Ugly Market Day Likely on Tap

Gaps and volatility were the hallmarks of the week and Friday was no exception.   A 3.2% gap lower at the open was followed several swings that also amounted to a 3% intraday range for the day.  After this rollercoaster ride, stocks closed near the highs of the day.  However, the SPY still closed down 1.65%, the DIA down 1.00%, and the QQQ down 1.69%.  The VXX closed up almost 12% to finish at 29.82.

For the week, a very vide-ranging Doji was seen across indices with the SPY actually up 0.41%, the DIA up 1.69%, and the QQQ up 1.08%.  So, although it certainly didn’t feel like it, it was a green week.  The 10-year bond fell below 0.70% yield during the week and closed the week at a record-low close of 0.764%.  Crude oil was also down 8% on the week as the hope of supply-side intervention from Monday faded. 

As a result of Russia not cooperating on production cuts, Saudi Arabia has announced that it will hike its own output and UAE, as well as other OPEC members, are expected to follow suit.  With prices already down 30% on the year, and countries seeming to shift to a “market share grabbing strategy” CNBC reports that some analysts are predicting $20 oil is coming this Spring.  That would have major geopolitical impacts as well as huge implications for oil companies and especially US shale exploration and production names.

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Obviously, coronavirus continues to dominate the news, markets, politics, and daily life pretty much around the globe.  Over the weekend, the headline virus numbers have risen to over 111,230 confirmed cases and 3,900 deaths globally.  In the US, 33 states have confirmed infections of the virus for a total of 565 cases and 22 deaths (numbers that more than doubled over the weekend).  However, these numbers will climb as testing kits are just now starting to become available more broadly. The most impacted states remain Washington, New York, and California. 

On Sunday, the head of the NIAID (HHS infectious disease dept.) said that “social distancing” needs to be prevalent in the US for at least the next 3 months.  However, he doesn’t feel strict quarantining as done in Wuhan would be publicly acceptable in the US.  He also reiterated that it will take at least 12-18 months before any vaccine is ready for distribution.  Finally, he said that overall, his sense of the US virus situation is not encouraging.

In the US markets, at this point traders have priced-in (65% probability) another three-quarter of a percent interest rate cut by on or before March 18th.  If this did happen, it would take US interest rates to 0.25% and would mean we have seen a 1.25% rate cut in less than a month.  On Sunday night, the 10-yr Bond yield fell below half a percent to 0.34% at one point.  This was about the time that S&P Futures temporarily stopped trading because they had reached the 5% Limit Down rule level. 

Overnight, Oil prices plummeted, taking credit markets and then Asian stocks with them.  Markets were down over 5% in Japan and almost 7% in Australia for example.  Europe is also very deep in the red, down about 6-7% across the board so far today.  As of 7:30 am, U.S. futures are pointing to a gap lower of over 5% as of now.  There is no major economic news scheduled for Monday.  There are also no major earnings on tap for the day. 

Expect gaps, heavy volatility and circuit breakers today as uncertainty and human emotions still reign in the market.  Do you really need have an edge trading in that environment? Remember, cash is a valid position and the loss of a day, week or even a month of trading is a small price to pay to avoid being whipsawed to death.  Trading is a business, and consistent, effective trading is the goal.  Don’t chase.  Don’t trade on emotions.  Don’t think you can predict turns.

Ed

Sorry, no Trade Ideas for your watchlist and consideration today. Markets are simply too volatile. 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.

🎯 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

🎯 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.

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it.  Past performance does not guarantee future results.  Terms of Service

The market hates uncertainty!

The market hates uncertainty

The market hates uncertainty, and holy cow do we have a basket full of the unknown with a spreading outbreak heading into a weekend.  After giving up the Wednesday rally, markets around the world are selling off this morning as worries of the mounting economic impacts continue to grow.  To say the price action volatility is challenging is a gross understatement of the danger this market presents.  Unless the wave bad virus news suddenly shifts this weekend, we should plan for more wild and unpredictable price swings next week.

