Bears Still In Control And China Trade

Markets gave us another gap higher at the open on Friday and then proceeded to sell off the first couple of hours.  However, then the bulls stepped in for a rally that lasted until 3 pm when traders took some profits at day end.  This left us with bullish Harami candles with plenty of wicks in all 3 major indices.  On the day, SPY gained 1.19%, DIA gained 1.45%, and QQQ gained 0.62%.  The VXX fell to 26.82 and T2122 jumped back up to mid-range at 66.12.  10-year bond yields fell sharply to 1.465% and Oil (WTI) rose almost 1% to $75.74/barrel.

On Sunday, TSLA announced they had shipped 241,300 vehicles in Q3, well above the 220,900 predicted by analysts.  The company also produced 237,823 cars in Q3.  Both figures were well above the 201,250 shipped and 206,421 produced in Q2.  As a comparison, GM delivered 446,997 vehicles in Q3, which itself was a 33% drop from the prior year due to the chip shortage.

In other weekend news, an oil spill of roughly 3,000 barrels is washing up on beaches in CA.  The spill currently covers 13 square miles of ocean.  The rig from which the spill originated is operated by a subsidiary of AMPY. GOOG also announced it will abandon the idea of offering bank accounts to users via Google Pay.  In the announcement of this move, GOOG said it has decided that competing with banks was not as good of an idea as focusing on a digital ecosystem to be used by banks and financial services firms with existing customers.  

US Trade Rep. Tai will be outlining the Biden Administration’s trade strategy for China today.  She will speak to a Washington think tank at 10 am.  In the speech, she is expected to announce targeted tariffs after saying that China has failed to live up to their “Phase 1 commitments" from the Trump administration trade deal.  She is also expected to address “serious concerns” over China’s “state-centered and non-market practices” that were not addressed in the previous administration’s trade deal. Analysts expect China to again retaliate with their own “targeted tariffs.”

Overnight, Asian markets were mixed, but leaned to the green in uneven trade.  Hong Kong (-2.19%), South Korea (-1.62%), and Japan (-1.13%) were all sharply lower.  On the other side, Indonesia (+1.83%), Singapore (+1.26%), and India (+0.91%) were higher.  (Mainland Chinese markets were closed.)  In Europe, markets are mixed at mid-day.  The FTSE (+0.15%), DAX (-0.02%), and CAC (-0.21%) lead as usual.  However, smaller exchanges are split between strong gains in Russia (+0.90%) and strong losses such as Finland (-1.19%).  As of 7:30 am, US Futures are pointing toward a down open.  The DIA is implying a -0.30% open, the SPY implying a -0.36% open, and the QQQ implying a -0.49% open at this hour.  10-year bond yields are up sharply to 1.496% and Oil is flat as the Dollar is weaker in early trading.

The only major economic news scheduled for release on Monday is August Factory Order s (10 am).  However, the regular monthly OPEC+ meeting is also scheduled to begin.  There are no major earnings reports scheduled for the day.

As we start the first full week of October, it looks like the mega-cap tech names are starting the week lower, and dragging the rest of the market with them. All 3 of the major indices have now backed down from their premarket highs. In addition, markets still face that bearish trend and resistance levels overhead. So, be careful taking too much constructive from Friday's white candle or Harami signal. Candle signals are not real until they have confirmation. So for now, the bears are still in overall control.

Consider waiting, if you want to go long in this market, and even if you trade to the short side, stay nimble because you know bear moves end faster than bull moves. Focus on your trading process and managing the things you can control. It is discipline and good trading rules that separate trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers.


Swing Trade Ideas for your consideration and watchlist: DISH, RJF, FITB, RHI, SABR, SAVE 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.

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🎯 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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