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Strong Rally

December 7, 2021 by Doug Campbell

The bulls maintained the strong rally yesterday and plan to continue this morning with another big gap open. Be careful chasing this morning gap because we will have gone from oversold to overbought in two trading days! With overhead resistance and downtrend still in play, today’s gap sets up the possibility of a pop a and drop. I plan to take advantage of the move by taking profits rather than getting caught up in a fear of missing out buying spree. Gaps are gifts; take the gift and bank it!

Asian markets surged overnight as the world shook off concerns of China’s variant economic impacts and money easing plans. European markets are also decidedly bullish this morning as pandemic fears fade. The U.S. futures point to a considerable upside gap to challenge overhead resistance levels ahead of earnings, trade, and productivity data. However, price volatility remains high, so plan your ricks carefully as Russian and Chinese aggression accelerates.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 28 companies listed with several unconfirmed. Notable reports include TOL, AVAV, AZO, CASY, CONN, DBI, PLAY, & SFIX.

News & Technicals’

Intel plans to IPO its self-driving unit in the U.S. by mid-2022. It acquired Mobileye, an Israeli autonomous driving firm, for $15.3 billion in 2017. As a result, Intel’s share price has fallen from $68 in April to less than $50 in December. Founded in Jerusalem in 1999, Mobileye is one of Israel’s biggest success stories in tech. Evergrande plans to forge ahead into a restructuring that would include all of its offshore public bonds and private debt, according to analysts. The troubled real estate developer, snowed under by $300 billion of liabilities, also said Tuesday that it’s setting up a risk management committee, which will play a role in mitigating and eliminating future risks for the firm. Analysts say that sentiment has also been buoyed by China’s move towards an emphasis on easing. President Joe Biden is expected to give Russian President Vladimir Putin a stark warning against attacking Ukraine during Tuesday’s video call. Experts say time is running out for the U.S. to prevent further hostilities between the neighbors. The call is expected to take place around 3 p.m. London time. There are widespread concerns about Russian military troop movements on the border with Ukraine and increasingly aggressive rhetoric towards Kiev from Moscow. Toyota will build a new $1.29 billion battery plant for electrified vehicles in North Carolina, and the company announced Monday afternoon. The automaker expects the facility to produce enough lithium-ion batteries for 200,000 vehicles when production begins in 2025. Treasury Yields rose in early Tuesday trading, with the 10-year edging higher to 1.444% and the 30-year climbing to 1.7784%.

Yesterday’s strong rally improved technicals, and the futures market suggests another big gap this morning as the recovery continues. However, I would be a little cautious rushing into this morning’s pop until we see some follow-through buying after the open. My concern is that we may have moved too far too fast, setting up a possible pop and drop. Don’t get me wrong, having picked up SPY calls yesterday morning, I love the big gap and will take advantage of it to take profits at the open. However, going from oversold to overbought in just two trading days, with overhead resistance and downtrends still in play, is a good enough reason for caution in my book. Toss in Russian and Chinese aggression escalating, and I will consider this gap a gift!

Trade Wisely,

Doug

Q3 Productivity and Labor Costs On Tap

December 7, 2021 by Ed Carter

We saw divergence on Monday as the DIA gapped up 0.91%, SPY gapped up 0.58%, and the QQQ gapped up just 0.13%. All 3 indices then faded the gap before starting a slow rally that lasted until the last hour of the day. During that last hour, a selloff turned into a sideways grind in a tight range the last 30 minutes of the day. This left us with Bullish Harami candles in the SPY and QQQ, while the DIA printed the strongest white candle (still with significant upper wick) and was the only one of the 3 to be able to close above its T-line (8ema). On the day, SPY gained 1.15%, QQQ gained 0.79%, and DIA gained 1.90%. The VXX fell almost 8% to 25.78 and T2122 spiked up into the mid-range at 54.78. 10-year bond yields rebounded from Friday’s sharp drop to spike all the way back up to 1.439% and Oil (WTI) jumped a massive 5.43% to $69.87/barrel.

Bloomberg reports this morning that a GSK Antibody Covid Treatment is effective against the new omicron variant. In fact, their internal research shows the treatment works against all 37 known mutations of Covid that have been identified. Sotrovimab (the drug’s name) reduced the risk of hospitalization or death of Covid patients by 79%. Markets are likely to love this news, but remember that this is only based on studies done by GSK itself.

