All the uncertainty about the pandemic business impacts will begin to come to light with the kickoff of 2nd quarter earnings. With there will be companies that have benefited from the pandemic, most will likely suffer profound impacts. Expect significant volatility, stick to your rules, and stay focused on price action. Trying to predict and biased trading with so much uncertainty will be very dangerous.
Asian markets closed in the green across the board last night as Chinese exports fall less than expected. European markets are flat to slightly positive this morning as they mull a lock-down exit strategy. US Futures put on a brave face ahead of the earnings kickoff, pointing to a substantial gap up open. Tighten your seat-belt; this could be a wild ride!
Economic Calendar
Earnings Calendar
Today we begin the 2nd quarter earnings calendar with more than 70 companies reporting. Notable reports include JNJ, JPM, FAST, INFY, JBHT, and WFC.
Top Stories
While US officials talk about reopening the country, the UK is likely to extend the lockdown. Cases in Germany jump by more than 2000, Singapore reported 386 new cases. India continued its lockdown until May 3rd, with Russia hitting a new record in daily infections of 2774. There are now nearly 2 million cases worldwide with the virus as the US quickly approaches 600,000 infections.
JPM reports this morning, but one has to wonder with such uncertainty looking forward, how the numbers can be meaningful. The SEC has told companies not to be too concerned if their guidance changes rapidly, and some have suggested that may companies will suspend guidance altogether.
Technically Speaking
After an uncertain and choppy day of price action, the overnight futures market surges upward ahead of the 2nd quarter earnings season kickoff. With the Fed seemingly buying up everything in sight, including junk bonds to bolster the market, it would appear they are worried about the earnings season. While fighting the Fed is a bad idea, it’s hard to imagine that company earnings could be anything other than dismal. With there will be companies such as AMZN, WMT, KR & COST that may well benefit from the lockdown, the vast majority have suffered devastating impacts. Expect this earnings season to be extremely volatile. One thing for sure it won’t be boring!
The current bullish short-trends are holding support levels, but the potential for big price moves add significant risk to an already very challenging market condition. While there is tremendous hope we have seen the worst of this crisis, we can not rule out the possibility of another test lower as the real business impacts are finally revealed. What we want to happen or what we might think will happen doesn’t matter. What matters is that we set aside our bias, focus on the price action remaining disciplined to our trading plan and rules to ride out this earnings season with success.
Monday started with a small gap down and then a selloff that more than faded all the progress the bulls had made since Wed. morning among large-caps. However, the tech-heavy QQQs bucked the trend by rallying all day after the gap down. At the end of the day the bulls had pushed back up toward the open to where the SPY was down 0.92%, the DIA down 1.25%, but the QQQ up 1.08%. The VXX fell again to 40.68 and 10-year bond yield rose to 0.762%. Oil (WTI) fell despite Sunday’s OPEC+ production cut deal as it closed at $22.60/barrel. From a technical standpoint, the QQQ printed a bullish engulfing candle and SPY printed a black hammer with both of the large-caps avoiding printing Evening Star signals.
During the day the President felt the need to assert his belief that he had sole power (total power) to ReOpen America Businesses. Contrary to his assertion, the Governors of six Northeast states (NY, NJ, RI, DE, CN, and PA), which actually issued lock-down orders, formed their own state-level working group to coordinate their own decisions on the matter. Meanwhile, out west, the states of CA, WA, and OR also formed a similar regional working group. The key take-away is not the President’s belief or even the political struggle.
The key point is that the President is obviously feeling a lot of pressure from economic advisors and business interests to get the economy up and running again. However, at the same time, the NY Fed announced Monday that it is starting to scale back its recent emergency interventions (repo operations) “in light of the more stable markets.” So, it seems the Fed is less jittery about market conditions than the White House (and others) seem to be about the economic situation. Since markets are said to be a discounting machine that front-runs the economy by 3-6 months, maybe this is an indication we are only looking to turn the corner by next year.
However, on the topic of economic pain, Ginnie Mae (FHA and VA loans) reported that its mortgage bailout requests had risen 78% in the last week and are currently at just under 6% of the loans they are servicing. So far, Fannie Mae and Freddie Mac forbearance requests are still at a much lower 2% level. So, even at this early point in the economic fallout, mortgage repayments are already showing stress.
