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Virus and ACB Confirmation Lead News

October 26, 2020 by Ed Carter

Markets gapped up about four-tenths of a percent on increased hope for a stimulus deal. However, they immediately began slowly selling off the rest of the morning before slowly rallying all afternoon. At the end, prices closed about where they opened leaving indecisive, Doji-type candles. On the day SPY closed up 0.34%, QQQ, up 0.20%, and DIA down 0.11%. The VXX was flat at 22.17 and T2122 rose further into the overbought territory to 89.43. 10-year bond yields were down just slightly to 0.841% and Oil (WTI) fell 2% to $39.78. On the week, all 3 major indices had their first down week since mid-September.

On the stimulus front, talks broke down again Friday afternoon and over the weekend the blame game resumed, both sides claiming the other is moving the goalposts. In addition, the likelihood of progress on a deal at least early in the week is little as the ACB confirmation process and last-minute politicking has retaken center stage in Washington.

In business news, DNKN reported Sunday it is close to a deal with Inspire Brands (owner of Arby’s, Sonic, and Buffalo Wild Wings) to take the company private for $106.50/share). AAL announced that they will be holding “customer tours” and “Pilot conference calls” in the coming weeks in order to increase public confidence in the use of the troubles BA 737 Max plane. AAL said they are tentatively expecting the FAA to lift the 737 Max flight ban in the US sometime in mid-November and expects to hold its first flight on the plane on December 29. Finally, China is sanctioning BA and RTX over arms sales to Taiwan.

The virus is raging across the US, even as many continue to downplay the need and/or usefulness of containment measures. Over the weekend and White House Chief of Staff Meadows flat out stated “we’re not going to control the virus” (brushing off the recommended mitigation methods apparently in favor of economic growth). The country posted a record-high number of cases both Friday and Saturday. At the same time, 24 states reported single-day new case highs at least once in the last 7 days, 35 states report case counts increasing more than 10% (on a 7-day average basis versus a week ago), and 31 states are in the White House Task Force’s “Red Zone” (having more than 100 cases per 100k of their population). The case numbers show we now have 8,889,577 confirmed cases and 230,510 deaths with a 7-day average daily new case count have risen to 68,951/day, while the average daily deaths also ticked up to 818.

Globally, the numbers rose to 43,405,696 confirmed cases and the confirmed deaths are now at 1,159,835 deaths. This includes the world seeing over 428,000 new cases Sunday with a 7-day average about 418,000. Global Covid deaths rose by nearly 6,000 on the day. European numbers are surging as governments continue with the least possible impactful responses such as Spain implementing an 11pm to 6am curfew. However, in good news, AZN reported Monday that its vaccine candidate does produce a similar immune response to virus exposure. While adverse responses to the vaccine were seen, those responses were lower than catching the virus itself, which is obviously a good thing.

Overnight, Asian markets were mixed, but leaned to the red again. India (-1.36%) and Shanghai (-0.82%) led the losses, while Hong Kong (+0.54%) and Shenzhen (+0.52%) led gainers. In Europe, markets are solidly red across the board as the virus surges throughout Europe and the US. Among the big 3 bourses, the DAX is down 2.09%, the CAC down 0.40%, and the FTSE relatively flat at down 0.10% at this point in their day. The rest of the European Exchanges are down roughly a half to one percent. As of 7:30 am, US futures are pointing to a gap down at the open. The large-cap indices are both down 0.85%, with the QQQ showing the least weakness at -0.63% as of now.

The only major economic news for Monday is Sept. New Home Sales (10 am). Major earnings on the day include HAS, HCA, OTIS, and SAP before the open. Then after the close, AMKR, CE, CINF, GOOG, GOOGL, NOV, NXPI, and PKG report.

With the Senate locked on ACB Confirmation debate and votes and the Speaker of the House and the President’s Negotiators back to casting blame, stimulus will have to take a back seat for at least a day or two. (Of course, this is also the stretch run of the election. So, all politicians also have things they’d rather focus on than the people’s business right now.) So, the major recent market driver (hope for more stimulus) remains in limbo and there are no other obvious drivers for the day.

It looks like a red open, but still in the range of the last week’s candles. The short-term trend remains bearish and has broken the medium-term uptrend. However, it looks like we may have found some support close below. Just remember that while unlikely today, even a whiff of a stimulus deal would likely turn the bulls loose. So, keep locking-in your profits and sticking to your trading rules. Don’t get greedy, don’t chase the moves you have missed, and don’t predict. Be sure that you respect potential support and resistance. Follow the trend and trade your plan.

Swing Trade Ideas for your consideration and watchlist: RIOT, BLL, FTCH, FB, FCX, FITB, NIO, TLRY, M, GNUS, MARK, YY. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers we mention and talk about in the trading room are not recommendations to buy or sell.

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🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

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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.

