On Wednesday CPI came in hotter than expected (but still better than last month) and as a result premarkets pulled back, giving us a small gap down at the open.  From there, the QQQ led the other indices into an all-day selloff that closed near the lows in all 3 major indices.  This gave us big, ugly black candles and new 52-week lows in all three.  On the day, SPY lost 1.61%, DIA lost 1.02%, and QQQ lost 2.99%.  The VXX diverged from expectations by only rising a fraction to 27.28 and T2122 fell even more deeply into the oversold territory at 0.81.  10-year bond yields fell to 2.93% and Oil (WTI) spiked 5.4% to $105.18/barrel after having lost 10% in the prior couple of sessions.

As mentioned, the April Consumer Price Index showed an 8.3% increase (year on year), which was higher than the 8.1% expected, but still less than March’s 8.5%.  Analysts say this indicates we are at peak inflation and could see it slacking off later this year.  However, the Core CPI number (which strips out volatile food and energy impacts) was up 0.6% in April which was much higher than the 0.4% expected. While markets are still pricing in “just” a half-percent hike in June, the potential for a three-quarter percent hike seems back in the cards as the Fed’s favorite inflation measure (Core CPI) came in well above expectations.

After the close, FUJIY, STE, and DOX reported beats on both revenue and earnings.  Meanwhile, CPNG missed on revenue while beating on earnings.  Finally, DIS, VIV, and OPHLY reported misses on both lines.  With that said, DIS did beat significantly on Disney+ subscription estimates.

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Cryptocurrency volatility is off the charts again, even by crypto standards.  Bitcoin was down almost 11% this morning before recovering some 8% of that loss.  This comes as COIN had to explain the risk of bankruptcy to their users after $200 billion of wealth has been wiped out by selloffs over just the last 24 hours.  At the same time Project Terra (Luna and UST stablecoins) continue to decouple from their supposed peg to the US Dollar.  At one point Wednesday, UST was trading at less than 30 cents while Luna has lost 97% of its value in the last day.

On the Russian invasion story, the Russian Foreign Ministry told the US Ambassador in Moscow that Russian-controlled portions of Ukraine will be requesting annexation by Russia.  Meanwhile, Italian PM Draghi said that Italy European companies can pay for their gas in Rubles without breaching sanctions, in direct conflict with EU guidance on the matter.  The other developments were diplomatic, with Russia warning of nuclear war if the West continues to send arms to Ukraine and train their military, Finland moving very close to requesting NATO membership, and the UK signing a security guarantee with/for Sweden.

Overnight, Asian markets were red across the board.  Taiwan (-2.43%), Hong Kong (-2.24%), and India (-2.22%) led the way lower.  However, the only exchanges to avoid a 1% loss were Shanghai (-0.12%) and Shenzhen (-0.13%).  In Europe we see the same picture taking shape at mid-day.  The FTSE (-2.04%), DAX (-1.97%), and CAC (-2.13%) are leading the way lower as disruption to natural gas supplies, disagreement over caving to Russian demands for Rubles, and inflation are the main fears of the day.  As of 7:30 am, US Futures are pointing toward a down start to the day ahead of the morning data.  The DIA implies a -0.36% open, the SPY implies a -0.50% open, and the QQQ implies a -0.95% open at this hour.  10-year bond yields are down again to 2.841% and Oil (WTI) is off 1.3% to $104.35/barrel in early trading.

The major economic news scheduled for release on Thursday include Apr. PPI and Weekly Initial Jobless Claims (both at 8:30 am), the WASDE Report (noon), and a Fed speaker (Daly at 3 pm).  Major earnings reports scheduled for the day include BAM, DDS, KELYA, NICE, PRMW, TPR, USFD, and WE before the open.  Then after the close, AQN, COMP, EDR, MSI, TOST, and VZIO report.

So far this morning BAM, TOELY, SFTBF, SOMLY, UTZ, TPR, WE, and CIXX have reported beats on both revenue and earnings.  Meanwhile, SFTBY, NSANY, CSIOY, YPF, and HIMX all missed on revenue while beating on earnings.  On the other side, NTTYY, SSMXY, and ALIZY have reported beating the estimates on revenue but missed on the bottom line.  Finally, SIEGY, TEF, KUBTY, SSDOY, KNBWY, BOUYY, FUJHY, STBFY, TAST, TINLY, and GHG have reported misses on both lines.

Premarkets continue to be red this morning with PPI and Jobless Claims coming before the bell. Geopolitical and cryptocurrency risks are also on Mr. Market’s mind. However, we have another few weeks before the next Fed hike and the betting has not changed in the last week. Most futures traders expect a half-point hike. So, we have time to adjust and no major changes are expected. Again, no need to panic or experience FOMO. If you want to trade this market, unless you are a daytrader, the smart move is to stick with the downtrend. The bears still have all the momentum.

Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Remember that the first rule of making big money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. You also don’t need to be in the market all the time. If this isn’t a market condition you thrive in, then get out of the way. It will settle out at some point and it’s far better to wait and have money the market condition you prefer than to force trades now and be busted when things do turn. Keep in mind that nobody is right all the time. If you’re wrong, just admit it and take your loss. Focus on your process and enjoy yourself.

Ed

Swing Trade Ideas for your consideration and watchlist: BTU, VET, SWN, TECK, TCOM, MOS, ABC, HAL, APA, SLB, KWEB, AIZ, L, ANTM, KR. 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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