Bear Signals and Virus Fear

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Markets took some profits on Friday as the US followed the pattern of Asia and Europe for the day.  The QQQ and SPY ended the day as Doji candles after some volatility, but the DIA printed a large-body black candle to print an Evening Star signal.  The SPY was down 0.53%, the DOA down 0.87%, and the QQQ down 0.43%.  As a result, the VXX climbed slightly to 14.38 while the T2122 fell again to 33.94 (still not oversold).

The big story on the day seemed to be a complete reversal by the Fed from what was told to the financial press just two days earlier.  On Friday, the Fed reported to Congress that the coronavirus presents a new risk to the US economic outlook and they warned of disruptions to global markets.  Specifically, the Fed reported, “Because of the size of the Chinese economy, significant distress in China could spill over to U.S. and global markets through a retrenchment of risk appetite, U.S. dollar appreciation, and declines in trade and commodity prices.” 

On Tuesday and Wednesday, both Fed speakers and the President’s Chief Economic Advisor Larry Kudlow had said the virus would not have a significant impact on the US economy.  This reversal may help explain the profit-taking on Friday.

Over the weekend, the virus has continued to spread and has surpassed the SARS outbreak of 2003 in terms of impact.  The number of confirmed cases has now reached over 40,000 and deaths now exceed 900.  One of those deaths was in the US.  In terms of impacts, there is serious scrambling going on throughout the Auto and Electronics industries as the vast majority of those supply chains run through China.  In other words, you can’t make a car in Detroit, Berlin, Japan or Mexico if the parts have not arrived from China.

Overnight, Asian markets were in the red.  Europe is mixed at this point, but most of the major bourses are red…the FTSE being the striking exception.  As of 7:45 am, U.S. futures are flat, sitting on either side of the break-even line.

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There is no major economic news for Monday.  However, there are a couple of Fed speakers during the day.  Earnings are also light for the day, but AGN, QSR, L, DO, IVC, and AVYA report before the Open.  After Monday’s close, CHGG, MELI, RNG, XPO, APPS, ELY, MESA, MOH, IIVI, JCOM, RE, RPD, VRNS, DVA, BLKB, VOYA, FLDM, FRT, ICMB, and PYX all report.

Markets took some profits Friday, but the bulls have been resilient and relentless for a long time now.  The trend remains clearly bullish, but we are still a bit extended and there is no new impetus with light earnings and no planned economic news Monday.  Perhaps the rumors of President Trump’s election-year budget (apparently going to expand tax cuts) will be the driver today. 

Again, the bias is on the long side, but the candle patterns are on the bearish side. I think we need to remain cautious.  At the very least take a look at bearish setups or hedges. I know I sound like a broken record on the topic, but nobody ever went broke taking profits and reducing risk.  Plan the trade, make the trade come to you and then trade the plan.

Ed

Swing Trade Ideas for your consideration and watchlist: PLCE, FTK, SLCA, SLM, KSU,DKS, CROX, KLAC, SWKS, QRVO, ZM. 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 Plans • Private 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

Wild Ride

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Wild Ride

What a wild ride the market has delivered this week, recovering to new record highs amid a mixture of earnings results, the Presidents acquittal, and a virus outbreak that continues to expand.  After such a strong rally, we should not be surprised to see some profit-taking as we head into the uncertainty of the weekend.  Let’s hope the very big gaps left behind can hold as support if tested by the bears.  It could make for a very volatile pullback should those gaps start to fill.  If your currently holding gains, it may not be a bad idea to capture at least some of them before the weekend.

Asian markets closed mixed overnight as China’s trade data was delayed, and the outbreak expanded to more than 31,000 confirmed cases.   European are seeing only red this morning but so far, losses are rather moderate.  US Futures currently point to a gap down of nearly 100 points ahead of the Employment Situation number and a lighter day of earnings reports.  Although the bears are indicating some pressure this morning, I would not expect the bulls to give up easily.

On the Calendar

On the Friday earnings calendar, we get a nice break with just over 40 companies reporting results.  Notable reports included ABBV, AVTR, FE, HMC, & MSG.

