Markets gapped higher, giddy about a recycled MRNA story after the close the prior night and a big GS beat in pre-market.  However, after the gap, markets soon found resistance and traded in a choppy range the rest of the day.  We ended up with indecisive black-body candles in all the major indices, but also green from the gap-up.  The SPY closed up 0.92%, DAI up 0.87%, and QQQ up 0.20% as the big tech names were mixed at best.  VXX fell to 32.26 and T2122 rose deep into overbought territory at 98.18.  10-year bond yields rose slightly to 0.632% and Oil (WTI) climbed to $40.99/barrel.

After the close and following in the footsteps of UAL, AAL warned 25,000 employees that job cuts are coming.  (Federal law requires them to give 60-days’ notice.)  TWTR also reported a major set of account hacks.  The TWTR accounts of Jeff Bezos, Bill Gates, Elon Musk, AAPL, UBER and many others were used to send scam messages offering to double every bitcoin donation made within 30 minutes.  It is unclear exactly how much money was lost to the scam, but law enforcement sources told Bloomberg that over $100,000 is known lost.

The US-China relationship story remains fairly muddled as China is distracted with major flooding nationwide and the US is sending mixed signals from our side. Sec. of State Pompeo tried his tough-guy routine Wednesday saying that “China will be made to pay a price” (related to the attempt to blame China for the pandemic).  However, President Trump played the dove during the day by deciding not to sanction Chinese officials for now.  This all comes a day after his campaign speech that mentioned signing legislations giving him more power to sanction Chinese officials and also removing Hong Kong’s special trade status.  China has vowed retaliation (tit-for-tat sanctions) for the latter two moves (and the sanctioning of Chinese business leaders) as “US interference in China’s internal Hong Kong affairs.”  Speaking of China, their GDP beat expectations coming in at 3.2% for Q2, but Retail Sales fell again by 1.8% for June. 

In the US, the virus numbers show we have 3,618,739 confirmed cases and 140,172 deaths. Retailers WMT, KSS, TGT, BBY and KR all announced a mask mandate for all shoppers, giving up their wait for a federal rule.  A couple more states joined that chorus as well, including AL and MT.  Overall, the country reported over 66,000 cases again on the day, with FL reporting over 10,000, TX reported over 8,000 and CA over 7,000 new cases on Wednesday.  In a sign of the situation, the state of TX asked FEMA to send 22 additional (3 are already in place) refrigerated morgue trucks to various Texas locations, each capable of holding 20 bodies at a time. The state also opened up a couple of convention centers as temporary virus hospitals.

Globally, the number of cases has reached 13,727,380 confirmed cases and 587,662 deaths.  China announced it will open some cinemas as of July 20 in order to spur retail sales.  India reported the highest daily jump in new cases for the second day in a row. 

Overnight, Asian markets were strongly red across the board (with the exception of India).  China was hit particularly hard as Hong Kong was down 2%, Shanghai was down 4.5%, and Shenzhen down 5%.  There was no specific cause for the Chinese selloff other than US-China relations, massive flooding, and lower than expected Retail Sales.  In Europe, markets are also down, but more modestly red than Asia with a couple minor green break-even exceptions.  In the US, as of 7:30am futures are looking for a gap-down at the open, but are wide-ranging.  DIA futures are down 0.6%, SPY futures down 0.62%, but QQQ futures are down 1.36% as of now.  This all comes as the big banks continue to report blow-out trading profits and unprecedented set-asides for expected bad-loan losses.

The major economic news for Thursday includes June Retail Sales, Initial Jobless Claims, July Philly Fed Employment Index (all at 8:30 am), May Business Inventories (10 am), and a Fed Speaker (Williams at 11 am).  Major earnings reports on the day include ABT, BAC, DHR, DPZ, JNJ, MS, SCHW, SON, TFC, TSM all before the open.  After the close, FNB, JBHT, MRTN, NFLX, PPG and WAL report.

Wednesday’s candles were much more indecisive that the earlier days this week.  It is unclear whether the bulls or bears won yesterday’s battle (at least after the gap-up).  Expect more volatility and keep watching those FAANG stocks that are a good “canary in the coalmine” for the markets.  Focus on short-term charts, but don’t chase, don’t predict, and take profits as you go.  Remember we are in earnings season now, so some surprises are likely to happen…plus usually every initial reaction is met with a “on second thought” re-reaction.

Ed

The Daily Swing Trade Ideas for today: OSTK, ROKU, IMMU, ADSK, WPM, AUY, GLD, PYPL, CRM, WDAY, TTOO. 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.

🎯 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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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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