After receiving the worst unemployment number in history, the
market chose to focus on the coming 2-trillion stimulus bill extending the bullishness
for a 3rd day. The rally
recovered some important price levels of support, but not the question is, will
they hold heading into an uncertain weekend.
With the US now with the highest number of confirmed infections and the
2nd quarter earnings season just around the corner, there is still a
lot of fear in the market.
Asian markets follow the lead of the US rallying to close out
the week in the green. European indexes,
however, are red across the board this morning but only down about 2% at the time
of this report. US Futures point to an
overnight gap down at the open ahead of personal income and consumer sentiment
reports. Consider your risk carefully as
we head into the weekend because anything is possible by Monday morning.
Economic Calendar
Earnings Calendar
We have a light day on the economic calendar with just over
40 companies reporting. However, the
majority are small-cap companies, and I can find no particularly notable reports
today.
Top Stories
Hopes are high that the House will move forward with a vote
today on the 2-trillion stimulus bill.
There is, however, still a chance that one or more representatives reaching
for the spotlight could delay the vote into the weekend.
The US now has the grim title as the highest number of
infections that will, too, continue to rise exponentially through the
weekend. As of this morning, 85,625 American
infections and more than 1300 have died.
The market shrugged off the record-breaking 3.2 million
unemployment number to record the biggest bounce 3-day bounce off in
history. To put this into perspective, unemployment
topped out around 780,000 during the 2008 banking crisis.
Technically Speaking
Although the third day of the rally was fantastic, it did
little to improve the technicals of the index charts. The QQQ had the best response once again,
recovering its 500-day average. The SPY
broke through resistance at 255, and the Dow recovered it 2018 low. The question now is, can they hold these
important price supports heading into the uncertainty of the weekend. Hope that passage of the stimulus bill will undoubtedly
provide a little help, but the unrelenting bad news of the virus spread will
continue to weigh heavily on the minds of investors. Keep in mind it will be at least another
3-weeks before the relief checks start to reach American bank accounts. In this market, a lot can happen over the
course of just one hour; 3-weeks will feel like a lifetime!
Those that rushed to by at the end of the day yesterday will
be punished this morning with a nasty overnight gap down. As for me, I plan to go into the weekend, essentially
flat. I won’t rule out the possibility
of some quick intra-day trades, but for me holding into the weekend is a
straight-up gamble that I will avoid. Be
safe, my friends and have a wonderful weekend.
Armageddon seemed to be already priced into the market as the bulls absorbed a New Jobless Claims number 5-times the all-time record and still gapped higher with follow through the rest of the day. This included a massive rally for the last 10 minutes. As a result, the SPY closed up 5.84%, the DIA up 6.14%, and the QQQ up 5.27%. This was the third consecutive up day for a total gain of 17% in the SPY, almost 21% in the DIA, and 12.5% in the QQQ. Technically, this takes us out of a Bear Market.
Speaker Pelosi said she expects the stimulus bill to pass the House by around noon Friday. Minority Leader McCarthy echoed the same expectation. In the daily briefing, President Trump explained he hadn’t needed to invoke the Defense Production Act due to companies switching production on their own, although some states and cities will disagree that has been enough. He also said that the US has done more testing than any other country. Without knowing the true numbers out of China, this is likely true. However, we did get a very late start and it is also true that as of Thursday, the US had tested 1 of every 780 people, while South Korea has tested 1 of every 150 of their people. So, we still have a way to go to get near where we need to be, but the trend is encouraging.
In business news, after the close GM announced it would be extending North American plant shutdowns, without defining a specific restart date (the previous date was April 1). This fell in line with what Ford had done a few hours earlier. GM also temporarily cut the pay of 69,000 salaried workers by 20%. Toyota also announced it will keep its North American plants close, but issued a tentative restart date of April 20.
