Stocks gapped down about 1.2% on a +7.9% Annual CPI numbers Thursday and then put in a roller-coaster morning that found the lows of the day about noon.  However, from there stocks rallied slow and steady the rest of the day.  This left us with white body candles with significant wicks (Doji type in the QQQ) but had recovered most of the gap down in the large-cap indices by day end.  It is worth noting that volume was extremely low in all 3 major indices.  On the day, SPY lost 0.47%, DIA lost 0.37%, and QQQ lost 1.11%.  The VXX fell over 4% to 25.83 and T2122 fell back to the mid-range at 51.38.  10-year bond yields shot up to 1.992% and Oil (WTI) fell another 2.16% to $106.25/barrel.

After the close, DOCU, NTCO, and ULTA reported beats on both lines.  However, both ORCL and ZUMZ missed on earnings while reporting in line on revenue.  ORCL said that losses on investments into a gene-sequencing company and ARM server chip manufacturer (neither listed) were the cause of the earnings miss.  After hours, electric vehicle maker RIVN also missed on earnings and announced they expect to produce only 25,000 vehicles this year, far below Wall Street expectations.

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On the Russia story, they started to retaliate against Western sanctions on Thursday.  Russia Prime Minister Mishustin said that legislation has already been drafted to seize the assets of Western companies that have suspended operations in their country.  This would include over 240 western companies such as MCD, AAPL, BP, SHEL, XOM, GS, JPM, KO, MSFT, MSFT, IBM, TM, etc.  They also banned the export of a wide range of products including telecom, medical, automotive, electrical, and agricultural products through the end of 2022. This export ban is mainly a PR stunt since importers of such equipment have largely already ended those sales.  On the “companies exiting Russia” front, both GS and JPM joined the list by announcing they’re in the process of winding down Russian operations.  Beyond all this, Western banks such as C, CS, DB, and GS are owed more than $121 billion by Russia. Those banks told Bloomberg they are now expecting at least significant losses (if they are paid in Rubles that cannot be moved out of Russia, as the Ruble devalues) and possibly total losses on those loans. On the ground in Ukraine, Russia has expanded its offensive to the West and is now attacking cities within 70 miles of the Polish border.

The ECB made a surprise announcement that it will end its bond-buying program.  However, this will not take effect until Q3 and only if economic data continues to support that faster than planned move.  It is worth noting that ECB President Lagarde said the war in Ukraine “is having a material impact on economic activity and inflation” and therefore circumstances may change.  Still, ending buying in Q3 is the latest plan.

Overnight, the Asian markets were mixed but leaned to the red side.  Japan (-2.05%), Hong Kong (-1.61%), and Taiwan (-0.97%) led the region lower.  In Europe, stocks are strongly in the green across the board at mid-day. The FTSE (+1.69%), DAX (+3.21%), and CAC (+2.46%) are representative of the continent in early afternoon trading.  As of 7:30 am, US Futures are also pointing toward a strongly green start to the day.  The DIA implies a +1.25% open, the SPY is implying a +1.39% open, and the QQQ implies a +1.56% open at this hour.  10-year bond yields have breached the 2% level and Oil (WTI) is up modestly to $1.06.65/barrel in early trading.

The major economic news scheduled for release on Friday is limited to Michigan Consumer Sentiment (10 am).  There are no major earnings reports scheduled for release Friday.    

Once again, volatility reigns as we are seeing another gap in the opposite direction today. This move comes on without any particularly good news and therefore must be seen to be whiplash (reaction to over-reaction). Just remember that the pattern lately has been either to fade the gap or at least have a wild roller-coaster ride after the gap. Also, remember that this is Friday and there is a weekend news cycle to live through before we can adjust any trades. So, prepare yourself for that situation by getting flat, small, or hedged. Who knows what the news out of Ukraine could be this weekend? New scanctions? Escalation? Progress from talks now that Russia is in a better position? It could go any direction.

I know it is a very hard thing to do…the right thing often is. However, if a volatile, choppy market is not your wheelhouse and you aren’t able to become that fast daytrader, sitting on your hands is the best move you could make. Remember that you don’t have to trade every day (or even week) and you definitely don’t need to chase gaps and moves. Trading is a marathon, not a sprint. So, stick to your trading rules and manage the things that you can control. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. The first rule of making money in the market is to not lose big money in the market. So, don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. (That’s why we set stops in the first place.)

Ed

Swing Trade Ideas for your consideration and watchlist: QS, ITUB, AVGO, M, CRSP, CRWD, CAR, PFE, COST, WMT, DRE. 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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