Earnings Season Kicks Into Gear Again

Markets made a small gap higher on slightly better than expected PPI results.  However, after a short grind sideways, that was all she wrote for the bulls in the SPY and QQQ.  The DIA held out until noon, but then it too started selling off.  All 3 major indices closed near their lows of the day and failed their T-line tests.  In addition, if you can look past the DIA having a long lower ick on the first candle, all 3 finished printing Evening Star signals Thursday.  On the day, SPY lost 1.38%, DIA lost 0.48%, and QQQ lost 2.50%.  The VXX gained over 6% to 18.74 and T2122 dropped back into its mid-range at 54.81.  10-year bond yields fell to 1.701% and Oil (WTI) dropped a bit over a percent to $81.70/barrel.

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During the day, another FOMC voter called for a rate hike in March.  This makes 5 voting members which have publicly made a call for a rate hike at that meeting.  In addition, after the close, Philly Fed President Harker told CNBC that he does not know if 3 rate hikes in 2022 will be enough. He said that he personally sees 3 or 4 needed, in addition to other Fed tightening measures.

After the close, the Supreme Court blocked the Biden Administration’s “vaccine or test” requirement for large private employers.  The reversal impacts 84 million employees of private companies with more than 100 employees.  However, the court left the vaccine mandate for healthcare workers (in any facility that accepts Medicare or Medicaid).  This does not change company-mandated testing or vaccination such as required by the major banks (GS, MS, BAC, JPM, etc.). 

Earnings season kicks into high gear again this morning with the big banks.  So far, C, JPM, WFC, and regional bank FRC all beat on both lines.  BLK beat on earnings but came in a little light on revenue. 

Overnight, Asian markets were mostly in the red.  South Korea (-1.36%), Japan (-1.28%), and Australia (-1.08%) led the way lower.  In Europe, markets are down on every exchange except Norway at mid-day.  The FTSE (-0.16%) is hanging on better, but the DAX (-0.73%) and CAC (-0.79%) are typical of the continent in early afternoon trading.  As of 7:30 am, US Futures are pointing toward a modestly down open with a lot of data to come this morning.  The DIA implies a -0.18% open, the SPY is implying a -0.21% open, and the QQQ implies a -0.34% open at this hour.  10-year bond yields have spiked back up to 1.74% and Oil (WTI) is up three-quarters of a percent in early trading.

The major economic news scheduled for release Friday includes Dec. Retail Sales and Dec. Import/Export Price Index (both at 8:30 am), Dec. Industrial Production (9:15 am), Nov. Business Inventories and Michigan Consumer Sentiment (both at 10 am), and a Fed speaker (Williams at 11 am).  However, earnings season gets going again with pre-market reports from BLK, C, FRC, JPM, and WFC.  There are no major reports scheduled for after the close.

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The hawkish sentiments expressed by Fed members the last few days have world markets worried.  With lower highs confirmed in all 3 major indices Thursday, the trend is to the downside now and all 3 have also failed their T-line. For the swing trader, this puts us in a bearish market at least short-term. The fact that the mega-cap DIA is the strongest of the indices tells us that money is seeking safety and continues to rotate out of high-growth/high-volatility names. Keep in mind that whipsaw volatility remains likely at least intraday and that bear moves tend to be faster than bullish ones. In short, be careful of long positions, unless they are in inverse names.

Remember this is Friday and we have a long holiday weekend since US markets are closed Monday in celebration of Martin Luther King Day. Stick to your trading rules and on managing the things you can control. Don't chase, trade with the trend, keep consistently taking profits when you have them, and move your stops in your favor. And keep in mind that the first rule of making a lot of money in the market is to not lose a lot of money in the market. So, don't be stubborn. When you're wrong, just admit it and take your loss. (That's why we set stops.)


Swing Trade Ideas for your consideration and watchlist: VXX, COST, FSLY, PANW, NVDA, PENN, PLTR, SNAP, GMA. 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.

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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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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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