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On the longer-term outlook, a non-partisan watchdog (Committee for a Responsible Federal Budget) released estimates that the US federal deficit for the year will top $3.8 trillion for 2020…even if Congress does not approve any more stimulus/relief (which they almost certainly will). That represents almost 19% of the economy and is the highest deficit as a percentage of GDP since 1945. The same group estimates this will lead to total public debt equaling total GDP by the end of October (roughly $20+ Trillion). They also warned their numbers may well be on the low side due to using conservative estimates.
On the virus front itself, the global headline virus numbers have now reached 1,936,700 confirmed cases and 120,568 deaths. In Asia, the number of cases is picking up again, with relatively large increases in places like Singapore. However, new Chinese cases fell back below 100 again. In Europe, the UK said it is likely to extend its lockdown as far as late May. Meanwhile, in Germany, the country’s Health Minister said they have begun plans to implement a gradual recovery in a step-by-step fashion. As in the US, no timelines have been announced yet and they will be seeking a balance between preventing new outbreaks and economic recovery.
Meanwhile, in the US we now have 587,173 confirmed cases and 23,644 deaths. The pace of increase in new cases continues to slow in the worst-hit areas like NY, NJ, and MA, which reported a lower number of new cases. The rate of new deaths is also starting to decline but that statistic continues to lag the reduction in new case rates.
Overnight, Asian markets were green across the board, as China’s March Trade Data came in down, but much better than expected. (Down 6.6% vs. a 14% drop expected.) In Europe, markets are mixed, but mostly green at this point in their day. As of 7:45 am, US futures are pointing toward a 1.5% gap higher on early mixed earnings news (JPM earnings way down, but explained it as stockpiling reserves for the virus impact, JNJ cuts outlook but beat on revenue and raises dividend, etc.).
On Tuesday, major economic news is limited to Mar. Imports/Exports (8:30 am). On the earnings front, DAL, FAST, FRC, JNJ, JPM, and WFC all report before the open. JBHT will report after the close.
While the uptrend continues, we are now entering a very uncertain earnings season. Do not be surprised if reports come in spotty (good in some cases, bad in others) as supply and demand pressures hit different industries at different times and some companies spin the story one way while others spin it another. Remember, while it may be time to start dipping your toe in again, we need to continue to be very attentive, and either be very fast (day trade) or very slow (long-term holds). Be very cautious about any swing trades you take.
Ed
Swing Trade Ideas for your consideration and watchlist: AMD, ATVI, INTC, NVDA, ANSS, BABA, JD, AMGN, BMY. 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
Traders shrugged off historic unemployment, choosing to bet on the massive FOMC and Federal Government stimulus programs and staging the biggest weekly Rally since the late 1970s. The question now is, can the bulls maintain control as we enter the 2nd quarter earnings season and witness the staggering impacts to business. Analysts estimates suggest earnings declines of 20 to 30 percent with expectations that recovery may not occur until 2021. In actuality, the numbers won’t matter nearly as much as how the market reacts to them. Anything is possible as there is no benchmark for reference to this health crisis.
Asian markets closed mixed but mostly lower as China reported more than 100 new infections attributed to foreign travelers. European markets are higher across the board this morning in reaction to the FOMC’s new 2.3 Trillion stimulus plan. After sliding more than 300 points in the overnight session, US Futures have bounced, trying hard to rally and shake off the worry of the pending earnings season. Expect the extreme volatility to continue.
Economic Calendar
Earnings Calendar
This week we have the official beginning of the 2nd quarter earnings. We start this Monday with 46 companies reporting results.
Top Stories
Despite the rising virus infections, US Markets choose to focus on hope with the largest weekly Rally since the late 1970s. As US infections top 550,000, the President is hoping to begin reopening the economy in May, but health officials are concerned that it is too soon with a possible vaccine still more than a year away.
OPEC reached an agreement over the weekend to cut oil production by nearly 10 million barrels per day, which is the single largest output cut in history. The deal could save as many as 2 million jobs in the United States.
