CPI, Deficit and Impeachment on Tap Today

Markets opened flat Tuesday and then proceeded to print indecisive Doji-type candles in all 3 major averages.  So, after a rollercoaster session, the consolidation of the last couple days remains in force.  On the day SPY (+0.01%) was on the green side of flat, DIA (-0.16%) was on the red side, and QQQ (+0.18%) was on the green side.  The VXX lost 3.4% to 16.75 and T2122 jumped back up into the overbought territory at 87.08.  10-year bond yield were flat at 1.134% and Oil rose the better part of 2% to $53.15/barrel.

During the day, two different Fed speakers said that into 2022 the FOMC will remain accommodative, but that inflation could rise faster than expected.  In other economic news, President-elect Biden announced more economic relief will be coming, saying he will extend the Student Loan repayment moratorium in addition to earlier calling on Congress to forgive $10,000 in student loans.  The dollar also continued to weaken, which helped most commodities and even bonds to an extent.  However, this weakening also raises concerns that the EU, China, and perhaps others will soon make moves to devalue their own currencies relative to the dollar to offset the impact of falling dollars (it is harder to sell things to the US when a dollar buys less).

Overnight, in Europe, ECB President Lagarde told reporters she is standing by her forecast of 3.9% GDP growth for 2021 (versus what is believed to be a 7.3% contraction last year).  Despite the current lockdowns and travel restrictions, she said the model expected the current situation.  She said that what might change forecasts would be lockdowns that extended past March. Until then, she still expects close to 4% growth.

Related to the virus itself, US infections continue to rage as the US.  The totals have risen to 23,369,732 confirmed cases and 389,621 deaths.  The post-holiday surge is now starting to hit, as we average just over 253,000 new cases and after another record day of 4,300 dead, we now average almost 3,400 deaths per day.  The CDC has announced that all international air travelers will require a negative test before boarding a flight destined for the US as of Jan. 26.  In addition, the agency also reported that we have vaccinated 9 million people with the first round (of two) of the PFE-BTNX or MRNA vaccines.  REGN also announced a deal with the government to provide 1.25 million additional doses of its Covid antibody treatment.  Interestingly, at almost the same time Dr. Fauci (NIH) and other scientists were saying that the new South African variant may pose a threat to the effectiveness to the existing antibody treatments and could theoretically also impact the effectiveness of vaccines.

Globally, the numbers rose to 92,118,795 confirmed cases and the confirmed deaths are now at 1,972,685 deaths.  As a reference, the world is averaging over 733,000 new cases and over 13,000 new deaths per day.  Germany tightened inbound travel restrictions and extended its lockdown again today, specifically trying to stop the UK and South African mutations of the virus.  In bad news, a Chinese vaccine from Sinovac Biotech was found to be only 50% effective in Brazil trials (versus the 78% the company had claimed from Chinese trials).  In Japan, PM Suga declared a state of emergency for 7 additional regions of the country. And in the UK, Health Sec. Hancock is now considering putting COVID-19 patients into hotels to ease capacity pressure on the NHS.  However, while it would surely help make space, that measure would not help any personnel, material or equipment capacity issues.

Overnight, Asian markets were mixed again.  China showed the only red with Shenzhen (-1.08%), Shanghai (-0.27%), and Hong Kong (-0.15%) to the downside.  Meanwhile, Taiwan (+1.74%), Malaysia (+1.53%), and Japan (+1.04%) led gainers.  European markets are also mixed, but lean to the red side on modest moves so far today.  Among the big 3 bourses, the FTSE (-0.20%) , DAX (-0.19%), and CAC (-0.10%) are all slightly red.   As of 7:30 am, US futures are also in the red.  The DIA is implying a -0.18% open, the SPY a -0.28% open, and the QQQ a -0.26% open.

The major economic news for Wednesday includes Dec. CPI (8:30 am), Crude Oil Inventories (10:30 am), Fed Beige Book and Dec. Federal Budget Balance (both at 2 pm) and 4 Fed Speakers (Bullard at 9:30 am, Brainard at 1 pm, Harker at 2 pm, and Clarida at 3 pm). Major earnings reports include INFO, INFY, SJR, and WIT before the open.  There are no major earnings reports after the close.

With no surge of earnings today and the political drama still only slowly simmering, markets may be wont to drift with threats of more seditious violence 3-10 days away (according to FBI reports). If we look at the bright side, this sideways action could be taken as good for the bulls as over-extension gets worked off. However, be careful of odd moves. Bloomberg reported that six of the 10 most active stocks on Monday were penny stocks which moved in massive swings on no particular news, possibly pointing to major pump-and-dump or other unknown activity.

As always, follow the trend, respect both support and resistance, and don’t chase the moves you have missed.  Lock in those profits (base hits are the way we build consistency) and stick with your discipline.  Focus on the overall market, the specific chart, and your own trading process. Remember, trading is a marathon, not a sprint. 

Ed

Swing Trade Ideas for your consideration and watchlist: PTON, LYFT, XLB, XLI, CPE, MOMO, SPCE, NKLA. 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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