Asian markets closed the week in the red across the board.  European markets are down more than 3% this morning as traders run for the door leading into the weekend.  Ahead of expected bullish Employment Report, US Futures point to dismal gap down of more than 600 points as worries virus economic impacts continue to inspire the bears. 

On the Calendar

Earnings Calendar

On the Friday earings calendar, we have our lightest day this week with just 29 companies reporting.  Looking through the list, I see particularly notable reports.

Top Stories

As the virus fears continue to grow the 10-year Treasury yield, hit a new record low of 0.7% as investors run to safety.  On the bright side and 30-year mortgage rates dip to 3.3% that may help home sales and inspire a round of refinancing to keep banks busy.

On the Virus front, South Korea infections have grown to 6600.  In Iran, there were more than 1000 new infections, and their death toll has risen to 124.  Australia shut down its first school the Netherlands confirms its first death, Vatican City reported its first case of the virus as confirmed infections in Italy rise above 3000.  China invokes ‘force majeure,’ a provision that exempts business form contractual obligations.  According to reports, the government has issued nearly 5000 such certificates as of March 3 due to the epidemic. 

As oil demand continues to drop, OPEC is trying to get approval for the most significant oil supply cut since the 2008 banking crisis.  Russia, to this point, has not endorsed the proposal. 

Technically Speaking

The DIA managed to hold on to its 500- day average at the close yesterday, but the SPY once again failed to hold on to its 200-day.  After yesterday’s overnight reversal, Wednesday’s big rally was wiped out as the spreading virus continues to worry investors.  Now the concern is, will the indexes retest last week’s lows, and if so, will the lows hold as support?  Only time will tell, but one thing for sure is that is is a hazardous market condition as it tries to come to grips with such uncertainty.

Action Plan

As we head into an uncertain weekend, US Futures point to another huge gap down as the extreme volatility makes it very challenging and dangerous to trade.  Although analysts expect to get a good jobs number this morning virus fears are likely to rule the day.  As confirmed cases grow around the world, fear of what comes next here is the US will likely get much worse before it gets better.  No matter your level of trading experience, it will be tough to protect your capital if you choose to hold positions into the weekend.  With that in mind, we should not be surprised to see another rough day of selling as traders go into weekend protection mode.  With the bad news on the virus continuing to increase next week could easily be more of the same with very volatile price action.  Remember, cash is a position, and protecting your capital during times like this may prove the very best decision you can make amidst all this uncertainty.

Trade Wisely,

Doug

Virus Keeps Causing More Damage

The market continued its recent volatile, bearish ride Thursday.  A strong gap down punished the bulls who chased into the prior day’s rally.  However, it was also an unpredictable ride intraday.  The buyers pushed markets up off the lows at the end of the day and left us with indecisive (wicks as long or longer than the body), black candles.  On the day, the SPY fell 3.32%, the DIA was down 3.48%, and the QQQ was down 3.04%.  The VXX jumped 16%, up to 26.68.  Meanwhile, 10-year bond yields also fell to as low as 0.90% and Oil fell to $45.98/barrel (West Texas Intermediate).

As you know, coronavirus remains the main news story.  The headline virus numbers have risen to over 100,000 confirmed cases and over 3,350 deaths globally.  This includes over 15,000 cases outside China as the outbreaks in places like South Korea (6,600), Italy (3,900), Iran (4,750), Germany (550), France (425), Japan (360), and Spain (300) continue to expand.  However, in China itself, recovery is starting to get underway as it is estimated 60-65% of their workforce (nationally, but not uniformly) have returned to work this week.  As an example, 90% of Chinese Starbucks locations are open, albeit with reduced staff, hours, and reduced or eliminated seating areas.

In the US, virus cases now exist in 17 states, with 235 confirmed cases and the death toll has risen to 12.  These numbers are expected to grow as we start to see broader testing in the US.  (The Dept. of HHS expects to miss their goal of a million test kits distributed by the end of the week.  However, there are still hundreds of thousands of more tests available now than last week.)  Then again, maybe the spread of cases and deaths will just stop.  President Trump disputes C.D.C. and W.H.O. statistics.  He has a hunch that hundreds of thousands of cases simply recover on their own, without treatment, as those people just sit around or keep going to work, with only minor symptoms.

