Bulls Look to Rebound From Evergrande

Stop me if you’ve heard this one before.  So, China caught a virus and the US got sick.  Ba-dum-dum.  In this case, China's virus is the Evergrande fund's $300 billion loan default, and "the US" refers to US markets. At any rate, US markets started the week with a big gap down and then put in a wide-ranging, indecisive Spinning Top candle day in all 3 major indices.  On the day, SPY lost 1.66%, DIA lost 1.80%, and QQQ lost 2.17%.  That made Monday the worst day since May.  However, for context, it’s important to remember that we are still just 4-6% off the all-time high in the various indices.  The VXX rose almost 11% to 29.74 and T2122 dropped deep into the oversold territory at 3.54.  10-year bond yields fell to 1.311% and Oil (WTI) dropped 1.56% to $70.85/barrel.

Afterhours, RDS.A announced a deal to sell the entirety of its Permian Basin assets (operations and drilling rights) to COP.  The deal was for $9.5 billion and includes current production of 175,000 barrels per day.  This deal ends Shell’s US onshore production operations, but RDS.A will continue to operate their production offshore from Texas. 

On Monday, Covid-19 surpassed the 1918 Spanish Flu as the deadliest pandemic in US history.  There have been 43.1 million total cases and 694,619 total deaths in the country.  Meanwhile, the averages 133,979 new cases and 1,623 new deaths per day across America.  In related news, this morning JNJ (whose top vaccine selling point was a single dose) says that the vaccine is 94% effective when a booster dose is given two months after the original dose.

Overnight, Asian markets were mixed, but mostly green.  Japan (-2.17%) was a huge e outlier as fear from the Evergrande debt crisis impacting Japanese firms gripped the Nikkei.  However, the region's few other losses were very minor.  Meanwhile, India (+0.95%), Thailand (+0.74%), Shenzhen (+0.71%), and Singapore (+0.71%) led the gainers.  In Europe, we see green across the board at mid-day.  The FTSE (+1.14%), DAX (+1.53%), and CAC (+1.37%) are typical as the continent rebounds from the initial Evergrande shock.  As of 7:45 am, US Futures are pointing toward a gap higher at the bell.  The DIA is implying a +0.83% open, the SPY implying a +0.77% open, and the QQQ implying a +0.75% open.  10-year bond yields and Oil are also rebounding in early trade as the Dollar is just on the red side of flat so far this morning. 

The only major economic news scheduled for release on Tuesday are August Building Permits, Q2 Current Accounts, and August Housing Starts (all at 8:30 am).  The major earnings scheduled for the day include AZO and CBRL before the open.  Then after the close, ADBE, FDX, and SFIX report.

Markets are trying to rebound after the ugly Monday session. However, a lot of technical damage was done and the whipsaw is in effect both intraday and interday. Be careful not to get caught in that whiplash. Also, with the Fed Meeting starting today, it would not be surprising for markets to start drifting until the FOMC shows its next card Wednesday afternoon. So, be ready for a dead drift sideways if it comes.

Keep in mind that you don't have to trade every day. And when you do trade, the Trend is your friend. Right now, that trend is bearish. So, 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. Discipline and good trading rules are what separates 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.

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.

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🎯 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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