All through the bears made a quick visit last Friday, the bullish trends remain, and according to the futures, the bulls are rested and ready to get back to work this morning. With the inauguration just around the corner and the ramp-up of 1st quarter earnings, traders should expect an extra dose of price volatility in the days ahead. Although the market is very hopeful about the next round of stimulus, make sure you check earnings dates before making trading decisions. With so many stocks looking elevated, a disappointing earnings report could create painful selloffs. Plan carefully.
Asian markets traded mixed but mostly higher overnight, with the HIS surging 2.70% higher. European markets trade cautiously this morning, chopping around the flat-line. However, the bulls seem to be on a mission this morning, pointing to a gap up open ahead of earnings results. It would be wise to expect an extra dose of volatility as earnings ramp up.
Economic Calendar
Earnings Calendar
We begin to ramp up the 1st quarter earnings calendar with 20 companies reporting results. Notable reports include IBKR, NFLX, BAC, SCHW, CMA, GS, HAL, JBHT, LOGI, PETS, STT, & ZION.
New & Technicals’
Last Friday, big bank earnings beat estimates, but they all found a few sellers. Today we ramp earnings, but futures are currently staging a rally ahead of GS, and BAC reports this morning, with the first big tech report this afternoon coming from NFLX. With the change in power at the White House just around the corner, it’s possible we could experience a bit of price volatility with lower than usual volumes as the world watches. Although energy prices have seen a sharp rally recently, the IEA cut their oil demand outlook due to pandemic lockdown restrictions. Germany has discovered a new virus variant among 35 hospital patients. Though the outgoing Trump administration wants to lift travel ban restrictions, the Biden administration says they will keep Europe and Brasil restrictions in force.
Although we experienced a little bearish activity last Friday, overall uptrends held as support. This morning as we return to work after the MLK holiday, the bulls seem ready to resume their march higher, with the Dow futures suggesting a gap up of more than 150 points at that time of writing this report. BAC beat top-line estimates but fell short of revenue expectations, yet the stock is holding up in premarket trading. Higher unemployment, weak retail sales have not dampened the spirit of the bulls with the hope of more stimulus on the way, so perhaps earnings can be added to the list of things that don’t matter all that much in this environment. Keep an eye out for price volatility due to earnings and the transition of power in the Whitehouse.
Markets gapped down Friday on some bad economic data (Dec. Retail Sales miss lower than expected Producer Price Index, and NY Empire State Mfg. Index much lower than expected. Then all the major indices put in indecisive candles for the session. The QQQ put in a black Spinning Top type candle while the DIA and SPY printed Dojis. On the day, SPY lost 0.73%, DIA lost 0.62%, and QQQ lost 0.79%. The VXX gained 2.5% to 17.11 and T2122 fell back into the mid-range at 59.70. 10-year bond yields sold off strongly as traders bought into safety, ending at 1.087% and Oil (WTI) fell almost 3% to $52.04/barrel.
GS has raised their 2021 US Economic forecasts based on the $1.9 billion Biden stimulus plan. Among the changes are an increase in economic expansion forecast to 6.6% (vs. 6.4% previously) and a reduction of unemployment forecast down to 4.5% (vs. 4.8% previously). Lastly, GS now says that disposable income will increase 4.5% (vs. 3.8% increase previously).
On Monday, China reported higher than expected growth for Q4 (6.5% vs. 6.1% est.). However, consumer spending for Dec. was lower than expected (4.6% vs. 5% in Nov.). That said, economists are estimating a slowdown of growth for the year 2021, reducing estimates from 8.4% to 7.4% for the coming year.
Related to the virus itself, US infections continue to rage as the US. The totals have risen to 24,626,441 confirmed cases and 408,623 deaths. This comes as the average number of new cases has fallen to 211,000 new cases and deaths have flattened at 3,326 per day. As usual, the President is out of step, trying to lift travel restrictions from Brazil, Europe, and the UK on his last day in office. President-elect Biden has said this move will be reversed Wed. at noon.