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The President announced that his folks are working on guidelines and methods for the next phase of the fight (after the re-Opening of America). This system will categorize every county in the US according to their perceived risk. Social Distancing and quarantine guidelines will be different for each category of county. The massive nationwide testing regime was not mentioned, but would almost certainly be needed for such a plan. He did mention that easing and the new guidelines will be accompanied by mass surveillance, but any such system would likely not be wide-spread enough for the entire country. So, this system would depend heavily on public compliance, self-discipline, and self-limiting of domestic (intra-county) travel. No mention was made, but presumably like the rest of the world, some type of enforcement will be required to isolate people in risky counties from the less-risky counties.
The global headline virus numbers continue to grow exponentially, now at 549,300 confirmed cases and 24,871 deaths. China is closing its borders again, as some experts are saying they may be seeing a second wave starting. The UK, PM tests positive and is experiencing mild symptoms. Meanwhile, the US has now become the epicenter of the virus (the most cases), with 85,749 confirmed infections and 1,304 deaths.
Overnight, Asian markets were mixed, but mostly green. In Europe, markets are red across the board, down heavily in the major bourses. As of 7:45 am, the futures are pointing to a 3% gap down.
Major economic news on Friday is limited Feb. Core PCE and Feb. Personal Spending (both at 8:30 am) and Mar. Michigan Consumer Sentiment (10 am). There are no major earnings on the day.
Again, markets remain very volatile. Remember that even three days of massive rally do not make a recovery yet. Don’t try to predict price action here. Wait for trades to come to you. We still have no uptrend on the daily level. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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
Our first 2-day rally in weeks was a sweet relief, but today
we face a possible history-making increase in joblessness. Can the hope of the 2 Trillion dollar stimulus
bill keep the bulls engaged in the wake of high virus-related
unemployment? We will soon find out at
8:30 AM Eastern this morning. With the death
toll and infections, rising holding positions into the uncertainty weekend will
likely be difficult.
Asian markets closed lower across the board, with the NIKKEI
falling 4.50%. European indexes are
seeing modest losses this morning, and the US Futures point to a Dow gap down
of more than 150 points ahead of readings on GDP and Jobless Claims. Expect considerable volatility as the market
reacts to the first economic data to include the outbreak impacts on business. It could be a wild day, so buckle up.
Economic Calendar
Earnings Calendar
We have nearly 110 companies fessing up to quarterly results
on Thursday. Notable reports include
CSIQ, FDS, GME, JEF, KBH, LULU, MOV, SIG & RH.
Top Stories
Now the Senate has passed the stimulus bill it’s now time
for the House to get the political spotlight.
According to reports, they plan to begin their work on Friday, and the
political rhetoric is already raising concerns about how long they might delay
getting the bill to the President.
The coronavirus death toll jumped over 1000 during the night
with confirmed cases quickly approaching 70,000. The New York health care system is already in
a crisis and seems to be on the same escalation curve as Italy.
The entire market is sitting on the edge of its seat this
morning, waiting for a reading on the jobless numbers at 8:30 AM eastern. Consensus Estimates expects more than 700,000,
but some are suggesting the number could be as high as 3.5 million. Needless to say, the outbreak impacts on
employment are significant, and it will be interesting to see if the warm and
fuzzy glow of the stimulus bill will keep the bulls engaged.
Technically Speaking
Yesterday we witnessed the first day of bullish
follow-through in several weeks. At the
close of trading, the DIW, SPT, and IWM managed to hold on to some gains as traders
took profits ahead of the Jobless numbers.
Sadly the QQQ closed lower on the day and failed to hold it’s 500-day
average. The DIA managed to test the
2018 lows, but the resistance proved too strong backing way sharply after the test.
Having taken some very nice gains yesterday, I now think the
risks are just way too high ahead of the jobless numbers and heading into the
week. The outbreak numbers have begun to
rise exponentially, and I suspect it will weigh heavily on the minds of
investors. If anything, the path forward
appears even more uncertain with such a long road ahead in a battle with an
enemy we can’t see.
