On Tuesday stocks opened mixed and then yo-yoed up and down until 1 pm in the QQQ and SPY.  At the same time, after a small gap lower, DIA had managed to recover fast and stay modestly bullish up to that 1 pm mark as well.  However, at 1 pm a steady and accelerating selloff took over (possibly on political news), driving prices to the lows of the day at 3:30 pm.  After the Congressional hearing ended, stocks bounced up off the lows in the last 15 minutes of the day.  This leaves the 3 major indices as gap-down, black candles that are essentially Spinning Tops (indecisive).  All 3 failed in their attempt to regain the T-line (8ema) after the gap lower. 

Eight of the 10 sectors were red, with Energy by far the biggest loser and Communication Services faring the best, although that is only up 0.28%.  Overall, it was another modestly bearish day, but indecisive day, filled with reversals, and all on low volume.  On the day, SPY lost 0.88%, DIA lost 0.56%, and QQQ lost 0.97%.  The VXX climbed 1.2% to 22.48 and T2122 climbed just outside the oversold territory to 26.42.  10-year bond yields fell just a bit to 2.971% and Oil (WTI) plummeted 8% to $95.68 per barrel.

In stock news, airline stocks skyrocketed on the major drop in oil.  These include AAL (+9.98%), UAL (+8.09%), HA (+6.51%), DAL (+6.15%), and LUV (+4.64%).  Trucking companies were the other big winners, including USX (+8.39%), YELL (+7.32%), and TSP (+5.41%).  After the close, TWTR sued Elon Musk seeking to enforce Musk’s original $54.20/share takeover agreement. 

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In economic news, after the close Tuesday, the IMF cut its US GDP growth forecast again.  The international group now forecasts +2.3% for 2022 after having just lowered to 2.9% in late June.  Elsewhere, US Bond yield rates are still signaling recession risk.  The 2-year yield is inverted with the 5-year and 10-year.  The 5-year yield is also inverted with the 10-year.

In Forex and crypto news, the Euro fell to parity with the Dollar on European recession fears during the day.  This was the first parity since 2002.  However, it recovered to 1.0031 per dollar by day end.  Elsewhere, Bitcoin fell over 5% to close at $19,435 and Ethereum plunged more than 8% to $1,046.  In related news, the US Treasury Dept. is seeking comment on the risks and opportunities of digital assets ahead of a report on cryptocurrencies later this year.

Average mortgage rates held steady for the week at 5.74%, while points decreased from 0.65 to 0.59 (for conforming 20% down loans).  However, demand for new home purchase mortgages fell 4% week-on-week and was 18% lower than the same week last year.  Refinance loan applications did rise 2% for the week (after several terrible weeks), but remained 80% lower than the same week one year ago. 

Overnight, Asian markets were mixed.  Taiwan (+2.68%) was an outlier to the upside, but Shenzhen (+0.56%), Japan (+0.54%), and South Korea (+0.47%) led the gainers.  On the downside, Malaysia (-1.04%), Thailand (-0.68%), and India (-0.57%) paced the losses.  In Europe, stocks are nearly red across the board at mid-day. Athens (+1.62%) is the only green in the region as the FTSE (-0.77%), DAX (-0.90%), and CAC (-0.87%) lead the region lower in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly green start to the day (mind you, before CPI data).  The DIA implies a +0.22% open, the SPY is implying a +0.28% open, and the QQQ implies a +0.38% open at this hour.  10-year bond yields are falling again at 2.948% and Oil (WTI) is up 1% to $96.83/barrel in early trade.

The major economic news events scheduled for release Wednesday include June CPI (8:30 am), Crude Oil Inventories (10:30 am), the Fed Beige Book and the June Federal Budget Balance (both at 2 pm).  The only major earnings reports scheduled for the day are DAL and FAST before the open. On that front, DAL reported a beat on the revenue line while coming up short on the earnings line.  Meanwhile, FAST missed on earnings but came in in-line on earnings.

In economic news coming later this week, on Thursday we see the June PPI and Weekly Jobless Claims.  Finally, on Friday we get June Retail Sales, June Import/Export Price Index, NY Empire State Mfg. Index, June Industrial Production, May Business Inventories, and Michigan Consumer Sentiment.

In earnings reports later this week, earnings season kicks off again on Thursday with reports from CTAS, CAG, ERIC, FRC, JPM, MS, and TSM.  Finally, on Friday we hear from BK, BLK, C, PNC, PGR, STT, USB, UNH, and WFC.   

With earnings season is one day away, all eyes will be on the CPI report later this morning. While it is expected to come in at a sizzling hot 8.8% for June. However, some analysts are considering the worst past us having seen a month-long fall in gasoline prices and computer technology prices continuing to fall as they have most of the year. Against that backdrop, it would not be surprising to continue see a knee-jerk reaction to the CPI release only to resolve in choppy action when traders realize a flood of major earnings reports start tomorrow. The one thing we know for sure is that the low volumes of the last few weeks tell us there is not a huge amount of conviction in either the bull or bear camps. With that said, the longer-term trend remains bearish, we may be sitting on shorter-term uptrend support, and we have a lot of technical damage to work through if we are going to start a rally.

Stick with your trading rules, trade with the trend, and take those profits when you have them. Demonstrate patience and wait for confirmation. Remember that trading is our job. So, do the work and follow the process. Always move your stops in your favor and remember the “Legend of the man in the green bathrobe“…it is NOT house money, it’s all our money! One way to put this is Buffett’s first rule of making big money in the market, which is to not lose big money in the market. So, don’t be stubborn. If you have a loss, just admit you were wrong, respect your stop, and take the loss before it grows. 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. Lastly, remember it is Friday. So, be prepared for the weekend news cycle.

See you in the trading room.

Ed

Swing Trade Ideas for your consideration and watchlist: MVIS, SPCE, CPNG, MU, LCID, AAPL, ACCD, DXD, AJG, SDS, QID. 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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