It looks as if yesterday’s nice relief rally will enjoy a flow-through gap up this morning. The question is, will the bears be lying in wait to attack as we approach resistance in the index charts? The lackluster performance of big tech and the new daily record of COVID-19 cases reported by the WHO adds some uncertainty. Remember, the FOMC meeting begins today, and the market will often become choppy as it waits for there direction.
Asian markets closed mostly up overnight as China reported its first positive retail sales report since the beginning of the pandemic. European markets are cautiously bullish this morning as they await the central bank decision. Us Futures point to another substantial gap up open ahead of economic and earnings news and kick off the of the 2-day FOMC meeting.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have 17 companies reporting quarterly results. Notable reports include ADBE, FDX, and CBRL.
News & Technical
The nice relief rally fell short of breaking price resistance in the index charts as big tech produced a lackluster performance. The VIX pulled back but remained relatively elevated, closing well above 25 handles. The WHO reported a record one-day spike in coronavirus cases and warned that the pandemic shows few signs of slowing. In a somewhat confirming story of the epidemic, the IEA cut 2020 oil demand seeing a ‘treacherous’ path ahead due to the rising cases heading into the fall. The President seems to have walk back his requirement of a TicTok sale approving of the deal with Oracle. Apparently, in the partnership of the social media app, Oracle will be responsible for the privacy concerns that caused potential banning. However, make no mistake the apps fundamental purpose to data-mine users as all social media will continue.
Technically speaking, yesterday’s bounce quickly moved the T2122 indicator from short-term oversold but may near a short-term overbought condition as soon as the open today as the all or nothing knee-jerk reaction volatility continues. The FOMC meeting begins today, and traders should keep in mind that it’s pretty standard for the market to become quite and the price action choppy as we wait for the statement and Powell’s presser. As we approach resistance in the index charts, observe to see if the bears will line up in defense. Yesterday week performance in the big techs is a bit concerning should those bears decide to attack. With the election on the horizon and coronavirus cases rising, the uncertainty of the path ahead is likely to keep traders on edge and volatility high. Plan your risk accordingly.
Monday was another indecisive day with at gap up and then no follow-through. This left all 3 major indices stuck in what could certainly be a bottom, but could also be consolidation before another leg down. On the day the SPY was up 1.31%, DIA up 1.26%, and QQQ up 1.74%, but all closed well off their highs. The VXX fell again to 25.10 and T2122 rose sharply (out of oversold territory) to 70.49. 10-year bond yields rose slightly to 0.674% and Oil (WTI) was flat at $37.29/barrel.
During the day, ORCL confirmed that they had reached a deal with Byte Dance to partner with TikTok for US operations. However, the parties are counting on President Trump to back off his original demands, because there would be no outright sale to ORCL in the agreed deal. This leaves an open question because of the political points to be made, as well as the ties of ORCL Execs to the President. All this is on top of the President’s demand that the US government get “a lot of money” out of the deal. So, several headlines Monday, but nothing definitive yet
The House is working on a Continuing Resolution to keep the government funded past the end of the fiscal year on Oct. 1st. Treasury Sec. Mnuchin (negotiating for Republicans) has agreed with Speaker of the House Pelosi that the only topic for this bill will be the CR (no stimulus). Republicans want the new funding to only last until just past the election, while the Democrats want it to last through the swearing-in of the next Congress. Negotiations are still underway about the funding levels of the CR (and probably pork) and no vote is expected until next week, giving the Senate just enough time for an up/down vote on keeping the government open.
On the virus front, in the US, the numbers show we now have 6,749,406 confirmed cases and 199,018 deaths. This comes after a “mild day” of 37,000 cases and 480 deaths. While AZN has restarted its UK trial on its vaccine, the US trial remains halted until at least mid-week after while the FDA investigates a severe neurological problem in one of the trial participants. In FL there has been a 26% increase in cases among children in the month since school began again. In MI, MSU has ordered the quarantine of all fraternities and sororities after hundreds of cases have been found in those groups.
Globally, the numbers rose to 29,474,968 confirmed cases and 933,423 deaths. In the UK, there is a test shortage causing people to travel hundreds of miles or (as had been the case in the US a month ago) wait weeks for results or both. This comes as the UK is only processing 200,000 tests per day. In Austria, cases are rising as their government warns of a second wave starting.