Globally, the numbers rose to 96,095,456 confirmed cases and the confirmed deaths are now at 2,051,742 deaths. As a reference, the world average new cases is down to 666,551 per day, but deaths remain high at over 13,600 new deaths per day. Israel hit another record number of new cases as its government is considering extending its national lockdown. In Germany, PM Merkel is meeting with state leaders to discuss a tighter set of restrictions, including mandatory N-95 masking by anyone in public. This comes as Germany announced it has discovered yet another mutation of the virus among 35 patients. Still, in hopeful news, the UK’s Minister for Vaccine Deployment said that national hopeful news, UK Minister for Vaccine Deployment said that restrictions in the UK could be gradually eased in March as the top 4 cohorts of the most vulnerable should have received vaccinations by then.
Overnight, Asian markets were mixed, but leaned mostly green. Hong Kong (+2.70%) and South Korea (+2.61%) led the gainers. Meanwhile, Shenzhen (-0.96%) and Shanghai (-0.86%) paced losing exchanges. In Europe, so far today markets are mixed but leaning green on modest moves. Among the big 3 bourses, the FTSE -0.05% in on the res side of flat, DAX (+0.23%) has a modest gain, and CAC (+0.01%) is just on the green side of flat. As of 7:30 am, US futures are pointing to a small gap higher. The DIA is implying a +0.59% open, while the SPY implies a +0.64% open, and the QQQ is implying a +0.79% open.
There is no major economic news for Tuesday. Major earnings reports on the day include BAC, CMA, GS, HAL, PETS, SCHW, and STT before the open. Then after the close, JBHT, NFLX, and ZION report.
With planned weekend protests at state capitols mostly failing to take place (give or take 25 armed protesters in Michigan), the market seems to be ready to start the week rested and hopeful for a transition to the Biden Administration. With 25,000 troops plus thousands of Federal Law Enforcement, as well as Iraq-style Red and Green zones fenced off, it would seem unlikely there will be any protests, riots, or disruptions to the inauguration. In fact, the new administration is already starting to work as new Sec. of Treasury Yellen is calling for action on the $1.9 trillion stimulus plan.
So, look for a bullish start to the short week. As always, follow trend, respect both support and resistance, and don’t chase the moves you have missed. Lock in those profits when you achieve trade goals and stick with your discipline. Focus on the overall market, the specific chart, and your own trading process. Remember, trading is a long-term game. We don’t have to try to get rich every day.
Ed
Swing Trade Ideas for your consideration and watchlist: No Trade Ideas for Tuesday. 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.
🎯 DickCarp: 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
|607% in just 24 months |
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.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Another 1.9 Trillion may be on the way soon if President-Elect Biden’s stimulus plan can make it through the congressional gauntlet. Somewhat surprisingly, the market at this point is taking a wait and see attitude as it faces big bank earnings and a full plate of economic data with the potential to create some price volatility. We have a 3-day weekend with the market closed on Monday for Martin Luther King day, plan according to keeping in mind earnings ramp up next week.
Overnight Asian markets struggled after the U.S. blacklisting of smartphone maker Xiaomi. European markets trade lower across the board this morning on slower than expected recovery concerns. Ahead of a big day of earnings and economic data, U.S. futures currently point to lower open the day after the IWM set a new record high. Buckle up the road ahead could be a bumpy one.
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have just five verified reports, but they are potentially market-moving. Notable reports include C, JPM, PNC, & WFC.
News & Technicals’
President-elect Biden revealed his stimulus plan adding another 1.9 Trillion to the 900 Billion passed just last month. The plan includes raising the federal minimum wage to $15.00 an hour and sending an additional $1400 in direct payments to most Americans. Big banks will take center stage this morning with reports from C, JPM, PNC & WFC. The financial sector has enjoyed a tremendous bull run for the last couple of months, so all eyes will be watching. If that’s not enough, we have a full plate of economic reports that have the potential to add to this morning’s price volatility. Make sure your checking company reporting dates before buying or selling decisions. Prices have risen so much in the last few months an earnings miss could see a severe and painful punishment.
The DIA & IWM indexes hit new record levels yesterday, but only the IWM could hold the new ground by the close of the day. That said, the indexes continue in bullish trends ahead of a big day of data. Futures point to lower open as I write this report, but traders will have to stay flexible because anything is possible in reaction to all the news. As you plan your risk into the weekend, it would be wise to remember 1st quarter earnings ramp up next week, and who knows what kind of political goofiness could crop up affecting market prices with the inauguration of President Biden. Monday, the market will be closed for Martin Luther King day so enjoy your 3-day weekend!
