From record market highs to bailout conditions in less than
a month! Oh, how the tables have turned by
a microscopic virus wreaking havoc around the world. A punishing day that saw heaving selling in
every sector of the market, and a barrage of bad news that points massive economic
impacts in the weeks and months to come.
With so much uncertainty facing the market, anything is possible, and it
seems government money can’t buy back investor confidence facing a pandemic.
Asian markets finished the week in the red, with Japan closing
more than 6% lower on the day. European markets
are in bounce mode this morning, rallying more than 5%. After a very turbulent night, US Future now
points to a Dow gap up of more than 1000 points as this will price action rollercoaster
ride heads into the uncertainty of the weekend.
Plan your risk carefully because anythings possible by Monday morning!
Economic Calendar
Earnings Calendar
On the Friday earnings calendar, we have just short of 70
companies reporting quarterly results.
Notable reports include BKE & GOGO.
Top Stories
Another rough market day triggering circuit breakers with
the Dow suffering the worst one day plunge since 1987 even as the Fed stepped
up with half a trillion dollars. A barrage
of virus news with professional sporting teams suspending seasons and large
venue closures in an attempt to control the virus spread.
Although its Friday the 13th, there is a favorable
breeze blowing in the pre-market after a wild night of price volatility in the
futures markets. Japan sold off sharply
last night, dropping as much as 10% at one point, pushing Dow futures down as
much at 700 points. However, the bulls
have come roaring back with a substantial gap up in prices at the open
today. Cross your fingers that it can
hold heading into a weekend that’s not likely to provide better news on the
virus front.
Technically Speaking
Index charts, as well as most stock charts, are in an ugly
technical condition. The Dow dropped
like a hot knife through butter closing well below the 2018 low nearly 19% below
its 500-day average. The SP-500 finished
the day just short of 14% below its 500-day with the Nasdaq composite 8.5%
below. The failure in the Russel is epic,
closing more than 28% below its 500-day average. What happens next is anyone’s guess, as the
economic impacts of the outbreak continue to compound. Some analysts are suggesting the market could
lose half of its value by the time this is over, and the full measure of
damages totaled. Congress is working on some
kind of relief package, but according to reports, it will be next week before a
vote occurs. The silver lining to all of
this is that great stocks are reaching bargain prices for those willing to hold
through what is likely going a very turbulent market for weeks or even months
to come. As we head into an uncertain
weekend, plan your risk carefully because anything is possible by Monday
morning.
In another roller-coaster day, the bears roared and the bulls got slaughtered. Futures plummeted after the 9 pm speech and we woke to a 7% gap down. Shortly after the open, this led to a halt. After the restart, markets got a roller-coaster ride. This lasted until shortly after 1 pm. From there, the rest of the day was a jagged slide lower. Just before the close, markets fell off a cliff, closing near the lows. This left the SPY down 9.57%, the DIA down 10.06%, and the QQQ down 9.17% on the day, which was the worst performance since Black Monday in 1987. As you’d expect, the VXX flew higher to end at 47.36, while Oil (WTI) closed down again to $30.90/barrel. The 10-year bond yield also sold off near the close after being up in the afternoon. It closed at 0.809%. Interestingly, banks raised mortgage rates in an effort to curb refinancing.
The most shocking event of the day was that the Fed threw their full weight into the fight, but came up short. Fed Chair Jerome Powell announced $1 trillion in additional easing through repo operations ($500 billion in 1-month and $500 billion in 3-month). That raises total Fed QE efforts to $1.5 trillion overall. However, that additional $1 trillion only bought markets a 6% mid-day gain that lasted 15 minutes. As soon as the euphoria wore off, markets sold off hard again for the rest of the day.
