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.
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
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.
Wednesday was another brutal, roller-coaster day in the market. After futures went limit-down overnight, US markets opened on a 5% gap down. The volatile intraday moves covered a 9% range and caused a trading halt when the circuit-breaker was tripped mid-morning. However, prices closed up off the lows, with the SPY down 4.94%, the DIA down 6.60%, and the QQQ down 3.04%. The VXX rose almost 18% to 69.00. Oil was crushed during the day, closing down 24% at $20.37/barrel.
The 10-year bond yield spiked sharply to 1.198% by day end, as overall interest rates rose. This seems counter-intuitive with the Fed spending hundreds of billions of dollars to drive yields down. However, Bloomberg reported the likely cause is the fact the federal government is increasing national debt just as fast or faster in order to provide relief, stimulus, and bailouts. In addition, the public is selling everything, including bonds, to raise cash. Regardless of the cause, rising rates are not good news for an economy starting into a big shock. So, we might expect Fed programs to increase pace even further in an effort to over-power the new government spending effect.
Late in the day, stocks did come up off their lows as the Senate finally passed the House-White House relief deal from last week. (This isn’t the major stimulus bill, but rather the one to guarantee paid sick leave, paid family leave and increased funding for food programs and Medicaid.) The larger stimulus bill(s) are still being haggled over between Republicans, Democrats and the White House. Expect that larger stimulus plan to be the lead story for a couple of days as what is finally included is negotiated.
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In ominous news, at the daily presser, Dr. Deborah Birx pleaded for Millennials to respect social distancing and quarantine measures. This was prompted by data out of Europe showing that more young people are getting sick from the virus than had been previously believed. In addition, the WHO report that 6% of infected children have had severe or critical symptoms from COVID-19 (as opposed to 19% for adults).
The global headline virus numbers rose to 221,450 confirmed cases and 9,000 deaths. In Europe, Italy now has 35,720 cases with 3,000 deaths. Spain has 15,000 cases with 640 deaths, France has 9,150 cases with 265 deaths, Germany has 13,100 cases and 31 deaths. On this continued spread, Automakers and other industries closed all of their operations across Europe and the US on Wednesday. In the UK, the country prepares for lock-down with closures of transit systems, schools, and businesses. The ECB also announced an $819 billion dollar stimulus package (this caused US futures to jump well over 500 points from negative to positive on this news).
In the US, confirmed infections continue to grow, following the same exponential growth rate seen in Europe. The totals are now 9,425 cases and 150 deaths. Last night, NYC again lobbied the NY Governor to approve a shelter-in-place quarantine order for the city. This came less than a day after the Governor said he wouldn’t allow this measure. The NYSE also announced it will be closing floor operations as of Monday the 23rd and go to fully-electronic trading due to a pair of infections found among floor traders trying to enter the floor.
Overnight, Asian markets were down, with South Korea hammered 8.4%. Europe is mixed, but the majors (FTSE, DAX, CAC) all down 1-2% so far in their day. In the US, futures were volatile again overnight, swinging up and down repeatedly. As of 7:45 am, the futures were pointing to another gap down of between 1% and 2%.
On Thursday, the major economic news is limited to Weekly Initial Jobless Claims, the Mar. Philly Fed Mfg. Index, and Q4 Current Accounts (all at 8:30 am). In earnings news, ACN and DRI report before the open, while LEN and CTAS both report after the close.
While the worst is yet to come in terms of cases, deaths and economic damage, it is important to keep in mind that we have fallen very far, very fast. We are more than 40% off the mid-February highs in the SPY and almost 50% off those highs in the DIA. So, expect the funds (who can handle pain) to start picking up some deals soon as long-term holds for their portfolio and suggesting the public do the same (maybe to protect their own moves?).