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Despite his hunch, we continue to see real impacts with a parade of closures, cancelations, and warnings.  In addition, the US is starting to see certain shortages in some areas (i.e. face masks, hand sanitizer, toilet paper, and even some drugs).  For example, the largest grocery chain (KR) is now limiting the number of cleansers, sanitary items, cold, and flu-related products any one customer can purchase.  Meanwhile, in San Francisco, one of the infected cruise liners has been refused docking rights (with 2,500 passengers still on board) and is anchored off the coast as passenger testing and negotiations are underway to decide whether the ship can dock in that city.  On the bright side of the outbreak, it appears that money (including significant foreign money) is piling into the US real estate market, as a safe haven.  This point is reinforced by announcements that large banks are now reassigning significant parts of their staff to process loan applications faster. In China, the government has invoked “force majeure” for 4,900 companies, which invalidates contracts. (If a company had a Chinese supplier or customers, they may not now.)

Last night Jamie Dimon, CEO of JPM was hospitalized and had emergency heart surgery.  He has been temporarily replaced by the company’s Co-Presidents.  Also overnight, Asian markets were deeply red Friday.  Europe is even deeper in the red, down about 3.5% across the board so far today.  As of 7:30 am, U.S. futures are still volatile, but point to a gap lower of between 2.5% and 3.25% as of now.

Friday’s major news includes Avg. Hourly Earnings, Import/Exports, Feb. Nonfarm Payrolls, and Feb. Unemployment Rate (all at 8:30 am).  There will also be half a dozen Fed speakers throughout the day.  There are no major earnings reports scheduled. 

Another gap, heavy volatility, and uncertainty is likely to reign again Friday.  Even a two-day weekend represents a lot of headline risk with a global news story like COVID-19 underway.  We could see a major increase in the spread, some kind of coordinated economic response or who knows what before the opening bell Monday.  So, if you are trading at all, my advice is to be delta-neutral before the close today.  Remember, cash is a valid position.

As Warren Buffett says, the first rule of making big money in the market is not losing big money in the market.  In comparison, the loss of a day, week or even month of trading is a small price to pay to avoid being whipsawed to death.  Successful trading means good risk management.  Trading is a business, and consistent, effective trading is the goal.  Don’t chase.  Don’t trade on emotions.  And plan every trade.

Ed

Sorry, no Trade Ideas for your watchlist and consideration today. Friday is payday. Take some profits. 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.

🎯 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

🎯 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.

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Healthcare Sector led rally

Healthcare Sector

The Biden win on Super Tuesday, the IMF approving $50 Billion and the House passing $8.3 in virus spending brought out the bulls yesterday with the healthcare sector leading the way.  Although the Dow surged more than 1100 points this morning the Dow futures suggest a good portion of the move will be taken back in an overnight gap down.  Such is the nature of a market that’s facing so much uncertainty.  While I would like to think the volatility will soon get better I have to remember we are just at the very beginning of the outbreak here in the US.  I suspect the wild price gyrations will continue to make for very challenging trading for the near future.

Asian markets rallied sharply overnight in reaction to Wall Streets’ big move and the IMF $50 billion in virus relief.  Unfortunately, European markets are decidedly bearish this morning and the US Futures point to a disappointing overnight reversal gap punishing those that bought up stocks yesterday hoping the relief rally was underway.  Expect the extreme volatility to continue as we move toward the uncertainty of the weekend.

On the Calendar

Earnings Calendar

No the Thursday earnings calendar we have our biggest day this week with 230 companies reporting results.  Notable reports include COST, ADT, AOBC, BJ, BURL, CHUY, HRB, KTB, KR, FIZZ, PLUG & TTC.

Top Stories

A huge surge of bullishness led by the healthcare sector after the more moderate Joe Biden became the leading candidate for the democratic party.  The buying accelerated throughout the afternoon session with hopeful traders looking for a relief rally.