In miscellaneous business news, the CEO of AAL announced he will retire by 3/31/22 and will be replaced by current AAL President Robert Isom. INTC also announced that it intends an IPO to spinoff its “Self-Driving Car” unit (which is based on an Israeli company named Mobileye that INTC acquired in 2017).

On Monday, China went against the global trend and decided to loosen lending standards by cutting their bank reserve requirement ratio (RRR). The move pumped $188 billion into their economy, in an effort to offset the problems faced in the Chinese real estate sector. This will make it easier for banks to lend to companies, which can then use the proceeds to pay off bonds. The move was clearly for this purpose because the statement from the Central Bank said “stability is the top priority for the coming year.”

Overnight, Asian markets were heavily on the green side. Hong Kong (+2.72%), Japan (+1.89%), and India (+1.56%) led the rally. Only Shenzhen (-0.38%) showed any red. Two factors led to the massive Hong Kong rally. First, Evergrande announced it will restructure the company and is being buoyed by China’s most recent move toward easing. Second, was optimism over omicron being potentially overblown as a threat. In Europe, markets are green across the board at mid-day. The FTSE (+1.17%), DAX (+2.07%), and CAC (+2.28%) are typical of the afternoon trading. However, Finland (+3.27%) is an outlier to the upside. As of 7:30 am, US Futures are pointing toward the US following the rest of the world higher at the open. The DIA is implying a +0.98% open, the SPY implies a +1.30% open, and the QQQ implies a +1.84% open at this hour.

The major economic news scheduled for release Tuesday includes Imports/Exports, Trade Balance, Q3 Unit Labor Cost, and Q3 Nonfarm Productivity (all at 8:30 am) and the EIA Short-Term Energy Outlook (at noon). The major earnings reports scheduled for the day are also limited to AZO, CNM, and DBI before the open. Then, after the close, CSAY, SFIX, and TOL report.

The bulls are looking to break out of the recent whipsaw range with a significant gap-up open. However, there is still a fair amount of recent resistance to work through if the goal is to get back to the highs. Before you get too excited, remember that gaps are great when they go in your direction…it’s a gift and you should take that gift by locking in some profit. However, remember the other side of the coin. Gaps mean volatility and until a trend is established, you might find the next overnight move goes against you. So continue to be careful.

Stick to your trade rules and on managing the things you can control. (Not trying to force the market to obey your desires.) Consistently taking profits when you have them and moving your stops in your favor should be part of your plan. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.

Swing Trade Ideas for your consideration and watchlist: WISH, CCL, Z, GPN, CVX, HAL, CHGG, IBM, NCLH, V, VALE, OSCR, GT, SABR, SAM, FGEN, AAPL. 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.

Hit and Run Candlesticks / Road To Wealth Youtube videos

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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Precarious Technical Condition

December 6, 2021 by Doug Campbell

With stock, futures mixed, the VIX elevated, we kick off the week with the indexes in a precarious technical condition. Uncertainty of the spreading new variant economic impacts, a Fed sounding more hawkish, a possible Evergande default close at hand, and more price volatility is likely to us guessing in the week ahead. While a relief rally seems possible, we can not rule out the possibility of more selling to retest recent lows. If we do rally, keep a close eye on price resistance levels for entrenched bears that are may not be as willing to give up as quickly as they have in the recent past.

Asian markets traded mixed but mostly lower overnight, with tech shares falling and a possible Evergrande default weighing on investors. On the other hand, European markets are in relief rally mode this morning, showing green across the board. With a light day of earnings and economic data, U.S. futures currently suggest a mixed open, but with an elevated VIX head fakes, whipsaws, and overnight reversals are not out of the question.

Economic Calendar

Earnings Calendar

We continue to lighten up the earnings calendar kicking off this week with just 15 companies listed and several unconfirmed. Notable reports include COUP, DLHC, HQY, MDB, & SAIC.