We remain in a very erratic and over-reacting market with a strong bias still to the downside. Again, this is not a market to be Swing Trading. Use this time to really learn the trading setups and vehicles (like option strategies) you will be using. Refine your trading plans, put the time to work…but don’t be chasing trades. Remember the market can stay extremely oversold a lot longer than any retail trader can stay solvent being too early. 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
As violent price gyrations continue, so does the extreme
danger for retail traders. Although we
have had several big one day rallies, we have yet to see the bulls able to
follow-through the next day. Instead was
we see is overnight reversal ripping the heart out of traders that tried to
hold positions just one more day. This morning
is a repeating that pattern once again with US Futures limit down wiping out
most if not all of yesterday’s hopefulness.
Asian markets seesawed back and forth overnight, finally
closing the day lower across the board.
European markets are sharply lower this morning with the DAX, FTSE,
& CAC, all showing losses fo more than 5%.
Ahead of a Housing Starts number and 60 earings report Dow futures to point
to an overnight reversal of more than 800 points, and fear and uncertainty continue
to drive extreme price volatility.
Prepare for another wild day.
Economic Calendar
Earnings Calendar
On the hump day earings calendar, we have about 60 companies
reporting results. Notable reports
include GIS, FIVE, GES, HABT, TLRD, TCOM, & WSM.
Top Stories
Biden swept three primary elections last night as he doubles
the delegate lead over Sanders can drawing closer to clinching the Democratic
nomination. President Trump has now won
enough delegates to lead the Republican party in the 2020 election.
After a day of rally closing the Dow up more than 1000
points, futures now point to an overnight reversal wiping out the gains waiting
on yet another government bailout proposal to be passed. Munchin reportedly warns senators the impacts
of the virus could lead to a 20% US unemployment rate as a business shutdown
responding to CDC recommendations.
The Vegas strip is quiet for the first time since the
Kennedy assassination as all gaming in the state was ordered to shut down. Kansas schools have closed public schools for
the rest of the year! The first such state
to make such a drastic decision.
Technically Speaking
Yesterday’s relief rally was a nice change to the extreme
selling pressure, but sadly it looks as if a second day of follow-through is too
much to ask for amid such wild volatility.
After another wild night of price, action futures reached another limit
down trading halt. The QQQ rally moved
up to test the resistance of its 500-day average, but sadly the overnight
reversal will wipe out almost all of yesterday’s hopeful gains at the open.
With the VIX closing, the day above a 75 handle, and a likely
sharp move higher this morning options, prices will remain very dangerous and
virtually untradeable. While there are
some tempting values in stock prices, the volatility requires a tremendous tolerance
for risk that few retail traders are willing to ride out. The best course of action for most is to
continue to remain disciplined to your trading plan and protect your capital while
market prices continue to gyrate violently.
Tuesday was another roller-coaster ride for markets. A 2% gap higher was met with immediate selling down to the lows of the day. However, from 10 am to noon was a hard rally. The massive waves continued all day until a close near the highs. Once again, we had an 8% intraday range, but the SPY closed up 5.63%, the DIA up 5.42%, and the QQQ up 7.58%. The VXX only lost 1.18% to 58.51, which points to intraday volatility. Oil was down 6% on the day, closing at $26.84/barrel (WTI) on fear of a global recession and even further Saudi supply increases. However, the 10-year bond yield was back up above 1%, closing at 1.064% on the day as Fed bond-buying ramps up.
During the daily press conference, the President kept his tone for a second straight day, announcing desires to have fiscal stimulus. This includes deferring April 15 income tax payments for 90 days and a check sent to every American home. At the time of the presser, the administration hadn’t yet spoken to Congress on the plan specifics, but their hope was to have the checks cut and mailed within two weeks. Note that it took 2 months after signing the bill in 2009. Nonetheless, markets liked something they heard.
The House and Senate Democrats also put forth packages of their own and as said, were in mid-day negotiations with Treasury Sec. Mnuchin (who left the President’s press conf. early to start those negotiations). Subsequently, it leaked that they were talking about a $1.2 trillion relief package including over $250-$500 billion in immediate checks to family homes, $200-$300 billion in small business assistance, $200-$300 billion in tax cuts, and $50-$100 billion in relief for the airline industry. It also came out that during discussions with Congress, Mnuchin said he was worried unemployment could hit 20% due to the virus.
