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.
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.
🎯 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 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.
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.
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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.
🎯 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
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?
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.
$50.00 discount with code: Privilege
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.
🎯 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 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!
The bears set another bull trap Wednesday. After another gap higher, markets saw follow-through to the upside. By 11am all the major indices were up close to 2%. However, about 11:30am the trap door opened and a selloff lasting the rest of the day ensued. During this selloff, the 10-year Treasury Bond fell to a record low yield (1.3%) as traders flocked to safety. At the close, the SPY was down 0.37%, the DIA down 0.35%, but the QQQ managed to stay green at up 0.52%. All three printed black candles with large upper wicks. However, at the same time, the VXX fell 2% to 18.93. Overall, the recent downturn has taken the indices down about 9-10% from the recent all-time highs.
Coronavirus continues to be the main story and driver of the markets. The headline numbers have now risen to 82,500 confirmed cases and over 2,800 deaths globally. The W.H.O. reported that Wednesday was the first time there were more new cases reported outside China than inside. However, many governments (including China) are suspected of under-reporting cases and deaths. It could also be that the China/World ratio is just indicative of testing outside China finally beginning to ramp up.
Among the major virus news items was the first US case with no known connection to overseas. (This person had not traveled abroad and does not know anyone who has traveled abroad recently. This likely means they contracted the virus from someone else who contracted the virus from a third person who had some connection with one of the early outbreak countries.) Also of importance, is that in Japan the first patient who had fully recovered and tested negative for many days has now tested positive again. So, either reinfection is possible or the best-known tests will give negative readings while the virus is actually still active.
In contrast to widespread public and market concerns, the President was reportedly upset that US markets were down over this issue. He publicly scolded both the press and a CDC official (who told Americans to prepare for disruption to their daily lives) for needlessly spreading fear. Later at his press conference, he said the risk to Americans is very low, his administration’s precautions have been extremely successful, and the US is number one in the world in terms of preparation for a pandemic. However, he did appoint V.P. Pence to act as Czar for the crisis. In a somewhat contradictory fashion, the health professionals who then spoke went on to say that spread in the US is likely although they “hope” to have a treatment regime ready for distribution “sometime soon.” (That potential treatment regime is currently in a one-patient test.)
In terms of impact, more companies (including MSFT) dropped or lowered guidance again overnight. In addition, schools, sports events, and public gatherings have been canceled or outright banned across many nations. The head of China’s Central Bank also said they are “very worried” about the impact on the global economy. Germany’s Health Minister said his country is headed for an epidemic and that quarantine does not seem to be effective. Meanwhile, several other European and Nordic countries (i.e. Austria, Belgium, Croatia, Finland, Netherlands, Norway, Sweden) all reported their first cases. In South America, Brazil also reported its first case.
In an example of the related contradiction/confusion, biotech company MRNA released a statement saying it has already sent a vaccine to the government seeking approval for a human trial. However, at the evening press conference, the head of the N.I.H. vaccine testing said that no vaccine will be ready for human tests until possibly May (late April if we ere lucky) and then would require 12-18 months of testing before proven safe and at least partially effective enough for release. He added that they expect the virus to return next year and he hopes they will have a vaccine ready by then.
$50.00 discount with code: Privilege
Overnight, Asian markets were in the red again. Europe is also down sharply across the board at this point. As of 7:45 am, U.S. futures are pointing to between a 1.3 to 1.7 percent gap lower. So, it looks like a bumpy open, to say the least.
The major economic news for Thursday includes Jan. Durable Goods Orders, Q4 GDP, and Weekly Initial Jobless Claims (all at 8:30 am), Jan. Pending Home Sales (10 am), and a couple more Fed speakers. On the earnings front, BBY, CBRE, DISCA, DISCK, FLIR, NRG, NLSN, PWR, and SRE all report before the Open. Then ADSK, BIDU, CNP, EOG, EIX, MNST, MYP, NKTR, NI, OXY, PRGO, and WDAY report after the close.
The bears are firmly in control and a gap lower looks to be in the cards. However, volatility is high and we will very likely see intraday swings. So, anyone trading now needs to either be fast, able to endure pain and/or hedged. Remember that cash is a perfectly valid position and sometimes the very best position you can take.
Be careful, keep following the trend, listen to price action and trade consistently. Remember Buffett’s number one rule for making a lot of money in the market: 1) Don’t lose a lot of money in the market! Trading is a job and it requires consistent, careful, and effective work…not a gunslinger, get rich quick mentality.
Ed
Swing Trade ideas for your watchlist and consideration: IOVA, CME, NFLX, FLO, BYND, TDOC, LPX, SGRY, NTNX, SIG. 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 CDC warning of a substantial coronavirus breakout
in the US markets extended its losses with the Dow sinking more than 1900
points in the just 2-days. There was
such a demand for the relative safety of treasury bond the 10-year yield fell
to a record low and oil dropped below $50 a barrel. What happens next is anyone’s guess as markets
around the world grapple with the economic uncertainty of this very contagious
outbreak.
Asian markets closed in the red across the board and European
markets continue to sell off this morning.
