Congress finally came to an agreement, and the stimulus is on the way! The question is, will it bring stability to the market? In a very wild overnight session, the Dow futures rallied 500 points after the news of the agreement. Unfortunately, as I write this report, the futures have been unable to hold the news-driven gains. With unemployment numbers due out tomorrow and New York seeing a doubling of confirmed cases every 3-days one has to wonder if there is any amount of money that can buy our way out of this terrible situation.
Asian markets closed positive across the board last night,
with the Nikkei lifting over 8%. Sadly,
European markets are not feeling the love form all the stimulus spending with
mixed results and the DAX down 2.25%.
Here in the US, the futures markets have seen a very turbulent evening. They have been bullish and then swung quickly
bearish, where it might be by the open is anyone’s guess! About the only thing, I think we can count if
very volatile price action in the day ahead.
Economic Calendar
Earnings Calendar
On the Wednesday earnings calendar, we have over 50
companies reporting results. Looking
through the list PAYX is only notable I can come with this morning.
Top Stories
At about 1:30 AM the Congress cane to an agreement on the
stimulus plan. The question now, will the
market be able to rally a second day on the news? Only time will tell.
They are reaching a critical situation in New York City now
with more than 25,000 cases, as the cases double every three days overwhelming the
healthcare system. The President said
yesterday that he would like the country to get back to work by Easter, which
is just three weeks away. However,
health officials and many of the state Governors disagree, saying the risk of
spread is too high.
As business around the country continues to shut down, the
next focus may be the unemployment numbers that are due out on Thursday morning. Consensus estimates suggest more than 700,000
will be out of work, and the numbers are likely to rise in the coming weeks.
Technically Speaking
I was so nice to see a little relief from the selling yesterday,
but now the question is, can it follow-though?
In the middle of the night, Congress finally came to an agreement, and
the President said he would sign the stimulus bill immediately after its
passage. Futures rally nearly 500 points
on the news but have already faded into the red in a very volatile overnight
session. With 2.5 trillion buy us some
stability? One would hope so because the
Trillions that FOMC has spent has done nothing to curb the historic market collapse.
Tomorrow we will get a reading on unemployment, and
according to estimates, it will be shocking.
Of course, direct payments will be helpful to those out of work, and the
company bailouts with the support of the medical system is much needed. However, with all this spending translate into
stock buying as the virus spreads and the path forward remains uncertain? I’ve
said it before, and I will repeat once more that it seems unlikely we can buy
our way out of a pandemic that continues to spread across our country.
Turn-around Tuesday was an amazing job done by bulls, as the rest of the world led the US to a huge gap up on hopes of a massive Federal rescue bill. Markets followed-through even when news came that there was no agreement and the Senate had adjourned for the day. On the day the SPY was up 9.26%, the DIA up 11.19% and the QQQ up 7.82%. This was the best day for bulls since 1933. As you’d expect, the VXX was down to 46.77. Oil (WTI) closed up $23.88 and the 10yr bond yield closed up to 0.834%.
Regardless of Tuesday’s optimism, the Senate adjourned in the early afternoon without a deal. However, overnight the sides agreed on a deal on a $2 Trillion stimulus package. Speaker Pelosi and Minority Leader McCarthy are now trying to get their caucuses to support any Senate deal, as-is. This would be critical to speed because it must pass by unanimous voice consent. A single objection from any Congressman will require delay while the House returns to Washington for a roll-call vote. Futures fell on word of the deal. Regardless of what happens this time, sources told Bloomberg last night that Congress is expecting two more stimulus bills before this is over.
In the meantime, following a call with major Investors and Hedge Fund managers, the President told Fox News he wants the US to be “open and just raring to go by Easter.” Reportedly, he has soured on the ideas of quarantining and social distancing because “many Americans are ignoring the suggestions” (per unnamed aides). On the other side, doctors, infectious disease experts, and even President Trump’s former head of the FDA are saying that we need at least several weeks of lock-down to stem the virus. Dr. Fauci (NIH) told the daily presser we would need to be flexible and data-driven and after that, the President agreed, seeming to step back from a firm Easter date.