JPMorgan Chase said it would raise mortgage borrowing standards as the economic outlook continues to diminish due to virus impacts. New applicants will need credit scores of at least 700 and will be required to make a 20% down payment of the home’s value.
Technically Speaking
According to the T2122 indicator, we swung from extremely oversold to overbought in last week’s optimistic relief rally. As officials proclaim that the spread of the virus in the US has slowed the infections numbers swelled to more than 550,000 over the weekend with a death toll of topping more than 22,000. The big question on everyone’s mind this week, can we keep the optimistic Rally going as we begin the 2nd quarter earnings season? To this point, the market has been able to ignore the historic unemployment numbers, but as companies start to report, it will be hard to ignore the massive economic impacts of the outbreak. Only time will tell how the market will react, but we should prepare for a rough road ahead and the likelihood of a long, tough road to recovery.
Last week’s Rally significantly improved the technical appearance of the index charts, holding higher lows and establishing at least a short-term uptrend. Several price support levels were reclaimed with the QQQ leading the way managing to close the week just above its 200-day average. Even with the historic oil deal, the US futures point to a substantial gap down this morning as traders and investors attempt to price stocks. A difficult task considering there is no benchmark of reference, and no one knows how much longer this crisis could extend, making any company guidance issued nothing more than a hopeful guess. Hold on tightly, the bumpy ride of uncertainty is likely to continue.
Thursday (virtual Friday) was an interesting day. Substantial hopes for oil production cuts led to massive strength in the energy names premarket. Then we got a much worse unemployment number than expected, followed minutes later by the Fed announcing details of a new $2.3 Trillion asset purchase program. As a result, we gapped higher about 1%, except the oil heavy small-caps which gapped up 3.5%. However, a volatile day and no completion of the OPEC+ deal left us with “gap-up dojis” across the 3 major indices. The SPY closed up 1.52%, the DIA up 1.20%, and the QQQ flat at +0.14%. The VXX was down slightly to 41.57 and the 10-yr. bond yield closed down to 0.729% Oil was the real roller-coaster as it was up 12% at one point, but the lack of an announced production cut during the session caused a massive all-day selloff that left Oil (WTI) down 7.5% to $23.19/barrel.
Over the weekend, OPEC+ did agree on the expected 9.7mil barrel/day production cut for May and June (about 10% of global production), as well as 8mil barrels per day from July through December and then 6mil barrels per day all of 2021. As usual, the vast majority of the cuts will come from Saudi Arabia (8.5 billion barrel/day). However, for the first time ever, the US will participate in the cuts, although the mechanism and duration of US cuts are not clear and there are conflicting reports. The sticking block for a deal was Mexico until Sunday.
Apparently the President agreed that the US will cut approximately 300,000 barrels/day of US production to offset Mexico’s refusal to cut more than 100,000 barrels. (OPEC had demanded that Mexico cut 400,000 barrels/day.) Bloomberg reported that the reason the US is participating in the OPEC+ cuts is that Mexico holds a huge block of put options (price insurance) with Wall Street investment banks and US oil companies. This insurance policy means that low oil prices don’t hurt Mexico but instead pass the pain on to US interests. Bloomberg estimated (based on prior year data) that Mexico is still receiving about $45/barrel (with the difference between $45 and the market price paid by the US put sellers). As a result of this hedge, Mexico had no reason to agree to major production cuts. It also had allies in the US who had pressed the President to do whatever it takes to secure OPEC+ cuts (and they hope, push oil prices back up above $45).
On Sunday, Dr. Fauci (NIH) said he was cautiously optimistic that the virus outbreak in the US is slowing enough that measures could start to be eased IN SOME WAYS AND IN SOME AREAS during May. However, he said that other areas will take longer and some measures (social distancing) will not end. And, regardless of when easing starts, we need to expect new outbreaks to occur. In short, life will not return to normal for a long time to come. The important thing is that we have enough testing, immediate isolation and contact-tracing capacity in place in the specific areas eased before the time of easing in order to track down new cases and contain the new outbreaks.
