Looking at Another Gap Down This Time

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

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

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

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

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

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

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

Ed

Swing Trade Ideas for your watchlist and consideration: SNDL, GBT, ADBE, TNDM, TZA, SQQQ, SPXU, SDOW, SOXS. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

|607% in just 24 months |

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

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Temper Tantrum

Temper Tantrum

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

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

The Economic Calendar

The Earnings Calendar

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

Top Stories

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

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

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

Technical Speaking

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

Trade Wisely,

Doug

Biden Bounce or Expecting More Cuts

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

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

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

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

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

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

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

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

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

Ed

Swing Trade Ideas for your watchlist and consideration: SMG, RP, GNRC, ENPH, CLX, MSCI, ETSY, ZAYO, AYX, SEDG, GLD. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

|607% in just 24 months |

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

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Record-Breaking Bounce

Record-Breaking Bounce

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

Price Whiplash

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

Economic Calendar

Earnings Calendar

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

Market New Highlights

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

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

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

The Technical s

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

Action Plan

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

Trade Wisely

Doug

As Virus Spreads G7 To Hold A Call

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

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

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

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

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

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

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

Ed

Swing Trade Ideas for your watchlist and consideration: CLX, BIIB, ENPH, BMRN, FLO, S, DXCM, NUAN, ALKS, TDOC, TPC, GTT. Trade smart, take profits along the way and trade your plan. Also, don’t forget to check for upcoming earnings. Finally, remember that the stocks/etfs we mention and talk about in the trading room are not recommendations to buy or sell.

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

|607% in just 24 months |

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

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Fed Intervention

Fed Intervention

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

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

On the Calendar

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

Action Plan

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

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

Trade Wisely,

Doug

Whiplash and Perspective

Friday saw another day of wild swings as markets gapped lower and gyrated back and forth on every scrap of news.  Among those drivers were a whole bunch of rumor, conjecture, misinterpretation, and some pure lies.  What was real is that the bulls believed something positive as they ended the day on a rally.  At the close, we had white-body candles and losses were a bit pared.  The SPY ended down 0.42%, the DIA down 1.14%, and the QQQ up 0.08%.  This closed out the worst week since the financial crisis of 2008, as for the week the SPY was down 11.16%, the DIA down 12.14%, and the QQQ down 10.63%.  The 10-year bond yield fell to 1.12% (and fell further over the weekend).

Coronavirus remained the main story.  The headline numbers have risen to 90,000 confirmed cases and over 3,000 deaths globally.  The outbreaks in places like South Korea (4,300), all 27 EU States (2,100), Iran (1,500), and the US continue to expand. This includes the first two deaths in the US.  However, not all the news related to the virus is bad.

On a positive note, the trend in new cases in China continues to go down (fewer new cases found).  In fact, on Sunday China announced they officially had more cases who had survived and been released than cases still requiring medical care.  This is a great trend change in the world’s second-largest economy.  It also points to a theoretical two or three-month course for the virus within a strictly quarantined and controlled population.  So, an optimist might be able to extrapolate this into something like a one to two quarter hit for economies and then it’s just a question of what shape the recovery graph takes.

This weekend, the President blamed the media and Democrats for a hoax that led to the market losses.  However, he also condemned the Fed for not having given the US the lowest rates in the world long ago and then “hoped” the Fed step in to save markets immediately.  This raises the question, from a market standpoint, how worried should we really be?  So, let’s put some context on the economic impact of the virus.

China’s manufacturing PMI was reported Saturday.  It fell to an all-time low of 35.7 for February, down from 50 in January and far below expectations.  (A private version of this number based in Taiwan and covering small-medium businesses, reported 40.3.)  As an example, last week, two major Chinese electronics manufacturers, Foxconn (Apple’s main supplier for Macs and iPhones) and Compal (Acer, Dell, HP, and Toshiba’s main supplier) told their major customers they were only back to 30-35% of their normal production capacity.  This is 3 weeks behind their normal post-Lunar New Year holiday ramp-up and is also a MUCH slower speed ramp-up than a normal year.  From a different angle, across the entire country, only about 55%-60% of China’s trucking capacity has resumed work, but that number is almost zero in the quarantined areas. Disease testing checkpoints and disinfection activities are also slowing the transportation of goods.

Outside of China, global tanker and bulk freighter demand is down 70% since the first of the year as of last week.  In addition, the American Assn. of Port Authorities are now forecasting a drop of 10%-20% in cargo volume year-on-year between 2019 and 2020.  (That is a massive range for a forecast, but also a huge decline if true.)  In South Korea, one of Samsung’s electronic flash memory factories has been shut for two weeks.  In Europe, NIKE just closed their EU headquarters.