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The global headline virus numbers continue to grow exponentially, now at 434,866 confirmed cases and 19,607 deaths. In Asia, India locked-down its 1.3 billion people for the next 21 days. Several South American countries have also begun lockdowns. In Europe, death tolls are up again in Italy and Spain has had to turn ice rinks into temporary morgue storage. However, in positive news out of China, both Wuhan City and Hubei Province had their quarantine lifted after two months on lock-down.
In the US, totals are up to 54,963 cases and 784 deaths. New Orleans is the latest major city to order a lock-down as their number of cases exploded and Governor Edwards declared a state of emergency for Louisiana. The White House also announced that anyone who has traveled from New York should self-quarantine. In addition, New York Governor Cuomo and NYC Mayor de Blasio both decried a massive shortfall in ventilators as they expect to need 30,000 more of them in the next one to two weeks.
Overnight, Asian markets are strongly green again on the second day of expectation a US bailout plan passes and pumps up global economies. Japan was up 8% to make two straight days of massive NIKKEI gains. In Europe, markets are mixed and more muted, though mostly green so far today. In the US, futures fell on word the stimulus deal was agreed. As of 7:30 am, the futures are mixed, but mostly red with the S&P and NASDAQ pointing to lower opens and the Dow slightly on the green side.
Major economic news on Wednesday is limited to Feb Core Durable Goods (8:30 am) and Crude Oil Inventories (10:30 am). However, an agreement on a virus rescue plan will definitely be announced, if not signed during the day. Major earnings are limited to PAYX before the open and MU after the close.
Don’t think we are out of the woods and it’s all blue skies ahead. With more “stay a home” orders, company closures, and bad economic data coming, there are a ton of bad headlines we will need to ride out. In particular, we should be wary of Thursday’s Initial Jobless Claims that are expected to be the largest in history by a wide margin. However, it is also extremely likely the latest relief bill will be signed, more Fed steps will come and more stimulus bills will too.
So, markets remain very erratic and there is no reason to think that will stop. Remember, you don’t have to pick the absolute bottom to make a bundle on the rebound. So, use this downtime to get your list of tickers ready. Get some education, refine your trading plans, and improve your trading process. Then wait for trades to come to you. We still have no uptrend on the daily level. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
|607% in just 24 months |
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
With Congress still trying to get it to act together on a
massive stimulus bill, the US Futures point to a welcome rally. Though
it might prove to be only a monetary relief with quickly rising infection numbers
and a death toll sharply rising, any reprieve in the selling that created the fastest
30% decline in history is a welcome relief.
We still face a busy week of economic reports with impacts of the
outbreak starting to trickle into the numbers.
Expect price volatility to continue with lots of news-driven whipsaws and
reversals as the market tries to recover.
Asian markets closed in the green across the board with the
Nikkei surging more than 7% even after the postponement of the Summer
Games. European markets are also in the
mood to rally this morning with gains in the DAX over 6% in reaction to the Fed
Stimulus. Ahead of earnings from NKE,
CCL, and economic reports that include PPI & New Home Sales, US Futures
point to a huge gap up at the open. If Congress
can pass the stimulus, expect another surge of short-term optimism that could
extend the relief rally.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have 72 companies
stepping up to report results. Notable
reports include NKE, CCL, CONN, INFO, & SCS.
Top Stories
In the last six weeks, the Dow has lost about 11,000 points,
but this morning we have a moment of relief with the US Futures pointing to a
rally of more than 900 points. We are
still waiting on Congress to decide on a stimulus package that will total more
than 2-trillion dollars. The unprecedented
move by the FOMC that through the doors open for unlimited asset buying was
only able to inspire the bulls for a brief moment yesterday, ultimately closing
lower on the day.