News and Technicals’

The Fed is likely to decide to double the pace of its taper to $30 billion a month at its December meeting, comments from Fed officials suggest. Initial discussions could also begin about when to raise interest rates and by how much next year. Fed Chair Jerome Powell, in testimony last week, supported the idea of a faster taper and made a dramatic shift when he said the big concern with another wave of the virus or new variant was inflation. Evergrande is back in the news as the shares plunge nearing default. Having made three 11th-hour coupon payments in the past two months, Evergrande again faces the end of a 30-day grace period on Monday, with dues totaling $82.5 million. But a statement on Friday saying creditors had demanded $260 million and that it could not guarantee funds for coupon repayment wiped a fifth off its stock’s value on Monday. Evergrande is grappling with over $300 billion in liabilities, meaning a disorderly collapse could ripple through the property sector and beyond. The Japanese tech giant’s Alibaba share price fell from 5201 yen ($46) to 5103 yen on the Tokyo stock market. At one point, shares fell as low as 5,062 yen, which is their lowest level since June 2020. Portfolio companies, including Alibaba, Arm, and Didi Chuxing, are all experiencing periods of uncertainty that have hit their market value. Treasury yields climb slightly in early Monday trading, with the 10-year trading up to 1.3733% and the 30-year rose to 1.7026%

We begin the week with indexes in a precarious technical condition as the Fed begins sounding more hawkish and the uncertainty of the new variant impacts as it spreads across the county. While the T2122 indicator continues to suggest a relief rally may soon occur, we can not rule out the possibility of more selling. With the VIX closing above a 30 handle on Friday, price volatility will likely remain high, making head fakes, whipsaws, and overnight reversals possible. Remember, resistance levels can harbor bear defensive lines, and it’s unlikely they will be willing to give up as quickly as they have in the recent past. Also, keep in mind the punishing price action of the last couple of weeks has stripped a lot of money from the buy-the-dip buyer’s accounts and likely diminished their tolerance for risk in the process. Finally, the possible default from Evergrande and the uncertainty of Chinese issued stocks adds another layer of uncertainty traders will have to grapple with this week.

Trade Wisely,

Doug

Very Rough Weekend for Bitcoin

December 6, 2021 by Ed Carter

The chop continued on Friday as a modest gap up was immediately sold in all 3 major indices. The selling went on all day until a spike in the last 10 minutes of the day took markets up off the lows. The QQQ got the worst of the pain as Chinese stocks and tech in general sold off. This action left us with a Bearish Engulfing candle in the QQQ and a Dark Cloud Cover type candle in the SPY. On the day, SPY lost 0.91%, DIA lost 0.11%, and QQQ lost 1.74%. VXX gained almost 9% to 27.99 and T2122 fell deeper into the oversold territory at 8.03. 10-year bond yields fell hard to 1.358% and Oil (WTI) was flat at $66.45/barrel.

The November jobs report put a scare into bulls on Friday. The number was expected to come in about 573k jobs added but actually came in at +210k jobs. Part of this is due to the participation rate increasing to 61.8%. The unemployment rate also fell sharply to 4.2% (from 4.5%).

Bitcoin got crushed Friday and Saturday, plunging 25% (from $57,100 to $43,100) before rebounding to $49,000, which was still down 16% as of Saturday night. While analysts did not cite any real reason for the freefall, one told CNBC it was likely the result of a derivative move caused by Friday’s flight to treasuries by funds.

Sunday afternoon, confirmation was given to what I’ve reported in the past. Despite selling 10.1 million shares in the last few weeks of TSLA (7 million shares fewer than he said he would sell), Elon Musk now has 564k more shares than when he started selling. This is because the real reason for him to sell stock had nothing to do with his TWTR poll, but was to pay for the gains made on a huge chunk of stock options that he exercised. He also still has 12.2 million shares worth of “soon to expire” stock options that he would be foolish not to exercise. So, his holdings will increase dramatically, even if he sells more to cover taxes.

Overnight, Asian markets were mixed but leaned to the downside. Hong Kong (-1.76%), India (-1.65%), and Malaysia (-1.22%) led the losses, but the red was widespread. The reason behind the losses was Asian tech giants like BABA getting hammered and China Evergrande Group teetering on the edge of default again. In Europe, markets are mixed but lean to the green side at mid-day. The FTSE (+1.01%), DAX (+0.51%), and CAC (+0.84%) are typical of the region in early afternoon trading. However, Russia (-2.24%) is a massive outlier. As of 7:30 am US Futures point toward a mixed open. The DIA implies a +0.68% open, the SPY is implying a +0.29% open, and the QQQ implies a -0.43% open at this hour. 10-year bond yields are sharply lower (1.397%) and Oil (WTI) is surging higher +3.27% in early trading.