Action Plan

After the wild week of bullishness, I was expecting to see the Friday morning futures pushing to extend higher to finish the week strong.  However, the delay in China’s trade data seemed to bring some attention back to issues surrounding the outbreak.  Death numbers rose to 636, and confirmed cases grew over 31,000.  Confirmed cases on the quartered cruise ship are now over 40 as testing continues.  I have to image news like this will continue to affect all travel-related stocks negatively.  As of right now, business is scheduled to resume in China on Feb. 10th, but with the outbreak continuing to expand, could we see another extension by the government this weekend?

The sharp recovery rally this week set new record highs in the DIA, SPY, and QQQ, but also left behind some very big gaps which provide weak levels of price support.  If a pullback begins, that could cause some considerable volatility if price slips into the gaps.  With the uncertainty of the weekend ahead, a little selling pressure could quickly bring out profit-takers.  Plan your risk carefully into the weekend, and remember never to allow greed to prevent you from taking a profit.  Have a great weekend, everyone!

Trade Wisely,

Doug

Profit-Taking Friday?

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The bulls continue their surge Thursday.  The SPY and DIA both gapped higher and then just vacillated the rest of the day, closing very near the open.  The QQQ gapped higher, but found some follow-through as TSLA rebounded after Wednesday’s profit-taking.  The SPY ended 0.34% higher, the DIA 0.30% higher, and the QQQ 0.86% higher.  All three were new all-time high closes.  The VXX fell slightly to 14.09 and the T2122 fell back to 67.15 (out of the overbought region).

We received generally good economic data (Weekly Jobless Claims were below estimates again and Unit Labor Costs were in-line, while Q4 Nonfarm Productivity was below expectation) on the day.  Added to this was generally good earnings.  Together these factors seemed to override any coronavirus fears for the bulls. 

On the coronavirus front, the number of patients continues to grow.  The tally now sits over 31,000 confirmed cases and 636 deaths.  In terms of impacts, it was announced that airlines around the world have now canceled 50,000 flights to or from China (including Hong Kong).  However, an independent economic data provider about China, called China Beige Book (not to be confused with the periodic US Beige Book Report produced by the Fed) forecasts that while there will be a GDP drag on China, the long-term outlook remains stable.

After hours Thursday, EBAY was taking a beating after ICE said they have decided to stop exploring a buyout of the auction website.  MYAD was down a whopping 30% after missing on both the top and bottom lines.  However, UBER also spiked on a smaller than expected loss and PINS soared 17% after beating estimates. 

Overnight, Asian markets were mixed, but generally in the red.  For a change of pace, China was the lone green spot in that region. However, Europe is showing red across the board at this point in their day.  As of 7:45 am, U.S. futures are all pointing toward a gap lower of a modest one-third of one percent.

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Friday’s major economic news includes Jan. Avg. Hourly Earnings, Jan. Nonfarm Payrolls, and Jan. Unemployment Rate (all at 8:30 am).  While earnings are light on Friday, we will hear from ABBV, CBOE, and FE.

The bulls have been relentless all week.  However, globally, Friday seems like a profit-taking day.  Maybe the rest of the world wants to lock in gain before the long weekend news cycle just as we suggest.  The trend remains clearly bullish, but we are a bit extended and there is that weekend headline risk to consider. 

So, again I think we need to remain nimble, hedged or cautious.  Don’t let profitable positions go South on you when you aren’t looking.  I know I sound like a broken record on the topic, but nobody ever went broke taking profits and reducing risk.  Plan the trade, make the trade come to you and then trade the plan.

Ed

No Swing Trade Ideas for your consideration and watchlist on Friday If you have tickers you want to discuss, be sure to come to the trading room at 9:10am Eastern and we’ll give them a look. 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 Plans • Private 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

Massive Short Squeeze

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Massive Short Squeeze

With a massive short squeeze, the bulls managed not only managed set new records but chose to ignore the possible outbreak impacts.  With the virus now spread to more than 28,000 and the possibility China will have to extend business closures, it will be interesting to see what comes next.  The President acquitted Chinese tariff cuts, and a huge day of earnings and economic reports would suggest price volatility continues and that anything is possible.

Asian markets rally to close green across the board in reaction to the Chinese tariff cuts overnight.  European markets are also in rally mode this morning with gains across all indexes.  US Futures point to more new record highs with Dow once again set to gap up more than 100 points at the open.  Once again, be very careful chasing the open.  Plan your trading carefully.

