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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

🎯 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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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

Buy the dip?

November 30, 2021 by Doug Campbell

The talking heads continue to sing in chorus to buy the dip, but It would seem their wide-eyed speculation will punish them this morning with a significant overnight reversal. Emotions are very high, and the truth is we still don’t know anything about the new variant and if it will have economic impacts! However, we do know that markets hate uncertainty! Uncertainty increases price volatility and, at the same time, removes a trader’s edge. Therefore, I continue to suggest caution. Avoid gambling, watch, wait, protect your capital until your edge returns.

Asian markets struggled for direction overnight mixed results, with the Nikkei down 1.63% followed by Hong Kong down 1.58%. European markets trade decidedly lower across the board this morning as traders grapple with the sharply declining global sentiment. U.S Futures have bounced off of overnight lows but continue to suggest a substantial reversal at the open, with Powell and Yellen headed to the hill to testify. So buckle up for another day of uncertainty.

Economic Calendar

Earnings Calendar

We have a bit more earnings activity today, with 31 companies listed with several unconfirmed. Notable reports include AMBA, BNED, BOX, CHS, CTRN, FRO, GFS, MOMO, HPE, NTAP, CRM, & ZS.

News & Technicals’

Moderna CEO Stephane Bancel told the Financial Times that he expects vaccines to be less effective against the new strain. As a result, Asia and European stocks fell on Tuesday; U.S. futures were also in the red. The moves lower come after European and U.S. stocks attempted a relief rally on Monday. Many unknowns surround the new omicron Covid variant; early signs indicate it’s more transmissible, but we don’t yet know what risks it poses to public health. However, global market sentiment nosedived on Tuesday morning amid fears that the Covid-19 vaccine currently in use could be less effective against the new omicron variant. Fed Chair Jerome Powell believes that the omicron variant of Covid-19 and a recent rise in coronavirus cases pose a threat to the U.S. economy. Worries over the new variant could “reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” he said in prepared remarks. Treasury Secretary Janet Yellen will join Powell on Tuesday in testifying before the Senate Banking Committee on Tuesday. Treasury Yields declined sharply in early morning trading, with the 10-year falling nine basis points to 1.4324%nd the 30-year declining six basis points to 1.8139%.

Although we saw a nice bounce yesterday as the traders tried to shrug off the possible impacts of the new variant. Though there is a chorus of talking heads suggesting buy the dip, I continue to be cautious because we don’t really know anything at this point. Currently, markets are highly speculative and combine that emotional energy with significant uncertainties, and anything is possible. The current price volatility favors intraday traders can prove t be very damaging to swing trading accounts. This morning we look to open with a significant overnight reversal that will be proof positive there is no edge in buying the dip in wide-eyed speculation. Gamble if you must, but as for me, I will stand aside, protect my capital and wait for my edge to return.

Trade Wisely,

Doug

Wild Ride of Uncertainty

November 29, 2021 by Doug Campbell

The typically dull Black Friday session became a wild ride of uncertainty with the WHO going into an emergency meeting on a new virus variant they see as concerning. What was remarkable was that before the market had even opened on Friday, a string of talking heads in the financial news were shouting, buy the dip! Unless you’re a very experienced intraday trader or a buy-and-hold forever investor, that might work. However, for most retail traders, trading without an edge is nothing more than gambling. So let the institutions and gamblers deal with the wild volatility and save your capital until your edge returns. There is nothing healthy about a 1000 point drop in a short session and nearly a 300 point gap the following day!

Asian markets closed the day red across the board. However, European markets are in rally mode after Friday’s rout. Though there is remains incredible uncertainty about what comes next, U.S. Futures point to a gap up open. Watch for the possible hefty price swing intraday whipsaws as we sort out all the emotion.

Economic Calendar

Earnings Calendar

We start this week with just over 20 companies listed on the earnings calendar, with several unconfirmed. Notable reports include ARCE, GBDC, & LI.