Overnight, Asian markets were mixed again, but leaned toward the green on moderate moves to either side. Thailand and Malaysian were the only countries to move more than a percent positive and Indonesia the only one to move more than a percent negative. The major bourses moved about a half percent to the green except Japan which did the opposite. However, in Europe we are seeing green across the board so far today. The FTSE leads the big 3, up 1% with the DAX and CAC seeing much more moderate moves as of mid-day. In the US, at 7:30 am, the futures are pointing to another gap higher at the open. The NASDAQ is leading, implying a gap of nearly 1% while both large-cap indices imply a gap up of 0.70% as of now.
The major economic news for Tuesday includes August Import/Export price Index and NY Empire State Mfg. Index (both at 8:30 am), and August Industrial Production (9:15 am). The only major earnings reports on the day are ADBE and FDX after the close.
The lack of follow-through after Monday’s gap has not dampened bull spirits. It seems another gap higher is in the cards this morning. However, remember we don’t have a bullish trend yet (on the daily at least) and we are still inside that bottoming area that could go either way. Perhaps the markets are waiting on more news from the Fed or Congress, but we have the 50sma below and the top of the bottoming congestion above acting as at least temporary limiters.
Be careful of volatility. Stick to your plans. Follow the trend and don’t chase moves you have missed…there will be another one soon. Hang in there with your rules and keep locking-in profits. Remember, trading is a job, not a lottery ticket.
Ed
Swing Trade ideas for your Consideration and Watchlist: SYF, HWM, CFG, JCI, AUY, JETS, LYV, DRI, WKHS, KSS, FSM. 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
A big weekend of buyout news combined Friday afternoon bounce that left the DIA and SPY hovering above there 50-day averages has the overnight futures pointing toward a substantial gap up this morning. However, keep a close on the overhead resistance above as new cases of COVID-19 begin to rise, and the presidential election that adds significant uncertainty to the path forward.
Asian markets rallied overnight as Japan’s Softbank lept by 9% after the announcement that Nvidia will buy Arm Holdings from them in a 40 Billion dollar deal. However, European indexes are flat and mostly lower this morning, giving up early gains as Brexit challenges persist. US Futures suggest a gap up of 250 points in the DOW ahead of a light day of earnings and economic reports. Traders should expect challenging price volatility to continue.
Economic Calendar
Earnings Calendar
On the Monday earnings calendar, we have a light day with just 14 companies stepping up to report. Looking through the list, there is only one, LEN, that stands out as a notable report.
News & Technical’s
As more than 100 wildfires continue to burn, across California, Oregon, and Washington, the search for missing people has begun. Millions of acres have burned with some entire communities decimated as high winds continue to challenge firefighter efforts. With college in full swing around the country, cases of COVID-19 are starting to tick higher once again. The Whitehouse medical advisor warned this weekend to brace for a problematic fall with the likely spread of the virus picking up pace. As of now, nearly 200,000 Americans have fallen victim to the pandemic. Nvidia is spending 40 billion to buy Arm Holdings from SoftBank in a busy weekend news cycle of buyouts. Innunmedics shares doubled after news that Gilead agreed to by the cancer drug maker in a 21 million dollar deal. In the battle for TikTok, it looks like Oracle may have emerged the winner to partner with the popular social media app only days before the ban deadline. According to reports, Chinese owners reject Microsoft’s offer in favor of Oracle this weekend.
The DIA & SPY continue to hover above their 50-day moving averages bouncing Friday afternoon. The QQQ also bounced but lacked the energy to recover its 50-day average by the close. All the buyout news seems to have inspired the bulls this morning, with Futures pointing to a gap up open in the DOW of nearly 250 points. The bullish price action could trigger a bit of a short squeeze this morning but let’s not forget the resistance above the selloff as created. The historically low rates favor the bulls, but the uncertainty of rising COVID-19 cases and the upcoming presidential election could also inspire considerable price volatility.
Friday was a volatile day, opening with a half-to-three-quarters of a percent gap higher, riding the roller-coaster within a 2-3% range and closing with indecisive black candles. On the day, DIA was up 0.47%, SPY flat at up 0.05%, and QQQ down 0.69%. The dreaded-h pattern remains in place for all three indices with potential support at the breakdown level. Oddly, the VXX was down hard (almost 6%) to 25.52 and T2122 remains well into the oversold area at 9.03. 10-year bond yields fell to 0.669% and Oil (WTI) was up slightly to $37.33/barrel.