The US House passes and 8.3 billion dollar emergency spending plan to battle the coronavirus and the IMF puts up more than 50 billion in aid to help defray the massive health care costs of the fast-spreading virus.  

Airlines continue to cancel 1000’s of flights due to lack of demand parking unneeded aircraft.  The industry now projects losses that could reach 113 billion.  Italy may suspend budget rules to pass a 5.6 billion dollar virus package after yesterday ordering all schools closed for 2-weeks.  Iran has now set up checkpoints between cities and closed all schools and universities trying to curb the spread of the very contagious virus.  Last night China reported an increased relapse rate with patients getting the virus once again. 

Technically Speaking

Yesterday’s rally pushed the Dow up to test its 200-day average and a significant price resistance level. The SPY once again broke back above its 200-day average while the technically strong QQQ lifted back up toward its 50-day.  The beleaguered IWM rallied but remained substantially below its 200- day average.  With so much price volatility its hard to make heads or tails of any technicals on daily charts.  Expect the wild price action to continue as the uncertainty here in the US continues to grow.

Acton Plan

Although risking sounding like a broken record, traders should be very careful in this very volatile price action environment.  Overnight price action swings are very dangerous for anyone other than day-traders.  Just a day after the Dow surged more than 1100 points the Dow futures suggest a huge reversal this morning gapping substantially lower.  As we head into the uncertainty of the weekend anything is possible.  With our biggest day of earings this week, several potential market-moving economic reports and the likelihood of disturbing virus news trader should continue to expect extreme volatility.  While this sell-off was traumatic I’m not sure we have reached a point of capitulation.  With the outbreak in the US just in the beginning stages we should not rule out the possibility of a retest of recent lows or perhaps even deeper losses in the near future.  Plan your risk carefully.

Trade Wisely,

Doug

Looking at Another Gap Down This Time

My apologies upfront about today’s blog.  I’m under the weather today and not quite up to speed.

Wednesday saw a strong gap higher and an all-day rally as markets apparently liked the idea of Joe Biden winning Super-Tuesday.  The day closed very near the highs with the SPY up 4.20%, the DIA up 4.47%, and the QQQ up 4.17%.  The VXX fell back to 23.00, but obviously still elevated.

Coronavirus remains the main news outside of the election results. The headline virus numbers have risen to 96,300 confirmed cases and over 3,300 deaths globally.  This includes over 13,000 cases outside China as the outbreaks in places like South Korea (6,100), Italy (3,100), Iran (3,520), Japan (320), France (260), Germany (350), Spain (170), and the US (160) continue to expand.  In the US, cases exist in 14 states and the death toll has now risen to 11.  It is worth noting that Wuhan China is reporting an increase in relapse rates of previously cleared patients being re-admitted for symptoms and testing positive again. 

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In terms of impact, the parade of closures, cancelations, and warnings continue.  Italy closed schools nationwide (following Japan’s example).  Health workers in the UK and Italy have now tested positive.  Italy will apply to the EU to suspend EU budget rules due to the costs of the outbreak.

Overnight, Asian markets were strongly green Thursday.  However, Europe is strongly red across the board so far today.  As of 7:30 am, U.S. futures are still volatile, but deeply red again, point to a gap lower of more than 2%.

Thursday’s major news includes Weekly Initial Jobless Claims and Q4 Nonfarm Productivity (both 8:30 am), Jan Factory Orders (10 am) and a trio of Fed speakers.  Major earnings reports are limited to KR before the open and COO, COST, and HRB after the close.

Gap and volatility continue to be the buzzwords. You need to keep asking…Is there really a good reason for you to be trading markets that are more wide-ranging, more volatile, and less consistent than they have been in literally years?  Are you chasing the “action,” reacting to emotion, or scrambling to somehow get back to even?  If so, think twice.  That is probably not a river you should be swimming across.  Trading is a business, cash is a valid position, and consistent, effective trading is the goal.  This day, this week or even this month will not make the difference between a successful trading year (let alone lifetime) either way.  Good trading is good risk management.  The bottom line continues to be…be careful.