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Stimulus Deal Almost There

October 23, 2020 by Ed Carter

Markets started off flat on Thursday, but began a rally at 11 am that lasted the rest of the day (on optimistic stimulus comments from House Speaker Pelosi). This left all 3 major indices with hammer-like candles (although the QQQ hammer has a black body). On the day, SPY gained 0.56%, DIA gained 0.62%, and QQQ was dead flat. The VXX lost 2% to 22.15 and T2122 4-week New High-Low Ratio climbed back into overbought territory at 86.56. 10-year bond yields rose sharply to 0.865% and Oil (WTI) was also up 1.5% to $40.65/barrel.

The big news during the day was the House Speaker Pelosi told reporters “we are just about there” on a stimulus deal. She went on to say the remaining issues seem to be wording and then getting Senate Republicans to agree to the deal. However, White House staff (like Economic Advisor Kudlow) expressed optimism that they “could round up the needed votes from their side of the aisle.” That said, no official deal has been announced yet, nor votes scheduled, let alone timing of any disbursements.

After the close, the FDA approved GILD antiviral drug remdesivir as an emergency use treatment for Covid-19 and their stock soared after-hours. MAT stock also jumped on an earnings beat (heavy Barbie and Hot Wheels sales). However, even though INTC beat overall, the stock got thoroughly hammered on poor results both in the consumer desktop and the cash-cow datacenter sectors (where AMD is eating their lunch despite INTC’s massive market share). Later Thursday night a CA Appeals Court ruled UBER and LYFT must comply with state and federal employee labor laws for all people they had previously treated as independent contractors.

On the virus front, in the US the numbers show we now have 8,664,365 confirmed cases and 228,423 deaths. After another day with 74,301 cases, the 7-day average daily new case count has risen to 62,993/day, while the 973 deaths only moved the daily average of deaths slightly to 808. 5 states reported new record high daily case counts, while 14 more states reported record-high 7-day average counts. Chicago announced business closures from 10 pm to 6 am as new cases, hospitalizations and deaths have spiked in that region.

Globally, the numbers rose to 42,083,997 confirmed cases and the confirmed deaths are now at 1,144,239 deaths. This includes the world seeing over 478,000 new cases Thursday (a record high new case count). Global Covid deaths have also risen (almost 7,000 again on the day), but on average remain about 5,690 per day. A record for new cases were reported throughout Europe, including Spain, France, Italy, Portugal, Germany, and the Netherlands. However, in Asia, India continues to open up its country (economy) in belief they are past the most recent wave.

Overnight, Asian markets were mixed, but leaned to the red. Shenzhen (-1.90%) and Shanghai (-1.04%) led the losses, while Hong Kong (+0.54%) and New Zealand (+0.51%) led gainers. In Europe, markets are solidly green across the board so far today on hope for US stimulus. Among the big 3 bourses, the FTSE is up 1.53%, the DAX up 1.11%, and the CAC up 1.37%. The rest of European Exchanges are more modestly green. As of 7:30 am, US futures are pointing to a modestly higher open with all 3 major indices showing +0.22% as of now.

The major economic news for Friday is limited to Mfg. PMI and Services PMI (both at 9:45 am). However, major earnings reports include ALV, AXP, BLMN, CLF, CRI, and ITW all report before the open. There are no earnings reports after the close.

With the Presidental Debate done, little major economic news, and relatively few major earnings, the main driver of stocks Friday is likely to be stimulus negotiations. Even with both sides of the negotiation saying a deal is close, much doubt remains. The third-side that was essentially not part of the negotiations (Senate GOP) will have the ball in their court once a deal is passed. So, major doubts remain whether anything will get done before the election. That being the case, we are likely to see more volatility until more clarity emerges with hope driving markets up and fear of delay or renegotiation with the Senate Republicans driving prices down. Meanwhile, the virus continues to surge, but markets seem to have baked that fact into the cake and are now more worried about political risk and stimulus.

Remember this is Friday, so think about whether you need to hedge or lighten up in front of the weekend news cycles. Also, continue to be careful and nimble in this whip-saw market. The short-term trend remains bearish and has broken the medium-term uptrend. However, it looks like we may have found some support the last 3-4 days and all it will take is a whiff of a stimulus deal to turn the bulls loose. So, keep locking-in your profits and sticking to your trading rules. Don’t get too greedy, don’t chase the moves you have missed, and don’t predict. Be sure you respect potential support and resistance. Follow the trend and trade your plan.

Swing Trade Ideas for your consideration and watchlist: DIS, WBA, GILD, SCHW, SO, WRB, XLE, TLRY, USB, AA. 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

Big Day of Earnings

October 22, 2020 by Doug Campbell

Today we face a big day of earnings news that has been a mixed bag of results so far this quarter. Couple that with the uncertainty of stimulus, rising virus impacts, election meddling by Iran, and Russia expect extreme sensitivity to the news cycle and the significant price volatility to continue. The DIA, SPY, and QQQ are quickly approaching their 50-day averages, and one has to wonder if they can hold as support without a stimulus deal. If we head into the weekend still waiting on a deal, don’t be too surprised to see the bears become more aggressive.