On the Calendar

On the Thursday earnings calendar, we have our biggest day this week, with more than 210 companies reporting.  Notable reports include UBER, ATVI, MT, BIDU, BLL, BDX, BMY, CAH, DNKN, EL, EXPO, FCAU, FTNT, HBI, IQ, K, MPW, NYT, NLOK, PENN, PM, PINS, SPGI, SNY, SKX, TTWO, TPR, TMUS, TWTR, TSN, WWE, WYNN, XYL, & YUM.

Action Plan

A soaring day in the market as bulls stage a relentless push once again breaking records.  After the bell, the Senate voted to acquit the President of all charges and this distraction is now in the rearview.  During the night, China announced it would cut tariffs on hundreds of US goods by half a gesture they say is an attempt to improve the trade relations between the two countries.  Numbers on the Coronavirus continue to grow rapidly with now more than 28,000 confirmed cases and 563 deaths.  Japan reported ten more people on the quarantined cruise ship have tested positive bring the total to 20 cases.  Over the last 3-days, the market has done a good job of ignoring the potential economic impacts of the outbreak; one has to wonder how much longer that can continue. 

Tariff cuts, earnings and economic reports will provide plenty of opportunities for price volatility to continue today.  The T2122 indicator went from oversold or overbought in just 3-days of trading, indicating just how emotionally charged and volatile price action has become.  After such a strong run, it might be wise to consider taking some profits rather than chasing stocks that appear very extended or pushed up against resistance levels.  Futures this morning are once again pointing to a gap up open, and it’s very easy to feel the fear of missing out and find yourself wanting to chase.  Consider your risks carefully as the bulls continue to stretch stocks far from support levels.

Trade Wisely,

Doug

Those Bulls Keep Running

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Once again, the bulls ran wild on Wednesday.  Markets gapped up by almost a percent and then proceeded to run higher in the SPY and DIA.  The QQQ also gapped higher, but then faded the gap, mostly due to a sharp pullback by TSLA after its parabolic move Monday and Tuesday.  The SPY closed up 1.15%, the DIA up 1.67% and the QQQ also closed up 0.33%.  This made for new all-time high closes in the SPY and QQQ again.  It is worth noting that the major indices (including the VXX) are a bit extended from their moving averages.  In addition, the T2122 closed at 88.05 which is in overbought territory.

As usual, the coronavirus story continues to be the top story.  Confirmed cases are now over 28,000 and deaths have hit 563.  In related news, YUM China has closed 30% of its stores due to the outbreak.  TSLA also closed it dealerships in China and announced the delay in delivery of the vehicles that have already been sold there.  In addition, Japan has quarantined a CCL cruise ship for two weeks after 20 passengers have tested positive.

In a potentially related story, China announced that it will cut in half the retaliatory tariffs placed on US goods (in response to the US tariffs).  In some cases that means going from 10% to 5% and in others from 5% to 2.5%.  Analysts seem mixed on what to make of the move.  Some feel this is a sign of improving relations and more proof that President Trump’s trade war worked.  Others suspect this is a goodwill gesture in front of China not meeting the import quotas announced as part of Phase One of that deal.  In either case, markets are taking it as good news.

After hours Wednesday, markets saw a number of earnings beats.  Among these were CINF, CTSH, FMC, FOX, FOXA, MET, and QCOM.  On the other side, AVB, LNC, and ORLY all posted misses.

Overnight, Asian markets continue to rebound with green across the board again.  The same is true in most of Europe, with green everywhere except Russia and Athens at this point.  As of 7:30 am, U.S. futures are also pointing to another gap higher, this time by about four-tenths of a percent. 

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Thursday’s major economic news is limited to Weekly Jobless Claims and Q4 Nonfarm Productivity (both at 8:30 am).  However, there are a couple FOMC speakers during the day.  On the earnings front, among those reporting before the open are: ABMD, BLL, BMY, CAH, CI, EL, HBI, ICE, K, MAC, PM, REGN, SPGI, SNA, TPR, TWTR, TSN, VMC, WLTW, XYL, and YUM.

The bulls have been relentless this week and pre-markets are telling us to expect more of the same.  However, pay attention to what happened in TSLA on Wednesday.  The take-off of a jet plane is awesome.  However, if the jet runs out of fuel, it falls out of the sky like a rock and that too can throw you back in your seat.  Both long-term and short-term trends are clearly bullish.  However, I think we need to remain nimble, hedged or cautious here.  

