Markets opened flat on Friday. However, the SPY and QQQ proceeded to sell off until 11 am. During this time the DIA simply meandered sideways. From 11-noon, all 3 indices rallied and then ground sideways until about 3:15 pm. All 3 then sold off the last 45 minutes of the day. This left indecisive candles in all 3 indices with a white Doji in the DIA, a black Spinning Top in the SPY, and a black candle with good-sized wicks on both ends in the QQQ. On the day, SPY lost 0.40%, DIA lost 0.02%, and QQQ lost 1.08%. VXX lost almost 3% to 18.82 and T2122 remained in the mid-range at 61.99. 10-year bond yields rose sharply again to 1.767% and Oil (WTI) lost seven-tenths of a percent to $78.90/barrel. For the first week of the year, SPY was down 1.87%, DIA was down just 0.28%, but the rotation was obvious as the QQQ was down 4.52%.
During premarket Friday there was some conflicting data. December Nonfarm Payrolls came in a +199k, which was less than half of what was expected. (Oddly, the ADP Dec. Nonfarm Payrolls had come in a +807k, versus the same +400k expected just two days prior.) However, the Dec. Unemployment rate fell to 3.9% (versus 4.1% expected) while the Participation rate remained steady. So, markets were left with either “which data do you believe?” or “None of the data is good” as their options.
During the day Friday, C followed up on its October announcement that vaccination is a condition of employment. It sent a memo to all employees saying that if they had not proven they have been vaccinated by next week they will be put on unpaid leave and will be terminated as of January 31. CNBC reports that about 90% of the workforce at C has already submitted proof of vaccination, but that still leaves 22,000 employees at risk of termination, which could have an impact on bank operations. So far, the other major banks (JPM, BAC, WFC, GS, and MS) have not gone as far as terminating their non-compliant staff.
Friday gave us some very odd food inflation data. Despite widespread food inflation and news of high food prices, fertilizer prices had a wild week, especially on Friday. After the price of urea (nitrogen) had swung at least $100/short ton each day of the week, Friday saw fertilizer prices fall 12% (most since 2009). This massive fall in price is unexplained and comes despite the fact very little of that commodity was available at the discounted price. (US production is sold out, there are production plant closures across Europe due to a lack of natural gas, China still not willing or able to export until at least May, and the Middle East essentially sold out with production already sold through the end of February.) Yet the prices fell 12% on a single day.
Overnight, Asian markets were mixed. Hong Kong (+1.08%) and India (+1.07%) led the gainers while South Korea (-0.95%) was the only red ticker that was not nearly flat. In Europe, stocks are strongly in the red, with only a couple of minor exchanges showing green at mid-day. The FTSE (-0.12%), DAX (-0.39%), and CAC (-0.54%) are typical of the region in early afternoon trading. As of 7:30 am, US Futures are pointing toward a down open. The DIA implies a -0.13% open, the SPY is implying a -0.31% open, and the QQQ implies a -0.67% open as it appears both the rotation and pullback will remain in place at least early Monday. 10-year bond yields are up very slightly and Oil (WTI) is down two-thirds of a percent in early trading.
There is no major economic news scheduled for release Monday. The only major earnings report scheduled for before the market is CMC. There are no major reports scheduled for after the close.
The bears seem to have maintained the momentum over the weekend as premarket prices are sitting at the lows across the board. Be very careful with long positions and remember that hedging and waiting are both valid ways to reduce risk. However, also remember that intraday whipsaw has been the norm lately, especially in large-cap spaces.
Remember that the first rule of making a lot of money in the market is to not lose a lot of money in the market. So, don't be stubborn. When you're wrong, just admit it and take your loss. (That's why we set stops.) Stick to your trading rules and on managing the things you can control. Don't chase, trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor.
Swing Trade Ideas for your consideration and watchlist: JNJ, CTRA, CVS, FCX, DG, TNA, MMC, GME, SKIN. 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.
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🎯 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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