There is no major economic news scheduled for release Monday. For traders sick of “Fed speak” market jerks, the good news is that we are now in the dark period (no Fed speakers) until the Fed decisions next week. The major earnings reports scheduled for the day are also limited to SAIC before the open. There are no earnings reports scheduled for after the close.

The back and forth whipsaw action continued Friday. More volatility is likely as the market adjusts to the idea that the Fed will be focusing more on fighting inflation than job creation over the next year. If you’re a swing trader, be very wary of this type of market. Chop is a condition for the very fast (scalpers) and very slow (long-term trading) with the guys in the middle..well…getting chopped up. So, if you don’t trade hedged and you are not extremely quick to be in/out, it’s past time to consider stepping back and waiting for a trending and less volatile environment.

Remember, you don’t have to trade every day or week. Stick to your trade rules and on managing the things you can control. (Not trying to force the market to obey your desires.) If you do trade, that should always include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.

Swing Trade Ideas for your consideration and watchlist: No tickers this morning. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Employment Situation

December 3, 2021 by Doug Campbell

As new cases of the variant come in from around the country, the market now appears willing to shrug off some of the uncertainty. Therefore, we will not turn our attention to the monthly Employment Situation number that expect a solid number according to several reports. If so, it should inspire the bulls to continue the relief rally. However, if the hype misses expectations, the bears might find inspiration. Whatever occurs, it will be interesting to see if there is a willingness to hold positions through the weekend due to the uncertainty.

Asian markets struggled for direction overnight, trading mixed with modest gains and losses though seemed to celebrate the delisting of Didi in the United States. This morning European markets edge higher as investors closely monitor economic data and news on the new variant. With jobs numbers just around the corner and a light day of earnings, U.S. futures have rallied off of overnight lows, currently suggesting a flat open. However, the results of the employment number could change things quickly and dramatically before trading begins. So, buckle up for move volatility!

Economic Calendar

Earnings Calendar

On the Friday earnings calendar, we have a light day with just 12 companies listed on the calendar, and several of them are unconfirmed. Notable reports include BIG, GCO, & HIBB.

News and Technicals’

Minnesota, Colorado, New York, and Hawaii confirmed new cases of the omicron variant on Thursday. New York City Health Commissioner Dr. Dave Chokshi said the Empire State cases indicate community spread of the variant. In addition, the first U.S. case of the virus was confirmed in California on Wednesday. The House and Senate passed a bill to prevent a government shutdown. The president plans to sign the measure before the end of Friday and prevent a lapse in federal funding. The legislation will keep the government running through Feb. 18. Shares of Didi soared as much as 14% in U.S. premarket trading Friday. Didi says it plans to delist from the New York Stock Exchange “immediately.” The Chinese ride-hailing firm plans to pursue a listing in Hong Kong instead. Tesla Chief Executive Elon Musk has sold another 934,091 shares of the electric vehicle maker worth $1.01 billion to meet his tax obligations related to the exercise of options to buy 2.1 million shares, and regulatory filings showed on Thursday. Following a flurry of options exercise, Musk still has an option to buy about 10 million more shares at $6.24 each, which expires in August next year. Treasury yields pulled back slightly in early Friday trading, with the 10-year dipping to 1.4444% and the 30-year trading at 1.7644%.

Yesterday was a nice relief rally that avoided the emotional swings even as more confirmed cases of the new variant across the country. So now we turn our attention to the monthly Employment Situation number, which many expect to come in with solid results. With the uncertainty of the government shutdown kicked down the road until the 18^th of February, a good employment number may set the stage for more relief rallies. However, if the highly anticipated number misses expectations, look out for more price volatility. If we do rally today, it will be interesting to see if the bullishness will hold as we slide into the weekend. With the new variant’s high volatility and considerable uncertainty, willingness to hold risk through the weekend could bring on a wave of profit-taking into the close.

Trade Wisley,

Doug

November Payrolls Data On Tap

December 3, 2021 by Ed Carter

Thursday gave us a more or less flat open after the brutal prior day. Then markets proceeded on a whippy day-long rally in all 3 major indices. This left the two large-cap indices as Bullish Harami-type candles. On the day, SPY gained 1.43%, DIA gained 1.80%, and QQQ gained 0.72%. However, the downtrend was not broken in any of the major indices and there is no indication that the whipsaw action will not continue on Friday. The VXX fell almost 6% to 25.72 and T2122 came up a bit, but remains in the oversold territory at 14.48. 10-year bond yield rose to 1.449% and Oil (WTI) came up just under 1.9% to $66.81/barrel.