Meanwhile, the global headline virus numbers have risen to 137,700 confirmed cases and 5,080 deaths. In Europe, Italy now has 15,100 cases with 1,020 deaths. Spain has 3,900 cases with 90 deaths, France has 2,900 cases with 61 deaths, Germany has 3,060 cases and 6 deaths. In the middle east, Iran has 11,400 cases with 520 deaths. In Asia, South Korea has 7,980 cases with 71 deaths and Japan has 700 cases with 19 deaths. Perhaps the worst virus news of the day went under-reported. A study that was published in the Journal Lancet (191 patients), found that people remained contagious a median of 20 days after diagnosis with the longest being 37 days. This means that long after symptoms are gone and a 14-day quarantine expires, people can still spread the virus
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In the US, 47 states (plus D.C.) have confirmed infections of the virus for a total of 1,762 cases and 41 deaths. All major sporting events, concerts, conventions, etc. have been canceled and many states have banned any gathering of over 250-1,000 people (varies by locale). Many more companies also laid-off workers without pay due to a loss of business. Shortages and hoarding have begun, although those instances are not completely out of hand now.
However, not all the virus news was bad. In China, only 18 new cases (7 of which were travelers from abroad) and 11 new deaths were reported Thursday. So, with as much as 80% of their workforce back to work, they are now reporting the peak of the epidemic is behind them. While this is a very hopeful sign, we do have to remember that they had a good testing regime, had strictly-enforced quarantines, and a socially compliant population, which the US lacks (as of now). Still, it is a positive sign.
Overnight, Asian markets were down again across the board. (Down hard in the case of Japan, which lost over 6%.) However, Europe has gone the other direction with every bourse up strongly, including the 3 majors being up over 6% at this point in their day. As of 7:30 am, U.S. futures are pointing to a large gap higher (4-5%), after having reached the 5% “limit up” circuit-breaker overnight. So, instead of Mr. Hyde, the markets may give us Dr. Jeckyl today.
On Friday, the major economic news is limited to Feb. Import/Export Price Index (8:30 am) and Michigan Consumer Sentiment (10 am). Once again, there are no major earnings reports on the day.
With the incredible volatility and heavy selling that has gone on this week, it will take a braver man than me to take positions into the weekend. (And that’s true regardless of what happens Friday.) The headline risk is on both sides, with the possibility of a stimulus package and/or more Fed actions on one side. On the other side, there is a likelihood of large increases in the numbers of cases and deaths, as well as more weekend announcements from businesses. There are also too many wildcards to count. So, my advice is to get flat or at least delta-neutral going into the weekend.
If you have to trade, trade small (nimble), fast, and lock in profits every chance you get. Remember, this won’t last forever and there will be another day. Prepare for the eventual bottoming, but don’t expect a V-shape. Have a list of tickers you will look to buy and a price pattern where you’d be interested in buying. Then wait on the trades to come to you. Say it with me… Don’t chase. Don’t trade on emotion. Don’t think you can predict turns. Let price tell you when a trend and support are in place.
Ed
Sorry, but due to market volatility there will be no Swing Trade Ideas 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 the longest bull run in market history officially over and unprecedented travel restrictions going into place, investors continue to run for the doors. As the markets continue to tumble, expect more forced selling as mutual fund, 401K redemption’s and margin calls grow. We are in uncharted waters as the now official pandemic personal, business, and economic impacts create an uncertain path forward. Protect your capital!
Asian markets closed lower across the board as Japan falls into bear a bear market. European markets just one day after a central bank rate cut sees losses of more than 5% this morning. Ahead of a huge day of earnings and economic reports, the US Futures have to trigger their second circuit breaker in a week. Halting trading but pointing to a morning gap down of more than 1200 points. Hold on tight; this will be a bumpy ride today!
Economic Calendar
Earnings Calendar
On the Thursday earnings calendar, we have our biggest day
this week, with more than 250 companies reporting. Notable reports include DG, AVGO, WORK, ADBE,
CRON, GPS, JBL, ORCL, TLYS, TUP, ULTA, & ZUMZ.