Remember, nobody ever went broke taking profits and reducing risk.  We talked about this in the room yesterday afternoon where people were hesitant to take 30%, 50%, or even 100% profits off the table.  Yes you may be able to squeeze more out of a trade, but you can also give back those impressive gains in a heartbeat.

Ed

Sorry Rick is out sick today. So no Swing Trade Ideas for your consideration and watchlist now. I will pull together a list by 9:10am Eastern and present them in the room. 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 Plans • Private 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

Ravenous Bulls

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Ravenous Bulls

A mixed bag of earnings results and a growing outbreak now approaching 25,000 infected is no deterrent for the ravenous bulls as the QQQ leaps to new record highs yesterday and is once again gaping sharply higher this morning.  Let’s party like it’s 1999, but be careful chasing stocks already extended.  Plan your trades carefully at or near price support levels with a logical stop in place in case the music suddenly ends.  No one knows when that might be so follow your rules, avoiding those emotional mistakes that can prove very costly when we get caught up in the chase.

Asian markets were once again green across the board overnight, with China regaining another 1.25% after selling off 7% on Monday.  European markets and US Futures both turn higher after and unconfirmed Chinese TV report of a dug break-though for the corona outbreak.  Anything is possible with a big day of earnings and economic reports, so expect the wild price action to continue.

On the Calendar

On the hump day earnings calendar, we have a busy day with more than 160 companies stepping up to report.  Notable reports include ABB, AVB, BSX, ELY, CINF, COTY, ELF, ENR, FEYE, FLO, GM, GPRO, GRUB, HUM, IAC, IRBT, MRK, MET, OHI, ORLY, QCOM, RGLD, SAVE, SPOT, TWLO, YUMC, & ZNGA.

Action Plan

An early morning rally in the US Futures rally after a Chinese TV report of drug breakthrough for the coronavirus.  Even though the story is unconfirmed, this emotional market lept up nearly 300 points in early morning trading.  As of last night, there are nearly 25,000 confirmed cases and more than 490 deaths.  American and United announced overnight they are stopping flights to Hong Kong and Princess Cruise Line quarantines 3700 passengers after confirming 10 cases of the virus on board.  Disney reported is expects a 175 million impact for the closing of its parks in China, and analysts have started to adjust next quarter expectations on companies exposed to the virus outbreak.  NKE reported possible production delays due to their material supply chain from China is experiencing significant delays.

Despite the pending impacts, the US markets continue to rip higher with the QQQ setting a new record high yesterday.  If fact, it would seem that the ravenous appetite to buy already extended stock prices has increased.  Even stocks that appear to be in parabolic patterns such as TSLA continues to attract buyers with seemingly no concerns about price.  I am not saying the conditions are the same but the relentless buying is reminiscent of the tech run-up in 1999.  Though I risk sounding like a broken record, traders should guard themselves against chasing stock prices without regard to the last price support.  You don’t want to be the last person looking for a chair when the music stops.

Trade Wisely,

Doug

More Charging Bulls

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On Tuesday, the bulls gapped markets strongly higher (about 1.25% gap) and got some follow-through until noon.  Then we saw three hours of sideways grind followed by a selloff the last 30 minutes.  The tech giants which had suffered so much fear related to coronavirus impact seemed to lead the way.  In addition, TSLA was notable for following up their almost 20% gain Monday with almost another 14% gain Tuesday.  As a result, the QQQ closed 2.29% higher (a new all-time high close), the SPY gained 1.52%, and the DIA ended the day up 1.43%.  As you’d expect, the VXX was down hard to 14.83 and the T2122 returned to mid-range at 61.30.  This latter fact would seem to indicate we are still not over-bought.

The coronavirus story continues even while it remains unclear how much global impact will result. Confirmed cases are now up to 25,000 and deaths have risen close to 500.  The Chinese Health Minister told reporters that the virus has already mutated into a stronger and more communicable variant.  There have also now been babies born with the virus when the mother was infected. However, Fed speakers seem to indicate this entire outbreak will not have a significant impact on the US fiscal outlook.  In addition, Larry Kudlow told CNBC coronavirus is not a disaster for the US economy. On top of this, world markets have risen the last two days in hopes of a cure and vaccine.

Nonetheless, in after-hours reports, NKE warned that the virus will have a significant financial impact on their business, especially in their China operations and market (their primary product source and largest growth market).  Foxconn (a key AAPL supplier) also cut its outlook for the year.  The Chinese government has announced lower tax rates and eliminated fees to banks offering low-rate business loans and to at least some businesses involved in fighting off coronavirus impacts.