Wednesday was another roller-coaster for markets. We got a gap higher on the follow-through on Tuesday’s huge rally. However, that was me with a severe selloff and then a big intraday rally on hope of a Senate deal. After some grind sideways, the bottom fell out the last 15 minutes of the day as 4 Republican Senators (Lynsey Graham, Tim Scott, Ben Sasse, and Rick Scott) pushed to cut unemployment funding in the bill and Bernie Sanders threatened to hold it up if they did not drop their demands. On the day, the SPY gained 1.50%, the DIA 2.62%, and the QQQ lost 0.74%. Meanwhile, the VXX rose to 50.90 as 10-year bond yields fell to 0.837% and Oil (WTI) fell to $24.10/barrel.
The Senate passed the stimulus deal late last night after getting all the Senators in line. Beyond that hassle, the House may be an even bigger hurdle. If a single congressman of either party objects, the bill will have to go to debate, potential amendment and a roll-call vote in the House. Unfortunately, some congressmen are threatening just that as this situation gives them a lot of leverage. And even before the bill passes or is signed, many Governors (both parties) are already saying they will need more than this bill will deliver. Gov. Hogan (MD – Rep.) who heads the National Governors Association said: “states and local governments will need to come back for more than this bill provides in the next round of stimulus.” So, once this passes, don’t expect it to be the last dollars out of Washington on this crisis.
In the daily briefing, Sec. Mnuchin said the $2.2 Trillion stimulus package would keep the economy afloat for 3 months. He also said some people could start to see the $1,200/ adult and $500/child payments in as little as 3 weeks (if they have direct deposit info on file with the IRS). However, for others, it could take as long as 3 months if checks need to be cut and mailed. Both those time periods fall in-line with what happened in 2001 and 2008. So, they sound believable.
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The global headline virus numbers continue to grow exponentially, now at 487,050 confirmed cases and 22,025 deaths. Meanwhile, in the US, totals are up to 68,581 cases and 1,036 deaths. Hospitals in New York are already beginning to be overwhelmed by patients and supplies of PPE (masks, gloves, and gowns) have been exhausted despite federal help, donations, and large increases in production. In addition, Dr. Fauci (NIH) told Americans to prepare for a second wave after this one is weathered.
Overnight, Asian markets in the red again. Japan gave up 4.5% of its big gains from the prior 2 days. In Europe, markets are also in the red, down about 2% across the board so far today. As of 7:30 am, the futures are down as well, but range between down 1% (DOD and S&P) and half a percent (NASDAQ).
Major economic news on Thursday is headlined by the Initial Jobless Claims (8:30 am), which is expected to be the largest in history by a long shot. Estimates range from 1 million to 4 million new claims, but the consensus is 1.5 million. We also get Q4 GDP and Feb Trade Balance (both at 8:30 am), but these will be after-thoughts to the Jobless Claims. The only major earnings of note is LULU after the close.
Even with over $6 Trillion in stimulus coming from the Fed and now Congress, don’t think we are out of the woods yet. A ton of bad headlines still lie ahead. (For example, don’t think the Jobless Number this week will end up being the worst.) However, it is also likely that when the latest relief bill is, the bulls may latch onto this news and run.
Again, markets remain very volatile. This is not a casual trader’s market. Don’t try to predict price action here. Sit on your hands if you have to in order to keep from trading. Use this downtime to get your list of tickers ready. Get some education, refine your trading plans, and improve your trading process. Then wait for trades to come to you. We still have no uptrend on the daily level. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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
Congress finally came to an agreement, and the stimulus is on the way! The question is, will it bring stability to the market? In a very wild overnight session, the Dow futures rallied 500 points after the news of the agreement. Unfortunately, as I write this report, the futures have been unable to hold the news-driven gains. With unemployment numbers due out tomorrow and New York seeing a doubling of confirmed cases every 3-days one has to wonder if there is any amount of money that can buy our way out of this terrible situation.