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On the virus front itself, the global headline virus numbers have now reached 1,864,555 confirmed cases and 115,099 deaths. In the UK, PM Johnson was released from the hospital to continue recovery at home. Both Spain and Italy saw a leveling off of new cases, but their death numbers fluctuate as the toll rose again in Spain after 3 days of decline. Nonetheless, Spain began easing some of its lock-down measures on Monday. On the downside, Russia saw a record number of new cases. And in Asia, Indonesia and Singapore also saw new record numbers of cases, while the number of new cases in China has once again climbed above 100/day again.
Meanwhile, in the US we now have 560,433 confirmed cases and 22,115 deaths. Over the weekend AAPL and GOOG teamed up to announce a contact tracing platform based on cell phone GPS positioning and Bluetooth connections made. This is very similar to the mandatory tracking and “social passport” phone app the Chinese have deployed. Advocates for civil liberties and limitations on governmental power have already voiced concern over the potential for abuse of this new platform in the longer-term.
Overnight, Asian markets were mixed but mostly red with Hong Kong and Australia being the green outliers. In Europe, markets are also mixed but are mostly green with the majors (DAX, FTSE, CAC) well on the positive side at this point in their day. As of 7:30 am, US futures are flat, sitting on either side of break-even from Thursday’s close.
There is no major economic news for Monday, although markets may react to Friday’s March Core CPI, which came in slightly lower than estimates or Sunday’s Oil Production Cut announcement. There are also no major earnings Monday.
Other noteworthy virus-reaction news includes AMZN having stopped accepting new Grocery customers. In addition, JPM has raised its mortgage lending standards to reduce the risk of loan defaults. The new standards include a 700+ credit score and a 20% cash down payment on the purchase. DIS also announced it will furlough 43,000 union workers from its Disney World theme park.
On Sunday, Fed voter Neel Kashkari said he expected a “long and hard road to recovery” with rolling phases of flare-up and that expectations of a V-shaped economic recovery are too optimistic. So, the uptrend continues, but fears remain palpable. The good news is that the market tends to lead the economy by 3-6 months. Remember, while it may be time to start dipping your toe in again, we need to continue to be very attentive, and either be very fast (day trade) or very slow (long-term holds). Be very cautious about any swing trades you take.
Ed
There are no Swing Trade Ideas for your watchlist 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
Futures are flat this morning as we wait on the next Jobless number as the virus impacts create the worst unemployment situation in the nation’s history. Heading into a 3-day Easter weekend with a CPI report, possible oil production cuts on Friday, and infection rates continuing to grow, anything is possible by Monday morning. Plan your risk carefully as we head into the weekend.
Asian markets closed mixed but mostly modestly higher overnight. European markets are trading slightly higher this morning, and the US Futures point to flat open ahead of the weekly jobless claims with estimates that another 5 million Americans are out of work. We will also hear from Jerome Powell and get a reading on Consumer Sentiment, which may see a sharp decline.
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have 41 companies reporting quarterly earnings. Notable reports include SJR.
Top Stories
All 11 sectors of the US market rose yesterday, with traders reacting to an ever so slight improvement in virus infections in New York. However, New York now holds the title of the highest number of diseases in the entire world! Health officials now suggest the actual death tools are 100 to 200 higher each day due to undercounts of those that died at home.
Bernie Sanders dropped out of the Presidential race yesterday, making Joe Biden the presumptive Democratic candidate.
OPEC and allies will meet on Friday with the hope of an agreement to cut oil production as supplies continue to historic levels. There is a possibility that some states may see gas prices fall to near $1.00 per gallon in the coming weeks.
What just a little planning can do in just one week.
Technically Speaking
Yesterday’s rally was broad-based with all 11 sectors of the market seeing gains with the oil and energy sectors leading the way. All the major indexes challenged the resistance of Tuesday’s high, but at the close, all fell just short of breaking out to new weekly highs. The QQQ is in the best technical position of the indexes, having recovered its 200-day average with the IWM continuing to suffer the most substantial damage.
This morning futures point to flat open with all eye focused on the jobless claims number at 8:30 AM Eastern. Consensus estimates suggest an additional 5 million people are out of work this week but keep in mind the forecasts have missed the actual number substantially in the last 2-weeks. That’s understandable because this country has never experienced this level of unemployment. How that translates into company earnings that begin next week is anyone’s guess. Friday, we will get the latest reading on CPI, but the market will have to wait to react because of the Good Friday closure. I wish you all a 3-day happy Easter weekend. Stay safe, my friends.