Ed

Swing Trade Ideas for your watchlist and consideration: SNDL, GBT, ADBE, TNDM, TZA, SQQQ, SPXU, SDOW, SOXS. 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.

🎯 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

🎯 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.

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Temper Tantrum

Temper Tantrum

After cutting the interest rate by 50 basis points the market appeared to have a bit of a temper tantrum showing its disappointment with the Dow closing down nearly 800 points on the day.  The president also expressed disappointment calling for a much deeper cut.  However, after the big win of Joe Biden on Super Tuesday this very emotional market is in rally mode even though this sets up a party battle for remaining delegates that could go all the way to the convention.  We should expect another wild news-driven day as virus news continues to cloud the path forward with tremendous uncertainty.

During the night Asian markets closed mixed and nearly flat as auto sale and service sector numbers plummet as a result of the outbreak.  European markets have recovered early losses and are green across the board while here in the US the futures market points to a huge gap up as this wildly emotional market flop’s all over the place.  Traders should plan for the extreme price volatility to continue as we once again approach another uncertain weekend.

The Economic Calendar

The Earnings Calendar

On the hump day earnings calendar we have about 130 companies reporting results.  Notable reports include ZM, ANF, AEO, CPB, DLTR, GWRE, MRVL, OMI, SPLK, & PLCE.

Top Stories

During the night China reported that vehicle sales dropped 80% and the service sector is down 70% as impacts from the outbreak begin to roll out.

After cutting the rates by 50 basis points the market shot up nearly 700 points in just 7 minutes but in a very volatile session ended the day down with the Dow losing 800 points.

Joe Biden pulled off a huge victory last on Super Tuesday pulling ahead in the delegate count but with wins in California and Colorado Bernie Sanders has enough delegates to set up a party battle into the convention.  It’s going to be a wild election year but it would seem the market is happy that Biden has emerged as the front runner with US Futures pointing to a substantial opening gap.

Technical Speaking

Yesterday’s wild price action volatility moved prices so fast you might have felt a bit seasick just watching the swings.  At the end of this wild ride the Dow had once again failed its 200-day average and the IWM closed back down near its 500-day average.  The QQQ fell back below the 50-day average while the SPY edged down toward its 200-day.  Dark cloud cover candle patterns were left behind on all the indexes but with such extreme volatility I’m not sure that means all that much.  As the US cases of the virus continue to grow we should also see the high volatility continue with so much uncertainty ahead.  As of now US Futures point to a huge gap up seemingly reacting to last night’s election results but keep in mind as news of the virus spread continues to roll anything is possible in the days and weeks ahead.  Hold on tight this rollercoaster ride may have just begun.

Trade Wisely,

Doug

Biden Bounce or Expecting More Cuts

Tuesday was another roller-coaster day for markets.  We sold off at the open but rallied massively for 5 minutes on the news that the Fed cut rates.  However, that very short-lived and the rest of the day was a jagged and volatile bearish move.  The day closed with the SPY down 2.86%, the DIA down 2.89%, and the QQQ down 3.21%.  The good news is that markets did close off their lows.  The VXX was also volatile but closed up almost 11% to 24.45.  Shortly after the rate cut, the 10-year Bond yield fell to another all-time low of less than one percent (0.906%).

There was an emergency conference call between G7 Finance Ministers during the premarket.  However, this resulted only in a statement that they would support global markets against the impacts of coronavirus as appropriate.  There was no mention of specific actions or timing in the message.  This lack of action by the G7 (many of which already have negative or zero interest rates, and thus limited responses available) may have forced the Fed’s hand in the face of pressure to do something.  Either way, the Fed did announce an emergency half percent rate cut just two weeks before their next meeting.