Asian markets closed mixed but mostly lower overnight as the IMF downgrades economic growth forecasts amid rapidly rising infection rates worldwide. European markets are flat this morning as they continue to monitor U.S. stimulus talks and earnings results. U.S. futures point to a slightly bearish open at this time, but with a big day of earrings and Jobless Claims numbers, anything is possible by the open. Plan your risk carefully and be prepared for news-driven whipsaws and full reversals.

Economic Calendar

Earnings Calendar

We have our busiest day of the week on the Thursday earnings calendar, with 80 verified quarterly reports. Notable reports include ALK, AB, AAL, AEP, T, BJRI, SAM, CTXS, KO, DOW, EHTH, FITB, FCX, GPC, HBAN, INTC, KMB, LLNW, MTB, MAT, NOC, NUE, PBCT, PHM, DGX, RHI, STX, SIRI, LUV, TSCO, UNP, VLO, VRSN, GWW, & WST.

News & Technicals’

Wednesday was another day of struggle as the market waits for a decision on stimulus negotiations. The bulls controlled the positive morning gaps that quickly ran out of steam allowing the bears access and leaving behind tremendous uncertainty in the candle patterns. With the DOW, SPY, and QQQ drawing near their 50-day averages, a test of this key technical levels seems likely unless news of a stimulus deal occurs soon. Although there is a palpable uncertainty in the market, the index charts’ technical damage is minimal, with lower highs as the primary concern. However, that damage could become critical if the 50-day moving averages are unable to hold as support. Earnings thus far have shown a mixed bag of results, and with today being the biggest round of reports so far this season, we should expect an extra dose of price volatility as a result. As the election draws near, the FBI says both Iran and Russia have obtained U.S. voter registration data to influence the outcome. A cybersecurity firm confirmed that a hacker is trying to sell info on 148 million U.S. voters. Despite the issues, please get out and vote! The oil industry is now warning of significant layoffs in the coming weeks as rising virus infection rates substantially impact the sector. I can only imagine the damage and helplessness business must feel as the infection and death rate numbers increase and the worry of more restrictions on the horizon.

Overnight futures were quite bearish, but this morning they have bounced off the lows, trying to put on a brave face ahead of a slew of earnings and economic news that includes the latest reading on Jobless Claims. With so much uncertainty swirling about, expect a considerable price sensitivity to stimulus and virus news. If there is still no deal as we head into the weekend, I would not be surprised to see the bears become more aggressive. Plan your risk carefully.

Trade Wisely,

Doug

Jobless Claims, Stimulus, and Debate Lead

October 22, 2020 by Ed Carter

Wednesday was another roller coaster day for stocks as the opened before running up and down all day, closing on the lows. All 3 major indices printed ugly black high-wick, inverted hammer type candles. On the day the QQQ was flat (-0.08%), SPY was down 0.21%, and DIA was down 0.35%. The VXX was also down to 22.67 and T2122 fell back to almost exactly mid-range. 10-year bond yields rose again to 0.818% (the High since June) and Oil (WTI) fell over 4% to $39.97/barrel.

Stimulus (or the lack thereof) remained the main story during the day. The Senate failed to pass the $500 billion PPP loan/grant program Majority Leader McConnell had been pushing. At the same time, while negotiations continue, House Speaker Pelosi and Treasury Sec. Mnuchin failed to reach a deal. However, both sides announced that differences are narrowing and that they are optimistic for a deal. Talks will continue on Thursday. However, even if a deal is reached, it is still an open question if and when McConnell would bring the deal to a Senate vote or whether they could get a larger deal passed. FDA Head Hahn also said that while no timeline exists, the goal remains that all Americans will be able to begin a vaccine course by sometime next Spring.

Purdue Pharma has plead guilty to 3 federal criminal charges stemming from opioid marketing, will pay a $8 billion fine, and the Sackler family will close the company as an entity while the operations continue as a new company. Several State Attorney’s General objected to the deal, which would create a government-controlled business from the assets of the company (to continue making/selling Oxycontin). The objection is based on the states would likely have gotten more money from a private sale, because at least one other drug manufacturer has expressed interest in purchasing the business. However, the DOJ has completed the deal anyway.

