 3.60%.  The VXX fell 4% to 27.03 and T2122 rose to just outside the overbought territory at 79.41.  10-year bond yields spiked to 1.943% and Oil (WTI) took a tremendous beating (down 13% at one point before rallying), closing down 10.54% to $110.66/barrel.  Wheat also fell more than 6.5% on the day.

After the close, AMZN announced a 20-for-1 stock split for owners of record on May 27 (effective June 3, 2022).  In addition, the company announced a $10 billion stock buyback program, which replaces the current $5 billion buyback program.  The stock spiked over 13.5% on the news during post-market trading. Also after the close, LU, FNV, KRO, and CRWD all reported beats on both lines.  However, BEKE missed on earnings while beating on revenue.

SNAP Case Study | Actual Trade

Overnight, the House passed a bipartisan $1.5 trillion omnibus spending bill (including $13.6 billion for Ukraine) Wednesday evening.  Covid-19 Relief spending was stripped out to avoid contention and make it easier to get to 60 votes in the Senate.  The Senate will take up the bill today and it needs to be passed by Friday to avoid a government shutdown.

Related to Oil prices, US Energy Sec. Granholm called on US oil and gas companies to increase production.  However, many oil industry officials at the conference expressed reluctance to add even more capacity.  The executives noted that the White House had also asked OPEC to increase output. (On that front, the UAE openly called Wednesday for OPEC to increase production to replace any Russian oil that is banned by the West.)  So, US companies fear the cost and long-term nature of adding US capacity when it is possible that supply may have overcome the current deficit by the time that output was online (i.e. prices may have come back down).  There was also an unstated concern about US government policies intended to promote competing “green” alternatives to oil and gas. Those concerns aside, US producers have already increased US output by a million barrels per day this year. 

On the Russian invasion story, CAT and DE joined the chorus of companies that have suspended sales and business operations to Russia.  MCD clarified that their closure of 850 restaurants in Russia will cost them $50 million per month. Meanwhile, Russia has escalated the bombardment of surrounded cities.  In Mariupol, they bombed a children’s hospital as well as the civilian evacuation corridor, killing several people.  Russian Foreign Minister Lavrov also claimed they have found an alternative buyer for oil and gas that is now being sold to Europe.

Overnight, the Asian markets were strongly green across the board.  Japan (+3.94%), Taiwan (+2.46%), and Shenzhen (+2.18%) led the way higher.  However, in Europe, stocks are mostly red (with the exceptions of Norway (+0.14%) and Finland (+0.22%)) at mid-day.  The FTSE (-1.30%), DAX (-3.10%), and CAC (-2.43%) are leading the way lower in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a gap lower at the bell.  The DIA implies a -0.89% open, the SPY is implying a -0.89% open, and the QQQ implies a -1.31% open at this hour.  10-year bond yields are up to 1.953% and Oil (WTI) has spiked another 4.35% to $113.40/barrel in early trading.

The major economic news scheduled for release on Thursday is limited to February CPI and Weekly Initial Jobless Claims (both at 8:30 am) and Feb. Federal Budget Balance (2 pm).  The major earnings reports scheduled for release before the open are limited to BZUN, CLVT, GCO, and JD.  Then after the close DOCU, ORCL, and ULTA report.   

Volatility remains king as it appears we will see a significant gap down at the open. However, there is CPI data before the open and that may change things. The question is whether hot CPI data will lead to more fear when a rate hike next week is already assumed to be a certainty. Regardless of how we open, be wary of intraday swings and be very cautious. 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: OPCH, OXY, WU, OLED, PENN, RKT, KO, ENPH, BCC, UPST, HPQ, BLNK, PLUG, NET, RUN, FSLR. 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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