On Sunday it was announced GILD will buy IMMU for $21 billion in order to add the IMMU breast-cancer treatments to their catalog. In other takeover news, overnight NVDA bought British chipmaker ARM (from Japan’s Softbank). The co-founder of ARM immediately attacked the deal as a disaster because inevitably NVDA would move the company to the US. The deal is most noteworthy because AAPL recently announced they are dropping the INTC architecture in favor of the ARM architecture (rebranded as “Apple Silicon” as if AAPL had somehow designed or built the chips).
In trade war news, ORCL seems to be the winner in the TikTok forced-buyout deal as Byte Dance has rejected the joint MSFT / WMT bid. However, over the weekend the Chinese government, which must approve the sale, said the TikTok algorithm would not be part of any sale and no official deal announcement has yet been made. Still, this should be looked on favorably by US administration officials given ties to both the CEO and Chairman of ORCL. If announced this week, the deal would beat the White House-imposed September 20 deal deadline.
On the virus front, in the US, the numbers show we now have 6,710,031 confirmed cases and 198,533 deaths. As of Sunday, cases are growing by more than 5% on the weekly average in only 11 states, which is a big improvement over a couple weeks ago. However, troublingly over the weekend is was reported that political appointees at HHS have been given the ability to review and demand changes to case and mortality data from the CDC. In brighter news, on Sunday, PFE said they may have up to hundreds of thousands of doses (2 doses required per patient) of their vaccine by year-end…if it passes Phase 3 trials and if it is immediately approved by the FDA for emergency use. Of course, in the same interview, PFE’s CEO also said “there was a good chance they would know IF their vaccine works, and how well, by the end of October. Until then, all that can be done is to plan using the best-case scenario.”
Globally, the numbers rose to 29,216,069 confirmed cases, and 929,056 deaths. On Saturday AZN resumed its Phase 3 trial (oddly just days after saying it would resume by year-end). Meanwhile, the case surge in France continues as their Health Minister said there was a “clear deterioration of the virus situation (especially hospitalizations),” although there was a slight dip in new cases on Sunday. In the middle-east, Israel has approved a second general lockdown of their country. And in Asia, South Korea is stockpiling PPE for Winter, while China announced there was no need to vaccinate the country’s entire population at this stage, (instead just focusing on frontline workers and other select groups).
Overnight, Asian markets were mixed but generally positive with Indonesia (+2.89%) far outpacing everyone, followed by South Korea (+1.3%) and Shenzhen (+1.15%). All other Asian markets were either modest winners of modest losers. In Europe, markets are also mixed but split more evenly at this point in their day. The big 3 European indices are mixed with 2 modest losers and the CAC up 0.21% as of now. In the US, at 7:30 am, the futures are pointing to a strong gap higher at the open. The DIA is the laggard, showing an implied gap higher of 0.87%, but SPY is looking at +1.21% and QQQ at + 1.64% as of now.
There is no major economic news scheduled for Monday release. And the only major earnings reports on the day is LEN after the close.
After a bull trap on Thursday and a less than stellar Friday, markets look to be charging into the new week. The trend remains to the downside, but the 50sma area may have given support for all 3 major indices. It certainly looks as though we will gap up through the downtrend. However, remember this is not the same thing as starting an uptrend. In recent months it has been the mega-tech FAANG names that have led markets higher. It is possible the TikTok and/or NVDA-ARM deal is helping them find their legs again. Regardless, gaps are gifts, but otherwise, nothing we can take advantage of…and they are a signal of more volatility.
So, regardless of the open, stick with your plan. Follow the trend and don’t chase moves you have missed…there will be another one soon. Stick to your rules and work to consistently lock-in profits and reduce risk.
Ed
Trade ideas for Monday: XYL, IP, SYF, NIO, LYV, JCI, LYFT, DOW, FCX. 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 day of wild price action as the market whipsawed early gains into substantial afternoon declines that left behind a bearish candle pattern and likely damage some investor confidence. Adding to the selling pressure was the failed attempt of the Senate to gain the votes needed to advance another COVID stimulus package. Although US Futures point to a bullish open today, keep in mind a test of the 50-day average in the Dow and SP-500 is not out of the question in the days ahead.