While that rate cut was fully expected by markets in two weeks, the urgency of action and Chairman Powell’s statement led to fear as he said we might see forecasted growth cut in half this year. Perhaps worse, many economists, pundits, and traders have questioned if rate cuts will have any real impact.  The critics say this move does nothing to impact the core issues of supply chain disruptions, and both customers as well as workers staying home.  In short, the problem simply isn’t that high-interest rates are inhibiting economic activity.  So, they label this move as nothing but a transparent stock market circuit-breaker, which failed.  To top this off, the President then immediately demanded further rate cuts and Quantitative Easing.  (Trump wants the U.S. to have the lowest interest rates and the easiest money in the world.)  Something about this picture did not strike markets as good news.  So, the rest of the day was a volatile, but strongly bearish selloff. 

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In virus-specific news, there was a significant development as the global mortality rate has climbed from 2% up to 3.4%.  The headline virus numbers have risen to 93,500 confirmed cases and over 3,200 deaths globally.  This includes over 13,000 cases outside China as the outbreaks in places like South Korea (5,600), Italy (2,500), Iran (2,400), Japan (300), France (215), Germany (200), Spain (170), and the US (130) continue to expand.  In the US, cases exist in 14 states and the death toll has now risen to nine.  The Dept. of HHS also said they are working to resolve issues with inaccurate originally-distributed test kits and get 75,000 new (presumably good) kits distributed.

In terms of business impact, every day a host of companies are banning travel, canceling events, closing facilities, warning customers of delays, cutting guidance, and/or suggesting workers telecommute.  On Tuesday, that included GOOG, F, the US Federal Government (Seattle), AMZN, INTC, CSCO, CRM, V, among others. Japan also announced they are hoping to hold the Olympics as scheduled, but may delay them as far as year-end. It is also worth noting that markets STILL have fully priced in three more Fed rate cuts this year. So, the expectation seems to be that much more pain is to come as well as much more help.

Overnight, Asian markets were volatile and mixed Wednesday.  Europe is green across the board, so far, maybe responding to yesterday’s Fed rate cuts.  Maybe the U.S. markets are reacting to Super-Tuesday results or just following Europe. Either way, as of 7:30 am, U.S. futures are pointing to another big gap. This one a gap higher of about 2.5%.

Wednesday’s major news includes Feb. ADP Nonfarm Employment (8:15 am), Feb. Composite PMI and Feb. Services PMI (both at 9:45 am), Feb. ISM Non-Mfg. PMI (10 am), Weekly Crude Oil Inventories (10:30 am), Fed Beige Book (2 pm), and a Fed speaker.  Major earnings reports are limited BFB, CPB, and DLTR before the open and SPLK after the close.

As volatility continues, markets swung back to bearish for the 8th time in the last 9 days on Tuesday.  With gaps and ATR both at their largest since 2018, this is not a market for new traders or anyone who is not very fast and attentive.  With that said, now that the Fed has fired one of its few remaining bullets, markets expecting more, and no action on the fiscal side or across the G7, the odds seem to stack up as more bearish than bullish in the near-term.  But, will markets trade on news or expectations?  I certainly can’t (and won’t) handicap that race. 

Traders need to keep asking themselves…”Is there really a good reason to be trading markets that are more wide-ranging, more gappy, and less consistent than they have been in years?”  Are you chasing the “action,” reacting to emotion, or scrambling to somehow get back to even?  If so, you probably don’t have a good reason to be trying to swim that raging river.  Trading is a business and consistent, effective trading is the goal.  This day, week or even month will not make the difference between the success or failure of your trading year (let alone lifetime).  Good trading is good risk management. Remember that.

Ed

Swing Trade Ideas for your watchlist and consideration: SMG, RP, GNRC, ENPH, CLX, MSCI, ETSY, ZAYO, AYX, SEDG, GLD. 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.

🎯 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

🎯 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.

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Record-Breaking Bounce

Record-Breaking Bounce

Yesterday we experienced a record-breaking bounce on hopes of a big central bank intervention.  While it was wonderful to get a relief rally in the selling this all or nothing market price action remains very dangerous due to the extreme volatility.  The market loves freshly printed money and lower interest rates but one has to wonder how effective such a move will be against a virus outbreak.  Plan your risk carefully and be prepared for very fast price action and news-driven reversals.  This is not a market for the faint of heart or those without sizable tolerance to risk.  Plan carefully!