On the virus front, in the US the numbers show we now have 8,585,748 confirmed cases and 227,419 deaths. After another day in excess of 63,600 cases, the 7-day average daily new case count has risen to 61,481/day, while the over 1,200 deaths only moved the daily average of deaths slightly to 794. With that background, the CDC reported an alarming trend with surging cases all across the country and particularly high transmission levels in the Midwest as national cases have risen 17% in the last week. However, NIH Director Collins says a viable vaccine should be approved in the next couple of months with wide availability sometime in Q2 of 2021. In related good news, the head of the “Warp Speed” program told Bloomberg that it is possible both the JNJ and AZN phase 3 trials would be allowed to restart this week.

Globally, the numbers rose to 41,568,570 confirmed cases and the confirmed deaths are now at 1,137,684 deaths. This includes the world seeing over 437,000 new cases Wednesday (a record high new case count). Global Covid deaths have also risen (almost 7,000 on the day), but on average remain about 5,640 per day. In the UK, the country saw another record number of new cases. In Poland, the daily death count has reached four times the count during the first wave as the country recorded another consecutive record number of new cases and has turned the national stadium into a field hospital. A similar situation runs throughout Europe, in particular the Eastern part of the continent including Russia, but also Italy, Belgium, Germany, and Ireland.

Overnight, Asian markets were mostly lower with South Korea (-0.67%) and Shenzhen (-0.49%) leading the modest losses. In Europe, markets are mixed so far today with very modest moves so far. Among the big 3 bourses, the FTSE is up 0.10%, the DAX flat +0.01%, and the CAC up 0.17%. The rest of European Exchanges are mainly in the red. As of 7:30 am, US futures are pointing to a modestly lower open with all 3 major indices showing -0.20% as of now.

The major economic news for Thursday is limited to Initial Jobless Claims (8:30 am), Sept. Existing Home Sales (10 am), and a Fed speaker (Kaplan at 6 pm). However, there is also the final Presidential debate at 9 pm. Major earnings reports include AAL, AB, AEP, CTXS, DGX, DHR, DOW, EQT, FAF, FCX, FITB, GPC, GWW, HBAN, KMB, LUV, MTB, NOC, NUE, PAG, PHM, POOL, RCI, RS, SIRI, SON, STM, T, TSCO, UNP, and VLO all before the open. Then after the close, COF, INTC, MAT, RHI, SIVB, and TFII report.

Jobless claims or some tidbit from the stimulus negotiations are likely the only drivers today, in front of the last Presidential Debate. That being the case, we may see another day of rest in the markets as traders seek more clarity. The virus continues to surge, but markets seem to have baked that fact into the cake and are now more worried about political risk and stimulus. Of course, earnings reports remain the wildcard, with mixed but generally positive results reported so far against much-lowered expectations.

Continue to be careful and nimble in this whipping market. The short-term trend remains bearish and has broken the medium-term uptrend. However, all it takes is a whiff of a stimulus deal to turn the bulls loose. So, keep locking-in your profits and sticking to your trading rules. Don’t get too greedy, don’t chase the moves you have missed, and don’t predict. Be sure you respect potential support and resistance. Follow the trend and trade your plan.

Swing Trade Ideas for your consideration and watchlist: AA, BKR, WRB, HUN, SO, DIS, KSS. 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

Will They or Won’t They Agree

October 21, 2020 by Doug Campbell

Will they or won’t they agree on a stimulus deal remains the big question of the day? Emotions are high on the subject that could have dramatic effects on the short-term market direction. If Pelosi and the White House finally agree, there is still the uncertainty if the Senate has the votes to pass a spending plan over 2 Trillion. That said, news of a deal expect the bulls to celebrate. A failure to reach an agreement and expect a market temper tantrum, creating technical damage in the index charts. Hold on for another uncertain day as we wait.

Asian markets closed mixed but mostly higher overnight, but European markets trade in the red across the board this morning. US Futures point to flat open as we wait on stimulus news, earnings, and economic data. Expect volatility and remain focused and flexible as anything is possible.

Economic Calendar

Earnings Calendar

On the hump day earnings calendar, we have 35 verified companies stepping up to report quarterly results. Notable reports include TSLA, ABT, AN, BKR, BIIB, CMG, CCI, CSX, DFS, EW, DFX, GL, KEY, KMI, LRCX, LVS, LAD, MANU, NDAQ, NEE, SUI, TMO, VX, WHR, & WGO.

News & Technicals’

Apparently, the Pelosi imposed deadline has passed and was nothing more than a negotiation tactic as talks continue today. Yesterdays’ price action reflected the high market emotion chopping rather violently as hope rose and fell throughout the day. The good news is we do not have to deal with a considerable gap this morning but, we will have to prepare for another day of uncertainty with high volatility on a deal or no deal news event. After the bell, NFLX disappointed investors by missing earnings estimates. Shares of the streaming behemoth indicate more than a 25 dollar per share drop at today open. According to reports, next week’s GDP report will likely show record-breaking economic growth if estimates are correct. Across the pond, the top Brexit negotiator says that a trade deal is now in reach, boosting the British pound overnight. That could have ripple effects in the currency markets today, lowering the US Dollar and proving the energy for Gold to break above price resistance.