With pressure rising, the Olympic Committee has decided to
postpone the start of the Summer Games for the first time in history. In wartime, the games Olympic’s experienced
full cancellation 3-times but never a postponement. Just another item for the history books alongside
the fastest 30% market decline ever. The
President said in comments yesterday that he expects a quick recovery for the
market. However, reports suggest he like the rest of us is concerned the
recovery will be a slow process due to the company level damage and unemployment.
Technically Speaking
With the futures pointing to a substantial gap up and the
hope that Congress might get its act together passing the massive stimulus bill,
we could finally see a little relief from the selling. Unfortunately, with infections approaching 45,000
and more than 525 reported deaths here in the US, it’s challenging to be in a celebratory
mood. The QQQ has the best chance of
recovering its 500-day average, but even with the big up expected this morning,
the bulls will have to deal with if as resistance.
We will get the latest reading on the PPI and New Home Sales,
both of which expect declines according to consensus estimates. As the coronavirus impacts trickle into the earnings
and economic reports, we could see volatile price swings that traders will have
to consider when holding positions overnight.
I suspect the road to recovery will be a very bumpy one with dangerous whipsaws
and flat our reversals to challenge trader skills. Don’t forget that consistent
base hits win games, not the exciting home runs. When the recovery begins, don’t allow greed
to prevent you from taking those base hit trade profits. To be a consistently profitable trader, we
have to get comfortable with taking profits consistently.!
Monday was another roller-coaster ride. After a limit-down in futures Sunday night, the Fed pulled out the big guns during premarket hours, saying they would do unlimited purchases of assets (QE including corporate bonds), roll out loans to businesses, and committed to $125 billion/day in Repo operations to give banks tons of liquidity. This immediately took futures positive, but hope soon faded and we gapped down at the open. After a volatile day, punctuated by a second failed vote for a relief bill in the Senate, markets closed down, but off the lows. The SPY ended down 2.67%, the DAI down 3.19% and the QQQ down just 0.14%. For some odd reason, the VXX was also down sharply (-15.56%) to end at 51.13. Oil was up almost 5% to close at $23.76. The 10-year bond yield was also down to 0.759%.
As mentioned, the huge fiscal spending bill ($2 Trillion at last estimate) failed another procedural vote again in the Senate. There were no details on remaining differences, but the two opposing camps were blaming each other. Republicans were blamed for being “too focused on business bailouts” while the Democrats were blamed for being “too focused on social spending.” Either way, there is no Senate deal yet. The House (where any spending bill must originate by law) stopped waiting as House Democrats introduced their own $2.5 Trillion rescue plan. That plan includes $500 billion in grants and interest-free loans for small businesses, expanded paid medical and family leave, $1,500 per individual payments, and increases unemployment insurance for anyone put out of work by the virus.
The President also seems to be leaning back toward his first position of “business as usual,” accept the losses and spin the story. Essentially, he is again more concerned with the economic damage that may be done and the health of businesses than with the potential loss of life and health. In his daily presser, he said the “reopening of American” is coming very soon. He also said he would soon implement a middle-ground approach of quarantining and testing some areas and groups while getting others back to business. There was no mention of the possibility that a “partial cure” may be worse in the long run, with a relapse shutting-down the country again. Regardless of the choice made, some will be unhappy. However, whether you trust health experts or this President, the gap in approach between the two does lead to uncertainty. This is also true to comparisons with other countries that have (or are) locking-down for longer periods.
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In other news from the day, there appeared to be no real glitches in the first-ever day of trading with no humans on the trading floor (entirely online). BA also announced it is closing all operations for 2 weeks. The SEC also warned traders on inside trading after last week’s story about senators. Finally, the President also announced measures to prohibit hoarding, price gouging, and blocking some fake remedy sales.