US Futures have been all over the map this morning facing a big day of
earnings and economic reports. With
trends and key support levels broken we can expect highly volatile price action
to continue as we sort through the wreckage of the last 2-days.
On the Calendar
On the hump day earnings calendar, we have more than 250
companies reporting quarterly results.
Notable reports include LOW, SQ, TDOC, AMCX, APA, BKNG, BOX, CARS, CNVA,
CHK, DAKT, EV, ETSY, STAY, TWNK, SJM, KW, LB, MAR, MNST, NTES, NDLS, ODP, PZZA,
DOC, SEAS, TJX, TCOM, UPWK, VIPS, WB, WEN & WYND.
Action Plan
After a 2-day selloff that dropped the Dow more than 1900
points triggering more market selloffs around the world. With the CDC now expecting a substantial breakout
to occur in the United States 10-year treasury bonds dropped to their lowest levels
in history while oil fell below $50 a barrel.
Travel stocks such as airlines, cruise lines and travel booking company’s
plummetted as did health insurers and health care related stocks. The South Korea outbreak jumped to nearly
1150 confirmed cases and reported 11 deaths.
With possible vaccine’s still months away it would seem this situation
will get significantly worse before it gets better. The uncertainty of the potential economic impacts
is likely to keep the market on edge and volatile in the weeks ahead.
With trends broken and prices slicing through multiple price
support levels all at once traders will find it very difficult to find there
way back into the market with the high risk of news-driven reversals. During the night US Futures whipsawed from triple
points up to triple points down as shellshocked trader’s emotions continue to vacillate. Normally one would assume we have reached a
short-term oversold condition a relief rally is due to begin but this is not a
normal situation and traders should prepare for just about anything. With a huge day of earnings reports and a
couple of key economic reports on the calendar expect highly volatile price action
to challenge even the most experienced traders.
Remember cash is a position and there is no shame in watching from the
sidelines as the uncertainty continues to unfold.
Markets gave us a head fake at the open Tuesday with a half-percent gap higher followed by a minute of momentum that took markets up an additional half percent. However, this was met by a sharp reversal a couple of minutes into the day that turned into a brutal all-day selloff. There is no mistaking the decisive, large-body black candles printed across all the major indices on the day. The SPY closed down 3.05%, the DIA down 3.15%, and the QQQ down 2.72%. As you’d expect the VXX jumped again and is now at 19.38, a level it has not seen since October.
Coronavirus remains the main story as it seems the possibility of economic impacts has just dawned on many traders in the last few days. That said, governments do continue to downplay this story. For example, both China and South Korea “predict” a turning point in the outbreak in their countries this week. Meanwhile, President Trump and his economic advisor Larry Kudlow said again Tuesday that the virus has been well contained in the US and economic growth will not be significantly impacted.
The headline numbers have now risen to 81,250 confirmed cases and about 2,800 deaths globally. Of course, the vast majority of cases have been inside China. However, looking at major economic centers outside China, South Korea now reports more than 1,260 cases, Japan about 200 cases, Germany 20 cases, France 20 cases, the UK 15 cases, and Italy more than 375 cases.
In terms of impact, many major companies have lowered forecasts. This includes key indicators of consumer activity like MA warned they will miss 2020 revenue forecasts by at least 2-3% (even though those original forecasts were published less than a month ago) as a result of the virus. The European Automaker Groupe PSA warned the entire auto industry worldwide is now working with extremely short supplies of parts. In other indications, the Dept. of Health and Human Services said the virus is “likely to cause a global pandemic” and “it’s just a matter of time before the outbreak starts spreading in the US.” The CDC spokesman agreed with that assessment and went so far as to predict disruption to daily lives in the US.
Overnight, Asian markets were all in the red again. Europe is slightly mixed, but shows losses across most, including the 3 major (FTSE, DAX, CAC), bourses at this point. As of 7:45 am, U.S. futures are pointing to a flat open, but they have been very volatile all night.
The major economic news for Wednesday is limited to Jan. New Home Sales (10 am), Crude Oil Inventories (10:30 am), and a couple more Fed speakers. In terms of major earnings reports, SJM, LOW, NI, PEG, and TJX report before the open. ANSS, APA, BMRN, BNKG, CCI, LB, MAR, NTES, FTI, TCOM, and UHS report after the close.
$50.00 discount with code: Privilege
The bears are firmly in control, but the drop has moved so far, so fast that it certainly looks like chasing to add shorts here, unless you are a very short-term trader. Yes, Asia and Europe continued to slide, but that doesn’t mean we can’t see an up day in a downtrend. Be careful to not let your emotions get the better of you. No revenge trading. No chasing. No reversal picking. Keep that discipline.
Remember that cash and sitting on your hands is a valid position and sometimes the best move you can make. Be cautious, follow the trend, listen to price action and trade consistently. Keep reminding yourself, trading is a job/business and sometimes, calling in sick for a couple of days is the only way to avoid burnout.
Ed
Sorry, but there are no trade ideas for today. Markets need to settle before we can plan out quality swing trades. 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