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Not to be outdone, Majority Leader McConnell told the press that the Senate would not adjourn again until they had passed a relief package larger than the House passes. (A somewhat odd statement for a “Fiscally Conservative” party leader, but I guess these are different times.) In addition, during the day the Fed extended its $500 billion/day repo operations (to aid banks) through at least the end of the week and announced a new lending facility for US businesses (beyond banks). So, the government is now firing all their guns.
The global headline virus numbers rose to 203,500 confirmed cases and 8,225 deaths. In Europe, Italy now has 31,500 cases with 2,503 deaths. Spain has 13,720 cases with 600 deaths, France has 7,750 cases with 175 deaths, Germany has 9,920 cases and 26 deaths. On this continued spread, the EU closed its exterior borders to all non-EU people for 30 days. In addition, the UK announced a 400-billion-pound relief package. Both the UK and France said they will start fining and may jail anyone infected who is out in public. Italy, France and Belgium all also banned selling short for 3 months in their stock markets.
In the US, all 50 states (plus D.C. and Puerto Rico) have confirmed infections as the virus is following exactly the same exponential growth rate seen in Europe. The totals are now 6,525 cases and 116 deaths. Again, more states have ordered public venues, bars and restaurants closed. Schools were closed across 37 states. NYC also gave warning that they will soon join San Francisco in closing the city and ordering shelter-in-place quarantines.
Overnight, Asian markets were down, with South Korea down 6.5% and Australian down almost 5%. Europe has continued to the downside, with another acceleration today. So far in their day, the major European bourses are all down more than 5%. In the US, futures were volatile again overnight. However, as of 7:30 am, U.S. futures were pointing to another 5% gap down.
On Wednesday, the major economic news is limited to Feb. Building Permits and Feb. Housing Starts (both at 8:30 am) and Crude Oil Inventories (10 am). The only earnings of note for the day are GIS before the open and TCOM after the close
The US numbers will continue to rise exponentially (especially once testing really starts ramping up), more businesses will report the impacts, and the life of the public will halt. So, volatility and gaps are not going anywhere. We are simply in a massively erratic and over-reacting market with a bias still to the downside right now. Again, this is not a market to be Swing Trading. Keep reminding yourself, you do not have to trade every day, week, or month!
Needing action is the worst reason in the world to take trades. So, remember there will be another day. Keep preparing your list of strong companies you will want to own WHEN THE TIME IS RIGHT. Then wait for those trades to come to you. Don’t chase. Don’t trade on emotion. Don’t think you can predict turns. Let price tell you when we have a more stable price action, less volatile trend and see proven support below us. Until then, get very fast (day trade), very slow (long-term holds) or stay out.
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
It would appear attempting to buy our way out of this
current crisis is not going to work after the massive move of the FOMC did
little to dissuade the bears in the face of such uncertainty. I would like to assume the worst is over, but
with the US just now beginning the process of a shutdown, the path forward is
more uncertain than ever. Long and short
trader getting involved in this will volatility with have to have considerable
tolerance for risk with the VIX now above the 2008 high. It would seem the best course of action for
most retail traders is to remain on the sidelines protecting their capital
until we begin to see some improvement.
Asian markets closed mixed with Australia surging nearly 6% overnight. Unfortunately, European markets are still
feeling some selling pressure this morning as they are modestly lower across the
board. After a wild night of volatility
in the futures markets, point to a little bullishness at the open. With a big day of earnings, economic data, and
uncertainty, anything remains possible.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have 60 companies reporting
quarterly results. Notable reports
include FDX, FLR, HDS, LE, & MIK.
Top Stories
With more than 4200 confirmed cases and over 70 deaths, the
CDC has recommended restricting gatherings to less than ten people in an attempt
to slow the spread. Many states have now
recommended closing bars, restaurants, night clubs, fitness facilities, and
schools until further notice. Small
business impacts are tremendous.
The Feds surprise rate cut and massive cash injection increased
the fear of the unknown lifting the VIX-X above the 2008 highs and creating the
worst one-day selloff since 1987. All 11
sectors of the S&P were down on the day, but there were some bright spots amongst
the carnage, such as KR and CLX.