The global headline virus numbers continue to climb fast, now just under 392,148 confirmed cases and 17,138 deaths. In Asia, several countries are reintroducing travel stoppages to head off a second wave of infections. In the UK, Prime Minister Johnson ordered his nation to stay at home for the next three weeks. This measure is in addition to Sunday evening’s 12-week quarantine for anyone at risk. They are also, following Germany in prohibiting any gathering larger than 2 people. Finally, the IOC has now postponed the summer Olympics, although the length of the delay is still being negotiated with Japan.
In the US, totals are up to 46,168 cases and 582 deaths. After the close, the CDC reported that the virus remains alive on the Princess cruise ship after passengers and crew had left the ship. Indiana and West Virginia ordering residents to stay at home, and Rhode Island postponing their Primary election.
Overnight, Asian markets rallied hard on a US bailout plan passing and pumping up global economies. In Europe as every bourse across the region is also up very strongly so far today. In the US, futures went limit up on hope for a rescue plan. As of 7:45 am, the futures were pointing to a huge gap up of between 4.25% and 4.6%.
Major economic news on Tuesday is limited to Mar. Mfg. PMI and Mar. Service PMI (both at 9:45 am) and Feb New Home Sales (10 am). However, influential voting FOMC Member James Bullard also speaks mid-morning (important because over the weekend he told Bloomberg he expected the US to hit 30% unemployment). Major Earnings are limited to INFO before the open and NKE after the close.
With more “stay a home” orders, company closures, and bad economic data coming, there are a ton of bad headlines still ahead. However, it is also extremely likely there will be a plan of some sort passed soon. So, markets remain very gappy and erratic and there is no reason to think that will stop. Remember, you don’t have to pick the absolute bottom to make a bundle on the rebound. So, use this downtime to really learn, refine your trading plans, and improve your processes. Wait for trades to come to you. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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 had a bit of a temper tantrum last night after the
Senate failed to pass the massive stimulus bill. We can expect significant price sensitivity
through-out the day as they legislators scramble to resolve issues and vote
again later today. A passage could trigger
a quick rally, but a failure could really bring out the bears, so keep an eye
to the news as they wrangle party politics.
Asian markets closed mixed but mostly lower as Hong Kong and
Australia saw heavy selling during the night.
European markets continue to tumble with the FTSE down another 3.5% as
the coronavirus continues to ravage the euro block. With tremendous overnight volatility, US futures
point to a substantial gap lower this morning that will test the lows of last
weeks as support. Hang on for another
wild day of price action.
Economic Calendar
Earnings Calendar
On the Monday earnings calendar, we have over 80 companies stepping
up to report quarterly results today. However,
after looking through the list, I don’t see any particularly notable or market-moving
reports.
Top Stories
After another volatile evening where the futures briefly dropped
to limit down, they point to a substantial gap down this morning. The massive stimulus bill failed to pass last
night but will try once again today. If passed
or fails to pass, it’s likely to be a market-moving event, so keep an eye to
the news as we progress through the day waiting on the vote.
The Olympic committee is under pressure to postpone or cancel
the Summer games hosted in Japan due to the virus concerns. Canada and Australia are the first countries
to announce they will not send athletes should the games move forward as
scheduled.
Last evening the President activated the National Guard in
New York, Californa, and Washington to expedite the moving of medical supplies
and equipment as their outbreaks continue to grow at an exceptional rate.
Technically Speaking
The QQQ had the best chance of recovering the 500-day
average last week, but on Friday left behind a very disappointing bearish
engulfing candle. This morning the four
major indexes are set to open at or below recent market lows. Although most charts paint a pretty grim picture,
there was an effort by the bulls to defend the week’s lows. In a surprise and very bold move, Goldman
upgrades BA suggesting they have enough cash to get through the crisis and that
air travel will return following the crisis.
I assume the Goldman is also anticipating that the government will swoop
in with a considerable bailout for the company in an attempt to prevent massive
layoffs.