On Thursday, Jobless Claims shot up unexpectedly to almost 1 million, but markets did not care. All three major indices opened flat, but then sold off a bit most of the day. As a result, the SPY and DIA both printed Bearish Engulfing candles, while the QQQ put in a black candle. On the day, DIA lost 0.19%, SPY lost 0.35%, and QQQ lost 0.53%. Interestingly, the IWM was up 2% and closed at an all-time high close. VXX gained just over a percent to 16.68 and T2122 fell slightly, but remains in the overbought territory at 89.97. 10-year bond yields spiked on expectations of the Biden stimulus plan closing a 1.129% and Oil (WTI) rose 1.5% to $52.72/barrel.
After hours, President-elect Biden released his $1.9 trillion stimulus plan. The plan includes another $1,400 direct payment (raising the December $600 to $2,000). It also calls for extending $400/week federal unemployment benefits through September, as well as raising the federal minimum wage to $15/hour. Other key points include $350 billion for state and local government aid, $170 billion aid for schools, $50 billion for Covid testing and $20 billion for vaccinations. One expected item that was missing was a $10,000 student loan forgiveness plan.
As he leaves office, President Trump continues to escalate tensions with China. This time by adding more Chinese companies to the federal blacklist (prohibited from doing business in the US and from US investment) including the largest Chinese smartphone maker Xiaomi and massive oil company CNOOC. Some tariffs have been in place as of January 1st, impacting things such as the price of computer graphics cards. Oxford University estimates the impact of the trade war will be about $1.6 trillion over the next 5 years, but did not break down the split between the world’s two largest economies. Reuters did report that it may result in up to 732,000 fewer US jobs being created by 2022.
Related to the virus itself, US infections remain very high, but may show signs of easing just a bit. The totals have risen to 23,848,410 confirmed cases and 397,994 deaths. This comes as we average just over 243,000 new cases and just over 3,400 deaths per day. (Extremely high, but less than just a few days ago.) In addition, in an effort to ramp up vaccinations, baseball stadiums and convention centers are being transformed into large-scale vaccination centers across the country. President-elect Biden has called for a doubling of the pace (we currently give about 500,000 shots per day and he wants 100 million in 100 days).
Globally, the numbers rose to 93,637,684 confirmed cases and the world has now broken the 2 million death mark as confirmed deaths are now at 2,004,815 deaths. As a reference, the world is averaging 715,000 new cases and over 13,500 new deaths per day. Ireland reports that half of its total cases have come in the last 2 weeks. While the number is a drop in the bucket relative to the US, that trend should be alarming. France imposed new travel restrictions. German PM Merkel proposed another total national lockdown (they are already in a partial one), but is being fought by German states and business groups. In Asia, perhaps just coincidentally, China reported its first COVID-19 death in 5 months and a renewed outbreak in the Northwest of the country, on the same day WHO experts arrived in Wuhan to investigate the virus source.
Overnight, Asian markets were mixed but leaned to the red side. Shenzhen (+0.27%) and Shanghai (+0.27%) again paced gainers. Meanwhile, South Korea (-2.03%), India (-1.10%) and Thailand (-1.11%) led the losses. In Europe, so far today markets are red across the board. Among the big 3 bourses, the FTSE -0.90%), DAX (-1.05%), and CAC (-1.14%) are all leading the way lower, but losses are over three-fourths of a percent across the continent. As of 7:30 am, US futures are down slightly as well. The DIA is implying a -0.41% open, while the SPY implies a -0.32% open, and the QQQ is flat, implying a -0.06% open.
The major economic news for Friday includes Dec. Retail Sales, Dec. PPI, and NY Fed Empire State Mfg. Index (all at 8:30 am), Dec. Industrial Production (9:15 am), and Nov. Business Inventories and Mich. Consumer Sentiment (both at 10 am). Major earnings reports on the day include C, JPM, PNC, and WFC before the open. There are no major earnings reports after the close.