Asian markets finished the week on a high note bouncing to close green across the board. However, European markets trade mixed and mostly flat with Brexit issues in focus. US Futures point to a bullish overnight reversal, a welcome relief from the selling ahead of the latest reading on the CPI. Expect price volatility to continue as we slide into the weekend.
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have just 14 companies reporting quarterly results. About the only notable report I can come up with today is the report from KR.
News & Technical’s
Yesterday was another wild ride with the Dow rallying more than 200 points at the open with an intra-day reversal that sent the index plunging more than 500 points, leaving behind an ugly bearish engulfing candle. The SP-500 closed the day less than 25 points above its 50-day average with the Dow just 230 points away. Testing this key technical average seems quite likely in the days ahead even though the Friday morning futures point to an overnight bounce. The Senate tried but failed to move forward another federal stimulus package disappointing a market that had become absolutely addicted to the massive deficit spending. According to reports hacking attacks attempting to influence the outcome of the Presidental election are coming from all over the place. Both campaigns have suffered attacks.
Although there is no technical damage to the index moving averages yesterday, create some price action damage making lower highs and falling below some price support levels. Yesterday’s price action also left behind bearish candlestick patterns and likely damaged the overall investor confidence. The VIX closed above a 29 handle, but it’s interesting to note it didn’t register a sharp increase in fear as the selling accelerated in the afternoon session. I suspect we are at or very near a short-term oversold condition that warrants a bit of a relief rally; however, I would be very wary of the idea that the full market pullback is over.
Traders should fasten their seat-belts tightly because it looks as if the road ahead may continue to be challenging to navigate. With the radical price swings, trading risks are extraordinarily high so consider your decision carefully should you choose to risk your hard-earned money in a market where it is near to impossible to maintain an edge. Very experienced day-traders have the upper hand, while swing and position traders have a substantial risk of intra-day whipsaws and complete overnight rehearsals.
Asian markets closed the day mixed but mostly lower overnight. European markets are modestly bearish this morning ahead of an ECB meeting, and the US futures currently point to a bearish open ahead of earnings and economic reports.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have 22 companies reporting quarterly results. Notable reports include CHWY, PTON, PLAY, ORCL, & ZUMZ.
News & Technical’s
The wild price action volitility continued yesterday will a big relief rally, but the big question is can it hold. After rising more than 680 points, the Dow dropped more than 200 points in just 30 minutes, heading into the close. The VIX pulled back nicely but ended the day holding at its 200-day average and remaining elevated at the finish, pointing to the significant danger these big price swings create. What comes next is anyone’s guess, so use caution avoiding overtrading because retail traders have little to no edge with such an uncertain condition.
In the index charts, there continues to be no significant technical damage; however, the threat that DIA and SPY may yet test their 50-day moving averages does still exist. Although a light day on the earnings calendar, we do have several notable reports as well as an economic calendar that includes Jobless Claims, PPI before the bell for the market to digest before the open. Currently, futures point to a bearish open, but a lot could change over the next 2 hours with volatility so high. Buckle up the road ahead is likely to remain bumpy and very challenging to navigate.
Stocks gapped more than a percent higher (2% in the QQQ) on Wednesday. They then followed-through in the morning before grinding sideways until late-day selling closed all 3 major indices well off their highs. On the day QQQ gained 2.94%, SPY gained 1.97%, and DIA gained 1.61%. The VXX fell hard to 26.83 and T2122 climbed out of the oversold range up to 31.21. 10-year bond yields rose a bit to 0.698% and Oil (WTI) rose nearly 3% to $37.78/barrel.
CNBC reported that several economists have told them that $3 trillion of additional fiscal stimulus is needed to support the economy. The economist interviewed said those funds should be used to incentivize remote working and help the unemployed. At the same time in Congress, the Senate Republicans plan to vote on just $500 billion (Democrats say it will not pass) while the talks between the Administration and House Speaker Pelosi’s team are still stalled with the GOP side at $1 trillion and the Democrat side at $2 billion.
In the UK, PM Johnson is feeling great pressure after admitting there will very likely be no trade deal before the year end Brexit deadline. Yesterday he proposed UK legislation that would break the withdrawal agreement (and other international trade agreements), by taking control over Irish, Scottish and Welsh foreign trade. This was probably an attempt to use Ireland/Northern Ireland as negotiation leverage. However, the act does jeopardize the UK-US trade agreement as well as the status of many global companies at risk as well.