Airlines have already asked the government for a 50 billion
dollar bailout, and I’m guessing there will be many more industries to follow
as the impacts on business grows. The
virus is now impacting the Presidential election, with Ohio closing its primary
polls.
Overnight futures came close to a limit up rally, but during
the night gave back most of the move in another display of incredibly dangerous
price volatility.
Technically Speaking
When looking at the charts, there is very little to see but tremendous
technical damage. One would hope that
yesterday was the final capitulation, but with much of the country right at the
beginning of its shutdown, the path forward seems more uncertain than ever. With such incredible price volatility, stock
traders attempting to pick up the deeply discounted stocks will have a
substantial tolerance to risk and willing to hold through the huge overnight reversal
and steep intra-day swings. With implied
volatility so high option traders face incredibly inflated contract prices, as
well as punishing bid/, ask spreads making it extremely dangerous to trade. Until there is some improvement, it is hazardous
to consider being long or short. Staying
in cash on the sidelines, protecting your capital continues to be the most reasonable
course of action the majority of traders consider.
Another day, another ride through the meat grinder for traders. After Sunday evening’s Fed move, markets made a massive 12.5% gap down at the open. This triggered an immediate halt. After the 15-minute break, the daily whipsaw continued with more than 8% intra-day range but ended near the lows. The SPY closed down 11.11% (off the lows), the DIA down 12.76% (near the lows), and the QQQ down 11.98% (very near the lows). The VXX spiked 38.87% to close at 59.99. The 10-year bond yield closed down to 0.758% and Oil closed at $28.67/barrel (WTI). This is significant because shale companies cannot stay in business at that oil price.
During the day markets were panicked and manic as news came fast. Toward the end of the market day, the President held another press conference, where he changed his tone again. This time he accepted that the virus is out of control. In fact, he said “if we do a good job,” the COVID-19 outbreak may be under control by July or August. He also said he may implement “lockdowns” (quarantine) for certain areas, is calling for social distancing by all ages, and for all Americans to avoid any gathering of more than 10 people. In addition, he pledged to bailout the airline, cruise, and hospitality industries.
On Monday, the Senate did not take up the relief bill that was passed early Saturday in the House with Presidential support. Majority Leader McConnell reported that Senate Republicans cannot accept the paid sick leave in the House bill (although House GOP members and the President had, and the bill exempts smaller companies). However, Senators on both sides of the aisle have already staked out positions offering various forms of payments to be sent to every American home. The G7 also held a teleconference. While European leaders were hoping it would result in announcement of specific coordinated economic action, all that came from the meeting was a vague promise to do “whatever is necessary to support global trade and economies.”
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Last night the global headline virus numbers rose to 185,500 confirmed cases and 7,330 deaths. In Europe, Italy now has 28,000 cases with 2,160 deaths. Spain has 11,200 cases with 491 deaths, France has 6,650 cases with 150 deaths, Germany has 7,640 cases and 20 deaths. Many countries have closed their borders to foreigners and implemented virtual shelter-in-place rules by closing businesses and banning public gatherings. Automakers such as Fiat-Chrysler and Volkswagen have closed all of their operations across Europe.
In the US, 49 states (plus D.C. and Puerto Rico) now have confirmed cases as the virus is following exactly the same exponential growth rate seen in Europe. The totals are now 4,740 cases and 95 deaths. More states have ordered public venues, bars and restaurants closed. San Francisco has also ordered shelter-in-place quarantines across most of the Bay area. Some states have also canceled or postponed primary elections to avoid crowds. However, not all the news was bad. With all the demand from online-shoppers, AMZN announced it is trying to hire 100,000 new employees for distribution centers and delivery operations.
It was reported Monday that MRNA began the first trial of a potential vaccine candidate. However, even if this is the perfect vaccine, it will take 12-18mo before it would be ready to go to manufacturing for wide distribution. It is also worth noting that in the history of the world, only 1 virus (Hepatitis-C) has ever been cured. So, traders should be very careful not to latch-on to every report of a miracle drug as an immediate massive opportunity.