We can continue to expect extreme price volatility and
sensitivity to the congressional vote on the stimulus bill. I would not rule out the possibility of a
quick and substantial rally should the bill pass. However, another failure to pass could easily
trigger another sharp selloff that could easily trip circuit breakers. Keep in mind no matter what happens, holding
positions overnight will remain very dangerous due to the overnight swings. I think a V-bottom recovery is unlikely
because we are still weeks if not months away from seeing an improvement in the
war against the outbreak.
Friday was another head fake day in the downtrend. After a gap up of about 1%, the rollercoaster began. Selloffs led to rallies, which led to ever more selloffs. With a 7% intraday range, we closed very near the lows. As a result, the SPY lost 4.62%, the DIA lost 4.67%, and the QQQ lost 3.92%. Interestingly, the VXX also lost 2.34% on the day to close at 60.55 and the 10-year bond yield also fell to 0.876%. Meanwhile, Oil (WTI) got hammered again, down 8.88% to $23.61/barrel as in addition to the epidemic and price war, money continues to seek safety in dollars (making dollar-denominated items, worth less each day). This concluded the worst week on Wall Street since 2008.
During the day, the Treasury Dept. also pushed the Income Tax filing deadline out to July 15th. Attorney General Barr also invited ethics probes into Senators (both parties) who sold and/or bought specific heavily-impacted stocks after coronavirus briefings in late January and early February. (Back when this was still a hoax.) The Fed also expanded its operations into buying municipal bonds. NY, IL, and CT also all joined CA in a state-wide in-home quarantine.
On the relief bill front, what started as a $1 Trillion bill, has doubled in size, but even so, it is likely to grow more. For now, the stumbling block seems to be the emphasis of the aid package. Democrats want the bill to concentrate on aid for hospitals and other healthcare as well as money for unemployed workers. For their part, Republicans insist the bill focus on more tax cuts and grants/loans for companies. (So, stereotypes are nicely still intact as Monday dawns.)
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Over the weekend, many more countries have banned incoming travelers, more US states have locked-down with “Stay Home” quarantine measures, and the federal government failed to reach an agreement on a relief bill. Meanwhile, the Fed is close to announcing a $4 Trillion infusion via asset purchases as they and Sec. Mnuchin held talks this weekend. The question now is what we will see out of DC? Ether we see some bi-partisan leadership or a new round of the “Blame Game.” It appears markets are depressed at the lack of leadership and fear the Blame Game as both global markets and US futures tanked when the Senate failed to pass a procedural vote on a relief bill.
The global headline virus numbers continue to climb fast, now just under 350,000 confirmed cases and 15,300 deaths. In Asia, the very early stages of a second wave have started in places like Australia, Thailand, Malaysia, and South Korea. In Europe, Germany has now banned any gathering over 2 people. The UK has also quarantined anyone who is at-risk for the next 12 weeks. In addition, Spain has extended its lock-down through Mid-April. Meanwhile, Italy has banned domestic travel and deployed the military to enforce the restrictions.
In the US, cases almost tripled since Friday morning as testing ramped (but then was almost immediately greatly restricted, to rare cases where a positive result would change the treatment plan, in places like Los Angeles and New York City). Regardless, the totals are now 35,070 cases and 458 deaths.
Overnight, Asian markets were down hard again everywhere except Japan, which posted a 2% rebound. There isn’t even that single green shoot in Europe as every bourse across the region is down 3-4% so far today. In the US, futures were volatile again overnight, but went limit-up on the NASDAQ at one point. As of 7:45 am, the futures were pointing to a gap down of between 2.5% and 3.5%.
There is no major economic news on Monday. There are also no major earnings announcements scheduled. However, the Fed announcement will drop some time. Also, some industry/business leaders have started calling for reduced restrictions on workers who are less at risk. Apparently, they do not understand (or care) about lower-risk categories of people being carriers for virus distribution.