Asian markets closed positive across the board last night,
with the Nikkei lifting over 8%. Sadly,
European markets are not feeling the love form all the stimulus spending with
mixed results and the DAX down 2.25%.
Here in the US, the futures markets have seen a very turbulent evening. They have been bullish and then swung quickly
bearish, where it might be by the open is anyone’s guess! About the only thing, I think we can count if
very volatile price action in the day ahead.
Economic Calendar
Earnings Calendar
On the Wednesday earnings calendar, we have over 50
companies reporting results. Looking
through the list PAYX is only notable I can come with this morning.
Top Stories
At about 1:30 AM the Congress cane to an agreement on the
stimulus plan. The question now, will the
market be able to rally a second day on the news? Only time will tell.
They are reaching a critical situation in New York City now
with more than 25,000 cases, as the cases double every three days overwhelming the
healthcare system. The President said
yesterday that he would like the country to get back to work by Easter, which
is just three weeks away. However,
health officials and many of the state Governors disagree, saying the risk of
spread is too high.
As business around the country continues to shut down, the
next focus may be the unemployment numbers that are due out on Thursday morning. Consensus estimates suggest more than 700,000
will be out of work, and the numbers are likely to rise in the coming weeks.
Technically Speaking
I was so nice to see a little relief from the selling yesterday,
but now the question is, can it follow-though?
In the middle of the night, Congress finally came to an agreement, and
the President said he would sign the stimulus bill immediately after its
passage. Futures rally nearly 500 points
on the news but have already faded into the red in a very volatile overnight
session. With 2.5 trillion buy us some
stability? One would hope so because the
Trillions that FOMC has spent has done nothing to curb the historic market collapse.
Tomorrow we will get a reading on unemployment, and
according to estimates, it will be shocking.
Of course, direct payments will be helpful to those out of work, and the
company bailouts with the support of the medical system is much needed. However, with all this spending translate into
stock buying as the virus spreads and the path forward remains uncertain? I’ve
said it before, and I will repeat once more that it seems unlikely we can buy
our way out of a pandemic that continues to spread across our country.
Turn-around Tuesday was an amazing job done by bulls, as the rest of the world led the US to a huge gap up on hopes of a massive Federal rescue bill. Markets followed-through even when news came that there was no agreement and the Senate had adjourned for the day. On the day the SPY was up 9.26%, the DIA up 11.19% and the QQQ up 7.82%. This was the best day for bulls since 1933. As you’d expect, the VXX was down to 46.77. Oil (WTI) closed up $23.88 and the 10yr bond yield closed up to 0.834%.
Regardless of Tuesday’s optimism, the Senate adjourned in the early afternoon without a deal. However, overnight the sides agreed on a deal on a $2 Trillion stimulus package. Speaker Pelosi and Minority Leader McCarthy are now trying to get their caucuses to support any Senate deal, as-is. This would be critical to speed because it must pass by unanimous voice consent. A single objection from any Congressman will require delay while the House returns to Washington for a roll-call vote. Futures fell on word of the deal. Regardless of what happens this time, sources told Bloomberg last night that Congress is expecting two more stimulus bills before this is over.
In the meantime, following a call with major Investors and Hedge Fund managers, the President told Fox News he wants the US to be “open and just raring to go by Easter.” Reportedly, he has soured on the ideas of quarantining and social distancing because “many Americans are ignoring the suggestions” (per unnamed aides). On the other side, doctors, infectious disease experts, and even President Trump’s former head of the FDA are saying that we need at least several weeks of lock-down to stem the virus. Dr. Fauci (NIH) told the daily presser we would need to be flexible and data-driven and after that, the President agreed, seeming to step back from a firm Easter date.