During the day, Germany issued another national lockdown (but only for the unvaccinated). Their government is debating a national vaccination mandate, but it is unclear if this will happen since Chancellor Merkel leaving office next week. On our side of the Atlantic, Congress passed a bill to provide temporary funding, avoid a government shutdown, and kick the can down the road until February on passing a budget. However, the bill still must pass the Senate by Friday to avoid a shutdown and there are indications Senate Republicans will use this leverage to demand a prohibition against government vaccine mandates in the bill. In an unexpected development, in early-morning hours the Senate passed the shutdown avoidance bill mostly on party lines.

Right at the end of the day, the FTC sued to block NVDA’s acquisition of the chipmaker Arm. NVDA stock did not respond to the news in the last 30 minutes of the day. Arm is an alternative chip architecture to the traditional x86 architecture used by the market-leading chipmaker such as TSM. Arm chips are used in AAPL and QCOM devices as well as Android phones. In addition to the US lawsuit, this $40 billion purchase by NVDA (from Softbank) also faces stiff resistance from the UK (one-time home of Arm) and the EU by extension.

Thursday afternoon the SEC ruled it is able to force the immediate delisting of Chinese companies that fail to meet the Public Company Accounting Oversight Board (PCAOB) audit requirements. This stemmed from the 2020 case of Luckin Cofee (LKNCY), who fired its CEO after finding massive internal fraud, where the company simply “created” $310 million in sales on paper. Thursday night, Chinese ride-hailing company DIDI announced it will delist from the NYSE rather than comply. The company said it would convert US-listed shares into international exchange shares that are “freely tradeable.” Oddly, DIDI stock spiked 14% higher on this news in the premarket.

Overnight, Asian markets were mixed. Japan (+1.00%), Shanghai (+0.94%), and Shenzhen (+0.86%) led to the upside. Meanwhile, India (-1.18%), and Indonesia (-0.69%) paced the losses. In Europe, markets are mostly green at mid-day. The FTSE (+0.42%), DAX (+0.24%), and CAC (+0.09%) are representative of the continent, with only a few exchanges slightly on the red side of flat in early-afternoon trading. As of 7:30 am, US Futures are pointing toward a flat open in front of a lot of data. The DIA is implying a +0.03% open, the SPY implies a -0.02% open, and the QQQ is implying a -0.03% open at this hour. 10-year bond yields are lower to 1.431% and Oil (WTI) is up more than 2.5% in early trading.

Major economic news scheduled for release Friday includes Nov. Nonfarm Payrolls, Nov. Avg. Hourly Earnings, Nov. Participation Rate, Nov. Unemployment Rate (all at 8:30 am), Nov. Services PMI (9:45 am), and Nov. ISM Non-Mfg. PMI and Oct. Factory Orders (both at 10 am). The major earnings reports scheduled for the day include BMO, DOLE, and GCO before the open. There are no earnings reports scheduled for after the close.

The back and forth whipsaw action continued Thursday. However, the market seems to either need some rest or perhaps it is just waiting on the PAyrolls data. In either case, no gap is implied at this point. That said, more volatility is likely as markets adjust to the idea that the Fed will be focusing more on fighting inflation than job creation over the next year. If you’re a swing trader, be very wary of this type of market. Chop is a condition for the very fast (scalpers) and very slow (long-term trading) with the guys in the middle..well…getting shopped up. So, if you don’t trade hedged and you are not extremely quick to be in/out, it’s past time to consider stepping back and waiting for a trending and less volatile environment.

Remember, you don’t have to trade every day or week. Also, keep in mind this is Friday…so don’t forget to prepare for hte weekend news cycle. Stick to your trade rules and on managing the things you can control. (Not trying to force the market to obey your desires.) If you do trade, that should always include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.

Swing Trade Ideas for your consideration and watchlist: APA, FANG, ERX, COP, MRO, CVX, HAL, XOP, BP, XOM. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Nasty Intraday Whipsaw

December 2, 2021 by Doug Campbell

News of the first confirmed case of the omicron variant in the U.S. brought out the bears and produced nasty intraday whipsaw. Those following the talking head dip-buying mantra were likely punished severely on the news-driven reversal. With the VIX closing above a 31 handle, we should expect price action to remain very challenging even if a relief rally begins. If and when we begin to recover, keep a close eye on the overhead resistance levels because this kind of move will encourage the bears to stay aggressive. Plan your risk carefully!

