Markets gapped down on Friday, but that was a bear trap as the bulls immediately started a slow, steady, all-day rally that closed near the highs.  This left us with another large shite candle in all 3 major indices.  It was the fourth straight gain on a strong white candle and saw the large-caps cross up through their 50sma.  On the day, SPY gained 0.78%, DIA gained 0.50%, and QQQ gained 2.05%.  This capped the best week since 2020.  The VXX fell 4.4% to 25 and T2122 remains very overbought at 93.23.  10-year bond yields fell to 2.153% and Oil (WTI) gained 2% to $105.10.

This morning it was announced that BRKB has purchased another insurance company (Y) over the weekend for $11.6 billion in cash.  That represents less than a 2% premium on the Y closing price Friday, after it is clear that word of the deal had leaked and Y spiked 23% on the day.  In other business news, another BA 737 plane (this one now a 737 Max) has crashed.  This time the crash was in China with 132 people on board.  BA stock has been down as much as 10% in premarket.

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On the Russian invasion story, the Ukrainian defense continues to surprise everyone, especially the Russians.  On Sunday the Russians issued an ultimatum to surrender to the defenders of Mariupol and then giving everyone in the city until this morning to be exit (to Russian “refugee camps”?). This was clearly an implication that Russia will go “full Aleppo” on the city as of today.  The demands were rejected.  China has ordered their national coal stocks to be replenished (presumably from Russia) overnight.  This raises the specter of sanctions spreading to China after last week’s marathon sessions of warning the Chinese not to give Russia any material help.

In economic news later this week, we have a trio of Fed speakers on Tuesday (Williams at 10:35 am, Daly at 2 pm, and Mester at 5 pm).  On Wednesday we get Feb. New Home Sales (10 am), Crude Oil Inventories (10:30 am) and a couple of more Fed speakers (Chair Powell at 8 am and Daly at 11:45 am).  Thursday brings Feb. Durable Goods Orders, Q4 Current Account, and Weekly Initial Jobless Claims at 8:30 am, Mfg. and Services PMIs (9:45 am) and more Fed speakers (Waller at 9:10 am and Bostic at 11 am).  Finally, Friday we get Michigan Consumer Sentiment and Feb. Pending Home Sales (10 am) and two more Fed speakers (Williams at 10 am and Waller at noon).

Overnight, the Asian markets were mixed.  Singapore (+0.75%), Japan (+0.65%), and Taiwan (+0.59%) led gainers while India (-0.98%), Hong Kong (-0.89%, and South Korea (-0.77%) paced the losses.  This comes as China has handled the recent covid resurgence well and it appears economic impacts will be minimal as one city at a time is locked down and then later released.  In Europe, stocks are also mixed on modest moves at mid-day.  The FTSE (+0.70%), DAX (+0.05%), and CAC (-0.09%) are typical of the range across the continent in early afternoon trading.  It is worth noting that in Russia they have allowed bonds to resume trading, but not stocks.  Russian bond yields have spiked to almost 20% in their premarket but fell back to 13% when the Russian bond exchange opened.  As of 7:30 am, US Futures are pointing toward a flat open.  The DIA implies a -0.17% open, the SPY is implying a +0.08% open, and the QQQ implies a -0.01% open at this hour.  10-year bond yields are surging again this morning at 2.189% and Oil (WTI) is spiking again, up over 4% to $109.09/barrel.

The only major economic news scheduled for release on Monday are two Fed speakers (Bostic at 8 am and Chair Powell at 10 am).  The only major earnings report scheduled before the Open is PDD.  After the market close, NKE and TME report.

The week ahead looks like a slow week for economic news with a lot of Fed speakers out talking their opinions on the economy and monetary policy. After 4 days of strong rally, markets are very extended. Even if a bottom has already been put in, rest and consolidation is clearly in order. However, remember we can’t predict Mr. Market, he can remain “wrong” a lot longer than we can stay solvent being “right too early.” So, be careful of chasing optimism at this point, but recognize that the longer-term downtrend has been broken. We just need to see a higher low hold and bulls to step in to establish the new uptrend.

Stick to your trading rules and manage the things that you can control. Remember that you don’t have to trade every day (or even week) and you definitely don’t need to chase gaps and moves. Trading is a marathon, not a sprint. 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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