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The global headline virus numbers continue to grow exponentially, now at 434,866 confirmed cases and 19,607 deaths. In Asia, India locked-down its 1.3 billion people for the next 21 days. Several South American countries have also begun lockdowns. In Europe, death tolls are up again in Italy and Spain has had to turn ice rinks into temporary morgue storage. However, in positive news out of China, both Wuhan City and Hubei Province had their quarantine lifted after two months on lock-down.
In the US, totals are up to 54,963 cases and 784 deaths. New Orleans is the latest major city to order a lock-down as their number of cases exploded and Governor Edwards declared a state of emergency for Louisiana. The White House also announced that anyone who has traveled from New York should self-quarantine. In addition, New York Governor Cuomo and NYC Mayor de Blasio both decried a massive shortfall in ventilators as they expect to need 30,000 more of them in the next one to two weeks.
Overnight, Asian markets are strongly green again on the second day of expectation a US bailout plan passes and pumps up global economies. Japan was up 8% to make two straight days of massive NIKKEI gains. In Europe, markets are mixed and more muted, though mostly green so far today. In the US, futures fell on word the stimulus deal was agreed. As of 7:30 am, the futures are mixed, but mostly red with the S&P and NASDAQ pointing to lower opens and the Dow slightly on the green side.
Major economic news on Wednesday is limited to Feb Core Durable Goods (8:30 am) and Crude Oil Inventories (10:30 am). However, an agreement on a virus rescue plan will definitely be announced, if not signed during the day. Major earnings are limited to PAYX before the open and MU after the close.
Don’t think we are out of the woods and it’s all blue skies ahead. With more “stay a home” orders, company closures, and bad economic data coming, there are a ton of bad headlines we will need to ride out. In particular, we should be wary of Thursday’s Initial Jobless Claims that are expected to be the largest in history by a wide margin. However, it is also extremely likely the latest relief bill will be signed, more Fed steps will come and more stimulus bills will too.
So, markets remain very erratic and there is no reason to think that will stop. Remember, you don’t have to pick the absolute bottom to make a bundle on the rebound. So, use this downtime to get your list of tickers ready. Get some education, refine your trading plans, and improve your trading process. Then wait for trades to come to you. We still have no uptrend on the daily level. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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
With Congress still trying to get it to act together on a
massive stimulus bill, the US Futures point to a welcome rally. Though
it might prove to be only a monetary relief with quickly rising infection numbers
and a death toll sharply rising, any reprieve in the selling that created the fastest
30% decline in history is a welcome relief.
We still face a busy week of economic reports with impacts of the
outbreak starting to trickle into the numbers.
Expect price volatility to continue with lots of news-driven whipsaws and
reversals as the market tries to recover.
Asian markets closed in the green across the board with the
Nikkei surging more than 7% even after the postponement of the Summer
Games. European markets are also in the
mood to rally this morning with gains in the DAX over 6% in reaction to the Fed
Stimulus. Ahead of earnings from NKE,
CCL, and economic reports that include PPI & New Home Sales, US Futures
point to a huge gap up at the open. If Congress
can pass the stimulus, expect another surge of short-term optimism that could
extend the relief rally.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have 72 companies
stepping up to report results. Notable
reports include NKE, CCL, CONN, INFO, & SCS.
Top Stories
In the last six weeks, the Dow has lost about 11,000 points,
but this morning we have a moment of relief with the US Futures pointing to a
rally of more than 900 points. We are
still waiting on Congress to decide on a stimulus package that will total more
than 2-trillion dollars. The unprecedented
move by the FOMC that through the doors open for unlimited asset buying was
only able to inspire the bulls for a brief moment yesterday, ultimately closing
lower on the day.
With pressure rising, the Olympic Committee has decided to
postpone the start of the Summer Games for the first time in history. In wartime, the games Olympic’s experienced
full cancellation 3-times but never a postponement. Just another item for the history books alongside
the fastest 30% market decline ever. The
President said in comments yesterday that he expects a quick recovery for the
market. However, reports suggest he like the rest of us is concerned the
recovery will be a slow process due to the company level damage and unemployment.