The point is that in a global economy of just-in-time entities, (where inventory buffers have been systematically reduced for decades in the name of cost savings), supply disruption is a huge problem.  Not just in China, but anyplace in the world that sources anything from China, South Korea, etc.  In a sense, the more “modern” and profitable a business has been, the worse they will feel the impacts of a supply disruption.  The good news is that many industries have replaced inventories with the ability to be more agile (ramp up and down faster).  So, is coronavirus the end of the world…no.  Is it the end of revenue growth and significant profits for at least a few months or even a couple of quarters for many businesses…undoubtedly.   

$50.00 discount with code: Privilege

With that all said, Asian markets were volatile but took another beating Monday, ending deeply in the red again.  Europe is also once again down sharply across the board at this point.  As of 7:45 am, U.S. futures are pointing to a half to three-quarters of a  percent gap lower, but continue to be very volatile whipping back and forth.

In terms of major economic news, Monday’s slate is limited to Feb. Mfg. PMI (9:45 am) and ISM Mfg. PMI (10 am).  Major earnings are also limited, with only EVRG, JD, and XRAY reporting (all before the open).

The market freefall slowed Friday as bulls jumped at various signs of hope. However, massive volatility continued.  The only thing that really changed over the weekend was a couple of days off to reassess how we should really respond as a trader at this point.  This morning we still see a lot of volatility in the future, but they seem to be looking to start the week lower again. 

The question you need to answer is “do I really want or need to be trading in these conditions?”  Is this volatility and fast-moving market something that is in your favor?  If not, step away from broker platform and do something else.  Don’t let your emotions lead you into mistakes.  Keep repeating the mantra: no chasing….no revenge trading…no bottom/top picking.  Trading is a business, cash is a valid position, and consistent, effective trading is the goal.

Ed

Sorry but due to futures 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.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

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

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

Hit and Run Candlesticks / Road To Wealth Youtube videos

|607% in just 24 months |

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

Free YouTube Education  •  Subscription PlansPrivate 2-Hour Coaching

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

Correction Territory

Correction Territory

Suffering another nasty whipsaw the indexes fell into correction territory with the worst week of selling since Oct. 2008.  We could certainly use some good news to lift the market spirits but as of now there seems to be only bad news as the outbreak continues to spread.  Moody’s now places the offs of a global recession at 40% due to the impact of the outbreak.  As we head into another weekend of uncertainty all we do is hope for the best prepare for the worst.  When this is over there will be some screaming deals on very good stocks, but for now the wise thing to do is protect your capital.

Asian markets close the week with heavy volume selling as a portion of Japan declared a state of emergency.  European markets continue to selloff strongly this morning declining as much as 4%.  After a wild night where the Dow Futures dropped another 500 they have recovered slightly but continue to point to a bearish open.  Hold on tight and expect extreme volatility to continue as we approach the uncertainty of the weekend.

On the Calendar

On the Friday earnings calendar we get a little break with only 70 companies reporting.  Among the notable are FL, SSP & W.

Action Plan

With another huge whipsaw we ended the day selling off more than 1100 Dow points.  In just 6-trading days we have gone from new record highs into full correction with indexes down more than 10% in the worst week since October 2008.  I would love to say the worst of the selloff is over but as we head into the uncertainty of the weekend we could easily see more selling.  Global markets have now erased more than 5 trillion as the virus continues to spread.  Schools in Iran have now been closed and Japan has closed schools for a month with one area of the country declaring a state of emergency.  Moody’s has now raised the chance of a global recession to 40%. 

When you take a look at the index charts it hard to find anything technically traders can base any logical decision as to what comes next.  With panic in full bloom and extreme price volatility trading now is little more than wild speculation and gambling.  During the night Dow futures dropped another 500 points but have since recovered some of those losses currently indicating a gap down.  However, a retest of the overnight lows after the open is not out of the question.  In fact, as we head into the weekend the worry we face is will the low overnight hold? 

Trade Wisely,

Doug

Volatility and Virus News Galore

Volatility reigned Thursday as markets gapped lower, rallied hard and then fell again even harder.  It is a sure bet that a slew of reversal-pickers had their heads handed to them during those intraday swings.  On the day the SPY closed down 4.49%, the DIA down 4.54%, and the QQQ down a whopping 5.01%.  All three closed on their lows and printed big black candles with large upper wicks.  As you’d expect, the VXX spiked to 22.00 and bond yields fell to new all-time lows for a second straight day. 

It’s impossible to overstate the dominance of coronavirus in markets, media, and public discussion.  The headline numbers are now 84,000 confirmed cases and about 2,900 deaths globally.  However, these numbers are questionable with anomalies like Iran, where 26 are reported dead against only 245 cases has led to skepticism.  (An 11% mortality rate would be extremely alarming compared to the 3% death rate in China.)  Among other headlines that jerked markets around were GS saying that it has lowered its 2020 forecast for the growth of US company earnings to zero.  This is a dramatic break from the Wall Street consensus of 7% earnings growth for 2020. 