Markets remain very gappy and erratic. It is true we are down a very long way and got here historically fast. Some bottom-pickers (who can stand the pain, like funds) are likely to start dipping in here. However, retail traders cannot take the pain that is likely still to come. With more “stay a home” orders coming into effect every day (midnight Monday in Ohio), there are a hell of a lot of bad headlines still ahead. I’ll say it again, this is not a Swing Trading market. You don’t have to pick the absolute bottom to make a bundle on the rebound. So, use this downtime to really learn, refine your trading plans, and improve your processes. Wait for trades to come to you. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
|607% in just 24 months |
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
A ray of sunshine begins the market day with the first
bullish follow-through open setting up this morning. It’s been nearly 2-weeks since
we have seen a positive close followed by an optimistic open the next. That said, expect the wild price volatility
to continue as infections here in the US begin to spike heading into another
uncertain weekend.
Asian markets closed mixed but mostly higher as China holds
steady on its price rates. European
markets are green across the board this morning, reacting to the massive government
stimulus efforts. The US futures point a
positive open ahead of economic and earnings data but expect the price action to
remain very challenging.
Economic Calendar
Earnings Calendar
On the Friday economic calendar, we have 59 companies reporting. Looking through the list about the only
notable stock I can find today is HIIB.
Top Stories
After another turbulent evening where the US Futures traded
between 350 down and 900 up currently points to positive open of more than 700
points. However, with such volatility in
price, anything is possible by the open.
With virus infections beginning to rise rapidly, the California
Governor ordered that all residents stay home and inside. The first state to issue such an extreme
lockdown order. Italy now has the distinction
of the largest death toll surpassing China as the country calls out the
military to move coffins overwhelming the countries cemetery system. Here in the US, infection estimates could
reach more than 30,000 by next week.
The Senate has proposed a massive spending bill sending
direct payments to US citizens of $1200 per adult and $500 per child, including
billions and billions for company bailouts.
I doubt this will be the last of the backstop measures that will be
required to stabilize the economy.
Technically Speaking
Although we saw more than a 1200 point swing the in Dow yesterday,
it was nice to see a positive close. As
of now, it looks as if we could get our first bullish follow-through open that
we have seen in 2 weeks of massive overnight reversals. Crossing my fingers and hoping it will hold
at least to the open, the QQQ could recover its 500-day moving average. The technical damage in the charts is so extreme
that even a hold of this week’s lows could lift spirits as we head into another
uncertain weekend.
Although there are some fantastic values in stock prices, buying
them in the faces of such volatility and extreme uncertainty is not for the
faint of heart. With the VIX holding above
a 70 handle options are punishingly expensive, and the slippage in the bid/ask
spreads make then nearly impossible to trade except for very quick and very dangerous
day-trades. Let’s all hope for the best but
prepare for the wild price action to continue in the coming weeks as impacts of
the outbreak continue to expand. Protect
your capital, take care of your family, and support your communities as best
you can through these troubling times.
Thursday was a relatively stable day, with a 1% gap down, a sell-off to the lows, and an immediate rally to up 1%. The rest of the day included trading in a relatively tight range…relatively. The actual intraday range was 6.5% with the SPY closing up 0.58%, the DIA up 0.96%, and the QQQ up 0.60%. All three printed long-wick Spinning Top candles showing the indecision. The VXX fell 10% to 62.00. Meanwhile, Oil spiked in its best day ever, up 23% after the prior day carnage, closing at $25.08/barrel (WTI). The 10-year bond yield fell to 1.158%.
During the daily presser, the President said he was “ok with” both future legislation that may prohibit buybacks and is also considering the US government taking equity stakes in those companies that will receive bailouts. In addition, he said he has not exercised the Defense Production Act he invoked Wednesday because there was no need yet. He also ordered the FDA to do “off label” tests on a 1940 malaria drug (hydroxychloroquine) for potential effectiveness as a treatment for COVID-19. It has been shown effective in one study in test tubes and promising in small-scale Chinese studies, but it is poisonous in higher doses. (This drug is more promising than the alternative because of its availability and being off-patent versus say the GILD drug Remdesivir, which has also shown some promise.)