Technically speaking, the bulls have defended critical price supports in the index charts, but the palpable uncertainty has them teetering on the edge. A lot is riding on the stimulus deal’s outcome, and traders should prepare for a substantial and volatile price move as news spin on the subject tugs on market emotion. The bulls will likely celebrate with a strong rally should they hammer out a deal, but we should also prepare for a market temper tantrum and a bear attack should they fail. Keep an eye on the news and stay focused on price action as we wait.

Trade Wisely,

Doug

Stop Me If You’ve Heard This – No Deal Yet

October 21, 2020 by Ed Carter

Tuesday saw another volatile day with a half percent gap higher followed by a roller coaster ride that traded in a 1.25% range before closing back just below the open. The result was a high-wick Doji day that did nothing to break the downtrend. On the day, SPY was up 0.38%, DIA up 0.35%, and QQQ up 0.21%. The VXX was flat at 23.23 and T2122 rose a bit but remains firmly in the mid-range at 63.89. 10-year bond yields rose again to 0.791% and /Oil (WTI) rose a percent and a half to $41.51/barrel.

The main news on stimulus was positive during the day with House Speaker Pelosi saying a deal could come before day end and Senate Majority Leader McConnell saying that if a deal was reached, he would hold a vote in the Senate “at some point.” However, Pelosi’s statement came before she had spoken to Treasury Sec. Mnuchin Tuesday and McConnell also said he was still doesn’t support a bigger deal and is doubtful that such a deal would pass the vote if he held one. In the evening, White House Chief of Staff Meadows said more progress was made in negotiations, but big differences remain.

In other news, just before the open Tuesday, the US government sued GOOG over anti-trust violations. In particular, they cite a deal GOOG struck with AAPL in 2018 to make Google the default search engine on all AAPL devices and software (Safari). As a result, apparently almost half of all GOOG search traffic came from AAPL devices in 2019. Emails filed with the case report that an AAPL senior executive wrote to GOOG saying their goal was for the two companies “to work as if they were on company.” Of course, GOOG later released a statement saying the suit is deeply flawed and would hurt consumers by “artificially propping up” lower-quality search engines.

On the virus front, in the US the numbers show we now have 8,521,465 confirmed cases and 226,204 deaths. After another day in excess of 62,000 cases, the 7-day average daily new case count has risen to 60,915/day, while the nearly 1,000 deaths did little to move the lagging daily average of deaths, which remains relatively flat at 759. 42 states are reporting an increase in Covid-19 hospitalizations as 20% of all hospitals nationally are reporting 80% or more of their ICU beds are full. However, there are some parts of the country (those that locked down hardest early in the pandemic) that are now easing restrictions. This includes San Francisco, which has now opened non-essential office spaces and various indoor venues.

Globally, the numbers rose to 41,115,504 confirmed cases and the confirmed deaths are now at 1,130,693 deaths. This includes the world seeing just under 400,000 new cases a day. The good news is that global reported Covid deaths remain about 5,500 per day. In the UK, Manchester was forced to lock down based on the city’s spike in cases, but local authorities and even Tory party factions continue to rail against PM Johnson and the restrictions. Cases also jumped again in Germany amidst talk of more restrictions from Chancellor Merkel. The Czech Republic saw another all-time high in new cases, including their PM.

Overnight, Asian markets were mixed yet again on modest moves both directions. Hong Kong (+0.75%) led the gainers being boosted by airline shares soaring after an announcement of major layoffs (5,900) by Hong Kong based Cathay Pacific. Meanwhile Shenzhen (-1.10%) and Malaysia (-1.23%) led the losses. However, most of the Asian exchanges were split modestly on either side of break-even. In Europe, markets are red across the board on pessimism over more US stimulus. Among the big 3 bourses, the FTSE is down 1.13%, the DAX down 0.83%, and the CAC down 0.96%. the rest of the continent’s exchanges are following the same pattern at this point in their day. As of 7:30 am, US futures are relatively flat, all 3 showing -0.10% to -0.15% as of now.

The major economic news for Wednesday is limited to Oil Inventories (10:30 am) and a pair of Fed speakers (Brainard at 8:50 am and Mester at 10 am). However, major earnings reports include ABT, AAN, APH, AVY, BKR, BIIB, ERIC, IPG, KEY, KNX, LAD, NEE, NTRS, SLGN, TMO, and VZ before the open. Then after the close, CMG, CCI, CSX, DFS, EW, EFX, FTI, GL, KMI, LRCX, MTH, TSLA, UFPI, WHR, and XLNX after the close.