Top Stories
Yesterday the WHO declared a global pandemic as the virus continues to spread around the world. The White House bans travel from most European countries for 30 days in an attempt a slow the spread of the virus.
The NBA suspends the season, and March Madness will happen
with no spectators allowed.
The longest bull run in market history is now officially
over as US markets slump into bear market territory and continuing to slide south.
Technically
What’s there to say other than the charts are a mess and
continue to worsen as virus panic grips the market. Although it seemed nearly implausible just a
few days ago that the market would test the 2018 lows this morning that looks
very likely with the Dow pointing to more than 1000 points lower at the
open. While the virus situation could get
much worse, there is a silver lining if we can get past the emotion of the selloff. Eventually, this will be over, and great stocks
will be at bargain-basement prices. The
massive price volatility is currently very dangerous, but given time it will
get better, so protect your capital and be patient.
Well, that stimulus rally didn’t last long. Wednesday started off with a 2.7% gap down and then we saw volatile follow-through the rest of the day. However, at the end of the day we did see some short-covering or bulls stepping in to reduce the damage. Either way, the buyers came up short as at the close, the SPY was down 4.87%, the DIA down 5.84%, and the QQQ down 4.36%. The VXX closed up over 13% to 38.66. However, oddly the 10-year bond yield closed up to 0.85%. Oil also closed down to $33.12/barrel (WTI) on the day. As mentioned yesterday, we are now into a bear market, well more than 20% off the highs in all the major indices.
During the day, the WHO finally declared coronavirus to be a global pandemic. (Insert Captain Obvious joke here.) The President also met with Wall Street executives while his staff met with Oil lobbyists to discuss the crisis. However, in a sign of what really gets things done, shortly after we hit bear territory in all three major indices, the Fed announced it will pump an additional $25 billion/day ($175 billion/day total) into banks through the repo program. There was also then an announcement the President would be giving a national speech Wednesday evening.
In his speech, the President banned all travel from Europe for 30 days. Of course, he did so after blaming those countries for some outbreaks in the US. He also seemed to finally embrace the tone of the medical experts as he advised the elderly not to travel, Nursing Homes to stop all non-medical visits, and all people to adopt measures like social distancing, staying home when sick, and increasing hygiene practices. He then asked Congress for $50 billion in economic relief and to consider giving unspecified payroll tax relief. In addition, he ordered the SBA to give low-interest loans to SMEs. He concluded in his typical style (and I’ll leave it at that). Whatever his style and the content, markets apparently expected more as both futures and Asian markets plunged immediately after the speech.
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Meanwhile, the headline virus numbers have risen to 127,750 confirmed cases and 4,720 deaths globally. In Italy, on top of a national travel quarantine and ban on public gatherings, their government has now closed all retail businesses except for groceries and pharmacies. This comes as the number of Italian cases rose to 12,500 with 830 deaths. Germany’s Chancellor warned that up to 70% of all Germans (2,080 cases now) could contract the virus. France saw a jump up to 2,300 cases, with Spain (2,280 cases) right behind. Iran is in dire straits as well as they reached 10,100 known cases and 430 deaths. South Korea is up to over 7,870 cases, but relatively few deaths at 66. However, it is worth noting that GS also is now estimating that 80% of Chinese workers have returned to work, albeit with masks and taking extra precautions. This came as China reported only 15 new cases.
Overnight, Asian markets were down hard again across the board. Europe has followed suit with the major bourses down over 6% so far today. As of 7:45 am, U.S. futures are pointing to a 5% gap lower, after having halted trade due to circuit breakers following the President’s speech.
On Thursday, the major economic news is limited to Feb. Core PPI and Weekly Initial Jobless Claims (both at 8:30 am). However, on the earnings front, DG reports before the open and ADBE, AVGO, GPS, ORCL, and ULTA report after the close.