The Senate and House (and both parties) continue to wrangle over competing versions of the next relief bill. After the close, a Republican Senate version was unveiled that ups the ante from $1000/adult to $1200/adult with both proposed plans also kicking in $500/child. However, there are mavericks (and excluded players) on all sides of these negotiations who oppose the announced plans. Expect this story to continue with a target of a deal passing both houses over the weekend, but that may be optimistic.
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Afterhours, TSLA closed its Fremont CA factory and NY operations after fighting such measures earlier in the day. In addition, former UN Ambassador Nikki Haley resigned from the Board of BA, because she opposes the idea of government aid. However, BA management says the company will not survive without a bailout and has asked for a $60 billion aid package.
The global headline virus numbers continue to climb fast, now at 252,750 confirmed cases and 10,400 deaths. In Europe, Italy now has 41,100 cases with 3,400 deaths. Spain has 20,000 cases with 1,002 deaths, France has 11,000 cases with 375 deaths (a day behind in reporting), Germany has 16,625 cases and 45 deaths. The number of deaths in both the UK and France jumped 40% in the last 24 hours. Italy and France also extended the duration of the national quarantines they have in-place.
In the US, virus infections are following the same path as in Europe as our testing ramps up. The totals are now 14,366 cases and 217 deaths. More companies and industries continue to say they will fold without immediate government aid. This now includes the hospitability industry, retailers, entertainment venues, airlines, rental car industry and many others. While small and medium-size businesses will have far less political clout, their needs will be just as large. In terms of impact, the Governor of CA issued a statewide “stay at home” order overnight.
Last night, Asian markets were up, except Japan where the NIKKEI lost 1%. Europe is green across the board, up 2-5% so far in their day. In the US, futures were volatile again overnight but went limit-up on the NASDAQ at one point. As of 7:45 am, the futures were pointing to another gap up of between 1.5% and 3.5%.
Friday’s major economic news is limited to Feb. Existing Home Sale (10 am). The only major earnings are from TIF before the open.
Markets remain erratic. However, as said yesterday we are down a very long way, very fast already. Bottom-pickers are likely to step in. Still, regardless of what happens during the session today, holding over the weekend is a very risky prospect. There are a lot of bad headlines yet to come and it will be two long days before traders can adjust. As has been the case for some time, this is not a market to be Swing Trading. Use this downtime to really learn, refine your trading plans, and improve your processes. Wait for trades to come to you. For now, continue to either be very fast (day trade), very slow (long-term holds) or just wait.
Ed
Sorry, but due to extreme volatility there are no Trade Ideas for today. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
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I had a computer problem this morning, so I apologize, but I
will have to keep the blog short this morning.
After another wild night of price action in the futures market, it would
appear sellers still have the upper hand this morning. Even the so-call safe-haven securities sold
off yesterday in a rush to raise cash and avoid additional market risk. During the night, the ECB unveiled a massive stimulus
plan of more than 800 billion with the President signed the first stimulus package
for the US almost immediately after the Senate passage. They are now going to work on the second
package that could top 1.2 trillion with direct payments to US citizens. Monday, tradings pits will close, and we will
move to a fully electronically traded market. It’s unclear how that might affect price
action.
With infections numbers continuing to grow, we could easily
see more than 10,000 cases by the weekend, which would suggest and exceptional
expansion is likely to occur over the next 2-weeks. I know I sound like a broken record but Protect
Your Capital because the uncertainty going forward is expected to get much
worse before it gets better. More
importantly, protect yourself and your family.
The next few weeks could be difficult, but I’m confident better days lie
ahead.
Economic Calendar
Earnings Calendar
We have more than 120 companies reporting earnings today,
but in the current situation, it’s unlikely many will notice. Notable reports include DRI, LEN, CAN, CTSAS
& OLLI.