In the US Tuesday night, M also said they will close 125 stores and cut 2000 corporate jobs.  In addition, F reported a $1.7 billion loss and GILD reported a miss for the quarter.  On the other side, Disney beat (on 28.8 million DIS+ subscribers, but they did not update their streaming service guidance). Other beats included CB and CMG among others. 

Overnight, Asian markets continue to rebound with green across the board again.  The same is true in Europe, with strong gains in all the major bourses.  As of 7:30 am, U.S. futures are also pointing to another gap higher of between eight-tenths and one percent. 

$50.00 discount with code: Privilege

The bulls look to be continuing their charge this morning. Just bear in mind, the second-largest economy in the world seems to be in trouble from the virus and much of Asia is already feeling economic impacts. It seems logical that there would be some sort of impact on the US as well, but leaders say no. So, be careful chasing as it sure feels like more shoes will drop.

As I have relentlessly preached, a trader’s job is to consistently take profits and reduce risk (manage trades). So, don’t chase or give in to Fear of Missing Out. Make the trade to come to you…plan your trade and trade your plan. Or as Rick puts it: See it, Plan it, Trade it.

Ed

Swing Trade Ideas for your consideration and watchlist: BX, OKTA, VRTX, GE, TEAM, LLY, INTC, INFO, BLK. 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 Plans • Private 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

Bullish Charge!

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Bullish Charge

A GOOGL revenue miss, an outbreak continuing to expand, and a sputtering conclusion to the Iowa caucuses remarkably and somewhat confusingly inspires a bullish charge this morning.  We have a very big day of earnings and this huge gap up is likely to trigger a painful short squeeze for traders caught short.  As we seemly shake off any concerns of the outbreak economic impacts focus on the price action and the fact we are gaping right into price resistance levels.  Chasing this creates a large risk to support levels if, like yesterday virus new spoils the bullish party.

Asian markets close in the green overnight with the Shanghai composite bouncing 1.34% after yesterday’s plunge.  European markets also advance this morning, reacting to earnings and shaking off virus concerns.  As we approach the open US Futures, continue to climb ahead of a big day of earnings and economic news.  Hang on today would be a wild ride!

On the Calendar

On Tuesday earnings calendar we have a big day with 153 companies reporting quarterly results,  Notable reports include CMG, DIS, AFL, AGN, ALL, ATO, BOOT, BP, CNC, CB, CLX, COP, CMI, EMR, FISV, F, GILD, LHX, LII, MTCH, MCK, PBI, PAA, RL, RCL, SBH, STX, SPG, SIRI, SNAP & SNE.

Action Plan

Futures created a big gap and steep rally, and then virus fears once again brought in the bears after a report that a cruise ship passenger contracted the disease 6-days after departing the ship maybe infecting other passengers.  After the bell, yesterday GOOGL somewhat disappointed investors beating earnings estimates but missing on revenues falling about $45 a share.  Despite the disappointment and the virus deaths reaching 425 with nearly 20,500 infected futures are flying high this morning as markets choose to shake off and ignore previous concerns.  

As I write this report, US Futures point to a 300 point gap!  I can’t find anything in the news that justifies such a gap, but clearly the institutions what a return to bullishness.  This mornings gap could easily trigger a short squeeze rally forcing the markets higher still.  I don’t understand where the bullishness is coming from but the good news is I don’t have too.  My job is not to understand the wild emotional swings this market makes.  My responsibility is to maintain focus & discipline to my rules and my trade plan.  Unfortunately, a gap of 300 points is likely to create increased risks that may prevent me from entering trades.  I will not chase with a fear of missing out as the market gaps into price resistance. 

Trade Wisely,

Doug

Bulls Looking to Charge Again?

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The bulls gave us a little rebound Monday, coming off the worst week in 6 months.  After a small gap higher, the bulls pushed but were driven back in the large-caps leaving large upper wicks.  The SPY gained 0.74%, the DIA gained 0.55%, and the QQQ was strongest up 1.51%.  This caused the VXX to fall to 15.68.