As we head into a long weekend and with the FBI reporting warnings of more pro-Trump attacks possible in all 50 state capitols as well as 3 serious threats to the US Capitol, do not be surprised to see hedging or profit-taking action Friday. 3 days is a long time to hold much risk in this kind of environment. Besides, it’s Friday…and Friday is payday. So, don’t forget to take some money off and pay yourself.
Lock in those profits (base hits are the way we build consistency) and stick with your discipline. As always, follow the trend, respect both support and resistance, and don’t chase the moves you have missed. Focus on the overall market, the specific chart, and your own trading process. Remember, trading is a long-term game. We don’t have to try to get rich every day.
Ed
Swing Trade Ideas for your consideration and watchlist: GILD, MPC, FUBO, INSP, XBI, OSTK, PSX. 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.
🎯 DickCarp: 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
|607% in just 24 months |
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.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
SPY and the QQQ provided some market lift yesterday while the DIA and IWM took a little break. Index trends remain bullish as officially kickoff the 1st quarter earnings season hearing from BLK with GS, JPM & C reports Friday morning. We will get the latest reading on Jobless Claims, Jerome Powell speaks at 12:30 AM Eastern, and President-Elect Biden will reveal his stimulus plan. These are potentially market-moving events, so stay alert for price volatility as the data is released.
Asian markets closed mixed but mostly higher as China’s December trade data beat expectations. Across the pond, European markets trade with modest gains across the board on hopes of U.S stimulus. U.S. futures trade mixed but mostly higher this morning with the intoxicating smell of freshly printed deficit spending in the air.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have the 1st quarter earnings season’s official kickoff with eight verified reports. Notable reports include APHA, BLK, TSM, & DAL.
News & Technicals’
The U.S House has voted to impeach President Trump. Now the Senate will take up the issue, but according to reports, the trial may not begin until after President Biden’s inauguration. Airbnb yesterday canceled reservations in the Washington area during the inauguration. Though a bit choppy, the market managed to push upward, led by the SPY and QQQ, while the DIA and IWM chose to rest, slipping sideways. We have vaccines back in the news as J&J’s one-shot system is proving safe and generates a promising immune response. Health officials are hopeful as the new vaccine would greatly simplify the inoculation of the country. Treasury yields are again on the rise this morning with the expectation of Bidens’ stimulus plan announcement later today. The market loves freshly printed deficit spending, so be prepared for a possible reaction.
Trends remain bullish, with the indexes charts mostly consolidating as we head into the 1st quarter earnings season. Blackrock (BLK) will kick off the big bank’s reports today, followed by JPM, GS, and C on Friday. The financial sector has rallied strongly in anticipation so let’s hope it’s not a buy the rumor sell the news event. Keep in mind before the market, we get the latest reading on Jobless Claims and have Jerome Powell speaking at 12:30 PM eastern. Stay alert as big moves up or down remain quite possible.
Markets opened flat and then printed indecisive (Doji or Spinning Top type candles). The QQQ even formed a sort of “Morning Star type” signal, although the wicks are too large to meet the technical definition. On the day, the SPY (+0.25%) was up, the DIA (-0.04%) on the red side of flat, and the QQQ (+0.68%) closed higher. The VXX was down to 16.49 and T2122 (4-week New High/Low Ratio) rose higher into overbought territory at 90.91. 10-year bond yields fell for the first time this year to 1.095% and Oil (WTI) pulled back half a percent to $52.91/barrel.
After the close, Congress impeached the President for a second time with 10 GOP members voting with all Democrats to call for an impeachment trial. This vote came as 7,000 National Guard troops (of 20,000 expected) and another 1,500 Federal Law Enforcement personnel had already occupied the Capitol because the FBI reported 3 credible threats of terrorism (dated 1-16 through 1-20) targeting those buildings and officials, presumably around the Inauguration event.
The US Budget Deficit grew 61% in December to $144 billion. Oddly, that number was much better than the $200 billion deficit for the month that was expected. In other good news, Crude Oil Inventories came in a million barrels lower than expected, declining 3.25 million barrels. In not-so-good news, Fed member Brainard reported that workers in the bottom quartile of salary still has an unemployment rate above 20%.
