Stocks gapped higher about half a percent Wednesday.  However, this was met with an immediate strong selloff that lasted until 1 pm, giving back 2%-3% in the process.  At that point, the bulls stepped back in tepidly to lead a slow afternoon rally that took us right back where Tuesday had closed.  However, the bears weren’t done either and we sold off again the last 10 minutes of the day.  Nine of the 10 sectors were down on the day with only Energy showing green.  All-in-all, this left us with indecisive, larger black-bodied Spinning Top type candles in all 3 major indices.  On the day, SPY lost 0.80%, DIA lost 0.56%, and QQQ lost 0.77%.  Oddly, VXX lost 1.33% to 22.26 while T2122 also fell to 84.21 (still inside the overbought territory).  10-year bond yields surged to 2.915% and Oil (WTI) fell slightly to $114.67/barrel.  Overall, it was just another day of whipsaw indecision after last week’s rally.

During the day Wednesday, May Manufacturing PMI came in slightly lower than forecast, but May ISM Mfg. PMI came in above estimates (and last month).  April JOLTYs came in exactly as expected at 11.4 million current openings (a decline from the prior month).  In a little more depth, back before the pandemic businesses tended to lay off an average of 2 million people each month.  In May, 1.2 million people were laid off while 4.4 million voluntarily quit.  This left us with 11.4 million openings in a still red-hot job market.  So, companies will continue to see pressure on wages and other benefits in order to hire and keep their best employees.

After the close, CHWY, PVH, NTAP, PSTG, and VEEV all reported beats on both the revenue and earnings lines.  Meanwhile, GME beat on revenue while missing on earnings.  However, HPE missed on both lines. 

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In business news, FB number 2 (COO) Sheryl Sandberg (who had been seen as the business mind in the room versus Zuckerberg’s creative/technical skills) announced she is leaving the company (FB, soon to be META) in the fall.  Meanwhile, at TSLA CEO Musk sent emails to office staff demanding that they return to the office full-time or get out.  Specifically, Musk demanded that office employees spend an absolute minimum of 40 hours per week in the main office (not a branch) or the company will assume they have resigned.

On the Russia story, pro-Putin Hungary continues to negotiate against other EU members in a bid to make life harder for Russian opponents.  This time, they are demanding the EU lift sanctions on a Putin-loyalist religious figure in exchange for allowing the previously-agreed sixth round of sanctions (which include a partial ban on Russian oil by year-end) to be enacted.  This round of sanctions would include a ban on insurance companies covering tankers carrying Russian Oil.  While this would hurt Russian oil sales normally, Chinese and India-bound tankers would likely be insured by sovereign sources.  China also reaffirmed its close and growing relationship with Russia.  President Biden announced he will visit Saudi Arabia later this month and in likely-related news, the Saudis have said they are considering increasing oil production to offset the decrease in Russian output.  Finally, OPEC+ began its 3-day meeting in Vienna.  On the docket is whether or not to temporarily exclude Russia from the group.

In miscellaneous news, Bloomberg reports that a survey of Americans who earn at least $250,000/year found that one-third of them report living paycheck-to-paycheck.  (I don’t know about you, but that sounds like a consumption problem to me.)  It was also announced that the Biden Administration will cancel the student debt of about 560,000 students of various Corinthian Colleges (around 100 campuses exited).  The for-profit companies were accused of predatory and unlawful practices and face many lawsuits from the Consumer Financial Protection Bureau.  The company filed for Bankruptcy in 2015 rather than face those lawsuits.

Overnight, Asian markets were mostly in the red.  Hong Kong (-1.00%), South Korea (-1.00%), and Taiwan (-0.73%) paced the losses.  Meanwhile, only Shenzhen (+0.67%), India (+0.64%), and Shanghai (+0.42%) managed gains in that region.  In Europe, stocks are mixed but leaning to the green side at mid-day.  The FTSE (-0.98%), DAX (+0.73%), and CAC (+1.10%) lead the way as always.  Russia (-1.09%) is the biggest loser at least in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a green open to the trading day.  The DIA implies a +0.41% open, the SPY is implying a +0.48% open, and the QQQ implies a +0.60% open at this hour.  10-year bond yields are backing down a bit to 2.909% and Oil (WTI) is off 2.7% to $112.18/barrel in early morning trading.

The major economic news scheduled for release Thursday includes ADP Nonfarm Payrolls (8:15 am), Weekly Initial Jobless Claims, Q1 Nonfarm Productivity, and Q1 Unit Labor Costs (all at 8:30 am), April Factory Orders (10 am), and Crude Oil Inventories (11 am).  We also have another Fed speaker (Mester at 1 pm).  The major earnings reports scheduled for release include CIEN, DBI, HRL, SPTN, and TTC before the open.  Then after the close, COO, CRWD, JOAN, LULU, and RH report.

So far this morning HRL and DBI have reported beats on both lines.  Meanwhile, SPTN missed on the revenue line while beating on earnings.  However, CIEN has reported a miss on both the revenue and earnings lines. TTC reports at 8:30 am.

In economic news later this week, on Friday we get May Avg. Hourly Earnings, May Nonfarm Payrolls, May Participation Rate, May Unemployment Rate, May Services PMI, and May ISM Non-Mfg. PMI. On the earnings front, we get a report from DOOO on Friday.

Markets are looking to make a modest gap higher this morning, but remain well inside the body of the black candles from Wednesday. In short, indecision remains the rule as traders may be waiting on Payrolls data Friday before picking a direction. Technically speaking, a new uptrend has not yet begun, even if the longer-term downtrend has been broken. We may just be working off some over-extension here with choppy consolidation. So, this might not be the week to get aggressive. The market still has to decide whether we’ll see a soft or hard landing going into year-end as well as early 2023. All I can do is follow the trend (which is up in the very short-term and down in the mid and longer-term) and acknowledge that we are still overbought.

Be very careful chasing any gaps/moves early. Whipsaw is very real during times when we are thinking about changing trend and as we saw yesterday, gap-chasers get hurt. Remember that the first rule of making big money in the market is to not lose big money in the market. Trading is our job. So, do the work and work the process. Stick with your trading rules, trade with the trend, and consistently take profits when you have them. Always move your stops in your favor. Don’t be stubborn. If you have a loss, just admit you were wrong and take it before it grows. As they say, the best time to have taken a $500 loss is when you are now staring at a $1,500 loss. Finally, remember that you get rich steadily in Trading…not by striking it rich on one or two trades.

Ed

Swing Trade Ideas for your consideration and watchlist: PDD, CTLT, PTC, ENPH, CHNG, IBM, LLY, DXC, APD, SNPS, FANG, EOG. 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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