Big Tech Trying to Drag Markets Higher

Markets opened flat Tuesday.  However, then we saw a divergence.  The large caps sold off for the first hour or so.  Then the DIA ground sideways while the SPY slowly regained ground.  Meanwhile, the QQQ climbed back to the morning highs.  This left us with Hanging Man candles in all 3 major indices.  The QQQ (+0.42%) closed at another new all-time high close, while the SPY (-0.18%) lost slightly (snapping a 7-day winning streak), and DIA (-0.61%) lagged.  The VXX gained about two and one-quarter percent to 29.57 and T2122 fell back to 30.99.  10-year bond yields fell sharply to 1.351% and Oil (WTI) dropped almost 2% to $73.72.

During the day the Pentagon canceled the controversial $10 billion contract that had been contested between AMZN and MSFT (MSFT was awarded the contract during the last administration).  However, as part of the announcement, it was stated that both companies had been asked to bid on another Multi-vendor Cloud Computing contract, where both companies are likely to get part of the pie.  The market took this as a big plus for AMZN (assuming they will get a big chunk of the contract).  AMZN gained 4.69% and MSFT was flat on the day.

Recent IPO company DIDI suffered another blow overnight.  Chinese regulators had removed the DIDI app from app stores in China late Friday.  However, last night the app was also removed from major messaging and payment services.  These include Tencent, WeChat, and the Alipay payment service (spun off from BABA).  While existing users of the app and who had previously used DIDI through the message platforms or payment system can continue to use it, these moves effectively stop all future growth for DIDI in China.

Mortgage applications fell to their lowest level since before the start of the pandemic this week.  The decline was 1.8% and took the total back to the lowest level since January 2020. Counter-intuitively, this fall came as mortgage rates fell over the same period.  This, combined with the massive April, May, and June mortgage numbers may mean that the massive housing market boom has peaked.

Overnight, Asian markets were mostly in the red.  Singapore (-1.54%), Japan (-0.96%), and Thailand (-0.93%) paced the loses.  Meanwhile, Shenzhen (+1.86%) and Australia (+0.90%) led the gainers.  In Europe, markets are green across the board as of mid-day.  The FTSE (+0.39%), DAX (+0.82%), and CAC (unchanged) are typical of the spread across all European bourses.  As of 7:30 am, US Futures are pointing to a green open.  The DIA is implying a flat +0.06% open, the SPY implying a modest +0.18% open, but the QQQ is implying a +0.60% gap higher.  10-year bond yields are lower again at 1.345% this morning and the dollar is down slightly, which means commodities are higher at this point.

Major economic news scheduled for Wednesday includes May JOLTS (10 am), June FOMC Minutes (2 pm), and a Fed speaker (Bostic at 3:30 pm).  The only major earnings reports scheduled for the day is MSM before the open.   

The bulls clawed back from what had been a bad start to Tuesday. It looks like they might be trying to follow through to start off the day Wednesday. The lack of any movement on OPEC+ negotiations may help bulls today, especially in the Oil sector. However, be careful here. The large caps feel a little toppy and the QQQ has been on a heck of a run, which implies a need for at least some rest if not pullback.

All trends reverse at some point and every S/R level is breached eventually. So, don't just assume trend, support, or resistance will always hold. However, The odds favor following the trend and, as always, respect both support and resistance levels. So, follow those trading rules and stick to the trade plan. Keep taking your profits, moving your stops, and maintaining your discipline. Remember that consistency is the key to long-term trading success. So, book those singles and doubles. Base hits win championships, not the occasional home run.

Ed

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

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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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