Markets gapped 1% higher at the open and then bulls followed-through to print bullish harami candles across all the major indices. Markets seemed to surge after Dr. Fauci held a positive outlook press conference. However, others said it was after Bernie Sanders dropped out of the Presidential race. Regardless, the SPY closed up 3.45%, the DIA up 3.41%, and the QQQ up 2.12%. The VXX fell to 42.40, while the 10-year bond yield up to 0.771% and Oil (WTI) closed up over 10% to $26.14/barrel (somebody thinks they know something about OPEC+).
The relief/stimulus bidding war also heated up again. On Tuesday Senate Republicans had said they would vote Thursday on an additional $250 billion for small business. On Wednesday Democrats announced they will seek an additional $500 billion to include the $250 billion for small businesses and would add $150 billion for hospitals and $100 billion for states. Then the figure $350 billion additional was floated by Republican sources to add in bailout money for the cruise industry. However, the $2 Trillion infrastructure bill both the President and Congressional Democrats supported a week or so ago looks to have been shelved again for now as Senate Republicans remain concerned about costs.
Related to the previously passed stimulus bill, banks are experiencing huge logistical issues that are leading to delays. For example, just 2 banks (JPM and BAC) received 625,000 small business loan applications in the first week. At the same time, small community banks that normally process 5-6 SBA loans in a year, have received 500 to process in the last week. These are just front-end issues and don’t reflect the problem experienced on the government (SBA) end to review and approve (or denial) of perhaps millions of new loan applications. Obviously, delays apply more stress to the economy.
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CNBC reported that the consensus expectation for new unemployment claims is at 5.25 million again this week. After the close, California reported that 2.4 million of their citizens had filed unemployment since March 12. However, we knew unemployment was bad. The FOMC minutes indicated that the Fed will keep interest rates near zero until the economy has weathered the pandemic. Specifically, they tied the decision to their maximum employment mandate.
On the virus front itself, the world crossed above 1.5 million diagnosed cases of COVID-19. The global headline virus numbers have now reached 1,529,439 confirmed cases and 89,416 deaths (5.8%). The number of new cases in both Russia and Germany jumped in the last 24 hours. In addition, both Spain and Italy experienced an increase in deaths again Tuesday (after they had fallen for a few days). However, overnight Spain reports its death toll fell again slightly. While that goes on, the EU failed to reach an agreement on its own 500 billion Euro economic stimulus plan after a 16-hour conference call. Meanwhile, the UN has announced that it estimates 195 million jobs will be lost globally in Q2 due to the virus.
Meanwhile, in the US we now have 435,160 confirmed cases and 14,797 (3.4%) deaths. As mentioned above, Dr. Fauci told a press conference that he is now expecting the rate of new cases to plateau starting next week. However, he reiterated this doesn’t mean it’s time to ease restrictions. In addition, the consensus model now forecasts US deaths will be about 61,000 (20,000 less than the model showed a week ago). Part of the reason for this is adherence to the guidelines as shown by drops in travel. For example, the TSA announced that it screened a record low number of passengers Tuesday (97,000). While still a huge number of people and flights, that is down 95% from a year ago.
Overnight, Asian markets were mixed but mostly green. In Europe, markets are also mixed, but more evenly distributed red-green at this point in their day. As of 7:30 am, US futures are pointing toward a one percent gap lower at the open.
The major economic news for Thursday includes Initial Jobless Claims and Mar. Core PPI (both at 8:30 am) and Michigan Consumer Sentiment (10 am). However, OPEC+ will also meet (10 am) to discuss potential production cuts. Major earnings on the day are limited to DAL and FRC before the open. For Friday, markets are closed, but major economic news will include Mar. Core CPI (8:30 am) and Federal Budget Balance (2 pm). There are no major earnings Friday.
The uptrend continues, but the lack of conviction is palpable. The OPEC meeting today may result in production cuts that could boost the energy sector. However, unemployment claims and the fact this is “virtual Friday” are unknowns that may be a drag on the day. So, we need to continue to be very attentive, and either be very fast (day trade) or very slow (long-term holds). It’s still not a good swing trading market yet with all the gaps and volatility. And a 3-day weekend is a long time to be holding a position you cannot adjust. Be very cautious on any swing trades you take.