With little news on the schedule, stimulus negotiations and the Senate vote on a much smaller PPP-only bill are likely to lead the news today. The virus continues to surge and the Presidential campaigns may slack off a bit today in preparation for Thursday’s debate. However, we have seen hope spring eternal for more stimulus and all we can be sure of is that volatility remains high. Of course, earnings remain the wildcard, with mixed but generally positive results reported so far against much-lowered expectations.

Swing Trade Ideas for your consideration and watchlist: RIOT, TWTR, FITB, BIDU, CARR, F, FCX, NIO. 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

Pop and Drop

October 20, 2020 by Doug Campbell

Yesterday’s pop and drop price action left behind some bearish candle patterns but fell short of creating technical damage in the index charts. While that’s true, the damage to trading accounts being chopped up in the politically created volatility was likely substantial. Unfortunately, as we wait on stimulus negotiations, more whipsaws and reversals are likely. If you love to gamble on a political outcome, then this market is a dream come true. Place your bets the marble is rolling, and in the next 24 hours, we will find out if the outcome is red or black.

Overnight Asian markets were mixed as China keep lending rates unchanged. European markets trade mixed this morning as well, as they monitor the growing virus concerns and stimulus hopes. US futures, on the other hand, once again point to a significant gap up open ahead of earnings, economic data, and the quickly approaching Pelosi deadline for stimulus.

Economic Calendar

Earnings Calendar

On the Tuesday earnings calendar, we have 44 verified companies fessing up to quarterly results. Notable reports include PG, NFLX, ACI, AMX, CNI, CP, CIT, CMA, DOV, IBKR, IQV, IRBT, LOGI, MAN, NAVI, PNR, PM, PLC, RF, SNAP SYF, THC, TXN, TRV, & USB.

News and Technicals’

Yesterday’s nasty pop and drop reversal left behind some concerning candle patterns, but with news, progress on the stimulus, futures point to a bounce. In other words, more of the same news-driven political spin volatility for a very uncertain market. The Pelosi imposed deadline to get a bill passed before the election is upon us. The result of the negotiations is likely to have dramatic market consequences over the next 24 hours. If the news occurs during the market day, quick traders may be able to take advantage of the move. However, should the story come out after the close, expect a significant gap in either direction. Guess right, and you could be a big winner! Guess wrong, and money could quickly disappear from your accounts. No available trading edge; place your bets on the roulette wheel and hope your gamble pays off. I can’t speak for you, but I didn’t become a technical analyst to gamble on a coin flip. Rapidly rising virus cases also weigh heavily on investors’ minds, with 37 states reporting increased hospitalizations that seem likely to accelerate in the coming weeks. The economic impacts continue to mount as some states ramp up restrictions in response.

On the technical front, the indexes printed bearish candle patterns yesterday, confirming lower highs and adding some overhead resistance. That said, there was no significant technical damage created, and we all know another reversal is possible depending on the political news. What happens next is anyone’s guess, but once again, I will caution you about the dangers of chaising a morning gap with so much uncertainty ahead. Get ready; this wild ride is far from over.

Trade Wisely,

Doug

Still No Stimulus Deal But Hope Remains

October 20, 2020 by Ed Carter

Stocks gapped higher at the open for no particular reason except hope for stimulus, but that was just a bull trap. After the first 5-minutes, the rest of the day saw an all-day selloff which saw prices close near the lows. The DIA printed what looked like an Evening Star pattern, as did the SPY (if you squint) with the QQQ printing the biggest black candle of the bunch. All 3 indices gave up their mid-term uptrends and look to be headed down toward their 50sma for a retest. On the day, QQQ was down 1.63%, SPY down 1.52%, and DIA down 1.38%. The VXX rose over 4% to 23.24 and T2122 fell all the way to the lower end of the midrange at 32.28. 10-year bond yields rose significantly to 0.772% and oil fell half a percent to $40.71/barrel.

On the stimulus front, after the close Monday it was reported that House Speaker Pelosi and Treasury Sec. Mnuchin made some progress in their talks. The pair plan to talk again Tuesday. In the meantime, Senate Republicans oppose the deal the two sides are working toward. So, on Tuesday, Majority Leader McConnel is still planning to propose a bill about one-fourth the size what Pelosi and Mnuchin are negotiating (covering $500 billion in PPP Loan/Grants for small businesses) in hope of passing it in the Senate in a vote Wednesday. With all this, there still seems to be optimism in the market that a deal can be reached before the election.

After hours, INTC announced that they had agreed to sell their NAND memory unit to South Korean firm SK Hynix for $9 billion. Early this morning PG reported a huge beat on sales (+9%) on high demand for household items.

On the virus front, in the US the numbers show we now have 8,459,041 confirmed cases and 225,241 deaths. The 7-day average daily new case count rose again to 59,124/day, while the lagging average of deaths remains relatively flat at 741/day. At the moment, 37 states are reporting virus hospitalizations increasing more than 5% since last week. More ominously, a half dozen states report ICU bed utilization over 80%. At the same time, 41 states are reporting new case numbers growing by more than 5%.