News & Technicals’

Stocks head into the week ahead on shaky footing after swooning in the half-day post-Thanksgiving session, and more selling is possible as investors watch developments related to a new coronavirus variant. In addition, traders are watching to see if stocks can hold critical technical levels or whether they break through them, threatening a year-end rally. Moderna’s Chief Medical Officer Paul Burton said Sunday the vaccine maker could roll out a reformulated vaccine against the omicron coronavirus variant early next year. However, it’s not clear whether new formulations will be needed or if current Covid vaccinations will provide protection against the new variant that has begun to pop up around the globe. According to the World Health Organization, the omicron Covid variant is likely to spread further and poses a “very high” global risk. It warned Monday that surges of Covid infections caused by the variant of concern could have “severe consequences” for some areas. The WHO issued a technical brief to its 194 member states on Monday. Treasury Yields climbed in early Monday trading, with the 10-year trading up to 1.5363% and the 30-year rising to 1.8805%.

The fear over a new Covid variant turned the Black Friday short session into a wild ride of uncertainty. Not typical on a day that is usually very boring and lifeless. I watched CNBC in my hotel room before the market opened, and it was amazing to see an endless string of talking heads shouting “buy the dip.” So, okay, the market is bouncing this morning, but I have to ask, do you have an edge trading a collapse of 1000 points and then a gap up of nearly 300? Volatility like this is dangerous and can heavily damage a retail trader’s account. So I plan to stand aside and let the institutions and gamblers deal with the wild price action that is likely to experience significant whipsaws intraday. In truth, we don’t know anything yet, so take a breath and wait until your edge returns. Keep your money safe because swings like this does not a healthy market make!

Trade Wisely,

Doug

Bulls Look to Bounce from Brutal Friday

November 29, 2021 by Ed Carter

Friday was a brutal half-day for the bulls. A new variant of Covid out of South Africa (Omicron) has been labeled a threat by the WHO and world markets are ran for cover. In the US, a 2% gap down, led to follow-through the first two hours. However, a rally from 11:30-12:30 am brought markets back to the gap-down level, only to be met with more hard selling until 12:55 pm. Interestingly, there was a bullish move on MASSIVE volume (probably dark pool volume from the open) the last 5 minutes. This all left us with a gap-down Spinning Top in the DIA, and gap-down big black candles in the SPY and QQQ. On the half-day, SPY lost 2.23%, QQQ lost 1.90%, and DIA lost 2.52%. The VXX spiked to 26.16 and T2122 dropped deep into the oversold territory at 3.88. 10-year bond yields fell off a cliff as traders ran for safety to 1.482% and Oil (WTI) dove an incredible amount of more than 13% to $68.17/barrel.

As mentioned above, the Omicron variant made most of the economic news over the last 4 days. Cases have been found in Europe, Australia and Dr. Fauci (NIH) says it is likely already in the US as well. Travel restrictions are already being imposed globally. So, the market faces uncertainty about what can be done to contain the economic fallout over this new outbreak as we enter Winter and with central banks and fiscal policies already facing heavy inflation. On the other hand, we don’t know the mortality rate of the new variant and it does appear that the pharma response will be faster this time. (MRNA says testing is already underway and an Omicron vaccine could be ready in early 2022.) So, while the market hates uncertainty, don’t be surprised if at least today we see a rebound after what may be perceived as Friday’s overreaction.

In-store retail traffic was down 28% on Black Friday compared to 2019 according to retail industry analysts. This was despite closures having Thanksgiving Day sales down 90% from 2019. However, Black Friday sales were still up 48% from the 2020 levels. In addition, online retailers report sales slightly lower than last year ($8.9 billion vs. $9.0 billion in 2020) on Friday. With all of this said, given the tremendously strong Q3 retail results, analysts are predicting that shoppers have just been buying throughout the season rather than so heavily on the Thanksgiving weekend. One industry analyst (Adobe Analytics) is still predicting Cyber Monday to be the biggest shopping day of the year according to CNBC.

TSLA changed its tune Friday. What had been an all-out push for deliveries at any cost for several quarters was reversed when CEO Elon Musk told employees to focus on “minimizing the cost of deliveries” rather than on hitting end-of-quarter delivery goals. However, the company still expects to meet its broad goal of achieving 50% average growth in deliveries for the year.

Overnight, Asian markets were mostly down. Japan (-1.63%), Singapore (-1.44%), and Thailand (-1.30%) led the way lower. Only Indonesia (+0.71%) was appreciably green, although Shenzhen (+0.22%) and India (+0.16%) both stayed above water. In Europe, however, markets are strongly green across the board at mid-day. The only exception is Denmark (-0.30%). The FTSE (+1.04%), DAX (+0.48%), and CAC (+0.98%) are leading the charge, but some of the smaller exchanges are up considerably more (such as Russia at +2.11%). As of 7:30 am, US Futures are pointing to a rebound. The DIA is implying a +0.52% open, the SPY implies a +0.71% open, and the QQQ is implying a +0.87% open at this hour. Oil is already making a strong comeback (up 4.97% at this time) and 10-year bond rates are also spiking in early trading.

