Budget-Debt Limit Fight and China Crypto Statement

Markets gapped higher at the open Thursday and then followed through strongly the first half-hour of the day.  Then we saw a very slow, steady rally into 2 pm before doing a very slow, steady selloff into the close.  This left us with strong, white, gap-up candles that left an upper wick in all 3 major indices.  On the day, SPY gained 1.21%, DIA gained 1.48%, and QQQ gained 0.92%.  The VXX fell over 6% to 25.37 and T2122 rose to just outside the overbought territory at 76.21.  10-year bond yields spiked to 1.427% and Oil (WTI) rose 1.4% to $73.24 even though the Dollar fell on the day.

During the day, the White House began alerting federal agencies to prepare for a government shutdown next Thursday night.  Democrats are scrambling to move ahead with a bill that links the budget (government shutdown) with increasing the debt ceiling (the next crisis).  Bloomberg reports that House Speaker Pelosi and Senate Majority Leader Schumer are now pointing to a showdown vote on Saturday.  If the vote fails, we can expect more machinations next week and a probable shutdown next Friday.  To this point, these issues have been ignored by markets, but with the weekend news cycle ahead, Fed meeting behind, and events drawing nearer, today may be a new story. 

After the close, the CDC endorsed the use of PFE booster shots for older and at-risk patients.  TRIP reported a missed on both lines last evening.  Meanwhile, NKE reported a miss on revenue, but COST managed a beat on both lines.  NKE is down 5% in premarket even as TRIP is down half of a percent and COST is up six-tenths of a percent this morning.

Overnight, Bitcoin and other major cryptocurrencies fell by more than 5%.  Ethereum, the second-largest crypto fell more than 8%. The moves come after China’s Central Bank posted a Q&A on its website that said all crypto-related activities are illegal and that there would be a harsh crackdown on that entire market.  This is not China's first attack on the alternate currencies, but adding to the earlier moves against crypto mining along with the country's trials of their own digital currency last year, some analysts believe this is the start of their move to force the use of only government-transparent digital currencies. This is a move likely to be followed by all major powers as governments do not want to give up control of and visibility to at least as much of all transactions as they have now. In other foreign political news, polls say Germany is poised to see a new ruling party after elections on Sunday. (The current CDU has been in power since 2005.)

Overnight, Asian markets were mixed.  Japan (+2.06%) and Taiwan (+1.07%) stood out on the upside while Hong Kong (-1.30%) and Shanghai (-0.81%) stood out to the downside.  In Europe, stocks are red across the board at mid-day. The FTSE (-0.20%), DAX (-0.72%), and CAC (-0.94%) are representative.  However, the much smaller exchanges are feeling the hit much harder.  Greece (-2.28%), Norway (-1.89%), and Finland (-1.56%) lead the pain parade in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a gap-down at the bell.  The DIA is implying a -0.38% open, the SPY implying a -0.50% open, and the QQQ implying a -0.67% open at this hour.  The Dollar is rebounding this morning as 10-year bond yields are at 1.417% and Oil (WTI) is down a third of a percent in early trading.

The major economic news scheduled for release on Friday is limited to August New Home Sales (10 am) and a trio of Fed speakers (Chairman Powell, Bowman, and Clarida all at 10 am).  The major earnings reports scheduled for the day are limited to CCL before the open.  There are no earnings reports scheduled for after the close.

A volatile week that started with a sizeable Evergrande gap-down and has proceeded with a whipsaw-filled recovery of that gap is now about to wind down. With more Fed speakers seeking to soothe markets on tap for today, but the prospect of a showdown vote over a government shutdown and debt ceiling coming this weekend...do not be surprised if we see a Mr. Market be manic again today. The short-term trend is now bullish, but we have yet to take out the downtrend that goes back to the beginning of the month, at least in the SPY and QQQ. So, the bulls still have serious work ahead if they want to overcome the pullback's technical damage.

Manage your existing trades before you chase any new ones. Focus on the process and on managing the things you can control. Don't worry about the things you can't control. Remember that it's discipline and good trading rules that separate trading success from failure over the long run. Above all, consistently take profits when you have them. A good trader refuses to let greed turn their winners into losers. Finally, it is Friday, so consider how you want your account sitting Monday morning, and don't forget to pay yourself.

Ed

Swing Trade Ideas for your consideration and watchlist: No trade ideas today. You can find Rick's review of tickers on his YouTube Channel here. Trade your plan, take profits along the way, and smart. Also, remember to check for impending earnings reports. Finally, remember that any tickers 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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