Overnight, Asian markets were mixed. Europe has continued to the downside so far in their day. In the US, futures were all over the place overnight. They went “Limit up” at one point only to turn around and go negative. As of 7:45am, they are pointing to a bounce after the ugly day yesterday.
On Tuesday, the major economic news is limited to Feb Core Retail Sales (8:30 am), Feb. Industrial Production (9:15 am), and Jan. Business Inventories and JOLTS (both at 10 am). The only earnings of note are from FDX, which reports after the close.
Expect volatility and gaps to continue. We are simply in an erratic and over-reacting market with a bias to the downside. Not a good market to Swing Trade. Keep reminding yourself, “I do not have to trade.” Needing action is possibly the worst reason in the world to take a position. So, remember there will be another day. Keep preparing your list of strong companies you will want to own WHEN THE TIME IS RIGHT. Then wait for the trades to come to you. Don’t chase. Don’t trade on emotion. Don’t think you can predict turns. Let price tell you when more stable action, less volatile trend and proven support are in place.
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
Sunday afternoon, the FOMC made a surprise mid-meeting decision
to cut interest rates to zero and aggressively inject another 700 billion. An action that would typically bring the bulls
charging back had an opposite effect scaring the market and pushing the futures
limit down just minutes after opening Sunday evening. It appears the Friday gains disappeared in
one fell swoop on the weekend reversal.
Price volatility will be extreme at the market open and don’t be
surprised it we trip another circuit breaker halting trading for 15 minutes shortly
after the open.
Asian markets closed down across the board, and European markets
are falling as much as 8% this morning. Downside
pressure could easily create new market lows this morning as panic grips the market
unable to come to grips with the outbreak impacts. Protect your capital as extreme price
volatility is likely to continue for the near future.
Economic Calendar
Earnings Calendar
We have a big week of earnings reports starting Monday with
more than 160 companies reporting results.
Notable reports include COUP, HQY, REV, & TME.
Top Stories
The Government is pulling out all the stops trying to stop
the market from bleeding out. Friday,
the President declared a National Emergency, freeing up 50 billion dollars for
stimulus setting of a strong buying rally into the Friday close. Late afternoon on Sunday, the FOMC made a second
mid-meeting decision to cut the interest rates to 0% and stepping up aggressive
operations to the tune of 700 Billion. The
action was not received well by the market, with the Futures dropping limit down
in about 15 minutes after opening Sunday evening, and treasury yields fell
sharply.
The CDC is asking to cancel or postpone all group activities
of 50 people or more. California and New
York have ordered closures of bars, night clubs, restaurants, and other states
are soon to follow. New York is also
closing its schools. Las Vegas has
started to shut down as well, with all the MGM and Wynn resorts closing its
doors this week.
Piling on to the bad news, Apple has been fined 1.2 Billion
Dollars by French antitrust authorities early this morning.
Technically Speaking
The Friday afternoon rally allowed the QQQ to recover its
500-day average closing the week with a little hopefulness of a relief rally. Sadly that hopefulness faded quickly after
the shocking FOMC action scaring the market that things but be much worse than anticipated. With the market in full-on panic mode, there’s
not much to hang our hat on technically with such wild emotional swings. With the futures, limit-down expect an open
that wipes out the entirety of Friday’s gains and the possibility of new market
lows. Don’t be surprised if a circuit
breaker trips shortly after the open halting trading for 15 minutes for the 3rd
time in under a week.
It goes without saying this is a very dangerous market with
no relevant metrics to guide traders as to what comes next. We know the impacts are going to be huge but
were trying to shoot at a target in total darkness with no idea how long the night
will last. Anything is possible, and the
best traders can do is protect their capital by standing aside while the
violent price action continues.
The roller coaster continued Friday with a gap higher at the open, a run back down near the Thursday lows and then a strong rally into the close. In contrast to the Wednesday night speech, the bulls loved what they heard from the President’s press conference at day end. As a result, the SPY closed up 9.20%, the DIA up 9.43%, and the QQQ up 8.47%. Interestingly, the VXX was only down 8.78% to 43.20. Oil (WTI) also closed higher at $32.93/barrel and the 10-year bond yield also climbed to 0.983%.
