Markets gapped higher on Tuesday, following through on Monday’s rally. However, after the gap and initial rally, markets faded the gap the remainder of the day. At day end, the SPY closed up 0.17%, the DIA closed dead flat and the QQQ up 0.02%. While all three printed new all-time highs during the day, only the SPY and QQQ closed at new high closes, and even then, just barely. The VXX gained very slightly but it remains extremely low at 14.12. Meanwhile, the T2122 has climbed back near, but not in overbought territory at 76.02.
The main news on the day came from the Fed. They announced that US Household Debt is now at the highest level in 12 years. This, along with climate change, severe weather, and the coronavirus are all risk factors impacting economic forecasts. Chairman Powell again rejected the idea of negative rates. However, while he was testifying, President Trump (as is his norm) repeated his demand that the Fed go to negative rates and then blamed Powell for the afternoon selloff in the US markets. Meanwhile, market analysts blamed the tiny intraday pullback on over-extension and possibly too much prior nonchalance about the coronavirus impact as more companies are warning of its impact.
In other news, the Federal Trade Commission announced that in a 5-0 decision, they have chosen to investigate how previous acquisitions of small companies by the largest tech companies were used to amass market power, consumer data, and market monopoly. However, just hours later, President Trump met with the CEOs of the Trillion Dollar Club (MSFT, AMZN, GOOG, and AAPL). He lauded those four companies, calling them MAGA (his campaign slogan).
On the coronavirus front, the count of confirmed cases now stands at 45,000 and the death tolls is over 1,100. In terms of impact, Hilton closed all 150 of their hotels in China, UA estimates a mild $60 million impact in Q1, and AAL extended their cancelation of all flights to/from China. Also making news was a cruise ship stranded at sea (not allowed to dock in several countries), but overnight Cambodia allowed it to dock. In addition, the W.H.O. said that even with governmental fast-tracking, the public should not expect a vaccine until at least next year, let alone wide availability of any such vaccine.
Overnight, Asian markets were in the green. Once again, Europe has followed Asia as we see green across the board. As of 7:30 am, U.S. futures are again pointing to another gap higher of between three-tenths and half a percent.
Major economic news on Wednesday is limited to Fed Chair Powell’s Senate testimony (10 ma) and Crude Oil Inventories (10:30 am). However, there will also be another Fed speaker during pre-market hours. In terms of earnings, CME, CVS, GPN, IPG, IQV, TAP, MCO, and NBL all report before the open. Meanwhile, AMAT, CDNS, CF, CSCO, CTL, EFX, EQIX, IFF, MGM, MRO, NTAP, REG, TRIP, and WELL report after the close.
The DIA sits at potential resistance for a second straight day. However, in general, the bulls continue to see nothing but the upside. The trend remains clearly bullish, and we are a little less extended than yesterday. Don't get complacent, expecting the bulls to run every day forever. Remember to keep locking in profits. Don’t let a profitable position go South on you.
Swing Trade Ideas for your consideration and watchlist: HCA, SC, MNST, AVY, ZBH, FAST, BLL, YNDX, ALL, ITW. Trade smart, take profits along the way and trade your plan. Also, don't forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
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🎯 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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