Ed
There are no Swing Trade Ideas for your watchlist on “Virtual Friday” of a 3-day weekend. 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
Yesterday a considerable gap and selloff displayed the schizophrenic nature of the current price action as the market attempts to price stocks ahead of a likely turbulent 2nd quarter earnings season. With analysts suggesting a 2020 earnings decline from 20 to 30 percent and the US outbreak numbers hitting new highs, the uncertainty of the path forward is understandable. Expect the volatility to continue as the administration rushes to put out another stimulus package hoping to curb the rising unemployment.
Asian markets closed flat to mostly lower overnight while European decline as hopes of the pandemic recovery fade. US Futures continued to display volatility overnight but currently point higher open ahead of petroleum numbers and the FOMC minute release.
Economic Calendar
Earnings Calendar
We have about 20 companies reporting quarterly earnings on this hump day. Looking through the list, the only notable report today is PSMT.
Top Stories
A new spike in infections and the highest day of deaths the US has seen to date. New York led the way with more than 730 deaths. With now more than 400,000 infections and 12,800 deaths, the market gave up early gains.
The administration is moving forward as quickly with another business stimulus spending bill as we continue to hear about more and companies forced to layoff or furlough 10’s of thousands of employees.
The Euro zone failed to reach a deal on a new stimulus plan after 16 hours of negotiations.
Technically Speaking
After a wild 2-day rally, markets sold off, giving back all of the gains huge early morning gains. The DIA, SPY, and QQQ failed at resistance levels in the daily chart leaving behind dark cloud cover candle patterns adding more technical confusion an already messy set of charts. Yesterday’s virus numbers hit a new daily high disappointing a market that was trying to shrug off the outbreak impacts. The volatility of this market is not only very challenging but reflects the complete uncertainty of the earnings season set to kick off next week.
Today we will get a reading on Petroleum supplies, and we get a glimpse at what the FOMC is thinking with the release of the minutes at 2:00 PM Eastern. Mortgage applications reported a drop of 18% this morning, which is not all that surprising with most of the country concerned about the future of the jobs. During the night, futures remained volatile, and what happens next is anyone’s guess. We will get another round of jobless numbers Thursday morning and will hear from Jerome Powell. Plan your trading very carefully.
“Gap and crap” may be crude, but it is a very accurate description of the market on Tuesday. After a 3.5% gap higher at the open and a little roller-coaster ride, markets slid all afternoon to close flat on the day. The SPY gained 0.12%, the DIA gained 0.07%, and the QQQ lost 0.04% for the day. Oil fell during the session as hope for an announcement of major production cuts on Thursday faded some from Monday. The closing price (WTI) was $24.10/barrel while 10-year bond yields rose to 0.734%.
Related to the economic stimulus, during the day Tuesday President Trump fired the acting Pentagon IG (Bush appointee) who was to oversee the $2 Trillion package. This is part of his much broader plan to replace IGs across all agencies, as he seeks more personal loyalty to himself. Add this termination to his written statement that he would not allow the fund watchdog to make a report to Congress about any bailout decisions (as required by law) without his express permission. What you get is a valid concern about the fairness and transparency of stimulus operations. Since both Republicans and Democrats have already voiced opposition to the move, it is likely to cause political rancor soon.
In business news, a Fed survey was reported. The survey stated only 20% of small businesses had the money to withstand two months without revenue. This led to Treasury Sec. Mnuchin to seek and Majority Leader McConnell to announce that the Senate will vote Thursday on a new bill offering an additional $250 billion in small business bailout loans/grants. It is unclear how this will work since only the House has the right to approve spending and the House is not scheduled to resume session until April 20th. Larry Kudlow (White House) also told Fox News that early planning for reopening the economy was underway and that reopening might begin in 4-8 weeks.