Technically Speaking
With the futures pointing to a substantial gap up and the
hope that Congress might get its act together passing the massive stimulus bill,
we could finally see a little relief from the selling. Unfortunately, with infections approaching 45,000
and more than 525 reported deaths here in the US, it’s challenging to be in a celebratory
mood. The QQQ has the best chance of
recovering its 500-day average, but even with the big up expected this morning,
the bulls will have to deal with if as resistance.
We will get the latest reading on the PPI and New Home Sales,
both of which expect declines according to consensus estimates. As the coronavirus impacts trickle into the earnings
and economic reports, we could see volatile price swings that traders will have
to consider when holding positions overnight.
I suspect the road to recovery will be a very bumpy one with dangerous whipsaws
and flat our reversals to challenge trader skills. Don’t forget that consistent
base hits win games, not the exciting home runs. When the recovery begins, don’t allow greed
to prevent you from taking those base hit trade profits. To be a consistently profitable trader, we
have to get comfortable with taking profits consistently.!
Monday was another roller-coaster ride. After a limit-down in futures Sunday night, the Fed pulled out the big guns during premarket hours, saying they would do unlimited purchases of assets (QE including corporate bonds), roll out loans to businesses, and committed to $125 billion/day in Repo operations to give banks tons of liquidity. This immediately took futures positive, but hope soon faded and we gapped down at the open. After a volatile day, punctuated by a second failed vote for a relief bill in the Senate, markets closed down, but off the lows. The SPY ended down 2.67%, the DAI down 3.19% and the QQQ down just 0.14%. For some odd reason, the VXX was also down sharply (-15.56%) to end at 51.13. Oil was up almost 5% to close at $23.76. The 10-year bond yield was also down to 0.759%.
As mentioned, the huge fiscal spending bill ($2 Trillion at last estimate) failed another procedural vote again in the Senate. There were no details on remaining differences, but the two opposing camps were blaming each other. Republicans were blamed for being “too focused on business bailouts” while the Democrats were blamed for being “too focused on social spending.” Either way, there is no Senate deal yet. The House (where any spending bill must originate by law) stopped waiting as House Democrats introduced their own $2.5 Trillion rescue plan. That plan includes $500 billion in grants and interest-free loans for small businesses, expanded paid medical and family leave, $1,500 per individual payments, and increases unemployment insurance for anyone put out of work by the virus.
The President also seems to be leaning back toward his first position of “business as usual,” accept the losses and spin the story. Essentially, he is again more concerned with the economic damage that may be done and the health of businesses than with the potential loss of life and health. In his daily presser, he said the “reopening of American” is coming very soon. He also said he would soon implement a middle-ground approach of quarantining and testing some areas and groups while getting others back to business. There was no mention of the possibility that a “partial cure” may be worse in the long run, with a relapse shutting-down the country again. Regardless of the choice made, some will be unhappy. However, whether you trust health experts or this President, the gap in approach between the two does lead to uncertainty. This is also true to comparisons with other countries that have (or are) locking-down for longer periods.
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In other news from the day, there appeared to be no real glitches in the first-ever day of trading with no humans on the trading floor (entirely online). BA also announced it is closing all operations for 2 weeks. The SEC also warned traders on inside trading after last week’s story about senators. Finally, the President also announced measures to prohibit hoarding, price gouging, and blocking some fake remedy sales.
The global headline virus numbers continue to climb fast, now just under 392,148 confirmed cases and 17,138 deaths. In Asia, several countries are reintroducing travel stoppages to head off a second wave of infections. In the UK, Prime Minister Johnson ordered his nation to stay at home for the next three weeks. This measure is in addition to Sunday evening’s 12-week quarantine for anyone at risk. They are also, following Germany in prohibiting any gathering larger than 2 people. Finally, the IOC has now postponed the summer Olympics, although the length of the delay is still being negotiated with Japan.