The major economic news scheduled for release Monday includes Oct. Pending Home Sales (10 am) and an onslaught of speakers (Fed Chair Powell testifies at 10 am, Treas. Sec. Yellen speaks at 10 am, Fed member Williams speaks at 10:30 am, Fed member Clarida speaks a 1 pm, Fed member Williams speaks at 3 pm, Chair Powell speaks at 3:05 pm, and Fed member Bowman speaks at 5:05 pm. Major earnings reports scheduled for the day are limited to LI before the open. There are no major earnings reports scheduled for after the close.

The bulls have had 2.5 days to consider the real potential impact of Omicron and get past initial fears. They seem to be trying to mount a rebound charge in Europe and, so far, are looking to follow Europe back higher this morning. A lot of technical damage needs to be fixed but the bulls look ready to try early.

Be leery of chasing into what could turn out to be a pop and drop. However, for the nimble, 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: PLD, ON, DVN, PFE, HPQ, LCID, KR. 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.

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Anything is Possible

November 24, 2021 by Doug Campbell

With a slew of potentially market-moving economic reports, I think it’s fair to say anything is possible as we slide into the Thanksgiving shutdown. On a typically declining volume getaway day for holiday travel, traders will have to plan considerable price volatility as the data come in rapid succession. So, will it inspire the bulls, or will the bears gain an edge today? Adding to the worries we have the rising U.S Bonds and a possible German pandemic lockdown, and it’s no wonder the premarket is filled with uncertainty.

Asian markets struggled for direction in a mixed session during the night, with New Zealand’s central bank announcing a rate hike. European markets traded mixed this morning, with more pandemic concerns as infection numbers hit new records. U.S. futures reflect the uncertainty currently suggesting a lower open across the board ahead of the data deluge. So, buckle up; it could be a wild pre-holiday session.

Economic Calendar

Earnings Calendar

We have a very light day on the Wednesday earnings calendar with just 20 companies listed with several unconfirmed. Notable reports include DE, CMCM, BAM, KC, FUTU, & HTHT.

News and Technicals’

Germany will decide on tougher Covid restrictions on Wednesday. Officials have been considering more Covid rules and even a full or partial lockdown. Germany sees a daily record of Covid cases and mounting pressure on hospitals as the delta variant takes hold. Health Minister Jens Spahn has already issued a dire warning to Germans this week. In addition, Samsung plans to build a $17 billion chip plant in Texas. The factory will aim to help boost the production of advanced logic semiconductors used in phones and computers. Samsung said it expects building work to commence in the first half of 2022, and it hopes to have the site in operation by the second half of 2024. The total expected investment of $17 billion will be the most significant investment Samsung has ever made in the U.S. The Turkish lira has collapsed to previously unfathomable record lows this week. The country’s central bank, the TCMB, continues to cut interest rates despite rising double-digit inflation. Since September, the central bank has cut its main policy rate by 300 basis points, sending the already depreciating currency into freefall as investors flee Turkish assets. Treasury declined modestly in early Wednesday trading, with the 10-year slipping to 1.6462% and the 30-year dipping to 1.9946%.

On the eve of the Thanksgiving market shut down, I think it’s fair to say anything is possible. Typically volume declines as traders shut down early, heading out holiday travel. However, with a massive amount of market-moving data coming our way, prepare for some wild volatility this morning as the deluge begins. First, durable goods, GDP, International trade, and Jobless claims all happen before the bell. Then comes New Home Sales, Personal Income & Outlays, Consumer Sentiment, Petroleum Statis, and the FOMC minutes. Add to that a possible announcement of more German pandemic lockdown, rising U.S. bonds, and the collapsing Turkish Lira, and we have more than enough data to digest to give investors preholiday indigestion. The market will be open for a partial day of trading Friday, but it is typically anemic price action to be very careful should you decide to trade. Right Way Options will be closed both Thursday and Friday as a result. I wish you and your families the very best on this long Thanksgiving weekend!

Trade Wisely,

Doug