Globally, the numbers rose to 40,720,262 confirmed cases and the confirmed deaths are now at 1,124,213 deaths. In Europe, Ireland has imposed a 6-week national lockdown closing bars, restaurants, offices, and limiting gatherings to fewer than 6 people. Meanwhile, the UK has set a deadline for the city of Manchester to comply with a lockdown order with the threat of national government intervention if they do not comply. However, in Asia, Hong Kong has slightly reduced restrictions after a week with a better trend in new cases.

Overnight, Asian markets were mixed again. Japan (-0.44%), Australia (-0.72%) are typical on the losing side. Meanwhile, Shanghai (+0.47%) and South Korea (+0.50%) are typical on the green side. Shenzhen (+1.33%) was the only mover of more than one percent. In Europe, markets are also mixed, but generally lean to the positive side. Among the big 3 bourses, the FTSE (+0.31%) and CAC (+0.56%) on green while the DAX (-0.27%) shows red at this point. The rest of the continent is mixed, but the larger moves are to the plus side at this point in their day. As of 7:30 am, US futures are pointing to another gap higher at the open. The large-cap indices are both implying a move of +0.74%, while the QQQ is indicating +0.71% at this point.

The major economic news for Tuesday is limited to Sept. Building Permits and Sept. Housing Starts (both at 8:30 am), and 2 Fed speakers (Williams at 9 am, Quarles at 10:50 am. However, earnings are ramping up with ACI, CP, DOV, GPK, IQV, LMT, MAN, NVR, PCAR, PM, PG, RF, and TRV reporting before the open. Then after the close AGR, CNI, CSL, NFLX, TER, THC, TXN, and WRB all report.

The virus continues to surge, no stimulus deal has been reached, and the politicians of both parties are more focused on the impending election than the nation’s business. Nonetheless, the hope/expectation of more stimulus very soon appears to remain high in the market. earnings reports are likely to remain the big drivers of the market Monday. Earnings are the wildcard, with mixed but generally positive results reported against much-lowered expectations. The one constant is raised volatility. And don’t forget there are ACB confirmation votes and the final Presidential Debate coming this week that is sure to raise the political risk.

So, continue to be careful in this market. The short-term trend remains strongly bearish and has broken the medium-term uptrend. Lock-in your profits whenever you can and stick to your rules. Singles and doubles in the bank beat hope for a home run every time. Don’t get too greedy, don’t chase the moves you have missed, and don’t predict. Be sure you respect potential support and resistance. Follow the trend and stick with your trade plans. Monday’s candles were ugly, but again this morning the market seems to want to shrug that off.

Swing Trade Ideas for your consideration and watchlist: MRNA, TNA, FAS, DDOG, BYND, RIOT, NIO. 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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Wild-eyed Speculation

October 19, 2020 by Doug Campbell

As coronavirus numbers surge, wild-eyed speculation of stimulus continues to drive indexes toward record territory. With Speaker Pelosi issuing a 48-hour deadline to get a deal passed before the election, expect extreme price sensitivity on the stimulus news cycle. Substantial whipsaws and full intraday reversals are possible as both sides of the aisle battle for position through the news. There is a lot at stake as we push company valuations to perfection and beyond, even as our economy faces rising joblessness and new business impacts due to the rising infection rates.

Asian markets surged during the night as China reports their economy grew by 4.9%. European markets are flat cautiously monitoring US Stimulus talks and Brexit uncertainty. US Futures point to a Dow gap of nearly 200 points ahead of earnings, Jerome Powell comments, and the latest reading on the Housing Market Index. Buckle up for another week of challenging price volatility.

Economic Calendar

Earnings Calendar

On the Monday earnings calendar, we have 20 verified reports as the 4^th quarter earnings volatility begins to ramp up. Notable reports include ADC, FNB, HAL, IBM, LLI, PPG, STLD, & ZION.

News & Technicals’

Speaker Pelosi drew a line in the sand this weekend, giving the White House just 48 hours to reach an agreement on a stimulus package so that it can be passed before the election. Reports suggest the Pelosi and Munchin will continue negotiations today, but it’s still unclear if the Senate has the willingness to give the deficit spending bill nearing a 2 trillion dollars. China released numbers saying its economy grew 4.9% in the third quarter lifting Asian markets overnight. Unfortunately, as coronavirus infections accelerate, new restrictions and lockdown measures increase the economic uncertainty looking forward. Worldwide cases of the virus topped 40 million, with more than 90K new cases reported in the US over the weekend. The IMF downgraded the outlook for the Middle East and Central Asian economic recovery, with oil prices expected to suffer next year due to virus-driven demand impacts.

