The bears sprang a Bull Trap on Thursday morning.  All 3 major indices gapped higher at the open, only to immediately begin a strong all-day selloff that took them out on the lows.  This left us with large, ugly, black candles in all three indices, including a Bearish Engulfing candle in the DIA and something that approximates a Bearish Evening Star in the SPY.  Both the SPY and QQQ failed their T-lines, while the DIA is now at that level and ready to retest.  On the day, SPY lost 1.50%, DIA lost 1.09%, and QQQ lost 2.07%.  The VXX rose almost 2% to 24.86 and T2122 fell back to just outside the oversold territory at 24.27.  10-year bond yields spiked back to 2.91% and Oil (WTI) rose almost 1.9% to $104.09/barrel.  It is worth noting that the 5yr vs. 30yr bond yields have inverted again.

On the Fed watch, during the day Fed Chair Powell spoke twice.  To nobody’s surprise, he said that taming inflation was absolutely essential as was restoring price stability (which I thought were the same thing).  He committed to “raising rates expeditiously.”  Then he went on to say that he thinks a 50-basis-point hike is on the table for May, which matches the Futures bets showing a 98% chance of a half-percent hike at that meeting.

SNAP Case Study | Actual Trade

In business news, the fight between Florida Republicans and DIS ratcheted up Thursday.  The state dissolved the DIS special district as of June 1, 2023.  This would eliminate certain special privileges DIS has had, such as having their own zoning authority and deciding their own infrastructure projects.  However, the move would also transfer somewhere around $1 billion in debt to the two counties that would take over responsibility for the district area.  This likely means a series of lawsuits will follow.  Elsewhere, GPS announced that the CEO of their Old Navy division is leaving the company this week, fired over “execution challenges.”  Finally, FB COO Sandberg is under investigation for pressuring a UK tabloid news outlet to bury a report about her boyfriend (ATVI CEO Kotnick) being under a restraining order filed by another woman.  This pressure happened on two separate occasions, three years apart.

Elon Musk said he has lined up $46.5 billion to finance his takeover of Twitter.  This does not affect his offer of $54.20/share.  However, it is notable because just last week a judge ruled that he lied about the same thing (and was fined $20 million for stock manipulation by the SEC as well as paying TSLA stock owners $40 million over fraud claims) when he tweeted he had financing in place to take TSLA private in 2018.  As far as the current bid for TWTR is concerned, as reported last weekend, the TWTR Board has already implemented a “poison pill” defense in case Musk was able to amass 15% or more of the shares of the company.

After the close, PPG, UFPI, WAL, and SIVB all reported beating on revenue and earnings.  Meanwhile, FE and ISRG reported beats on revenue while coming up short on earnings.   However, SNAP and SAM both missed on the top and bottom lines.

Overnight, the Asian markets were mixed, but leaned heavily to the downside as the Chinese Yuan hit a new one-year low.  Japan (-1.63%), Australia (-1.57%), and India (-1.27%) paced the losses.  Meanwhile, only Singapore (+0.38%), Shanghai (+0.23%), and Malaysia (+0.23%) managed any green.  In Europe, stocks are red across the board at mid-day.  The FTSE (-0.74%), DAX (-1.83%), and CAC (-1.55%) are typical of the continent in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a slightly lower start to the day.  The DIA implies a -0.22% open, the SPY is implying a -0.14% open, and the QQQ implies a +0.01% open at this hour.  10-year bond yields are up again to 2.938% and Oil (WTI) is off 1.5% to $102.25/barrel in early trading.

The major economic news scheduled for release on Friday is limited to Mfg. PMI and Services PMI (both at 9:45 am).  Major earnings reports scheduled for the day include AXP, ALV, CLF, HCA, KMB, NEM, RF, SAP, SLB, and VZ before the open.  There are no major reports scheduled for after the close.

So far this morning, AXP, VZ, KMB, RF, SLB, and CLF have all reported beating the estimates on both the top and bottom lines. Meanwhile, SAP, HCA, and VLVLY (Volvo) have missed on earnings while beating on revenue.  However, NEM and ALV have both reported misses on both lines.

Markets are limping toward the weekend and look to open lower as the SPY tries to avoid another down week. Remember that both intraday volatility and day-to-day chop have been the norm for a while now. So, respect that fact and continue to be cautious. Don’t be in a hurry to chase into a rally the first few minutes of the day. Swing trading is not about catching every cent of a move. It’s about taking your slice out of the middle of a swing. Finally, keep in mind that it is Friday and you need to prepare for the weekend news cycle.

Remember that the first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself. Stick with your trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor.

Ed

Swing Trade Ideas for your consideration and watchlist: No Trade Ideas today. 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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