In the US, totals are up to 46,168 cases and 582 deaths. After the close, the CDC reported that the virus remains alive on the Princess cruise ship after passengers and crew had left the ship. Indiana and West Virginia ordering residents to stay at home, and Rhode Island postponing their Primary election.
Overnight, Asian markets rallied hard on a US bailout plan passing and pumping up global economies. In Europe as every bourse across the region is also up very strongly so far today. In the US, futures went limit up on hope for a rescue plan. As of 7:45 am, the futures were pointing to a huge gap up of between 4.25% and 4.6%.
Major economic news on Tuesday is limited to Mar. Mfg. PMI and Mar. Service PMI (both at 9:45 am) and Feb New Home Sales (10 am). However, influential voting FOMC Member James Bullard also speaks mid-morning (important because over the weekend he told Bloomberg he expected the US to hit 30% unemployment). Major Earnings are limited to INFO before the open and NKE after the close.
With more “stay a home” orders, company closures, and bad economic data coming, there are a ton of bad headlines still ahead. However, it is also extremely likely there will be a plan of some sort passed soon. So, markets remain very gappy and erratic and there is no reason to think that will stop. Remember, you don’t have to pick the absolute bottom to make a bundle on the rebound. So, use this downtime to really learn, refine your trading plans, and improve your processes. Wait for trades to come to you. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs 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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Futures had a bit of a temper tantrum last night after the
Senate failed to pass the massive stimulus bill. We can expect significant price sensitivity
through-out the day as they legislators scramble to resolve issues and vote
again later today. A passage could trigger
a quick rally, but a failure could really bring out the bears, so keep an eye
to the news as they wrangle party politics.
Asian markets closed mixed but mostly lower as Hong Kong and
Australia saw heavy selling during the night.
European markets continue to tumble with the FTSE down another 3.5% as
the coronavirus continues to ravage the euro block. With tremendous overnight volatility, US futures
point to a substantial gap lower this morning that will test the lows of last
weeks as support. Hang on for another
wild day of price action.
Economic Calendar
Earnings Calendar
On the Monday earnings calendar, we have over 80 companies stepping
up to report quarterly results today. However,
after looking through the list, I don’t see any particularly notable or market-moving
reports.
Top Stories
After another volatile evening where the futures briefly dropped
to limit down, they point to a substantial gap down this morning. The massive stimulus bill failed to pass last
night but will try once again today. If passed
or fails to pass, it’s likely to be a market-moving event, so keep an eye to
the news as we progress through the day waiting on the vote.
The Olympic committee is under pressure to postpone or cancel
the Summer games hosted in Japan due to the virus concerns. Canada and Australia are the first countries
to announce they will not send athletes should the games move forward as
scheduled.
Last evening the President activated the National Guard in
New York, Californa, and Washington to expedite the moving of medical supplies
and equipment as their outbreaks continue to grow at an exceptional rate.
Technically Speaking
The QQQ had the best chance of recovering the 500-day
average last week, but on Friday left behind a very disappointing bearish
engulfing candle. This morning the four
major indexes are set to open at or below recent market lows. Although most charts paint a pretty grim picture,
there was an effort by the bulls to defend the week’s lows. In a surprise and very bold move, Goldman
upgrades BA suggesting they have enough cash to get through the crisis and that
air travel will return following the crisis.
I assume the Goldman is also anticipating that the government will swoop
in with a considerable bailout for the company in an attempt to prevent massive
layoffs.
We can continue to expect extreme price volatility and
sensitivity to the congressional vote on the stimulus bill. I would not rule out the possibility of a
quick and substantial rally should the bill pass. However, another failure to pass could easily
trigger another sharp selloff that could easily trip circuit breakers. Keep in mind no matter what happens, holding
positions overnight will remain very dangerous due to the overnight swings. I think a V-bottom recovery is unlikely
because we are still weeks if not months away from seeing an improvement in the
war against the outbreak.