The related resource concern in the US has also escalated.  The Dept. of HHS announced Thursday that 40 labs nationally can now test for the virus, but 93 more labs could also be equipped next week.  However, shortly after the CDC increased the pool of people who should be tested to include not just those who have been to China, but also travelers from South Korea, Japan, Italy, and anyone with major respiratory issues.  Meanwhile, the Gov. of California said his state has 8,400 people under observation because they traveled from China.  However, they have less than 200 test kits in the entire state.  So, they simply cannot test even a fraction of those 8,400, let alone those who have been to Japan, South Korea or Italy…or the people they have contacted since returning.

Then overnight, a new angle was reported by the government of Hong Kong, who found the first case of suspected human to animal transmission.  In this instance, the pet dog of a previously confirmed coronavirus case has now tested as “weakly positive” for coronavirus.  This raises the specter of another means of community transmission.

Asian markets took another beating and were deeply in the red again Friday.  Europe is also once again down sharply across the board at this point (more than 3%).  As of 7:45 am, U.S. futures are pointing to a one to one-and-a-quarter percent gap lower.

Friday’s major economic news includes Jan. Core PCE, Jan. Trade Balance, Jan. Personal Spending, and Retail Inventories (all at 8:30 am), Feb. Chicago PMI (9:45 am), Michigan Consumer Sentiment (10 am), and another Fed speaker.  On the earnings front, AES, BAX, and FL all report before the open.

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The bears continue to pile on. While some people have made a quick buck in this market, a ton of traders have been sliced and diced by the whiplash.  Markets are quite oversold but can remain that way longer than most of us can take the pain of being too early.  As we head into a weekend of headline risk, we all need to consider how much risk we want to carry through that period.    

Remember that today is a completely new and different day.  If you let your emotions lead you into trying to get back to even (or get rich) quickly, you are likely to get punished.  Keep repeating the mantra: no chasing….no reversal picking…no bottom/top picking.  Trading is a business, cash is a valid position, and consistent, effective trading is the goal.

Ed

Friday is payday. Sorry but in front of the weekend and especially with current headline risk, there are no 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.

🎯 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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Uncertainty Dominates Price Action

Uncertainty Dominates

After a will day of volatility where the Dow whipsawed more than 650 points closed the day lower as fear and uncertainty dominate the price action.  Though indexes appear very oversold in the short-term futures indicate another substantial gap lower this morning with the CDC announcing our first community spread incident of the virus.  As much as we all want some selling relief the conditions suggest this could get much worse before it gets better.  Anticipating a bounce with a buy the dip mentality could prove very dangerous in the days ahead.

Asian markets closed mixed overnight with Japan sinking 2% with the South Korean central bank holding rates unchanged.  European markets are decidedly bearish this morning declining more than 2% with the outbreak continuing to spread.  Ahead of our biggest day of earnings reports and a busy economic calendar US Future point to Dow gap down of more than 350 points.  Expect fast price action, news-driven reversals and intra-day whipsaws to continue as we head into the weekend.

On the Calendar

On the Thursday earnings calendar is the biggest day of reports this week with more than 325 companies fessing up.  Notable reports include AMC, BUD, ADSK, BIDU, BBY, BYND, CROX, CRON, DELL, DISCA, EOG, EQT, FLIR, FRO, GCI, GNC, IQ, JCP, JD, KDP, MAIN, MYL, NLSN, NRG, PRGO, RRC, SRE, SWCH, TTD, TD, VMW, WDAY.

Action Plan

Yesterday’s 650 point whipsaw in the Dow shows the market stress as it struggles to come to grips with the virus impacts.  The CDC announced that a woman in California tested positive for the virus and is now the first community spread case in the US.  The news reports on the spread of the virus around the world are becoming increasingly grim as health agencies struggle to inhibit the expansion.  Companies continue to warn of substantial financial impacts and uncertain markets continue to fall.  Where this ends is anyone’s guess but for now price volatility will continue to make trading very challenging and traders should prepare for the fact this could get a lot worse before it gets better.

Technically speaking indexes are oversold but in this situation market fears could continue to drive the markets lower.  I suspect we could soon experience more drawdowns with mutual fund redemptions and 401 plan holders shifting to money markets to protect their capital.  The cascading effect can trap traders trying to buy the dip attempting to anticipate an oversold bounce or relief rally.  It will take a significant time for the daily charts to recover to the point that bullish patterns can appear.  With the high volatility this is a Day Traders market.  Swing and position traders will find this to be very challenging and dangerous.  Remember that cash is positon and just because the market is open you should not be compelled to trade it until conditions improve.  Protect your Capital!

Trade Wisely

Doug