That said, US Futures are surging this morning as hopefulness of a stimulus deal outweighs virus concerns. The T2122 is once again suggesting that we are in an extremely overbought condition as wild-eyed speculation pushes the indexes toward record territory. As we gap up once again in anticipation, remember to watch for the possibility of a pop and drop pattern. Traders will have to stay on their toes as news sensitivity around stimulus could be extreme should negotiations fail. With the VIX continuing to hold above 25 handles, anything is possible, so plan your risk carefully.

Trade Wisely,

Doug

Bulls Looking to Gap Again Monday

October 19, 2020 by Ed Carter

Markets gapped higher at the open and ran higher the first hour Friday on better than expected Sept. Retail Sales. However, a mid-morning selloff led to a sideways grind that lasted until 3pm, when the floor fell out from underneath the indices. That late-day selling left all 3 major indices with higher wicks and ugly black candles (although the DIA managed to remain a Gravestone Doji). On the day, SPY ended down 0.06%, QQQ down 0.55%, and DIA up 0.33%. The VXX was flat at 22.27 and T2122 remains just inside the overbought territory at 81.48. 10-year bond yields rose to 0.749% and Oil (WTI) fell slightly to $40.78/barrel.

On the stimulus front, on Friday House Speaker Pelosi told other Democratic leaders that the 2 sides remain far apart on several issues. These are funding for state/local governments, tax breaks for working families, child care funding, and the liability waiver that Republicans want for businesses. Meanwhile, Senate Majority Leader McConnell insists the two sides are negotiating at 4 times the level the Senate GOP will accept and on Saturday said he’s proceeding with votes on a $500 billion PPP Small Business loan/grant bill on Tuesday and Wednesday. In response, on Sunday, Speaker Pelosi set a Tuesday deadline for a deal prior to the election.

On Sunday AAL said they intend to return to the use of the BA 737 Max in December. Then, early Monday, COP said it will acquire driller CXO for $9.7 billion. In economic news, China also announced that its economy grew 4.9% in Q3, which brings YTD growth up to +0.7% versus 2019. However, in the Middle East, the IMF is forecasting a 4.1% economic contraction and oil prices to remain in the $40-$50/barrel range through 2021

On the virus front, in the US we have now gone over 8 million cases, with the numbers showing we now have 8,388,013 confirmed cases and 224,732 deaths. The 7-day average daily new case count rose again to 56,322/day, while the lagging average of deaths remains relatively flat at 718/day. 21 states reported a record number of new cases at least once in the last week. At the moment, 38 states are reporting new case numbers growing by more than 5% with only 2 states trending down and the country as a whole has seen a 16% increase in cases in the last week.

Globally, the numbers rose to 40,348,289 confirmed cases and the confirmed deaths are now at 1,119,305 deaths. Europe has overtaken the US to become the area with the highest average daily new case count (to be fair, Europe including Russia does have nearly 2.5 times the US population). This comes as the WHO is warning that many major cities across Europe may reach ICU bed capacity in the next couple of weeks based on the current new case and hospitalization rates. On cue, Poland began converting a soccer stadium into a field hospital, Italy announced new restrictions and the UK is in negotiations to lockdown its Northern city of Manchester.

Overnight, Asian markets were mixed, but overall, modestly higher. Taiwan (+1.24%) and Japan (+1.11%) led the gainers, while Thailand (-2.02% on political unrest) and China (-0.70%) led the losers. In Europe, markets are also mixed by generally higher so far today. Among the big 3 bourses, the FTSE is down (-0.22%), the DAX flat (-0.03%), and the CAC up (+0.32%). The other European bourses show a modest move in either direction, but lean to the green side. As of 7:30am, US futures are pointing to a gap higher at the open. The DIA implying +0.70%, the SPY suggesting +0.83%, and the QQQ indicating +1.00% at this point.

The major economic news for Monday is limited to Sept. Federal Budget Balance and 3 Fed speakers (Chair Powell at 8 am, Clarida at 11:45 am, and Harker at 3 pm. Major Earnings Reports include HAL before the open and CCK, IBM, LOGI, PPG, STLD, and ZION after the close.

The surging virus, lack of a stimulus deal, and earnings reports are likely to remain the big drivers of the market Monday. However, any potential news on the political front remains an overhang for at least another couple of weeks. And of course, the M&A world seems to still be in vogue as we head into the stretch run of the year. The one thing that is sure is that posturing is sure to add to volatility. So, continue to be careful in this market.

Lock-in your profits whenever you can and stick to your rules. Don’t get too greedy, chase the moves you have missed, and don’t predict. Be sure you respect potential support and resistance. Follow the trend and stick wiht your trade plans. Friday’s candles were ugly, but the market seems to want to shrug that off this morning.

Swing Trade Ideas for your consideration and watchlist: GLW, URI, HAS, NIO, CGC, GPS, MCRB, SPCE. 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