Overnight Asian markets closed mixed as the uncertainty of the path forward concerns investors. European markets trade decidedly bearish this morning, seeing nothing but red across the board. However, U.S. markets once again point to a gap open, but plan carefully because price action could include some nasty whipsaws throughout the day.

Economic Calendar

Earnings Calendar

We have 28 companies listed on the earnings calendar this Thursday, but a number of them are unconfirmed. Notable reports include COO, DG, DLTH, EXPR, JOAN, KIRK, KR, LE, MRVL, OLLI, SIG, SWBI, TLYS, ULTA, VRNT, & ZIMZ.

News and Technicals’

The Biden administration tightens travel rules to and within the U.S., requiring all in-bound international passengers to test for Covid within 24 hours of departure. It’s also extending its mask requirement on all domestic flights and public transportation through March 18. The changes are part of a broader plan to bolster its arsenal of tools in the nation’s fight against the virus as the world enters its third year of the pandemic. “Frankly, omicron will dominate and overwhelm the whole world in three to six months,” Singapore doctor Leong Hoe Nam told CNBC’s “Street Signs Asia.” New vaccines targeting omicron are a “nice idea” but won’t be practical because of the transmissibility of the strain, he said. Experts don’t know precisely how contagious the highly mutated omicron variant is, but the virus’ spike protein — which binds to human cells — has mutations associated with higher transmission and decreased antibody protection. Treasury yields traded mixed early Thursday, with the 10-year ticking higher to 1.4392%, and the 30-year slipped lower to 1.7718%.

The first confirmed case of the omicron variant created a nasty intraday reversal increasing the technical damage in the index charts. The DIA dropped below its 200-day average, and the SPY dipped below its 50-day average. Yesterday saw the first substantial selling in the QQQ since the market pullback began dropping through its 34EMA-average. As the selling intensified, moving toward the close, the VIX spiked above recent highs, closing above a 31 handle. Not that big of a surprise considering the more than 900 point travel in the Dow during the day. Options traders will have the additional challenges of high-priced options due to the implied volatility spike. Although the T2122 indicator suggests an extreme short-term oversold condition, traders should continue to plan for very challenging price volatility even if a relief rally begins.

Trade Wisely,

Doug

You Get a Whip and I’ll Get a Saw Honey

December 2, 2021 by Ed Carter

Wednesday was another massive whipsaw way. All 3 major indices gapped at least a percent higher at the open and then followed through as Fed Chair Powell and Tres. Sec. Yellen testimonies turned up nothing market-moving. However, in the late morning a case of the omicron variant was identified in California and a selloff started. As scalpers, profit-takers and stops kicked in, the selloff turned into a rout. This left us with upper wicks that had challenged (and failed) the downtrend line over big, ugly black candles in all 3 major indices. It also made for the largest 2-day drop since October 2020. On the day, SPY lost 1.10%, DIA lost 1.29%, and QQQ lost 1.69%. The VXX rose 7% to 27.30 and T2122 fell even further to a very oversold 1.63. The 10-year bond yields fell to 1.424% and Oil (WTI) dropped another 1.5% to $65.18/barrel.

As was mentioned, the first case of the omicron variant was identified in CA. The person who contracted it was fully vaccinated, but it is worth noting that, so far, the patient is only experiencing mild symptoms. However, President Biden did tighten travel restrictions and mask mandates again as part of his plan to fight Covid.

After the close, FIVE and SPLK beat on both lines, while SNPS beat on earnings, but came in in-line on revenue. However, PVH beat strongly on earnings but came in light on revenue. In neon-earnings news, DIS replaced their long-standing board chair (Bob Iger) with Susan Arnold. SQ also changed its name to Block (as a signal they will move to work more on crypto).

This morning DG posted beats on both lines. The company also announced plans to open 1,000 “Popshelf” stores aimed toward a younger and wealthier demographic than has been the company’s target to date. The stores are scheduled to all be in place by the end of fiscal 2025.

