Counterintuitively, stocks gapped higher at the open Friday after better-than-expected August Payrolls (+315k vs. +300k forecast) which would logically be seen as helping to lead the Fed to a larger September Rate hike that one would think the bulls would hate.  However, maybe traders were hanging their hats on the oddly higher Unemployment rate which rose to 3.7% as opposed to the previous (and expected) 3.5%, which could be seen as giving the Fed cover for a smaller hike. In either case, after some volatility and a 2-hour sideways grind, all 3 major indices sold off hard about noon and then took another leg down about 3:15 pm.  This action left us with large Bearish Engulfing candles that failed a retest of the T-line (8ema).

On the day, 8 of the 10 sectors were red with Healthcare (-1.25%) and Technology (-1.11%) leading the market lower.  Energy (+2.06%) was an outlier on the other side due to G7 agreeing to try to limit the price Russia can get for its oil and, probably not coincidentally, Gazprom shut down natural gas flows to Europe but also announced it had “found a leak” and can no longer commit to restart the gas flows September 3 as previously planned.  The SPY lost 1.05%, the DIA lost 1.04%, and QQQ lost 1.41%.  (This capped off a terrible third-straight down week for the major indices.  On the week, SPY lost 3.22%, DIA lost 2.84%, and QQQ lost 3.99%.)  VXX fell almost 2% on the day to 19.09 and T2122 climbed but remains deep in oversold territory at 10.70. 10-year bond yields fell to 3.195% and Oil (WTI) rose modestly to $87.19/barrel.

In stock news, Friday afternoon it was announced that for the first time AAPL iPhones account for more than half (just over 50%) of all US smartphones. Elsewhere (also Friday afternoon) the CFO of BBBY committed suicide by jumping from his high-rise apartment balcony.  This leaves BBBY without a CEO or CFO as it works to compile its quarterly report for the period ending August 27.  Bloomberg reported Saturday that AMZN has now abandoned dozens of existing and planned delivery facilities around the US as sales have slowed in the post-pandemic period.

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In Forex news, the Euro sank to a new 20-year low (below $0.99) Monday following the news Russia will not reopen the Nord Stream One gas pipeline.  However, the Euro recovered a bit to the $0.99 level within 6 hours.  Meanwhile, the British Pound hit a 2-year low against the dollar as the UK’s Tory Party selected Liz Truss as its new leader and therefore also new Prime Minister.  After her selection, she vowed to cut taxes and also cut energy bills (2 promises, in the short-term and long-term).  No specifics were offered.

In energy news, on Friday, G-7 countries (US, Canada, France, Germany, Italy, UK, and Japan) agreed to force a price cap on Russian Oil and explore insurance rules that would ban shipments of Russian oil above a capped price.  (Analysts predict this plan is likely to be ineffective at best without the cooperation of China and India.)  Not at all coincidentally, Russia announced the flow of natural gas to Europe would not resume as planned Saturday (ostensibly due to an oil leak in a turbine).  Shortly after Russia’s announcement, Germany announced an additional $65 billion (bringing the total to $95 billion) in Consumer Energy Inflation Relief.  Then on Monday, OPEC+ announced a production cut of 100,000 barrels per day starting in October.  This came one month after the group’s token increase of 100,000 barrels per day just one month ago.  The group said that the small September increase (seen as a rebuff of President Biden) was always intended as a temporary measure.  Oil prices surged higher on this small decrease. Finally, Tuesday Uniper (largest German Gas supplier) warned of a European crisis coming soon unless drastic steps are taken to control markets. The company’s CEO said that wholesale prices are now 20 times what they were two years ago.

In Russian invasion news, the head of the UN Inspectors (Intl. Atomic Energy Agency) will release its report on the findings from inspection of the Zaporizhshia nuclear power plant (largest in Europe) following Russia’s takeover and continued shelling in the area.  Elsewhere, India said Monday that it will carefully consider the G-7 price cap on Russian oil.  On another front, French President Macron called for his citizens to cut energy use by 10% in order to avoid rationing in coming months.  For its part, Russia has upped the threats to cut energy supplies to the West and sell more oil to Asia in response to the G-7 price-cap.  They also, through Gazprom, said they have no idea when the gas can resume flowing into the Nord Stream One pipeline, saying it is up to SMNEY (Siemens Energy) to repair the turbine.  However, Siemens said the leak in a turbine is no reason to halt gas flows.

Overnight, Asian markets mixed but leaned to the upside on the day.  Shanghai (+1.36%), Shenzhen (+1.04%), and Thailand (+0.73%) led the region higher on mostly modest moves.  In Europe, stocks are mostly solidly in the green with the major outlier being Norway (-2.54%) at mid-day.  The FTSE (+0.16%), DAX (+0.90%), and CAC (+0.49%) are leading the region higher in early afternoon trade.  As of 7:30 am, US Futures are pointing toward a gap higher to start the day.  The DIA implies a +0.67% open, the SPY is implying a +0.70% open, and the QQQ implies a +0.75% open at this hour. 10-year bond yields are rising again at 3.244% and Oil (WTI) is down two-thirds of a percent to $86.33/barrel in early trading.

The major economic news events scheduled for Tuesday are limited to Aug. Services PMI (9:45 am) and Aug. ISM Non-Mfg. PMI (10 am).  In terms of earnings, there are no major earnings reports scheduled for the day.

In economic news later this week, on Wednesday we get July Trade Balance and Fed Beige Book.  Then Thursday, Weekly Jobless Claims and Weekly Oil Inventories are reported.  Finally, on Friday, there are no major economic reports.

In terms of earnings later this week, on Wednesday ASO, GIII, KFY, NIO, REVG, AEO, CASY, and GME report.  Then Thursday, we hear from BILI, DOCU, and RH report.  Finally, on Friday, we hear from ABM, KR, and WDH.

The last piece of news to start the week is that CVS has reached an agreement to buy SGFY for $8 billion or $30.50/share. (That would be a 6% premium over Friday’s closing price of $28.77 for SGFY.) AMZN had been mentioned as a bidder for the healthcare provider and this deal is just another example of vertical integration in the Healthcare-Pharmacy space.

The downtrend remains in place after 3 weeks of pullback. So, while the premarkets are looking to make a modest gap higher, do not get caught up in FOMO to the upside. At this point, it looks like a move to relieve over-extension more than a reversal.

Remember that trading is our job, not a pastime or hobby. So, treat it that way. Do the work and follow the process. Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. When price does move in your direction, always move your stops in your favor (remember the “Legend of the man in the green bathrobe“…it is NOT HOUSE MONEY, it’s all OUR MONEY!). Lastly, remember that you get rich slowly and steadily in Trading…not by striking it rich on one or two trades. So, give up that lottery ticket mentality.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: No trade ideas today, Rick is on vacation visiting a gandbaby. 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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