Price Whiplash

Asian markets closed mixed overnight as the RBA cuts the cash rate to new record lows.  European markets are decidedly green this morning on huge stimulus hopes and US Futures point to an extension of yesterdays rally at the open.  It would be wise to note significant price resistance levels are still above in the major indexes.  Chasing this wild rally could prove dangerous considering the wild volatility.

Economic Calendar

Earnings Calendar

On the Tuesday calendar we have 90 companies reporting with a heavy concentration of retail reports today.  Notable reports include TGT, AVAV, AZO, HPE, IGT, KSS, JWN, ROST, URBN, & VEEV.

Market New Highlights

Yesterday the Dow bounced nearly 1300 setting a record for the largest one day gain in history on hopes of central bank intervention.  Overnight Australia cut interest rates to 25 basis points and President Trump has already chimed in urging the Fed to follow suit with a big rate cut. 

Polls are open for Super Tuesday with Burnie Sanders currently leading in delegates but Joe Biden seems to be gaining some traction getting the endorsement of several former candidates that have now dropped out of the race.  The outcome of Super Tuesday could have a market effect in the coming days.

On the virus front the confirmed cases in the US is now over 100 as the fast-spreading illness is now in 10 states.  Fearful consumers, expecting the worst, cleared shelves of long shelf life food products, vitamins & sanitizers with the Governor of Washington suggesting avoidance of public gatherings.  South Korean infections continue to accelerate as more and more countries report newly discovered cases.

The Technical s

The incredibly wild price volatility continues to plague price action making it very challenging and very dangerous except for very experienced traders with a substantial tolerance to risk.  Even with the big move yesterday the Dow remains more than points below its 200-day average and significant level of price resistance at 27,300.  The SP-500 rallied above its 200-day and the QQQ used the 200 as a launchpad but remained below its 50-day average resistance.  Overnight futures were once again very volatile and continue to bounce around significantly this morning.

Action Plan

Traders unable to deal with the extreme price volatility should protect their capital and watch the show from the sidelines.  We are in a day-traders market and we should prepare for news-driven intra-day reversal and large overnight gaps.  Although the market is betting on a huge central bank bailout one has to wonder how effective that will be against a long-term virus threat.  Only time will tell but one thing for sure the fear of this outbreak may be along way from calming down as the spread continues.

Trade Wisely

Doug

As Virus Spreads G7 To Hold A Call

Monday saw heavy pre-market volatility, a gap higher and an instant selloff.  However, after the first half-hour, the bulls stampeded the rest of the day buying everything hard on the expectation of large and near-immediate rate cuts by the Fed.  The result was a massive rally day where the SPY closed up 4.33%, the DIA up 4.90%, and the QQQ up 5.16%.  The VXX too was volatile but closed down 3.42% to 22.03.

While coronavirus is the main story, markets have now jumped past the impact to assuming potential rate cuts, QE, G7-coordinated easing, and maybe US tax cuts will erase the economic impact companies are and will experience.  For example, JPM reported they believe the Fed will cut half a percent in March and another quarter percent in April.  This fits with current markets that have 100% priced in a 50-basis-point cut this month and the betting is 70% on the side of a second cut in April.  Still, economists are saying that the rate cuts might make it seem like the government is doing something, but are unlikely to actually help the actual economy. (The belief is the lags are too long in the economy and we are already at incredibly low rates.) So, while markets are expecting these things, nothing concrete has actually happened yet.  Therefore, the question is “Can and will the Fed really cut as fast and as much as markets expect?”

The headline virus numbers have risen to 92,100 confirmed cases and over 3,150 deaths globally.  This includes over 10,000 cases outside China as the outbreaks in places like South Korea (5,200), Italy (2,100), Iran (2,400), Japan (270), France (200), Germany (170), Spain (120), and the US (105) continue to expand.  In the US, cases exist in 14 states and the death toll has now risen to six. 