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At the daily presser, the President again looked for a scapegoat to blame. This time he claimed the WHO caused months of delay in US response and (probably more importantly), criticized him as his attempt to rewrite history continues. He said “we’re going to look into them (WHO) and put a powerful hold on their funding because we fund them, provide the majority of their funding and they’re very China-centric.” When pushed on the funding pull, he back-tracked to say he will consider it. This came as he also claimed that his own downplaying of and calling the virus a hoax for 6 weeks was because he was just acting as a cheerleader for the country. However, the idea that the WHO knew about the virus for months, downplayed, and/or hid it, is ridiculous and does not match the facts.
On the virus front itself, the world is nearing 1.5 million diagnosed cases of COVID-19. The global headline virus numbers have now reached 1,446,557confirmed cases and 83,149 deaths. On the positive side, China has lifted the quarantine (some restrictions remain) for Wuhan after 76 days. Assuming no additional outbreaks there, this could be seen as a hopeful sign.
Meanwhile, in the US we now have 400,549 confirmed cases and 12,911 deaths. In mixed news, New York recorded its worst day for deaths, but the rate of new cases is plateauing in the state. At the daily event, Dr. Birx (White House) said we have a million-test backlog (more kits are available now, but labs don’t have the capacity to process them all as received). However, she hoped that bringing existing ABT test-processing machines online can add 100,000/day capacity soon. Current test result time varies from place to place and by case priority but ranges from 2 to 5 days for the vast majority of tests at the moment (few instant tests are in place just yet).
Overnight, Asian markets were mixed, but mostly red with the exceptions of Japan and India, which were both strongly green. In Europe, markets are red across the board at this point in their day. As of 7:30 am, US futures are all on the green side this morning, but looking at less than a half percent gap higher.
The only major economic news for Wednesday are Crude Oil Inventories (10:30 am) and FOMC Minutes (2 pm). Once again, there are no major earnings on the day.
The truth is that the economy (US and global) will recover. It’s really just a question of when. We should expect news cycles to continue to be bad and we’ll probably see fits and starts in the recovery. Still, in the long run, we’ll be fine and a fast economic restart is not a nicety, not a primary concern. It will work itself out once the virus is totally under control. So, for long-term investors, it’s definitely time to go bargain shopping with the money we can afford to forget about for quite some time.
However, as traders, it’s a different story. We have a short-term bullish trend, but after Tuesday’s candle we very well could see markets go back down to test the uptrend. It is still likely going to be a long time until we see markets relentlessly rip higher the way we did back before mid-February. So, as we’ve said, even with a lot of bad news already “baked into” markets, we need to continue to be attentive, and either be very fast (day trade) or very slow (long-term holds). It’s still not a good swing trading market yet with all the gaps and volatility. Be cautious on any swing trades you take.
Ed
There are no Swing Trade Ideas for your watchlist 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
Yesterday’s dramatic rally is once again leaping higher this morning as health officials report that infection rates are showing signs of improving. That is indeed excellent news, but with 2nd quarter earnings just around the corner and infection number nearing 375K, recovery may still be a long way off. Stay disciplined to your trading plan and avoid chasing already very extended prices as profit-taking could begin at any time. Trading with the fear of missing out can quickly add insult to already injured trading accounts.
Asian markets followed the lead of the US rally closing in the green across the board. European markets are decidedly green this morning, with the DAX advancing 4%. US futures point to another huge gap up ahead of earnings and the JOLTS report at 10:00 AM Eastern. Watch price action closely for the possibility of profit-taking with the Dow having gains nearly 3000 points in just 2-days.
Economic Calendar
Earnings Calendar
We have 20 companies stepping up to report quarterly results this Tuesday. Notable reports include CONN and LEVI.
Top Stories
There is more hope this morning with health officials saying we have begun to flatten the curve virus growth. Unfortunately, the US infections could reach 375,000 soon, and the death toll is nearly 11,000. Around the world, Japan has now declared a national emergency, Spain’s death rate is once again on the rise, and Russia reports a sharp increase in infections. With a potential vaccine, still, a long way off the COVID-19 pandemic will continue to impact our way of life for months to come.
As the market sharply rebounds, a new poll indicates that more and more Americans worry about the loss of wages and covering the cost of health care. Within a consumer-based economy, that could have long-term business impacts should consumer sentiment continue to contract.