Related to the virus itself, US infections continue to rage as the US. The totals have risen to 23,616,345 confirmed cases and 393,928 deaths. This comes as we average just over 253,000 new cases and just over 3,400 deaths per day. JNJ reported after the close that their one-shot vaccine is showing promising results from a tiny set (57) or early-stage study participants. However, the company also acknowledged a mfg. delay that has put them behind schedule on production of the vaccine (pre-producing in hope it will be approved later). Meanwhile, Ohio researchers have identified two new US-originating mutations of COVID-19, one of which (dubbed the “Columbus Strain”) is similar to and as contagious as the UK variant.
Globally, the numbers rose to 92,891,624 confirmed cases and the confirmed deaths are now at 1,989,396 deaths. As a reference, the world is averaging 733,000 new cases and over 13,400 new deaths per day. A study out of the UK has found that if you catch COVID-19 and recover, your body has approximately 5 months of immunity, but not lifetime resistance. In other bad news, one of the Chinese vaccines from Sinovac Biotech was found to be only 50% effective in Brazilian trials (versus the 78% effectiveness the company had claimed from Chinese trials). In Japan, PM Suga declared a state of emergency for 7 additional regions of the country. And in the UK, Health Sec. Hancock is now considering putting COVID-19 patients into hotels to ease capacity pressure on the NHS. However, while it would surely help make space, that measure would not help any personnel, material or equipment capacity issues. And in Germany, the government tightened inbound travel restrictions again today, specifically trying to stop the UK and South African mutations of the virus. This after reporting that German 2020 GDP had contracted by 5%.
Overnight, Asian markets were mixed yet again. Shenzhen (-1.39%) and Shanghai (-0.91%) again paced the losers. Meanwhile, Hong Kong (+0.93%) and Japan (+0.85%) led gainers. European markets are leaning to the green side so far today. Among the big 3 bourses, the FTSE (+0.73%), DAX (+0.20%), and CAC (+0.10%) are all positive at mid-day. As of 7:30 am, US futures are flat. The biggest mover is the DIA, which is implying a +0.27% open, while the SPY implies a +0.14% open, and the QQQ implies a -0.06% open.
The major economic news for Thursday includes Dec. Import/Exports and Weekly Initial jobless Claims (both at 8:30 am) and 3 Fed Speakers (Bostic at 11 am, Chair Powell at 12:30 pm, and Kaplan at 1 pm). The other event that could be caused major economic news is President-elect Biden will unveil his stimulus proposals after the close. (Sources have told reporters it will be in the $2 trillion price range.) Major earnings reports on the day include BLK, DAL, FRC, and TSM before the open. There are no major earnings reports after the close.
With all political drama done, for now, waiting for more economic news or on the outcome of additional threatened acts of insurrection may give the market pause. Also remember that Monday is a market holiday. So, there could be some hedging or profit-taking the next couple days in front ofth e long weekend. Again, we can look at the bright side of this sideways action helping work off over-extension.
As always, follow the trend, respect both support and resistance, and don’t chase the moves you have missed. Lock in those profits (base hits are the way we build consistency) and stick with your discipline. Focus on the overall market, the specific chart, and your own trading process. Remember, trading is a marathon, not a sprint.
Ed
Swing Trade Ideas for your consideration and watchlist: GBT, QCOM, CB, SPWR, MVIS, LLY, BKD, HUYA, NET. 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.
🎯 DickCarp: 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
|607% in just 24 months |
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.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
The energy sector was the clear winner yesterday, with the financial sector coming in a close second, helping to set new record highs Russell-2000. The Dow fell just short of setting new records as the rotation to value stocks continues. Retail had a very good day as well, surging higher as folks spend their stimulus checks. However, with high political drama in Washington, traders should prepare for the possibility of price volatility as we near the inauguration of President-elect Biden. Be prepared if a profit-taking wave begins because the point move down to price supports is substantial.
Asian markets closed mixed but mostly lower as the surge in pandemic cases puts 28 million people in lockdown. European markets trade cautiously around the flatline, while the U.S. futures seem to take a wait and see approach as the pandemic death toll sets a new daily record and the political drama in Washington unfolds. It would be wise to prepare for a bumpy ride.
Economic Calendar
Earnings Calendar
On the hump day earnings calendar, we have eight companies fessing up to quarterly results today. Notable reports include INFO, INFY, SJR, & WIT.