Asian markets were volatile and mixed Tuesday (China up, Japan down).  However, Europe is following the US example from Monday.  They are strongly green across the board at this point.  As of 7:30 am, U.S. futures are mixed and flat with traders apparently waiting on the results of the G7 conference call today.

The only major scheduled economic news for Tuesday is a Fed speaker in the afternoon.  However, expect some statement following the G7 Economic Leader Conference Call.  That will probably be the true economic news driver today.  Major earnings reports are limited to AZO, KSS, and TGT before the open.  After the close, HPE, JWN, and ROST all report.

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Markets have already latched on to expectations of the Fed (and G7) saving the day and of the virus impacts being lower than forecast on earnings.  Monday’s rally was very impressive.  However, it’s worth noting that we were down 11-12% the prior week.  So, a rebound was due anyway.  We also have to bear in mind that regardless of what the market expects, nothing has actually been done yet that will change economic realities.  We rallied on hope alone Monday. It is easy to see that it would not take much disappointment to tip things back into “sell, sell, sell” mode.  The bottom line is, be careful.

If you are a fast trader and you make good money in those markets, this might be your time.  If that’s the case, then go for it. However, the question remains the same.  “Do I really want to be trading in these conditions?  Do I have an advantage in this kind of market?”  Hopefully, an announcement from the G7 and Fed can clear these questions up.  However, I won’t be front-running those decisions/announcements. As always, I’m going to urge you not to chase, not to revenge trade, and not to pick bottoms or tops.  Trading is a business, cash is a valid position, and consistent, effective trading is the goal.

Ed

Swing Trade Ideas for your watchlist and consideration: CLX, BIIB, ENPH, BMRN, FLO, S, DXCM, NUAN, ALKS, TDOC, TPC, GTT. 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.

🎯 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

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Fed Intervention

Fed Intervention

With the hope and rumor of Fed intervention we had our first glimmer of hope of a relief rally on Friday albeit a very volatile beginning.  During the weekend we learned the virus has spread to 70 cases in the US with 2-fatalities.  It would seem this is just the beginning of what could be a very challenging time for the US market as fear and uncertainty of what comes next weigh on traders and investors.  If the overnight price action in the US Futures is a clue we should continue to expect very challenging volatility with fast price action and quick intra-day news-driven reversals.

Overnight Asian markets closed positive despite their PMI falling to a historic low and Macao gaming plunging over 87%.  European markets are decidedly bearish across the board and the US Futures gyrate all over the place as it tries to deal with the massive uncertainty and hopes of a Fed stimulus package.  What comes next is anyone’s guess.  Even very experienced day traders are likely to find this morning’s price action to be very challenging.  Be careful, and remember cash is a position!

On the Calendar

On the Monday earnings calendar we have more than 130 companies reporting quarterly results today.  Notable reports include GSKY, JD, TERP, TLRY, & UNIT.

Action Plan

After a very rough week of selling it was nice to see a little relief rally by the end of the day on Friday with the market hoping for Fed intervention.  With 70 sporadic cases of the virus showing up in a handful of US communities over the weekend it seems likely the infections will get worse before its better.  What that means for the market is anyone’s guess but if the very volatile overnight futures session is a clue of the kind price action that lies ahead it could be another very challenging week.  It will be interesting to see how the market responds when the impacts of the virus and supply chain issues begin to show in economic reports and company earnings. 

We have another big week of earnings and an economic calendar topped by the Employment Situation report on Friday morning.  After dropping about 4000 points last week it would be nice to see a little relief rally and if the FOMC does chime in with an intervention of rate cuts or quantitative measures spirits would be lifted at least for the short-term.  However, with such a huge cloud of unknowns facing the market and the virus spread just beginning in the US, I think there is more pain to come.  With volatility closing just above a 40 handle any new news could trigger quick intra-day reversals.  Expect sizable opening gaps making it difficult for swing traders to hold positions overnight.  As I mentioned last week we are now in a Day-Traders market but it will take significant trader experience to deal with the speed of the volatility and a tremendous focus on price action to bring home profit.

Trade Wisely,

Doug