Overnight, Asian markets were mixed, but leaned to the up side. Japan (-0.65%) was the clear loser on the day while South Korea (+1.57%), India (+1.37%), and Indonesia (+1.17%) led the wider-spread move up. In Europe, markets are red across the board at mid-day. The FTSE (-0.90%), DAX (-1.54%), and CAC (-1.28%) are leading the way lower on renewed Covid (omicron variant) fears in early afternoon trading. As of 7:30 am, US Futures are pointing toward a mixed open. The DIA is implying a +0.67% open, the SPY implies a +0.37% open, while the QQQ implies a slightly red -0.04% open. 10-year bond yields are up only slightly and Oil (WTI) is up two-thirds of a percent in early trading.

The major economic news scheduled for release Thursday is limited to Weekly Jobless Claims (8:30 am) and 3 speakers (Fed Member Quarles at 11 am, Fed member Bostic at 11:30 am, and Fed member Daly at 11:30 am). The major earnings reports scheduled for the day include CM, DG, EXPR, GMS, KR, SIG, and TD before the open. Then after the close, COO, DOCU, JOAN, MRVL, and ULTA report.

Yesterday’s action was just another case of the whipsaw that continues over the last week. Volatility is likely to continue as markets adjust to the idea that the Fed will focus more on fighting inflation over the next year. As said before in this blog, nimble scalpers are in heaven with this many intraday swings. However, this makes for an extremely hard market for swing traders to be successful. So, if you don’t trade hedged and you are not extremely quick to be in/out, it’s past time to consider stepping back and waiting for a trending and less volatile environment.

Remember, you don’t have to trade every day or week. Focus on the times when the trend and chart setup gives you have an edge. Stick to your trade rules and on managing the things you can control. (Not trying to force the market to obey your desires.) If you do trade, that should always include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.

Swing Trade Ideas for your consideration and watchlist: No stock picks this morning, but members can see them in the trading room at 9 am. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching

Significant Technical Damage

December 1, 2021 by Doug Campbell

Although Nasdaq has held firm in the recent selloff, the DIA and the IWM have suffered significant technical damage. Moreover, with only 35% of stocks holding above their 200-day averages, it is truly amazing that the QQQ has held solely on the back of just a handful of tech giants. That said we the T2122 indicator now suggests a short-term oversold condition. However, with so much uncertainty, including a looming debt ceiling and budget battle along with a Fed taper, there is still a lot of uncertainty to keep the price action very challenging.

Asian markets rebounded with modest gains overnight, with oil prices surging higher. European markets are decidedly bullish this morning, attempting to recover amid the wild uncertainty. Ahead of ADP and ISM data, U.S. futures point to a substantial gap up at the open but expect volatility to remain challenging as the Fed testimony continues in Congress.

Economic Calendar

Earnings Calendar

On the Wednesday earnings calendar, we have 26 companies listed, with several of them unconfirmed. Notable reports include CRWD, DAKT, FIVE, PDCO, PVH, RY, SMTC, SNOW, SPLK, SNPS, & VEEV.

News and Technicals’

Failure to get the first dose of a coronavirus shot by Jan. 16 in Greece for anyone aged 60 and above will result in a monthly fine of 100 euros ($114). As of Tuesday, about 62% of the Greek population is vaccinated against the virus. Greece’s announcement comes at a time when other European nations are also considering compulsory vaccination. In addition, oil prices have the scope to move “a lot higher” from current levels given the world’s deep reliance on fossil fuels, says Jefferies’ Christopher Wood. Last year, Wood said fossil fuels met 84% of the world’s energy demand. That’s despite the “political attack” in recent years that has removed the incentive to invest in fossil fuels. Moreover, oil saw its worst day of 2021 on Friday amid a global market rout triggered by the World Health Organization’s Thursday warning about the omicron variant. In related news, the White House is considering stricter international travel testing requirements to slow the spread. Finally, Elon Musk described a dire situation with SpaceX’s development of Raptor rocket engines the day after Thanksgiving in a companywide email, a copy of which was obtained by CNBC. The Raptor production crisis is much worse than it seemed a few weeks ago,” Musk wrote. Raptor engines power the company’s Starship rocket, with Musk adding that SpaceX faces “genuine risk of bankruptcy if we cannot achieve a Starship flight rate of at least once every two weeks next year.” In early Wednesday trading, Treasury Yields surged, with the 10-year climbing to 1.5005% and the 30-year rising to 1.8363%.