News & Technicals’
Another day and another record high as IWM continues to surge higher, supported by rising energy prices and strong buying in the financial sector. The bulls pushed hard but fell just short of breaking out to a new record. Unfortunately, we also set a grim new record of pandemic related death with more than 4300 Americans succumbing to the virus. China is also under pressure putting 28 million people into lockdown ahead of their lunar holiday. Facebook has again banned the President from posting to his account until after the inauguration of president-elect Biden. Though under pressure from Congress, Vise-president Pence has refused to envoke the 25th Amendment to remove President Trump from power in his last week of office. However, that is not the answer Congress wants to hear, so they are moving forward with impeachment proceedings in an attempt to remove the President from office. It will not be a surprise if the political drama in Wahington spills over to the market in the form of price volatility.
Technically there is no doubt the bulls are still in control and that the index trends remain bullish. That said, the T2122 indicator is warning once again of a short-term extended condition. The VIX also remains a bit perplexing, closing the day above a 23 handle as new record highs continue. Stay with the trend but have a plan should a profit-taking wave begin because there is a large point move before finding price supports on the charts. With many charts showing very extended conditions, it’s easy to find parabolic stocks in nearly all market sectors. Be careful not to chase!
Markets opened flat Tuesday and then proceeded to print indecisive Doji-type candles in all 3 major averages. So, after a rollercoaster session, the consolidation of the last couple days remains in force. On the day SPY (+0.01%) was on the green side of flat, DIA (-0.16%) was on the red side, and QQQ (+0.18%) was on the green side. The VXX lost 3.4% to 16.75 and T2122 jumped back up into the overbought territory at 87.08. 10-year bond yield were flat at 1.134% and Oil rose the better part of 2% to $53.15/barrel.
During the day, two different Fed speakers said that into 2022 the FOMC will remain accommodative, but that inflation could rise faster than expected. In other economic news, President-elect Biden announced more economic relief will be coming, saying he will extend the Student Loan repayment moratorium in addition to earlier calling on Congress to forgive $10,000 in student loans. The dollar also continued to weaken, which helped most commodities and even bonds to an extent. However, this weakening also raises concerns that the EU, China, and perhaps others will soon make moves to devalue their own currencies relative to the dollar to offset the impact of falling dollars (it is harder to sell things to the US when a dollar buys less).
Overnight, in Europe, ECB President Lagarde told reporters she is standing by her forecast of 3.9% GDP growth for 2021 (versus what is believed to be a 7.3% contraction last year). Despite the current lockdowns and travel restrictions, she said the model expected the current situation. She said that what might change forecasts would be lockdowns that extended past March. Until then, she still expects close to 4% growth.
Related to the virus itself, US infections continue to rage as the US. The totals have risen to 23,369,732 confirmed cases and 389,621 deaths. The post-holiday surge is now starting to hit, as we average just over 253,000 new cases and after another record day of 4,300 dead, we now average almost 3,400 deaths per day. The CDC has announced that all international air travelers will require a negative test before boarding a flight destined for the US as of Jan. 26. In addition, the agency also reported that we have vaccinated 9 million people with the first round (of two) of the PFE-BTNX or MRNA vaccines. REGN also announced a deal with the government to provide 1.25 million additional doses of its Covid antibody treatment. Interestingly, at almost the same time Dr. Fauci (NIH) and other scientists were saying that the new South African variant may pose a threat to the effectiveness to the existing antibody treatments and could theoretically also impact the effectiveness of vaccines.
Globally, the numbers rose to 92,118,795 confirmed cases and the confirmed deaths are now at 1,972,685 deaths. As a reference, the world is averaging over 733,000 new cases and over 13,000 new deaths per day. Germany tightened inbound travel restrictions and extended its lockdown again today, specifically trying to stop the UK and South African mutations of the virus. In bad news, a Chinese vaccine from Sinovac Biotech was found to be only 50% effective in Brazil trials (versus the 78% the company had claimed from Chinese trials). In Japan, PM Suga declared a state of emergency for 7 additional regions of the country. And in the UK, Health Sec. Hancock is now considering putting COVID-19 patients into hotels to ease capacity pressure on the NHS. However, while it would surely help make space, that measure would not help any personnel, material or equipment capacity issues.