Markets around the world are plunging and being halted Thursday. The President has had his say and that appears to not have been enough. With this said, expect heavy volatility to continue. It is likely something will happen that will jerk the market the other way on at least fleeting hope. That is simply our human emotions in an uncertain environment.
I’ve been saying for a long time now, ask yourself if you really need to be trying to swim this river of volatility? I am not and I remind you that cash is a perfectly valid position. You don’t need to trade every day to have a great year. If you are trading now, get small (nimble), be very fast and stay focused. This is not an easy market to trade. As always, remember, you do not have to pick the bottom to make incredible returns on a market recovery. Say it with me…Don’t chase. Don’t trade on emotions. Don’t think you can predict turns.
Ed
Sorry, but due to market volatility there will be no Swing Trade Ideas 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
After an excellent one day rally, it seems the bears have
come back this morning to punish anyone that held long positions overnight with
the US futures another substantial overnight reversal. With the central bank’s actions ineffective and
federal government stimulus likely months away, the path forward for the market
is clouded with uncertainty. With US
infections jumping to more than 1000, its evident this outbreak will get much
worse before it gets better, so expect the wild market volatility to continue.
Asian markets close red across the board overnight, but European
markets see only green this morning after the bank of England cut rates by 25
basis points. Ahead of the CPI report
and more than 100 earnings reports Dow futures to point to substantial gap down
wiping out about half of yesterday rally in one fell swoop. Prepare for another wild day of price volatility!
Economic Calendar
On the Hump day earnings calendar, we have nearly 120 companies
reporting results. Notable results
include TACO, EXPR, HABT, LK, UNFI, VRA, & ZAGG.
Top Stories
Joe Biden takes a commanding lead in the Democratic race for
the President wining in 4 more states last evening.
Italy’s infection number cross over 10,000 as the country
mulls the idea of a full country shutdown.
According to the CDC, the US confirmed infections jump over 1000, with
the virus spreading to 30 states. The President
pitched an idea of cutting payroll taxes to 0% for the rest of the year but didn’t
hold your breath because stimulus packages commonly take more than
6-months.
Technically Speaking
The rally yesterday was great to get a little relief in the
selling. Unfortunately, there is a lot
of work to do before there we will see a significant improvement to the massive
technical damage suffered by stocks and indexes. With the coronavirus numbers growing, federal
stimulus actions having little to no effect, and health officials struggling to
slow the spread of the outbreak, investors remain very uncertain about the path
forward. This morning we face another
overnight reversal with the Dow pointing to gap down of more than 500 points as
this frustrating volatility continues to challenge even the most experienced traders. Sadly, it seems this problem is far from over,
and traders should prepare for another day of wild price action.
What a volatile day. We saw a 3.7% gap open, followed by a roller-coaster day with a 5.5% range and it ended at the highs. The White House did not have a rescue plan ready in the morning, but the President proposed a cut to payroll taxes through the election (per Bloomberg) later anyway. Even with details scant, the markets still loved the idea that there was going to be a major stimulus package of some type. On that news, the SPY closed up 5.17%, the DIA up 4.92%, and the QQQ up 5.45%. The VXX fell to 34.11 and the 10-year bond yield rose to 0.8%. Oil rose to $34.36/barrel (WTI).
While we would hope to have broad American leadership, that’s not how politics work in the US, especially in an election year. However, politically, this nebulous package headlined by a proposed Payroll Tax suspension was quite a savvy move by Republicans (or President Trump). It gives Republicans a period where only their plan is in the news as doing something (even if it is not completed or changes along the way). It will also force Democrats to either defend blocking this plan (when completed and finally introduced) or to up the ante with a bigger plan of their own and defend even wider deficits. Neither of those actions is likely to appeal to the middle-ground demographic. Of course, Democrats could also just go along with whatever the Republicans finally hammer out and let the President crow about saving the day. So I would say this was a well-played move.