Coronavirus continues to lead the news.  Among related stories, in the afternoon CCL reported that one of its passengers had tested positive for the virus 6 days after leaving one of their cruise ships.  Oil also fell to the lowest price in more than a year on fear of the virus’ impact on demand. As of this morning, the count has risen to 21,000 confirmed cases and 425 confirmed deaths. However, US markets now seem to expect this outbreak will end up having little impact on the US and global economies.

After the close, Alphabet reported earnings, beating expectations on earnings by 20%, but apparently disappointing on ad revenue.  As a result, both GOOG and GOOGL were down 4.5% in after-hours trading.  The other Monday night story was the Iowa Caucuses and their debacle of not releasing results.  Pete Buttigieg (widely seen as a moderate) claimed victory, but the Democratic Party announced nothing after finding inconsistencies in the data from the App they used to roll up precinct results.  A hand recount of the tallies will be done today.

Overnight, Asian markets rebounded after their beating yesterday and there was green across the board Tuesday.  The same is true in Europe, with strong gains being made in all the major bourses at this point.  As of 7:30 am, U.S. futures are also pointing to a large gap higher.

Tuesday’s major economic news is limited to Dec. Factory Orders (10 am).  Of course, although not economic or even usually news, the President Trump will deliver the State of the Union speech tonight. However, again there are many earnings reports.  Reporting before the bell are CNC, CLX, COP, CMI, ETN, EMR, IT, J, MCK, RL, RCL, SPG, SIRI, TDG, WAT, and ZBH.

$50.00 discount with code: Privilege

The bulls seem to be making another push this morning. However, the primary economic story (coronavirus impact) has not changed and I’m not aware of any unexpectedly good earnings stories that changes the outlook.  So, be careful trading in either direction. Remember what happened to Monday’s candle after the gap and morning run.

Keep in mind that our job as traders is to consistently take profits and cut risk. Don’t chase or act on emotion. Make the trade to come to you…plan your trade and trade your plan.

Ed

Swing Trade Ideas for your consideration and watchlist: OPGN, EZPW, PLAN, NFLX, LULU, IR, ALLE, SVRA. 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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1.3 Trillion Yuan Injected

by
1.3 Trillion Yuan

Although it likely helped significantly, the freshly printed 1.3 Trillion yuan injected into the Chinese market last night did not stop the Shenzhen from falling more than 7% by the close of the session.  Other Asian markets saw their 8th straight day of declines with the outbreak reaching more than 17,000 infections and 361 deaths.  With the Iowa caucuses set to begin and a big week on the earnings and economic calendar, the stage is set for continued volatility and challenging price action for traders to navigate.  Plan your risk carefully as big daily gaps and overnight reversals are likely to continue as the uncertainty continues to unfold.

Asian markets had a rough night with the reopening of the Shanghai composite but the HSI managed a modest gain of 0.17% by the close.  European markets are cautiously and modestly higher across the board this morning as they track Brexit & virus outbreak developments.  US Futures are putting on a brave face this morning, indicating a Dow gap up of more than 100 points ahead of earnings and economic reports.  Be careful not to chase into price resistance levels.

On the Calendar

On the Monday earnings calendar, we have 64 companies set to report quarterly results.  Notable reports include ACM, GOOGL, HIG, HP, LEG, NXPI, ON, SYY, & VVV.

Action Plan

Fear and uncertainty brought out the bears on Friday, wiping out all gains year-to-date.  Let’s hope the old saying, ss January goes, the year.  As the virus outbreak continues to weigh on the on investors, my major concern was how the reopening of trading in Shanghai would affect today’s open.  It’s not a big surprise that the index fell more than 7% but it could have been much worse without the 1.3 trillion yuan they injected into the economy.  Dumping all that cash all at once into the system also sent the yuan sharply lower against the greenback during the night.  Over the weekend, the confirmed cases of infection grew to more than 17,200 with 361 deaths creating the 8th straight day of selling in some Asian markets.

With Iowa caucuses just around the corner, the market could react to the outcome depending upon the strength of the results and the candidates that emerge on top.  We also have a very big week of earnings to keep us on our toes as if we didn’t already have enough factors injecting price volatility.  This morning the US Futures are pointing to a gap up open of more than 100 Dow points.  Perhaps recognizing Friday’s price action was an overreaction, and of course, the market loves freshly printed money no matter where the injection originates.  Just keep in mind this morning’s gap up will not be challenged by price resistance levels above.  Be careful chasing.

Trade Wisely,

Doug