On the virus front, in the US, the numbers show we now have 6,549,771 confirmed cases and 195,245 deaths. The 7-day average of new cases has fallen to 37,248. Meanwhile, deaths rose sharply to 1,209, well above the 7-day average of 753. The Federal government has decided to drop testing for incoming International travelers.
Globally, the numbers rose to 28,056,120 confirmed cases and 908,651 deaths. In a surprising story, AZN says it should know by year-end if its vaccine trial can restart. This is potentially a much longer delay than markets had anticipated. The Intl. Air Cargo Assn. reported overnight that even ignoring the temperature demands I reported yesterday, the world will still need 8,000 cargo jets the size of a BA 747 to distribute even a single dose of a vaccine worldwide. (Of course, all the current vaccine candidates require 2 doses and it is undetermined how long that set of vaccinations would provide protection.) In Europe cases continue to climb as France says they cannot rule out the need for more local lockdowns (although they will resist another national lockdown). Meanwhile in Asia, India reported more than 95,000 new cases on the day and places like Indonesia have put the brakes on easing.
Overnight, Asian markets were mixed with Shenzhen down over 2% while Japan and South Korea were up about 0.88%. In Europe, so far today markets are mostly in the red, led to the downside by the FTSE after the UK’s Trade news. In the US, at 7:30 am, the futures are pointing modestly to the downside with large-caps looking toward a half-percent gap down and the QQQ a gap 0.20% open lower.
The only major economic news for Thursday is Aug. PPI and Weekly Jobless Claims (both at 8:30 am). The only major earnings reports on the day come after the close when AMRK, CHWY, and ORCL report.
The bulls had a nice day Wednesday. However, markets closed well off their highs and so far this week, all we are showing is a lower-high. So be careful getting to long on the “buy the dip” sentiment that has surrounded markets for some time. We are swing traders, not long-term holders and currently the short-term trend is still down. So, follow the trend, but don’t chase moves you have missed. Stick with your rules and work to consistently lock-in profits and reduce risk.
Ed
Trade ideas for Thursday: PENN, OTRK, GOLD, ETSY, DDOG, W, OSTK, PDD, GLW. 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
In the last 3-trading days, we’ve received a reminder that bears still exist despite a very favorable Fed and massive governmental intervention. Although the futures point to a nice relief bounce at the open, let’s not forget that the 50-day average may still get tested in the days ahead. Be careful rushing back into highly volatile price action with the buy the dip mantra ringing in your ears. Stay focused and consider carefully how this wild price action takes away a trader’s edge.
Asian markets closed in the red across the board overnight as tensions with the US continues to grow. European market point to a modest bounce at the open, and the US futures point to a little relief rally ahead of earnings and the JOLTS number at 10:00 AM Eastern. Expect the wild price volatility to continue.
Economic Calendar
Earnings Calendar
On the Hump day earnings calendar, we have 20 companies stepping up to report quarterly results. Notable reports AVAV, ABO, GIII, GME, NAV, RH, VRNT, & ZS.
News and Technical’s
After a 3-day nasty selloff, futures point to a modest bounce this morning. With the Dow closing just 1.2% above its 50-day average and SP-500 hovering less than 1% above this critical technical indicator, traders should be cautious with the buy the dip mantra and rushing into positions. Although there has been nothing typical about this year’s market, we must consider the possibility that 50-day averages may still experience a test of support. Market pullbacks most certainly provide buying opportunities; however, the violence of this selloff adds the tremendous risk head fakes and fast intraday reversals with the VIX so elevated. A bounce may, in fact, provide an opportunity to take some risk off the table rather than add—something to consider as you plan your day forward.
Technically speaking, the indexes were so overextended they have yet to experience any significant technical damage even though the psychological damage has been rather extreme. Fast moves like this make traders very jittery so prepare for considerable price volatility in the days ahead. If this pullback has hurt, you guard yourself against revenge trading. Stay focused on your plan and your rules. The market is a high-risk proposition at the moment, so carefully consider this question. Are you gaining or losing your edge when trying to trade an extremely volatile market. Plan carefully!