However, think twice before you jump in bullish with both feet. Don’t naively think Tuesday’s announcement means nothing but blue skies ahead. Keep in mind that we still have no proven treatment, the virus continues to spread in the US, and nothing has even been proposed in Congress yet, let alone passed. Even more importantly, most of the rescue plan specifics (or even outlines) are unannounced if they have even been fleshed out. So, we are still likely to keep reading “they are considering” for various industries and measure for a while. Just do not be surprised by a lot more volatility as some rescue package gets hammered out and makes its way to approval.
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Meanwhile, the headline virus numbers have risen to 121,000 confirmed cases and 4,366 deaths globally. In Italy, things got worse with a jump of 1,000 cases on the day, up to 10,200 cases and 631 deaths as of day-end Tuesday. Iran is a similar situation with over 9,000 known cases and 354 deaths announced. South Korea is up to over 7.755 cases, but relatively few deaths at 54. Spain jumped to 2,100 cases, with France (1,800 cases) and Germany (1,600) not far behind.
In the US, 40 states (plus D.C.) have confirmed infections of the virus for a total of 1,040 cases, but “just” 29 deaths. Cancellations, company orders to not travel, and orders to work from home continue to expand. For example, Google told its 100,000 workers to just work from home until further notice. Presidential candidates are even canceling rallies at this point. Quarantines also continue to expand as New York state called out their National Guard to enforce a quarantine around an area with a cluster of cases (just North of NYC).
Overnight, Asian markets down everywhere except India and Malaysia. Japan down 2.27%. Europe is mixed, but the major bourses are on the green side so far today. As of 7:30 am, U.S. futures are pointing to a gap lower again across the board.
On Wednesday, the major economic news is limited to Feb. Core CPI (8:30 am) and Crude Oil Inventories (10:30 am). However, once again, there are no major earnings on tap for the day.
The idea of a Payroll Tax cut seemed very promising to markets Tuesday. However, nothing is certain about this plan, what the market will think of the details (when they come out) or about the virus’s impacts. So be careful. Expect heavy volatility to continue as both uncertainty and human emotions will continue for weeks or months to come.
Keep asking yourself if you really have an edge when trading in this environment? If you are trading now, trade small (nimble), be quick and stay focused. This is not a nonchalant trader’s market. Remember, you do not have to pick the absolute bottom to make incredible returns on a market recovery. Don’t chase. Don’t trade on emotions. Don’t think you can predict turns. I promise you there will be other trades in days to come.
Ed
Sorry, but due to market volatility there will be no Swing Trade Ideas 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 day after a landmark selloff, the President proposes a tax
cut to help with the impacts of the virus attempting to stabilize a very nervous
market. I think it’s safe to say the immediate
economic impacts of the outbreak are substantial, but with the spread, in just the
beginning stages here in the US, the path forward will be challenging to
navigate. Though a relief rally is
overdue, we must remember that a retest of market lows is very common, so trade
must prepare for the wild volatility to continue in the coming day and weeks.
Asain markets bounced back overnight in a very turbulent
session closing in the green across the board.
European markets are also in bounce mode this morning, trying to recover
about 3% of yesterday’s punishing selloff.
Ahead of earnings and a light day on the economic calendar US futures
point to gap up of nearly 1000 points in reaction to the proposed tax cut. Expect fast and volatile price action.
Economic Calendar
Earnings Calendar
On the Tuesday earnings calendar, we have about 100
companies reporting quarterly results. Notable
reports include CASY, SOHU, SFIX, & MTN.
Top Stories
After the biggest one day point drop in Dow history with the
market grappling with a more than 20% plunge in oil prices and a spreading
outbreak, futures point to a substantial bounce. Shortly after the bell, the President proposed
a payroll tax cut to help stimulate the economy, and China injected a 4 billion
aid package to support markets. With the
indexes down about 19% from last month’s record highs, we are nearing official bear
market territory still facing a long road ahead of outbreak impacts.