Overnight, Asian markets were mixed again. China showed the only red with Shenzhen (-1.08%), Shanghai (-0.27%), and Hong Kong (-0.15%) to the downside. Meanwhile, Taiwan (+1.74%), Malaysia (+1.53%), and Japan (+1.04%) led gainers. European markets are also mixed, but lean to the red side on modest moves so far today. Among the big 3 bourses, the FTSE (-0.20%) , DAX (-0.19%), and CAC (-0.10%) are all slightly red. As of 7:30 am, US futures are also in the red. The DIA is implying a -0.18% open, the SPY a -0.28% open, and the QQQ a -0.26% open.
The major economic news for Wednesday includes Dec. CPI (8:30 am), Crude Oil Inventories (10:30 am), Fed Beige Book and Dec. Federal Budget Balance (both at 2 pm) and 4 Fed Speakers (Bullard at 9:30 am, Brainard at 1 pm, Harker at 2 pm, and Clarida at 3 pm). Major earnings reports include INFO, INFY, SJR, and WIT before the open. There are no major earnings reports after the close.
With no surge of earnings today and the political drama still only slowly simmering, markets may be wont to drift with threats of more seditious violence 3-10 days away (according to FBI reports). If we look at the bright side, this sideways action could be taken as good for the bulls as over-extension gets worked off. However, be careful of odd moves. Bloomberg reported that six of the 10 most active stocks on Monday were penny stocks which moved in massive swings on no particular news, possibly pointing to major pump-and-dump or other unknown activity.
As always, follow the trend, respect both support and resistance, and don’t chase the moves you have missed. Lock in those profits (base hits are the way we build consistency) and stick with your discipline. Focus on the overall market, the specific chart, and your own trading process. Remember, trading is a marathon, not a sprint.
Ed
Swing Trade Ideas for your consideration and watchlist: PTON, LYFT, XLB, XLI, CPE, MOMO, SPCE, NKLA. 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.
🎯 DickCarp: 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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The bears made a brief appearance yesterday to remind us there are some concerns to be aware of, but the bulls, hopeful of more stimulus, won the day defending the early selloff. Rising treasury rates hint at the possibility of additional price volatility slow the rally of growth names and inspire more attention toward consumer cycles, and value plays as a result. With the VIX closing above a 24 handle once again testing its 50-day average as resistance, traders will need to stay on their toes. Swift whipsaws and reversals are possible.
Asian markets closed green across the board even as China moves to lockdown more areas of the country due to surging pandemic numbers. European markets are mixed and mostly lower this morning as investors focus on virus impacts and turbulent U.S. politics. That said, the U.S futures are once again on the rise this morning, hovering just below new index records ahead of the jobs opening report.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have just seven confirmed quarterly reports. Notable reports include ACI & KBH.
News and Technicals’
After a nasty gap down at the open, the bulls went to work defending the selloff pushing the index back up but fell short of fully recovering. The U.S. House has introduced an article of impeachment with a vote planned for next Tuesday. I could include a provision to prevent president Trump from holding elected office. China adds to lock down areas as the virus spikes ahead of the WHO visit intended to investigate the origin of the pandemic. The death toll in the U.S rose above 375,000 as the health care system strains to handle the growing numbers of the infected despite the efforts to vaccinate. Treasury yields continue to climb, with the 10-year notes hitting 1.156% and the 30-year moving to 1.888% as the market reacts to the president-elect Biden promise of further economic stimulus. Rising bond rates could signal more volatility ahead for investors.
Yesterday’s bumpy ride ended the day with no discernible technical damage to the index charts. However, it demonstrate the potential danger of possible swift and substantial moves that could occur should sentiment shift. It servers as a reminder that to be prepared should the bears have an opportunity to attack. Although the bulls stepped up and defended the early selloff, the VIX rallied once again to test its 50-day average as resistance. Closing above a 24 handle as the indexes hover near all-time highs remains a concern and keeping traders a bit on edge and alert to the potential of whipsaws and even the possibility of reversal. Stay with the trade and remain focused with a plan as the price moves could be substantial.