On a brutal day in the markets, stocks gapped lower Tuesday, roller-coastered in a 1% range and then sold off into the close. All 3 major indices closed near the lows with the QQQ sitting on its 50sma and both large-caps not far above their own. On the day QQQ lost 4.81%, SPY lost 2.73%, and DIA lost 2.25%. Oddly, the VXX also lost ground, closing at 28.28 and T2122 dropped hard to 6.03 (deep into the oversold territory). 10-year bond yields fell significantly to 0.68% and Oil (WTI) lost over 7% to close at $36.87/barrel.
In trading news, there has been much market talk recently about the impact of “Robinhood traders.” Over the weekend Bloomberg reported a clue found in perplexing and worrisome options activity. It appears (but isn’t known for sure) that retail (stuck at home) momentum traders have been piling into options causing over-sized moves…particularly in the high-flying high-tech names. This inference is drawn from large volumes coming from small contract lot trades. For example, CRM call open interest more than doubled on the day after its earnings release. Another example is AMZN whose average daily call volume has spiked to the highest since the late 1990s. The same is true across all the major FAANG names. Finally, retail brokerages like AMTD, ETFC, SCHW, and IBKR have all reported record numbers of transactions. The implication is that this may be a virus effect, but can also be a signal of irrational exuberance that has proceeded previous crashes.
Last night, AZN has paused its phase 3 vaccine trial in the UK after an unexpected and unexplained illness in a test subject. Just to group the vaccine stories, PFE has been leaking that they believe their vaccine candidate may be ready to submit for emergency approval (prior to testing completion) in the US by late October. However, that does not mean it would then be available widely or perhaps at all for quite a while beyond that point.
Last Weekend, articles in the Wall Street Journal and Barron’s said that freezers are the new hot commodity in the virus fight. It seems the 2 vaccines furthest into Phase 3 testing in the US (from PFE and MRNA) both have strict storage needs. One of them must be kept below -50 Fahrenheit (PFE) and the other must be kept at -5 Fahrenheit (MRNA). Obviously, these temperature demands require high-end freezers and will reduce the amount that can be stored, the locations where they can be stored (freezer capacities), and even how they can be transported. Given all these logistical hurdles, some experts were claiming that even best case there would be nothing beyond a paper rollout of these vaccines (even if everything goes perfectly in testing) until at least late Q1 2021.
However, it is worth noting that later vaccine candidates (like those from AZN and JNJ) are expected to have far less stringent temperature requirements. As far as the vaccine Russia recently released, it can be freeze-dried. This means it can be shipped and stored at room temperatures. However, immunology experts say this also is an indication that the Russian vaccine is likely to be less effective. (They guessed it might be 40% or less effective at producing antibodies with an even lower percent of users developing any significant immunity.) Still, it’s available now and can be shipped/stored easily.)
On the virus front, in the US, the numbers show we now have 6,514,376 confirmed cases and 193,536 deaths. The 7-day average of new cases has fallen to 38,101. Meanwhile, average new deaths has also fallen to 737. San Diego State and West Virginia are the most recent colleges to move to virtual classes only as 400 cases were found at the CA school, University of Tennessee announced 600 cases (especially among fraternities) and West Virginia University had 377 cases before moving to virtual. On the bright side, Iowa has resumed athletic practices presumably in anticipation of a positive revote after political pressure on the B1G to restart fall sports seasons.
Overnight, Asian markets were red across the board as traders followed the US lead. Shenzhen took the biggest hit (-3.22%) but losses were widespread with Japan, Shanghai, Korea and others all losing more than a percent. In Europe, so far today markets are in the exact opposite is true. There is green across the board with the big 3 bourses up strongly. FTSE is up 0.76%, DAX up 0.86%, and a CAC up 0.38%. In the US, at 7:30 am, the futures are pointing to a gap higher (bull trap?) that includes big divergence. The QQQ is implying an open up 1.30%. Meanwhile, the SPY is looking toward a 0.50% gap up and the DIA just a 0.25% gap higher.
The only major economic news for Wednesday is July JOLTS (10 am) and Crude Oil Inventories (10:30 am). Major earnings reports on the day include AEO, HDS, and NAV before the open. After the close GME and RH report.
Volatility reigns as a much-needed correction has or is taking place. Remember that you do not need to trade every day to be successful. So pick your spots. That said, as always, follow the trend that fits with your trading horizon, stick to your rules, and always lock-in those profits as you go.
Ed
Rick is out with his son and new grandbaby. So, no new trade ideas for Wednesday. 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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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