With the outbreak in Italy continuing to spread rapidly, the
government extended its lockdown to the entire country. The first country to take such extreme
measures to battle the epidemic as their death toll jumps over 450. South Korea’s infected tops 7500 as the nation
extends school and universities closures another 2-weeks. As numbers continue to grow here in the US,
nervous consumers continue to stock up on food, paper products, and cleaning
supplies expecting to stay home for extended periods. The economic impacts worldwide
attributed to this outbreak will be substantial, and many are now suggesting a
recession is all but inevitable.
Today is another big primary day as Birnie Sanders and Joe
Biden battle for delegates across several states. If one candidate happens to make a clean sweep,
the Democratic Party may finally have a clear front runner in the 2020 race for
the Presidency. A market reaction to the
results is possible, so say on your toes.
Technically
The charts are an absolute mess due to the sharpness of the
selloff. In the short-term, we are very
oversold with the DIA and SPY well below their 500-day averages. The proposed tax cut has inspired the bulls
to bounce back hard this morning, pointing to a 1000-point gap up as this very
wild price action continues to challenge traders. While a relief rally would be very welcome,
we must keep in mind that market lows are often retested after a period of
relief. While yesterday appeared to be a
capitulation selloff, we should plan for the possibility of more virus inspired
bearish moves in the days ahead. If we
rally, keep an eye on crucial price and moving average resistance levels for
clues. Expect the extreme volatility to
continue with substantial intra-day whips and significant overnight reversals to
test the risk tolerance of all traders.
Another Monday, another massive gap. This one was a huge gap lower, which set off a trading circuit breaker. That pause was followed by a very volatile and wide-ranging day. At the close, the SPY was down 7.47%, the DIA down 7.87%, and the QQQ down 6.95%. That made it the worst loss since the 2008 Financial crisis. As you’d expect, the VXX closed up 23.54% to end the day at 36.84. The 10-year bond yield also fell to 0.318% (all-time low) during the day, but ended at 0.54% (all-time low close). So, the bear market (yes bear market, because we’re over 20% off the highs) rollercoaster continues.
While coronavirus continues to be the driver, the immediate cause of carnage Monday was the plunge in oil prices. This was due to the OPEC response to Russia’s refusal to cut production. As a result, Oil got hammered hard, with WTI closing down 25.34% to $30.82/barrel. One important thing to remember is that Russia could change its mind any time before the end of March when current production limits are set to expire. This would not change the demand destruction caused by the virus. However, it could reverse some or all of the price plunges based on a “market-share grab” price war. So, just be aware of this upside risk
The headline virus numbers have risen to over 114,600 confirmed cases and 4,030 deaths globally. In response, Italy has expanded its quarantine to their entire country. Several other countries have imposed spot quarantines, outlawed large gatherings, and/or have ordered people with a cough to remain home. At the same time, the daily number of new cases in China continues to fall. Meanwhile, the WHO has said that recovery from the virus can take up to six weeks.
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In the US, 35 states (plus D.C.) have confirmed infections of the virus for a total of 755 cases and 26 deaths. Many thousands of others have been quarantined or have self-quarantined. This includes 5 Congressmen (including President Trump’s newly named Chief of Staff). However, all these numbers will climb as test kits become available more broadly. (On Monday, the CDC said just 75,000 test kits have been distributed in the US so far, and less than 1,600 tests have been processed. However, HHS Sec. Azar directly contradicted this a couple hours later at an evening press conference, saying millions of tests have already been distributed in this country.)
At this point, US markets have priced in a 72% chance of an additional three-quarter of a percent interest rate cut on or before March 18th and another quarter percent cut in April. Analysts are saying that markets expect even more rate cuts (beyond those two), as well as more QE and fiscal stimulus. During the day Monday, the Fed addressed part of these expectations by announcing it will increase the money given banks for short-term funding (repo operations) by 50%, to $150 billion/day, through at least Thursday. Then after the close, the President said he’ll meet with Republicans about a payroll tax cut and “very substantial relief” for impacted industries. (Politics never wastes a crisis.) These moves come just days after Treasury Secretary Mnuchin and Sr. Economic Advisor Kudlow told the press such measures were not needed on Friday.
