Stocks gapped higher at the open Tuesday, presumably on the fact that March CPI “only” came in at 8.5%.  There was even a little follow-through during the first half-hour of the day.  However, markets then rethought their position and this led to a steady selloff that lasted the entire rest of the day.  This left us with black candles with plenty of wicks at both ends in all 3 major indices.  On the day, SPY lost 0.37%, DIA lost 0.29%, and QQQ lost 0.42%.  The VXX also lost 1.4% to 25.74 and T2122 climbed a bit, but remains in the lower half of the mid-range at 39.32.  10-year bond yields fell back to 2.72% after being at a 3-year high early in the day. 

Tuesday also saw Oil (WTI) spike massively (over 7%) to $100.98 after being up “only 5%” most of the day.  This seemed to initially be related to lockdown easing in Shanghai leading traders to expect higher demand.  Yet, more talk of European sanctions on Russian oil and OPEC slashing the forecast for Russian oil exports led to fears about supply as well.  President Biden’s easing of maximum ethanol percentage regulations seemed to do little to impact either oil or gas prices, at least for the day.

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On the Russian invasion story, after-hours Reuters reported that the US will announce another $750 million in weapons aid for Ukraine today, including heavy ground artillery such as howitzer cannons.  Among the winners of contracts to resupply the US military will be RTX, LMT, RTN, BA, NOC, GD, and LHX who have all been invited to the Pentagon to discuss their capacity to supply Ukraine and refill American stockpiles.  Overnight, Sweden’s ruling party decided to back entry into NATO in a direct afront to Putin’s demands and threats.

So far this morning, DAL, FAST, and FRC have reported beats on both revenue and earnings.  JPM and BBBY both beat on revenue but missed on earnings.  JPM did so after taking over a $525 million hit from Russian sanctions and BBBY blamed supply chain woes (low inventories) for a poor holiday quarter.  Finally, BLK missed on revenue while reporting a massive beat on earnings ($9.52 actual vs. $8.92 est.).

Overnight, the Asian markets were mixed.  Japan (+1.93%), South Korea (+1.86%), and Taiwan (+1.83%) led the gainers.  Meanwhile, Shenzhen (-1.60%) and Shanghai (-0.82%) paced the losses.  In Europe, stocks are mostly red at mid-day.  The FTSE (+0.08%), DAX (-0.89%), and CAC (-0.51%) lead the way with only Norway (+1.62%) being a significant winner in early afternoon trading.  As of 7:30 am, US Futures are pointing to a green start to the day.  The DIA implies a +0.42% open, the SPY is implying a +0.51% open, and the QQQ implies a +0.67% open at this hour.  10-year bond yields are flat at 2.725% and Oil (WTI) is up almost 1.8% to $102.44/barrel in early trading.

The major economic news scheduled for release on Wednesday is limited to March PPI (8:30 am) and Oil Inventories (10:30 am).  However, earnings season kicks off in earnest today with these major earnings reports scheduled before the open, BBBY, BLK, DAL, FAST, FRC, INFY, JPM, and SJR.  There are no major earnings scheduled for after the close.

Everybody expects a very hot PPI number this morning, but as usual, it won’t be as hot as yesterday’s 8.5% CPI number. (Business always passes on more than the hit they take.) Yesterday’s number led to an initial gap up, but then a rethink. Will we get the same today? It’s hard to say, especially since we are starting back into earnings season and eyeballs will be focusing on the rearview mirror for a while, gauging the impact of Russian sanctions (on companies that shut Russian operations or lost business due to embargoes) and inflation. This will be even more evident in consumer names as markets try to read through “just how badly has consumer spending been hurt by rising prices.” We should still expect volatility (like yesterday morning’s big reversal) and be prepared. That means continuing to be either being very nimble/quick, being hedged, or having loose enough stops (and the ability to withstand short-term pain) to ride out the whipsaw action. Trade carefully and position yourself so that shocks in either direction don’t throw you into a panic.

Remember, earnings season is starting again (check those earnings dates) and also that markets are closed Friday (Good Friday). So, you don’t have to chase trades early this week. Stick to those trading rules and manage the things that you can control while trying not to worry about the things you have no control over at all. Trade with the trend, don’t chase, keep consistently taking profits when you have them, and move your stops in your favor. Remember that the first rule of making big money in the market is to not lose big money in the market. Don’t be stubborn, and protect yourself from yourself. If you are wrong, just admit it and take your loss. Trading is a marathon, not a sprint. So, focus on the process and enjoy yourself.

Ed

Swing Trade Ideas for your consideration and watchlist: EXR, MRO, SHEL, OXY, X, DRE, CF, KGC, FE, MDT, DVN, TWTR, ZBH, LULU, EOG, APA, FIS, XLU, CVX, ET. 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.

🎯 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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