Bulls Looking to Charge Again?

The bulls gave us a little rebound Monday, coming off the worst week in 6 months.  After a small gap higher, the bulls pushed but were driven back in the large-caps leaving large upper wicks.  The SPY gained 0.74%, the DIA gained 0.55%, and the QQQ was strongest up 1.51%.  This caused the VXX to fall to 15.68.

Coronavirus continues to lead the news.  Among related stories, in the afternoon CCL reported that one of its passengers had tested positive for the virus 6 days after leaving one of their cruise ships.  Oil also fell to the lowest price in more than a year on fear of the virus’ impact on demand. As of this morning, the count has risen to 21,000 confirmed cases and 425 confirmed deaths. However, US markets now seem to expect this outbreak will end up having little impact on the US and global economies.

After the close, Alphabet reported earnings, beating expectations on earnings by 20%, but apparently disappointing on ad revenue.  As a result, both GOOG and GOOGL were down 4.5% in after-hours trading.  The other Monday night story was the Iowa Caucuses and their debacle of not releasing results.  Pete Buttigieg (widely seen as a moderate) claimed victory, but the Democratic Party announced nothing after finding inconsistencies in the data from the App they used to roll up precinct results.  A hand recount of the tallies will be done today.

Overnight, Asian markets rebounded after their beating yesterday and there was green across the board Tuesday.  The same is true in Europe, with strong gains being made in all the major bourses at this point.  As of 7:30 am, U.S. futures are also pointing to a large gap higher.

Tuesday’s major economic news is limited to Dec. Factory Orders (10 am).  Of course, although not economic or even usually news, the President Trump will deliver the State of the Union speech tonight. However, again there are many earnings reports.  Reporting before the bell are CNC, CLX, COP, CMI, ETN, EMR, IT, J, MCK, RL, RCL, SPG, SIRI, TDG, WAT, and ZBH.

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The bulls seem to be making another push this morning. However, the primary economic story (coronavirus impact) has not changed and I'm not aware of any unexpectedly good earnings stories that changes the outlook.  So, be careful trading in either direction. Remember what happened to Monday's candle after the gap and morning run.

Keep in mind that our job as traders is to consistently take profits and cut risk. Don't chase or act on emotion. Make the trade to come to you...plan your trade and trade your plan.

Ed

Swing Trade Ideas for your consideration and watchlist: OPGN, EZPW, PLAN, NFLX, LULU, IR, ALLE, SVRA. 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.

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