The Government and 3M agree on a deal that will get 166.5 million medical masks to the US over the next 3-months to help with the virus response.
After checking into the hospital just one day ago due to complications from the coronavirus, UK’s Prime Minister entered the intensive care yesterday afternoon and remained there as of this morning.
Technically Speaking
Yesterday’s sharp rally looks to continue this morning on hopes that the infection rate is starting to flatten. The relief is sweet, but with earnings, just around the corner, traders will have to stay on their toes as the worst of the impacts may still lie ahead. Unfortunately, in this all or nothing market, the massive morning gaps continue to make the risk of trading very high. Option prices remain very high with wide bid/ask spreads, and the extreme price volatility makes holding positions overnight unpalatable for most retail traders.
As the futures point to another 800 point gap, the fear of missing out can be very dangerous if traders rush in chasing prices. With a 2-day Dow rally of nearly 3000 points, those holding positions may be more inclined to take profits, so observe price action for clues of reversal. The market remains very emotional, and though infection rates may be cresting, we are still a long way from recovery. Matain, your discipline, sticking to your trading plan and rules, avoiding emotional decision making as the market dramatically gyrates.
The bulls ran wild Monday with a 4% gap up and follow-through to the upside. This was impressive, even in the face of oil down hard on the postponement of an OPEC+ summit to discuss oil production cuts. The market move breaks us out of a J-hook pattern, giving us now a low, high, high-low and higher-high. So, we have a bullish trend now. On the day, the SPY closed up 6.76%, the DIA up 7.45%, and the QQQ up 7.20%. The VXX closed down as you’d expect now at 42.21 and as mentioned Oil (WTI) was back down to $26.37/barrel. The 10-year bond yield rose to 0.673% on the day.
It seemed clear that markets are looking to the future, discussing recovery strategies and easing timetables, even though new cases and deaths continue to mount. The same is true in Oil markets as the buzz Monday was not the postponement of a summit and name-calling, but the “fact” that the Saudis and Russians are “near” an agreement on production cuts to drive up oil prices.
In virus-economic news, BA closed its last remaining (South Carolina) commercial jet production facility on Monday. AMZN also announced it is tracking warehouse workers and may fire them if they violate company social distancing rules. Meanwhile, Former Fed Chair Janet Yellen spoke out during the day. In a CNBC interview, she said that a V-shaped recovery is still possible, but she is worried that will not be the case. Specific issues related to high levels of debt (both consumer and small business), and rolling increases of acidity are more likely to cause the recovery to have “fits and stalls” rather than get back to pre-shutdown efficiency like flipping a switch back to the “on” position.
$50.00 discount with code: Privilege
The global headline virus numbers have now reached 1,359,398 confirmed cases and 75,945 deaths. In Russia, the reported daily new case number rose 1,000 for the first time. In Spain, the daily death toll rose 17% above the number of the previous day. In the UK, PM Johnson was moved to intensive care after his Sunday hospital admission. One of his cabinet members has also entered self-isolation.
Meanwhile, in the US we now have 368,449 confirmed infections and just under 11,000 deaths. In good news, there are signs that the infection growth rate is starting to flatten. In fact, the mean model is now calling for “only” 81,000 deaths (versus 100,000-200,000 prior estimates). However, for now, US death rates are still exponential, but there are some signs of peaking in early states (New York in particular).
Overnight, Asian markets were strongly green across most the board (the exception being a red Australia). In Europe, markets are also strongly green across the board at this point in their day. As of 7:45 am, US futures are pointing to another 2-3% gap higher at the open.
The only major economic news for Tuesday is Feb. JOLTS (10 am). Again, there are no major earnings on the day.
Markets seem to have really latched on to optimism. We finally have a bullish trend in place on the daily chart. So, while we can expect much more bad virus and economic news, a lot of bad news is already “baked in” to markets. So, it may well be time to be getting back involved in the market. Still, we have to assume there will continue to be a lot of gaps and volatility. Remember, not to chase, not to predict turns, and to plan and manage your trades.
Ed
Swing Trade Ideas for your watchlist and consideration: CGC, XRAY, HALO, CLDR, FSLR, TMUS, NWL, CROX, NTAP. 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