Overnight, Asian markets soared on the prospect of a massive US stimulus plan. Japan was up 5.6% and the Hang Seng 2.45%. Europe is following Asia and is up about 3% across the board so far today. As of 7:30 am, U.S. futures are pointing to a gap higher of over 4% as of now (on top of having reversed futures that were lower prior to the President’s pre-announcement of meeting with only his party leaders. Again Tuesday, there is no major economic news scheduled. There are also no major earnings on tap for the day.
Nothing fundamental has changed yet. However, based on President Trump’s promise of a huge fiscal stimulus announcement, it looks like the gap is upward today. Still, there remains the possibility of markets being disappointed if the stimulus package isn’t enough…or…if the Democrats balk at some feature of that rescue package (them having been excluded and all). So be careful. Expect heavy volatility to continue as uncertainty and human emotions still control markets.
Keep asking if you really need have an edge trading in this high volatility environment? If you are trading, be fast, focused, and nimble (small). Trading is a business, and consistent, effective trading is the goal. You do not have to pick the bottom to make incredible returns on a market recovery. Don’t chase. Don’t trade on emotions. Don’t think you can predict turns.
Ed
Swing Trade Ideas for you watchlist and consideration: EVBG, WEC, KR, AWK, CPB, ZM, TDOC, ETSY. 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
There is blood in the street this morning with the virus
news not getting any better and plunge in oil prices that’s shaking up currency
markets around the world. During the
night, US futures trading halted as the 5% circuit breaker tripped. Suffice it to say we face a very rough day in
the markets with a huge gap down and the real possibility that more circuit breakers
could trip during the day as investors run for the doors. Expect extreme price volatility and hazardous
market condition in the days ahead.
Asian markets plunged during the night, with Japan falling
over 5% by the close. European markets are
sharply lower this morning with the DAX, FTSE, and CAC all down by more than 6%. US Futures point to a gap of more than 1200
points down as the market grapples with plunging oil prices, currency
fluctuations, and an outbreak continuing to spread uncertainty of economic
impacts. Expect a very rough day!
Economic Calendar
We have a very light day on the economic calendar with a 3
& 6-month bond auction as well as the TD Ameritrade IMX report at 12:30 PM
eastern time.
Earnings Calendar
Monday begins with just short of 100 companies fessing up to
quarterly results. Notable reports
include CASY, SOHU, SFIX, & MTN.
Top Stories
With OPEC failing to cut a deal with Russia, they have
decided to dump a glut of oil onto the market, driving the prices sharply lower,
punishing Russia for not joining their attempt at price controls. At the opening of the futures market on
Sunday evening, oil price plunged, pulling the overall market down as it
fell. The plunge in oil prices is also
creating substantial currency fluctuations putting central banks between a rock
and a hard place. Cut rates to stimulate
the economy or raise rates to support currency valuation. What a tangled web this has suddenly become. Even the cryptocurrencies are feeling the
pain with $26 billion wiped away in the last 24 hours.
With the futures pointing to massive losses during the night,
a 5% down circuit breaker tripped halting futures trading to prevent them from
falling further. If the selling resumes
during the day, we could trigger more circuit breaker trading halts as
investors run for the doors. A drop of
7% in the SP-500 halts trading for 15 minutes, a decline of 13% will once again
stop trading for 15 minutes. A decline
of 20% will stop trading for the rest of the day.
When it comes to the outbreak news, the spread continues around
the world, and here in the United States as the governor of New York said, it’s
like trying to stop air. Long story
short, it will likely get worse in the days and weeks ahead, and the uncertainty
of the economic impacts will continue to worry investors and make the price
very volatile and trading very dangerous in the near term.
