Bulls Look To Follow-Up Big Week

The May Unemployment Report came in much better than expected and the bulls were off to the races Friday.  After an almost 2% gap higher, a morning rally drove us to the highs by late morning.  A grind sideways in a tight range took over for several hours, then profit-taking the last hour of the day pulled markets back into what the Bears might call a Shooting Star candle in the SPY and DIA.  On the Day, DIA gained 3.12%, SPY gained 2.59%, and QQQ gained 1.98% (closing at an all-time high).  The VXX fell below 30 for the first time in 3 months to 29.17 while the T2122 4-week High-Low Ratio proved it could go higher to close at 99.26.  At the same time, 10-year bond yields rose to 0.893% while Oil (WTI) gained over 4% to close at $38.97/barrel.  The Dow was up almost 7% on the week and the S&P up almost 5%.

On Saturday OPEC+ agreed to extend their production cuts for one more month even as oil prices have more than doubled in the 7 weeks since the start of the cuts.  The one fly in the ointment is compliance to cut promises (some countries having only cut one-third as much as promised). Regardless, the cut extensions are good news for US shale producers who need prices where they are now or higher to make a profit.

Bloomberg reported on Sunday that sources tell them AAPL is looking to get further into the finance business.  No word, on whether this is due to a demand slump.  Either way, AAPL is reportedly preparing to sell their products and services via installments with either “6mo. no interest” or “12mo. no interest” payment plans.  The move would have the additional benefit of forcing more adoption of the Apple Card as that is how payments would be managed.

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Elsewhere on Sunday, in China, it was reported that May exports fell 3.3% year-on-year, after a surprising gain in April. However, May imports were down almost 5 times more than exports.  As a result, China had a record trade surplus overall for the month, shipping almost $63 billion more than it imported.  While the May numbers were bad, both the imports and exports handily beat average economist expectations reported by Reuters.  It’s also worth noting that the US trade deficit with China widened by another $28 billion during the month.

On the Virus front itself, the global headline numbers are 7,110,306 confirmed cases and 406,474 deaths.  New case rates keep falling in the countries hit early.  However, South American, the Middle East, and Africa all have exploding rates.  The global daily new case number has grown to 100,000 per day for over a week, that is the highest daily average seen so far.  Responses continue to vary, for example Brazil decided to simply stop reporting the number of new cases or related deaths as of the end of last week. 

In the US, we crossed the 2 million case mark this weekend and now have 2,007,531 confirmed cases and 112,471 deaths reported to date.  NYC has finally met the CDC guidelines and will begin the first phase of reopening today.  At the federal level, an HHS Dept. official told CNBC the govt. supply of GILD's Remdesivir (the only proven coronavirus treatment, which cuts hospital stay just over 25%) will run out at month-end. Speaking of GILD, over the weekend AZN approached GILD about a potential merger but were told there was no interest.

Overnight, Asian markets green across the board again, but still very mixed.  India was up over 3% and Japan 1.4%, but at the same time China, Hong Kong, South Korea, and Australia were dead flat.  In Europe, stocks are mixed on either side of break-even at this point in their day.  At 7:30 am, US futures are also mixed, with the NASDAQ just on the red side of flat, the S&P up 0.4%, and the Dow looking to gap up 0.7%.  There are no major economic news or earnings reports on Monday.

The bulls have been running rampant, but Friday’s high wick may show some over-extension concern at this point.  However, peaceful protests and no major economic stories did nothing to do dampen spirits over the weekend.  So, Monday could see some follow-through to last week’s run.  Don’t bet against the trend unless you’re doing it to hedge, but remember a pause or pullback is normal in uptrends.  So, stay focused on the short-term chart and lock in profits as you go.  Above all, don’t chase or predict.


Trade ideas for your watchlist and consideration: FNGU, SNAP, UNH, SQ, HD, ORCL, PYPL, DRI, CRWD, ZS. Trade your plan, take profits along the way, and smart. 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.

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🎯 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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