In the presser, the President declared a national emergency as well as steps that will soon be taken to triage potential cases and direct people to a nearby testing center. Later, Dr. Fauci (NIH) clarified that it’s more complicated some stated at that event. He told BBC that temporary facilities need to be built, supplied, and tens of thousands of testers will need to be trained. In addition, newly added labs need to be set up to process the samples as well as supplied with reagents. So, millions of tests will not be available (let alone done) this week. That said, he noted the US was on a much better testing trajectory Friday evening than it had been on Thursday.
The event was serious, but also oddly congratulatory. The President, VP, Task Force members, and a parade of CEOs were all praised, thanked and asked to speak. While I personally didn’t like that tone, this seemed to be exactly what traders wanted to hear. It had a very lifting effect on markets, which perhaps sensed the government finally recognizes the scope of the problem, is now serious about it, and that major testing efforts are being planned to begin.
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Over the weekend, the global headline virus numbers rose to 173,000 confirmed cases and 6,665 deaths. In Europe, Italy now has 24,750 cases with 1,810 deaths. Spain has 8,800 cases with 300 deaths, France has 5,500 cases with 130 deaths (but they have not reported number updates in over a day), Germany has 6,220 cases and 13 deaths. France, Spain, and Germany also all followed Italy in closing all public venues, closing non-essential businesses, as well as stopping non-critical travel.
In the US, 49 states (plus D.C. and Puerto Rico) have confirmed infections as the virus is following exactly the same exponential growth rate seen in Europe. The totals are now 3,800 cases and 69 deaths. As far as impact, things got ugly this weekend as groceries were stripped bare many places, major retail chains closed (or were ordered closed), hospitals began canceling elective surgeries, and unpaid employee furloughs escalated. Food and household goods makers also warned of supply chain disruptions caused by hoarding and loss of workers. In addition, a number of states banned large gatherings. Ominously, NY state reported that it is nearly out of ICU beds and may authorize hospitals to take over hotels.
Still, on Saturday Sec. Mnuchin echoed the President when said he still did not expect a recession. Nonetheless, on Sunday, in the 2nd emergency move in just days, the Fed cut the Fed Funds rates a full percent to 0.25% (while extending the repayment period to 90 days), cut bank reserve requirements to zero, launched $700 billion in additional QE (for a total of $2.25 trillion) and said “they were prepared to use its full range of tools” as needed.
In a separate event, the President reverted to his form telling the daily press briefing the virus is “something we have tremendous control of.” Another flatly false statement. Fortunately, real experts were also on stage to give us the real sitrep. After Trump left, Dr. Fauci told the press “the worst is yet to come…we are at a critical point now.” Earlier in the day, the CDC had recommended that for at least the next 8 weeks, people cancel or postpone any gathering of 50 people or more.
Overnight, Asian markets were down hard again across the board despite moves by the Fed and other Central Banks. Europe has continued the slaughter down 6%-9% across every bourse at this point in their day. In the US, futures went limit-down shortly after the Fed moves and were halted overnight. As of 7:45 am, U.S. futures are pointing to a huge gap down, which will very likely cause a circuit-breaker at the open.
On Monday, the scheduled major economic news is limited to the NY Empire Mfg. Index (8:30 am). Once again, there are no major earnings reports on the day. However, there are very likely to be economic news from the Fed, President, Congress, etc.
Heavy volatility and gaps are likely to continue. Remember, that there is no rule saying you must be trading. In fact, avoiding heavy volatility environments is a great idea for most traders. So, remember there will be another day. Prepare a list of tickers you will look to buy when the time is right. Then wait for the trades to come to you. Don’t chase. Don’t trade on emotion. Don’t think you can predict turns. Let price tell you when a less-unstable trend and proven support are in place.
Ed
Swing Trade Ideas for your watchlist: AAPL, KR, UNH, CPB, EVBG, ZM, CHTR, PYPL, MSFT, DPZ, REGN, ATVI, ABBV, GOLD, INTC, WMT. 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