The last few days of selling have created significant technical damage in the DIA and IWM charts. Yet, at the same time, the SPY and the QQQ have suffered little to no damage other than breaking elevated support levels. In truth, other than the price volatility, the Nasdaq held up remarkably strong based almost solely on the back of the tech giants. The T2122 indicator finally reached an extreme short-term oversold condition yesterday and does suggest a relief rally could soon begin. However, with the debt ceiling and budget deadlines fast approaching, the Fed moving toward taper and the new variant uncertainty expect the volatility to remain high. So, be prepared for substantial intraday whipsaw, head fakes, and news-driven overnight reversals as we learn more about broad economic impacts.

Trade Wisely,

Doug

Bulls Try to Open December With Bounce

December 1, 2021 by Ed Carter

Tuesday was a rough day for markets as a modest gap-down turned into a rout as Fed Chair Powell said the FOMC will discuss accelerating the bond-buying taper by a few months at its upcoming meeting. Markets stabilized and ground sideways from noon on, but closed near the lows. This left us with a Doji-Gap down black candle in the SPY and ugly black candles in all 3 major indices. On the day, SPY lost 1.95%, DIA lost 1.79%, and QQQ lost 1.41%. The VXX rose 15% to 25.47 and T2122 dropped to a very oversold 2.93. 10-year bond yields fell to 1.444% and Oil (WTI) plummeted 4.5% to $66.77/barrel.

In Covid news, before the open, MRNA CEO Bancel told the Financial Times that he expects all existing vaccines to be less effective against the omicron variant. This was a contributor to the gap-down open. In a completely separate report, REGN said their antibody treatment may be less effective against the variant as well. MRNA was down 4.36% and REGN was down 2.73% on the day. What wasn’t stressed is that this is to be expected of mutated viruses and new vaccines and treatments for the variant are already under development.

After the close, CRM beat on both lines. It also announced that it was promoting Bret Taylor (former CEO of a previous CRM acquisition) to Co-CEO alongside one of the founders (Marc Bennioff). In other after-hours reports, NTAP beat on both lines, while GFS and HPE both beat on earnings and missed on revenue.

So far this morning, PDCO, DOOO, GIII, and DCI have all beat on both lines. RY beat on revenue but missed on earnings. Refinance mortgage applications fell 15% for the week as 30-year fixed, conforming interest rates increased to 3.31% on average. However, new home purchase applications rose 5% for the week.

Overnight, Asian markets were mostly green. South Korea (+2.14%), Singapore (+1.87%), and Thailand (+1.41%) led the way higher, but the gains were widespread. In Europe, stocks are green across the board at mid-day. The FTSE (+1.51%), DAX (+1.66%), and CAC (+1.66%) are leading European markets higher in early afternoon trading. As of 7:30 am, US Futures point to a significant gap higher as American markets follow the move higher. The DIA is implying a +0.85% open, the SPY implies a +1.23% open, and QQQ implies a 1.46% open, 10-year bond yields are also up to 1.483% and Oil (WTI) is up 4.43% in early trading.

The major economic news scheduled for release Wednesday includes Nov. ADP nonfarm Payrolls (8:15 am), Nov. Mfg. PMI (9:45 am), Nov. ISM Mfg. PMI (10 am), Crude Oil Inventories (10:30 am), Fed Beige Book (2 pm), and a couple of major speakers (Fed Chair Powell testifies and Treas. Sec. Yellen speaks, both at 10 am). The major earnings reports scheduled for the day include DCI, DOOO, GIII, PDCO, and RY before the open. Then after the close, FIVE, PVH, SPLK, and SNPS report.

The whipsaw is continuing this morning as the cycle of overreaction and snap-back to omicron and Fed news keeps volatility high. This is not an easy market for swing trading, but nimble scalpers are loving what they see. So, be a little leery of chasing into what could turn out to be a pop and drop.

That said, for the agile or hedged, at least a short-term rebound seems to be in the cards this morning. Focus on your trade rules and on managing the things you can control. That should include consistently taking profits when you have them and moving your stops in your favor. Trade carefully and continue to think twice before holding through earnings…especially without a hedge.

Swing Trade Ideas for your consideration and watchlist: XPEV, PLBY, XLE, FSR, AAPL, AMD. 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

Hit and Run Candlesticks / Road To Wealth Youtube videos

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.

Free YouTube Education • Subscription Plans • Private 2-Hour Coaching