Technically
The charts are simply a mess due to the very high emotion
and uncertainty the market faces. If circuit
breakers begin to trigger the panic could much worse. You can just imagine the phones ringing off
the hook at mutual funds, 401K plans, and brokerage firms as investors pull the
plug to stop the pain. With the market
gaping the DIA and SPY below their 500-day averages and the QQQ open below its
200-day where this panic selling end is anyone’s guess. Hold on tight this could be a very wild week.
Gaps and volatility were the hallmarks of the week and Friday was no exception. A 3.2% gap lower at the open was followed several swings that also amounted to a 3% intraday range for the day. After this rollercoaster ride, stocks closed near the highs of the day. However, the SPY still closed down 1.65%, the DIA down 1.00%, and the QQQ down 1.69%. The VXX closed up almost 12% to finish at 29.82.
For the week, a very vide-ranging Doji was seen across indices with the SPY actually up 0.41%, the DIA up 1.69%, and the QQQ up 1.08%. So, although it certainly didn’t feel like it, it was a green week. The 10-year bond fell below 0.70% yield during the week and closed the week at a record-low close of 0.764%. Crude oil was also down 8% on the week as the hope of supply-side intervention from Monday faded.
As a result of Russia not cooperating on production cuts, Saudi Arabia has announced that it will hike its own output and UAE, as well as other OPEC members, are expected to follow suit. With prices already down 30% on the year, and countries seeming to shift to a “market share grabbing strategy” CNBC reports that some analysts are predicting $20 oil is coming this Spring. That would have major geopolitical impacts as well as huge implications for oil companies and especially US shale exploration and production names.
$50.00 discount with code: Privilege
Obviously, coronavirus continues to dominate the news, markets, politics, and daily life pretty much around the globe. Over the weekend, the headline virus numbers have risen to over 111,230 confirmed cases and 3,900 deaths globally. In the US, 33 states have confirmed infections of the virus for a total of 565 cases and 22 deaths (numbers that more than doubled over the weekend). However, these numbers will climb as testing kits are just now starting to become available more broadly. The most impacted states remain Washington, New York, and California.
On Sunday, the head of the NIAID (HHS infectious disease dept.) said that “social distancing” needs to be prevalent in the US for at least the next 3 months. However, he doesn’t feel strict quarantining as done in Wuhan would be publicly acceptable in the US. He also reiterated that it will take at least 12-18 months before any vaccine is ready for distribution. Finally, he said that overall, his sense of the US virus situation is not encouraging.
In the US markets, at this point traders have priced-in (65% probability) another three-quarter of a percent interest rate cut by on or before March 18th. If this did happen, it would take US interest rates to 0.25% and would mean we have seen a 1.25% rate cut in less than a month. On Sunday night, the 10-yr Bond yield fell below half a percent to 0.34% at one point. This was about the time that S&P Futures temporarily stopped trading because they had reached the 5% Limit Down rule level.
Overnight, Oil prices plummeted, taking credit markets and then Asian stocks with them. Markets were down over 5% in Japan and almost 7% in Australia for example. Europe is also very deep in the red, down about 6-7% across the board so far today. As of 7:30 am, U.S. futures are pointing to a gap lower of over 5% as of now. There is no major economic news scheduled for Monday. There are also no major earnings on tap for the day.
Expect gaps, heavy volatility and circuit breakers today as uncertainty and human emotions still reign in the market. Do you really need have an edge trading in that environment? Remember, cash is a valid position and the loss of a day, week or even a month of trading is a small price to pay to avoid being whipsawed to death. Trading is a business, and consistent, effective trading is the goal. Don’t chase. Don’t trade on emotions. Don’t think you can predict turns.
Ed
Sorry, no Trade Ideas for your watchlist and consideration today. Markets are simply too volatile. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 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
