Markets gapped down Thursday as PPI came in as expected, +0.5%, which was way down from last month’s +1.6%.  The Core PPI (stripping out volatile food and energy) came in lower than expected (+0.4% vs +0.6% forecast).  After the gap down, stocks rallied to the highs of the day at 11am when a reversal and strong, sustained selloff took markets to the lows at 3pm.  However, the day ended on strong rally off the lows to end the day basically flat.  This left us with indecisive, long-legged Spinning Top candles in all 3 major indices.  On the Day, SPY lost 0.09%, DIA lost 0.25%, and QQQ lost 0.21%.  The VXX fell to 26.93 and T2122 climbed a bit, but stayed deeply in the oversold territory to 1.60.  10-year bond yields fell to 2.873% and Oil (WTI) rose 1.13% to $106.90/barrel.  Consumer Cyclicals (+1.63%) and Healthcare (+1.50%) led on the day with Utilities (-0.79%) and Basic Materials (-0.60%) pacing the losses.

During the day Fed Chair Powell was reconfirmed for a second term.  In other market-related news, the cryptocurrency story refused to go away today with the supposedly-stablecoin LUNA losing 97.48% of its value (dropping to $0.03 in value). Ethereum also lost 8.7% and Bitcoin remained relatively stable, down 2%, but hitting $26,000 before closing at $29,400 (down from $41,500 less than a month ago).  Treasury Sec. Yellen told reporters the recent volatility and decoupling of so-called pegged stablecoins is a clear example of why the government should be regulating that market.

Meme stock mania made a comeback Thursday with AMC trading in a 29% range to close up 8% on the day.  In addition, GME traded in a 30% range, was halted multiple times for excess volatility, and closed up 10.13%.  TLRY also 9.36% on a relatively stable 14% range while BBBY traded in a 17% range to close up only 1.95%.  HOOD also spiked 5% on the day, but this might also have been on leaks related to the after-hours story that a cryptocurrency exchange CEO is buying a 7.6% stake in HOOD.  This caused the stock to spike +41% in after-hours trading.

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After the close, MSI, EDR, and PAM all reported beats on both revenue and earnings.  Meanwhile, HLI missed on revenue while beating on earnings.  On the other side, TOST, COMP, and VZIO beat on revenue while missing on earnings.  US Senator Paul has killed the effort to fast-track the aid package to Ukraine.  He is demanding a special Inspector General to oversea all spending from the package.  He refused to allow it to be voted on as an amendment, instead insisting it must be part of the main bill.  This will delay passage by several days despite strong bipartisan support.

This morning, Elon Musk says his purchase of TWTR is “temporarily on hold.”   The reason for this pause is an audit to verify that less than 5% of TWTR accounts are not real people but actually fake/bot users.  TWTR has also frozen hiring and has rescinded job offers previously made until the deal closes.  TWTR stock is plummeting in premarket trading, down 14% at time of this writing.  Elsewhere, Bloomberg reports that Fed Chair Powell reiterated that the FOMC will hike rates by half a percent at each of its next two meetings.  He also said that whether or not the economy goes into recession is outside of the Fed’s control.  Finally, the Terra project has stopped processing block chain transaction for the second time in less than a day.  This came as the company scrambled to find a way to reconstitute their network in the face of Luna having dropped to practically zero.  Binance has already suspended trading of that crypto.

Overnight, Asian markets leaned heavily to the green side.  Japan (+2.64%), Hong Kong (+2.68%), and South Korea (+2.12%) led the gainers with only 3 exchanges just barely in the red.  In Europe, stocks are following Asia with all but 2 exchanges well into the green at mid-day.  The FTSE (+1.56%), DAX (+1.35%), and CAC (+1.53%) lead the way with only Belgium and Denmark slightly in the red in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a strong gap higher to start the day.  The DIA implies a +0.75% open, he SPY implies a +1.09% open, and the QQQ implies a +1.66% open at this hour.  10-year bond yields are back up to 2.904% and Oil (WTI) is up 1.7% to $107.96/barrel in early trading.

The major economic news scheduled for release on Friday is limited to Apr. Imports/Exports (8:30 am), Michigan Consumer Sentiment (10 am), and a couple of Fed speakers (Kashkari at 11 am an Mester at noon).  Major earnings reports scheduled for the day are limited to HMC before the open.  There are no major earnings reports after the close.

So far this morning HMC reported beats on both lines.  Meanwhile, DWAHY, ISUZY, and TRYIY missed on revenue while beating on earnings.  On the other side, KDDIY, GASNY, OJIPY, BPIRY, and AACAY have reported beating the estimates on revenue but missed on the bottom line.  Finally, SMFG, MARUY, RKUNY, ATASY, PBSFY, and AHKSY have reported misses on both lines.

Premarkets seem to be gapping strongly in favor of the bulls this morning as markets try to prevent the SPY from slipping into a bear market (down 20% from its recent high). However, remember that the last two gaps higher were “bull traps” that were met with strong selloffs. So, don’t go chasing gaps, especially gaps against the trend. Regardless of the action today, it seems very unlikely that any of the major indices can avoid yet another down week. Inflation, geopolitical risk, and cryptocurrency meltdowns are also on Mr. Market’s mind. So, caution remains the smart play. Remain nimble, hedged, and small (if not flat) as we head into the weekend. There is certainly 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 for the right market condition 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: 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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